All-In with Chamath, Jason, Sacks & Friedberg - E73: Late-stage VC markdowns and mistakes, market strategy, Ukraine/Russia update with Brad Gerstner

Episode Date: March 26, 2022

0:00 Bestie Guestie Brad Gerstner is filling in for Friedberg 1:34 Understanding public SaaS and Internet multiples, Instacart's cuts its valuation by 40%, understanding reality of overvalued late-stage companies 21:52 Capital allocators at fault, how crossover funds are reacting, late-stage price discovery, investor and founder behavioral psychology 40:37 Sacks' burn multiple, managing growth spend, new VC qualifications, lessons from the COVID bubble 53:58 Russia/Ukraine: US potential non-ceasefire strategy, Zelenskyy's revelations in CNN interview, rhetoric getting more aggressive 1:08:58 How will Putin withdraw without redacting the sanctions? What is the offramp? Zelenskyy's posture on global war 1:24:18 Understanding China's recently announced tax cuts, All-In Summit talk Follow the besties: https://twitter.com/chamath https://linktr.ee/calacanis https://twitter.com/DavidSacks https://twitter.com/friedberg https://twitter.com/altcap 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://sacks.substack.com/p/the-burnmultiple-51a7e43cb200 https://substack.com/profile/11803623-jamin-ball https://twitter.com/nfergus/status/1506243619384037378 https://www.bloomberg.com/opinion/articles/2022-03-22/niall-ferguson-putin-and-biden-misunderstand-history-in-ukraine-war https://www.rand.org/pubs/research_briefs/RB10014.html https://twitter.com/samramani2/status/1507378113893871617 https://www.reuters.com/world/europe/russia-says-first-phase-ukraine-operation-mostly-complete-focus-now-donbass-2022-03-25/ https://www.wptv.com/news/national/russia-ukraine-conflict/zelenskyy-warns-of-world-war-iii-if-russia-ukraine-peace-talks-fail https://www.realclearpolitics.com/video/2022/03/20/zelensky_ukraine_failed_putin_talks_would_mean_a_third_world_war.html https://www.politico.com/news/2022/03/20/zelenskyy-ukraine-zakaria-interview-00018716 https://fortune.com/2022/03/25/russia-g20-summit-putin-biden-indonesia-bali-china-ukraine/ https://www.nytimes.com/2022/02/23/world/europe/putin-speech-russia-ukraine.html https://fortune.com/2022/03/24/putin-russia-natural-gas-europe-imports-pay-in-rubles-sanctions/ https://www.wsj.com/articles/saudi-arabia-considers-accepting-yuan-instead-of-dollars-for-chinese-oil-sales-11647351541 https://www.nytimes.com/2022/02/23/world/europe/putin-speech-russia-ukraine.html https://www.cnbc.com/2022/03/24/biden-says-us-would-respond-to-russia-if-putin-uses-chemical-or-biological-weapons.html https://www.washingtonpost.com/news/post-politics/wp/2014/03/09/blinken-u-s-would-not-recognize-crimea-secession/ https://www.wsj.com/articles/biden-sticks-with-longstanding-u-s-policy-on-use-of-nuclear-weapons-amid-pressure-from-allies-11648176849 https://www.bloomberg.com/news/articles/2022-03-21/china-embraces-supply-side-economics-with-tax-cuts

Hey, everybody, everybody, welcome to another episode of the all in podcast. We have a new bestie, yes, he filling in for the Prince of panic attacks. The Queen of Kinwa, the Sultan of Science can't make it this week. I think after his incredible performance last week and him trending on TikTok with his incredible insights over, sadly, the potential famine that could come after this Ukraine war. He decided he would take a week off. I think it's just a little too much attention for him. So we have a bestie guestie today. Yes, the shaman of stocks is with us. He brings the equanimity to equities. You know him. He'll bring that namaste to your payday. His predictions are the anti-Galawa.

Brad Gersner, welcome back to the program. Thanks for having me. Namaste. And also with us, of course, the Rainman himself, he's bitter on Twitter, he's brawling on callin'. He's the bill of rights from pack heights. Dave Sacks. Boy, you've really had done yourself today and the principal of alto the overlord of the overton window Polyhapatio Check out you the stinker of stonks. Oh God relax. You don't leave the comedy to me We're not a political show here, but obviously when world affairs become acute as they have, we cannot ignore the war that is occurring in Ukraine.

We're going to talk a little bit about markets. I think we'll start with those with Brad Gerson here, the SaaS market and the index. Why don't you walk us through this chart here because everybody's wondering what's happening with the markets given the war, given interest rate hikes, and the repricing of stocks. I don't know how you would look at what happened in November, December, January, Brad. How do you contextualize? Well, certainly a repricing. There's certainly a repricing, but I think of it more as normalization. Jimoth was saying it in November. I was on CNBC talking about the fact that when we got to a post-COVID world, rates were going to normalize, go back to where they were in January 2020. That

was around 2%. And the growth multiples would have to come off of this historic red bull high that we were on during most of 2020 and 2021. So we were 30 to 50% depending upon the index above the five-year average growth multiple pre-COVID. So that just needed to happen. Like we should be celebrating in one sense that that happened because that means that we overcame a global pandemic. The downside is we couldn't play with artificial money, zero percent rates, trillions of dollars, you know, of, of000 of congressional and federal injection in order to prop out valuations. And when it happened in and of itself,

that was gonna be extraordinarily painful. What I didn't anticipate, and what most people didn't anticipate, is that on top of that, we're gonna have increasing fears of hyperinflation, not just getting back to normal rates, and that we were going to find ourselves in the middle of an incredibly devastating war in Ukraine.

Those two things added to the uncertainty, the risk premiums, added to uncertainty around future inflation, the dot plot exploded higher and expectations of forward rates went higher. Now why the hell does this matter? It matters because when you take, you know, if you're looking at that chart, the five-year average, the 10-year was two and a half percent. Like, we all got comfortable investing in this period of time. The market paid uncertainty. We had a predictable way for us to estimate where we thought our wax should be in our discounted cashflow models. All of sudden that was thrown into the air. Oh my God. Look what we got going on.

I can't believe it. Look at this. Oh yeah. Never can be with babies or animals. No chance. No chance. This is Talita. Talita. Look at this little butterball. Oh my goodness. Lord look at that. So so good Sacks that's called a child. It's you have three of them Those are babies and what you're seeing there is affection from a father and a child Look at how cute this little baby Sacks is like I love this is taking from my time get that baby out of here. Ah So cute so Brad I guess what everybody wants to know now that we see this repricing occur is

what do you think is going to happen in 2022 and then into 2023? So we're now, multiples are now below the five-year average. For software, we're about at the five-year average for Internet, we're well below the five-year average. I said on Twitter that the rate path last week became a lot more certain. The Fed said something last week that I think is still not well reported well understood. The Fed said at the end of the year we're going to have 2% negative real rates. They said we expect inflation exiting the year to be 4.3 and we expect the tenure to be around 2.3. The reason the market exploded higher is because under the

Fed's prior protocol, a 4% inflationary rate would mean that rates would have to go to 4.5. If you take rates to 4.5, then growth multiples need to be about 30% below the five-year average. Okay. So as investors, whether we're investing in mid-stage venture, late-stage venture, whether we're investing in the public markets, like we need to know what exit multiples are. And it was bad enough that we had to bear the drawdown coming off of, you know, this red bull high of 2020 and 21. But if you think we're durably going to an inflation rate of 3% or 4% and an interest rate environment of 3% or 4%, then you simply have to adjust what you're willing to pay for growth assets. And so, as I look ahead, we don't know with certainty, the question is, what's the distribution of

probabilities? And just this morning, city Goldman Sachs raised their exit 10 year 2022 to 2.7% and took it as high as 3.5% for 2023. I think it's gonna, this period is gonna be marked by a lot of uncertainty around inflation and rates to way out more clarity and what that means is allocators of capital are gonna allocate less to risk assets and they're gonna pay less for risk assets. But you know, listen, if I look out over the five,

10 year horizon, I don't believe in global stagnation, I don't believe that we're in this new hyperinflation environment, but we're going to have to get through this next six, 12, 18 months, and it's going to be filled with a lot of volatility and a lot of uncertainty. From what rings most true about what Brad just said, and then what can you add to the prediction for this coming year? I mean, I don't know what the prediction for this year is. I think the markets are mostly moving upwards for the short term. And then I think volatility is going to come back. I'm just trying to find good long term businesses and just kind of close my eyes

and not have to look at these stock prices every day. And as long as I can manage my own psychology, I think I'll be fine. And I think that's probably the thing that most of us need to be doing. The interesting thing about Brad said is that the implication of that is that it means that late-stage venture is pretty badly mispriced. And I think you're going to have to knock these things back by 50-60%. I think you saw the first real big movement there yesterday, which was the Instacart print.

We went from a $40 billion valuation to, I think, it was 24. If you look at from February of last year, which was really the high for all of us, right, that's when we all thought we could do no wrong. You know, the comps to Instacart are off anywhere between 50 and 70%. You know, takeaway is off 70% Uber's down 60% DoorDash was down 55%. So these are some big moves. And so, you know, it made sense that Instacart had to get kind of like reset The problem that it has is that it's now the end-player trying to get public

Into a space with many players who've guzzled up a lot of capital in a low-rate environment And so if you think about company building this is why entrepreneurs have to pay attention to this stuff You want to get money when money is cheap owners have to pay attention to this stuff. You want to get money when money is cheap, but the problem is you can't control that timing. And so if you can't control your operating margins and your profitability, then you're going to have to go and basically pay somebody an enormously high price to get their money. And I think that's what setting itself up to happen in a bunch of these markets. I think enterprise SaaS has always claimed long-term profitability. The thing is, when you look at the real long-term companies, they've built some enormous modes. If you look at a service now or a sales force at the

high end, and then there's a crop of a couple of companies like Palo Alto Networks who are the next ones coming after, who seem like behemoths in the making. But everybody else, I think people have to really question like where the long-term profitability are going to come from. And so if that's true, then the late-stage private SaaS companies are in trouble. Similarly in places like Delivery, where again, you've had a bunch of comps come out, they've been curing in the public markets for years, Uber, DoorDash, there's a couple of these behemoths getting built. DoorDash being the most obvious.

And then there's a bunch of more question mark business models, including Uber, which is not really hanging together in the public markets. So I think the real question for entrepreneurs is if you have the end business, end being not the first, not the second, but you're like this seventh or eighth or tenth trying to go public. And all the seven or eight before you are gas guzzling machines, you're going to pay a very heavy price to get public. And I think that that's the reckoning that we're starting to see.

So I'm really interested to see how that plays out. The Instacart valuation could easily be cheap at 24, but it could just as easily be overpriced by another $10 billion, depending on how people think about who the last buyer of resort is in the public markets. Saks did Instacart miss their window to go public, and then what does this say about the backlog

of hundreds of unicorns that the venture community is investing heavily in? Some of them are probably gonna have to IPO at down rounds. I think that's sort of the takeaway. Explain what that is to Neophytes. Well, it just means that their graphical public and evaluation lower than what the last private round was. So all of these late stage private investors

who assumed that they would always make money investing in a company in the last private round before when public, they thought that was sort of an automatic gain and arbitrage and it's not. And there's going to be some disappointment there. Brad's been sharing these charts with me since I guess what December, Brad, where then the charts basically show public SaaS valuations as a multiple of ARR and then he's got a similar chart for the internet companies that sort of non-SaaS internet companies as a function of revenue.

And we've been looking at these charts. Once Brad showed these to me again four months ago, it became so obvious what was going on, which is that valuations were reverting back to the historical mean. If you look at during the know, during the two-year period, during COVID, the multiples had risen to some insane level, right? And because of all the liquidity that have been pumped into the system. So as soon as you saw the charts that way, you could just see where things were headed, which is back to historical averages.

Now we're below those averages, partly because of this. No, no, no, it, not really. Not really. The multiples are. Can I summarize Brad's chart because it is extremely elegant and simple for the layman to understand. So here's the layman's understanding of Brad's analysis, technical analysis, and balance sheet and PNL analysis, which is accurate. When rates are zero, typically people are willing to pay eight times revenue for a company. Okay, so if you're generating a hundred million revenue, top line revenue, you're generating a hundred million dollars revenue in your reasonably high margin,

reasonably high growth software business, that's worth eight hundred800 million in the public markets. For every 100 basis point increase in rates, you decrease the valuation between 15 and 20%. So if you think rates are at 2.75%, the price is somewhere between 30 to 40% cheaper than what it was when rates were at zero. So if you go back and you look at every tech crunch article and every Bloomberg article and every information article and you look at all those headline valuations when rates were zero,

we all just said rates are gonna be somewhere between, you know, 2.5 to 3% at the end of this year. At a minimum, you have to haircut those things by 30 to 40%, steady state, meaning the company is continuing to execute on all cylinders. If they have a down-tick in their performance, then it increases that discount. If rates go higher, it increases the discount. But the basic way to think about this is for every 100 basis point increase in rates, you got to down take that valuation by 15 to 20%. And I think, you know, just to be fair, I think I don't think there's any daylight between

you and Sachs on this. What's actually said is the 40%. Ron is giving the numerical rule that that's right. I think you're right. That is the that is the the correlation. And so this idea, listen, we all get paid to find good companies and avoid bad companies. That's generally what we get paid to do. We're decent at it. All of the sudden, in fact, most fundamental investors say, hey, I'm not a macro expert. I don't know where inflation's going. I

don't know where interest rates going. I just find good companies. We've had a decade or longer where that was okay to do. That was easy to do because guess what? Inflation was it too, and we had two and a half percent tenure. When all of a sudden you have massive volatility in that, it's not acceptable as an investor just to say, well, none of this matters because it does matter, right? Price matters because what you can exit for is essential to the game. And there were a lot of people invest in 2013, 14 and 15 when the cost of entry was low and exited when the cost of entry was high. Multiple expansion hides many sins, right?

And now just the offices happening in a dramatic and historic way, in that multiples were higher than they've ever been caused by a global pandemic, and the exit rate for a lot of those companies, right, is gonna be very painful. I think that Sachs has point about down-round IPOs. I don't think this is the exception, David.

No, Reddit, I think that I think from the majority of companies that come public in the next 12 months are going out below their last six- Consueling evaluation. Yes, but the Reddit rumor was that Goldman put a $10 billion price on the cover and that it effectively been cut in half. Again, these are all rumors, so these could completely not be true.

I don't have any knowledge when we're the other to $5 billion. That may actually end up being too expensive. It just depends on where the market is. Well, just so people are clear, when investors, sophisticated investors make these late-stage valuations at very high multiples like they have, they do have some downside protections. In other words, they cannot lose more than the money that was put in when this thing IPOs or they may get kickers of additional shares. So maybe they... Now, these IPO, no, no, in fairness, you're talking about something very important, but they're very rarely in these high price rounds,

because most of these high price rounds are in go-go companies where all of those rights get stripped away. This is why I do think Jason, what you're actually bringing up is in the last innings of a bull market, you have incredibly irresponsible behavior by a bunch of these investors. And that's also going to get exposed as well So Jason what you're talking about is what's called an IPO ratchet. Yeah, which means I'm giving you this money at this price But if you can't IPO at this price then you're gonna give me an equivalent number of shares that makes me whole Right, so it's as if I am I am indifferent to what price you IPO at. That's extremely dilutive to really one really important class of individual,

which is the employees of the company. It's also really dilutive to other investors who've come in before them. But Jason, you're probably right. To the extent that there were IPO ratchets, they'll get triggered. But I think in many of these go-go companies and Brad and Sacks can confirm,

but I see it, all those rights get stripped away. It's like, come in at this crazy price. This is your chance to get no governance. Get our logo on your fund raising deck for the next round. And so this is the price of the capital. It's been a little bit of sloppy behavior. Just so people understand this, if the red evaluation was 10 billion somebody put in 100 million in the Slate States round, if it came out at five billion, they would get twice as many shares to make up for that difference. That doesn't exist in the case of Reddit, J.Kale, you know, it was Fidelity who led that last round. So they're going to be price takers at whatever price the company comes public. What does that mean explain that price takers? So, you know, if they come public at five billion dollars and you put in a hundred million dollars,

your stake is now worth 50 million. Right. So you lost 50 million. Why didn't they have the discipline to put in these protective prohibitions, ratchets, et cetera? What happened in the market? To Chimaz point, they haven't really existed in most deals for the last five years. Right?

I go back to 2000 and I think 2007, 2008, kayak raised money with a ratchet in their last pre-IPO round. It prevented them from getting public for three or four years. That delusion overhang was a significant impediment to getting public. So, you know, listen, we all know that Groupon raised it $20 billion, went public in a year or later, and were $2 billion. I mean, it's not as though this hasn't happened before, but yes, people got a little laxia daisicle. I just wanted to, I just want to say one other thing though, because multiples coming down as a problem. What this really reveals is the

important of stock and company selection, right? Because if you were a shitty company with an unproven business model way out on the risk curve, okay? And you had a shitty company with an unproven business model right way out on the risk curve okay and you had a super high valuation last year and you don't you know there's a good chance you never grow in it grow into it you never get back to that valuation example your example your growth will decel well give us an example company okay discord ripple Okay. Discord, Ripple, Clack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack, Crack I don't know why they need to exist. I don't think they're going to get funded. Maybe one or two of them do. But when you have door to ash and uber that are free cash flow positive, that have strong brands and that can redeploy those profits back into competing those markets, I think

it's very tough. Neo banks are another example. Neo banks, the number of Neo banks that have been funded at exorbitant valuations, where the problem is all of these financial services companies are essentially an arbitrage on rates. When rates are zero, they take that money at 0%, and then they can go and execute a business model and sell that money at 1% and take the difference. But when their cost of capital is 2 or 2.5% or 3% the whole business implodes on them. So you're going to see a bunch of these financial services

companies get under pressure. Another example Jason is like all the low end, bottoms up SaaS companies. And the reason is because they spend their time inside of Google and Facebook doing customer acquisition and managing this very intricate dance of LTV to CAC. And when all of those input costs go up, their business implodes because you can't raise rates faster or you can't raise prices faster than the input

costs are. And then all of a sudden, your unit economics blow up. And in all of this, what is the salvation in a moment like this? It's being healthy, gross margins, healthy contribution margins and a realistic path to profitability, which means being EBITDA positive this year or within the next two years. Set another way, if you're profitable, you're not going to go away. If you can't show that you're used to famous Paul Graham Matage default alive in a moment like this, then you are a price taker, which means that you will have to pay probably a very high cost of capital to raise incremental capital to support a fundamentally

fragile and non-resilient business model. Here's the issue here, SACS, that when you see the Getter, Gorilla, Zap, all these instant delivery companies get funded at exorbitant prices and they're the seventh eighth ninth as Chamatis pointing out. No, no, no, Instacart was the seventh. Those are like the 10th, 11th, 12th, 13th. Okay, so now here we are. This to me seems like the fault of poor judgment

by capital allocator sacks. Are there too many venture funds chasing two few deals and not thinking through what investing in the 10th, 11th or 12th player in a market is going to be able to do. Is it too much venture? I think part of what's going on with the companies you mentioned is that they're physical world companies. They are very capital intensive.

They burn a lot of money. They're operationally intensive. I have sort of sour, I soured on those businesses years ago, and that's why I just focus on SaaS because they're basically perfect growth smart businesses. They're very, they can be very capital efficient if the founders want to run them that way. So what we're doing now is telling founders, lengthen your runway, be more capital efficient, you need to understand that, you know, multiples, if you raised last year at 100 times ARR, you need to understand that the next time you raise it may be at 20 times ARR. So now you can grow into that, right? If you're tripling and then triple

again, the next year, you'll be able to grow into that valuation. But, you know, make your money last two, three, four years instead of, you know, burning it in 12 to 18 months, unless you want a down round. I think this is the point that now, allocators, venture capital is gonna spend the next six months thinking about. What's in bucket one? Low quality companies burning a lot of cash

that may very well not make it across the chasm. No paths to profitability. What are the high quality companies that, yeah, the multiples down because public market multiples are down, risk premiums have changed, inflation change, but they have plenty of cash on the balance sheet. And think about it this way. Snowflake became a poster child in the public markets

of a high priced SaaS business. Snowflake this year will grow its free cash flow at over 100% a year. Next year, probably, you you know 80 or 90 percent Free cash flow not just revenue free cash flow in Q4 I think they booked 1.4 billion of revenue Q4 on a business that entirely and last year did 1.2 billion in revenue Right you think about that the incremental was more than what they had generated in the prior many years That business so let's say we reduced the multiple by 50%, but the company's growing top line

and free cash flow by 100%. It doesn't take you very long to grow through the multiple compression. So snowflakes multiple is plummeting for two reasons one because the stock price came down. Number two, because right, their growth rate and free cash flow growth is so high. And so now if you look at the multiple, it's similar to what we would expect of a regression of the five-year analysis. Unless these private companies are going to go dark for the next three to five years, meaning no sophisticated lay-stage investor doing around or going public, they'll be okay.

But otherwise, they're going to have to reckon with a version of what Brad just said, which is the flight to quality problem. When in moments of uncertainty and high volatility, it's just more straightforward to go to the things that are reliable. And so, you know, when you think in the public tech markets, what is a reliable must-own company? Well, I would put snowflake in the list of these must-own high-growth software businesses, right? You know, the fangs tend to be in the must-own category.

But then there are all these other businesses that then get orphaned because they're kind of nice to own, would love to own, would be great in any other circumstance. And that gets even more exacerbated in the private markets. You have to remember, right now, like the private markets cannot really exist without an incremental buyer of equity, right? You can't be bag holder. Somebody has to buy the stock that needs to be the bag holder. Somebody needs to be the bag holder after you.

And the problem right now is that those folks have a lot more credible, safe, durable assets that they can own and not have to deal with all the crazy anxiety that comes with owning something that's high volatility. Or, Shemoth, correct me if I'm wrong or Brad, if they don't want to even be involved in this, Micheal Gena, they could just be in cash and the interest rates are going up. So maybe they could say, you know what, I'll just sit this out for a year. Is that also happening with those folks?

Well, I think it's too hard to do because of inflation. Brad, she knows a bunch of these folks, but like take, for example, D1, you know, it's Dan sometimes great investor. I mean, my understanding is that they are sort of off privates completely because why invest in a private company at X times ARR when you can invest in a public SaaS company for six times. So, I think Tiger is still in market with a gigantic fund for privates, but the valuations have come down. So they're essentially repricing everything. I think those are probably the two broad reactions you could have, right, Brad?

Certainly. I would say this broadly speaking, the late-stage private financing market inventory is closed because there hasn't been, right, we're in this buyer seller standoff. Cellars aren't to the point where they're willing to accept that a new regime of multiples exists, right? It's painful. We saw, you know, the Instacart news here recently, but I think, you know, like listen, we're not even 10 or 20% of the way into the psychic reset that needs to occur in order for us to see real price discovery. That's not going to occur until these companies need money or

want to go public. That's right. This fall is when we'll start to see real price discovery. You couldn't pry a late-stage dollar out of my hand right now because I don't think that we have real price discovery going on. Early stage venture for investing in an incredible, you know, software business at 300,400,000, 500 billion, we think it can be worth tens of billions. You can withstand a little inflation, but the later you get in the life cycle of a business, it's about IRRs and IRRs in late stage

at last year's valuations, relative to today's public market valuations, that is a negative arbitrage. Explain IRRR why that matters Yeah, just for the way you know We expect our herder right in the public markets is a 20% risk adjusted rate of return So if I'm you know like You know you look at these late-stage private valuations from last year. I mean

You know sacks just talked about companies repricing down 40 or 50 or 60 percent. So if they haven't done that, you just don't have a conversation. Just to up level this, what Brad is saying is the following, Jason, any person can wake up tomorrow and buy the S&P index, right? What Buffett would tell you to do just buy the S&P 500 index. That historically has compounded it around 8% a year if you reinvest the dividends. So you can do nothing. Get a basket of the 500 best companies in the world that are automatically selected for you based on revenue and profitability. You don't have to do anything and that will

compound it 8%. That is effectively the risk-free rate if you want to own an equity. So if you're going to step into the late stage private markets and buy some to own an equity. So if you're going to step into the late-stage private market and buy some shares and ding dong.com, you've got to be rewarded for that, which typically means that there is a premium above the 8%. And what Brad is saying, it's actually more than double. In his case, what he's saying is it's two and a half times. You've got to clear 20% to you. Otherwise, you're better off on a risk of decent basis.

And the opposite is what's likely to happen. I'm looking here on the list. Go puff at 40 billion, canva at 40 billion. Klarna at 45 billion, discord at 15 billion, ripple at 15 billion, these, grammarly at 13 billion, these don't make sense. Given that if they were public, they would be trading at 50% of that. Here's what you can say. If everything is held equal, just with the rise of rates, you have to reset those valuations between probably 15 and 40%. At a minimum. But what Brad said is also true, which is if they then keep growing at a superior rate, they can get back to even. So meaning, in a few months, they could also show up again at 40 and be net net awash. They can get unstuck.

But a lot of hard work will need to happen underneath the covers of these businesses in the next two years. Okay. For that to happen. And that's what's gonna happen with a lot of these early stage private companies, right? Is let's say the error multiple has gone

from 100 times to 20 or 30 times, they have to grow their ARR 5X to get the same valuation. So the question is, can they grow their ARR 5X before I mean to return to market? That's just to get a flat round. Now, if they are tripling this year and then doubling next year, then that's 6X growth in ARR. So even if the multiple has gone down 5X, they could still get a slide up round. So that's the game I think all these companies are going to be playing is lengthen your runway so that you can grow into your valuation and not take it down round. Because the problem is, if you're ever in a situation where you take it down round, it's way worse than just the delution. Because now the psychology of everyone in the company changes.

Everyone has to worry that you're gone sideways. It's hard to prove. But here's the difficulty of what's accessing though. In order to grow revenue, you have to invest, right? You have to invest in salespeople and account management functions in engineers and product managers, right? And all of those people need to exist, which actually increases op- managers, right? And all of those people need to exist which actually increases op-X, right?

It increases burn, it doesn't maintain burn. And so this is the debt spiral Jason you're talking about which is in order to actually grow by those multiples. You actually don't have more fuel. You got to increase your speed. You have to burn more fuel. You don't actually have the money to withstand two or three years.

Or the altitude. You're now, so it's gonna be a very precarious balancing act of trying to figure out how these companies actually get to the other side. Because again, I think the buyers in this case will drive a hard bargain. You know what I mean?

Like look, organizations like Durable D1, Tiger, Altimeter, these guys are the smartest of the smart. They're not dumb. And so the price of capital is going up in that case. And so, you know, they're gonna strike really good opportunities for their investors, right, for their LPs. If we were gonna do an analogy here,

20% the analogy here is, these founders were on autopilot, they were asleep at the wheel, and now all of a sudden they're in the soup, and they got a really poor, no, that's not fair. I don't think they were asleep at the wheel at all. I just think that they, you know, boom, when the music is on, you got a real. I don't think they were asleep at the wheel at all. I just think that they, you know, boom, when the music is on, you got to dance. They did it. They raised money at the highest valuation possible. God bless them. Now you're going to see who is really good at what they do

and who is benefiting from a lot of just natural, you know, you know, right? But people were only when I say The pencils for the first time that I'm talking about you have to make real-time Look in an upmarket in a well in an upmarket or a boom market the three things that matter are growth growth and growth in a down market The three things that matter are growth burn and margins. In a down market, the three things that matter are growth, burn, and margins. It's not that growth stops mattering. It's just that burn and margins also matter. And now there's going to be real trade-offs.

Before, it was just how much money can we spend, how quickly, to get growth? Now it's wait a second. Is this growth efficient? And will we have enough runway to get to the next round without having to take it down round? Brad, when we saw at the peak of the pandemic, some leadership, I'd say seasoned or well-informed leadership, Airbnb and Uber come to mind, cut their staffs massively. They used that crisis to reset their cost structure and get to profitability quicker.

Those were money-losing businesses for a long time, maybe taking advantage of these hot markets. Is that what needs to happen here? Are we going to see a cascade of companies lowering their valuation, lowering their cost, sharpening their pencils, cutting staff, and then becoming more efficient and more ruthless at the sixth, seventh, eighth product and launching saying, hey, let's go to the core product and make it sing, make it profitable. Frank Sluitman has said that Silicon Valley is full of companies that are walking dead and they don't even know it.

Frank is, he says in tape socks, he says, listen, I'm a wartime CEO, not a peacetime CEO. He came into snowflake when it was growing over 300%. And he reconstituted what that culture was about to prepare for wartime. Because he says, when wartime comes, Nick gets challenging, I want to run the field. I don't want to be laying off employees. I want to be, that's the time to hire. That's the time to press the advantage. That's the time to invest in product. That's the time to press the advantage. That's the time to invest in product. That's the time to win the new customers.

Unfortunately, over the course of last 12-18 months, a lot of people without that experience took a negative signal. And the signal was, money will always be available, and it will be available at ever increasing valuations. And of course, anybody who's been at this for 20 years, like the four of us, we know that isn't true, but it's amazing. I mean, the behavioral psychology, our ability to gaslight ourselves in these moments and move out on the risk curve and ignore these lessons. Right. And so I really actually hurt, and I've spent a lot of time on zooms lately with founders and with their teams. Talking them through this because like we talk about it in the abstract and in the through the lens of a spreadsheet. But there are a lot of people's lives at stake. If you're

an employee and you went to this company and you took everything and stock at 15 billion that's now worth 5 billion, you're totally underwater. At the same time, the cost of buying a home and mortgage rates and everything else is going up against you, I mean, this is a massive morale problem, right? You know, for companies that frankly, we want to invest in, these are the innovators, but this is what happens when you have government intrusion, right, that we can all debate whether or not it's worthwhile, but it was hugely distorted. What we know to be true is that we had more distortion in markets the last two years than probably any time since post-World War II. And the consequence of that is dramatic. And, you know, we all kind of saw it, but we

all kind of gaslighted ourselves as well, because you were like, well, maybe there is a new normal. Maybe we have accelerated digitization. The truth of the matter is the law of economic gravity is interest rates and inflation, and it remains. Yeah, and this time turns out it's not really that much different. I think Jason, if you take your list of these high-price startups, I think it would be a good, useful exercise for somebody to do, somebody in the press should probably do it.

But if you take that list and just rank companies based on valuation, the last announced state, and then if they are not announcing layoffs of any kind, you can probably forecast when they're going to burn through the money, especially if they're hiring. And the reason that you can probably forecast that accurately is you can pretty much predict what op-ax will be, especially knowing the fact that their input costs are actually going up. So for example, most of these businesses that rely on Facebook and Google and Instagram for customer acquisition, those input costs are going up.

And the reason you know that is that's $2 trillion a market cap that doesn't give a flying fuck what's happening in startup land. They're going to make their numbers. Right. Okay. Those are the most important companies in the world. They will ratchet up the prices and so your input costs are going up. It's not just the physical supply of materials that I think is going up. It's just the cost of customer acquisition is going to probably go up by 20, 30, 40 percent. Right? And you know this because Facebook and Google guide to where they need to perform. And so if you pass that through the Venture ecosystem, that all of a sudden now upticks your burn. If you're adding more people, it upticks your burn. And now back to David's math, you then also have to grow 5 or 6x. That it none of this hangs together. So we are at the beginning of probably a very complicated

process of unwinding. Yep. The distortion that we've lived through in the last couple years. At this point, I mean, you have to blame the capital allocators in this instance. They bought these logos. They suspended disbelief. We've had this ridiculous culture of no governance, uncapped notes, just pushing, I see it on the boards on mine, you guys probably see it too. Some people just pushing top line growth, never discussing Unicconomics, never discussing the bottom line, and they created these crazy, fugu-easy markups.

They raised bigger funds based on it, and they just were never the adults in the room, the stewards of capital, it's infuriating. I'll tell you an incredible conversation I had yesterday with one of my partners. So he's been with me for 10 years. He was really the one that pushed us very early on to go into deep, deep, deep tech when nobody else is doing it.

3D printing of rockets, satellites, all that stuff. And it's been, so I really trust and respect his perspective. And he was telling me a story. He called a recruiter, you know, because we've been toying with, you know, helping get some folks to help us manage some of our early stage deal flow. And he asked her essentially something to the point of like, who are the types of GPs that are getting higher today in early stage? And he said, you know, this is how we approach our business, right? We have a permanent capital balance sheet, you know, we do, you know, at most one deal a year

per partner. And she said, well, you're not ever going to get anybody. Because a mid-level executive at one of these high-flying startups that then goes and joins a venture firm, she said, the consistent single thing that they make their decision on, are you ready for this? What? Is how many deals will I be allowed to do per year? What? And so, you know, these people are make-work construction workers, right? That's dig-a-ditch, philoditch. That is not what investing is. That's not about having a discerning philosophy on what a business should be or a market.

So if you have a bunch of capital allocators, Jason, to your point, who are unsophisticated about investing, probably very sophisticated operationally, but fundamentally don't know what they're doing, and they're coming and transforming in an organization that should be a disciplined, discerning allocator of capital and turning them into a velocity deal machine. This is what you're gonna get.

I mean, sometimes the best money, SACS, is money you put into a bet deal machine. This is what you're going to get. I mean, sometimes the best money, SACs is money you put into a bet you've already made, continuing to build the pot with a startup that's already proven themselves, correct? So I think we're going to see. We have a fall on fund. Yeah, I mean, I gotta say the things you guys are saying are making me feel great about our portfolio. Explain.

Not because we won't get hit with the same valuation corrections that everybody else is going to suffer, but because a few years ago, we decided we were going an investment starting kind of company. I mean, high margin, SaaS and marketplace businesses that were not capital intensive. We defined a new metric that didn't exist called burn multiple, which is the amount of money you burn for every dollar of incremental ARR that you generate, incremental subscription revenue. And we turned down investments that were growing fast, but they had a horrible burn multiple. And so, and I do think most of our companies raised last year when they made, hey, while

the sun shined. So there's going to be, they need to manage their cash flow so they don't have to raise too quickly, but as long as they do that, and they keep growing, they're gonna weather the storm. What's the right number? Spend $3 to make one, spend $2 to add one, what's your ratio?

So what I've said is that if you can spend a dollar or less to generate an incremental dollar of ARR, you're doing amazing. And between one and two is good. So in other words, if you're burning 20 million in a year to add an incremental 10 million of ARR, you're doing quite well in Starpland. And then when you start getting it to two and a half, three, that's a problem.

And then above three is just bad. Or more. So spending 30 million to add 10 million in ARR. It means it takes three years or probably four or five because you'll have turn to get that money back. Yeah. And that's just a lack of discipline. And how many VCs are we on the boards or other investors are we on the board and having

that nuanced of a discussion? It's always just top line, top line, top line. Who's going to be the next factor? I think it's very difficult because I think the number of qualified investors have gone way down as the surface area of investing has gone way up. So again, just going back to this conversation, this woman is staffing most of these venture firms with their junior and mid-level partners.

And again, the qualification to become a venture capitalist at this point is not that you have an ability to pick or in David's case, have operated and actually run a business and then actually have developed a methodical framework or Brad's business, which is Brad had to start from literally zero in the public markets and work his way backwards, stand up with 15 or 20 billion of assets. It's none of that. It's, are you a VP at an XYZ unicorn?

That may also be poorly run. And all of a sudden, that, you know, gives you the qualification to go into a job where, and it's not their fault, where what they are told is what you want is what we're going to give you, which is the ability to write X number of checks per year. That is insanity. That's not what makes a good investor. And then your ability to then give advice, I don't know, it's probably zero or less than zero. Your ability to give advice is,

I think we have to qualify. Bad advice is being given. So the ability to give quality advice is that what's missing in this formula. I just think these people are really naive. Like, you know, and it's not their fault, but, you know, they're given way too much rope to hang themselves with.

And the unfortunate byproduct is going to be the companies who get bad advice or the bad businesses that get funded. That's not what an efficient capital market should do. One of the things I'm seeing our portfolio companies do is use Burn Multiple as a governor for how fast they're going to grow. So for example, they will say that the burn multiple should not exceed two in the next quarter. So the old way of doing it would be that the company would just have a forecast and say, we're going to grow three X this year. We're going to grow ARR from 10 million to 30 million.

And whatever that costs, it costs. That was basically how companies did it. Now what I'm seeing from some of our portfolio companies is they are saying, yeah, our goal is to grow from 10 to 30, but we will not spend so much money that our burn multiple exceeds to. So, you know, if it turns out that there's a trade-off here between growth and burn, burn is going to win. We're not going to exceed that level of that ratio of spending. That's actually a good, I've

seen a few companies implement that already, and it's probably something they should all be doing. If these are pilots, they basically created a rule to not stall the plane. You've got to keep a certain altitude, a certain speed So what is the opportunity here then? If we're going to have too many companies, too high evaluations, if we're going to hang around the rim and try to get some rebounds here and try to find opportunities, what are the opportunities, what are the layups here for capital allocators and for founders? If we have there no way to advise for them.

There's nothing. There's never been layups. The problem is, in up markets, whenever we think that there are, it ends up being what causes our downfall later because we just take the wrong signal away. I don't think that there are, I don't want to be investing incremental capital into a lay-stage startup that's poorly run, that doesn't have their margins in line, and then having to work it out. Why do that? Again, I can just go have their margins in line, and then having to work it out. Why do that?

Again, I can just go in the S&P 500 and get 8%. And yeah, it's not 30%, but it's 8%. And I don't have to deal with all this nonsense, like a bunch of people. Because you're a cross-over investor, right? I mean, you have the ability to choose between public, private, or wherever you want to play. I actually think what I am is an investor. Right.

You don't have LPs for a VC fund like SACs and I do. But this is my point, like I think investing, irrespective of whatever stage you do it, still fundamentally comes down to the following, which is, do you have the judgment to understand whether these decisions are marginally good, marginally average or marginally destructive for the short medium and long term of a business. And I just don't think that enough people steep themselves in the practice that it takes to get good at that kind of a game. And I think what these moments expose is that the status games that come around investing because it just seems like it's easy, it just seems like you don't do

much work. That's what ruins these periods and the implications, I think, is Brad said, is really right. It affects the employees, it affects the entrepreneurs, it affects the startup culture, it affects the incremental desire for people to take a shot of things. You can overcome all of it we have and we will again. But I really think, like, through the entrepreneur, the message message is if you're, you know, taking a term sheet, I think you have to have better judgment to really look at that, that investor and say, is this person really qualified to help me? Because in these moments, in the absence of help, you're probably going to basically have

a valuation reset at book minimum case and the worst case is you go out of business. What's the side of what you said, Shemaat, then I'll hand it to you, Brad. Is that a lot of the founders picked based on the highest valuation who their next investor should be. And now we see what a trap that is, Brad. You know, the takeaway for me is we return to a place we've always been, which is about selection, right? Look at the mean returns for ventures for 20 years.

They're lousy Lousy right 90% of the of the spoils Barely mapped to the public was if you 5 to 10% of the investments and that's the way it's always been look at look at Buffett Right by superior companies at good prices. What are the two technology companies Buffett bought in the public markets? good prices. What are the two technology companies Buffett bought in the public markets? How? Apple and Snowflake. Snowflake. Apple and Snowflake. He doesn't own a broad basket of long tail internet or long tail software. And so I think what you're going to see and to Saks's point, I think even running a recipe on

software is though all ARR is created equal. I mean, I can show you five companies, each with a hundred million of ARR, each growing at 30%, and there's massive dispersion in future outcomes. Yeah. Right? And so, like, I just think that this at the end of the day is a craft business.

It's an essentialist business. It's about finding and identifying those very, very, very few companies that ever, durably or worth more than $10 billion. You know, on my screen today, finding and identifying those very, very, very few companies that ever terribly are worth more than $10 billion. You know, on my screen today, Chamath was just talking. There are four internet companies that are green today. Amazon, Google, Apple, and Facebook. Everything else on my screen is bleep. Mustone, mustone versus. Yeah. Everything else is red and my growth

internet stocks are down 400 basis points. Right. The market is voting with its wallet where it wants to sit on the risk curve. Right. And I think we're just going to go, there's no new normal here. This is just back to the future. Right. This is what we've always done. And you know, the reset is always painful. The only surprising thing is how often we have to go through it. If opportunities do arise, where will they, where where will they be, Brad? I mean, I was watching Peloton. I always love that company. I see the change in management, I see the management, you know, thinking about profitability, thinking about creating it into a marketplace, maybe

having a more hardware available, disconnect from the software, etc. Do you think there's opportunities there's opportunities there or there will be opportunities over the next year to buy some of the names that aren't the fangs? What we do in the first instance, Jason, and listen, we outperformed last year because we owned quality and we were short, lower quality stuff.

Unfortunately, this year, the market said guess what? It's all over valued. Quality and low quality doesn't matter. We're taking it all lower. And so for us in moments like this, and I've lived probably through five of them in the public markets, we always do the same thing. D gross, take risks down. First thing is, like like have less chits on the board. Number two, reduce the number of outliers, pull in the risk curve. Right? For me, I want to own five or six things because remember, I'm the biggest LP in the fun. This is my money. I want to sleep well at night and I want to protect the foundations, the endowments, the good causes we represent. I can't

do that with a company that has an unproven business model I may think that it's going to be great in the future, but I don't know so the problem with for the Pelotones of the world Right, they may be incredible returners But what every portfolio manager on the planet is doing today is Compressing the number of names of their portfolio saying Saying, what are the companies I know with absolute certainty? Whether rates are two and a half, three and a half, four and a half, five and a half, it's going to be worth more over the course of the next two to three years. That's what I want to own.

Jason, what I was just going to start not really about bread, but Jason, what you're talking about is what a lot of people do. You see a lot on Twitter and I call it clapping as a strategy. What about this and what about that and what about if they do this and what about clapping is not a strategy. Clopping is something people do at the black check table. It turns out it doesn't actually influence the cards.

Sure. And so I think you have to stop with the clapping as a strategy because it doesn't work. That's not my strategy. I was asking Matt as the moderator. Is there an opportunity to be clear? I'm not advising Matt as a strategy. I'm saying I think you're representing a psychological reaction that a lot of people have.

And I think what Brad is trying to tell you is clapping is not a strategy. I'm asking that on behalf of the audience. It is not my belief just to be clear. My commentator to the audience is clapping is not a strategy. Yes. correct. Yes. If enough people though, do what you're saying, Brad, and they just retreat to quality,

at some point those quality companies would then become fully valued, maybe even overvalued, and thus the cycle begins again or not. So how long does that take? No, you nailed it. What happened last year, 2021, dispersion collapsed. Go check out Jam and Ball,

who does incredible software analysis on our team. Dispersion collapsed between the best cohort and the worst cohort of software companies last year. The first thing that happened is dispersion returns. We pay a higher price for the best shit when we pay a lower price for the low quality stuff, right? Then when we start to recover, when there's more predictability in the world, when we resolve

the war, when we understand the path of inflation, right, the stuff close in on the risk curve, that'll start being fully valued. So then we will be brave enough to walk a little further out on the ice on the lake, testing it, is it safe to walk a little further out on the ice on the lake. Testing it is it safe to walk here. And then you walk out a little further. And sadly, right, eventually we're in the exact same pattern we've been before, which is we'll know we're at a market top five or six or seven years from now. When we repeat the same ass and I behavior that we just went through when everybody becomes complacent again and overbidding this stuff way out on the risk curve. I'm just suggesting to you the number one question

I get from GPs venture capitalists and others right now is when are we going to bounce back. Let me be absolutely clear. There is no bouncing back to where we were the last 18 months. That was the outlier. That was the make believe. What I hope and expect is that we can bounce back to the five-year average, but even to durably trade at the five-year average, we have to have a lot more clarity on the war in Ukraine on inflation and rates. So that's a perfect place to pivot, SACs. We are now here, and I think this is the fourth or fifth episode where we've been discussing the war, and we flipped it today just to do markets first for a little change of pace and since we had Brad here, where are we at with the war?

And what is your expectation of it wrapping up or it escalating? Well, actually, there's a tweet storm this morning that Chmoth you sent to the group that from a Russian official and it seemed to indicate, well, it indicates what we've kind of known for a few weeks now, which is what the broad contours of what a peace deal would look like, which is there's three main pieces, neutrality for Ukraine, the Russians insist

that it not be part of NATO. They get to keep Crimea, which they annex in 2014, that's been a fate of complete. And then some version of independence for these sort of breakaway territories in Eastern Ukraine, the Donbass region. Everyone kind of knows that's the broad strokes of the deal. Then there's, you know, a lot of details

are gonna matter a lot to the people who live there. Like, is there this land bridge from Kramia to Donbass, but frankly don't matter as much to all of us the United States of America. So the question is, you know, what is the administration going to do about it? Biden just went to Europe and you know, my concern is that no one in Washington, and I talked about this last week, seems to be pushing for a ceasefire. It seems like their preferred position is for Russia to bleed out as long as possible in Ukraine for the U.S. to fund an insurgency Allah Afghanistan where these fighters in Eastern Ukraine are sort of like the Mujahideen.

Surgeon C is that the right word? Well sure because if the island... They're defining their own land. And so we where the Mujahideen, I mean, I know, but why would you call it an insurgency? Well, depending on their land, if the government of Ukraine falls that it becomes an insurgency. So the point is that the administration, the question is, what's the administration's endgame here? Do they want to lead the

world to a ceasefire or do they want to protract the conflict do they want to lead the world to a ceasefire or do they want to protract the conflict to impose on the Russian state a Afghan style, you know, debilitating defeat to destabilize the Russian regime. You'll Ferguson had a column this week in, it's his Bloomberg column. He's from the Brookings Institute at Stanford. No, he's from Hoover. Oh, Hoover rather sorry. Yeah, so I'll read this point.

Hoover is that, can you just explain to me what the Hoover Institute is and how that means? Who are the two for a piece? I would say it sort of leans, idealistic and foreign policy. I would describe Neil as sort of the most realistic idealist. Got it. Okay, thanks for the context. But he's quite well sourced, I think, with, you know, and with, you know, various people on Washington, Europe. And what he wrote is, the US intends to keep this

war going. The administration will continue to supply the Ukrainians with anti-aircraft stingers, anti-tank javelins, explosive-switch blade drones. It will keep trying to persuade other NATO government supply heavier defensive weaponry, and so on. He drones, it will keep trying to persuade other NATO government to supply heavier defensive weaponry and so on. He says Washington will revert to the Afghanistan after 1979 playbook of supplying an insurgency only if the Ukrainian government loses the conventional war. So the concern here is that the US government has an incentive actually right they don't want a quick end to this war is basically the theory is they want the russian state to bleed out and be destabilized in a way it's the one chance we have for like regime change there without us actually starting a war is that

they have the self inflicted wound that is the theory yeah and i think a lot of people are saying that that is what a lot of people want in was. I don't, you know, this is not like conspiracy theory. People are saying this is our chance to topple the Russian state to destabilize it. There was a Rand corporation survey done a few years ago. Oh, there's a Rand corporation studied on a few years ago that was commissioned by somebody, probably in our state department, or someone like that,

where they talked about this, that if we wanted to destabilize the Russian regime, Ukraine is the way to do it. Right. They would fall for it, right? They would actually fight that fight. That is an unwinnable fight. We would basically be putting an app. We'd be supporting an Afghanistan-like path for them to go down like we did.

And they took previously to that. Right. And the problem that I see is just this, which is we've discussed on this program, the downsides of this war. First, it's a humanitarian disaster. Second, we've talked about the risk of recession later in the year. Third, Freeberg talked about famine, the risk of famine later this year if this drink planning doesn't happen.

And then fourth, we have this, always we have this risk that the war spends out of control and goes nuclear, right, And leads into war three. Those are some vital American interests to avoid all of those scenarios. I don't see an equivalent vital American interest in determining the exact nuances of who rules the Donbass. In other words, the broad strokes of this agreement are there. You know, what the US should be doing is leading. They should be pushing for lead, not bleed, lead the way to a ceasefire,

not to inflict maximum damage on the rest of the regime. Which we don't know exactly what their intent is because they're doing this behind closed doors. Brad, what's your take on this? I think David and I talked about that so it didn't end the other. I think there's something bigger playing out here. I mean, clearly he's the expert on real politics.

And, you know, but it seems to me that we have had decades of military diplomacy, right? And most recently, the pal doctrine of overwhelming force, we don't wanna make the same mistake we made in Vietnam. So we're gonna go in with full force. And basically the public doesn't support military adventure isn't anymore, right?

And so now we have maybe we'll call it the Blinken doctrine, which is the pal doctrine equivalent but for economic force. It's the nuclear economic weapon that is on full display by the West right now that I think has really significant implications, right? It's reunited the West. And I don't think this is just about Putin. And I think the reason that the US and Western Europe is slowly in this a bit is they're sending a message

to the Chinese as well, which is that we are unified and we will use an economic weapon of mass destruction. If, you don't play by global norms. And so the box I think we're in from a negotiating perspective, right, in Ukraine right now is not a box around neutrality. I mean, neutrality is already clear. I mean, we had Zelensky didn't even ask for a no fly zone.

He's not even asking for NATO membership. They've already seeded neutrality. I think the real question is sanctions. I don't think the West wants to roll back sanctions. And I think Putin's saying, I can't high-tail it out of here unless you roll back all the sanctions and give me a little bit of the Donbass. And so watch the next week or two, like in any good negotiation. Unfortunately, I think both sides are going to amp up their current strategies. We may see missiles coming out of Russia, and we may see European complete European embargo of Russian oil, 3 million barrels a day. Those will be the final straws, right, before

we enter negotiations, because then they can see the last things that they took as part of the negotiation. But this I think is going to be all about economic sanctions. And I think the West is playing a really strong game. What I worry about, and Sachs has talked about this at length, is that we overreach, we overplay our hand here in an effort to send a signal to other parties around the world, right? And that has fat tail risk associated with it. You're representing China and Taiwan. Let me ask a question. How many of us woke up at the beginning of this year or making our New Year resolutions

and said that we need to risk recession, famine and war in order to destabilize and topple the Russian regime. When did this become a vital American interest? No one at the beginning of the year thought this was an important goal of America. What's more important is basically getting our economy back on track, getting back on track after this long, after this long, this plague we've had. I mean, nobody needed this problem. And what the administration should have done was used diplomacy and all the resources to

try and prevent the conflict. And now the conflict has occurred, we should be pushing for a negotiated peace and cease fire. We do not have a vital national interest in the details of who rules, rules the Donbass. Yeah, the problem with your setting up of that question is that we did not start the war. Putin did. Shamathi have been signed so far. What are your thoughts on this war? Jason, I'm not saying we started the war.

Well, you're saying did we wake up and say that we should do this? We did not. No, listen, you put a Trump's up. You and a lot of other people in the media woke up on February 24th and you think Putin went mad and there's no prehistory to this conflict. Now here's the deal. Hold on a second. This is a war of Russian aggression.

It's true that Putin started it. He's the invader. However, there were things we could have done to prevent or to avoid this war. An American diplomacy completely failed. And we even discussed it the month before this war started. We talked about how the US could have given a written guarantee to Russia that Ukraine would not be part of NATO. Just this week, Zelensky and an interview with Friedzekaria admitted, he was told by Blinken, you will not be part of NATO, but we don't want to admit that publicly.

What games were they playing? What is the point of playing that kind of game with a grave issue of war and peace? Why didn't Blinken say publicly what he said to Zelensky? This administration did not do everything it could do to prevent war and now we are faced with all of these existential risks. Why for what reason? The reason is that it gave the United States an opportunity to topple Russia. I Mean exactly and who of us thought we needed that at the beginning of this year? Well, I think that the thing to keep in mind, and again, I'm not saying that this is right, but I'm just game-fear rising, that these are like grudges that these guys have held for

a very long time. And I think it started when they were in the Obama White House and it carried over to now. And I think they saw an opportunity to basically execute a strategy that essentially now I think we're moving into the second phase of this war, which is effectively trying to bait Russia into doing something really egregiously bad. And that is terrible to David, to your point. I think we're willing to sacrifice a lot.

I think we've decided that implicitly by based on the actions of the American government. And it's weird. It's like we're trying to get Russia to react. And so the rhetoric, in fact, the rhetoric since that, do you guys remember, I think it was only 10 days ago that both Russia and Ukraine said the surface area of a deal is pretty much in sight.

Oh, freeberg from the top rope, come in. Look at you, freeberg, I mean, like you look like an every man, I mean, I'm so proud of you. Are you actually driving your own car? Gas goes the link car SUV in the mountains. You should be putting gas in that tank. Who's gas is in that tank? Is that putting gas?

I only use ethanol I make in vats in my backyard. I went out of my way. I used solar panels that are handcrafted in my backyard. Yeah, I went out of my way to find a luke oil gas station filled up. What I was saying, guys, was that, you know, from the 10 days from when, you know, both sides Russian, Ukraine were like, hey, you know, we think we're basically there. We have a deal.

The rhetoric has gotten really insane. You know, yesterday, I think it was like the United States said, you know, we think that Russia should be kicked out of the G20. Then Russia responded and said, I'm only going to sell that gas and settle it in rubles. You know, all of a sudden, other actors, China and Saudi Arabia are in the game now. You know, China and Saudi Arabia are negotiating, settling a huge oil trade in Yuan. Why in the last 10 days of all these things happened when we were so close to getting something done? I think the best explanation is that we are willing to, I guess we've decided, I mean,

none of us have decided, but the American government has said that some amount of sacrifice is okay, if it could trigger a Russian escalation, which could then further destabilize that country, and I think they believe that that's more important than anything else. And I think we, you know, from where I said, I think we can take Putin as word that he actually cares about reunification. And that's not to say he's crazy, David. And I don't think we can control his behavior. I think your...

When is he a regular, his word reunification? He's never sent that Jason. And also just today, the Russian military, the tweet that I sent you guys, was from the Russian military. And that was an official statement. And I don't think he, they would be allowed without Putin's explicit sign-off. They no longer talked about denatsificating Ukraine or demilitarizing Ukraine. They simply focused it on the Donbass. And to use your Sun-Zoo argument, it's almost like they're trying to construct their own Golden Bridge to exit in a way where they can claim victory to the

Russian people to explain the tens of thousands of, you know, Russian military people that have been killed in this whole conflict, right? Because they have an explanation that they have to get. But in all of this, I think that we're probably exposing a very high risk game of poker that we're playing, which is it seems that the US government is focused more on the destabilization of Russia than they are in getting this conflict behind us. I mean, he did say in his speech, since time immemorial, the people living in the southwest of what has historically been Russia and land have called themselves Russians and North Hacks Christians. That's Donbass. Yeah, I know, but he is.

There's been a, Jason, there's been a civil war going on since 2014 in this Donbass region between Ukrainians and these sort of, these Russian speakers. And now that civil war is, as this is a Balkan-style civil war that is now escalated with, you know, Ukraine and Russia getting in, and now the whole West potentially could get in. This is a very dangerous situation, which should not let's spin out of control. I haven't agreed with that. You guys asked me, did he ever talk about reunification? He did.

He didn't speak about Ukraine. That was not one of his stated war objectives. Now, you could keep accusing him of being a liar, but look, what his objective is. I'm just taking him out his word that he believes these areas are Russian and they should be considered Russian. The Donbass area where they are predominantly Russian speakers. Look, I'm not taking a side in who should rule the Donbass, okay?

I think it's a complicated, ethnic, strife sort of issue like we saw in the Balkans all the time between the Russians who live there and the Ukrainians who live there. What I do know is it's not worth risking war three. We're not going to issue 100% agreement. 100% agreement. Sax, let me, can I ask you a question? So how is Putin going to withdraw without a hundred percent lifting of the sanctions? And how is the West possibly going to trust him to withdraw, right? Well, well, taking all the sanctions off. That seems to me like when I try to construct the Golden Bridge in my mind, it comes down

to, you know, like how do we, how do we whack up the sanctions? Do we take some of them off? Say, prove to us, be out for expiry to time and then we'll roll the other ones off? Because these sanctions are not going to be rolled back in the next three months based on some ceasefire. I agree with that. I don't know that Putin can expect the sanctions to be lifted or that he

can effectively negotiate for that. I think, again, where I think the piece deal is, is that we've known all along what it's going to be. Ukraine will agree to neutrality in exchange for some security guarantees from the West. Russia will get to keep Crimea because that's been a fate of complete since the annexation in 2014. And there will be some sort of regional autonomy for these sort of Russian-speaking areas in the Donbass, which by the way, we could have had that too. There was a deal called Minsk too since 2015. That simply hasn't been implemented. So, you know, I think those are the broad strokes of the deal. And then there's questions about, well, is there a land bridge from Crimea to the Donbass?

And what weapons exactly does Ukraine get to get from the United States or get to keep? I mean, so look, those details matter a lot to the people who live there. But the broad strokes of this, I think, are pretty well understood. I'm not betting this way with with with our book, but if I had to guess, we are going to have a period of significant escalation on both sides before they both get to the table. Macron said this week that we still have the Europeans have not made a decision about the embargo of Russian oil. That will collapse the Russian economy,

and oil will go to 180 or $200 a barrel. I think that's a real likelihood. And the second one is, I think the Russians will amp up military aggression in some face-saving measure and to have more to negotiate with. So maybe to answer my own question is, if there is an oil embargo, then you take the oil embargo off, right?

As part of the economic sanction whacking up of the sanctions, um, because that's really the nuclear option, uh, against the Russians economically. But it's a, you know, unfortunately, I think we have to be prepared for this to get worse before it gets better because it makes sense from just a game theory for both sides to grab as much as they can right before. The sit down at the table so they have more shit to give to each other. Right, but the problem is if both sides keep asking I agree with that fundamental analysis is that neither Putin or Zalinsky can be trusted on their own to basically make peace because they want to push their advantage. If either one believes that they're winning on the battlefield, they're going to push their advantage to grab as much as they can to then negotiate from position of greater strength.

The problem is that they're in an escalatory spiral where if one or both of them miscalculate, we never get that deal. I think the longer the war drags on, the harder it is to make a deal, not easier. I actually, one of the disturbing things that came out over the past week was in that interview that I mentioned where Friedzekaria interviewed Zelensky. Zelensky said that it's, we're either going to get a peace deal or war war three. And I'm listening to this thinking, wait a second, you know, that, that is a pretty scary posture for him to be taking. And furthermore, who appointed him leader of the free world?

You know, the decision to have war three is not his decision. He is not the president of the United States. We did not vote for him. We may think he's heroic. We may think he deserves our support, but he does not get to turn this into war three for us. The American people did not choose that. And this is where I go back to Biden and the administration and their leadership.

What are they pushing for? Are they pushing for a protracted, never-ending Afghan-style war in Ukraine, or are they going to lead the situation to some sort of negotiation or ceasefire? And I just think if we're considering the interests of the United States, we would not let this decision purely Bezalinsky. This guy is willing to entertain war three. That's key. Yes. But what is his worst alternative? I mean, like he's losing his country. So of course,

he wants to say the thing that would scare us into action potentially, right? So he has nothing to lose. So that's what we can't write to the candidate. He has the right to decide for us. He's not getting it. He's using rhetoric to get us to talk about it, which he just won. Like you can see that. What he's saying. Right. Right. Yeah. Because you're talking about it. So I think the bigger question in all of this is when is the United States willing to draw a really hard line?

So there was another thing that happened, which is that Biden essentially said, like, if they use chemical weapons, we will react sort of in kind, right? There was some version of that statement. It's a red line, basically. He said yes. And then he also said, you know, depending on, you know, how they use nuclear weapons, we could theoretically respond. So just the rhetoric is ratcheting way, way up. And that is surprising to me because I would have thought

we had a deal in sight. Just get it done. Be pregnant. You're assuming that we have the influence, you assume, David, that we have the influence to actually cut a deal. You were saying yourself for the last couple of months that the US power has waned and that we don't have influence.

So which isn't? I think you're just blaming Biden. I believe we have the influence to get facility to deal. You were saying, look, let's go. We lost our influence. Listen, let me give you an example. We are giving Zelensky and the Ukrainians all these incredible weapons.

What are the conditions on that? If Zelensky is unwilling to make a reasonable peace deal, do we have any conditions and are giving him these weapons? Why wouldn't we insist? Zelensky, listen, we support you. We basically are against the Russian aggression. You should have the right to defend your homeland and drive them out, but we also want you to take a reasonable peace deal if one is available, and we need

you to specify what that is. You're assuming, are we exercising that kind of discretion? I don't think so. I think you're assuming that Biden is blocking this, what in fact it might be that Putin is. And I believe you're taking Putin's sort of position here over our own presidents. I think you need to think for a second that we don't want to have this continual escalate. You actually think there's a world in which Biden wants to see this escalate.

I don't think that that's the case. I think that we don't have influence. We don't have the influence. We do not have the influence today that we did. It is no longer... Neal Ferguson. Neal Ferguson, you know, gets to dictate to the world what's going on here.

We no longer have that. This is not about the right things. Putin wants to talk to Israel. Putin wants to talk to Macron in France, not us. Because we're not seeing this as an honest broker, but look, we don't have the influence we once had. Okay, let me explain. I'm not saying we can dictate the outcome, okay?

But we can push for a negotiated settlement instead of a protracted, we can lead not bleed, okay. Chimoth laid it out, Neal Ferguson laid it out, the RAN corporation laid it out. These, there is a significant chance that there are definitely actors in the State Department. Who want to see an Afghan-style situation, search and see play out in Eastern Europe, that's their goal, okay? Now, I don't know what Biden is thinking, but he has made no statement to the contrary.

What have we done to help lead the situation to a negotiated settlement? Name one thing. Well, I don't think we're in the room, David. But Biden is in your place. What do I need to be in the room? I've read all their public statements. I don't see any. I don't think they want to negotiate through the press with Putin. I read all their public statements. I don't see anything.

I don't think they want to negotiate through the press with Putin. I think they want to negotiate with Putin. I think they want to negotiate with Putin. I think that says enough about what his intent is. He's in Poland, right? He's going to Poland. He's in Poland.

We're scaling up our military presence. Listen, I mean, all I'm saying is, look, I don't know exactly what Biden is saying or doing behind closed doors. What I'm saying is that the US should don't know exactly what Biden is saying or doing behind closed doors. What I'm saying is that the US should be playing a constructive role to get to a negotiated ceasefire, not indulging this sort of fantastical thinking that we can basically perpetrate a regime change operation in Russia. I agree with you on that.

I agree with you on that. I'm worried that there may be a small strain of that probability in the range of outcomes here. I didn't think that before. I really thought that maybe we were a little bit on the outside looking in, but it looks like we're pretty close to a deal. These guys will get in a room. They'll chop it up and it'll be done.

Instead, honestly, if you just look at the headlines and the rhetoric and the words from all these three leaders in the last 10 days, it's been in the other direction. And so you have to wonder, what is the point of all of this right now? Other than... Crisendoing, like Brad said. It's a big question. I listened to Blinken over the weekend. And he talked about, I think he defined what is this new doctrine of economic state

craft. He said, our objective is we have the power to impose overwhelming costs on our target. Okay, economic cost. And he said, our cause, Putin's actions are remembered as a strategic failure, not regime change. That's what's within our control. That is very different. Bush wanted regime change in Iraq, and we executed it through the pal doctrine of overwhelming military force. I think that this is a doctrine of overwhelming economic force that is meant to not only signal to the Russians, but every other rogue dictator in the world. If you go rolling into your neighbor, uninvited,

you can count on the fact that there's going to be massive economic sanctions because our military deterrence is no longer a deterrent. Everybody knows we're not going to go defend Taiwan. Everybody knows we're not going to set our military to Ukraine. So we have to demonstrate that we actually have economic resolve, not these poo poo sanctions we've been having around the world for the last 20 years. And if that is the lasting impact on this. I think you're right. You know, that we turn this into an economic nuclear weapon.

Yeah, I think you're right. I think you're right. I think Tony is very smart to say what he said. The one thing that I would want, though on top of that, Tony, if you agree, is just to rack it down our rhetoric, which we can control. And maybe to, I mean, why not say that, listen, we're willing to put these sanctions on the table. We're willing to basically re-institute economic ties with Russia

if we can get to a satisfactory outcome. Well, you don't want to reward them. I mean, is there really a draw like that? I would say is we're making a big assumption to say that there's not back channel diplomacy going on from the Israelis, the Turks, the French, you know, having those conversations on our behalf, right? Like I don't, I honestly, I don't know

that that's a high probability that we're not sending those signals. But to your point, I just don't I honestly I don't know that that's a high probability that we're not sending those signals, but to your point, I just don't know. I don't know. I don't know either, but I don't know either, but but here's what I would say is look, I can only judge from the public statements. And I think there is signal in these public statements. And the statements are all one way there is no olive branch. It's all, it's all basically about escalation. Just like in January before the war, what were the State Department's statements about the situation? They said that NATO's doors open and will remain open even though they told Zelensky in private that he would not be joining

NATO, okay? That was an astounding revelation that came out this week on the Friedzekhararrius show. Number two, Blinken was saying that there was no change in the American position and there would be no change. They said, these are all public statements that the US would never recognize the Russian annexation of Crimea, never. You know, he said that we went into these peace talks

to represent our core values, there's no change in that. So in other words, it's been the position in the United States to be hard-lying with Russia to basically engage and no compromise whatsoever. And it's basically to double down. It's to double down. You assume, you assume, David, you don't know. No, those are the public statements.

I know, but you're assuming that there's no backshadows going on and just to, just another, I wanted to make one quick point, Chimoff, which was, you know, what if we offer to take the sections off and then we are training Putin that these kind of misadventures get him something, Donbass, et cetera, and that the sanctions roll off. So the isn't there a possibility, Chimoff, that if we don't keep the

sanctions up, we're actually rewarding his behavior. I'm a huge guy. Look, I've been the first person in the front of the line on sanctions. I thought this was the most brilliant approach to this whole thing. And I still believe that sanctions work. And I think that this will cripple that country. What I'm saying, though, is that there are these moments where instead of then sticking to the rhetoric that Tony talked about what he said, I don't know Brad where Tony said this this weekend But like sticking to that there are these added flourishes that I think are unnecessary So what I mean by that is to talk about you know us reacting or

retaliating for the use of chemical weapons Biden made a campaign vow I don't know if you guys remember this about nuclear weapons where you know He was very clear that you that it is a mechanism to demonstrate that this deterrence exists. And instead, he actually caved and instead he put out this carefully worded statement which kind of walked back the campaign vow earlier this week and I'll just read it to you. I'll just read what the Wall Street Journal said. It said, President Biden stepping back from a campaign vow has embraced the longstanding

US approach of using the threat of a potential nuclear response to deter conventional and other nuclear dangers in addition to nuclear ones. During the 2020 campaign, Biden promised to work towards the policy in which the sole purpose of US nuclear, the nuclear arsenal would be to deter or respond to an enemy nuclear attack. Instead, now it holds that the fundamental role of the nuclear arsenal will be to deter, but that it leaves the opening to respond and use it in extreme circumstances. So these are big changes. And if our whole goal is to just focus a service area to an economic set of sanctions, these are somewhat unnecessary.

We all agree. We don't need to talk about changing our nuclear policy. Yeah. Biden was right on the campaign trail. The United States of America should never use nukes except if nukes are used on us. Come on. We know that. And we're talking about changing that now. That's insane.

We changed it. We changed it. Look, it shows that there's an influence in in our government or state department of certain hard line elements who want this very tough policy that includes destabilizing the Russian regime and maybe toppling Putin. I'm just saying that objective is not worth all the existential risks that we're now facing. All right. Do we want to touch on the CCP tax cuts?

We want to wrap. We're at 80 minutes. I mean, the CCP tax cuts, Harkens, be back. Brad, you can react to this because you lived it with me. 2018, 19. I'll say it again. We were in this unique moment where we were not sure whether there was runaway rampant inflation.

And in Q4 of 2018, the Fed basically said, okay, you got us, the boogeyman exists. We're going to go tame inflation and they ran forward and raised rates. And low and behold, the Chinese economy turned over in Q1 of 2019. We had like a, you know, kind of a blippy little recession. And we had to overcome it because China became stimulative. Now, here we are again, we're worried about this inflationary boogie man and the Chinese government basically extended these tax cuts, increased the tax cuts, and essentially said we're going to be very stimulative in the economy, especially through the back half of the year.

Now China again is a massively export-driven economy, right? So the reality is that as goes China, so goes the rest of our economies. And so I think that it's a setup where how can the United States be under so much inflationary pressure? We're China is effectively telling you that we are in a contraction and a recessionary period. And so if that's where China is, there's a risk that we may already be there or entering that. And so I think it's a little, you know, you hit two really important points, Jama. Number one, which we didn't get too earlier. I tweeted a few weeks ago, the feds probably behind the curve on recession, not inflation. Right. We have massive demand destruction going on right now on the US economy.

Massive. The producer of price. To find what that means, Brad. To find what that means. So I mean, if you just think about what a $6 gas mean, what does no Stimichex mean? What is the fact that you actually have to go and get a job again mean? We're rolling back trillions of dollars

off the Fed balance sheet. I'll tell you what it means is that people can't spend as much money. Just the increase in the 30 year mortgage means you're buying power in December four months ago to buy a house and if you could afford $1,200 a month that buying power but you had $350,000 house. Today it buys you a $295,000 house.

People's ability to have money, to spend money is getting crushed. So I think we are going to face an economic slowdown. If you look at the PMI, so this was the inflation read in January. Little people didn't really notice it. PMI in January came in at .2 versus the consensus estimate of .6. That means the producer level of inflation was meaningfully less than we expected. If you look at consumer confidence, it's plummeted. One of the four biggest drawdowns over the last 20 years. Retail sales in the UK this morning crashing. Consumer confidence in the UK

crashing. The Chinese government sees this. We're not surprising. Look at what's going on in the world with energy prices. We've never had oil over 120 bucks and not gone into a recession. We're facing a global slowdown. That will have big implications for inflation, big implications for rates. But China sees this coming and says, we're going to get ahead of this. We've got a people's Congress in November. We've promised them five and a half percent GDP growth. Three trillion of that is export driven. That means if Europe and the United States catches a cold, they catch the flu, okay?

So they have to do everything in their power. This is why they're not going to supply the Russians with weapons, right? Because it's economically assassinating themselves, Right. So we have this interconnected world, this idea that we're de-globalizing what we do doesn't impact anybody else like that ship is sailed a long time ago. And the Chinese see this, that's why I think there's also a probability by the middleist this summer, the Fed in the United States is saying we now see a balance risk between growth

and inflation. Zach, let's get you in on this, just as we wrap here. The Chinese Communist Party premier talked about tax costs, and this is a quote, fertilizer applied directly to the roots of the economy. Tax rebates look like reductions, but actually are an addition. Today, you give back tomorrow, you get more in returns. Does this mean the United States people will go back and get jobs because they need to have more money and that maybe we should be looking at tax cuts at some point?

Listen, Jake, I think we got big problems here at home in the United States, Brad and Chimath, they've laid out these gigantic economic risks that are facing the country. I tweeted at the beginning of the year, January 24th, the president's main job is to ensure peace and prosperity. And Biden's popularity was already plummeting. I think this is one of his poll numbers, we're at 38%. But if he gets us into war and recession, he ain't seen nothing yet. This war, the longer it drags on, the longer it,

basically can spin out of control and become something worse that sucks us in. The longer it creates the risk of basically causing recession in the United States, we need the American, we need the, the, the, the Biden administration to help try and lead to a better outcome here instead of ratcheting up the rhetoric. All right, folks, there you have it. That's your all-in podcast for this week. Thanks so much to Brad

Kersner for joining us and filling in for the Sultan of Science. BG, thanks, bro. And a lot of great announcements here. Brad will also be joining us for the all-in summit. We're about to wrap up tickets. We've announced a bunch of great speakers for the event. May 15, 16, and 17 in Miami. You can just do a search for the all in summit. We have given out, we've sent 200 emails to people who ask for scholarships and a hundred of them have taken the tickets.

500 of the 650 tickets or so are accounted for. We'll be wrapping up registration in the next week or two. And we look forward to seeing you all at the New World Symphony in South Beach. You got any announcements of people? Who else is appearing? Oh my Lord, we have great announcements. Kees Verbois coming, Jolansdale is coming,

Nate Silver is coming. Nate Silver, I love Nate Silver. Well, we decided, Chimath, we would have people do 15 to 20 minute Ted style talks, like position papers. And so, who else do we have doing that? Tim Urban of Wait, but why? is a brilliant tech speaker and writer, Nate Silver is going to do that. And then Antonio is coming. He was just on, and he was just on a Rogan show. And so we're going to have these like 20 minute kind of hits. Then the best he's will sit

with them. We'll do those back to back. Kimball Musk is going to come and talk about his dow that he's doing for nonprofits, Brad. We're going to talk about what topic. So we're collecting all this talent, and then we'll figure out what positions they're going to play in the show and what the themes will be. But the themes will match what we've been talking about here. And we don't want to pre-set the themes six or seven weeks out from the event because we don't know what the world will look like then. And then Freberg said he wanted to do a position paper and actually give it 20 minute talk. So, Bessies will have that ability.

And Bessies will start the event and end the event. Tons of different speakers rotating in and out, talking about the most important topics of our time. But I would like to have Peter there. Can you get Peter to come? He's a piece of the most iconoclastic, please. He's a iconoclastic. I'm just not, I have to get over my uncertainty

that this whole conference thing is really a grift. It's not a grift. We're putting all the money is going back into the event. And we gave 200 scholarships. There would be no profit from the event. Okay, so you see me a really nice swag bag and I think it was already at $600 a person. I just spent three or four hundred thousand

on the bag. What is the material of the hoodie? All right. If... It's got to be a cashmere hoodie if that's six hundred dollars. Otherwise it's a lot of... You need to be able to buy up to the special hoodie. Brad, I just spent $600,000 per gift bag for 600 gift bags.

Okay, it's like four hundred grand in gift bags. And Jamoth wants to put a $6,000 sweater in there. I just wanted to know what the material was of the hoodie in the bag. That's all I'm just asking about. This is my life, Brad. I am busting my ass to put this event on and then Chimath's complaining about the gift bag,

sacks is complaining on me making a dollar from it and freeberg's having a panic attack that we don't have enough great speakers. And I'm doing all the work. That's my whole fucking life. I appreciate you, J.K. I know you did say some nice stuff to me. You just say some nice stuff to me.

I appreciate that. I've never wanted you to be on board with you getting a fee for your hard work. You know, I don't need the fee. You're like an hourly wage, you know, $15 an hour or so. No, I'm not your wage slave, David Sacks. I'm working hard here. I appreciate you, man. I'm working hard, but I just want to be appreciated.

I don't think you should have like a cotton blend. Is mine. I think it's same. I think it's mine. But don't, by the way, Brad, do you have any thoughts on the sushi? Should we be using brown rice and not the lime clout tuna? No, just make sure there's gold leaf on the sushi. No, literally we're spending, I think,

300 or 400,000 per party. It's over a million dollars in parties and I'm talking to talent bookers about serious talent coming to perform. Drake, can you get Drake? How about duality? That's $3 million, dual depot, two million dollars. I'm duality business.

I'm duality business. That's one of the branches I got. What is that? What is that? How much is dogecat? She's great. I think those are all seven figures. I would like to, anyway, what I'm trying to find. That would be a worthwhile use of the money.

I'll be a worthy use of, I mean, that would make it an incredible part of it. Oh God, I mean, I really would like to get, but sorry, how much is Drake again? Two million dollars. I heard two to three million for Drake. I heard three million for Drake. I'm going to get Drake.

Yeah, yeah, yeah, yeah, yeah. Can I have some of the bags? I don't know, give it all to Drake. So you guys are saying, I should be a friend. I should be a friend. And all the work I do, I should take two million dollars and hand it to fucking Drake. So you guys are saying I should be my guess and all the work I do I should take two million dollars and hand it to fucking Drake. Yes. Yes. Drake is more rival than you. 25 years of working on events and media Brad and these are my friends where like take the two million. No

but you can put in your pocket and finally make a profit on your work and just hand two million in a bag We don't need the bag Playing guys can't get a plane I'm turning a jack card. Do we get to work with Drake on which songs he's he would sing? I think he does like a medley of like three what I would like to do is have three songs for two Come on. I think it's basically like a hundred thousand a minute. I think that's what you're in for a hundred thousand permit just twenty minutes He was egregious. No, I mean these guys get paid bank when I hired snoop He did like 20 songs for me. I mean it was unbelievable

He did like it to a two or three hour show Sad as he forgot he was there. Yeah, he had a great time. Oh my god, man He was blowing this joint that was so powerful that I was 10 feet away and I got stoned. It mean it was like I remember. He walked in. It was like I'm out. It was like 20 Super Bowl shows. Good stuff. All right everybody. Love you besties. Love you Brad. Please. We're like your winners right. We're like your winners ride Rainman David

We open source it to the fans and they've just got crazy Besties are gone, go thrifted. This is my dog taking it away. She's driving away. She's excited. Oh man, my hamlet has your witty ass with it. We should all just get a room and just have one big hug. Because they're all just like this sexual tension that we just need to release that house. What your B. What your B.

B. What? We need to get merch I'm going on leave I'm going on leave