All-In with Chamath, Jason, Sacks & Friedberg - E66: $FB's major pullback, Rogan/Spotify mess, Xi/Putin meetup and understanding supply chain issues with Bestie Guestie Ryan Petersen (Flexport CEO)

Episode Date: February 5, 2022

0:00 Sacks' shining moment 2:34 Bestie Guestie Ryan Petersen joins to break down the supply chain situation: core issues, solutions, things to look out for 45:49 $FB's major pullback: causes, headwinds, and why going all-in on the Metaverse might have been a "frothy market mistake" 55:28 Breaking down the competition in the "XR Wars": Meta, Apple, Microsoft and Google; why a phone might have been a better $10B/year bet for Facebook, Google's strategic brilliance 1:09:14 Spotify's Joe Rogan situation: positions, speech rights, division amongst free speech 1:23:08 Reflection on Baby Boomers' transition from radically free speech and anti-government to authoritarian, misinformation changing over time, using science to discredit science 1:30:10 Xi Jinping and Putin are deepening their relationship: what does this mean for the world, and how should the US strategically respond? 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.google.com/finance/quote/INGR:NYSE https://www.forbes.com/sites/stevebanker/2021/04/23/walmarts-massive-investment-in-a-supply-chain-transformation/?sh=41a6b18340ed https://www.cnbc.com/2022/01/20/peloton-to-pause-production-of-its-bikes-treadmills-as-demand-wanes.html https://twitter.com/typesfast/status/1451543776992845834 https://www.google.com/finance/quote/FB:NASDAQ https://www.cnbc.com/2022/02/02/meta-reality-labs-reports-10-billion-loss.html https://www.cnbc.com/2022/02/02/facebook-says-apple-ios-privacy-change-will-cost-10-billion-this-year.html https://www.google.com/finance/quote/PYPL:NASDAQ https://www.google.com/finance/quote/SNAP:NYSE https://www.cnbc.com/2022/02/03/facebook-and-google-stocks-have-diverged-and-the-reason-is-apple.html https://twitter.com/GavinSBaker/status/1462831115572596744 https://www.google.com/finance/quote/NFLX:NASDAQ https://www.google.com/finance/quote/AMZN:NASDAQ https://twitter.com/DavidSacks/status/1489321225520238592 https://bariweiss.substack.com/p/get-ready-for-the-no-buy-list https://www.nytimes.com/2022/01/26/arts/music/spotify-neil-young-joe-rogan.html https://www.theverge.com/2022/2/3/22915456/spotify-ceo-joe-rogan-daniel-ek-town-hall-speech-platform-podcast https://www.dailymail.co.uk/news/article-10475473/Barack-Michelle-Obama-preparing-shop-new-podcast-partner-amid-outcry-Joe-Rogan.html https://www.washingtonpost.com/arts-entertainment/2022/02/02/spotify-rogan-white-house-covid-misinformation https://twitter.com/ggreenwald/status/1488252747489202181 https://twitter.com/ggreenwald/status/1489258034865971205 https://www.thewrap.com/tucker-carlson-liberal-viewership-fox-news https://twitter.com/echeloninsights/status/1487118055582965762 https://twitter.com/MonmouthPoll/status/1488180589505167372 https://www.wsj.com/articles/russias-vladimir-putin-meets-with-chinese-leader-xi-jinping-in-beijing-11643966743 https://www.voltairenet.org/article215540.html

The fact that Sacks' greatest moment in life was beating Peter Tiel in a multi-game chast, you ever see that picture of him with his arms raised and Sacks can't believe he beat Pete. I mean, tell us about that moment. Nick, show that picture of Sacks. I mean, listen, here's what I say. When I saw that picture, I had a couple thoughts. Number one, I've seen this picture somewhere else.

And then number two was, oh my God, it was on NBC's to catch a predator. No. No. No. I mean, I have never seen SACs happier. I like the birth of his children. Oh my God. I was in comparison to this moment.

I'll tell you, that was the day of PayPal's IPO. And so we did a party in the, it was like a keg party in the parking lot that was the extent of the celebration. And Peter did a 10 game simultaneous, which means he's playing against type people at the same time and he goes board to board, and makes his move.

And I was the only one out of the 10 that beat him. And somebody, I guess I put my chin on the left. I put money down. I put like 20 bucks down or something on the game, which is a foolish thing to do against Peter because he's like a chess master. And somehow I won and you can see I've got the money in my hands, right?

It's tough. Look at the look on Peter Till's face. Oh, he hates losing. Look at the look on PI. I mean, he's so angry. And he, but he sees the joy in your face and he can't process it. And look at Max.

Max is to my right and roll off his throat. He put your joy in there. Yeah, of course. For your joy. Yeah. process it and look at max maxes to my right and roll off his right and there are some of it. Yeah, because you're a joy. Yeah, but this was a few seconds before Peter smashed all the pieces off the board and what? You flip the board. He always does that when he loses and his motto is when you call him a sore loser, he says show me a good loser and I'll show you a loser. Wow, such a great line. But I just want to also comment on the pleats on sexist pants and how high that was and the cell phone hole.

The cell phone hole. Yeah. Oh my god. I'm I'm assuming I'm the cell phone poster.

Is that a black shirt? It just keeps it. Yeah. It's all about free phone guys. This is like, I mean, this is like 90s. The gift to keep sun giving. Yeah. I do have to say rule of hair game I mean strong hair roll-ups always had incredible hair his hair is incredibly great hair to this incredible thick yeah still thick like that never noticed Alright, everybody, welcome to another episode of The All in Podcast.

With us again today, the dictator Tramoth Polly Hoppatea, Rainman, David Sachs, and the Sultan of Science, formerly known as the Queen of Kinwa. He's out of that business. David, Friedberg, we got a lot on the agenda. However, one thing that we've had a hard time figuring out is the state of the supply chain. And it's confounding. It seems like nobody knows what the hell they're doing. But there's one guy who's been on Twitter and that we happen to know him. He's been on my pod

and a freeberg nose him. And his name is Ryan Peterson. And he's a bit of an expert on this. And we thought we'd have a Bestie guestie come on. We don't do this too often. Maybe it's a third or fourth Bestie guesty and Welcome to the pod Ryan Peterson from Flexport. What's up guys. Thanks for having me on what's up, Ryan? Ryan, did you tell Olivia you're doing the show today? No, I didn't tell her so she's gonna she's a huge fan Don't tell her she right now. Is she like not there? She was in the room next door, but I totally mean I'm doing podcast. She knows I'm gonna podcast. She doesn't know what you want She's a super fan. She's a very big fan fish She's literally wearing the wet your beaks hoodie right now. It's awesome. Fantastic. I co-incident. She doesn't know I'm on the show Fantastic. So what you're not gonna tell it right? She's just gonna watch my next show and you're gonna be on it

You will listen to it. Yeah, we probably listen to it together tonight whenever it comes out Ryan, what is this state now? Should we be worried about the supply chain? Is it getting better? Is it getting worse? What's 2022 going to look like? Yeah, I mean, I think the supply chain means a lot of things in a little panel of what your industry is, what's really happening, but it goes for everything from manufacturing products,

which means sourcing all the subcomponents, like semiconductors through logistics and final delivery all the way to a customer store. And we're flexible to focus on it as sort of picking goods up from factories around the world and delivering them into fulfillment centers all over the world. So kind of that global mile is what we sometimes call it. There you're seeing real disruption and it starts really with the pandemic shift in consumer behavior where people started buy more goods because they couldn't go to restaurants and travel and things. And so a lot of spend shifted on the goods and imports are up almost 20% imported container volumes.

So that's the start of it all. And then what we learned is our infrastructure is dilapidated and unable to handle a 20% increase. And by infrastructure, I mean the number of ships in the world, the capacity of throughput of the ports, the number of trucks and availability of trucks and chases, which is the trailers that all containers around. We just didn't have enough of these things or the port capacity, you know, like, look at American ports operate. This I just learned the statistic pretty recently and I keep saying it because it appalls me. Our ports operate with a lower throughput and productivity level than Mombasa, can you? And we just do not have modern port infrastructure.

Roger Dems have been fully automated for 20 years. So if they want to run 24-7 and keep containers flowing through the port, they can do that with self-driving trucks and everything. Is that a technology issue? Or do you think that's a regulatory capture and union issue? Like a labor issue, like a labor.

The tech is there, you know, it's existing for a long, long time. It's really about labor getting together with management, negotiating these things and allowing it to happen. And the way that our ports are run is pretty crazy when you look at it, they treat labor as a flungable commodity. As in the port terminal operators will say say I need this many workers tomorrow and the union provisions that many workers, but it's different people every day doing operating complex, you know, heavy machinery that you can't like the number one thing in business is like what did we learn today and how are we going to do better tomorrow every day with your team?

and how are we gonna do better tomorrow, every day with your team. But if it's a new team every day, like that's not even possible. So I don't know how you can drive a productivity improvement when it's different workers every single day of the week. Right. So wait, they're not full-time employees. They're like staff by the hour.

They're union workers that are paid by, they have annual contracts. And the union decide who goes to work every day and who gets shifts. Yeah, and where. So they're different terminals. And there's like 15 different terminals. So they just kind of move around, do different.

So essentially what we saw on the waterfront, where like the union decides you get to work today, these other people didn't, whatever. It's like literally like a movie. Yeah, it's literally like that. Even going further back in supply chains to manufacturing centers, how much are you hearing about and seeing kind of labor shortages because people are out for

COVID and hey, someone's sick, they got to take 10 days off and when 10% of the employees get sick and they lose 10 days of work, the facility sees a decline in productivity to 70, 80% are normal and then all of the output of that facility goes way down. Are you hearing about more of that stuff happening, particularly during this kind of Omicron wave, where the real effect of that hasn't really hit the supply chain system yet, and we're still kind of seeing a build-up of demand, and we haven't really hit the problems? So for the last 18 months, China had this total zero tolerance policy and was very successful in keeping COVID out of their country. And so manufacturing just kept running as if not no problem in China, which is the majority

of this manufacturing. With Omicron, you're starting to see that it is still taking hold in a zero tolerance policy. We haven't yet seen like major shutdowns and waves of shutdowns, but a little bit, you're seeing that here and there. The zero tolerance policy has shown up, for example, at least twice where one port worker in a Chinese port got COVID and they shut the whole port down for like three weeks. Yeah, that's crazy. It's really extreme.

I mean, US workers have been getting COVID nonstop and the ports keep operating. We have lower levels of productivity, but they'll shut the whole port down. That happened both at Yantian, which is the largest port in China or second largest in Ningbo, which is the third largest. So it's been very, very disruptive. It's also happened at the airports over there. So that's something I'll definitely keep an eye on here over the next couple of months is, or even next several weeks.

Are we still having this like, we're ordering too many goods and we're backed up? Or is it that we're backed up for six months, just trying to fulfill all those pandemic orders? Like what's the state of the backlog today if you could describe it? So volumes are high, but they're sort of flat. They're over year over year, they're flat now. They're much higher than pre-pandemic,

but they're pretty much flat year over year. And that's what has me so worried here is that you have increasing delays, even though the input's the same. And we have a complex system where the same amount of inputs coming in, but the delays getting longer and longer. That's a very worrisome sign.

If you're ever building a technology system, you're building this system, and you're sending the same amount of bits in, and performing the job is taking longer and longer, that should be like that would be a very alarming sign that you're gonna Want to send some of your best engineers in here to debug this thing But I think we're seeing that like because a lot of companies people don't realize like when they buy capital equipment like machines that You know are either sold to end users or machines that are used in their own production systems Capital equipment is typically assembled last minute. It's not like, you know, there are companies that own huge pieces

of equipment and then they ship them and they just get plugged in and turned on. It's usually components associated with them. And, you know, in businesses, I've been involved in over the last couple of years. We've got a lot of lab businesses and hardware businesses. And just getting capital equipment has been like delays like we've never seen. It's like, you know, a year to a year and a half or something that used to take four to six weeks to arrive because the company that makes that equipment is having delays with each of their component suppliers. And then all of the stuff backs up into the system

and it plays out with the end users now stuck waiting a year, a year and a half and the business doesn't make progress. And a lot of hardware companies in Silicon Valley right now are facing these significant shortages where they can't get the equipment they need to ship product to their customers and they're sitting around burning money every month.

And so the result will actually show up down the road when all of a sudden they misrevenewed three or four quarters down the road. And that's why I've been saying for a couple of shows now that the biggest thing I'm concerned about is when the revenue shortfall start to hit the companies that are dependent on these supply chains, but you don't actually see the revenue shortfall for a couple of quarters after the supply chain problems hit them. And just this quarter with the quarterly earnings we're now seeing the company yesterday that reported called InGridion.

Their big food ingredients company. And they just reported how supply chain problems have now backed up to affect and the stock was down like 10, 11% yesterday. And this is like a very stable, very mature third largest producer of starch in the United States. And their business got totally hammered, but it took a while before that hit them. And so, you know, it feels to me, Ryan, I mean, correct me if I'm wrong, but like a lot of the business level and market level risk isn't gonna show up for a while

after these supply chain problems really persist within their organization. This is the thing that has to be most concerned is what's happened is it's now taking a 115 days on average across our customer base. From when the factory says, hey, these goods are ready, come pick them up to when they finally get delivered

to a warehouse in the United States. Crazy. 15 days before the pandemic that was 50 and 50 evens felt high. Like the ship is only taking 15 days. Like what the heck is going on? Lot of inefficiency, a lot of customs processing, hard to find a truck, et cetera, even in normal times. When you go to 115, all of a sudden these companies are so much less agile. Like because you've placed the orders and your exp- When you go to 115 all of a sudden these companies are so much less agile

Like because you've placed the orders and you're expected forecasting demand is so hard and now you're forecasting demand for twice as long of a time period You've already placed all that inventory if your demand goes down. Guess what you've already ordered the goods So I'm really worried that we're gonna find out in six months or in some time period in the future here that People have ordered way too many goods that these companies expected demand to stay high and keep booming. At some point consumers start going to restaurants and start traveling a lot more. You get pre-COVID consumption patterns and all these companies get stuck with way too much inventory that they paid way too much to ship and get delivered and they can't sell it. And so I'd be very worried for like middle market kind of retail, the direct to consumer e-commerce,

these types of businesses, then aren't very sophisticated in demand planning and end up with way too much inventory. I think that there's been this weird dispersion actually, and I think that like the supply chain issues are not broadly distributed. So if you bear with me for a second, if you watch the earnings reports,

I don't know how close to you, you watch them run this past couple of weeks, but like, Appalain Tesla basically said, it's kind of reasonably well managed, particularly on the chip side, and we see the whole thing easing Q4Q wanted next year. Amazon last night basically said, yeah, there's some, you know, toughness in the system, but we think it's sort of like, you know, reasonably achievable and they're past it. And so it seems like the bigger companies who have influence were able to manage through it, the smaller companies to your point who really do rely on many

actors in the supply chain have been really thrown left and right. They probably don't know where demand really is. So is that sort of the more nuanced actual the way that it's running out? Yeah, and it's sort of, it's very interesting to see this flip. So pre-pandemic, the biggest companies paid the least for freight because they buy the most freight so they negotiate good rates.

Now they're paying the most and the biggest companies for a reason, they have the best businesses. They either have the best margins, the best, you know, they just built something that people wanted scaled to be huge. Well, when times are tough and you need to spend extra to prioritize your freight, to get loaded, to sign a contract, to make sure that these ship owners and airlines honor their commitments and set up, it's the big companies that can afford it.

And so they're not paying extra for freight, but they're getting around these problems. And freight is a really interesting market because it's pretty inelastic. Like you either are going to ship the thing or you're not, whatever the price is, you're probably still shipping it. And so like you, I haven't ever looked at an Apple at this level, but I'm sure that if you did, you'd see that it's a, the percent they spend on freight is just negligible. So if they doubled it, it wouldn't matter. But to Chimalt's point, it seems like, and I think we're seeing this a lot, the percent they spend on freight is just negligible. So if they double did, it wouldn't matter. But to Chimalt's point, it seems like, and I think we're seeing this a lot,

the bigger companies can actually afford to integrate their supply chains, whereas before it didn't make sense to vertically integrate, like I think Walmart announced that they've spent like $11 or $12 billion kind of rebuilding the supply chain themselves. Apple obviously has captive facilities, all the way down to the FAB,

where they're driving the whole supply chain from fab to components. All these Foxconn facilities that are operated for them are captive facilities. But the Tesla obviously has a very deeply integrated supply chain team, whereas GM probably relied on subs, who relied on subs, who relied on subs. And that's why GM delivered like no electric cars, but Tesla was able to keep volume up. The guys that are winning are the ones that are integrating supply chains. And do you think that that kind of becomes a persistent solution here where bigger companies their competitive advantage becomes, hey, we're going to own our whole supply chain all the

way through. We're going to own more of the infrastructure all the way through, like Amazon's done with delivery vans, and ultimately be able to kind of have a true competitive advantage because of this disruption that's going on right now. Yeah, potentially. I mean, I think, oh, my vision for Flexboard is that we become that layer and we allow small businesses, medium-sized businesses to get access to world-class

logistics services and get them a sort of almost be a union that can represent them at the table as against these bigger guys. I think it's very interesting to see companies, like the biggest companies have gone out and chartered their own ships. Totally. Wow, the experiment to watch for my, why am I saying you're a popcorn? You're bringing up a really important effect of all of this, which is what happens now in six or nine months to your point when

the consumption of hard physical assets turns towards the consumption of services, which it typically does. Right, if you revert back to the mean here, people aren't going to be buying as many pelotons and all of that stuff because they bought them all. They bought all the physical goods they need. To your point, these companies have overordered all this inventory. Actually, Peloton is a perfect example because they basically shut down their entire supply chain last. At the end of this past quarter, in a century, our inventory turns will be more than enough to meet existing demand for the foreseeable

future. That's an enormous capital problem that these companies now all of a sudden will face, right? So like the next step beyond all of the supply chain issues could be, and I think SACS has been talking about this a lot, like a pretty bad recession if these companies have all this inventory and they don't know how to get working capital. Yeah, give me a real ugly. And the other factor is the price is gone crazy. So the price of shipping and container, long run, like I've been in this business and been a customer of this business for 20 years, and you can just rule of thumb, it costs you 2,000 bucks to ship a container from China to the West Coast.

During 2016, that price collapsed. You have these booming bus cycles of an asset market. 2016, it was $550. Last year was $20,000. So it's up 10X over normal. It's up 40X over or more right over just a few years ago. And what that's done is create a real barrier to entry. Like for a DXC E-Com business,

you used to be able to just go to China, find some product, put your slap your label on it and go sell it on Amazon and you were in business. And it's like a huge number of people doing this. Right now, you have to come up if you want to ship 10 containers, it used to be you needed 20 grand, 92 grand.

That's like, that's a real barrier to entry. So actually, I've talked to some companies in this space. We're really happy. Like if you have an established business, you're like, great, now it's much harder for Joe Schmode to show up in China and start competing with me. So I was really surprised to hear that. I thought that was a pretty sophisticated take.

At what dollar point does air freight compete with containers? Because when we start hearing about chips, I was always wondering, again, I'm no expert, but putting a bunch of chips on a plane versus putting them in a container, given how much those chips are valued by a Tesla whoever's putting them into a car.

Isn't the brand-new plan? Certainly, but air freight vice has just gone in line and it's gone up five times as well. And one thing to remember is that 50% of all the world's air freight flies in the belly of passenger plants, which should kind of horrify you if you ever flying on a passenger plane from East Asia, but to the United States, there's probably a whole bunch of stuff down in that belly. And those are grounded.

So the supply of the ground. Why are they grounded? Nobody's flying to China right now. Oh, I see. So because there's no... Now we're seeing kind of the backlog playing the commodity cycles, right Ryan? So we're seeing like a lot of these commodities

because of these discontinuities in these supply chains. Suddenly commodity prices are spiking all over the place. And I mean, do we think that that settles down or do you think it kind of continues for, you know, the foreseeable future until this all works its way out. Yeah, I'm not the right person to ask about commodity prices, maybe it's your mouth as a view on that.

But on the logistics market, I don't see it sorting itself out for the next year, the next couple of years. In fact, you've warned that it might get worse, right? I mean, I saw on Bloomberg, you said that there could be a union strike in maybe October. What are the prospects for that? And what happens if that takes place?

So it's on July 1st. It's just for the, the West Coast Union, it's called the ILWU. That union extends from the southern border. So from Mexico, all the way to Alaska, and it includes Canada. So the whole West Coast of the United States is run by this one union at the ports.

And they are contract expires on July 1st. And in years past, so the last time this happened was in 2015. This is a contract that was signed then and extended at some point. But in 2015, it had a three month period where nobody could import anything on the West Coast. And some major companies, Miss Christmas that year. So that's July 1st. Typically, there's kind of slowdowns in the months leading up

to that, and we've already had slowdowns for a couple of years with hundreds of ships are now waiting off shore. So yeah, I can't make a prediction. This is slowdown, basically, in negotiating tactic by the unions. In the past, it has been. I'm not convinced that that's what we've seen over the last year versus, you know,

they are legitimate problem staffing People getting COVID etc So is there a role for presidential leadership in Sorting out these union issues or just sorting out the issues with the port more generally or avoiding a strike in July I mean it seems to me that if Biden wants to get reelected this inflation supply chain issues a pretty top of mind and in the news and are going to be on people's, you know, you want to be seeing doing things and I do think there are things that can be done.

So yeah, there's a role. And as far as union negotiations, Biden's probably pretty as equipped as any president's ever been to negotiate with a union and get them to play nice and not screw up his reelection with a strike. He's known as a union friendlyfriendly president and goes sit down and do a deal with them where Trump would probably never be able to do a deal with a union because they know that they're sort of natural adversaries. So there's something there. There's a lot more to be done. And I got some arguments with people that are like, you know, that's not in the president's power to do such and such. I'm like, yeah, but he's the president of the United States.

You pick up the phone. Like you can do things that aren't legally in your power just by asking for favors and other people do them. And you negotiate when unions a good idea, a good example, convincing to change the zoning laws in LA. So you can stack containers higher would be another. Yeah, that's not the president of the United States jurisdiction. But if he calls the mayor of LA or the city council, can you explain that?

So what does that mean? So in Southern California, you can't stack a container more than too high in a truck yard by law. Well, we got no place to put these containers. But is that a is that a danger issue or is that like a site issue? Sight lines like what what I say a little bit about so I think there's some safety issues. Although they're stacked six high all over the world. So that's not that legitimate to my, in my view. And in California, it's what, four or something? Two, two high.

It's two high, oh wow. At the truck yards, at the port, you see them stacked six high. But in the truck yards, two is the limit. Okay. And so it's, it's a, it's also an eye sore, especially in California, containers are a sign of free enterprise. And it's's, it's also an eye sore, especially in California, containers are assigned a free enterprise. And it's just, the people in California

can't stand to see them. Right. They really just object to the idea of capitalism in their neighborhoods like that. But there could be like some kind of temporary waiver that we do just to get through all of this backlog, which is to say, okay, let's just ease all of these small little things that slow the process down, just to get all these ships unloaded off

into the world where they need to be, and then we could revert back to what we are after things normalize. Yeah, so I wrote about this zoning law. And what's happening then is if you can't stack the container three high, there's no where to put that third container. So you leave it on the trailer. And now you have one less trailer in rotation, serving the port to unload. And that's true across Southern California right now.

There are thousands of trailers with containers on them because they're not allowed to stack them. They'll get fined if they do. So I tweeted about this and the city of Long Beach actually responded. I tweeted about it at 6 a.m. by 3 p.m. The city of Long Beach actually responded. I tweeted about it at 6 a.m By 3 p.m. The city of Long Beach had changed the zoning law to allow stacking up to 5 high, I believe I'm told the fastest response by any government to citizen action like ever. That's incredible. You must feel great about that

It was great, but unfortunately only Long Beach did that LA never followed through And there's not that many truck yards in Long Beach a lot of them are in Los Angeles, Compton, Runcher, Dominguez, etc. So I saw this kind of thing. Like yeah, Joe Biden could call these mayors and say, hey, let's work on this, right? Yeah, but let's face it, he's super union gel, right? Like I mean, he wouldn't even say the word Tesla over the union. But Jason, isn't that more pro union because won't these won't folks be working more and getting paid more? And I don't think there's a reluctance to pay, right? Because clearly, you're going to have to put some money into the system. And where the money comes from, we can figure that out later.

But the point is that there should be a desire to actually get the people on the ground to be working. It wasn't even a third shift, Ryan. That was another thing you were working on top of the stacking of these containers to alleviate the problem. You were also talking about they don't even have a third shift some nights, but they seem too faded at third shift, did that become permanent or not? Now, they do have a third shift,

but nobody's showing up is the problem. So truck drivers don't work in the middle of the night, where houses aren't open in the middle of the night. But is that a compensation issue, right? Like if we paid more of those folks show up? Like is that just a supply demand issue that basically gets through you? Never underestimate incentives. There's just a lot of factors and a lot of it is it's so easy to point fingers at somebody else

and blame someone in the chain, right? It's supply chain. You've got all these different people and it's everybody has their own opinion. You know, we at one point I wanted to hear what the union's opinion was, what are they saying? Because everyone else is calling them lazy and not working hard, what's really happening. So I said to Taco truck down to the port a couple of months ago, just to, because I figured we'd get in free tacos they'll talk to us and that will be our game. That's a game changer right there, yeah.

That really worked. So we, well, we got, they logged in, they said we're the only business ever to send tacos to the port and then they told us all about what their viewpoint was. They viewed that the truckers are screwing up, that 50% of all the appointments where a truck is supposed to come and pick up a container, they're missing their appointments. Right. And because, and then, and then so that's what sent me investigating, wait, why are they

missing the appointments? That's when I learned, oh, they don't have any trailers, these chases, because they're stuck under containers and can't be unlocked. So a lot of it is going here. The supply chain is kind of like this, that metaphorical elephant in the dark room, right? And everybody sees their own aspect of it, but you got to synthesize all those perspectives and kind of take a systems view and see if you can get some real understanding. I'm not convinced I have it yet, by the way. I think it is more complex and I'm really

beware of simple narratives. If someone, even including me says, oh, this is exactly what's happening. Like, it's really a lot of complexity in all of this. Right, how much of this is sort of the extreme end of the other spectrum, which is basically the US exceptionalism view that says, OK, we just need to really in house more of the stuff that we need so that we don't actually have to rely

on some of these arcane methods of just transporting goods from point A to point B. It might be that would be a shame if we, I mean, we have the best companies in the world who need to be able to source raw materials, components, finish goods anywhere on planet Earth, and we should have a modern infrastructure that makes that possible. Instead of being like, oh, we can't trade with the rest of the world. So we're going to become like self-sufficient. You know, we might as well go back to everybody being a farmer on subsistence farmer on our own land. Like, I think we should have global infrastructure that's really great and seamless and makes it really easy.

But you're right, that might be an end result as people can't rely on these supply chains and start saying, hey, let's manufacture at home or let's manufacture in Latin America, let's manufacture closer to home. To my perspective, that would be a shame. Well, I think the pendulum always starts from one extreme to the other. And I think the middle ground is probably that you need to have some heterogeneity, right?

You have to have some amount of it that is not just singularly reliant on China. Maybe it's, maybe it's de-central heterogeneity, right? You have to have some amount of it that is not just singularly reliant on China. Maybe it's, maybe it's Decentral or Latin America, right? Some that's domestic, but that domestic production probably has to be subsidized by something because we're never gonna be able to run as efficiently and as cost-effectively as, you know,

cheaper international labor. You know, unless we invent something really, you know, incredible. So the balance is probably in the middle, but it's going to take us a long time to kind of get there, I think. I saw a governor abit was pitching people on, hey, just send your containers to Texas, we're cheaper and more central in the country. Is that true? Is that a solution? It takes much longer to cost much more. When if the union goes on strike on the West Coast, it'll be one of your only options bringing stuff through the canal. What you'll very quickly takes much longer to cost much more. When if the union goes on strike on the West Coast,

it'll be one of your only options bringing stuff through the canal. What you'll very quickly see is that the canal is going to back up. Can't move that many more ships through the canal that are currently going to the West Coast. And you've seen that a lot where the bottleneck just moves. For a while, last summer, the, for example, the trains that were going into Chicago, they were really having a hard time staffing the railroads out there, and it was taking them a long time to unload containers at the port, at the terminals inland in Chicago. And drivers, a lot of the truck drivers are owner operators, so these are entrepreneurs who own their own truck,

work for themselves. And they were able pre-pandemic to do three loads per day at these Chicago railheads. Go drop it off, come back at another one, three times, with the delays and the traffic jams that resulted, they were only able to do one a day. And so you opt out because you can go drive for UPS or FedEx or take your truck and do something else. So we had this huge reduction in drivers.

And that's the kind of a feedback loop that we should all be really mindful of here, that X or take your truck and do something else. So we had this huge reduction in drivers. And that's the kind of a feedback loop that we should all be really mindful of here, where a problem begets more problems and you get these positive feedback loops in the system that really vicious cycles. And so, you know, bottlenecks move and you'll see as soon as they, if everybody started to ship to Houston,

guess what, he's important, won't be able to handle the volumes either. It's not like it's magically gutter just because it's a Republican state or something. Do we need more ports, or do we just need to run them more efficiently? And then who determines who runs the port? Because I know that they,

I've seen some tweets of yours where they license the government, I guess, own supports, but they license it to people to have the franchise there. More ports, better run ports, and then what's the business model of ports? I'd say better run ports is the answer. I don't think we need more ports. You can't really create ports out of thin air.

There's only a handful of geographic locations that actually make sense for a port. And we have great geography like the San Francisco Bay. Like there's probably the best natural harbor in the world or one of them. And the Oakland ports, perfectly fine. It's who owns it is, the city of Oakland or the city of Long Beach, the city of LA, so the local cities own the ports in the United States. That is a difference between the United States and Europe, for example, where there's sort of national strategic assets, they're still government owned, but it can be operated as a sort of public good for everybody. Instead of what are the odds given what's going on in Oakland that that's the big priority

of the mayor of Oakland to like run a better port. Like she got a lot of other things on her list. And so that's one problem with our system. And then second, they do rent it. So the government owns it and then rents it to a private company that operates it. And then, but those as a condition of renting the port, you must agree to hire the ILWU. You say, you can't run a non-union port in the United States. Should the government buy the federal government, buy the port from Oakland, buy the port from

Long Beach, offer them some trillion dollars or billions of dollars and buy it out from them? It's not a terrible idea. I mean, as long as you're forcing everyone to use union labor, it's not really like a private sector endeavors. It's like, you can't, especially with the way that the union's run, so you can't do that much. But like, here's an example where technology could, flexible already made this technology.

We could 10X the throughput of one of these ports overnight, which is today, a truck driver shows up looking for a specific container. He's like, I got this container number, so they have to make an appointment at that hour. And as I said, they're missing 50% of their appointments. Well, on the back end inside the port, they're gonna go find that container in the needle in the haystack and make sure it's at the front

during that one hour when the guy shows up for it. And we already have this tech to make it what we call a free flow stack where you just have this, the truck pulls up and you give them the first, the first container off the line and then the mobile app tells them where to take it. And he doesn't have to come for a specific container. And if you did that, you would just be every 30 seconds coming out of here instead of every 10, 15 minutes. You'd easily 10x the throughput. And this is, we already have this tech. So it's a matter

of implementation, deployment, and how do so it's a matter of implementation deployment and how do you get around a lot of people that don't really want to see better running ports and it's pretty sad to sit where I sit. They don't benefit from better running ports all that's the good point. Although at the back end they suffer from higher prices and inefficiency and not getting the things they want on time. Well, if you listen to Elon talk about unions and why Tesla is not a union shop, it's got nothing to do with wages.

He said, we'll pay you the union rate or better, and it's not about mistreatment because he said, listen, if someone mistreats you, we're going to have a no-assholes rule and we'll get rid of them. The issue is inflexibility, right? He wants to drive continuous process improvement at Tesla, and he can't do that with a union shop because every change has to be negotiated. And then, if there is a worker who's not living up to the performance bar, he can't get rid of them, and they can't repurpose workers and have them work a different line. So that's why Elon has always resisted being a union shop,

not the wages, not mistreatment, purely inflexibility. And it seems like that's what you're seeing in the ports as well is we can't drive changes in improvements because everything's so highly contractually negotiated. That's my material comment Ryan, what do you think about that? No, I mean, it's more studying a little history here is that like, you know, we went through the container revolution in the 60s and 70s and the union agreed to it. And that dramatically transformed the one front of the bus. Guys, like, you see the photographs from that era, they would put it on their back, like burlap, sacks full of stuff, like hauling it on and off these, these ships and kind

of load them by hand. It was a real art and it was a massive employment driver. And by the way, we've still barely recovered from this. Like the West Side Highway in New York is finally like a nice park. But it's that there for 50 years, like dilapidated pears and ugly-ass buildings. And some of those are still there.

San Francisco waterfront still mostly like that south of the Bay Bridge. It's still like these old dilapidated buildings. So it's kind of funny to see how long it takes like that infrastructure to change. But there was, and I don't know, I'm not like the world's expert on this history, but somehow they convinced the union to adopt containerization, which is about, it's far more radical than anything we would be proposing now,

in how you would change their workflow or change their work. Like, that was complete change, where it's really these giant automated, or these giant cranes that replace the worker. Couldn't Biden deploy his commerce secretary, or I mean, isn't there some cabinet official he could deputize to say, go solve this problem, go bring the parties together? Yeah, and I think I suspect that'll happen over the coming months because July 1st is pretty bad timing for a midterm election if they were to go on strike. Right.

I think he's got a lot of incentive to make sure that doesn't happen. He does have the incentive. It seems like, I mean, you've been tweeting about this for months that no one's paying attention to the administration. I mean, we've all been reading your tweet storm saying, like someone in Washington really should be paying attention to these ideas. This bands over two administrations now, right, Ryan? Both administrations have been out to lunch on this. And the unions, the unions are really big issue. That's going to come up this summer. There's, to come up this summer. There's, it might be an even bigger issue

that's gotten even less attention, which is on January 1st of next year, January 1st, 2023, which is tomorrow in shipping terms. That all the ships in the world will have to reduce their carbon emissions by 13%. And these are internal combustion engine. Sorry, right? Ryan, hold on a second, wait, just explain what that means by who's mandating that and how is that enforceable and why is that have to have?

It's the international maritime organization. It's part of the United Nations and it's the group that is overseeing global ocean freight. It's the regulatory body for ocean freight in the world. And it's the United Nations group. So any member state of the United Nations must follow the rules of the IMO and they've all said they will. And so the IMO has said all existing ships in the world must reduce their carbon emissions by 13%. And again, it's an internal combustion engine. We don't know how to make it 13% more

carbon-efficient. Are we? Would have done that already. Can you actually buy indirect offsets? I can you go and buy some Amazonian rainforest credits and offset the... No, you can't offset it. It's not about the fleet either. Some of these fleets have LNG, liquid, natural gas. The fleet might be more efficient, but it's down to the individual ship. There is one way to reduce the emissions of the ship, and that's to go slower. If you go 30% slower, then you can achieve a 13% reduction in carbon emissions.

Well, if you look at it on a per container basis, by the way, it's the same amount of carbon emitted because the ship is still carrying the same number of containers, just go slower. But if we reduce the supply of shipping capacity and slow everything down to another 30%, that takes place January 1, 2023. It's getting very little attention, but to my view, it's going to be massively disrupted. If we slow everything down, reduce the capacity of the network that much further, prices are going to go to the moon. And it's like really aesonine

law because it doesn't actually achieve any carbon reduction. The fuel type, correct me if I'm wrong, is this like MGOMDO, like it's dirtier fuel? Is that correct? So, using containers? The same group IMO actually passed a new log, January 1st of 2020. And it got totally, it was supposed to be a huge deal in our industry and then COVID and we all kind of ignored it. But that eliminated the worst kinds of fuel, sulfur. Used to be, you could have this bunker fuel that was up to 3% sulfur.

She led to crazy amounts of sulfuric acid, which is like, apparently like 15 times worse than carbon as a greenhouse gas. So that was eliminated. And now it's still kind of ugly bunker fuel, but it's not like it used to be. The reputation is probably still carried over from pre-20s one. If you could wave your magic wand

as we wrap up here and change two or three things, that to you seem like layups. And I think you kind of hinted at them in order. What would be the changes just based on your intuition and your knowledge of the supply chain? What two or three things are the layups we've got to do right now. I think first off, it's got to start with some with metrics like what, if you care about something, measure it. The metric that the government's been using for ocean freight delays has been how many ships are waiting offshore at the port of Long Beach.

And this is like one of the most mischievous, I don't know if it was just like outright fraud or incompetence, but one of the worst things I've seen from a government in terms of PR is they pass this rule that the ships have to wait 150 miles offshore so that the pollution wouldn't hit LA like reasonable good. But then they kept using the same metric for how many ships are waiting right outside the port. And it went way down and they started celebrating that success. So like, let's actually use the right metric

which is how long is it taking cargo to transport? You can't just hide the ships and celebrate that there's no ships there. If we get the government, you're saying that the government pushed the ships beyond the measurement window and then said they don't exist. Yes, basically. And the transportation secretary and the port of LA director got up there this government official.

That's like when I went to an XL sweater to hide my gut and I was like, I'm thin. Yeah, look, better to look at the scale. So if we at least get them focused on the right metric, which I think we have the best metric right now, we call it the Flexport Ocean Timeliness Indicator. It's how long is it taking the cargo to from when the factory says it's ready to when it can be delivered. Now, any solution that we create, we have a metric.

We know. There's a KPI here. Dory, Dory. Yeah, Dory, Dory. You mentioned the transportation secretary was part of that press conference where they're taking credit for changing the metric. So I assume that's Buddha-Jadge,

who's in charge of dispersing the $1.2 trillion infrastructure bill. Is there any money in the infrastructure bill to solve this problem? There's $17 billion allocated to ports. I went and read it, and I couldn't find any money that was gonna be spent on building ports. I went and read it and I couldn't find any money that was going to be spent on building ports. It was like, does your dad's thing? We just had this trillion dollar infrastructure bill that's

supposed to modernize and update the infrastructure of the country and it's doing nothing to solve the most pressing supply chain issue in the country, which is the bottleneck of the ports, which is driving inflation, which is causing interest rate increases and wrecking the economy. There's a term in Washington, which is called the Christmas tree bill. And the infrastructure bill is an example of that, which is this is not a directed shot on goal. What this is is a random, you know, tree that you go and hang little things on top of and eventually the whole thing is covered. So it kind of looks

beautiful from afar. But when you get really close to it, it's a little bit chaotic and you don't understand what's going on. And so to your point, the fact that Ryan can say there's $17 billion allocated to something like ports, but it's unclear to him who's an expert in the space where that money goes and how it's spent gives us zero chance of figuring this out. Yeah. I mean, it was like, it's like things like, oh, each state must create our supply chain readiness report about, it's like, what are you talking about? Like, the Singapore put $20 billion to build a badass automated port. Like, that's like a reasonable thing to do. Like, let's spend $20 billion to make the most automated, amazing port in the world. There'd be a good use of

government money, but like to then create studies and consultants, and I don't know that any of it's going to hit the ground and it's shoveled. Right. So you're saying that $17 billion that goes to, you know, studies and consultants could actually get redirected and we could pick a port where there's an amenable city and actually completely modernize it to set the example of what modern shipping should look like in the United States at a minimum match is what's happening in the rest of the world. Yeah, I think that would be pretty awesome.

It doesn't seem to me like science fiction like we've government wants to build a port who's going to stop the government to go to the port. That seems too logical and too obvious, Ryan. Well, we can try something else. We can try something else. Well, it's compete for who gets to get that 20 billion to be the modernized port. Like, well, if you put the mayor's in competition and see which mayor wants this in their backyard.

Does Greg Abbott want it? Does Long Beach want it? Does Oakland want it? Who wants to fight to be the most modern port? That should be the Sanchez wants it. I'll tell you that. Descent Miami, yeah, exactly. I'm sure DeSanchez and Greg Abbott wanted. I don't know that California's two incredible ports wanted and those are the two that are closest to China by the way. Spoiler alert. You guys were in a Google fiber ran that competition and they got like mayor Pittsburgh to swim in like a frozen lake and it was awesome. Yeah. Government it up, please bring us up.

So yeah, I think I don't have a lot of faith. Even if that came around, it would take five, six years, right? Even if it was done right, you don't get a port overnight. There are some very simple solutions like this changing the zoning law, adopting technology to go with a free flow out of the poor, puts some metrics in here, like have someone focus on this, a key part of problem solving is make sure the problem doesn't get worse. So let's assign someone to go work with the union and the company terminal operators, make sure that they don't go on strike, make sure, and then someone needs to go to look at this IMO you ending and figure out if the United States is really going to go through

with that because it's pretty crazy. Well listen Ryan, you've been incredibly generous with your time and knowledge and your leadership watching you as you know a CEO and a leader go out there on a boat and go visit and buy the fricking tacos and actually boots on the ground, figure this out. Like the country owes you a debt, the world owes you a debt to really keep this problem down to first principles and figure it out. And our government should be taking notes. And really the other leaders who are importing

whether it's Apple or Tesla, you know, it'd be great for all of them to be supporting you. I don't know if they've reached out, but maybe the, you know, a half dozen of you can then sit with this administration and the next one and just tell them where to point the money cannon. Well, we have a lot of, they know we're appointed. We have a lot of people in Washington that listen to this pod.

Please. Yes. Just reach out to Ryan and have lunch. Just sit there and please just, I just, I just, I just, I just, I just, I just, I just go for these poor, ready, ready, ready. Let Ryan, let Ryan, let you talk, oh, right. Let Ryan buy you a taco, guys. Ryan, bring your taco truck to Washington. One of the big common denominators of both business and politics is that leaders have to

focus on the right problems. And when they're not focused on the right problems, like bad things happen. And, you know, we know that inflation is a huge problem. The Fed now is raising rates or projecting raising rates very quickly, which is creating, it was created a huge market downturn. It's a very blunt instrument. It could cause a downturn or a recession. So that's the big problem. And yet there are specific solutions and fixes to the inflation problem by updating or modernizing the ports that Ryan suggested, but who's focusing on it? And now the problem's-

And it'd be more strategic, right? Sacks, it'd be a more strategic sniper shot as opposed to this blunt instrument like you're saying. Right, exactly. So, you know, and so what have they been focusing in Washington on? Definitely not this, you know? Absolutely. And then I see Ryan Posty suggestions on Twitter and then all these people coming in, they're all like fatalistic, oh, well the president can't do anything. You know, of course the president can. Emergency war time. There was ever a time for presidential leadership. This would be it. What I worry about is that if you're the union leader and you know that you've got Biden in the White House

who's always gonna take their side, why wouldn't you make your demands more unreasonable? Yeah, they should be asking for triple time to keep it open overnight. Why wouldn't they? Do you really, if you're the leader of that union, do you really have Biden's gonna break your strike? No way.

No way. Ask for quadruple time. Yeah, just make it painful. You should make the most of the crisis. Agreed just ask possible. I mean, this is your max leverage right now. Max leverage. Max leverage is right now.

Max leverage is right now. Yeah, this is your time. All right, man, listen, Ryan, thanks a lot. Great thanks, appreciate it. Appreciate it, man. Thanks, my pleasure. I'm a big fan of the show.

So being at BestieGestie, means a lot to me. So thanks, yes. Yeah, and we'll continue the discussion perhaps with the I'm a big fan of the show. So being at Bestie Guest, he means a lot to me. So thanks, yes. Yeah, and we'll continue the discussion, perhaps, at the all-in-sum in May. Exactly. See, M.I. I mean, Facebook stock has dropped over 25% after reporting negative user growth for the

first time. And not only $10 billion, or maybe even $12 billion lost a year, on their AR, VR, headsets, and project, but also a $10 billion decrease in projected 2022 revenue thanks to Apple's privacy features. I guess we got to go to you first, Shema. Paypal dropped 25% too. Yeah, we have to pay it. And then Snapchat had a whipsaw back and forth. But Shema, when you see this, you call this with your spread trade.

Maybe you could walk us through what you saw, you know, whatever it was, three, four, five months ago, and then what you're seeing now, and at this level, with $250 billion wiped off the market cap, what do you think about the future of this as a trade and as a company? Well, I think the trade did what it was supposed to do, which is in a period of a lot of volatility,

I saw an opportunity to, you opportunity to just reduce my risk exposure. Look, I'm generally long, very risky assets, right? I mean, all of us are in the business of building companies that have huge volatility, because all of our companies generate earnings very far in the future. And so, you know, in November of last year, I was trying to figure out what I could do to shield myself. And the reason I wanted to shield myself was because I saw Elon and Jeff in part selling, but also I saw that clearly we were going to go through a period where that high growth tech was going to trade down. So I sold some of that high growth tech, but then I also wanted to figure out a way where

I could be less exposed to some of that volatility by continuing to hold what I had. And the best way that I figured out how to do that was to do the spread trade. And so, you know, what I saw at the time was that there is one business above all others that I think is immune amongst big tech from any sort of real long-term issues and that's Microsoft. I think David expressed the reason well is that it's an enterprise business now. Politicians generally don't tend to care about enterprise businesses. They have enormous longitudinal growth in front of them.

They're able to do things on the margins, specifically around M&A, to keep building their business with very little oversight. And we saw this because they had the courage to do this Activision Deal just a few weeks ago. If you could imagine, again, no other company in big tech could even dare try to do a $70 billion acquisition because of the scrutiny. In this climate, it was a bold move. Yes.

I think it's not a bold move. I actually think it says the obvious, which is Microsoft is beyond the level of regulatory scrutiny that the rest of Big Tech actually has because they are consumer businesses. The second safest company is Google. The reason is that Google has the best of both worlds. They're both a platform because of Android. But then where they are at risk of being an app, they have an incredible deal with Apple that blunts that effect. And so when Apple talks about all their push to privacy, you still

have this very specific relationship. And Facebook called it out in their earnings release. They said, we believe that Google has preferential treatment relative to the rest of the internet in that Apple deal because they pay Apple $15 or $20 billion a year. And for people who don't know, that's for search. The default search on your iPhone goes to Google. Google pays $15 billion to Apple. And the accusation, explain the accusation there of why that would give them preferential. In case people don't... Can if you're paying somebody 15 or 20 billion dollars a year, they're less likely to do bad things to you. They made do bad things to other people, but they're not going to do as many bad things to you.

Did you believe that? Yeah, that allegation from Zuckia. Well, no, I don't believe the allegation, but I think that general thing is true. Like, you're not going to screw over your partners. You're going to screw over other people before to screw over your partners. You're going to screw over other people before you screw over your partners. Got it. Whether this applies here, it'll have to be borne out in some kind of lawsuit or state AGs or blah, blah, blah. But anyways, I think the point is that every other company has a lot more headwinds than Microsoft and Google and Big Tech.

And then the third thing is was a market observation from Gavin Baker, which I thought was incredibly brilliant. And what he said was, when you see a drawdown, meaning when the markets go down, it'll affect high growth tech first. It ended up touching a bunch of other areas, second, like biotech.

But he said that's key thing, which is, Big Tech will be the last to crack, but when said that's key thing, which is big tech will be the last to crack, but when they do, they are going to get shot. And so I spent a bunch of time just trying to figure out when big tech gets cracked, who's going to get cracked the hardest. And I just kind of wanted to create a spread between those who were the most inoculated, to those that were the most at risk. As it turned out, Netflix puked it up, Facebook puked it up.

Amazon actually got really crushed even though this past day, they had a pretty decent rally because of their earnings, but they really got crushed. So in any event, the trade is what the trade is, the bigger thing is what is going on at Facebook. And I think what you see are three really important headwinds that Facebook called out explicitly. One is that when they talked about usage, kind of flattening and starting to decay, what they're really

talking about is TikTok. And I think what we learned is that TikTok is an enormous threat and a huge competitive force now in the consumer social app ecosystem. The second is that Facebook is fundamentally an app that sits inside of an ecosystem that is subject to the rules of the platform owner. And that's Apple and Google. And so this IDFA change, so the change in how you can track advertisers, Facebook said it's going to have a $10 billion impact in 2022. And then the third thing, which was more implicit, is in order for them to grow, if you can't grow organically, the only other way to grow is inorganically.

And unfortunately, as we're seeing, the regulatory focus on this company is really enormous. And so it was a pretty watershed moment in, I think, that company's discussion of their future. And Mark actually kind of said that as much in the press in the... – SACs, you look at this business, you made an interesting observation. Facebook rebranding itself as meta before meta exists, maybe looked at as another sort of sign

that maybe they got a little tilted, maybe. What we should take on the sort of Changing the name of the company before that business really is at scale or exists Yeah, I mean it's a bubble move Because look when you're in an upmarket and the market is super frothy We had in hindsight last year was a giant asset bubble funded by all this liquidity coming out of the fed and the federal government. So yeah, in a bubble like that, all investors care about is the gross story. And so Facebook went all in on this story around Metaverse, but in the cold light of day, once the, once the punch, yeah, once the punch, was been taken away and you're in the

hangover and you're in sort of a very vaults old, potentially. The DJ packed it in. Yeah, bear market investors go, wait a second. You know, this VR division is losing 10 billion a year. It might maybe be 12 by the way, because they said it was a little higher. So they lost 6 billion last year. They lost 10 billion this year. So the losses are escalating. And so in that kind of market investors are like wait a second. Do I do I want to invest in a company that Whose future is that unclear? I mean if you look at this at this market We've seen that the gross stocks are down 60 today's an update yesterday was a horrible day So they're bouncing around 60 70 percent down off the highs in early November, okay?

But the fangs are only down like 14 percent or something like that. But Facebook basically took themselves out of the market leader bucket and put themselves in the growth bucket. They treat us like peloton. We're speculating. Why would they want to do that? You know, terrible strategic decision you're saying. Well, it was a kind of decision where you look back with 2020 hindsight

and you say, look, that kind of decision could only be made in a bubbly, faulty market. You would never make that decision in the kind of down market you have today. And other decisions look stupid as well. So PayPal was just down 25%. Okay. Why was it down? Yeah. Well, they just, well, no growth in users.

It was mostly on the forecast. And, they just well no growth in users. It was mostly on the forecast and yeah, they revised their forecast down considerably and of course they tried to blame it on the economy but other companies, you know, Amazon just had a huge beat, relative expectations. Yeah. They're up 15% today. So not everybody is blaming the macroeconomic picture of the way that PayPal did. Any event, my point is you go back six months ago, and what was PayPal doing? I wrote a story for Barry Weiss for her sub-stack about how PayPal was taking the lead

to financial deep platforming. They were working with the ADL and the SPLC to identify groups to kick off their platform. So that's what management was spending their cycles on, figuring out how not to grow, how to kick kick off their platform. So that's what management was spending their cycles on, figuring out how not to grow, how to kick people off their platform, and trying to figure out how to get more people on it. Sounds familiar.

Who else is trying to kick people off their platform? It's the kind of thing you do when you're in a frothy market and your stock is up and you feel confident, you can waste your management cycles on stuff like that. Now that their stock is down 25%. You have to wonder, gee, do we wish we had spent our time on other things?

Okay, so Friedberg, I have a question for you about the future. Obviously, Facebook has bet the farm on meta. They're betting on VR, and I guess eventually AR, or what collectively is called XR. And then we have news that Apple has a seemingly brilliant goggles product coming out. The developers are getting into it and they are the masters of hardware.

So now Zuckerberg has decided he will be on a collision course with the company that just took 10 billion dollars in revenue from them by doing the non tracking. And that is the masters of hardware. So we have this collision course coming, and then just two weeks ago, Google said, hey, by the way, remember that Google Glass thing? We're not giving up on VRA, or either, and of course, Microsoft, we all know, has their HoloLens.

So when we look at that four-horse race, if you were to bet and rank, who's going to win Apple, goggles, Google Glass, whatever they're gonna call the new thing, HoloLens and Meta's Oculus. Who's gonna win and how do you look at that competition between the big four? I don't know if that's a race you wanna be in.

So I like that answer. Race to nowhere. Have you guys used the Oculus Quest device? Absolutely, have two of them. Try, oh my. Have you played the game? So are you like move continuously through space? And like when you do that, it's like,

you're gonna throw up. You're gonna throw up. I mean, I'm not sure that this notion that that becomes the new computing modality is like a fair and true notion. And so, you know, there may, it may end up becoming kind of a niche entertainment device, almost like an Nintendo Switch switch where there's a, you know, a mode when you're using it, but I'm not sure it replaces traditional static, two-dimensional computing in front of you.

The jury's still out. I don't see like a computer sentiment that says these things will ultimately kind of prevail over the current mode. So, you know, who's going to do this? If it does work, who would win in your mind? Who's got the best chance for me? Let's assume we're all gonna use it every day for two hours as our desktop.

We're gonna put it on. We're gonna find workout apps to use whatever. It's gonna become, let's assume, you know, that, well, I think you just answered your own question. In all of these things, when you build hardware, I think you can take a lot of parallels from what happened in the PC space. If you have commoditized PC manufacturers, Compact, Dell, IBM, they're innumerable number,

thousands of companies that made PCs, the value created to the application layer to the operating system, and the people that can actually build ecosystems are typically the ones that win. And the people that already have an ecosystem and all they have to do is port somebody from, you know, platform A to platform B has a meaningful advantage over somebody that has to convince you to come to a new platform altogether. And so, you know, if you're a Microsoft and you have thousands or hundreds of thousands of developers, or if you're Google and you have hundreds of thousands of developers or if you're Microsoft and you have thousands or hundreds of thousands of developers, or if you're Google and you have hundreds of thousands of developers, or if you're Apple and you have millions of developers, it's just a smaller bridge to cross in order to convince them

to value it for one extra endpoint. iOS versus Android versus Microsoft. And by the way, the obvious transition where it's like Facebook is like, you got to go build all this stuff. And Apple made an incredibly important set of decisions a few years ago, which I didn't think a lot of people talked about, but they had an OS tree that was branching far too widely, right? They had a different operating system for the phones. They had a different operating system for iPads, desktop, for watches. And they started to try to converge and chew on these things into a set of basic primitives

so that it's more controllable. And I suspect the reason is because that gives them more optionality to go into a car, to go into a headset without having to do an entire developer reboot. Even better than that, Shamaath, it's a great point you bring up because they also started investing in their own chipset. And I think all of that chipset innovation gives them a dramatic advantage in having smaller batteries and more processing power in a headset if it does work, which what

chips does, which chip asset does Facebook have none. So I don't want to, I don't think we should say that Facebook is down and out, but let's just qualify what we think can win. So that's one thing. The other thing to remember is when you look at the PC industry, how did Intel become so dominant? Part of what Intel was able to do to out compete AMD

and everybody else was that program called Intel Inside, which is effectively these co-marketing pass through dollars that they would use to actually give an incentive for Dell and for Compact and for all these other folks to basically build the spec. And that was the wind-tell monopoly, right? Microsoft and Intel. If you play that out in VR, what you really need is just a bag full of cash, because if you

give developers a subsidized incentive to build for your platform, they'll do it. So then, again, if you rank the companies, you just need to look at how much cash do they have because those with the most cash happen. So again, I think the best way to think about this is how many developers do you have today? How much cash do you have today? How much cash will you have in the future?

And you can probably rank and just do a reasonable expected value to think about who has the best chance of winning. Assuming the platform is roughly equal. Now, if the company on that list with the fewest developers and the least money has a superior device, if that device is superior enough, they can overcome those things.

And Facebook has the least money and Facebook has the least. If you have prosperity, I think the person with the most money and the most developers probably has that chance to win. I think that's pretty much. I think that's pretty much. I think that's pretty much. Sacks, Facebook has the least developers.

They have no relationship with developers. In fact, they kind of screwed them over with Facebook, connect a couple of times. They have the least money, but they do have the largest user base of profiles. So does that give them some advantage here? And how would you rank? Who's going to win? Who's going to lose? Well, I think it gives them an advantage in to Jamass framework of porting over their app onto whatever the dominant platform is going to be. But probably it's the operating system players who are probably going to be able to extend

their operating system into this new VRAR world, probably. What I wonder about is, when Facebook have been better off, if they're going to run a $10 billion a year money losing division, that's highly speculative, would they have been better off gambling that on building their own phone, or maybe their own like forked version of an Android phone? And the reason why I say that is, you know. The project that I started. I was about to say, we talked about that. We've now seen, we've now seen.

That's not redig that. Well, they're losing, they're losing 10 billion a year now because this one permissions change that Apple has made, right? Because they're completely dependent on Apple's operating system for a big portion of their revenue. So what is their defense against that?

I mean, they're really pretty helpless. If you look just to make a comparison, if you look at the strategic brilliance of Google, what was it? First of all, after they came up with this cash cow, the idea of search, and then they combined it with this sort of keyword auction they got from Overture, they said that, listen, the next strategic move is,

we can't let anybody disarmediate us. So what do they do? They started moving upstream. The first sort of upstream player was the portal, right? So they started competing against Yahoo. They gave away Gmail. Then it was the browser. So it was Microsoft Explorer. So they gave away Chrome. Then it was the operating system. They gave away Android. They said, we're not going to let anybody else be upstream of us. And so they started replacing all those layers of the stack, giving away free products with free free, right? Sorry, and a good free product.

Yeah, great. I mean, all those have billions of users. I'll also say a big part of the monetization lock-in was Google then extended into the publishers very quickly with the acquisition of AdSense. And the publishers then allowed Google to offer the greatest CPM that those publishers could have over any other advertising network.

And as a result, Google built their network and then built their advertiser base. They effectively got this huge lock-in. The only disruptive threat to Google was what Facebook did, which is to create demographic profiles. Instead of targeting ads based on keyword or search intent, you could now target ads based on demographic. Then Facebook took it a step further and did retargeting. So basically following you across multiple sites, but Facebook always knew, and as we just

discovered, that was always going to be a weak point for them because they were dependent upon hardware devices that were going to let them do that tracking across apps and across sites. And that's why Google always had this kind of key lock-in advantage that will persist. The network is just so big on both sides, you can't compete. To Sachs' thought bomb, if they had invested in a phone, let's say they made a $1,000, let's say they made a phone with a bomb of $800. They just did this, by the way.

Just remember the fire TV, the fire phone. He gave a bunch of great speeches. You can watch these on what happened with that. Despite his extraordinarily large user base, his committed loyal users, all these reasons, his magical talented technical team, he hired the best people. He also tried to do the same with search, by the way,

with A9. And remember Apple also tried to do the same with search. All these guys tried to kind of compete. It's not easy to execute. It's not easy to execute. And you get a lock-in with the network value, but you also get a lock-in with the talent and you know This was a really hard thing to pull off and you have to get it all right

So let me ask Shemoth a question based on what sax they could that should they have deployed 10 billion into phones If we go back two years and they did deploy 10 billion into phones They take an $800 bomb, which is probably what the best iPhone cost I think it costs 700 for Apple to make and they still have for 1500 They could basically give the phone away for half price think it cost 700 for Apple to make and they still have for 1500. They could basically give the phone away for half price. Maybe give it away for four or five hundred dollars. That's what FirePhone was.

And if they gave away for four hundred dollars and you had to be a Facebook user, you buy it, they get the credit card of the person, that would be, they could put 25 million phones into the market every year. That's what Amazon thought. And it didn't work. I think that moves the needle.

So you don't think it would work. It didn't create a better user experience for users. Users got a better experience with the iPhone. Okay. And then they got a better experience with Android. The window of time was in 2009, 10, and 11 when there wasn't lock-in. And you know, I think that's, look, that's been well discussed about what we were doing and what we tried to do. So there's no point rehashing. But why did Facebook give that up? Because there wasn't an initiative, right? It wasn't that.

It came down to an ask that I made that we didn't get. And it didn't happen. So it didn't happen. We'll leave it at that. I'm not saying that would have been successful. I'm just saying. Neither did I. We didn't get to the starting line.

So we'll never know. In fact, I think it's unlikely that it would have worked because I'm not sure exactly what Facebook's value prop would have been. My point is, just if you're going to lose $10 billion a year on a division, wouldn't it be better for it to be something strategically vital as opposed to something that feels a little bit optional? Even if the majority chances you don't win, the question is, if you had a 20, 30, 35% chance of being a player in smartphones, would you take that

chance? And I think you have no choice but to take that chance, and it would be worth it, the expected value. Yeah. One thing I'll say in defense of Facebook is I think that all of this like anti-trust scrutiny is a little bit ridiculous today, and it looks pretty ridiculous, and let me just explain why. It seems that capitalism is pretty much working as intended, because if you looked at Google's results, if you looked at snaps results, at Pinterest's results, at Amazon's results, there is a vibrant and growing advertising ecosystem. By no means could you claim that Facebook has any real monopoly on that. Number one, and when you fold in TikTok, it's absolutely true. And then if you think about the usage curve of TikTok, there's a check and balance there on usage. And so anybody

that thinks that Facebook is a monopoly today, I think is a little misguided. So really, I think what politicians need to do today, you know, February 4th, is be a little bit more honest about what they really care about, which is really around section 230 and the misinformation, disinformation, fears that they have related to Facebook's distribution power. Because now, if you're going to try to legislate this company, it's really unfair. Especially going back 10 years to litigate an acquisition, you'd never do that to any other company that is sort of maybe on the back half of their growth cycle. It just doesn't make any sense.

It would be like going after Google now for the YouTube acquisition. And it's like, it's like, you think this regulation is based on the fact that Facebook kicked off Trump and is scaring politicians over actual competitive reality? I think that politicians are using the threat of regulation to try and drive the speech policies they want on these social networks. That's what's really going on. I mean, the merits of the case. Yes, so you agree with me. It's nothing to do with the business.

Yeah, look, who should get regulated on ancient trust grounds? Apple, you know, Apple is that and maybe Google, I mean, the, well, they're the big monopolist. I mean, they control the operating system. I mean, those guys, I mean, 90% of search and they, and I would say Amazon with respect to the verticals where they're competing with their own, yeah, with, with the basic, exactly. So in other words, when you control an operating system and then there's developers or other, you know, down to chairs on that ecosystem, you have to treat them fairly.

You can't privilege your own policy to then dominate vertical after vertical. So there are real antitrust concerns with those three companies. The Facebook way less so. And now they get the brunt of the attacks. Why? Because the people in Washington are trying to coerce Facebook into controlling what they call

misinformation, which is really just speech they don't like. And that is highly inappropriate. Perfect segue. Last week, we didn't jump into the Rogan Spotify debate. Maybe we should have, but we'll talk about it now with a lot more context. Obviously Neil Young and some other folks that were pulling our music off, Johnny Mitchell, whatever. Some actual high profile blogger said they don't want to be on there. And then Joe Rogan and Daniel Eck both decided to talk about this. Joe Rogan said, listen, I'm a comedian. I don't prepare for these air views.

And I just see where they go, but this show has gotten very influential, it's a number one podcast in the world, it's got a ridiculous listenership. So maybe I should, right now, right now, maybe I should have it labeled, and maybe I should have people on afterwards and maybe I should do some extra fact checking.

I thought it was the best non-polygy, you know, explainology of an apology because he did say, I'm sorry if you don't like it. But he did kind of say that he would do better. And then Daniel X said, and then I'll let you guys comment, Daniel X said, listen, we produce shows and we approve guests for the ringer and for Gimlett, which we own those studios. We license Joe Rogan. We don't do any editing on his show and we will remove ones after the fact, but it's a licensing, therefore we're not a publisher.

I'm curious what you thought, Friedberg on the non-pology and culpability for someone like Joe Rogan having guests on who are anti-vax or maybe are debatable in terms of science because he is a comedian, but as he says, the show is kind of big now, so maybe I should do a little fact check. And what do you think he should do when he has scientists and people and people on? On the two points, one is I don't think that journalism is regulated in the sense that you know we have freedom of speech

So anyone can stand up and they can say I have this belief or I have discovered this fact and You may not actually hold that belief and that fact may not be true But you're still allowed to stand up and say it and you're so allowed to have someone come on and say it And so I don't think that there's any disclosure obligation He's putting on a show it's the same as any new show or entertainment show I don't think that there's any disclosure obligation. He's putting on a show, it's the same as any new show or entertainment show. I don't think that there's a clear line or boundary. I mean, what the heck do we do here?

We've all got opinions. We try and talk about the news. We talk about our perspectives on the future. What the heck is it that we're doing here? There's no kind of clear line there. So I don't think that he has any obligations to do anything he doesn't want to do, except if and when his audience tells him or the listeners that he cares about, tell him, his customers tell him, this is what we expect and want from you. And then he responds to his customers, that's the way the market works and that's the way

the enterprise system should work. I think the separate bigger question here, that's really important and worth noting. You know, and I just want to speak about this for one second. All of the great internet companies started with this notion that they were creating democratization, that they were creating access to information that didn't exist, whether it's access to media or access to search, results or access to content or whatever that may not have been available to you. And that was a driving force for the entrepreneurs and the founders that started all these businesses. And all of them have these very idealistic points of view that we're not going to censor,

we're not going to take a point of view, we're not going to put our foot down and say what isn't going to be displayed or shown or made available to our users. We're going to let users choose what they want to get access to and what they want to hear and listen to. And in all these cases, from Google to YouTube to Twitter and now to Spotify, the idea of being just an access, a platform for access is proving to be wrong. All of them are de facto publishers. They ultimately have to make decisions

about what they do and don't light on the platform. And de facto, if you let something on the platform, you're giving it permission, you're giving it a voice, you're giving it amplification, and you're giving it access. And so all of them are now getting caught up in this problem that I don't think anyone from Larry or Sergei or Jack Dorsey or Daniel Eck ever wanted to be in they all wanted to be these democratization platforms and now they're finding that there is no way to avoid being treated like a publisher An publisher has someone that's called an editor and an editor decides what is and isn't put on that publishing platform

As has always been the case in old media, and now in new media, they're all kind of stumbling into this problem, and they're not set up for it, and it's creating issues where people on the right are saying you're censoring us, and people are on the left are saying, you're not giving us access to information we want. And it's, you know, it's just kind of the, I think the transition that none of them expected,

but we're all seeing happen. Shemoth, if Danielaac is giving $100 million to Joe Rogan, can he claim, listen, it's just where a platform, when, you know, listen, we're on Spotify as well, but they don't pay us. Doesn't it change their relationship when they give him the $100 million or can Daniel say, you know, intellectually honestly, like, hey, listen, we're not responsible for this. I mean, they're backing up the brink truck and they're promoting it like heck. Are they a publisher or not in your mind?

I read yesterday that Barack and Michelle Obama's deal with Spotify just expired and they're going to shop it. I suspect that somebody will pay them tens of millions of dollars to produce content. That's not illegal. And it's a sign of a free market that's working. Spotify has a business to run, and that business is to get content in front of the users that are paying them a lot of money on a monthly basis to get access to that stuff. And so who are we to say how Spotify should run their business?

I think you have a choice. Neil Young expressed his choice. There was a person in the New York Times, she took her podcast off of Spotify. Yep. There are subscribers that probably left. But then there are also subscribers that probably joined. Yep. And paid. Yeah. And paid. And so the reality is that's the free market being allowed to choose and being allowed to vote with their feet. And I think that all sides of that are in the right. So I think Spotify should be allowed to run their business. I think Joe Rogan should be allowed to say what he wants. If Spotify chooses to put a disclaimer in front of that podcast, that's their right. And that's good too. And if Joe Rogan decides that he wants to have point counterpoint across podcasts or within a podcast, that's laudable as well,

and that should be his decision. But I don't think people should be forced to make these decisions by law, because I think we get into a very slippery slope, because you don't totally understand the incentives of the lawmaker there. And we have a free market as you're pointing out, Shema. The free market is working perfectly. And more importantly, we have a founding document of principles that we all agree to. Yes. Yeah, and unfortunately, a lot of people who don't agree to it. That says we have a right.

If you're talking about the first amendment. So here we go. Let's go to our constitutional attorney, Councillor. Take us there. If you're talking about the principle of free speech, there's a lot of people who don't believe in it. That's the problem. First of all, you have this geriatric hippie. Whoa, whoa, whoa. Does Jerry, can I finish? Let me finish my ranch.

Okay. Right away. You got this geriatric hip. I love Neil. You know what happened here? Wait, sorry, Saks, just there. That was Jake Cal seeing, oh shit, he's going to get a bell claspeder clip and he got tilted. I got a, just there. That was Jay Cal seeing, oh shit, he's going to get a belt, plaster clip. He got tilted. He had to interrupt you there. That's really brutal, Jay Cal. That's like, I thought you were talking about Joe Biden. Can I explain?

Can I actually explain what happens? I think, frankly, you guys are completely missing it. The wheel of censorship broke on Joe Rogan this week. They try to Alex Jones him and it failed. Okay. First, you have this geriatric hippie, Neil Young, who somehow has turned into a narc. And he plants a flag and he tries to get all these people behind him. And the very online crowd says, yes, we got a cancel, Rogan. And then you got Jim Pesaki from the White House weighing in, bringing the coercive power of the administration on the side of censorship, okay?

And what happens? Rogan comes out with this non-pology, like you said, and he seems so reasonable. He's a guy who's inquisitive, he's on the side of just asking questions, he's on the side of balance, he says, yeah, look, I want to present both sides of the issue. And everybody was like, there is no reason to be censoring this guy. Rogan is an every man. And if they would censor him, they would censor every man. And that is why there was enormous backlash to it.

And everybody has opposed this. And so I think this is the week that this ridiculous idea of censorship has broke. Now, it would be nice if everybody to Chemaas Point did agree with this principle, but they don't. The fact of the matter is, Jake Hal, that censorship is now the official position of the Democrat party. And you see it in the poll numbers. There was a great tweet that...

Glenn Greenwald posted where he showed the polling numbers on this. So okay, you go back to the days of the Obama administration. Both Democrats and Republicans agreed that the US government and tech companies should not get involved in this type of censorship. But today, there's been a bifurcation. Democrats or lean Democrats versus Republicans who lean Republicans. It's 65, 28 in favor of government taking steps to restrict info online. And it's 7637 Democrats,

for Republicans on tech companies. So, the first amendment is no longer a consensus. And that is familiar to the issues. But I got to tell you, I think there is a backlash against this. And I think that most of the country now, and I think this is where they went too far, is that Rogan is not Alex Jones, he's not

Trump, he's not my loyal populist, he seems like a reasonable guy. He is the biggest figure in independent journalism. He gets 11 million viewers every week. And I think there's a lot of people, especially young people who are going, this is gone too far. And by the way, I do not think Obama ever would have made this political blunder of effectively denouncing Rogan because Obama tried to appeal to young voters. And I think Jempasaki by putting the administration on the side of the censorship they've

made a huge mistake. And the same week we saw that Tucker Carlson now gets more young Democrats listening to his show than CNN and MSNBC and I'm telling you this is the reason why. Okay, Henry, you can put in the roaring crowd of applause at this point. The best. The best. I'm telling you, Jake, how you got an independent stop making the

bombs in the democratic. I'm independent. There are now more Tucker Democrats. Okay. Among the key young demographic in your writers room, what Tucker's writer room? Which one?

I'm a Tucker Democrat, Jacob. You're a Tucker, you are, you love Obama, you love Clinton. I think what's happening is, I mean, and Charmoth, you've said this over and over again. Charmoth? I'm sorry, Charmoth, Palabitia. You had on one side, the right when lost their mind

in the alt-right, now they have come a little bit more center, and then you may not have the Democrats when lost their mind in the alright now they have come a little bit more center and then you may not have the The Democrats have lost their minds the fact that anybody can't look at Joe Rogan and say he's a comedian He worked on a show where they fed people shakes of blended insects feel factor and he's taking mushrooms And he's like why are you taking me so seriously? Well wait, I think you're being hold on I think you're being super dismissive of Joe Rogan. I think he's actually, I was sacs said, a pretty reasonable, curious person.

And then yeah, he does the stuff that everybody else is. What if he doesn't prepare for the show? He literally said, I don't prepare for the show. I don't do it. Maybe he doesn't, maybe he doesn't. No, I don't know. He's basically, he doesn't.

And he fact checks in real time. So you gotta keep your expectation at a certain level with Joe Rogan, I think. I think that that's important. I think that that's Rogan, I think. I think that that's interesting. I think that that's implausible to believe. I know that that's what he said, but 11 million people a week, $100 million deal. I do suspect that he does some sort of preparation.

I don't think he's completely winging it. Okay. He'll literally set you wings it. But okay, I understand that. But I think that's not the point. Okay. Okay, the point is whether he prepares or not, the excuse isn't, sorry, the dog ate my homework.

It's, hey, listen, I have a right to have this guy on my show. Just like I have the right to have this other guy on my show, you can listen to both and then you can decide for yourself. You could change the channel. Okay. That's the important point, so Jason, I would not like try to make this whole argument about whether he was prepared or unprepared as he excused. It's whether you believe there's a fundamental right to free speech or whether you believe

that people who disagree can disavow people and get them canceled and get them canceled. I obviously don't agree. I don't agree. I don't agree. I think he should keep going. Whatever Rogan's level of preparation, which I think is actually pretty high, the people who are accusing him of putting out misinformation or former guilty of it themselves. And I think one of the best points in Rogan's non-pology, as you called it, is he said,

listen, a lot of the things that we used to consider misinformation are now the truth for a small... We talked about it on the show. Well, we've been ahead of the curve and calling all the stuff out. You know, we could have been accused of misinformation. So examples, the lab leak theory, used to be consumer misinformation, the cloth mass not doing anything.

Listen, Dan Bonsino was kicked off YouTube two weeks before the CD's first saying that Dan Bonsino, he's a pretty big conservative commentator. Okay, he's got an audience of millions. You can be dismissive, but a lot of people like him, Jake Hal, but look, my point is, he was kicked off YouTube for saying cloths mass don't work. Then the CDC comes out to weeks later and it's the same thing. Right. I think that's a valid point. Well, it's the key point. I personally like, you know, for

example, we've talked about this thing where like if you look at like the top distributed links on Facebook, who do you see Ben Shapiro, Dan Bungino, you know, Brighton. You're a rogue and, right? My takeaway with all of these things is there are people of those things, if I listen to I'd probably find a warrant, but there are people there that are probably, I would appeal to me. In all cases, they should all exist though, because the whole point is let me spider my way through this stuff and figure out for myself.

Yeah. What works and what doesn't work. More speech is the best counter. The summary of this that makes the most sense is Elon tweeted this out, Nick, you can put this because I gave you the image, but it's a meme of Neil Young where it says, if you won't censor the guy I don't like, I won't let you listen to keep on rocking in a free world. Practically.

And it's just so true, which is like on the one hand, you know, you are a standard bear. Now, maybe what we should really do is talk about what has happened to this boomer generation over the last 50 years where they were, you know, sex drugs, rock and roll, no war in Vietnam. Let's fight for our rights. Let's fight for equality. Then punk rock. You know, no, I'm talking about just those those folks Okay, back then who are now 50 years later, you know sitting on 70 trillion dollars of wealth and who are basically like you can't say this You can't say that don't do this don't do that. We're masks don't leave your house. You know, yeah, how do you say they're Skinkers are old we're masks don't or you're getting from the panel. You can't go in. Yeah.

I mean, that generation, I think we all have some soul searching to do about what happened to that generation. I think they're scarecrowled and they feel like they're going to die from COVID. Is that generation or is it the fact that every generation rebels against the prior and ultimately becomes conservative? And that's the, that's just how life goes. I don't think they've become conservative.

I think they've become authoritarian. But I think that what happened is they're now in power. The boomers are in power. They've been making the decisions for the last 20 years. I think there is a enormous popular discontent with the way the country's been run over the last two decades. The futile pointless wars in the Middle East, the debt, the economy, the unfairness,

that it goes on and on. And especially with COVID, I mean, this COVID policy over the last two years has been a fiasco. And the point of this censorship of misinformation is to suppress the debate. I mean, what ultimately is the point on, take, for example, COVID, of saying

that people cannot take a point of view, it is to stifle the debate that's to prevent an honest debate on these issues. And the people who have an interest in doing that are the people who are in charge and are failing. And if you gave people the information, they would be voted out of office. If you look, when I asked, what are the specific claims that either Joe Rogan or his guest

made that people are objecting to, a lot of the people who are objecting and wanted him censored really didn't know. And one of them was he said early on, I don't know for a young person who's in shape if I would advise them to take the vaccine. I know a lot of people who have that position, which is like if you're young and I think actually Freiburg you might have said MRNA early on in this podcast is a very new technology and I could see people wanting to wait and see. Did you not say that?

I don't want to get you canceled here, but I think we did have that discussion. I don't have that conversation. That's a valid conversation. mRNA is a new technology, right, Freeberg? You should think about it and we should be cautious. Don't draw me into your cancel. I'm not sure.

That's why I said we. I just changed it to we were talking about that. Don't you remember that discussion we had? And I asked you, I think mRNA, what do you think of this versus the regular one the J and J? I think generally we've seen Science being used as a way as a term To discredit What I think would arguably and typically be scientific principles which is inquiry challenging hypotheses

and having vigorous debate to resolve to some sort of objective truth, otherwise you're having some sort of subjective belief. And more often than not, we've seen politicians and others grab onto the term science and saying, this is science, it says this, when in fact the process of science is inquiry and it is to challenge, you know, again, a hypothesis and what might be kind of a thesis. So yeah, I think generally this has been a pretty scary time to watch because it's almost like gaslit lighting, you know, it's like, hey, you know, you're using the term science to discredit the notion of science.

It's been pretty brutal. I said, you guys, this cartoon link, by the way, it's so funny. Oh, I just got it. Old left versus the modern left. It's a Volkswagen bus with a bunch of hippie, hippie, flowers and it says free speech, free love 1971. No CIA, screw the establishment, resist authority. And then it shows like a modern SUV with 2021. It says masks up by heart, the CDC obey the establishment, no free speech. Do what you're told obey basically. You have another poll you want to share sex? Well, yeah, this is a really interesting one. It says a majority of voters, 55% say COVID should be treated as an endemic disease.

Well, a majority of Democrats say it should be continued to be treated as an emergency. And then there was a similar poll, the Monmouth poll just came out where 89% of Republicans, 71% of independence say that it's time we accept, we accept COVID is here to say we need to get on with our lives, only 40 sure, so the Democrats. So the reality is that the rest of the country, I think, has moved on. It's ready to move on. The split is not between Democrats or Republicans anymore. It's within the Democratic Party. The Democratic Party is now divided on this question of whether we should move on as a country past COVID. Half of the Democratic Party still believes that COVID should be treated as this

emergency. Do you think that it's cut by age? Do you think there's a bias by age? Sure. For sure. I think, yes, absolutely. All people are more scared. Yeah. But I think, I think the media and the party, they've programmed their soldiers to be, you know, to treat COVID as an emergency. They can't deprogram them. And this is why I think we're seeing Tucker is, Tucker is now the biggest demographic among young Democrats. That's insane to me. It's insane. The idea that idea is insane. This does not bowed well for the, on top of everything else is happening in the country.

This does not bowed well for the Democrats in November. And then you had this crazy thing at the, you know, the Magic Johnson party at that. Oh, that was the best. I held my breath. I took a picture of Magic Johnson. I held my breath so I wouldn't get the virus. Yeah, I was with Garcetti and Newsom. Newsom claims that it's the new item in hell. Yeah, exactly. And then Newsom says that he was only photographed at the exact moment where he took off his mask for two seconds, you know.

You know what, if you go to the ski slopes, there is nobody with a mask on and nobody's enforcing it and no restaurants. And this is in Democratic country. Everybody has moved on at this point. Everybody's willing to see me. But why haven't they, why haven't, why haven't why haven't the media and the politicians because they're first-re signaling and they want to keep power.

But to you tell me that's that's that's the point. Well, I think they're dumb. They should take the position that we reopen. I think they're just take the reverse but wouldn't take in the reopening position get you more voters at this point. People are tired of this. They want to move on. Doesn't make any sense. They're making a bad political decision. I think they're holding to their base. That's the point. I think the whole country has moved on.

Even most Democrats have moved on, but the Democratic base has not moved on. And that is why Newsom and Garcetti have to pay lip service to this. Well, I mean, and these guys have been telling everybody got to wear a mask, got to wear a mask, and they're not wearing mask. But let's face it, they weren't wearing masks

at the French laundry. They have never worn masks. They've been throwing their own parties with no masks. They're much of hypocrites. The whole lot of them. All right, in other news, Xi Jinping and Putin got together, and they're apparently besties.

Here's the quote, some actors representing, but the minority on the international scale. I think that's us. Continue to advocate unilateral approaches to addressing international issues and resort to force. The interfere in the internal affairs of other states infringing their legitimate rights and interest and incite contradictions, differences, and confrontation. The statement said, I am willing to work with President

Vladimir Putin to plan a blueprint and guide the direction of Sino-Russian relations under new historical conditions. Mr. She said he added that China and Russia should act like big countries as a intensified coordination on fighting the coronavirus pandemic, Yadayata. Any feedback from our squad? I mean, you could have rewritten that press release as, you know, we will, we want to try to destroy US hegemony and replace it with ourselves. This is the beginning of the end of US cultural and economic influence globally or dominance rather influence it globally.

And I think that it's something that we've talked about quite a lot. I mentioned in the prediction episode that I thought that Putin was going to play a major role this year. And he's clearly not just out for his own interests, but he's going to play a really important role in China's rise to economic and cultural dominance. You agree, Chimoth, is this the sign that they are gonna be running the show?

Or does this look like something else to you? No, no, no, I don't think that there's a show to run. I think the point is that there was a first among equals for the last many decades in the world order where, you know, America order where America was that first among equals. And I think what they're saying is that it's time for that to change. And they're going to tie that to their ability to influence foreign policy in countries

the way that we have historically. So this is sort of basically putting a marker on the table that says, this is gonna be about, you know, a different cohort of people that are also gonna have an equal say. And if you think about where this all plays out, it's always in economics, right? And this is where, again, you have to think about what China has done, which is they have,

while we were fighting wars, you know, putting trillions of dollars into the Middle East, they took their trillion dollars and bought resources all through Africa. Yep. Right? They bought infrastructure all through South America. They put infrastructure all through Southeast Asia. That, say, call it $15 trillion that we spent in one direction, they spent another.

That's a $30 trillion gap that's going to create a resource imbalance that they will use to create even more influence in the future. And we have to figure out a way to counteract that. Sax, what do you think? Is this a changing moment in the world order? Should we be worried that these two dictators are going to act in unison and then maybe one gets the Ukraine, one gets Taiwan. Is this like really earth shattering news or do you think it's saber rattling and not

that big of a deal? Well, I think it's a dramatic statement and photo that was put out. It was a continuation of what we've seen where they have, you know, the G and Putin have been getting and Russia and China, they've been getting friendly or in friendlier. What saddens me and sort of sickened me as really an American patriot who would like to see the American world or order continue is the way that we have blundered and created this type of situation. So to Chimals Point, first of all, we wasted 20 years trying to do nation building in the Middle East. Six trillion, waste at $6 trillion on that.

How did China lose by not being part of that? They benefited. They were building built in road while we were engaged in this foolish interventions in the Middle East. And now more recently with Putin, we've really driven Putin into Xi's arms because we keep threatening to add Ukraine to NATO, which is not something that's in America's interest. If we would just give up on that position or just reaffirm that Ukraine should not be a military NATO, it would enormously help defuse tensions with Russia.

And by the way, your point that these are dictators of natural allies. That's not historically been true. During the days of the Soviet Union, you had Nixon and Kissinger make the great opening to Mao and China. We were able to cultivate a relationship there because China and Russia were natural antagonists. It was a major move in the Cold War that we were able to cultivate now and we did so even though he was a dictator with blood on his hands. So, Russia and China are not natural allies. We should be doing a better job of not so thoroughly alienating Putin that he is rushing to G's arms. That's the Blunder I see here. By the way, after this summit, they're going to meet with Iran.

There's a tri-partite, I think, excess of dictators. This is like the legion of doom. We need to be playing our cars in a much smarter way. Yeah. And to play our cars. Look, what is the strategy? I mean, the strategy is, look, we want the American-led world order to continue, but we got to be much more selective about picking and choosing our battles.

Iraq, Afghanistan, Syria, Libya, they were huge mistakes and now on top of it. What about the talks about Ukraine? What's that? Looking forward, like you keep bringing up the past, what's the look forward strategy in your mind? The look forward strategy, I think, is to diffuse and de-escalate the situation in Ukraine. Exactly the way Obama did it, which is to recognize that America does not have a vital national interest the way that Russia does.

To reaffirm that the nations of the caucuses that have borders spused with Russia, Ukraine, Moldova, Georgia, they are not eligible candidates for NATO at the present time. Kick that can down the road by 10 years. Okay. We talked about that last time. So I want as a much more complicated situation.

I do think you have a vital national interest there. Got it. Okay. So two very different situations. I actually agree with you. Yeah. Yeah. I think Taiwan, we have to hold the line. Yeah. We have a responsibility in the United States. And I think we're starting to do it. So I think there is good news where, you know, part of the strategic vital interest for Taiwan is because they have critical resources

that we need, and we depend on, and specifically those are semiconductors. We have now, I think, allocated $50,000 billion of capital of CAPEX across a bunch of companies that have committed to building domestic capability. We have to make sure we follow through on that successful, and the reason is that it gives this optionality. It allows us to breathe. It allows us to actually make rational decisions and be patient in our decision-making.

And I think that's going to be really important over the next 10 or 20 years. And so we have to invest in the United States. So the solution to all of these things is we cannot be overly dependent on any one country, any one shipping lane, any one product, any one natural resource, you just can't do that anymore. We have to be strong at home and we have to build strong relationships with other countries. And yeah, I think we've got an operating philosopher here.

All right, listen, let's wrap there. We'll see everybody on the next episode for the dictator, Chimouth Polyhapatia, the Sultan of science, David Friedberg, and the Rainman himself, triumphant versus Peter Tiel in that PayPal match. Great moment. David Sacks. Love you boys. Love you besties.

Bye bye. Bye bye. Bye. We'll let your winners ride. Rainman David Sackett. I'm going on a ride. And it said we open source it to the fans and they've just gone crazy with it. I'm going on a ride. I'm going on a ride.

What? What? What? What? What? Besties are gone. I'm going through it. That's my dog taking it away.

It's your driveway. It's a sex. These are gone, don't dirty. This is my dog taking a wish to drive away. Sit down. Sit down. Sit down. Oh man, my ham is a disaster when we eat the apple. We should all just get a room and just have one big hug or two. Because they're all just like this like sexual tension that we just need to release that house. What your feet, what your feet? Be your feet.

Be your feet. We need to get my feet I'm doing all this! I'm doing all this!