All-In with Chamath, Jason, Sacks & Friedberg - Hurricane fallout, AlphaFold, Google breakup, Trump surge, VC giveback, TikTok survey

Starting point is 00:00:00 Alright, everybody, welcome back to the number one science, politics, technology and business podcast in the world for five years running. We're about to hit our fourth anniversary here, Episode 200 is coming up. And a bunch of lunatic fans are getting together, you can join them all in.com slash meetups. Holy cow, we got the domain name all in. Fantastic. Go to all in.com slash meetups and hey, subscribe to our YouTube channel. We're going to do some sort of crazy event for the

Starting point is 00:00:32 million subscriber party. We're like 300,000 way gentlemen. This is nuts. Huh? You imagine this thing made it to 200 episodes. We have all in.com. How much do we spend on this? This is great. I negotiated it. I got it. It took me two years and I got a sick deal on it. I don't even want to say because I, you know, I don't want to change it, but don't say, I'll just say you believe it out. I got it for more so. And that's a million dollar domain. Just so we all know. Five letters in the dictionary. So good for branding.

Starting point is 00:01:06 Good job, Jaycon. Thank you, my friend. Yeah, now we have allin.com slash tequila. Ooh, I love it. Exactly, exactly. And you can yum yum. I got you sax.com, didn't I? You have the domain name sax.com.

Starting point is 00:01:17 Yeah, yeah, yeah. I need to go share that for you. Wow, we have all the way back to episode one. This is incredible. Oh, the new website? Yeah, this is great. Oh, can I tell you, if I may, all in.com all in.com. That's our website. It's like this thing is real. Yeah, it's like a real thing. After four years, we got our

Starting point is 00:01:35 together. This looks great. Here we go. And I want to give a shout out to podcast AI, one of our remember those fake all in episodes that became a startup podcast AI and they built our website for us or shout out to the team over there. All right, ladies, let's move on. And I am of course, your executive producer for life and some moderate podcast. And if I may just a tiny plug. If you're a founder, we are having our ninth cohort of Foundry University. It's a 12 week course I teach on starting

Starting point is 00:02:04 companies. What are you doing? What is this? Stop, stop. I'm just giving a quick plug for Founder University. I need to get a plug in because I want to be found. Go to Arrow One and buy Supergut bars, $3.99. You can pick them up this afternoon. I'm going all in. And it said, we open source it to the fans and they've just gone crazy with it.

Starting point is 00:02:30 Love you, essence. Queen of Kin Wands. I'm going all in. Speaking of that, your people use me in an ad, Breedberg, so don't talk about plugs. A few weeks ago when I shouted out that Glue AI was hiring engineers, we had like a hundred applications just from that. From Glue AI looking for engineers, we had like a hundred applications just from that. From Glue AI looking for engineers? From one plug on the show, yeah.

Starting point is 00:02:49 For Glue AI? Yeah. Right. That's awesome for Glue AI. And if you haven't tried SuperGut, Freeberg's team literally made an advertisement with me talking about SuperGut and didn't tell me. And we're still hiring, so. Okay, well, there you have it.

Starting point is 00:03:03 So go to founder.university to apply for my 12-week program. And check out GROCK. So okay, well, they have it. So go to founder dot university to apply for my 12 week program. I'm running a GoFundMe. Yeah, go to GoFundMe. For what? More Xanax to deal with your panic attacks. Alright, let's get started. Enough of the shenanigans. hurricane season is upon us as free Berg have predicted Hurricane Milton made land fall on Wednesday evening along the west coast of Florida, as many of you know. It's been downgraded.

Starting point is 00:03:33 It started as a category five potentially than a category three and then it looks like it's a category one now. So I guess these things are quite random. Leading up to Milton, those 6 million Floridians across 15 counties were ordered to evacuate that's a lot of people moving out and it was a pretty powerful storm it ripped off the roof of the Tropicana field in Tampa so far the death toll is at four but it's expected to rise sadly and just two weeks ago hurricane Helene swept through six southern states, killing over 220 people tragically, devastating western North Carolina and entire towns were wiped

Starting point is 00:04:13 out. These are also beyond the tragic human losses are economically staggering in terms of the losses. AccuWeather estimating the total economic damage could be between $145 and $160 billion from Helen and Moody estimates the property damage alone could be as high as $26 billion. Tons to get into here. FEMA, Starlink saving the day, tons of stuff. But Freeberg, back on episode 182, you predicted this would happen. What's causing all this? And let's just start with the science angle, I guess, before we get into the other political and insurance issues.

Starting point is 00:04:49 Well, I think if you'll remember when we talked about this a couple months ago, the sea surface temperature was at kind of a record high in the Atlantic. And warm ocean temperatures drive moist air up that evaporates. The warmer the air, the warmer the air, the faster the evaporation and that starts to cause the movement of the air, which drives ultimately the hurricane and then the hurricane sucks up more warm moist air from the ocean and it creates a feedback loop. So the more energy you

Starting point is 00:05:18 have in the ocean, the more likely you are to accelerate wind forces in storms. And that's why you get these massive hurricanes that suddenly form seemingly overnight and go, like in the case of Helene, that hurricane went from a cap two to a cap four or cap five in like 48 hours because of the energy that's stored up. And 90%, here's an interesting stat,

Starting point is 00:05:41 90% of the energy that we get from the sun is absorbed and stored in our oceans. The other kind of fact that's playing into this if you pull up that science that nature article and this is something that I think you guys may remember we talked about. So this was an article that came out a paper science paper that came out a couple of months ago and in this paper the scientists identified that removing sulfur dioxide from cargo ships that travel across the oceans is actually causing accelerated warming in the oceans. And the reason is that the sulfur

Starting point is 00:06:14 dioxide forms cloud formations as they travel across the oceans. And those cloud formations reflect sunlight. And in the absence of those cloud formations, that sunlight makes its way into the ocean, and you get more ocean warming. And by their estimation, removing sulfur dioxide, which causes acid rain, and that's the reason it's been pushed to be removed, and they started removing it in 2020, 2021 from cargo vessels,

Starting point is 00:06:42 by removing sulfur dioxide, we are now going to see a doubling of the rate of warming of the oceans in the 2020s and going forward. Let me pause there for a second, just to make sure people understand what you're saying. Emissions from cargo ships block sunlight, which then of course reduces the heat absorbed by the oceans. And so we're now choosing between pollution of the air or overheating of the oceans. And so we're now choosing between pollution

Starting point is 00:07:08 of the air or overheating of the oceans. Am I correct in summarizing that? That's roughly it. And, um. What is the pollution again? Sorry, I just saw it. It's emissions. It's sulfur dioxide. Sulfur dioxide.

Starting point is 00:07:18 Yeah. That goes into the fuel of cargo vessels. And a couple of years ago, they started to implement these mandates that sulfur dioxide no longer be used in the fuel. As a result, when sulfur dioxide is emitted from these vessels, it goes into the atmosphere. And it actually triggers cloud formation. So now you have these clouds that are forming and Nick's going to pull up this image right now. Yeah, here you can see that. So all of these tracks are these cargo vessels moving across

Starting point is 00:07:45 the ocean. And as they move across the ocean, they create cloud cover that cover actually reduces the warming in the ocean because it reflects sunlight. So now that sunlight energy gets absorbed into the ocean. So this is another driving force that some people are now speculating, maybe accelerating the warming of the oceans that we're seeing, which drives this extreme storm and hurricane events. And so this becomes a more frequent event. Now, a lot of people also- So sorry, can I ask you a question?

Starting point is 00:08:11 Does that mean that we're mean reverting? Meaning, if we improve the quality of the fuel source that are used in shipping, doesn't that then mean that we're reverting back to what would have happened in the absence of these dirty fuel sources? Yeah, so in addition- No, no, I'm asking you the question. Is that true or not?

Starting point is 00:08:34 So yes, we are no longer reflecting as much sunlight. And so for several decades- We had bad fuel sources. We had artificial cooling, effectively. We had an artificial cooling, and now we take, but that's counter to the narrative of what we all think is happening. Oh, well, the argument is that we've actually been warming the atmosphere, which we have been.

Starting point is 00:08:53 We can see the data that shows that everywhere, all over the earth, not just about sunlight coming in on the oceans and not just ocean warming, but the atmosphere is warming, the planet is warming. And so this is by blocking the sunlight above the oceans, we were artificially dampening that effect and we were reducing the amount of heat energy that was getting into the oceans. So now by taking that away, we're seeing the heat energy in the oceans accelerate.

Starting point is 00:09:18 And now the oceans are getting much, much warmer. Right. Much faster. So the pollution was good. Turns out it was good. That's the paradox here. Is that it was creating. That's the paradox here. Yeah.

Starting point is 00:09:25 Is that it was creating a blocker for sunlight. And to your point Chamath, exactly. Like, shouldn't we just be going back to what was normal, but at the same time, in the same system, we had heated things up. So this is a multifactored system that we're dealing with, Friedberg. And I guess the takeaway from all of this is that we gotta be really careful with what we do with the environment, right?

Starting point is 00:09:47 Well, I mean, let's talk about economics, right? So how much real estate do you guys think is on the Florida coastline? What's the real estate value? Sorry, Friedberg, can you just anchor this? Was it that it was supposed to be a category five and now it's a category three when it hit land? Right, so what happens typically when storms hit land is they no longer have that hot ocean

Starting point is 00:10:07 pumping energy back into the storm that keeps the feedback loop going. So the storm cycle starts to break down. All hurricanes when they hit land, they start to break apart. And so the category which measures the wind speed actually reduces. This is just a natural thing that happens. But this was a category five hurricane when it made landfall, I believe it was category four. So, you know, it was a massive hurricane as an approach. We should not dismiss it because my understanding was Helene was cat four when it like hit North Carolina. But I read yesterday that- What happened with Helene was it was- That Milton is cat three when it hit Tampa or something. Is that not right? Yeah. So that's right. But what happened when Helene hit North Carolina, it was not a cat four.

Starting point is 00:10:52 What happened is as that storm moved inland, it hit the mountains. And the first mountains it hit are on Western North Carolina. That area is elevated. There's mountains there. So when a heavy hot storm runs into cold mountains, all the moisture dumps out. It's like it runs into it, and suddenly everything precipitates out of that storm. And that's why some parts of Western North Carolina got like 18, some people measured as high as 30 inches

Starting point is 00:11:18 of rainfall in a couple of hours. So this insane dumping happens when that hot air hits a cold region and suddenly everything, all that warm moisture precipitates out and dumps to the ground. So it ran into a mountain. It's effectively why everything fell out in North Carolina. Oh, wait. So you're saying that it wasn't Democrats who basically...

Starting point is 00:11:36 Right. I blame Putin. Putin or Kamala. Who did it, Sax? I thought Nancy Pelosi cast a spell or something. Well, isn't there a lot of geoengineering conspiracy theories going on in your cohort? I mean, what's your-

Starting point is 00:11:51 I don't think so. But Vinod wants us to be very clear that we need to stop all this disinformation that somehow Democrats are behind that storm. Well, there are a lot of- So we can assure everyone that it was just precipitation. There's a lot of theory online that there's a ton of late geoengineering being run by government agencies to drive these storms. Yeah, I don't think people aren't taking that seriously.

Starting point is 00:12:11 Well, I mean, the origin of this though, Freeberg, is people have done experiments for decades on trying to control the weather or alter the weather and they're doing that in the Middle East by seeding clouds and creating more rain. We saw that with the Dubai floods, you know, alter the weather. And they're doing that in the Middle East by seeding clouds and creating more rain. We saw that with the Dubai floods, they said that that might have been caused by over seeding of clouds, which they're doing there. And then there have been experiments, just to, you know, for the crazy laser people conspiracy theorists, theorists on x, there actually have been experiments with lasers, you

Starting point is 00:12:42 know, being shot into hurricanes and storms, correct? Are you Alex Jones? Is that what we're doing? Well, no, we're not saying Alex Jones, I'm just saying that's the origin of where people are kind of building on this. There have been the amount. Okay, so let's just talk about the hurricane, the amount of seeing it out for you to debunk is what I'm doing here. Yeah, putting particulates in clouds to accelerate precipitation is I mean, we've done that for 100 years. You know, you can increase the precipitation rate when there's already clouds that have formed.

Starting point is 00:13:12 But that has nothing to do with creating 200 mile an hour wind speed. That requires an extraordinary amount of energy. All of this energy, the oceans are like giant batteries. And when a hurricane gets going, that battery is accelerating the hurricane and the hurricane sucks up more power from the battery. And it creates this incredibly dynamical system, there is no human created energy system that can force form a

Starting point is 00:13:35 hurricane. A hurricane is an extraordinarily powerful natural phenomenon that arises from the amount of energy that can come out of very, very, very hot oceans, relatively speaking. So you know, that's really where these hurricanes are coming from. Now they're going to be more frequent if the ocean temperatures remain elevated as they seem to be, and continue to be elevated. And this can be a function of generally, the temperatures warming on Earth, generally the removal of sulfur dioxide, generally these

Starting point is 00:14:00 El Nino La Nina cycles. There's a lot of factors, but it seems to be the case that we are having a very significant trend of continuously warmer oceans. And those continuously warmer oceans means that we're going to have what used to be called a one in 500 year storm, which is what Asheville is being turned at one in 500 year, these sorts of storm events can happen every couple years. And we're now looking at one in hundred year events happening every two to three years in the United States

Starting point is 00:14:26 with the the hurricane activity that we've been seeing. I think a lot of the conspiracy theories are built on actual experiments that happen this one project storm fury I'm sure you know about was to try to modify hurricanes by putting in some chemicals that would freeze them and dull them. So they're kind of building on it. Yeah, breaking apart. So, you know, there have been experiments here with altering weather, altering hurricanes, but that doesn't mean it's Putin, Pelosi, or, you know, the Illuminati. Okay, so let's get back to brass

Starting point is 00:14:58 tax. So let's talk about the economics. So there's 500 billion to a trillion dollars of real estate value on the Florida coastline. And what used to be a one in a hundred year event, the average Florida homeowner historically has been paying about 1% of the real estate value in insurance. So now if your real estate is likely to be wiped out one out of every 20 years, instead of one out of every 500 years, the cost of insurance gets to the point that it is untenable for most people to pay for their insurance. Florida has a state-backed reinsurance provider called the Florida Hurricane Catastrophe Fund. And this fund issues debt to meet its coverage demands

Starting point is 00:15:35 because it reinsures insurance companies in order to incentivize them to come into the state and underwrite homeowners insurance. You should explain the loop here, which is you go and get a mortgage. The bank says you need to get insurance if I'm going to lend you the money to buy the home. So then a bunch of insurers need to decide that they're willing to underwrite

Starting point is 00:15:55 that area. And then when they give you that insurance, they then want to lay that risk off and go to re-insure. Is that the cycle? That's right. And what's happening is they would normally underwrite that risk. They would say, this is going to cost, you're going to lose the value of your home every hundred years or every 200 years. But now the models are showing because of the frequency of these sorts of hurricane events and the severity of the hurricane events, that maybe you'll

Starting point is 00:16:19 lose the value of your home once every 20 years or once every 30 years. And no consumer is going to be willing or able to pay that much for the insurance on their home. So the state over the last several years has had to step in and effectively subsidize the insurance and now the state reinsurance vehicle only has statutory liability maximum of $17 billion in a single hurricane season. Now I think they got lucky with Milton today, but some were estimating that the Milton losses were going to be in excess of 100 billion,

Starting point is 00:16:50 bigger than Katrina. It's likely as of this morning, the reinsurance websites are all saying it's probably a 40 to $50 billion loss event, which still exceeds the state's reinsurance capacity. So you can kind of think about Florida state's reinsurance thing being effectively bankrupt, it doesn't really have the capacity to underwrite the insurance anymore. So the real question for everyone is, is the federal government going to have to step in and start to support the price of homes? Because if they don't, it's a terrible precedent to set. Because if you do it for Florida, then you'll

Starting point is 00:17:21 have to do it in Texas and Louisiana and California with wildfires, Arizona, California and Arizona and Texas. There's gonna be no way to create a clear demarcation of who gets a bailout and who doesn't. Which will mean that everybody will get a bailout or nobody gets a bailout. That's right. And if everybody gets a bailout,

Starting point is 00:17:39 and if you think about how systematically unpredictable, at least in the Southern States, the weather is, you're gonna be talking hundreds of billions of dollars a year, probably. The total value of all mortgages and homeowner mortgages in Florida is $454 billion. And those people typically have a debt to equity ratio, probably on the 50 to 80% range.

Starting point is 00:18:00 So if the value of your home dips by 25%, because everyone starts selling their homes, leaving Florida, or they can't get insurance, then the people that live in Florida, most of them have their net worth tied up in their home, are gonna see their personal net worth wiped out or cut in half. So it's not just an economic problem,

Starting point is 00:18:16 it's a social problem that now there are so many people that have put their entire net worth into their home and the value of their home is written to a point that it no longer makes sense given the frequency at which homes are going to get destroyed. That's probably the reason why they'll have to do it because they'll, but then that calculation will have to happen for every single homeowner in every single state at where

Starting point is 00:18:36 this is a, this is an issue. Yeah. Wait, Freebear, are you saying the entire Florida coastline is no longer economically viable? No, it's totally viable. It's just the question is, what are you willing to- At what price? At what price?

Starting point is 00:18:48 Will you pay 5% of your home value for insurance every year? You know, will you pay 2%, 3%? If the expected life of a house is 20 years, then that's not viable. It becomes very, very untenable. Well, it used to be one in 500 year, now it's probably one in 15, right? But my question is, does this apply to the entire coastline

Starting point is 00:19:06 or just parts of it? Well, I mean, you saw that the range at which these events can happen is all over the place. And the, and the challenge is the events are getting more significant because of this warm ocean weather that we see, this warm ocean temperature. So we're going to see more of this.

Starting point is 00:19:21 And the only good news is that now people are building the first couple of floors in high rises in Miami, and homes on stilts with concrete, and with resistant, you know, saltwater resistant material. So there is a counter to this. So we might be looking at investment in climate resilience. That's right. Yeah, so it might actually be an opportunity to upgrade all these homes to resistant ones using another set of technologies. But the bailout is

Starting point is 00:19:46 really interesting to sacks because Florence got a lot of electoral college votes doesn't it like I hate to bring this back to politics. But you know, promising people bailouts is how these politicians seem to be getting votes these days. But is anyone talking about a federal bailout? Is mean, is that, this is something you're predicting. I think what Freebrick is saying is that there's a pretty obvious parade of parables here where the question will have to be answered one way or the other.

Starting point is 00:20:14 Because if you only have a $17 billion re-insurance fund and there's 50 billion of damage, somebody's gonna have to come in and cover the gap. And if it's the insurance companies, expect your insurance premiums to double or triple. That's right. And that's what happened in California. And by the way, State Farm left a lot of California. And most of the-

Starting point is 00:20:32 This is what I was going to say. Most of these big insurance companies have already done the calculus to realize that these regions are no longer profitable enough to justify the downside risk. 100%. That's the bigger problem. So then the ones that are left are insolvent reinsurers or insurers that are just funding short-term ARBs because they know that

Starting point is 00:20:51 the odds are they're going to get wiped out. So they'll price gouge effectively. So, you know, a different example is that here where I live in Menlo Park, we're not in a floodplain, we're not in a fire region, none of that stuff. But in order for us to get home insurance, you have to now go through a risk assessment. And in our specific case, we were like, hey, what should we do with our roof? And they were like, you gotta take the roof off if you want home insurance.

Starting point is 00:21:16 We're like, well, home insurance is probably a good thing to have. Was it a wood shake roof on your house? You saw our house, it's a beautiful wood shake roof and we had to remove it. And the two choices were a $350,000 like iron roof. Composite materials, yeah. Or like 70K for composite.

Starting point is 00:21:32 And it's like, this is insane. And the cost of insurance was just egregious in the absence of going in one. Anyways, we ended up getting the. For most homeowners, when the cost of insurance gets to a certain threshold, you don't have budget for it. You can't afford it.

Starting point is 00:21:47 And so that's a lot of why the insurers leave. They'll underwrite anything at any price, but they just know that most consumers can't afford it. Here's some other interesting statistics, related but unrelated. In the early 1900s, the city of Phoenix, Arizona, averaged five days a year of temperatures of 110 degrees or warmer. By the 2010s, Phoenix averaged during the 2010s, 27 days a year where the temperature was 110 or higher. Since 2021, Phoenix averaged- 100 plus days.

Starting point is 00:22:15 42 days. And in 2024, it's been 70 days so far this year that the temperature is over 110. So this is affecting, and so there's increased risks in California with wildfires, increased risk with hurricane. There are a lot of these factors and I have friends that work in reinsurance and in the insurance markets. Even if you don't get affected by a wildfire or disaster when that that article was in the Wall Street Journal I think it said that the number of average days above a hundred was like a hundred something. Yes. And the profile they profile this retired woman who is an insurance adjuster or something. And the whole point of the article was not that her house was destroyed or at risk,

Starting point is 00:22:53 but the cost of electricity has gone just absolutely sky high. Yeah. Even with solar panels, even with storage, you need to basically lean on the grid. And the grid now just charges you an exorbitant amount of money. And so these folks were paying thousands of dollars a year. So if you imagine the trifecta, you have all of this climate risk

Starting point is 00:23:15 that could destroy your home. You're paying an enormous premium for home insurance, and then you're paying an enormous premium for electricity from the mainline power utilities. It's not sustainable. Yeah. And just for background, FEMA manages something called the NFIP, National Flood Insurance

Starting point is 00:23:33 Plan. And it's historically about 50% cheaper than private flood insurance. They have 4.7 million active policies providing 1.3 trillion in coverage. But they instituted a new risk assessment system and that caused rates to increase and yeah, it's because of all this, the policies have decreased over the last couple years, meaning less people have flood insurance at the same time that these things are getting worse. And so yeah, this is a really tough issue. I wonder if this is an opportunity to ma if you think about historically how insurance worked, it worked in communities where people would help each other out to

Starting point is 00:24:17 barn raising kind of events when somebody had a problem. So if we just put on our entrepreneurial hats here, if you look at the cost of insurance, if I hundred different people bundled the cost of their homes together, put money into some sort of platform, like an Uber Airbnb marketplace, and there was some management structure here of self insurance, because I know some people are doing self insurance for healthcare at their companies for this kind of thing. Do you think there's going to be a new business opportunity here?

Starting point is 00:24:46 Well, that's called a mutual. And those are like a good chunk of the industry are mutuals where it's the shareholders are the members and they all share the risk and the ownership. Those things work because you have broad geographic coverage. If you had to go just into Malibu and self-insure, the rates would literally be greater than the value of the home. Right. No one would pay into it. So if you do proper underwriting, what's happened in the last couple of years is all the reinsurance companies and all the insurance companies have had to re underwrite the rates that they charge for insurance because the frequency

Starting point is 00:25:18 of a disaster has gone up. And the new price that they should be charging is so high. It doesn't matter how the capital structure is set up. It's simply, there's one big event that's going to cause a big wipeout for a large number. My personal belief is I think that the real estate markets in some of these places are meaningfully mispriced. And specifically what I mean is that they're massively overpriced. That's right. Because I think when you actually account for the climate damage and the long-term financial stability of the insurers and the reinsurers, I don't think that many of the markets that

Starting point is 00:25:57 have seen these crazy sky-high prices, I'll name two to be specific, West Palm Beach and Malibu, so both ends of the coasts. These things just don't make sense. And I think people view these things as investments, but on the West Coast, when you deal with things like soil erosion and other things, I think it's a calamity waiting to happen. And I think on the East Coast,

Starting point is 00:26:20 when you factor in the extreme weather conditions, even Jason, your comment about rebuilding these homes in a more foolproof way doesn't solve it because you won't be able to rebuild the entire state. There's a lot of people that just can't afford it. There's a lot of folks that will not have adequate coverage. So I just think these are disasters waiting to happen, unfortunately. Yeah, it's a, and sax, there's a movement right now. A lot of people even of means are renting their homes. And so in the real estate market, what are your thoughts on that? Just renting versus buying now becoming like something that, you know,

Starting point is 00:27:01 people in the in the top half of homeowners or potential homeowners are now electing to not own their home and rent. Have you been monitoring that? I hadn't heard that. I mean, the trend that I thought was happening was that you had these big funds like BlackRock, whatever, buying up huge numbers of homes and then running them to low end homes, you know, low end or medium, you know, to families, I thought that's what was going on. I hadn't heard that at the high end of the range that people were running.

Starting point is 00:27:30 Well, if you think about it, like there's, there seems to be a tap when you have a $10 million home of what you can possibly rent it for. And it's, it's the the prices are now making more sense to keep more sense to keep your money in the market, or in other places and then rent. I'm just hearing that over and over again. Are you long real estate in Florida or coastal California if you could,

Starting point is 00:27:51 or do you treat them differently? I think they're different, but Florida is like, I mean, I don't know how you do the math on, I just don't know what you do on a trillion dollars of real estate value with half a trillion of mortgages When you have real exposure on loss more frequently than one in a hundred years there to your point They need to be repriced and how do you reprice those homes in the significant level that they need to be repriced without causing? Massive economic and social consequence. That's what's that's what's kind of think, challenging me in thinking about what's the path here.

Starting point is 00:28:26 So is it a good thing that I sold my Miami place? Once again, Sax makes a great trade. Pretty awesome. I top ticked it. Well done, Sax. You top ticked it again. Well done, Saxie. Just like, beep, beep.

Starting point is 00:28:40 I really love, I love that house. Oh. It's on the finish lines. You love that house? Where do you think I stayed when I. Oh, it's on the Miami. You love that house. Where do you think I stayed when I was in town? You're so selfish. I lost the, I lost a place to stay. I mean, the yacht access alone, being able to get out on the bay and get on a boat,

Starting point is 00:28:56 the ski do's all this great stuff. All right. Let's keep the free bird train going here. Huge news. Alpha Fo creators just won a Nobel Prize in chemistry. Two members of Google's DeepMind AI research team, Demis Hasabis and John jumper received this year's Nobel Prize in chemistry. They both work for Google's DeepMind as you know, and free Berg again, all calling getting their first explained what alpha fold was back on Episode 14. In December of 2020. That was almost four years ago. Freeberg, maybe you could explain

Starting point is 00:29:34 did we did we predict that they would win the Nobel Prize at the time? Believe you did. I will go check the receipts using search and it was it became it became much more likely that they would win the Nobel after they won the breakthrough prize. I mean, just to, just to point this out, but. Yeah. Shout out Yuri Milman. Shout out Yuri and Julia.

Starting point is 00:29:51 And Julia. Because when those guys won that award for 2023, and you, you heard the extent of what they've done, it was almost like obvious that they were going to win a Nobel after the fact. So I think the really interesting thing is actually in this community, I think the breakthrough prize

Starting point is 00:30:13 is actually meaningfully more relevant and a positive directional indicator to breakthrough science. Well, it's kind of like winning Sundance or Ken, you win the palm door, you become a favorite to win at the Oscars, right? In the Academy Awards. So that's actually interesting. The regional or more industry centric award could lead to the next one. So, Freiburg, just explain to us why this is so important.

Starting point is 00:30:35 I just think it's much more rigorous than the Nobel. I think the Nobel can be a little bit game, I think. Oh, interesting. Okay. What do you think, Freiburg? Explain to the audience why this is important and what's transpired since we talked about four years ago? There's been a long challenge in biochemistry on understanding or predicting or visualizing the three dimensional structure of proteins because remember proteins are produced by long

Starting point is 00:31:04 chains of amino acids. And those amino acids are kind of create like a bead beaded necklace. And then the whole necklace collapses on itself in a very specific way. And that three dimensional molecule, that big chunky protein does something structurally physically. And so trying to understand the shape of a protein is really hard. I mean, we've used kind of X-ray imaging systems to try and identify it and try to build models to identify how does that quote protein folding work? How do those amino acids collapse on each other to create that three dimensional construct? And if I don't know if you guys remember in the early 2000s, there was a Stanford folding

Starting point is 00:31:40 at home distributed computing project. Do you guys remember this? Yeah, it would use people's machines and extra CPU Like the SETI at Home Project to precisely yeah, do this exactly right? Yeah, so it's like it ran on the background of your computer It used your CPU cycles when you weren't using your computer and it tried to model protein folding And so this has been a problem that folks have tried to tackle with compute for decades to figure out the 3D structure. This is so important because if we can identify the 3D structure of proteins, and we can predict them from the

Starting point is 00:32:10 amino acid sequence, we can print out a sequence of amino acids to make a protein that does a specific thing for us. And that unlocks this ability for humans to create biomolecules that can do everything from binding cancer to breaking apart pollutants and plastics to, you know, creating entirely new molecules to running in some cases, like what David Baker did at University of Washington, he shared the Nobel Prize, creating micro motors, mini motors from proteins that he designed on a computer. And so this becomes, I think, this great big holy grail in biochemistry. And the Alpha Fold project at DeepMind inside of Google

Starting point is 00:32:48 solved this problem. And by the way, since then, they've come out with Alpha Fold 3. They've launched a drug discovery company called Isomorphic Labs, where they're basically predicting molecules that will do specific things for a target indication. And then they use the Alpha fold models to actually design and develop

Starting point is 00:33:06 those molecules. And there have been literally dozens of companies that have been started since DeepMind was published, and probably several billion dollars of capital that's gone into companies that are creating new drugs, creating new industrial biotech applications using this protein modeling capability that was unleashed with DeepMind a number of years ago. So it really has transformed the industry.

Starting point is 00:33:27 It'll be a couple of years before we see it transform the world, but it's an exciting kind of thing. Not to virtue signal here, but those are plus size proteins now, Freeberg. They don't like being called chunky and called plus size proteins. Plus size proteins. Yes.

Starting point is 00:33:41 One really difficult technical question for you, Freeberg, Is there any way for you to take this amazing breakthrough and make sax interested in? Is there any possible vector here for it to relate to sax and get him off his BlackBerry right now? BlackBerry. I think he's playing chess with Teal and JD Vance is watching them play chess. I think that's what's going on right now. It's really hard. I mean, the poor audience here is watching Sacks looking down. All right, let's keep this train moving here. Enough of the shenanigans. Anyway, congrats to the teams, the very team that won the No. 1.

Starting point is 00:34:16 Yeah. I mean, it's just great. And David Baker at the Baker Lab in University of Washington. And David Baker. Also a breakthrough prize winner. Yeah. What's interesting to me is like these two Nobel's, these guys, but also Jeffrey Hinton's, you know, you're really seeing now

Starting point is 00:34:32 the convergence of the hard sciences and computer science. Totally. In a really meaningful way. And I think that that's so interesting and cool. I think in the group chat, Chamath, you had an interesting, hey, maybe there should be a computer science award for, you know, a Nobel computer science award. And I actually think it's the opposite now, which is that it's amazing to see folks using computers to improve our understanding of the natural sciences. And I think that that's a really great place to be. So what Demis and John and David are doing in the life science is amazing. What Jeffrey Hinton, you know, did, you know, 30 and 40 years ago and 20 years ago in terms of training deep neural nets, also really amazing.

Starting point is 00:35:16 In related news. All computer based. Yeah, all computer based. And in related news, Benioff just nominated himself for excellence in CRM management. So congratulations to Benioff on nominating himself for a Nobel. What is that comment? It's just a stray. Why are you attacking Benioff? It's just a stray. The audience loves- What did he do wrong? It's just a joke. It's a joke. They're just jokes. Have you not learned anything from our audience? We're not going to attack the people that attacked you. It's not an attack. It's a joke. Benioff has done so much for philanthropy.

Starting point is 00:35:46 Just ask him. If you... Oh my God. Dude, he's doing the best he can. He's doing a great job. This is how I got drunk with Parvovac. What are you doing? Exactly.

Starting point is 00:35:55 Can you people have a sense of humor about yourselves? No, but it's not even funny if you had said something else. I mean, okay, give me a funnier, nobel. Go ahead. Benioff runs a 300 billion marketnier Nobel. Go ahead. Go ahead. Peniel runs a 300 billion market cap. Yeah, he's chomping at the bit to come back on the pod and explain why AI is not gonna disrupt SaaS. Really?

Starting point is 00:36:13 Oh, we see he wants to be back on the box. He's texting me, he wants to come on. We'll check in in $100 billion. Dude. I mean. He had his chance. That chance is closed. He shot his shot and it did not land.

Starting point is 00:36:27 That door was closed when he insulted our guests about not being able to afford the Disney course. When he called the all in people, boars. Oh my God. Now you're piling on. Anybody coming to Dreamforce 2025? Okay, let's move on. Anyways, leave Benny off alone, G.

Starting point is 00:36:39 It's like, leave Brittany alone, that famous meme. Leave Benny off alone. It's like, leave Britney alone. That famous meme, leave Benny off alone. How many new enemies do you want to create? Just jokes, people. Just jokes. This is when you thought he was running out of feuds, you know? I'm not in the mood with anybody.

Starting point is 00:37:01 I'm making stupid jokes. The reason people tune in is because you laugh and learn. Did you guys see that, that tweet that, uh, somebody suggested throwing a conference with all of J Cal's haters? Jason con. Jake, jaders, jaders convention. What is it called? Jaders.

Starting point is 00:37:22 Jaders. Yeah. J haters. Yeah. Jason haters. Jaders. Yeah. I'd like to shout out my jaders.aders? Jaders, yeah. Jaders. Yeah, Jason haters. Jaders, yeah. I'd like to shout out my Jaders. They're just jokes, folks.

Starting point is 00:37:30 I love you, Mark. I'm pending off. Come on the pod, Zach. I think somebody could launch a successful summit just doing that. It's like a ready-made audience. And they're clearly passionate. They're clearly passionate. All the YC founders will be there.

Starting point is 00:37:46 Keynote day one, Palmer Lucky. Keynote day two, David Sacks. I think it would rival the All-In Summit in terms of the passion of the fans. All three of us would show up, Jake Hell would be so devastated. Keynote one. Are you kidding me?

Starting point is 00:38:02 I think it's hilarious. I would have to key a gram. Oh, Betty. I like Betty off. I don't know. I'm trying to make it for Betty off. He's just going to have a sense of humor. Oh my gosh. Megan Kelly. Megan Kelly and Farmer Lucky. Wait, does that Kate you too?

Starting point is 00:38:18 Why does that? Oh my God. J Cal was so I was brutal to Zuck in the early. Yeah. Why? Anyway, we'll get to it later. hate you? Oh my God, J Cal was just so. I was brutal to Zuck in the early days. Brutal, yeah. Why? Well he just, anyway, we'll get to it later. But you're right, like, you know,

Starting point is 00:38:30 throwing a conference for J haters would just be, that's like a ready made. Jaters, Jaters. That is an underserved and passionate demographic. It would be bigger than Ted. Passionate demographic, just look at Zach's replies. Community with shared values. Hey man, if I can get 25% of those tickets sells, I'm in.

Starting point is 00:38:47 Let's go. All right. Let's keep the train moving here. We have an update on the DOJ's antitrust suit with Google. Looks like they're going for the breakup as Chamath predicted. You remember the Bloomberg report back in August, we covered in Episode 192. Google is found liable for maintaining a monopoly in search and digital ads. Now the DOJ is working on the remedy, right? Okay, they're guilty. So now

Starting point is 00:39:16 comes time for the remedy. And the DOJ is quote is from Bloomberg, considering asking a federal judge to force Google to sell off parts of its business. And according to this filing, the DOJ is specifically considering structural remedies that would prevent Google from using products such as Chrome, Google Play, that's the App Store on Android, and Android itself, to advantage Google search 32 page document released by the DOJ lays out several options and we'll go through them and talk about them here. The obvious

Starting point is 00:39:50 one terminating Google's exclusive agreements with hardware companies like Apple, the default search engine there for 30 or 40 billion a year. Samsung, that's a layup. Separating Chrome and Android, my God, that would be drastic ripping that out of the Google ecosystem, prohibiting certain kinds of data tracking, that's a layup as well, or other behavioral and structural changes for the company. I'm going to pause there, Friedberg, and get your thoughts on this as a former Googler and you interviewed Sergey at the summit, but I

Starting point is 00:40:20 don't think we talked to Sergey about this, because obviously, he would not be able to talk about it. So what are your thoughts here on a potential remedy? I think we've talked about this. I mean, look, I've shared in the past my belief that companies that are big, that have excess capital, that then invest that excess capital in R&D can be a net benefit for all of us. Look at Bell Labs.

Starting point is 00:40:43 Bell Labs had a monopoly on through their association with AT&T with developing radar microwave, the transistor integrated circuitry, information theory, everything that is the basis of the internet computing, even nuclear technology, and so on. It's because they had this extraordinary capital flow from the scale of the business and they were able to invest in R&D. Similarly, Google acquired and invested for many, many years in DeepMind. And we just talked about how Demison team won the Nobel Prize for the work that they

Starting point is 00:41:19 did. And they, by the way, published the protein structure for 200 million proteins for free out of that service. I just want to zoom out for a minute and talk about the fact that this isn't about, you know, whether Google has a monopoly in search that prohibits competition or in ads that prohibits competition, but is it really worth penalizing any company that's big? Particularly do we lose the benefit of those big companies investing in technology that pushes us forward?

Starting point is 00:41:49 Google also invested in Waymo for years and years and years, which arguably spurned and drove investment from many other companies in self-driving technology. And if Google hadn't done that, would self-driving have taken off the way it did? I don't know. Same with Kitty Hawk and Larry's investment in the Evie tolls. And that that spawned a lot of Evie toll investing. And

Starting point is 00:42:09 similarly, if you think about Amazon and their investment in AWS, where they were burning cash for many years, that turned out to spawn arguably a lot of interest and investment in cloud. And so I don't think that these big companies are bad just because they're big, I think we should take apart the monopolistic antitrust actions and behaviors that they take and then identify ways to remedy those behaviors Versus just saying anyone or anything that's big should be taken apart Because there is a tremendous benefit to be gained from the R&D dollars that they all put into

Starting point is 00:42:40 Things that you know move the whole industry forward And I think that leadership's important to need it. Otherwise, if you got a bunch of startups that are trying to get $10 million checks from VC is I'm not sure they're going to build a Waymo and I'm not sure they're going to build Amazon cloud. And I'm not sure they're going to build a deep mind, you know, protein folding company and publish it for free. So I don't know, that's just my point of view. What's the likely outcome? We should think about this stuff. Chamath, you kind of know this one. Pretty good with these predictions. Tell us we'll be sitting here five years from now what will have occurred. Unfortunately, not what free bird just said. It'll be the

Starting point is 00:43:17 opposite. There'll be some form of forced remedy. I'm sympathetic to free birds argument. I don't think that it's really a good thing in the end, because I do think there are some incredible examples of Google specifically reinvesting in a way that's really added value in the world. I think the problem though is that the technology innovation cycle has gotten too elongated. So you're not seeing creative destruction be the natural

Starting point is 00:43:48 force that keeps all of these companies in their own swim lanes. And so they are allowed to become too amorphous and too profitable. And I think it becomes an obvious target for politicians. I think that's a really good observation there about the timeline of this, because if you look at this, I have started now, and I know many people are starting their search journey on Claude and chat

Starting point is 00:44:17 GPT every day. I'm doing 30, 40, 50 queries and followups per day. I forced my entire team to do that as well. And so just as there's an actual viable competitor to Google, this action has reached, I don't know, the halfway mark. This is going to wind up being completely meaningless, Sachs, if chat GPT does build a viable competitor coexistor that siphons off search. Am I wrong here? competitor co-exister that siphons off search. Am I wrong here? Well, it is ironic that frequently the government takes actions on these monopolies at precisely the moment they're subject to the greatest disruption. Totally. The same thing happened with Microsoft in a way, but it was still a

Starting point is 00:44:59 good thing that the government acted when it did because there was a risk of Microsoft porting over its desktop monopoly into this new era of the internet. I think it's still a good thing to be looking at breaking up Google. I actually think that would be good. At the end of the day, it might even be good for shareholders. This thing should be probably three separate companies like we've talked about on our previous show. But it is true that Google is facing the most existential threat to its search monopoly, and it is a monopoly in the form of open AI at this point in time. I have one final thought here, a piece of advice for Sergey and the team over there.

Starting point is 00:45:34 And when I told Sergey directly, they have to get good at making apps to go use chat, GPT, you take out the app and it's a wonderful, beautiful experience. When you go try to figure out how to use Gemini, it's like shoehorned into search results. And then it's like some sub domain. That's why people aren't using it. Go by the domain in chat.com and make a dedicated app just for Gemini. You're 100% right. Kick ass. You're 100% right. You suck at apps.

Starting point is 00:46:02 We said this when when you asked about the bear case of open AI. If the DOJ is gonna go after Google, and by the way, the interesting thing, Jason and I mentioned this to you, is that in the same article that floated the trial balloon about this remedy of a Google breakup, the headline in the Wall Street Journal, which I think was very purposeful, said Google and Meta. So I think that they, if given their druthers, they being the powers that

Starting point is 00:46:30 be at Washington, will probably want to take a run at both of these companies. They'll start with the one that they think they can disassemble the quickest, and then they'll go to Metta afterwards. My strong advice to Metta and Google is if this is going to happen, you got to go out kicking and punching and fighting and scratching. And I think the most obvious thing is what you just said, Jason, which is you are the front door through the internet you are the front door through the internet. And there is this completely new emerging technology. And where is the same response to chat GPT that you had to X or that you had to Snapchat or that you had to TikTok?

Starting point is 00:47:18 Because if it's gonna happen, it's gonna happen. And then you might as well just go for it. Build the apps, make them kick ass, make the chat GPT alternative and get it to billions of people yesterday. That would be the most logical game theory thing to do, to build up a pool of users that you will rely on when the DOJ tries to come with some consent decree or whatnot. So this is the time to build up the assets now as aggressively as possible. Yeah. And selling YouTube would be

Starting point is 00:47:54 the ultimate. I know that the ad networks you've pointed out, Freeburg are connected, but if they distribute in, they spun out YouTube. I'll give you something about the ad thing. Can you imagine $500 billion going into Google's offers in YouTube shares? They would have $500 billion in cash, Chamath. I had a, I talked to a company, a CEO of a public consumer facing company, and this was in the context of some 80, 90 stuff. And he said that he and two other CEOs, the three of them, you guys would all know, these are very big companies, the three of them,

Starting point is 00:48:32 combined are particularly large. And they said they've had multi-year roadmaps to try to build a reasonable set of tools in advertising and it's been impossible. And partly why is that the tools that the big folks offer are so good that they just cannibalize and run over the entire market. And so what they hear from CMOs is we would love to advertise on your company, your site, but A, your tools are sub standard and B, even though your inventory is cheaper, you just don't give us the same scale

Starting point is 00:49:04 and breadth that we get in these other big places. I'm not saying that that's either right or wrong, but through the lens of probably what the DOJ sees is when a lot of these folks write letters to them talking about what they're going through, this is what they're saying. And I suspect that if you could actually have a more fragmented market in some of these key markets, it's going to be a little bit easier for these smaller companies to have a business. Now, you could say, well, tough luck, you tried and you couldn't build it.

Starting point is 00:49:34 I get that argument. And I think that at some point that is legitimate. But the problem is if you're public and you're trying to make your company profitable, what do your engineers want to work on? They want to work on consumer facing forward features. And so what always falls off the list, it's the stuff at the end, the attack. And so anyways, it's this recursive negative loop that a lot of these other companies are

Starting point is 00:49:54 in, in the shadow of these big companies that I think is going to cause the DOJ to try to do something. You know, this is a great setup for M&A. It's great setup for IPOs starting to look like and this is a great setup for M&A. It's a great setup for IPOs, starting to look like, and this is a multi-administration case that's been going, right? I think this started under Trump, went into Biden, and is now gonna continue on to Trump or Harris. So what are your thoughts here, Sax?

Starting point is 00:50:19 Well, in terms of the political environment for M&A next year? Yeah. Yeah, I mean, so obviously it depends which administration's in power. A lot of Democrats, prominent Democrats in tech like Mark Cuban or Reid Hoffman have been making the case that if Kamala is president,

Starting point is 00:50:34 she's gonna be much more hospitable and friendly towards M&A and they've been saying explicitly that they want Lena Khan fired. Well, in response to that, AOC just came out and said, we're gonna have a throwdown if you do that. So I don't, I would not expect a substantial difference or improvement in the, in the regulatory permissiveness towards M&A. If, if we have a democratic administration, if that, if you have Trump in office next year, I think that there will be an opening up of M&A. I think the Republicans have their own issues with big tech,

Starting point is 00:51:12 but those issues tend to revolve around censorship and bias and search results and LLMs, things like that, as opposed to bigness per se. So I think it will be easier to get M&A done next year if you have a Republican administration. Absolutely. I am going to be printing money in a Trump administration. It is going to be obscene how many M&A deals and IPOs are going to occur. There is such a huge backlog. But I do think the Democrats want to get this moving as well. And I was talking to Reid Hoffman want to get this moving as well. And I was talking to Reid Hoffman, and you and Peter Thiel in the Illuminati meeting, and they voted 190 to two to replace Lena Conn in the Illuminati meeting. Chamath, why didn't you make the Illuminati meeting last week? I'm shocked that you weren't there. I'm not invited to that. People don't know that you're being facetious, Jason. Oh,

Starting point is 00:52:00 really? They don't understand that I'm joking about the Illuminati. They often don't. Oh, really, they don't understand that I'm joking about the Illuminati. They often don't. Well, I'm sorry to the low IQ listeners who don't know that the Illuminati is not real. Oh, now you're insulting the audience? No, I'm insulting the ones who believe there's an Illuminati. He's trying to sell tickets to the Jaders ball. With Buck Nasty, Zuck Nasty. Jane Cowell is the biggest hater in the tech industry.

Starting point is 00:52:28 You ever see the hater's ball, Sax? I've not seen that. Chappell-cha? No. Chamath, it looks like between the time we mentioned it on the pod, it's actually happening. Here it is, the Jader's ball is happening. There it is.

Starting point is 00:52:41 Lena Cahn, David Sax. Why am I there? Well, because you're a headliner. You're organizing. I think you're the host. I'm the, okay, wow. I'm the MC. There look, there's, there's Zuck Nasty and there's Palmer Lucky. You guys don't know this bit from Chappelle? The haters ball from Chappelle. Oh my God. It's the funniest bit on Chappelle's show. It's literally.

Starting point is 00:52:56 I mean, I saw a lot of Chappelle's show. I don't remember. Oh God. Just show the real part. I mean, I saw a lot of Chappelle's show. I don't remember. I don't remember. I don't remember.

Starting point is 00:53:04 I don't remember. I don't remember. I don't remember. I don't remember. It's the funniest bit on Chappelle show. It's literally, I mean, I saw a lot of Chappelle show. I don't remember. Just show the real picture, Nick. Um, on the Chappelle show, they have all of these pimps who have a yearly convention, which is their player haters. I've seen this. I've seen it. All they do is sit there with like a toothpick in and they hate on each other and make fun of each other. I've seen this. this is the funniest bit in the history of the Chappelle show. All right,

Starting point is 00:53:29 let's keep the train moving here. CRV is giving back or maybe not calling down 275 million from their LPs Charles River Ventures shout out to my pal George Zachary and Greek brother from CRV. Historically, they invest in early stage startups, they did door dash air table Twitter back in the day. They had two funds that they raised back in 2022 billion dollar early stage fund and a 500 million growth fund. Sometimes people call that an opportunity fund or a select fund. The New York Times reported CRV is going to give back about half

Starting point is 00:54:00 of that $275 million to investors or technically probably not call it down before partners at CRV gave an exclusive to the New York Times. So either getting ahead of this story or maybe, you know, who knows what the motivation here is. But the reason they gave is that the market conditions for late stage have worsened dramatically, and that the valuations are still too high. Yes, the rent is too high. And that there aren't any exit options, as we just talked about, with the administration, no IPOs, no M&A. And that VC map doesn't work in the late stage. So I'll just stop there. There's a bunch of other notes here. Obviously, this isn't the

Starting point is 00:54:37 first time this has happened. I think founders fund cut the size of its eighth fund in half from 1.8 billion to 900 million. They didn't actually give the capital back to VCs like they're saying CRV did here again, not certain if that's what's happened or not. They put the extra 900 million into its ninth fund if they decide to raise that which I'm assuming founders fund will charm up you have any thoughts on this? I I guess we had two stories here. So I don't know if Peter Thiel did this and he gave back

Starting point is 00:55:05 quite a large piece of his fund a couple of years ago and then CRV just did it. I want to make sure I get the citation right. I think it was Thomas Lafont at Cotu who said this. It was really powerful. It made a huge impression on me, which is that the NASDAQ creates about $800 billion of enterprise value a year. And he brought that up in the context of private markets have to exceed that in order for it to be a real viable alternative to just owning public indices. And so if you factor in illiquidity risk and the duration, you have to probably generate, I don't know, a trillion, $1.2 trillion of enterprise value in private tech every year.

Starting point is 00:55:48 That just seems like it's really hard to do. Where is all of that value getting created? So I think that venture needs to go through a phase where it re-rationalizes. You know, this is sort of what I said at David's LP Day, which is, I think that LPs have made a couple of very big mistakes. And I think the biggest mistake that they've made is by smearing too much

Starting point is 00:56:10 money across too many general partners. And I think if you had to redo it, A, it's probably a lot less money in total. But B, and the example I gave there was instead of giving $50 million to Kraft and $10 million to somebody else, you're better off giving $60 million to craft and not even having that other GP. Because that GP makes everybody's life complicated. They overpay, they mispay, they're probably not supposed to be a GP in the first place. And so they force returns down. And then when you contrast that again to a public market that is systematically creating $800 billion of enterprise value a year,

Starting point is 00:56:49 this is an incredibly tough game and it's getting much, much harder. So I think that if you just take a step back, these are the right things to do because you're much better off having a smaller pool of capital that you can concentrate into the things that matter. You're probably better off having smaller teams versus bigger teams. And you're probably better off trying to forge LP relationships where they're not doing 50 fund investments because it just makes the entire industry lag, public liquid alternatives. And I think that that's just not good. Peanut butter getting spread a little bit then there any thoughts,

Starting point is 00:57:26 Freiburg on this trend, if we can call it that it or is this like maybe they're reacting right as the market is changing and valuations are getting more reasonable and the exit opportunities are getting more reasonable. It seems like this was the right reaction two years ago, but maybe it's the wrong reaction. Now, what do you think, free bird? For venture firm to return capital, they need to have at least one or two big winners. And so if that winner needs to be a 10x or 20x or 30x of the fund, because most of the investments in the fund are not going to work, you need to be able to enter at a reasonable price, and there needs to be enough opportunity relative to the capital trying to invest in

Starting point is 00:58:10 that opportunity out there for to make sense. So in a market where there is excess venture capital, where valuations are at a premium, and where you don't see the exit path, the M&A or the IPO events that makes sense that you can actually realize that model, you should take less capital and make fewer sure investments. And I think that that's what some folks have realized they don't want to be chasing, you know, highly valued inflated opportunities. And they don't want to be putting capital into tier B, or tier C

Starting point is 00:58:43 opportunities, just for the sake of deploying capital. This is a really interesting moment where you can kind of see who are the right folks in terms of thinking long term in Silicon Valley long term in terms of building an investment practice and private venture. And maybe who are folks that are trying to build their AUM stack and folks who have done reasonably well, like founders fund has probably the most exceptional track record in Silicon Valley as a venture firm. They are very cognizant of the market conditions. And I think that they're being very smart. By the way, the other

Starting point is 00:59:15 thing I've heard from LPs is they're similarly trying to find more concentrated capital themselves. So they're trying to put more capital to work in fewer managers. And so there's a real weed from the shaft moment happening in Silicon Valley venture right now. What I think a couple years ago was, hey, everyone's going to go do a startup. A few years ago became everyone's going to go do a venture fund. And now I think the froth that has occurred because of that is being cleared

Starting point is 00:59:41 up. And to just explain this math before I get sexes, thoughts on this, if this was a $500 million fund, let's say they were putting $25 million into each, we'll take management fees out of it $25 million into each opportunity at a billion dollar valuation, they would own two and a half percent, obviously of those firms, they need to get probably a $30 billion power law exit, a 30 X X in order to just return the fund.

Starting point is 01:00:09 There'll be some dilution obviously along the way. That's why it's not 20 X and the number of companies that go from a billion to 30 billion per cycle is incredibly low. Uber, Coinbase, Airbnb. It's a really short list, huh? Sachs in recent history. Robin Hood. Yeah, I mean, look, just to go back to the CRV thing, you said at the outset of the conversation that this was either a growth fund or an opportunities fund.

Starting point is 01:00:35 That makes a really big difference. Explain, please. Because, well, an opportunities fund typically exists to back up your winners. In other words, if the venture fund is producing some big winners, the opportunities fund exists to deploy more capital into those companies, as opposed to a growth fund, which is you'd be underwriting brand new companies from scratch. Typically, an opportunities fund is limited to companies that you're ready an

Starting point is 01:01:02 investor in through your venture fund. So that makes a big difference. I mean, if CRV has a billion dollar venture fund and only a $500 million Opportunities Fund, it may just be the case that they don't need all of that capital to back up the winners. They can do their prorata's out of the main fund. So I suspect that that might be what's going on. I actually think this is a pretty good time to have a growth fund. A lot of the... Why? Well, because a lot of the crossover capital has left the ecosystem. Okay. A few years ago. The Tigers and that sort of cohort, SoftBank, Masayoshi-san. Yeah. Well, Tiger and SoftBank are still around, but there are other very large investors, hedge funds, and so on, who had come into the ecosystem

Starting point is 01:01:45 with billions of dollars a few years ago, and now they've left. And some of those funds that you're talking about, like Tiger used to be $10 billion funds, now they're $2 billion funds. So- Right, they've been right sized, they're not violently doing,

Starting point is 01:01:55 I mean, the Tiger deal is my understanding was they weren't joining the board in a lot of the cases and they were outsourcing the diligence and that was a pretty violent pace. I don't know what I'm doing now. Yeah, this is the best time in probably five years to have a growth fund. Interesting. But to your point about the size of the venture fund, the bigger the venture fund,

Starting point is 01:02:11 the bigger the winner that you need to make that pay off obviously. Yes. And so because of the power loss or to take an example, I don't know, let's say you've got a billion dollar venture fund. Let's say that at IPO, you own 10% of whatever that winner is. And because of the power law, your fund performance is really determined by your best outcome, right? So in order to take a $1 billion venture fund and say deliver a 3X, so $3 billion of returns,

Starting point is 01:02:42 and your best company you own 10% of that implies you have a $30 billion winner in that fund. And there are precious few outcomes where you have a $30 billion IPO, right? Yeah, I mean, it doesn't happen very often on two hands the last cycle, like I just did, you got you got Uber, you got Robin Hood, you got Coinbase, Stripe will eventually come out, you got SpaceX. Well, got Coinbase. Strike will eventually come out. You got SpaceX. Well, that was two cycles ago. So I mean-

Starting point is 01:03:09 Yeah. You're going to need to have a meaningful ownership position and a massive company in order to make a fund that big payoff. The data that I think LPs look at shows that smaller venture funds tend to perform better for this reason. 500, 600 million dollar funds. So yeah, I personally wouldn't want the pressure of a billion dollar venture fund.

Starting point is 01:03:28 That would be really hard. As a five or 600 billion dollar venture fund, you kinda need to have or wanna have like a dekakorn outcome to make that a great fund. But to have to have a 30 billion dollar plus outcome, it's even more difficult. Moving on, Pew just published some really interesting research on TikTok.

Starting point is 01:03:48 If you don't know the Pew study, they've been doing it for decades. It's very well respected. And bipartisan or nonpartisan, four in 10 US adults aged 18 to 29 are now regularly getting their news from TikTok. Here's some charts for you to take a look at. As you can see,

Starting point is 01:04:05 the younger generation is really spending a lot of time on tick tock and getting a lot of their news there. I know this because, yeah, I've talked to a bunch of kids about this. And people that use tick tock 52% are regularly getting their news from the platform. And that number has skyrocketed compared to other social platforms. Take a look at this chart. Here's X 59% of people say they get their news at X. It's really a news platform. So that makes total sense. You look at Facebook, it's you know, 48% right now, Reddit 33%, YouTube 37% in 2024, Instagram 40%, but TikTok 52 up from 22%. So it's no longer just dancing. And this is the reason I think many people

Starting point is 01:04:48 in the government were concerned about the attack vector that the CCP would have in the United States since they still control the company for services like Snapchat, LinkedIn, and WhatsApp, and Nextdoor, it's below 20, below 30% get their news from their their shirt truth social their sex 57% of people get news there and rumble 48%. So what's your takeaway from from this just sex? Looking at it in this impact that tik tok has is this concerning on a national security level

Starting point is 01:05:20 since the algorithms a black box and you could tweak it if you really wanted to to really change sentiment and young people are obviously very impressionable on this platform and they're big users of it. Well, I thought there was other data in this study that should calm people's fears that TikTok would somehow be used as a political weapon. So in the same survey, you're talking about 95% of adults that use TikTok say they use it because it's entertaining. So that's the main reason people use it. And only 10% of accounts followed by US adults

Starting point is 01:05:53 post content related to political or social issues. Okay, that's posting and the main reason, right? Yeah, but so basically 90% of the accounts that get followed aren't even posting political or social issues. They're there for entertainment as people watching dance videos, as people watching. I mean, the main thing I use it for is to watch wrestling highlights. So you're a wrestling guy? Yeah, I'm a wrestling fan.

Starting point is 01:06:21 What? Yeah. You're into this Kabuki theater of wrestling? This is new information. K-Fave. I get my WWE on TikTok. You do? Yeah.

Starting point is 01:06:33 Who's your favorite? Are you a Hulk Hogan guy? Are you an Undertaker guy? Vince McMahon? I mean, Jimmy Superfly Snuka. Who, you Andre the Giant? The crazy thing is I know all those names, but. I also love the Road Warriors. Ultimate. I loved, I was a huge wrestling

Starting point is 01:06:46 fan. That was the one thing that my dad and I bonded over. We would watch wrestling every Saturday. Sax, did you ever watch the, the specials on Saturday night? Like the, oh, yeah. Oh, those are so that was the era of Hulk Hogan for sure. Saturday night's main event. Randy Madison, Savage. Savage is great. Savage. Yeah. event. Randy Macho Man, Savage. Savage is great. I mean, look, my all time favorite

Starting point is 01:07:09 was Stone Cold Steve Austin. Stone Cold is great. I marked out the hardest for Austin. He was anti-Wolk before anti-Wolk became a thing. Totally. This is crazy. You guys are into wrestling. And Flair.

Starting point is 01:07:22 I'd say Flair is number two for me. Wait, wait, hold on. Have you gone to a wrestling event in person, Zacks? Did you only like the WWF at the time or did you like the NWA? The other moments. When Hogan turned heel and joined the, was it the NWO?

Starting point is 01:07:39 That was like a big moment. I'm a big Andy Kaufman wrestling fan. That was my only interest is when Andy Kaufman came in there and, uh, trolled them. But have you been? Yeah. That was like in the 1970s, wasn't it? Or it was the late eighties. Remember he was on David Letterman with Jerry Waller and he, he comes to a wrestling match sacks in the South. And he gets in there. I grew up in my hometown of Memphis.

Starting point is 01:08:06 Right, so he goes there and he gets in the ring and he says, all of you rednecks, I wanna show you some new inventions. This is called soap and this is called a washcloth and you use it to clean yourself. And he's like just mocking the Southern accent and Jerry Lala, remember Jerry Lala smacks him and on Letterman. Oh, it's the great. It was a huge deal. I mean, where I grew

Starting point is 01:08:31 up because that this was like on the local news. Yes. When I grew up in Memphis, there was no professional sports teams. Okay, all we had was the Memphis State basketball and, and wrestling every Monday night, the Mid-S south Coliseum. That was it. That was like professional sports in Memphis. You also had probably like some state fairs or you know, like best goats, best sheep or something. Lawler was so popular that he could have been elected mayor. In fact,

Starting point is 01:08:59 I think there was talk at one point of him becoming mayor. I mean the intergender champion, Andy Kaufman. Did you, uh, did you guys like mouth of the South? Jimmy Hart? Oh yeah, of him becoming mayor. Wow. I mean, the intergender champion, Andy Kaufman. Did you guys like mouth of the South? Jimmy Hart. Oh yeah, of course. Yeah. He was amazing. He was like the main heel manager for a while.

Starting point is 01:09:14 Yeah. Okay. This is before the WWE took over, I guess it was called WWF back then, but there were all these little fiefdoms and kingdoms and mid-south wrestling was like one of those kingdoms And Lawler was like the king of it. And then you had all these guys come in and out and wrestle. Friedberg, you ever watch wrestling? And what do you think of this tik tok survey?

Starting point is 01:09:34 I don't watch wrestling. Okay, very good. And tik tok survey. Anything? Where are you now? Any thoughts? Looks like they gathered some reasonable data. Okay, there you go. There's your hard hitting hack. My point was that it's mostly an entertainment app where people go to watch dance videos, wrestling clips, style influencers and so on.

Starting point is 01:09:53 And I think that this idea that it's somehow a propaganda tool around, you know, programming our youth, I think that's a moral panic that's been exaggerated. What do you think the odds are that TikTok is hacked to allow you to passively listen even when the app is not being used? Zero. You think it's definitively zero?

Starting point is 01:10:13 No, like 5%. I think that's very unlikely. 5%? Yeah, because someone said that that was, that was a, there was some code that enabled that in the early version of the app and then some other people audited it and they said they did not find evidence that there was some code that enabled that in the early version of the app. And then some other people audited it. And they said they did not find evidence

Starting point is 01:10:28 that there was any technology. And Apple's got a very good audit system for this. Did those same people audit WhatsApp? And then it turned out that it was telegram. Did they passively listen? Yeah. Does WhatsApp passively listen? Yeah, it's one of the most well-known breaches. Well, maybe they do.

Starting point is 01:10:43 Maybe it's 100% certain that the CCP is using it because they, these people have tracked already journalists using it. So if they've already done it, it's a hundred percent. Now I don't know about the passive listening, but any thoughts on 50% plus of young people getting their news here? Chamath, any news on that?

Starting point is 01:10:58 I mean, obviously we don't have evidence that it's being used currently to manipulate people, but it's over 50% of young people are now getting their news there or say they're getting their news there., but it's over 50% of young people are now getting their news there, or say they're getting their news there. I bet more than 50% of young people are getting their news from podcasts, and those podcasts get chopped up and clipped,

Starting point is 01:11:12 and then people watch them on TikTok. Yeah, for sure. I bet that's how it's happening. There are a lot of people who think this show is a TikTok show, and they don't know it's a big show. We'll have to prepare for a brave new world in the following way. There was an article, I think it was in the Wall Street Journal, that said that Russia and Iran were paying low level street criminals to create chaos. Okay. And I read that article and I thought,

Starting point is 01:11:39 okay, well, what does this mean if you actually extrapolate this, which is that the hot wars are very complicated, not worth doing. These disruptive fissures are the better way to sow chaos. And it occurred to me then that tying this back to something that we saw before, it does make sense for a lot of folks to sponsor a lot of long tail content that say a lot of different things. I think that

Starting point is 01:12:06 that just is pretty obvious. And so I think that if you put these two ideas together, it stands to reason that a lot of people will be paying influencers a lot of money to create all kinds of content that is specific to a perspective that they have. And then on top of that, if you can algorithmically amplify one over the other, you're going to have issues. Is it the biggest issue in the world?

Starting point is 01:12:32 Probably not. But it's probably a thing. It probably wouldn't swing an election, but it would cause chaos. And we just had the Southern District of New York target that Russian. Russia today was giving $10 million to four podcasters, they didn't even

Starting point is 01:12:47 know they were getting paid by the Russians, they just picked them because they liked their opinions. And they gave them 100 thousand an episode to promote pro Russian positions. If the Russians were actually doing it, it's the stupidest use of $10 million ever. Because great, those podcasters already had their own channels they're already putting out lots of content and this other content is a drop in the bucket i think jamath the issue with what you're saying is just there is so much content out there already people create

Starting point is 01:13:14 it for free people create it you know because they're they have a career in it there's a whole long tail of influencers there is so much content out there already through podcasts, through websites, it's all being chopped up, that trying to do it as some sort of disinformation strategy, I think is very hard to do because it's just when there's billions and billions of impressions, any effort that you try to engineer ends up just being a drop in the bucket. I agree. So yeah, it's definitely a drop in the bucket. It makes sense in theory, but yeah, it makes sense a drop in the bucket, but that's not the goal.

Starting point is 01:13:45 It makes sense in theory. It's very hard to do in practice. Yeah, the goal is not to win any specific argument. It's to create mistrust in the entire news ecosystem, in the information system so that people give up trying to figure out what the truth is. And that's what the Russians and the KGB- I think the mainstream media is doing that on their own. Yeah, you could argue that. The mainstream media lies so much. That's what's creating the truth is. And that's what the Russians and the KGB is doing that on their own. Yeah, I mean, media lies creating the

Starting point is 01:14:06 distrust. As are the Russians paying off podcasters. Okay, let's give sacks. How is $10 million going to accomplish anything if that story is even true? Oh, very simple question. Great question. May I answer it? It's a great question. Conspiracy theory.

Starting point is 01:14:20 Not a conspiracy theory at all. These were very low level mid like, you know, tier B, CD, podcasters, if you give them $100,000 per episode, they can spend more money buying cameras, promoting their shows, hiring people. So you're just finding people and dropping money on their head so they can do more of the same. So it's a very smart strategy. In fact, I think, I think it's the stupidest thing I've ever heard that they took podcasters who are already successful and paid them to release

Starting point is 01:14:46 Content through a less watched channel. That's the yes It was it was just more about getting the money to produce more content and then they in the these guys are These guys are already live streaming like 24-7. Oh, there's your puppy. Oh, here he goes Freeberg trying to win more people over with this puppy love unbelievable, this guy is absolutely ridiculous. Unbelievable alright listen let me get some red meat here he got he got his little steak tart with my russia today story that you little amuse bouche and now i give you your tomahawk you ready to want your tomahawk you want it rare here it comes. your tomahawk you ready sacks want your tomahawk you want it rare here it comes. Twenty twenty four election update the betting markets and polling indicate a really tight race but

Starting point is 01:15:38 maybe trump is surging this week polymarket which is a betting market has trump 55 to 45 versus kamala kaal she another betting market fifty two forty eight trump. another betting market 5248 trump. Nevada and points bet those are offshore booking and poly market is also offshore. 5248 trump nate silver friend of the pod. His algorithm has it 5347. Kamala real clear polling. That's an algorithm has Kamala with a two point lead. New York Times Sienna, Kamala with a three point lead Reuters, Ipso, pretty well trusted, three point lead for Kamala NPR PBS Marist poll has Kamala with a two point lead. So sport books and betting markets are favoring Trump slightly while the polls are slightly favoring Kamala

Starting point is 01:16:21 sacks. I sliced it up nice for you. You got nice 10 slices of meat here. Which slice you going for? Well, I think your recitation of the polls there kind of mixes up a couple of things. There's popular vote polls, and then there's electoral college, which goes here by state. If you look at pretty much now all the main pollsters,

Starting point is 01:16:41 you look at Tony Fabrizio, you look at Real Clear Politics, they're now showing that Trump is winning the Electoral College right now he is up in almost every swing state, including I think, Michigan, which is pretty surprising. Clearly, there's been a huge swing towards Trump over the last week or two. And look, there's still 25 days to go. So anything can happen. I don't want to overstate this. But

Starting point is 01:17:02 yeah, this is a good example right here showing that Trump now has a lead in every sense. I think the electoral college is 296 to 242. What is Fabricio? He's just a Republican pollster, but his accuracy is pretty high. I've never heard of Fabricio. Well, another guy who I think is more neutral

Starting point is 01:17:18 is Mark Halprin, who is a pundit, who has been very accurate this election cycle. Remember, he's the one who broke the scoop that Biden would be replaced by Harris. And he even said exactly when it would happen. And he predicted it down to the day. He was exactly right about that. And if you follow his account, he is now saying that both Republican and Democrat insiders that he talks to are both saying the same thing, which is

Starting point is 01:17:45 their internals are now showing Trump ahead in every swing state or almost every swing state. And things seem to be breaking Trump's way right now. Again, there's 25 days left. But if you're wondering why is Harris all of a sudden doing interviews, it's because their internals started showing that she was in trouble. So they decided to get her out more. Or is it the other way?

Starting point is 01:18:07 Is it that her Howard Stern interviews or whatever are causing her to lose votes? Well, yeah, exactly. Well, so, you know, which one is it? Do you think because I don't know when I don't have the dates of all these polls versus that. No, I think it's what I predicted a couple of months ago. It's the doom loop. So what I said two months ago is that if Harris gets behind, she's gonna have to abandon this sort of basement strategy

Starting point is 01:18:28 of not doing interviews, she's gonna have to start doing interviews. The problem is she's not good at interviews, and if she does more interviews, she's gonna fall further behind in the polls, and it could cause a doom loop. So that's where we appear to be right now. I said that on August 30th.

Starting point is 01:18:41 Okay. Chamath, you're on that? I think that Donald Trump has basically stuck to his strategy, which is he is a generational retail politician. I just heard parts of what he did with Andrew Schultz, another great sort of, you know, podcast. I think David's right that the editing and the massaging of the Kamala Harris talking points

Starting point is 01:19:10 are galvanizing the people that have already decided and turning off the people that have already decided to vote for Trump, and she's losing the folks in the middle. And so this is what's causing her to have to be out there. And she's gonna have to deliver a very crisp message. And I think that right now it's been a little bit lacking, which is why you're seeing the polls, at least the electoral college, which is really what matters at this point, turn Trump. So she's going to have a bit of an uphill fight between here and November. The other thing I'll say is that if you've seen what's happening in the appellate court, it's not clear whether the

Starting point is 01:19:49 Trump case is going to get overturned before the election. But if that does, that could be very meaningful momentum for him. And then I think the third thing is that we should now buckle in because if the last two elections are any guide, there are going to be a bunch of spanners in the works between now and November. Wait, what did you say? Spanners? Spanners in the works. Yeah. What does it mean? What do you call it? Wrench in the system? You mean like an October surprise? You mean like some crazy turn of events? Okay. Freeberg, any thoughts here? Would you like to rush on test this and see what you want in

Starting point is 01:20:26 the numbers? Or do you have some objective thoughts here? What it what what's your what's your take? You know, there's a polling data? Oh, yeah. We're at in the election. You're pretty open ended here. You can look at the you can make a note on overall what you see between the betting markets and the polls and that disparity, you could just talk generally about where you think we are, you can talk about Kamala on Howard Stern and doing a bunch of interviews with friendlies

Starting point is 01:20:54 where you at right now. I didn't see her interviews. Okay. I saw some excerpts on Twitter. Oh, boy. Yeah. Let me just follow up on a point Jamal made. Jamal said that she had to be crisp. If you look at any of these interviews are the opposite of Chris, she's asked softball questions by by like Stephen Colbert saying, why are you running for president? How are you different than Joe Biden? Yeah, and she doesn't

Starting point is 01:21:16 have good answers. She starts free associating. She gives these very long winded answers that don't go anywhere. She says you can't think of a single way she's different than Joe Biden when when pushed on that. It's very strange. These are favorite shows. I wish you would do some challenging shows. I think she's got to do Joe Rogan, all in. And what would be another good podcast for a Deutche Ma? If she really wanted to like, do the adversarial thing or something?

Starting point is 01:21:42 Why don't you do an adversarial interview? Why don't you do an adversarial?? Why would you do an adversarial? Just come to All In. Come and have a conversation. Come and have a normal conversation here, yeah. No, I'm just thinking like, it seems like sex, if she comes and has a conversation, you'll be respectful. Yeah.

Starting point is 01:21:57 This whole idea that I didn't treat Cuban respectfully is nonsense, just watch the tape. I don't even keep all that. I know, somebody asserted that. No, I mean, the all of you look back on every single presidential related one we did here, they were all respectful. And they were all conversations. I think that Cuba one dipped because of both of you into a bit more of a debate. And it was

Starting point is 01:22:19 a lot more crossover than the other ones. That's what I agree back to him. He likes to come out. He likes to do his thing. Yeah, that's exactly what I wanted. You look at all the other ones. I'm trying to think of a moment where it if you look at the other Dean B Phillips, Chris Christie, the Vivek boring gotta go. Love you guys. This has been another amazing episode of the all in podcast episode 199. Make sure you go to all in.com slash

Starting point is 01:22:47 meetups. Make sure if you're starting a company, you go to founder.university. If you're an engineer, what are you doing? Please go to I'm doing over the f**k I please. David Sachs, make sure you go to superglue AI if you're an engineer. And if you like potatoes, go to a hollow.com and order your potatoes preorder a subscription. I mean we're doing it. So some let's sell some super go to 8090. We'll see everybody next ride Rain Man David Sack I'm going all in

Starting point is 01:23:26 And instead we open sourced it to the fans and they've just gone crazy with it Love you Westies The queen of Ken Wives I'm going all in What your winners ride? What your winners ride? Besties are gone That's my dog taking a notice in your driveway

Starting point is 01:23:44 Sacks Oh man Besties are gone That's my dog taking a shit in your driveway Oh man My avid Azure will meet me at the end We should all just get a room and just have one big huge orgy Cause they're all just useless It's like this sexual tension but they just need to release them out Wet your feet Wet your feet

Starting point is 01:24:02 We need to get merch!

All-In with Chamath, Jason, Sacks & Friedberg - Hurricane fallout, AlphaFold, Google breakup, Trump surge, VC giveback, TikTok survey

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