All-In with Chamath, Jason, Sacks & Friedberg - Markets turn Trump, Long rates spike, Election home stretch, Influencer mania, Saving Starbucks

Starting point is 00:00:00 Jason, do you want to go up to the bedroom, knock on the door and wake Chamath up? Where is he? You're in his house, go get him. Let's go. He's at the office. He went to the office. He's not here. Oh, he went to the office.

Starting point is 00:00:09 We're trying to find Chamath at the moment. Oh, here's Chamath. Okay. Are you wearing my goddamn sweater? What is, what is, is that my, Chamath, Chamath. Where in my house? Is that my sweater? No, I am so tilted.

Starting point is 00:00:20 Where is my wife? What the? Don't worry about your wife. Oh, oh my God. I'm gonna, I, this port is great. Where is he? I wanna the f***? Don't worry about your wife. Oh my god. Amore, this port is great. Where is that? Hold on, I'm calling now. Take off my sweater.

Starting point is 00:00:32 Amore. Don't touch my wife. Oh my god. Oh my lord, she's tainted. I'm so tilted. I'm not. Amore, don't you worry, Amore. You know your cashmere sweater is so, so soft. My sweater off.

Starting point is 00:00:47 It's great. This is so tilted. Get out of my house. Take my lord. But it will be done at one o'clock. So I'll see you then. Please let me know if you have lunch in the garden. Yes, please.

Starting point is 00:00:56 Lunch in the garden. Wear something simple. Don't don't get something simple. Is that the cashmere sweater with rhino horn buttons? It is. You know what? I did some shopping while I was here. It's great. Is that the cashmere sweater with the rhino horn buttons? So it is. You know what though? I did some shopping while I was here.

Starting point is 00:01:08 I did a little shopping. So I just, I filled up, you know, I've just, these Aesop's are great. Cause I don't have these at my house. I have ivory soap. So I got a couple of these from the guest room. But you know what? I agree.

Starting point is 00:01:22 This sweater is not so great. I think I'm going to switch to this one. Oh my God. Don't touch that sweater, Jason. This one's incredible. I cannot. I actually tilted him J.K.L. Don't put it on please. I won't put it on. I won't put it on. But you know what? This port. I'm not so sure. Sean? Sean? Yes. Sean, the port's great. But any other options? You have a delicious ice cream. Come around here. Let's

Starting point is 00:01:48 present. This is what we have. You're not on camera. Why? Why, chef? Don't. Don't. Yeah, Sean. This is it looks like a deep pull 1986 Chateau Tet. Sock. What I mean, this looks like it's worth opening. I mean, it was in the rack that said, don't open, right Sean? Yes sir.

Starting point is 00:02:10 All right, so let's put this on ice. Well if it's no good, just pour it out. Yeah, let's just, but you know what? Pour half out, because I like the bottom half, the texture. So just pour half into the garden, hit it with the spinach, and then I'll take the bottom half.

Starting point is 00:02:20 Thank you. Thank you. Free take off my sweater. Oh my God, this is so brutal. ["I'm Going All In"] Let your winter slide. Rain Man David Sack. I'm going all in.

Starting point is 00:02:34 And instead we open source it to the fans and they've just gone crazy with it. Love you best, I think. Queen of Ken Wom. I'm going all in. Did you have a good night's sleep at Chamath's house? How did you sleep last night? I slept so good Let me tell you something. I will compare my sleep here tonight

Starting point is 00:02:49 The lady of Saks Manor just texted me and she would like me to stay there tonight So, you know when I'm in the valley, I get a lot of different invites. I have to spread the wealth So I'll be dining with the Saxes tonight and I may be staying at Saks So that will help you with the wardrobe. Put your silverware over the Sax. Hide the Aesop soap from the bathroom. I'm hoping he doesn't have Aesop. I'm hoping he has something else. This is like when he stole the Pappy Van Winkle from my plane, remember that?

Starting point is 00:03:13 No, that was good. Yo, I mean, it was three quarters of a bottle. It's just sitting there. I mean, when are you gonna drink it? Sax, how do you prepare for J Cal coming over to your house to visit and spend the night? I mean, what do you do? He it? Sax, how do you prepare for J. Cal coming over to your house to visit and spend the night? I mean, what do you do? He thinks anything that's not bolted down is basically,

Starting point is 00:03:30 it's like a gift. It's like a freebie. How do you think I got that love seat in my kitchen? I got that love seat off the kitchen? That came from Sax's designer. Yeah. Yeah, I just had two guys. My brother Josh came.

Starting point is 00:03:43 We took it out the back. It was fun. We took it out the back. It was fine. We took it out the back. If I'm a guest, I'm leaving with something. Why don't you want to moderate today? You're on fire. Just moderate the show. Well, no, I was just I was going to be traveling and I wanted to do a good job. And you know, I thought maybe you you would love to get your chance at moderation. So lead us off here. Fearless, Dave Freeberg. So that is the announcement to start the show.

Starting point is 00:04:07 Jason, taking a week off from moderating. Yes. Gonna be a bestie guestie, gonna be a participant on the panel this week as we kick this off. So I'll be moderating this week. We're gonna do a couple housekeeping points. First off, very excited to announce

Starting point is 00:04:23 that we are doing another live event after the success of the summit during September. We had great content, we had great parties, everyone had a great time, but a lot of people said they wish they could have been a part of it. So we are going to try and do more live events. So we have pulled one together very last minute, but we are going to make it incredible. Saturday, December 7th in San Francisco around 5pm, we are going to do the All In Holiday Spectacular at the Palace of Fine Arts in San Francisco. It's going to be incredible. Tickets are going on sale today at allin.com slash events.

Starting point is 00:04:57 Not going to want to miss it. There's going to be a really fun show on stage with us and some guests, followed by open bar, food trucks, DJ, casino party. It should be a really great time, a real fun winter wonderland after party after the stage show. And so we're really excited to have folks come and join us at the Palace of Fine Arts on December 7th. It's gonna be awesome. You guys excited? Yeah. Really excited. Yeah. All right. So I have a question. Yeah.

Starting point is 00:05:23 Is our attendance required at this thing? I knew that was coming. I have no desire to participate in this. You don't want to be at what's called a party. Everybody in the world wants to do something except that. I thought I was signing up for a podcast. I don't know why I need to do all these events. This is literally a two minute drive from your house in San Francisco. We are going to load you in a van. J Cal and his brothers are going to come and

Starting point is 00:05:48 grab you throw you in the back. So drag down there. We're going to prop you up on stage for a couple hours and then we'll put you back in the van and you can go home. The good news is we might drink some tequila sex might have some tequila. So you have something to look forward to. And you get to see your friends. You get to see your friends. That's worth it. Right? They asked a ballot this way. You say yes, no comment. He says for those of you listening, I'm happy seeing you guys through zoom. You know, we don't

Starting point is 00:06:18 we can minimize his favorite holiday. What's your favorite holiday sex pandemic? His favorite holiday What's your favorite holiday sex pandemic? For six months every year Do not see anybody for six months bring back the pandemic socks are you serving blog you tonight? I mean as possible I'm gonna tell him not to anything anything that nice though for J Cal.

Starting point is 00:06:45 Keep it simple. Burgers and dots. Have you put your order in? J Cal, what did you put your order in? Well, you know, I talked to the, I talked to chef and he said Morel's not in season, but we are on the tail end of black truffles. So we have that locked in,

Starting point is 00:07:01 but we're too early for Morel's obviously. That's a spring. Okay, Jason, Jason, let's get feedback about last night's dinner. Sean's. I mean, let's be honest. Picanha is an underrated cut of meat. It's a very, people say it's like a serviceable meat, but when cooked properly with proper technique, it will stand right up there with a

Starting point is 00:07:20 rib eye or a New York strip. It's the best. People don't even heard of that. It's like,. People don't believe that. What's a pecanha? I've never even heard of that. It's like the shoulder. But it's like, it's like, it's the Brazilian word for it, but it's like a specific kind of meat. Sean did it last night. Honestly, David, I'm telling you,

Starting point is 00:07:34 it's better than any other cut of meat you could get. If it's properly made, Sean crushed it yesterday, but it is bananas. It's so good. You call it a rump steak. I think I like it. It's a rump steak. It's like a rump steak. No, it's just rump steak. I think I like it. It's a sour- Oh, it's a rump steak.

Starting point is 00:07:48 It's like a rump steak. I like it more than ribeye. I like it more than ribeye, 100%. I like it more than the New York strip. That's terrible. Filet, terrible. No fat. It's got a fat cap on it,

Starting point is 00:08:00 which sometimes be a little overwhelming for people, but Sean did a great job of kind of meeting us halfway. So it wasn't so fatty, just a nice layer of fat, crisp, perfectly cooked to perfection. Carrots were great. I had no notes. You know, I talked to Sean after I had no notes. So, okay.

Starting point is 00:08:20 What the start was ridiculous, too. Oh, my God. I only like sugar, burnt sugar, apple tart. What? You're a New York State. Oh my God. The burnt sugar apple. The burnt sugar apple tart. What? You're a New York state guy? I'm a New York state guy. Well done. Yeah. Oh my God. What?

Starting point is 00:08:32 Oh, oh. Oh, that's disgusting. Those are savages. I think you just lost like, I think you just lost three swing states. My mistake. You want to overcook your grip state. If you're going to do something au poivre,

Starting point is 00:08:43 I would go to the New York. I'm fine to deal with the New York in an au poivre, but well done, David Sachs, that is unacceptable. Shout out to Raoul's and Balthazar, two best steak au poivre in Manhattan in my estimation. All right, everybody. Let's get started. Welcome to you.

Starting point is 00:09:01 Why don't we call an audible tonight and go for steak au poivre, yeah. Just throw out the miso cod cotton or Wagyu and let's just redo it. Boys, welcome to the all in pod. This is Episode 201. And we're going to kick it off by talking about what's going on in markets, which is one of the kind of most interesting challenging enigmas of the day, or maybe it's not, maybe it's pretty simple. But there seems to be

Starting point is 00:09:27 a diversion in assets that is pretty unusual that hasn't been seen in some time. And a lot of market commentators, analysts, economists are kind of trying to figure out what's going on and why. The first is that bonds are falling. So US Treasury yields as a result of bonds declining in price have spiked up. We nearly hit the 10-year yield dropping as low as 3.5 in September, obviously leading up to the big 50-bip rate cut. And as of this morning, we're seeing the 10-year yield over 4.25. At the same time, we're seeing gold prices spike. So gold is typically a safe asset and gold has moved considerably as you all can see

Starting point is 00:10:10 here from the start of the year, whereas around 2000 an ounce up to 2750 an ounce, an incredible run-up, one of the best performing assets of the year. And then finally, in a market like this, you would typically see pain in equities. But we've seen the opposite. The S&P 500 is up considerably, has been on this endless run up, all time highs, close on all time hype. Where's your Bitcoin chart buddy? And let's pull up Bitcoin. Why are you showing gold? Nobody cares about gold. Show Bitcoin. Well, there's a lot more assets that have moved into gold than Bitcoin, but here's Bitcoin at today this morning, 68,000.

Starting point is 00:10:46 Who picked that at the beginning of the year? Hold on one second. Well, Chamath, give us your read on what's going on. There's another couple of nuances here that I think are important. The US dollar complex is thriving, which means like the US dollar is strong. Backend yields are rising. And then another thing that I look at is this thing called put call skew. So basically like on balance, how are people hedging in the short term and in the bond market they own a lot more puts than they do calls. I think that this is the entire financial infrastructure of the world repositioning itself from what was a toss-up election to a Trump win.

Starting point is 00:11:39 And when you look at why it's because when you forget the candidates themselves for a second, but if you think about the actual policies and where the spending will occur, I think that there has been a very clear decision that the Trump economic plan will drive better growth than the Harris plan. And if you think that there is more growth coming, typically what will come with that is a little bit more inflation. The risk premium that you're going to need in a high growth environment is higher. What is risk premium? That is how much do I want to invest for a risky asset versus a safe asset? And so all of these things are coalescing. So I think that the short-term takeaway that I have just looking at all of this data

Starting point is 00:12:35 is that in the economic distribution of outcomes, this is now tilted overwhelmingly to a Trump win. And this is not an emotional statement or what I want to happen, but this is just an observation of how tens of trillions of dollars of self-interested financial actors have now repositioned their risk. And if Trump wins, which it looks like he's increasingly going to do, and if he wins by the margins that it looks like it's going to do, you're going to see a lot of these things exacerbate. Gold's going to go up more probably. Bitcoin will probably go up. The short-term economic upside for the economy will probably get reflected in higher equity prices, but it'll also push out long-term rates. The inflation

Starting point is 00:13:26 picture becomes a little bit murkier, but I think that that's what's happening. I think that the the financial markets are pricing in a Trump win. Sorry, just to understand better, why is gold go up in a Trump win? I think in the short term, what happens is that you see more economic growth, but in the medium term, inflation goes up and so you want to hedge. Right. So it's more about a durational balance of assets so in the short term you'll be long the things that will generate earnings but in the medium to long term you want to hedge yourself. So bitcoin and gold I think will trade that way. Well let's pull up the video clip from Paul Tudor Jones Nick. Given all of the things you're saying, are you off buying gold and Bitcoin? And I think all roads lead to inflation. We're going to end up if you so does all roads lead

Starting point is 00:14:12 to inflation, therefore gold is a good investment. Is Bitcoin a good investment to you? I'm long gold. I'm long Bitcoin. I think commodities are so ridiculously under owned. So I'm long commodities. I think most young people find their inflation hedges via the Nasdaq. That's also been great. It's probably some combination. I probably have some basket of gold, Bitcoin, commodities, Nasdaq, something like that, and I don't know, zero fixed income. If I had my cash, it would be very short term.

Starting point is 00:14:40 Zach? Well, I think as you heard right there, the key line that Paul Tudor Jones said was all roads lead to inflation. I mean, that's what's basically happening right now is that the market is afraid that inflation is not whipped and is going to resurface and the Fed may have to pivot from the pivot and raise interest rates. That's why he doesn't want to own any treasuries. Separately, another financial legend, Stan Druckenmiller, gave an interview where he has something like a 20% short position,

Starting point is 00:15:12 meaning 20% of his holdings are short US treasuries right now. So he's betting that there are long-term inflation pressures and that rates are going to have to rise. You're seeing again that since the Fed cut rates on September 18th by 50 basis points, that the 10-year T-bills yield has risen by 60 basis points. So I think my interpretation is that this is less about the election and more about the markets not liking the Fed's rate cut on September 18th. I think that in hindsight, it was too big. We discussed it on the show and I pointed out that the 50 base point cut was contradictory in the sense that the only two times in recent history where the Fed began a rate cutting cycle with a 50 basis point cut was

Starting point is 00:16:06 in 2001 and 2008, which were on the verge of pretty big recessions. The Fed felt like it needed to cut dramatically in order to help stave off those recessions, but that was not Powell's rhetoric. What Powell said is the economy was doing very well. What I said a month ago was, well, if the economy is doing really well, why wouldn't you just tiptoe into the rate cutting cycle with, say, a 25-base point cut, and then see how the market absorbs it and get another month's inflation data? Well, we've gotten another month of inflation data, and it's showing that these are not huge moves, but it's showing that inflation

Starting point is 00:16:46 was a core CPI, which is a little bit higher than expected. So again, the market is concerned that inflation has not whipped, that the Fed may have been overly precipitous in how it cut rates. And then the other thing is they just do not like the long-term fiscal picture of the US. One other chart we should bring up is interest on the national debt. What you can see here is that it has gone absolutely parabolic. In the last couple of years, our interest on the debt is something like 1.3 1.4 trillion a year point three, five trillion run rate. Yeah, $3500 per American.

Starting point is 00:17:20 Pre and it's something like 20 to 25% of federal revenue now is going to debt service. And this continues to increase. Now, I think there was an expectation that we'd be able to get this line to go back down once we had rate cuts, right? Because if inflation is licked, and the Fed can lower interest rates again, and we can get back to a 2% 10-year bond, which is where we were a few years ago, then all of a sudden that national debt service becomes a little bit more reasonable.

Starting point is 00:17:48 You could service that debt at half the cost, but now it looks like that may not happen. So just to wrap this up, I just think that the market doesn't like these fundamentals of the US fiscal picture. You've got rapidly increasing debt service costs, you've got an inflation picture that is murky and may not be going away, and the bond markets are starting to price in higher interest rates for longer. And this is why Paul Tudor Jones is saying all roads lead to inflation and this is why Druckenmiller is shorting US treasuries. J. Cal, do you think either party or either candidate

Starting point is 00:18:28 in this presidential election is gonna drive a different outcome in terms of federal spending and the long-term impact on deficit and as a result rates? Well, if we look at previous performance as an indicator of future success, the answer is no, they're not going to cut spending. Most of the reports out say they're going to spend another 10 trillion in the next administration, independent of who you vote for. And I think that's actually what you have to think about here is where does all that money wind up, right? It's certainly not going to trickle down. And what's probably going to happen is it's going to find its way into equities. And that's why these equities are so high is because people are recognizing correctly that if we do spend another 10 trillion, and go another 10 trillion into debt,

Starting point is 00:19:17 that money winds up somewhere, where does it wind up? Government salaries, contracts, and if we get a tax cut as well, that's going to goose and I think one party will do a tax cut and spend eight, nine, 10 trillion. The other party will spend 10 trillion and maybe raise taxes a little bit. It's going to net that into the same place. And then I think what we'll see on top of that is what I think could be cataclysmic that is what I think could be cataclysmic contraction in white collar employment in the United States over the next four to 10 years next to administrations. And that's going to exacerbate this problem and create, I think, some social tension because we've

Starting point is 00:19:58 had record low unemployment. And so even though people feel bad about the economy generally, and some of that is related to which parties, you know, which party you're part of, and how you perceive the economy and all this data, but just brass tacks, you know, we have the lowest unemployment of our lifetime for the past five, 10 years. And it's been absolutely fabulous and salaries have gone up. And this is going to result in, I think, a little bit of austerity measures coming at some point, probably won't come in this next administration, but certainly the one after that is going to have to do some belt tightening. And we're going to have to address this issue because spending everybody in America having to pay their share of that interest alone is $3,500. I mean, let's not sink in, you're going to spend I mean, let that sink in, you're going to spend for every member of your family $3,500 a year in interest. That's your part of it.

Starting point is 00:20:48 Take the 1.3 trillion. It's just a lot of money. And if that is the case, it's going to create a massive bubble in equities again. And then if you look inside of the big companies, three or four years ago, Uber, Airbnb, Google and Facebook had more employees or the same number of employees they have now while growing, those companies are all growing 20% year over year. So the earnings and the top line of these companies continue to grow while they have a static team size. This is like an extraordinary thing we haven't seen. So the two pieces here that we haven't seen before is what happens when you put another, I

Starting point is 00:21:26 don't know, $20 trillion of debt into the US economy, and what happens when companies, the big ones stop hiring, and they just become wildly efficient and become wildly profitable. And this will be a renters, rentiers, you know, story where people who have equities and people who own property are going to do fabulous over the next five to 10 years, and then the 40% 50% of people who don't are going to really be feeling a pinch. Well, it does depend also on how levered they are. So just to

Starting point is 00:21:57 give you guys a sense total US household, corporate, and government debt, which includes state and local and federal. So household debt in the US about 18 trillion, corporate, and government debt, which includes state and local and federal. So household debt in the US about 18 trillion, corporate debts about 11 trillion, state and local government debts, 3 trillion, obviously the federal debt, 36 trillion. That adds up to a whopping $68 trillion of total debt across the US, which if you assume a 6% average interest rate, you know, you got corporate debt and household debt, so it's a little more risky, so it carries a higher rate. That means we're spending about $4 trillion a year

Starting point is 00:22:32 of an economy that's only 29 trillion a year to service the debt, just to pay the interest on the debt. So 15% of every dollar that trades hands is going towards interest payments on existing leverage, on existing debt. It's a highly leveraged system. And if you look around the world, this problem is not just a US challenge. Global leverage is a problem that's now becoming a crisis for countries everywhere. The UK is waiting on a big budget proposal this week. Higher taxes is what's

Starting point is 00:22:58 going to be in there to make up for a budget deficit, which is currently 4.4% of GDP. The UK economy is only growing at 0.9% a year. France has a major budget crisis underway right now. They're struggling to reduce their deficit from 6% down to 5% of GDP. And they've got skyrocketing bankruptcies. 74% of people that can work in that country are working. And that's because of large social programs that support the balance, 7.3% technical unemployment. And they're raising taxes on 440 firms, 440 companies in the country that make a billion or more in revenue with a quote, temporary tax.

Starting point is 00:23:35 There's a 4% surcharge on income over 500K that's going into effect, second home real estate taxes, and so on. France is struggling to figure out a way to generate revenue to make up for the shortfall. In Brazil, there's a major budget crisis. States owe $130 billion to the federal government there. Inflation is accelerating at 4.6%. Rates are going to go higher and longer, complicating other economic growth opportunities in the country. So this is becoming kind of a global leverage problem, which might explain the flight to safety and assets like gold and Bitcoin, and is going to present a lot of real struggles for every global economy.

Starting point is 00:24:13 Now the question is, does the US dollar maintain its reserve status? Because ultimately, I think it is inevitable that the Federal Reserve in the United States is going to need to buy the debt, they're going to need to monetize the debt, which means printing money. There is no one else to buy the debt. So pull up the China chart, Nick. China's historically been the biggest buyer and owner of US treasuries, but here's what's happened in the last couple of years. It peaked at about $1.3 trillion about 10 years ago. And then recently, particularly starting around COVID, they began selling down and have been selling down at an accelerated pace. Today, China is back to the level they were at nearly 15 years ago, in terms of their treasury holdings, and they have publicly declared that they

Starting point is 00:24:54 are selling off US treasuries and buying gold instead. So the biggest buyer of US treasuries has kind of left the market or is leaving the market. Who does that leave? Well, at the end of the day, the Federal Reserve has been the kind of buyer of last resort and if they end up buying treasuries, that's where we have a problem with too many dollars and inflation kicking up. And so it feels like a lot of the trades in assets are what's gonna benefit from the inflation

Starting point is 00:25:22 and it's gonna be gold, it's gonna be Bitcoin. And in some cases, because you're pumping more money in the system, it's going to be gold, it's going to be Bitcoin. And in some cases, because you're pumping more money in the system, it's going to be equities. And that might explain why equities are moving up as well. Where do you guys invest here? I mean, Chamath, like, do you care about how the markets position or how you're positioned in this election right now? And based on how we're seeing markets trade and what these kind of macro indicators are telling us, or you just business as usual heads down, invest and build as you always have.

Starting point is 00:25:50 Yeah, I think that you can't trade these things. And any attempt to do it is probably a level of false precision where you're going to lose more money. And there's a lot of slippage and even just trying to execute it. I mean, at the beginning of the year, I said the breakout asset was going to be Bitcoin. I think it looks like it's going to be the resounding inflation hedge asset for the next 50 or 100 years. So that die has been cast. I think you're seeing the last vestiges of people using gold as a rational economic insurance policy, but I think the future is specifically Bitcoin on that dimension. So I guess you could trade that. You could speculate on that. I think the question that I've been grappling with is in my scenarios, what happens if Kamala

Starting point is 00:26:42 Harris wins? What do the markets do? And I actually think it would reverse a lot of these trends over the last month and a half. Like I said, I really do think that there's a repositioning, rebalance component to everything that's happening right now. So I don't think there's much to do,

Starting point is 00:26:57 unless you have a very specific bet that you want to make. That would just keep my head down and keep building. Are you the same place, Alex? Are you, J you J. Cal, are you guys trading at all? I mean, I think trading is a mistake. Time in market is better than trying to time the market. And as I said before, where is all this money going to flow all this spending? But asset class, right? I mean, that's the key question, right? Like do you change what assets you own? I don't think so. And I, I do think there's another thing that's worth sort of unpacking here. Because when you do see people feel like the economy is working against them, all kinds of

Starting point is 00:27:34 interesting movements start cultural movements, etc. And I think that's what we're seeing in this election is people who believe in capitalism and free markets and people who don't people who believe in free speech, people who don't people who believe in free speech, people who don't people who see themselves as victims victims and then other people who see them as creators and I really study a lot of like what young people are doing and I don't know if you guys are watching sort of the anti-war movement or the fire movement which is financial independence, retire early. A lot of young people now are looking at financial markets, whether it's Robinhood or Coinbase or PricePix, whatever market it is, young men especially. And they're saying, I need to control my destiny.

Starting point is 00:28:16 I need to, this capitalism is not working for me. I need to own equities. I need to make trades. And I need to retire early and have experiences because the capitalist system is broken to some extent. And then there's another group of people who are just anti work. And there was this term back in the day called neat, not employed, not being educated and not in training, basically the people who are called the unproductives. And if you look at the peak engagement and employment in our country, and Japan has similar trends, although they're probably 10 years ahead of us.

Starting point is 00:28:50 And it's- Sounds anything but neat. Yeah, it's not neat. Sounds terrible. But we peaked at 68, 69% labor participation, and we're 10% off that, maybe more. Maybe we're at 61 or 62. I think a lot of people are gonna give up

Starting point is 00:29:04 because the debt is gonna be so crushing that the logical thing to do if you don't think you can get out from under it might be to move in with your parents or two or three other people tighten your belts and enjoy life and go skiing and go have experiences and a lot of young people are electing to do that. In other words, they're opting out of the American dream. Sorry, to your point, the one thing the one thing that I realized with a lot of young men that, Jason,

Starting point is 00:29:26 I think you're really hitting the nail on the head is a lot of them now do not view the job that they do as their only path to economic independence. And if anything, they may do a job, but then they're actively trading on the side, something, crypto, options, whatever. They're on Robinhood, they're using Coinbase, because it's almost like they've separated in their mind that the job they do will never give them the financial independence they want. And so instead, they're gonna do that job

Starting point is 00:29:57 because they like it, hopefully they love it, but then separately, they're gonna go and speculate to try to make money. It's a really interesting thing, because I had always been taught you earn your wealth through the job you have. And so if you wanted to make more money, you have to ladder up and do something different. Yeah, that's not true. That that idea has been sort of decoupled. Now. That's a really interesting change in how people approach work. I call them Jen bet. Like they're the generation that believes on there's just like subset of them. It's not all of them. A number of them are just quiet quitting and they just

Starting point is 00:30:28 don't believe in capitalism. And then there's this other group which are like trying to get control. I call them Jen bet because they just want to bet on themselves. And you know, and if they don't get wrecked by the financial markets, change trading options, you know, and doing the other thing I'll say just in recruiting a bunch of people at 80 90 over And I think that's a great way to do it. And I think that's a great way to do it. And I think that's a great way to do it. And I think that's a great way to do it. And I think that's a great way to do it. And I think that's a great way to do it. And I think that's a great way to do it.

Starting point is 00:30:54 And I think that's a great way to do it. And I think that's a great way to do it. And I think that's a great way to do it. And I think that's a great way to do it. And I think that's a great way to do it. And I think that's a great way to do it. And I think that's a great way to do it. I'm calling 25 as a rough number, but there are kids that are 18, 19, 20, 21 years old that are off the charts good. They're motivated, they're hungry, they're like, let's get after it.

Starting point is 00:31:13 And they are honestly different in the way they approach their job than folks that are in their late 20s and early 30s. These folks in their- I think they're the first generation who didn't go into debt in college and didn't buy into that. Like, so they might, the millennials ahead of them might have like taken the bullets, you know. Yeah, the folks that are in their late 20s, early 30s, and I'm not trying to generalize or disparage, but they lack a level of motivation. Again, generally speaking, that the youngest folks in the workforce have, and that also that people in our generation sort of have. So they're sort of sandwiched in between a very different way of approaching work. And as a result,

Starting point is 00:31:51 they stand out and I don't think they're standing out for all the right reasons. Hmm. Well, the majority now of young people, the number I believe, and Nick, if you could pull this up, 57% of Gen Z years want to be influencers as their primary career now. That the idea of working a job is almost like a secondary option, the primary option that everyone would thrive strive for is to be an influencer. And this number has grown considerably continues to grow. And in fact, if you look at the the rest of this report, this was out of a morning console. Did you say 50% of Gen Zers aspire to be influencers? Correct. Okay, 57%. As their career or just they want to be influential and build a brand

Starting point is 00:32:40 around themselves? I wonder. That's what they want to do for a living. That's what they would like. They want their paycheck to be interesting. They want to be independent. And I don't think they believe this. They believe the system's rigged against them. And why wouldn't you think the system's rigged against you if you went 150 or 250 K in debt and you couldn't get a good job? As a successful influencer, how would you advise the youth on their career choices? Yeah, look, I think that believing you're going to be an influencer is like believing that you're going to be like a rock star or movie actor, something like that. Pro athlete. Pro athlete. Yeah.

Starting point is 00:33:17 It's like a one in a million shot. It's just not a great thing to want to design your career around because it's just very unlikely to happen. So I think you're better off finding a career that you're passionate about, but where you're actually adding value. The world doesn't need 50 something percent of the population to become influencers. That's kind of crazy. It reminds me of a line from Fight Club where Tyler Durden says, we've all been raised on television to believe that one day we'd all be millionaires and

Starting point is 00:33:46 movie gods and rock stars, but we won't. And we're slowly learning that fact. And we're very, very pissed off. And that was Gen X. That was trying to Yeah, so that was their headed for a Fight Club like realization about this. So how do you advise a young person on there's this temptation to go and spend all this time making content and pursue that as your career and that's a life opportunity for you now? It's more free and open, they would think, than perhaps being a movie star or a basketball

Starting point is 00:34:17 player used to be. So I think it's just important to recognize that if we ourselves are influencers, the reason why we're not being hypocritical is that none of us here, with the possible exception of J Cal ever set out to be influencers, right? We did something different. We actually had a career and we did something interesting. And then as a result of that,

Starting point is 00:34:37 maybe people want to listen to our pod. The idea that you can just go be an influencer without having actually done anything interesting, what's your credential for that? So what I would advise is just people should go do something productive. And then if it leads to other people wanting to hear from them, then that's good. But setting out to be someone that other people should listen to without having any experience or having done anything productive in your life, it's like, why should we listen to you?

Starting point is 00:35:05 Yeah, one thing I did build and sell two out of my three businesses over the years. But there are tens of millions of people making money in the long tail as a content creator, and it's low thousands of dollars in some cases per month. But if you combine that with people who are gig economy workers, and they don't believe in the system because they worked really hard. They got this job at Google, they went to the office, then they got laid off and nobody cares about them. Now they're getting dragged back into the office, they still have these payments. And then

Starting point is 00:35:34 they look at this other system where hey, they started to get 10,000 followers, they started to make $1,000 a month and $3,000 a month, they actually see a path to being independent of a system that has no loyalty to me. And that's what I hear from folks. And I think it's great. If we're not going to be loyal as like corporations to individuals, those individuals are now responding. And the antidote to that poison of just being laid off randomly or being dragged back to the office after

Starting point is 00:36:02 you told you to work from home, all that stuff. They now believe, hey, I can be independent, and then you have to fight to get my services. And I think that's what this is about. If we're going to talk about Starbucks later, and I think that's a big part of the Starbucks problem. Having a side hustle makes you anti fragile, you have other sources of income, and you can tell your boss to F off. And that's what young people are doing. I've seen it. I've seen people just quit jobs and just say, you know what, I've got other ways to make money and I don't have a big burn rate.

Starting point is 00:36:32 And so that's smart for young people to do that. And I think my advice would be to build your brand, be as independent as possible and to make things in the world and show people what you mean. That's the best thing you can do. Can I give you the other side of this before we go back to macro?

Starting point is 00:36:47 Yeah. Imagine that Tom Brady, who really respected Bill Belichick, but I wouldn't say is super fond of him. They're not super close, but imagine that Tom Brady had a side hustle. And let's just say he drove an Uber and he made enough money where when things got hard and he didn't money where when things got hard and he didn't get enough playing time, he opted out. Would that have made Brady the person he was?

Starting point is 00:37:10 I think the answer is no. I think there are a lot of people who started companies after being in very difficult and challenging environments that stretched and pushed them beyond their comfort zone. And they lived in that world for years before they started something. If all of a sudden the answer is, let me have an escape hatch so that I can egress off

Starting point is 00:37:34 whenever things get hard, I don't think you're gonna accomplish much of anything. Because I'm not sure that that is the kind of boundary conditions that push greatness upon people. So I would just keep that in mind as well. I'm not sure the side hustle solves anything. It may actually allow you to quit before you actually get to the other side of something and realize what you're capable of.

Starting point is 00:37:56 That's a great point. You kind of have to mentally burn the boats when you do a startup. It's Cortez. You've got to burn the boats. Yeah, I agree with that. Your life needs to be like Cortez.'ve got to burn the boats. Yeah, I agree with that. Your life needs to be like Cortez. You've got to burn the boats. If you keep the safety net with you

Starting point is 00:38:10 as you move through life all the time, and you never put yourself at risk, you're never going to figure out what you're capable of. And then you're going to look back at some point, and the odds that you're going to be disappointed are higher than if you actually just tried and lived it and just said, okay, you know what, I'm really glad I'm betting on myself here. To wrap up the conversation about where markets are headed, Sachs, I think we were going to just do a quick round the horn. Anything that you've repositioned

Starting point is 00:38:35 in your portfolio around investing or asset classes that you shift as we face kind of looming budget crises, the election cycle. I'm trying to say every single SaaS startup I have in secondary markets. And you know how many bids there are for these SaaS companies? Negative one bid. That's interesting. I had a couple of my startups get offers. I've had three or four secondary offers in the last two weeks. I've had to deeply consider and they weren't like 75. What kind of companies?

Starting point is 00:39:08 Let's see, two were SaaS and then one I can't say because it would be too easy to guess, but the bottom feeders went from offering like an 80% discount to now a 25% discount. So you're not allowed to sell your shares and all in, right? I'm trying. I'm trying. Brad Grossner's bought 7% so far. So I'm quickly offloading to Gerson as much as I can. You just super tilted Freeberg there. Look at him, he's laughing, but inside, he's just about to explode. You're gonna have to have the Fib Fest here,

Starting point is 00:39:35 he's gonna win 7%. He gets 16 minutes per episode. If he'll moderate, I'll have him. I mean, this is moderation going, okay, or should I jump in and say me shout? He should write all in a get fit memo. Just on the question of, you know, how do you reposition? So first of all, the easy one to avoid is, is treasuries, right?

Starting point is 00:39:52 I mean, do you really want to accept a 4.2% yield for 10 years to own a US bond? And with the looming inflation that is still out there or the looming debt crisis that might be out there. So that's probably the easy one. I think the hard one is around equities, because equities are at an all-time high. Part of the reason why they're at an all-time high is because the Fed telegraphed that we'd have big rate cuts this year.

Starting point is 00:40:20 Remember at the beginning of this year, they said there'd be seven rate cuts. Those expectations have kept coming down. I think we had one, I guess, we had a double rate cut last month, and we were supposed to have one more 50-bit rate cut this year. I have to wonder if that's still going to happen. More to the point, if you believe Druckenmiller and Paul Tudor Jones, we might be in for an extended period of higher interest rates for longer. And

Starting point is 00:40:46 that will be bad for equities. equities normally are inflation protected in the sense that those companies can just raise prices over time and keep up with inflation. And so equities are generally a pretty good thing to own in the face of inflation. But if we're in for a period of high interest rates, longer than anyone thinks, that's going to be bad for equities. Well, I would just argue one thing, which is except in the scenario where you believe

Starting point is 00:41:11 the only inevitable path is for the central banks to monetize the debt, meaning the central banks step in to buy the outstanding treasuries that need to be issued, which both supports inflation but also introduces capital into the system. And that's where both equities, that's where you could see a scenario where equities and gold go up while fixed income goes down to have higher rates. So it's effectively a money printing indicator or signal. Now my personal position on this going into this new era, if it manifests as the markets are telling us it will, is kind of where Paul Tudor Jones is.

Starting point is 00:41:46 I think that commodities have and you know gold is a commodity. Everyone talks about it as being the safe haven asset but there are other commodities out there that are much more fungible and used in production cycles to make food, to make energy, to make goods and commodity linked businesses, meaning businesses whose revenue or profit grows with the underlying commodity price growing will outperform other businesses. They're gonna struggle to raise prices or struggle to pay higher labor costs

Starting point is 00:42:14 or struggle to deal with higher cogs. Whereas commodity linked businesses that effectively just make a margin on the commodity. What's an example? A mining business. So businesses that do mining of natural resources, businesses that trade agricultural commodities. So those businesses usually make kind of a fixed margin on the underlying commodity price and they do well in these cycles. So anyway, I think that Paul

Starting point is 00:42:38 Tudor Jones, because if you own a commodity, it's not a productive asset. It's not generating yield for you. But if you own a business that's making a profit and just seems like it's easier to own Bitcoin. That's one asset, but Bitcoin isn't a productive asset, right? I mean, so that's one way to kind of build a portfolio. But I personally like owning businesses where they're doing something and making value and in the process, they earn a profit, especially if the profit grows with an underlying inflationary pressure. On Sax's point about the equity markets, there is this thing that people look at called the Buffett indicator, which is the total value of the Wilshire 5000 divided by GDP. He mentioned it in

Starting point is 00:43:14 2000 and said it's probably the most reliable measure of where equities are and where they're about to go. And there is this long run mean when you calculated going back, you know, 50, 60 years. And every time it's at a short term high, there's been a pretty meaningful retrade. So in 2000, in the dot com bubble in 2007, during the great financial crisis, during COVID. And now we've actually set an absolute new high in this thing, which, again, to the extent that you believe in indicators like this, would kind of tell you that at some point here, equities are probably going to be cheaper before they're going to get more expensive. RG This is definitely the high end of normal. Nick, if you pull up the PE chart,

Starting point is 00:44:03 this is the obvious one to look at is, you know, not just the, how dramatic the stock market peaks are, but, you know, the price to earnings ratio. And it's at the high end of normal at like, I don't know, for a 25 P-E ratio. David's right. How can you get 4.25% when you have all of these risks looming over the next 10 years, because you know, Howard Marks, his letter, he had an investment letter that he published this week. And it was so great because it was so elegant in its simplicity, which is investing in an equity and investing in a bond are just completely opposite to each other, even though they're treated and spoken as if they're the same thing.

Starting point is 00:44:46 And his concept is like, people need to understand exactly what the term's fixed income means. It means that you will get something reliably over a long period of time. And so the question is whether is that fair knowing everything you know today? And I mean, all of you guys have said this now for it feels like years.

Starting point is 00:45:07 And when you show these charts of like ballooning debts and deficits, is it reasonable that the market clearing price for government issued debt over the next decade is 4%? I mean, my gosh, it could easily be 6%. It could easily be 7% or 8%. That is very scary. Totally. The big difference between a bond and a stock is that the bond provides you with, like you said, fixed income payments. And those would be horribly debased if you have high

Starting point is 00:45:36 inflation. A stock gives you earnings and a company can always raise its prices. And so in theory, it should be hedged against inflation. But both a stock and a bond are similar in the sense that they're both hurt badly by rising interest rates, right? Because the discount rate is higher. So this is where I'm just not sure about equities is if we do head into a new regime of higher rates longer, does that hurt equities even though equities normally are pretty good inflation head? So I just don't know the answer to that. I do think we're headed for a period of constraints. I think that since 2008, we basically were living in a consequence-free

Starting point is 00:46:18 environment where the Fed could keep interest rates at or near zero, the federal government could spend as much as it wanted. We sort of normalized emergency conditions. First, we had trillion dollar deficits as a result of the 2008 GFC, and then those got normalized. Then we had two trillion dollar deficits as a result of COVID, and those got normalized. And then the Fed was also doing QE, which means that it's buying the US government's own bonds, thereby propping up US bonds and the bond market. So now that's normalized. That's normalized. Yeah, keeping interest rates lower than they otherwise would need to be to attract those bondholders. So for about 15 years, we kind of normalized emergency conditions and consequence-free

Starting point is 00:47:06 spending by the US government. I think now, we may be entering an era of consequences. What that means is that you can't push on one aspect of the federal government's balance sheet without giving up on something else. In other words, if you're going to allow higher inflation, basically monetizing the debt, the bond markets are going to make the government pay higher interest rates on its debt, right? Because they're not dumb. So we're going to be in a world of higher interest rates, which means that equities get clobbered, real estate gets clobbered, the value of people's homes gets clobbered. So there's real consequences from that. Or you can tackle inflation,

Starting point is 00:47:44 which means that the Fed's going to have to tighten. But then I think what that means is the federal government's going to have to get religion around spending. They're not going to be able to spend all of this money. We've seen this austerity measures in Europe, right? We're pretty hard for people in Greece and Spain and to get their heads around and think Americans are going to have to get used to. We can't just spend and give handouts constantly.

Starting point is 00:48:07 On the equity side though, there's also the concept sacks that you can cut spending and increase earnings. And that that's well within your control as a CEO and board. And that's exactly what we've seen coming out of COVID. And I said it here a couple of years ago, I think the earnings are going to do well because people have this other lever and they can just turn the dial and reduce spending and increase earnings

Starting point is 00:48:28 and it's like, oh, that's painful, but it's not so painful that it's not worth doing. And so corporations have gotten religion around cost cutting and austerity and increasing earnings. The question is, and individuals have to, so they're pushing out buying new cars, and spending on travel. So then what happens when does the government get that austerity that companies and individuals are forced to do? And that's the problem you keep talking about free burgers. You know, this entire election cycle is about who can get more free. Enough

Starting point is 00:49:01 with the free like somebody's got to be an adult in the room and say, we don't have any more free left. I think this is what the market is saying is that regardless of who gets elected here, they've both kind of shown that the deficit will increase not decrease under their presidency. And look, maybe that is positioning to get elected. And maybe there is a kind of more rational underlying economic advisory group that is counseling a different path than what they are presenting. And I hope to whoever is listening that that is the case for both candidates. I very deeply hope. If you look at what happened in Argentina, so we've talked a lot about Javier Mele, he came in as president and his austerity measures by absolutely slashing government spending has reduced monthly inflation from 25% to around, you know, three and a

Starting point is 00:49:51 half percent. So he's really kind of broad inflation under control. But the consequence of that is that the economy has now shrunk because the government is spending less. That means there's less revenue for certain businesses. There's less income for individuals. So they spend less. So the economy has shrunk by 1.7% in the last quarter. And unemployment has spiked.

Starting point is 00:50:11 So now unemployment is at 8% in Argentina and it's rising fast. So for the US to actually execute this policy, when we have a fundamental mandate for the federal reserve to keep unemployment low, means that something is going to have to break. You can't keep unemployment low and inflation low if federal spending gets too high and federal debt gets too high. So we are in a condition now where federal debt is too high. And if we cut federal spending too fast, we end up seeing unemployment spike.

Starting point is 00:50:43 And if we don't, we're going to have inflation spike. Those are the two paths we could walk. Just one thing to challenge what you say, cause I actually, I disagree with it, is that I don't think that people view the spending packages of both candidates the same, because the dollar is not created equal. So there are certain programs that the Republicans have proposed that are

Starting point is 00:51:05 markedly different than the programs that the Democrats have proposed, even if the numbers look the same. And so this is why I think you have to look at how the short-term markets, when they thought Kamala was winning, behaved versus now the short-term markets. Short-term means how do you hedge this risk? And that is completely changed. And this is why I mean over the last 30 days, you've had a complete and absolute repositioning of the front end of the yield curve in terms of risk and who's making the bets. And I think why is because the Trump package, whether we agree with him or not, is viewed as more stimulative to long-term economic growth, which is why the inflation risk is being hedged out, versus the Kamala risk,

Starting point is 00:51:52 which is they're just gonna spend money. Now, on top of that, what I would say is, this may be where Elon Musk being able to streamline the government could be an incredible gift for us as well as our children and our children's children. And why is that? It's because if there's this sort of Damocles hanging over us constantly of billions and trillions of dollars of wasteful spending, he is probably in a position to show us that we have spent decades spending more and getting less. And now we can run the A-B test where we spend meaningfully, meaningfully less, cut regulation.

Starting point is 00:52:37 And if we actually get more, you will have the proof. And that could set us on a long term path of being more judicious in how we spend money. And I think that we deserve to run that experiment somehow. To just go back to your definition of GDP, it's true that if you cut government, that might cut GDP because GDP includes government spending. However, one could argue that although technically that is how the definitions work, that by cutting government you actually unlock resources that could be used by the private sector and that ultimately

Starting point is 00:53:15 it would lead to more efficiency but also stimulate the private sector. And I think that argument is particularly true when you've got an economy running a full employment. So you know if we had lots of unemployment, then cutting all these government workers would be very painful. But if you've got an economy that's doing quite well, and there's a lot of job creation going on, then it's a good time to actually cut government because the private sector can reabsorb these people. We should use the fact that we still have that we have a good employment picture to

Starting point is 00:53:44 make these painful cuts now, as opposed to waiting until it would be far more difficult. Best point I've heard in a long time. That's a great point, Sachs. Give us the election update. What's going on? Are we going to get your guy in office? Is it going to be Vice President Harris? What's the sense of what the polls are telling you, of what the markets are telling us,

Starting point is 00:54:05 what's your read on where we're at? All the data is basically pointing one direction, which is a Trump victory. And by data, I mean the polling, I mean the prediction markets, and then the early voting numbers. So if you look at the polls, there were two new polls by mainstream media. One, the Wall Street Journal yesterday said that Trump was up three nationally. And I think CNBC had a poll this morning saying that Trump was up to nationally. That's very good because that's the popular vote. That's a popular vote. So if

Starting point is 00:54:36 Trump is winning the popular vote, it's landslide. Most prognosticators say that because Republicans have a slight electoral college advantage, that Harris would need to win the popular vote by more than 2% to have a chance at winning the electoral college. So if Trump is winning the popular vote, then it's a landslide. Second area is if you look at the state by state polling, Trump has been advancing pretty much in every battleground state for the last couple of weeks. If you use RCP, Trump is now ahead slightly in every battleground state and the momentum is all

Starting point is 00:55:11 towards Trump. And then the final data point is around early voting in states where they have this early voting and put out the numbers. The Republicans are tracking well ahead of where they were in 2020. Now, there's still a question of, you know, does this mean that Republicans are just shifting their votes to voting earlier and then they'll do less well on election day? There's always that chance. But right now, if you're a Republican, it's what you want to see. And if you're a Democrat, it's definitely not what you want to see. Yeah. And the essay that Nate Silver wrote that was published by the New York Times yesterday said, it's a 50-50 toss up, either candidate could win, but my gut tells me it's going to be Trump. He's kind of indicated that's where, you know, as a guy who's obviously been a

Starting point is 00:55:55 big prognosticator, it says the market's headed. J. Cal, do you think Sachs is right on this? Anything you're picking up? I forgot to mention prediction markets. Prediction markets have moved very, very sharply in favor of Trump. It's almost two thirds, one third now in favor of Trump. So there's been a huge move among betters that Trump is gonna win. On Polymarket.

Starting point is 00:56:15 Yeah, Polymarket and then the Cal-She as well. Do you think it's over, J Cal? I'll go with Nate. I mean, I think Nate's probably the best thinker on this who I think puts a lot of effort into it. And if he says it's 50-50 with a slight advantage to Trump, I think I would go with his gut. But he's saying don't trust anybody. I don't trust the prediction markets. And I think the prediction markets are closing that gap as we get closer because they are

Starting point is 00:56:41 easily manipulated. Polymarket is only offshore, right? The US market is not allowed to participate in Polymarket. So it's all foreign investors. Now, of course, Americans could be putting money overseas somehow and using foreign accounts to place these bets. I'm guessing if you were a sharp and you really want to make money, that's what you would do. So I don't know what percentage of it. It was reported this morning that a French trader

Starting point is 00:57:07 has bet $45 million on Trump, on Polymarket, that he is the whale. He's a French national with, quote, extensive trading experience. He's not, quote, manipulating the market. He just really is trying to build a big position. So he sounds like he's a pretty active trader that's made the big move.

Starting point is 00:57:21 It's a crypto-based site. So you get the benefit of, like, you can track some amount of this on blockchains and then eventually find the person. But because it's crypto as well, you can also hide yourself pretty well with tumblers and other systems. So I would discount Polymarket a bit.

Starting point is 00:57:38 It's probably not as extreme as it seems, but it does seem like Kamala has not helped herself with the interviews. They haven't been great. And, you know, it is a toss up. And so, it's a surprise. Yeah, any October surprise still coming. I mean, there've been a few attempts the last couple days. I mean, it seems like the rhetoric for the last 24 hours, there have been some really gnarly ones that we shouldn't give it. I don't think we should give any credence to but some Republicans have been some really gnarly ones that we shouldn't give it. I don't think we should give any credence to, but some Republicans have been coming out talking about like a really gnarly one about the Republican side. And I mean, it's not much more gnarly than

Starting point is 00:58:15 other things that have been said about Trump already and judgments that Trump is against him already for $100 million. So it's in that vein. But I do think that that looks to me like it's cap. And I think there's going to be a lot of fake news, maybe even deepfakes that come out, you know, in the last week or two. So I think people should not trust anything they see on social media. Be very careful with that information. I'll tell you guys my kind of view is like things seem to be getting more inflammatory leading up to the election here it's like we've got 12 days left or whatever it is and the

Starting point is 00:58:50 the rhetoric and the tonality of the stuff that's being said is getting so nasty on both sides and I just worry more about the reconciliation reconstruction phase that needs to happen in America after the election. Do you actually see it on both sides? Is it equal on both sides, you think? That's your observation? I think Trump leaning out the window of McDonald's, and it was, I mean, I laughed pretty hard

Starting point is 00:59:18 when he was like, someone said to him when they interviewed Trump when he was serving French fries, and he said something like, I've now worked in McDonald's 15 minutes longer than Kamala has. And then one of the reporters said, well, why do you think she would lie about that? And he leans out the window, he says, because she's lying, Kamala.

Starting point is 00:59:33 And, you know, it's a funny joke. That's his quip. He makes fun of everyone. But I think the whole thing about making fun of everyone, it's such a different tone and a different rhetoric than I think what's gonna be needed. Because imagine if she wins and he's painted her as being a liar and crooked and deep state. I mean, look, I'm not gonna try and-

Starting point is 00:59:51 I don't know how you can possibly compare that to what the Democrats are saying right now, which is that Trump is literally Hitler. Literally Hitler. They're calling him a fascist. She called him a fascist. She said it's democracies on the line. And obviously when you say something like that,

Starting point is 01:00:04 when you say that the fundamental system of the electoral process is on the line, it implies that if he wins, we've ended democracy that will inevitably lead people to feel like we are in a place of civil chaos. And I don't think that anyone's gonna feel good coming out of this. How do you guys think we kind of deal with

Starting point is 01:00:26 like the election outcome here, one side or the other? Half the country is gonna hate the president and half the country is gonna hate where we are and how we sit as a country and half the country is gonna think that democracy is over. I mean, one half is gonna feel like this is the end. Is it just a temporary thing and everyone reconciles and we all like get back to work and

Starting point is 01:00:45 the election's over and whoever wins wins? I think unfortunately the mainstream media is responsible for giving roughly half the country a psychosis about Trump because they are pushing out this rhetoric non-stop that he's a fascist, that he's Hitler. They keep putting out all these fake stories and they are basically training people or indoctrinating them that he's this like threat to democracy. I was having dinner last night with someone who's a Democrat who pretty much gets all their information from mainstream media and she's like terrified of this. It's just not who Donald Trump is.

Starting point is 01:01:16 It's ridiculous hyperbole but if you're locked in that media ecosystem that's all you hear, you really are frightened by this. So I think that the media, the media's irresponsibility, the way that they don't report honestly, and that they gin up these threats, has really terrified half the country. Do you think that the Trump is Hitler rhetoric indicates that the Democrats feel like you're losing the selection? Well look, excuse me, I'm not sure if you're aware of lying. I mean, that's like pretty par for the course. What's so horrible about that? I mean, you could make the argument that she's lied about a lot of things.

Starting point is 01:01:48 As Anderson Cooper interrogated her quite well just yesterday on that town hall, he pointed out that she had said 50 times that Trump's wall was a stupid idea and now she appears to be in favor of it. So I think that accusing your opponent of lying is pretty par for the course for a politician. What's not par for the course is saying that your opponent is literally Hitler and a fascist. That's just going to a whole different level of rhetoric. Okay. Chamath, do you think we're in a nasty state and we're going to be able to get out of it

Starting point is 01:02:17 after the election? I think we're going to be fine. Okay. I'm actually pretty optimistic because I actually don't think it's going to be that close. I mean, right now it's looking like maybe the landslide is too strong a word, but a solid victory for Trump. That's what the polls are showing. That's the prediction markets are showing.

Starting point is 01:02:34 That's what the early voting is showing. And if you look at all the other data points right now, it's showing Trump winning pretty handily. The other data point that we haven't talked about is just how these campaigns are acting in the final stretch. If you look at the Trump campaign, it's pretty much steady as she goes. You look at the Kamala campaign, and they're in this throwing spaghetti against the wall mode. They're back to kind of the dark Brandon type messaging, where the reason to vote for us is Trump's a fascist. This is very different than their messaging when they made the switcheroo from Biden to Kamala, right? When they first made that switch, they said, okay, let's

Starting point is 01:03:10 get away from this dark Brandon threat to democracy type messaging. It doesn't seem to be working. Let's emphasize Kamala Harris as a change agent, as a transformational candidate, as a candidate of joy and positive vibes. And they did get a big bounce in the polls because of that. The problem is that over the last couple of months, that sort of bounce in the polls has worn off as Harris has not been able to explain what she would change. She keeps getting asked in all these interviews, what would you do differently than Joe Biden?

Starting point is 01:03:41 Anderson Cooper just asked her that yesterday for like the 19th time, and she still does not have an answer to that question. And so the problem she has is that this sort of veneer they gave her as this change agent has kind of worn off and she's seen as a continuation of Biden and the public does not want a continuation of Biden. And so now it feels like they're frantically trying to figure out how to reposition their back to the to the the anti Trump sort of hysterical messaging, which didn't work. It wasn't working three months ago when they made the switcheroo. So I tend to think that if you look at the behavior of these campaigns, it's pretty easy

Starting point is 01:04:19 to see which one feels confident and and which one is in a panic. Okay, Jake, if you could go back in time time and you were Kamala's advisor when she became the nominee, what would you have advised her to do differently than she has done in this campaign today? I would have had a speed run primary and I would have let democracy play out. That was the big mistake when the Democrats, if the Democrats lose, I think they'll look back and say, yeah. big mistake when the Democrats, if the Democrats lose, I think they'll look back and say, yeah. 100%. But and then in terms of thinking about why people believe that Trump is an existential threat to democracy, I encourage everybody who's a fan of this podcast to go back to episode 16 of the All

Starting point is 01:05:00 In Podcast. And that's the episode where we all reacted the week of January 6. And we all had great consensus amongst us that we thought this was one of the most disgusting, horrific days in the history of the country and that Trump was trying to overthrow the election results and that he was doing so in a non-democratic fashion. I know some people have re-underrided or changed their positions, but I encourage you all to pause this episode and go back and listen to our very thoughtful discussion on episode 16 of the All In Podcast. Because we were scared as well.

Starting point is 01:05:35 I think that things happen in a moment and you have to have enough compassion to say you react in a moment, but then you also have to have the intellect to separate yourself from the things that happened, learn more, and possibly and potentially change your mind. I don't want to be defined by a thing that I said in a moment. And I won't do that to other people. In that moment, I thought what happened was really terrible.

Starting point is 01:05:59 And then since then, I've got to know the person and I don't think that he actually incited much of anything. That's my belief. Yeah, and that's fine. That's your belief, but I do think there's another group of people who agree with your original assessment. Well, I think that those people need to also re-underwrite the way I did because I'm not really want to flip for random reasons. But that's not the point. The point is, I think that if you still believe what you believe then, then you should tell people to listen to what you said. Yeah, listen to what I said. Okay. But there are a lot. Listen to what Sacks said and listen to what Freiburg said. I thought we had a very productive

Starting point is 01:06:32 discussion when it happened. I think people have memory hold it. What you're trying to say, which I partially disagree with is those beliefs have changed over time. And I think it's more balanced for you to say that that's a point in time. And if you believe that that point in time still exists, that's fine for you to say that. But I think that's the way that you should say it. The other thing that I would like to say about this election, which I find really interesting, is we are in the part of the cycle now where the side that's losing is going to panic. And I think it's happened a couple of times,

Starting point is 01:07:07 but I would just remind everybody, we have run the A-B test. We know what the presidency's going to look like under Trump, except you get a real vice president plus RFK plus Elon Musk, whether you like them or not. But my point is, I think you need to consider that you're getting four for the price of one. And if the other side, if Harris wins, you mostly know what the trend will be

Starting point is 01:07:35 because you've seen the trend under four years of Biden. The second thing is, I think it's interesting to see that when you get into the home stretch, the losing side tends to turn on itself because they start to play protectionism for their own careers. And there's a lot of stuff that I think you can consume that starts to show that. And I think that's just an interesting observation. A lot of the tried and true most reliable media sources that I think were trying to navigate

Starting point is 01:08:07 as much as possible for a pro-Harris presidency are starting to push back in a way that I find a little surprising. I think the CNN town hall yesterday was one of those moments for me, where even people like David Axelrod, a little bit throwing Kamala Harris under the bus, I didn't expect that at all. So I think it's just important to observe that these things are happening. I would agree with that. We're going to make it through whatever. Hold on.

Starting point is 01:08:32 Let me just give one thing to your point, Shemad, since, you know, I am challenging you with that episode 16 call out, I do hope that whoever wins, we all support that person to do the best they can for all Americans. And that's always been my commitment. And I did it the last two times and we will survive this one. I don't think we'll survive two or three of these cycles if we spend 10 trillion each time. Just to add, you know, since Jake, how you're referencing an episode that I participated in said some things. I mean, look, I think that the goal of the mainstream media has been to try and keep us in the heat of that moment

Starting point is 01:09:08 for four years. I mean, if you've watched MSNBC for the last four years, it's like J6 is occurring every single day. I mean, this is all that they talk about. But I think like Jamal said, we have learned a lot of things since that day. I didn't know, for example, that Twitter had censored President

Starting point is 01:09:26 Trump's tweets telling all of these people to go home, that basically he said to protest peacefully, and then when they rioted, that he actually published tweets to try and tell them to go home. That was new information. What that came out, remember at the beginning of the whole primary cycle, Trump did that town hall on CNN with Kaitlin Collins, where he dramatically pulled the piece of paper out of his pocket with the tweets and started reading them. That was a lot of new information for people. And I think that gave him a different picture. And then I think one other point that I think is important is that imagine if the press had tried to keep us in the heat at the moment

Starting point is 01:10:02 of the summer of 2020 riots, the George Floyd riots, then we'd have a very different perception of which party was in favor of riots because Tim Walz was the governor of Minnesota when those riots occurred. He did not want to send in the National Guard. Trump did. And then Kamala Harris tried to raise money for bail for an organization that was bailing out some of these protesters and rioters out of prison.

Starting point is 01:10:27 So if the media was so inclined, they could portray Kamala Harris and Tim Walz as the party of the riots of the summer of 2020. I think at the end of the day, that both those takes are propagandistic and they happened four years ago. And it's certainly a piece of information that voters can take into account, And it's certainly a piece of information that voters can take into account, but it's only one piece of information. And there's a whole lot of other issues

Starting point is 01:10:51 and policies in this election. And I think at this point, everything that happened four years ago is kind of priced into the stock. And what voters want to know about now is what would you do on the issues? What would you do about immigration? What would you do about inflation? What would you do on the issues? What would you do about immigration? What would you do about inflation? What would you do about the economy? And when you look at the polling on those issues

Starting point is 01:11:10 that voters say matter to them, Trump has a decisive advantage. And Kamala Harris cannot explain what she would do differently than Joe Biden. David Axelrod, word, solid city. That's what he said last night, which was very shocking that he would say that. Totally. That is throwing her under the bus, but it's also just preserving his own credibility because it's hard to look. But this is my point. Anderson Cooper now has to preserve his own credibility. You can only prop up a candidate so long and then at some point you have to prioritize

Starting point is 01:11:35 your own media career. And I think Anderson Cooper last night had to start to push back. That's when everyone turned on Biden. Yeah. It's like he started to- Remember that one night when everyone turned on Biden. Yeah, it's like he started. Remember that one night when everyone turned on Biden after the debate. Exactly. All the journalists who had been covering Biden

Starting point is 01:11:49 for so long that it was obvious in their face the whole time. They suddenly had to be like, okay, I guess we got to admit now he's not really there. Yeah, look, and I think in one important way, Kamala Harris has been set up to fail here because on the one hand, she wants to distance herself from Joe Biden's record. But on the other hand, she won't say what she would do differently. So she's in this kind of like Never Neverland, this limbo.

Starting point is 01:12:12 Yeah, that's right. But that's also not her fault. That's the position the Democratic Party put her in. And this goes back to what J. Cal said. We should have run a primary. They should have run a primary for sure. I think they could have had a better candidate. But also, I think to go back to Freeberg's question, this is a little bit of a pre-mortem, what should they have done differently? I think you either defend Joe Biden's record or say what you would do differently. You can't be in this limbo state.

Starting point is 01:12:37 Joe Biden's got to be in the White House there and gritting his teeth, wanting to get out on the campaign trail and defending his record, because I think Joe Biden thinks he has a good record. And there are things you could say in favor of that record. I mean, I personally don't think it's great, but you could talk about the full employment picture. You could talk about the fact that, yes, we had 9% inflation, but now it's down to 3%. I mean, there are things you could say. I mean, he did sign... Equity markets.

Starting point is 01:13:01 Equity markets are an all-time high. I mean, he signed a lot of legislation that he obviously believed in. So the Democrats do have a record to run on. It's not a record that I personally believe in, but it's certainly one that I think you could make an effort to defend. And I think Biden, if he was the candidate, would be defending that record. And it's very awkward to have a candidate who was part of this administration who will not defend that record who distances herself from that record, but won't really say with any detail or conviction what she would do differently. That is just a losing proposition.

Starting point is 01:13:33 I think Anderson Cooper exposed it more than Bret Baier last night because Anderson Cooper had the time. Bret Baier only had 26 minutes and Bret Baier was seen as adversarial, whereas Anderson Cooper is fundamentally a friendly interviewer. And when she can't answer those questions for Anderson Cooper, that's when you know you're done. By the way, we've said this now consistently, almost monotonously now for about two or three months. She has to go

Starting point is 01:14:00 into these swing states and answer about four or five critical questions. And, and I would just say, this is still the problem. So if she wants to try to close this gap in the next 12 days and have a legitimate chance of winning, she, I think there's still 12 days. I mean, it's a very simple way to do it. Number one, the border got out of control. We've shut it down already and we're going to tighten it even more. Number two, the border got out of control, we've shut it down already, and we're going to tighten it even more. Number two, the stock market's at a record for a

Starting point is 01:14:29 reason. Number three, the employment is at the lowest it's ever been in our lifetimes. This is the as good as it gets folks. And if you go with the other guy, honestly, Jacob, you're a better campaign manager. Well, you're a better campaign manager than the person that's running the campaign right now. Very straightforward. Look, they're not doing a good job.

Starting point is 01:14:48 And I think that Sachs is right. They're afraid of their own shadow and they're going to walk into a meaningful reset of the Democratic Party of being careful. Well, and let me even finish. Number four, this person overturned Roe v. Wade. That's what they're doing. And his VP candidate has said he wanted a national ban. They walked that back, but if you're a woman, you shouldn't trust them. And number five, obviously,

Starting point is 01:15:08 you saw what happened on January 6. He'll do it again. And you got the job. And listen, I'm not Biden. Biden obviously needs to retire. He was a great president. He was a great vice president. We thank him for his service. I'm completely different. I have a different approach to all of this. And Trump is a wild card that this country doesn't need at the same the end. And they would win. But I don't know who's advising her. It's the same thing with Trump. I think Trump could have just gone right to the middle. And when he was Trump 2.0, he should be up 20 points on her the fact that he's

Starting point is 01:15:37 not up 20 points or 15 points on Kamala and that this is a dead heat. I think is crazy. Trump's the easiest candidate to be Kamala is easy candidate to be I Kamala is the easiest candidate to be. I wonder who's running both of these campaigns. Well, it's hard to be up 20 points when the entire mainstream media is against you. There's only reporting positive things about the other candidates, only reporting negative things about you. And you have a three to one money disadvantage.

Starting point is 01:16:00 One thing you could say for Kamala Harris is she has been a good fundraiser. There's plenty of billionaires who are funding her campaign. They literally have three times more money than the Trump campaign. And even in California, which is a safe state for them, you're seeing Kamala campaign ads everywhere that just tells you they're so flush with cash that they can afford to spread the money around even in California. So look, the reality is that Trump has the entire establishment against him. And I think for him to be ahead in the polls and the prediction markets and the early voting

Starting point is 01:16:30 fairly decisively is an extraordinary achievement. I think he's probably the only candidate who could have done that. In any event, and I do think, Jay Kal, that Kamala has tried to make some of the arguments that you just said, not very crisply, but she's trying to walk back on the border. The problem is they have no credibility on that because the Democrats, for the last eight years, have fought Trump on the border wall. It's his signature issue. And if you don't think Republicans should be believed on abortion, there's absolutely no reason to believe Democrats on the border. They fought Trump's wall. Yeah, I think that's fair. I think that's their parts of all for scrap metal. She was supposed to be the border czar

Starting point is 01:17:09 didn't even visit the border, which shows that she never thought it was important. Now she wants to pretend that she's Trump on the border. Public's not buying it to handle the border. She's so simple. She could just say, what work then is not going to work. Now we've we've we've filled up and we just true dough just did a tweet. Hey, we're taking a pause for two years. That's all she's got to Hey, we're taking a pause for two years. That's all she's gotta do.

Starting point is 01:17:26 We're taking a pause for two years on the border. We obviously, it got out of control. The end, we'll move on to the next issue. All right, if the Harris campaign is listening, J Cal's advice is out there. Come on the pod. You may come on the pod, you're always welcome. Everyone that's running for president is welcome

Starting point is 01:17:41 on the pod. Sorry, did you guys hear this rumor that Barstool Sports Tool? She's not my candidate, by the way, she's not my Sorry, did you guys hear this rumor that Barstool Sports? She's not my candidate, by the way. She's not my candidate. Did you guys hear this rumor that Barstool Sports was asked if they would interview her and they turned her down? Is this rumor true? Apparently, I don't know.

Starting point is 01:17:55 Why wouldn't they take it? No, they would take the interview. So Portnoy claims that the Harris campaign reached out and asked to be on two or three of their shows and Barstool declined having her on, which is pretty unbelievable. Well, they just waited way too late. I mean, there's no question that last month, they radically pivoted their media strategy. She became the candidate roughly three months ago. For the first two months, they didn't let her do any press interviews. Then they realized that

Starting point is 01:18:21 their internals were bad, they're behind in the polls. So now they're having her go out and do a lot of media. And like I said, a couple weeks ago, that started to create a doom loop because she is not a great media performer. So her polls are getting even worse. So then they got to put her out on more media to try and, you know, rebut that your doom loop was a good call. I'll give you credit. If the Kamala campaign were a startup, we'd be saying it's in a death spiral right now. Okay, got it. You got your line. Let's move on. It's a dead heat.

Starting point is 01:18:49 We got it, let's go. So we're gonna wrap up with- Starbys? What I think's a pretty, yeah, Starbys. Super interesting topic because it's a real question around traditional shifting to digital. Is that why Starbucks is having challenges? Or is it just maturity? Or is it what happens when a brand that's successful

Starting point is 01:19:06 as a luxury brand gets too big? And the kind of, you know, premium experience commoditizes. So as you guys know, we covered the Starbucks CEO, Brian Nicol, joining a few months ago. This was after the prior CEO had been in the office for just 16 months. And there were a lot of problems that were plaguing Starbucks. a few months ago, this was after the prior CEO had been in the office for just 16 months.

Starting point is 01:19:30 And there were a lot of problems that were plaguing Starbucks. But just this Tuesday, Brian Nicol came on and said that we're suspending guidance for 2025 after reporting preliminary earnings that showed another drop in sales at Starbucks. Same store sales, which is the key metric in the QSR or, or food and beverage retail business, attracts what your revenue is year over year. Same store sales declined 7% year over year, earnings per share drop 25% year over year. So Nichol said we're getting the bad news out of the way. Now we're going to this back to Starbucks plan focus on experience, improve the throughput, experience and quality, make baristas choose Starbucks as a career. And then he went through a whole plan. He put out a six, seven minute video on this whole thing. So clearly customers are frustrated

Starting point is 01:20:17 with the Starbucks product, the Starbucks experience, the employees are frustrated working there. And a lot of the system seems to be breaking down. I guess I wanted to kind of talk about what is the core driver and is there a business lesson in all of this about premium brands or about scale and maturity and markets to be learned from the Starbucks story. So I don't know if any of you guys

Starting point is 01:20:39 have gone through this earnings report or looked at the Nicholas video. I have actually. I go to Starbucks on the regular and I think this really is just a case of founder versus being counter. It's reminds me of Boeing or, you know, even Apple with their inability to produce new products, post the Steve jobs pipeline of products. And if you have anybody read, pour your heart into it.

Starting point is 01:21:00 Schultz is biography. It's absolutely fantastic. And he really had an obsession with user experience, like writing people's names on the cups was a Starbucks innovation, remembering people's names, empowering the green aprons was like a big part of this. And then once he was out of the bean counters came in, and they just got all about efficiency, the much smaller number of baristas at the store, ordering your drink through the app, and just trying to make

Starting point is 01:21:28 these grinded efficiency decisions, as opposed to the experience ones. And I think the Starbucks experience starts and begins with the baristas. And that's the main problem. If you've gone to a Starbucks over the last couple years, sometimes you go in, and there are literally 50 drinks from the like, I'm not kidding, like 50 drinks on the pickup counter and then this huge line if you're coming person, and it's the most impersonal thing and the stores are a wreck. They're disgusting.

Starting point is 01:21:54 They look like a truck stop. And the whole point of Starbucks was to create this third space is beautiful place that was welcoming with gorgeous lighting. And the baristas were supposed to make you hang out and enjoy yourself there. And they lost that and all you have to do is read Schultz's book and do exactly what he did. Now there are a lot of other issues there around the competition for Starbucks employees that I think are super important. Do you think that's really true, Jake help because like nickel came on and he said we're going back to the core flat whites, espressos, nice, nice espressos, delicious coffee.

Starting point is 01:22:28 But the reality is in order for them to have grown revenue over the last 20 years, Starbucks has expanded their menu as Chamath has pointed out to becoming a seller of sugar. They've become a seller of milkshakes and flavored beverages and high sugar cocktails, mocktails that people, you know, run into the store to buy two, three times a day. That's how they were able to get the pickup, not selling what they started out doing, which was fine Italian roast and espresso. It's now become a very different product

Starting point is 01:22:55 and a very different experience. And so can you really go back to the core and not lose all the customers that I would say aren't looking for a flat white and an espresso, they're looking for a milkshake in the middle of the day. You want to maintain the core is the key. You don't want to give up the core and the core was having a great in store

Starting point is 01:23:10 experience. And I think that is not what you get when you go there. Putting the sugar aside. It is I think like going for ice cream for kids. So my kids will pick if they want to go for ice cream or Starbucks. And to your point about the sugar trauma, it's basically the same profile. And it's a great place to get breakfast. I'll tell you that, you know, the egg bites and the scones. Let's watch Nichols. Let's watch Nichols clip and then Chamath. You can give us your take on this. This is a 30 second clip from Nichols six minutes that he put out on Twitter. To succeed, we need to address staffing in our stores,

Starting point is 01:23:43 remove bottlenecks and simplify things for our baristas. We need to refine mobile order and pay so it doesn't overwhelm the cafe experience. We're fundamentally changing our marketing. We've been focusing on Starbucks Rewards customers rather than talking to all our customers. And we're changing that quickly. We will simplify our overly complex menu, fix our pricing architecture, and ensure that every customer feels Starbucks is worth it every single time they visit.

Starting point is 01:24:08 We must reestablish ourselves as the community coffee house. By the way, this is one of the things that Nichols did at Taco Bell when he was the CEO there. You guys remember the Taco Bell menu? There was always like really interesting hidden things on that menu. He simplified the menu, made it very small, did the same at Chipotle.

Starting point is 01:24:25 He takes this approach of finding the best product, simplifying the experience, simplifying the operations and giving the customers fewer choices that ultimately leads to faster turnaround, better experience. But the trade-off is you have less variety that people have come to know and love. And at Starbucks in particular, where there is just so much variety to choose from now, if your favorite beverage got pulled off the menu, are you gonna start to go there less frequently?

Starting point is 01:24:53 Chamath, I don't know if you have a take on what's going on at Starbucks and whether it tells you something about the maturity about one of the most iconic consumer brands in America. This business is in trouble. Nick, please show the chart. This is Eli Lilly versus Starbucks. If you look at it over a year, you could look at it over the year to date.

Starting point is 01:25:13 You could look at it over two years. Five years. Five years. But what does this show? This shows sugar versus anti-sugar. And anti-sugar is winning. Say it differently. GLP-1s versus things that cause you to need GLP-1s. GLP-1s are winning.

Starting point is 01:25:37 And so I think this existential issue for Starbucks is about resetting to a much smaller footprint and a different product portfolio that tries to see where the puck is going. Where the puck is going is where a large percentage of the people that probably were buying Starbucks products and were very loyal Starbucks customers will have very different consumption habits as they more pervasively use these GLP-1s. And this in a nutshell is not something that Starbucks can fix with their current product mix. And so I think that they're fighting into a headwind and these other companies are deeply incentivized to get American taste buds to be different.

Starting point is 01:26:30 And so, Jason, the things that you talked about are exactly the things that I think start to fall off the menu or just don't sell as much. Because whatever the population of Americans are that are on GLP-1s, let's say it's single digits, the real question is, what percentage of Starbucks customers are on these things? And I think it's probably much more than single digits, the real question is what percentage of Starbucks customers are on these things. And I think it's probably much more than single digits. And this is why I think

Starting point is 01:26:48 you see the continuous decline in same store sales. And I think if you start to graph the adoption of GLP ones pervasively in America to the drop in same store sales, I think as GLP one adoption goes up, same store sales will continue to go down. But it doesn't it argue towards the original business free bird that going there and having a cup of coffee and hanging out leisurely with your friends and having a conversation and it being a third space is the core value prop. And maybe the sugary drinks maybe will fall out of fashion.

Starting point is 01:27:19 So it may be true. But I think that the the core objective of any corporation is to maximize shareholder value driven by growing profits over time. So growing profits over time requires increasing your revenue. There are three levers for doing this. Maximize brand, which is to get more customers. I don't know if you can get the brand to be any more maximal than Starbucks. Maximize coverage, which is how many products can you get those customers to buy, whether it's on a daily basis, weekly basis or monthly basis, how much of their meals and wallet share you're getting. And I don't know how many more times you can get

Starting point is 01:27:57 people to go back into Starbucks each week than they've done with their rewards program, with their digital, with their high throughput tools that they've built over the last decade and so on. And then finally, maximize price. There's a limit to how much you can charge people. When you put those three together, you got more customers, you're selling them more stuff at the highest price possible. At some point, you reach a revenue maximum. That has happened also at Apple. I think that Apple has faced a similar dilemma in the last couple of years, which is how do we get more customers? It's the most recognized brand on earth. You can only buy so many Apple products now, you know, they tried to launch the

Starting point is 01:28:27 vision pro it didn't go well today. They didn't announce that they're this week. They announced their discontinuing production or reducing production on the vision pro and you can only charge so much for these products. And I would argue that Starbucks is a victim of the same maximization effect that at some point you get all the customers, you get them to come in and spend it, buy as many products from you as they can, and you charge them the highest price possible. And then you reach this kind of maximum point on the business. And I think Starbucks has just reached that point of maturity. So to your point, it doesn't

Starting point is 01:28:57 mean that it's a bad business at all. It could be a great business, a nicely profitable business, but the growth ahead of it is limited. It cannot keep growing same store sales as it has historically because they've maximized all three of those levers. So fewer costs might be a way to drive more profits, more efficient operations. I think that's the natural next state for Nickel to tackle at this company. The sad thing for Starbucks is that the only road that they have is to actually double down on sugar. And the reason is because the ARPUs are meaningfully higher than traditional coffee. And so the economic pressure that shareholders will put on it

Starting point is 01:29:32 is to actually stay in the business that they're in and try to do it as long as possible, as you say, Freeberg, and just strip out as much cash as possible. And then you just, you grow profit by reducing costs and getting more efficient versus trying to add more products to get more customers. Which degrades the experience.

Starting point is 01:29:47 But the structural problem is Starbucks should be probably a $20 billion asset. Yeah, and so what happens when a company gets to this level of maturity, much like has happened with Apple, is the multiples compress. No, the difference is though that Apple has not had the competitive pressure that Starbucks has because Starbucks competes on a level playing field

Starting point is 01:30:03 with the Dunkin' Donuts of the world or the Pete's Coffees of the world, but they compete in a completely orthogonal plane with GLP-1s. And I think that is not something that Apple deals with. So Apple can still be at the point that you described earlier, which is let me just maximize free cash for a generation, which is what they do. And then let me allocate that back to shareholders via buybacks, which is also what they do. So there could be another decade or so where Apple can continue to run this play

Starting point is 01:30:29 with very little impact to them or to the company. Now, I'll say something else about Apple though, which is I actually upgraded my phone. I think this was three years in and I finally did it. My gosh, this phone is, sucks. iOS 18 software is janky. iOS 18 is just terrible. I'll show you one example of just like terrible design

Starting point is 01:30:52 where if a designer that worked on my team showed me this, I would have fired them. Look at this. Can you see this? Is it possible to understand why you have two images for the do not disturb thing, one above the other? I had broken one of those too. No, but it's a level of sloppiness and not taking care, which just shows you that it's like we make so much money, it just doesn't matter anymore.

Starting point is 01:31:16 That's what I feel like they're telling me. And then I'm like, well, wait a minute, why did I just spend $1,200 of my hard-earned money to upgrade to this thing if you don't care? How much was it to upgrade? I think it was like $1,200 of my hard-earned money to upgrade to this thing if you don't care? How much was it to upgrade? I think it was like $1,200 for this new phone. The other thing is that the actual upgrade itself, and I'm not exactly sure why because I didn't take the time to unpack it, it took four hours. The actual migration of like from an old phone to a new phone.

Starting point is 01:31:42 And I thought, my gosh, this is such monopolistic behavior. Right. So if it takes you an entire day to basically upgrade your phone, at some point, you're just going to stay with the platform you're on and never upgrade, or you're just going to stay on the exact same device. Because it's just too complicated. Imagine going from an Apple to an Android. It's like, it's always both of these businesses are victims of their own success. They reach like market saturation, they reach their natural audience and then some, and they've just got to figure out what to do next. And the adjacencies are hard to find. Yeah. Also, photos.

Starting point is 01:32:16 Vision Pro is a hard adjacency. Also, photos in iOS. Oh, they destroyed the app. It's terrible. It's terrible. Stop changing the interface, Apple. This is basically a camera and you made it terrible. It was good. Why did you do that? I think they're trying to change things for change. One of the things Amazon's gotten correct and, and other services like eBay and Craigslist is when you have an interface that works

Starting point is 01:32:39 and, and billions of people rely on it, you have to be very, very subtle in making changes to it. And they made a wholesale change to the photos app, and it did not work. It did not work. How do I get rid of the second silent thing on my thing? How can I just go back to the old thing? Yeah, that's when you know you failed as a product manager, when people want the old thing. But isn't this just so lazy? Something's not right.

Starting point is 01:33:07 Yeah. I know there's a lot of Apple people. This is, come on guys, can you just take this? The control center is what he's showing and the control center is massively confusing. It's like changing where the lights are in your bedroom and like, okay. Yeah.

Starting point is 01:33:21 All right, troubleshooting, part of the All In podcast is over. I really wanna say thanks to Saks for participating headily in our Starbucks discussion. Saks, anything you want to say on the maturity of Starbucks or other mature tech businesses or value luxury businesses as they get big? Too big to keep growing. Anything else? I mean, yeah, I'm just not an expert on Starbucks.

Starting point is 01:33:43 I mean, I do like their product, but- What do you get? What's your order? Tell us your order. Yeah, what's your order? I just get an Americano with a splash of oat milk. Oh, it's like my order, Sacks. Oat milk!

Starting point is 01:33:55 That's a great order. What happened with you? Yeah, that's great. Good for you. How about I just send you some specialty chemicals that you can just pour down your throat? Some xanthanthes. Coat burgers, oat milk bath. Some Kar-Gi-Gon.

Starting point is 01:34:06 Don't listen to Chamath. Do it again and say you put in heavy cream. You're gonna get kicked out of MAGA. This is horrible sex. You cannot be ordering oat milk and be MAGA. They don't have nut milks at Mar-a-Lago. I'm gonna find out in a couple of weeks, I'll let you know.

Starting point is 01:34:18 Don't put that stuff in your body, dude. I bet they do. You should take that sweater that you just took from Chamath and wear that to Mar-a-Lago when you go. It's like a perfect sweater for your Mar-a-Lago visit. Oh yeah. Oh my God. Don't touch it. Stop touching it. I'm still mad at Nat. I'm going to talk to her about this. Don't touch it. I'll talk to her at lunch. I'll talk to her at lunch. She's

Starting point is 01:34:34 putting a sundress on. Before you came on Zoom, Chamath, she was actually, she was just sitting on his lap and they were just chatting and I'm like, what is going on here? How outrageous. What do you want for lunch? I said, what do I on here? How rages. What do you want? I said what do I want for lunch? Your company. That's what I told her. Oh sweetheart. That's what I said. She said oh your body. She's like you speak to me so much more kindly than Tom Optus. Oh my god. Alright this has been another amazing episode of the All In Pod. As a team player I have been here to pinch hit for J Cali. He did not want to moderate this week.

Starting point is 01:35:06 So I stepped in to fill the shoes. I'll come back next week. Did you do a good job? Solid job. Solid job. One of this show's greatest moderators. For your Sultan of science, for the rain man, for the chairman dictator, and for the world's most absentee moderator.

Starting point is 01:35:25 I want to thank you all. I'm living a great life right now. He's stealing anything that's not nailed down. I'm the world's greatest houseguest. He's putting together his own gift bag. Love you besties. Love you boys. Bye bye.

Starting point is 01:35:40 Bye bye. I'll be there in a couple of hours, Saks! What, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, what, but they just need to release them now. What? You're the bee. What? You're the bee. Bee? We need to get merch. I'm doing all in. I'm doing all in.

All-In with Chamath, Jason, Sacks & Friedberg - Markets turn Trump, Long rates spike, Election home stretch, Influencer mania, Saving Starbucks

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