This Week in Startups - Tech takes action against Russia, Backbone's mobile gaming device + Joel Greenblatt from Gotham Capital | E1397

Episode Date: March 2, 2022

First Jason and Molly break down the reactions from big tech companies to the Russia / Ukraine conflict (2:22), then we showcase our Startup of the Day, Backbone which is innovating in mobile gaming (51:41). Then Jason does an amazing interview with investor Joel Greenblatt, where we discuss increasing public market participation, strategies for finding value, taxes and more (1:05:50). (00:00) Jason and Molly intro today’s DOUBLE episode, Ukraine, Tech companies and Russia sanctions, Startup of the day Backbone, Interview with investor Joel Greenblatt (02:22) What tech companies should do in response to Russia invading Ukraine (12:28) Gun.io - Get $250 off your first developer hire at https://Gun.io/twist! (13:50) Tech companies and Russia sanctions continued (21:27) OpenPhone - Get an extra 20% off any plan for your first 6 months at https://openphone.com/twist (22:51) Sanctions aren’t the perfect response because there isn’t one (30:17) Boast - Get your R&D tax credits without the hassle at https://boast.ai/twist (31:35) Apple needs to decide what to do in Russia (51:41) Startup of the day: Backbone (01:05:50) Jason interviews investor Joel Greenblatt (01:25:10) Joel talks about the long term effects of having so many young, new market participants (01:59:12) Joel’s thoughts on minimum taxes and tax loopholes More on Joel: https://www.gothamfunds.com/principals.aspx FOLLOW Jason: https://linktr.ee/calacanis FOLLOW Molly: https://twitter.com/mollywood

Hey, everybody, hey everybody. We have an amazing show for you today. It's a big show. Molly, what's on the deck? It is a thick boy of a show. First up, we're going to break down the reactions from big tech companies to the Russia-Ukraine situation because there is not a person or a company or a financial institution who is not being drawn into this.

And so we're going to break it down from our perspective in the tech industry. We're also going to talk about a startup of the day because we all need a little escapism, innovating in mobile games. Amazing. And the companies that we're going to talk about, I mean, it's Coinbase, it's Netflix, it's Apple, it's Google, it's Facebook, everybody is being drawn into the Ukraine conflict and everybody has a role to play in this.

So it's a very serious talk, and it's an expansive talk, and I think it's an important one, so I really hope you listen to it. But after we get through with that discussion and about an hour of news, we have another amazing interview. Joel Greenblatt is back on. the program. A year ago, he came on to talk about his book and a range of topics. This is one of the great investors in history, and he is well-versed like many investors are on the global situation, startups, the economy, taxes. We have a wide-ranging discussion with this legendary

investor in second appearance, and I booked him for six months from now. He is getting into the rotation, Molly. It's going to be a great show. Stick with us. This week in startups is brought to you by gun.io. The simplest way for any way for any want to hire world-class developers expertly vetted for you by senior engineers. Get $250 off your first hire at gun.io slash twist. Open phone. As a startup founder, a lot of mistakes are easy to roll back, but using your personal cell phone number as your company's number isn't one of them. Open phone makes it easy to get business phone numbers for you and your team right on top of your existing devices. Visit openphone.com slash twist to get 20%

off your first six months. And Boast. If you're a startup developing new software or R&D, you may be owed up to $250 in cash back from the government. Boast helps you get that money quickly and easily. The first 50 customers will get 10% off their first year by mentioning promo code twist at boast.aI slash twist. All right, everybody, in our first new story, as you could probably guess,

we need to talk about what's happening in the Ukraine. the war that is going on right now. And obviously, we are, I can't speak for Molly, but she will speak for herself. But I am obviously really heartbroken about this. It's hard to think about anything else the whole weekend. I was, you know, checking in on the news and very hard to interpret what's going on and what the right thing to do is. How are you feeling about all this, Molly? Yeah, same. I mean, it is 100% all I can think about. And I've been on Twitter all day, every day. Way too much, arguably. Because I don't know about you, but I get into this weird state of mind, like when you're reading a really immersive book or a movie, you know,

and I'm reading, I'm following this one reporter, Ilya Pona Morenko, who is a defense reporter with the Keeve Independent. I mean, this guy should get a Pulitzer for his Twitter feed. It's unbelievable. In your imagination, you start to feel like you're there and then you sort of pull back to the real world and it's super disorienting. And it's also just so an accurate. feeling like we forgot that people still just shoot each other in wars and blow each other up. And it just keeps getting more and more inhumane. And it's just hard to sit here and know what to do. Yeah. You know, it's we live in this time where we have a great amount of distance between horrible things happening in the world. We see, you know, microcosms of violence, but this wholesale

violence that humanity does experience, it's becoming more shocking. And in a way, that's a good thing, I think. And the fact that a lot of this stuff is being shared on Twitter and TikTok and other places, in one way, it's dystopian. And it's shocking and it's hard to reconcile that you're flipping through Twitter and TikTok and having a conversation about, I don't know, whatever show you're watching on Netflix or something happening in your business. And then there's Molotov cocktails going off or people being run over in cars.

So it is, does have this very dystopian feel to it. it. But then I was trying to think about the positive of it. And I don't know that any dictators anticipated that rolling into another country would result in a billion people or two billion people, whatever it is on social that's consuming this now, and what their reactions to it would be. And the overwhelming reaction now is two billion people saying, war is bad. Like, to quote, Alda Snow and get him to the Greek, you know, there's like this crazy moment where he's doing a music video and he writes on the screen, war is bad. Right.

You're just like, oh my God, this person is a simpleton and, you know, virtue signaling. But that's how we all feel. Yeah. And that's what everybody is communicating. So it feels and, you know, reality is different than feeling in Twitter and TikTok and media coverage and 24-hour coverage. But I do think that this global phenomenon of people saying, hey, this isn't right. Why is this happening? And we don't want this.

We don't need this. we can, there's got to be a better solution. This is a major difference than maybe previous wars that happened, that happened quietly, that, you know, the photos were withheld from the public. There were media blackouts in previous wars. And it took months, years for people to know exactly how bad these horrors are. So I think there is some silver lining here. I think it might be that the aggressor here, Putin, might have underestimated starting a war

in the age of social media. Yeah. Well, and he may have overestimated the impact and effectiveness, surprisingly, considering how effective disinformation has been since the 2016 election and even before. Yeah. It is kind of remarkable to see that years long, very deliberate, very expensive, and frequently very effective effort kind of fail here. It feels like he's not able to control the media narrative. Right. Because I think it's about stakes.

Like, it's easy to control a media narrative when it's just people picking teams or, you know, trolling or doing it for the lulls, like, or triggering the libs, right? Like, that is something that you can do without thinking consequence, thinking about consequences, pretty easily, right? You can just kind of goof, especially if you're not a person to whom these real world consequences usually happen or a person who suffers from real harm. But I think it's like that all changes when there's actual shooting. And so the people who thought that Putin was just like an awesome troll who triggered the libs and was on their team now are like, oh yeah, no, that's not a team we want to be part of. This is, it's way, the stakes are way higher and it's way too real for it to be so kind of casual and funny. Exactly. And then this Zelensky and the people of the Ukraine, I think are so tough, so resilient and so determined to fight.

That is another wildcard here that I don't think Putin or anybody else imagined. And I know this sounds silly, maybe at first glance. But Zelensky seems like somebody who is very adept at countering misinformation and creating a media narrative himself. People may or may not know that he is a comedian, an entertainer. I'm not saying he's making jokes now, but he seems very effective at communicating in this new medium and, you know, building a consensus. And he said, listen, we don't need to be, I don't need to be evacuated. I need ammunition. And you hear that line and it's going to be written in history this level of bravery.

And they are winning the hearts and minds of the rest of humanity. And I think it's emboldening people to say, hey, Russia is the aggressor here. There is no valid excuse for this. There is no way to explain this away. and it has to stop. And we don't want to escalate a war. I understand that. And this is not a program about politics.

But I do think we have to touch on, I think, two things that are very much in our wheelhouse is the communications through social media and then the sanctions. So I think we talked a little bit about the communications here. It's pretty awesome to see the entire world just demolish anybody who's pro- Putin or pro-war. it's almost like it's an untenable position to be pro this action by and I do want to go back to Zelensky and his skill with social media I think that that should not be underestimated I mean you had the you know the official Ukraine Twitter account saying tag Russia and tell them what you think about this and send us Bitcoin you have Zelensky making these posts on social media and I don't think we should like ignore the fact that he's young right he is in kind of the

age range to understand the power of this and frankly probably to have watched all of the propaganda efforts that Russia has undergone over the years. I mean, look, this is a country, you know, all the way back to the Soviet Union and certainly now, this is a one industry country. Like, and it's spying, right? It's the KGB and oil and gas props it up. And they are just masters at this. And so if you're the country right next door and a lot of you, you know, used to be part of the Soviet Union, for example, like you watch these techniques and Zelensky, in addition to showing incredible, physical, personal bravery and great leadership is awesome at social media.

And we shouldn't discount the power of that at all. It's huge. I mean, and I don't know if you saw, they were asking for internet connectivity. They asked SpaceX for Starlink. And then all of a sudden, a bunch of Starlink satellite showed up or a satellite receiver showed up. Like, this is, in some ways, Putin has been neutralized. As you pointed out, like, his greatest strength was the ability to.

manipulate media and he's impotent. Yeah. You know, and, you know, they were supposed to be like the aggressive, uh, sadistic, crazy, uh, Russian hand-to-hand combat, you know, foot soldiers, we're going to be able to come in here and just terrorize everybody. And then you're watching, you know, right? Women, uh, on the border making Molotov cocktails. And then I, I don't know, you saw the viral video of just a woman lighting a Molotov

cocktail in a car as they drive by. a tank and she just throws right there. I'm like, whoa. It's unbelievable. Unbelievable. And so that morale busting on social media, you know, like using these videos and memes to just humiliate Russians and show pictures of burned out tanks. And I mean, the information war is as much, well, it is not as much. It's a big, it's a huge part of this. There's a horrific loss of life happening and I don't want to like, you know, so, but information is always key, right? And what

we're seeing here is that you're not wrong. Propaganda is always key, and this is... Photos of what happened during the Holocaust or photos of what happened in Vietnam are what changed sentiment and then changed the direction of the war. So it is not actually underestimating. I think, you know, people fighting in the streets

and dying is obviously a bigger human tragedy. But in terms of effectiveness of what ends of war, it probably is correct that an image would be more persuasive. A video could be more persuasive in swaying the world and then creating a bunch of change or demands for change, then, you know, just hand-to-hand combat or Molotov cocktails versus, you know, machine guns. Like, those things are going to have, you know, an impact in the theater of war.

But one image, one statement, one tweet, one viral video could change just the way the entire populace of the world views this conflict. I think that's actually what's happened. Yeah. It really is. I don't think it's underestimating at all. I think you're correct. Well, an image can change everybody's consciousness. Hiring software engineers takes a long time.

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It's going to be really easy for you. Gun.io is the easiest way for startups to find and hire world class developers. And you're going to get $250 off your first hire at gun.io slash twist. And as it happens on, that note, the other thing that's right in our wheelhouse here is, you know, there are obviously a lot of financial sanctions. There are also companies being drawn into this in ways that they never expected. U.S. companies, of course, the obvious ones are the big social media leaders, right? The big platforms, TikTok, meta, YouTube, all three of those companies have restricted access to Kremlin-backed

sites, RT and Sputnik in Europe. And then meta and Twitter have been removing anti-Ukrainian disinformation campaigns over the weekend. They've been drawn into this by the Court of Public opinion big time. So these aren't our government sanctioning them and telling them you have to turn this off. This is them proactively saying we're a platform. We are making an editorial decision here that we do not want to give the aggressor, the person who's wrong, the ability to communicate with the rest of the world. We are shutting down Putin's ability to spread pop again. So they're kicking aside. And I think that's the right thing to do here. It's a no-brainer to not let

this propaganda out. And so I think kudos to YouTube, Facebook and TikTok. I'm not going to call it meta. That's just silly. But no. And to be fair, they are at least according to Politico getting lots of pressure from Western leaders to limit how Moscow can spread its propaganda. But it, I think like this is not a scenario to, you know, to your point about the the almost completely unified response to this aggression. like you do not want to be in the company that is basically like, well, we think there's like both sides here. Yeah, no, there is not both sides here. It's just free speech.

Like, no, no. This is not free speech. This is a campaign to take a democratic, a thriving country and to take them over. And anybody who supports it is supporting a dictator, murder, full stop. You know, I don't care who you are, whether you're Tucker Carlson or... you know, Trump, or whoever is pro-Putton in this, you know, it's deranged and anti-humanitarian to support dictators, period, full stop. Now, you could say, what is the technique we use here? And I think that that leads us to our next question, which is, we don't want to escalate a war. I understand that. And escalating a war with a nuclear power seems incredibly fraught and needs to be a very considered decision.

So every single technique that is not war and sending troops in and starting World War III with a nuclear power should be on the table and should be exhausted first and that means sanctions. So here we have censorship or not censorship, but shutting down the communications, I guess, you know,

the communication platform for the aggressor, for the person who is clearly wrong here. Well, let's, yeah, let's briefly touch on the kind of like the efforts to fight the disinformation. And it is interesting. And we'll talk about ways in which, you know, it's almost like there's a spectrum of reactions from these tech companies, too, that range from the pretty easy and obvious, like easy and obvious sanctions to the slightly more severe actions like, you know, literally blocking, for example, RT, to the extent that that's happening, RT and Sputnik. And that's closer to like targeting the oligarchs, right, in their yachts and planes, all the way to the potential nuclear option, which we'll talk about, I think, a little bit later, which is Ukraine asking. I can to block top level domains.

Let's go right to that. This seems to be like an incredibly aggressive. I didn't even think. Yeah, I didn't even think of it. But the idea here is for, correct me if I'm wrong, ICANN, which manages top level domains to turn off Russia's top level domain system. Yeah. Yeah, this was breaking this morning.

It showed up in, so my long time, friend Bill Woodcock was tweeting about this. He's at the packet clearinghouse, which is like a nonprofit that, I mean, he's basically like one of those wizards who operates global DNS, right? And so he's one of the few people, I think, who really can completely explain what Ukraine is asking for. They sent this urgent request to ICAN, the internet corporation per assigned names and numbers, which, as you know, is like based in the United States and has, is effectively, has a relationship with the Department of Commerce, although it is a nonprofit itself.

The request was, like you said, Jason, revoke permanently or temporarily, the domains.ru.org, dot p.O, or whatever that O is in Cyrillic, and dotSU. This list, the email went on, is not exhaustive and may also include other domains issued in the Russian Federation. And shut down DNS root servers situated in the Russian Federation in St. Petersburg and Moscow, contribute to the revoking for SSL. basically like wipe Russian domains off the map. Now, you would still be able to get to these if you had the IP address of the servers or they could set up other domain names and other countries and reroute them, I guess, or I don't know technically if you turn these off if there would be no way to get to those servers. My understanding is the domain routing is one way to get to a server on the IP address as the other.

So that means that Russians would have to then start WhatsApping or sending each other list of IP addresses. to go to get their email. Yeah, this could create chaos inside of Russia if you think of all the dependencies that people have on going to domain names to get information, to check their email. I mean, this could cause just chaos, I guess, for people who don't have VPNs

and who are not using non-Russian services. So pretty crazy. Right. And this, I think, is sort of where, like, there are going to be increasing conversations about centralization and control, and there's a bunch of conversations already about like crypto and freezing money and is that the system that we want to be part of where like

Apple pay you know i think William Gibson was retweeting somebody about this yesterday like where Apple Pay can just be turned off and then you can't use that is that are we cool with that and then this question about getting rid of these top level domains at this to this degree and not only you know according to bill and some other analysis would that cut off russian citizens from information it would also leave them vulnerable to greater, like, hacking attacks and security threats. And in the long term gives, I can, which is tiny, the ability to arbitrate international conflicts. And that is a nuclear.

That's nuclear, right? That is nuclear escalation. And of course, Ukraine is asking for that, but also, whoa. It does seem like the second order effects here, you know, in the downstream, third. order effects, like, how does this happen in the future? So somebody disagrees with, I don't know, the treatment of the Uighurs in China. Or the United States or whatever, you know? Yeah. So this to me seems like a, again, you know, we're using the term nuclear here. And, you know, it's fraught with confusion because of the nuclear, the stakes of nuclear weapons. But this is, could be a crazy moment in time to think that during a conflict, all.

the websites went down that people are dependent on. And this does, I think, give the crypto crowd, the decentralization crowd, another checkbox of, hey, you know, this is why we exist, is because these edge cases could happen. Listen, lots of founders are Lucy Goosey with their personal phone numbers. We know that. They put it in company documents. They use it for sales calls. They use it for everything, including all their personal usage.

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They'll do that for free. Just head to OPEN, P-H-O-N-E dot co-slash twist today. And I think that's a perfect segue into should crypto be turned off? And should the centralized crypto platforms like Coinbase, Binance, other folks, should they be allowing crypto trading to occur if assets are also being frozen

vis-a-vis payment systems, and international Swift and other things. What's happening with those areas? People, they have not been ordered to stop. The Ukraine requests things. Right. But we have not said no. And I don't even know if Coinbase operates.

Coinbase apparently said no so far. So Ukrainian leadership did ask crypto exchanges to freeze the accounts of all people in Russia and Belarus. And again, I mean, this is, you're talking about citizens. Yeah. In Russia, who frankly are only just finding out if they're finding out at all. all the extent to which this is an act of pure naked aggression and war crimes against Ukraine. A lot of them think it's, you know, they've been told it's a peacekeeping mission.

Obviously, that fiction is starting to fall apart in Russia. We're a white supremacist and Nazis. Right. But it's what you're doing. So, you know, this is asking crypto exchanges to freeze the accounts of all of these people, all of these citizens. A spokesperson for Coinbase told Vice's motherboard that they will not comply with Ukraine's request.

Coinbase cited economic freedom and the harm that a ban would bring to average Russians as to why they will not comply. But Coinbase did say that it's complying with existing sanctions and so did Binance. Right. So there is absolutely no doubt that Binance and Coinbase, if asked by the government or forced to by our government, will do that. Right. So there's no world in which they would not comply with sanctions because there would be the risk of ruin. Their company would be shut down and the executives would face being. arrested actually.

Right. If they don't participate in the sanctions our government says to do. And this is where sanctions are a dicey topic. What I would remind people is, what is the purpose of sanctions? The purpose of sanctions to cause pain and suffering that is significant enough to stop the pain and suffering that is greater of a murderous invasion. If it was not painful, it would not be a sanction, right? And so in order for us to put pressure on that government, we do need to put pressure on the citizens of the country.

I think it's the point of some of these sanctions when the suffering of Russia collectively, whether it's the oligarchs or sadly, citizens becomes great and they start to suffer. Revolutions occur or potentially could occur. And change can occur. So instead of sending troops to kill Russian men who are invading the Ukraine, I think the point of these sanctions is. is to create suffering that is economic or inconveniences that are economic or just inconvenient. You can't get your news, you can't get your email, so that people say, what is going on here?

And they pick up the phone or they do email or they get a VPN and they start looking at Western media. And I think Russians have pretty, somebody can correct me if I'm wrong here on the live stream, YouTube.com slash this weekend. You're listening to these in all likelihood on the podcast, but we have a live audience that listens to us, hash these things out and sometimes they'll give us some information. As much information is censored

in Russia, people generally there have access to VPNs and the populace generally has ways to get to the New York Times or CNN or, you know, any of this information on social media. It's very different than, let's say, China, where they really do have a great firewall and even there, people do have VPNs on the margin. This is a jump ball, but we do have to put pressure on the populace there to promote this change to get Russia to leave so that Putin has to face his own citizens where like, why can't we get our money? Why can't we get our crypto?

Why can't we read the news? Why can't I check my email? Why can't I pay my phone bill or whatever else Russians are using the internet for? Yeah. The will of the people really does matter. It really does, right? Like there's no such thing as targeted sanctions.

I think a lot of people want there to be the perfect response. And there is not a perfect response to a madman with nukes invading a country. There just isn't. There's all the things that we want to happen. It's kind of like how we all just wish that COVID didn't exist. And so we're mad. We wish that this weren't happening and we're mad.

And there isn't some perfect solution that's going to spare everyone. There isn't. Russian citizens are going to suffer from these sanctions. They may even not just be able to not get money out of the ATM. They might be hungry, right? Like sanctions are bad. They're not as bad as nuclear war. And raising that awareness in a country, like we can't overstate.

how dangerous it is that people in Russia are protesting this. Protesting. They're literally putting themselves at risk for torture, rape, murder, their families being tortured, raped, murdered, putting jail for a decade or two. Yep. Just to say we have to stop this war. I mean, these people are brave.

The people at St. Petersburg protesting against Putin are taking their lives in their hands for another country. Yep. That is just stunning. A high-level minister inside the government at a climate convention where they released this new IPCC report yesterday the day before. And they were talking about it and they were talking about how the roots of the invasion of Ukraine and the climate crisis are effectively the same. It's fossil fuels. It's fossil fuel dependence.

And a high-level Russian minister apologized to the members of the UN who were discussing this report and said, those of us in the government who failed to prevent this, we're sorry. And now the Ukrainian climate minister is saying, I'm just praying that he's okay because he had to go back to Russia and we don't know what's going to happen. So yes, is there a chance that sanctions will backfire and Russian citizens will blame the U.S. instead of Putin? Sure, there's a chance. But we have to try to understand that that's the goal is to lose the will of the people. And it's not like Putin himself is going to listen. It's more like the people around him or the olig.

will have had enough at some point. You know, there's an argument that anybody with a Russian passport, if you really want to take this to the conclusion, if we really think there's a chance that Russia will continue this excursion, this adventure, as Putin kind of frames it, to other countries, like, that is not an unrealistic concept to think about. And, you know, then you're starting to think, well, anybody with a Russian passport, is going to just have to be denied going anywhere in the world. And these oligarchs are, you know, they love to go gallivanting around the world.

And if their planes get grounded and they're sent back on a commercial flight and their yachts are impounded, and you say, you know what, you're just not welcome here. And there were all of these stories coming out about people, one person sinking a yacht or something. And, you know, who knows what's true? And I think we have to be careful as to figuring out what's true. There's images that are from five years ago that are trending now. also. But there's a lot of, a lot of popular Russian social media stars are coming out publicly against this. Russian's most popular rapper, I'm reading, OxyMurone, put an angry video message

out according to France 24 on a social media account declaring he was against, quote, this war that Russia is unleashing against the Ukraine. So the cracks are there. If you're a startup developing new software or investing in R&D, you may be owed up to 250,000,000. thousand dollars in cash back from the government. But the R&D tax credit program is very complicated. It requires a budget technical and financial justifications for the IRS. And that's where Boast can help you. Boast is a platform that helps startups get cash back from the government. They integrate with over 60 different software providers, which automates document gathering. This helps Boast deliver the fastest IRS compliant R&D tax credit claim in the industry.

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Just mentioned the promo code twist at boast.aI slash twist. That's b-o-a-st-a-I-slash twist. One thing I think is worth discussing is some leadership from Netflix here. And I think I'd like to see some increased leadership from Apple in this regard. Can you explain to the audience what Netflix's decision was? Absolutely. This is the end of Netflix in Russia. This was a nail biter, too.

if I'm being honest. Like it was just a, it was an at the last nanosecond show of leadership from Netflix, which was that the company announced yesterday, Monday, that it has, that it will not add Russian broadcasters to its service in Russia. Netflix was about to be forced as of today,

March 1st, to air something like 20 Russian channels that are all propaganda. And literally up until yesterday, Netflix had been saying, what, don't know what you're talking about. And speaking to the power of that international pressure, Netflix now said, we're not going to add these channels to our service, which will almost certainly result in Netflix being effectively banned from Russia. That could be the end of its Russian

business. Oh, it's going to be banned 100%. Yeah. Basically, they just gave up that market. They just gave out the market. I mean, Reed Hastings and to the team and Netflix, well done. here's the thing about being successful in life, dare I say having FU money, Reed Hastings, is that you get to say FU. That is the goal is to be so powerful that you can stand on principles and you can say, I don't need the money from Russia.

Russian, you know, needs Netflix, Russia needs the West, Russia needs to have these business relationships. Kudos to Reed Hastings for saying, you know what, screw it. I'm not participating. We're out. And we'll give up that market. We'll give up the whole region. Who cares? And I think that's the right decision. I think it's the decision the NBA should come to and Hollywood should come to with China. At a certain point, you have to, if you have the FU money, say FU. And that is what Reed Hastings did. He says FU to Putin and FU to war. And we're done here. So the question is, will Apple do the same? And Apple has bigger stakes, I think. Tim Cook tweeted that he was deeply concerned. I'm deeply concerned with the situation in Ukraine. This is on February 24th. We're doing all we can for our teams there

and we'll be supporting local humanitarian efforts. I am thinking of the people who are right now in harm's way and joining those calling for peace. And I quote tweeted him. Quote tweet is the most undervalued part of Twitter. That's when you know, like forget about ratioing. I always just look at how many quote tweets are there and I go right to quote tweets.

That's where the end. action is. Quote tweets, that's where the action is. If you care deeply, Tim Cook, perhaps you could start by having Apple stop supporting authoritarian with your devices or just stop selling iPhones in Russia until they leave the Ukraine. And I don't know, actually, somebody can fact check mirror. Are there Apple stores in Russia? Is the iPhone popular? Are people buying Apple laptops there? I think they are. This is what I think, you know, Apple needs to decide pretty quickly here is do we want to support Russia? Do we want to operate there. And when you operate in these countries, you do so at your peril. And Apple has $200 billion

in cash. What could possibly be the footprint in Russia? One percent, who percent? Who cares? To the people working at Apple, to Tim Cook, you want to be there supporting and engaging this maniac who is just going to invade another country and kill their children and kill their citizens? Of course you don't. So then pull the plug on it, right? Like what's the, what's the justification for Apple being in Russia now? Give me the counter argument. There has to be one, right? I mean, this is a tough one, honestly, because you have to at some point be the better option. Like, we know that, you know, decades and decades of sanctions against Cuba only kept an entire country in poverty and never got rid of Castro. And the idea that Russian citizens,

who have done nothing wrong and who have been lied to by their government in a lot of cases, would have to not have iPhones, feels like a way to engender negativity that wouldn't be directed in the right place. I mean, I think this is the conversation we're having now, which is what is the right response and what is the right response that is targeted at Putin or his government or the oligarchs? And there is a degree to which, like I just said, you can't target sanctions and you have to, you're going to assume that some citizens are going to suffer. But I think like, these companies are also all doing business in China. They're also all taking money from Saudi Arabia. And there's not going to be an ability. It's not going to be realistic for us to say that we will pick

and choose windows of time in which we're not okay with companies doing business in other countries. It's just not, it's not realistic and it's not likely in a global capitalist world. And I think our like, I'm not pretending to have an answer here. I'm just sort of saying like, in this period of time, putting all the possible pressure we can on the Russian economy is valuable. But we're also seeing this sort of rush to, you know, Disney and Warner Brothers and Sony and Paramount saying, oh, we're going to pause our film releases in Russia. But like, what are you doing about China? It just sort of highlights the built-in hypocrisy of the multinational world that we live in.

So we either don't censor ourselves because China wants us to. Like, we either stick to our principles all the time or we never do. But to do it in this sort of selected way based on sentiment, I think starts to feel, I don't know. The counter I would have to the counter is if engagement when the company is acting in good faith and directionally moving towards better behavior, I could understand. So if you are. But is China? Okay. So let's put China aside for a second, just talking about Russia, then we'll go to China.

So if Russia isn't doing these excursions up until now and it feels like Russian relations are getting better and, you know, Apple sells computers there or Netflix decides to start up their service there, maybe that's a fine thing to have occur. And then removing those things when they behave badly, you're now sinking engagement and retreating from the market to behavior. which would change behavior you would think or could potentially change behavior. So I think the decades of engagement in China were correlated with the country engaging the West, human rights and worker conditions getting better. Like Apple has a very strong argument to say,

listen, we are in those factories, we are demanding in our factories in China certain labor conditions. And they, we all heard about the suicide and the work hours and the work conditions and factories in China. And we also heard Apple saying, hey, we got people on the ground

and we're changing those conditions. So there's an argument that when things are going well, to engage, and there's an argument when the country start behaving badly to then remove the reward, right? So it's carrots and sticks.

Yeah, that's fair. There's no perfect answer. I think I like what you said before, Molly, which was, to paraphrase, we're making the best of bad choices. Yeah, yeah. These are all, choices we don't want to make. These are choices being forced on the West, forced on NATO,

forced on France, forced on Germany, forced on the American public, forced on the citizens of the Ukraine by an evil dictator, period, full stop. Nobody wants to be making Molotov cocktails in their basement and throwing them from SUVs at tanks. And nobody in the West wants to have to shut down Netflix and have all their employees leave and remove that engagement. And, you know, if you look, iOS had 23% market share in Russia. So, you know, there are one out of four phones over there, 95 million smartphone users in Russia in 2021. Apple has about 25%. So 23 million iPhones over there.

If all of a sudden Apple says, you know what, we're not selling iPhones there, we're turning off iPhones there. I think Apple could just say on a hardware level, we're going to just turn off iPhones. Yeah. We're going to brick. I mean, you want to get aggressive.

Like first there's a pop-up. Yeah. Right? First, there's a pop-up that's like Russia isn't engaging in an illegal, you know, in illegal war crimes in Ukraine. We at Apple cannot support that. Your phone will be inoperative until, you know, further noticed.

We're in 48 hours. Or in 48 hours. Download your photos, you know, back up your contacts because we're turning your phone off, all Apple phones will. be turned off in 40 hours. That's aggressive. Wow. I didn't even consider that. But that's the technique that Uber used and Lyft used when in New York they said they were going to cap the number Uber's and Lyfts. They said, hey, email the mayor. Here's his phone number and here's his

email address. Let them know. Yeah. And so, you know, the question is, will Tim Cook and the team at Apple take the same level of seriousness with this? Not just parts and minds and prayers. Oh, my. Yeah. Seriously. I feel terrible. You know, do what Also, Google, looking at you. 76% Android market share. Yeah, and you know, the thing with Android is it's open source. They don't have the ability to brick every phone. Yeah.

But there are other things that they could turn off. They could just say any IP address in Russia can no longer use Google Maps. That's a good starting point. Turn off Google Maps. Ben, turn off Gmail. Again. But they're using Google Maps to track the convoys and, I mean, Google Maps did turn off some. Why didn't say in Ukraine?

I said in Russia. Yeah. Yeah, yeah, in Russia. affair. In Russia, yeah. I mean, there's an argument to support Ukraine and give them more resources while turning off and causing pain in Russia. I mean, that's the idea of sanctions to cause pain. So I don't want to belabor the point here. Well, but you raise a really good point, which is like, this is the, these are the tools that tech companies have. And yes, these are the tools that you have to consider employing when something rises to such an appalling level. When it's, you know,

and in no way do I mean to minimize the human rights abuses that are happening in China. Yeah, separate issue. We can talk about these. We can talk about these things separately. Right. Without what about. However, if Apple and Tim Cook did turn off iPhones in Russia or do some other big intervention, they would also effectively be sending a message to China.

Like, we can't ignore how intertwine those two markets are. Sure. And that's partly why. Well, they make them in China too. But that's partly why I think you're saying it's almost like, Again, to go back to the kind of IRL corollary about like if there's Western intervention on the ground in Ukraine, then you potentially trigger a nuclear option. If there is, these tech companies are trying to walk their lines as well without essentially cutting themselves off from all of, you know, the Asian continent. I think the lesson here, and you know, I've been saying this for years is, you remember the CNBC clip where I said, listen, I would never operate in, I would never buy stocks in China.

because you have no insight into it. And I also have said many times, listen, I wouldn't take, certainly knowingly, any funding from people in a dictatorship, right? And people will challenge me on that number of times. Hey, what would you take it from a family that was pro-democracy who had left Russia or Saudi Arabia or China? And I'd say, well, I have to think that through it. You know, it's an edge case.

And I think that edge case now is here in Silicon Valley, which is we have somebody named Yuri Milner, who has been huge advocate for startups investing. His first two funds were backed by oligarchs famously and Russian citizens. But he has not raised in the last X number of funds

from Russia. And he's, from what I understand, persona nagrada, he cannot go back to Moscow because he's now fully an American and investing here. And I know Yuri, and I've had lunch with him one time, a really sweet, sincere guy.

I know I sound like I'm a Russian Apologist here I know I'm like But you know There are lots of My interpersonal relationship There are lots of opinions Well my interpersonal relationship

With him was Okay this person's like an American He's living in America He's raising his family in America Is it possible He's some Russian double agent spy And all this information is going back Of course it is

But I think it's kind of unlikely now I think actually it's quite the opposite Is that he is actually a target Of the Russian government Because he's not pro Putin. And I, you know, I don't know how vocal he can be in saying not without getting himself killed. But I saw Mark Andreessen came out in support of Yuri Milner. I can't make a statement on that either way because I don't know. How would I know? I have no idea. I do know that when I do know

you make a lot of friends with a lot of money. Exactly. And that that can be a tactic. Could there are a lot of questions. But this is like, I mean, this gets. to even what you just said about every Russian with a passport, right? Like the blanket approach is hard for these exact reasons. Maybe this guy is, you know, his parents still live in Moscow. Maybe he is the, you know, part of the kind of like fifth column operation funding all these social platforms that are helping to, you know, dismantle American democracy that some people on Twitter say he is. And maybe he is a really great guy who like left Russia and then got himself in trouble and tried to cut those ties. I don't.

know. I have no idea. I know that money makes friends. Yep. And so it's hard. So like, when you, when you choose who you're listening to ask yourself if they've been made friends with as a result of the money or not. Yeah. And in some cases, the people didn't need the money. Right. It's like not like Mark Andreessen needs, uh, any money from Yuri Milner. Um, they have a close personal relationship. I don't know the details of it. But they work together. I like how you made that sound as sketchy as possible. No, it wasn't my intent. I mean, I think you summed it up, which is like impossible to know.

It is impossible to know. How would anybody know? And this is why painting with a broad brush. I mean, if we said round up, I'm using that word very specifically, every Russian with a Russian passport. Yeah. And let's put them in a gulag here in America. Like, that's obviously not the right approach. I mean, we did that tragically with Japanese citizens. Yeah.

You know, during a war, not a good approach. And so you have to take a case-by-case approach here. But there's Mark Andreessen's quote. If you are on the video, we are now on video available on most podcasting platforms. You can just type in this week and start out its video. Or if you're on Spotify, I think it just does a button you can press to toggle. Here's Mark Andreessen's quote. Yuri Milner has been a valued friend and partner to me, our firm, and many of the U.S.

as best. New technology companies for nearly two decades. He has exhibited impeccable ethics throughout and proud to know him. So Mark and Drason could be absolutely 100% correct here, or he could be a useful idiot in the spy terms if Uri Milner turned out to be a double agent. I think that's highly unlikely. Again, I don't have super information here, but I know Uri Milner's LPs are not Russians anymore, and that is easily verifiable. And if they were Russian oligarchs, he would be expelled from the country. So that's pretty straightforward.

People don't know this, but the U.S. government tracks through something called KYC, know your customer, when you are a venture capitalist or a private equity person, they know what transactions and who you're transacting with. They have insight into that through the financial system. If you were to sign a Russian oligarch as a venture capitalist, or you were to sign any dictatorships money, North Korea, China, as sovereign wealth funds from other regions that are run as dictatorships or we have sanctions against or actions against.

You will get a phone call. I know people who've gotten the phone call, which is, oh, you have your paperwork from that country and you signed a deal with them and they're putting $100 million at your firm. Yeah, you can rip it up is what they told a friend of mine. Rip it up and send the money back. Wow.

They're no longer in business with you. And this is like high-level State Department, you know, Department of Justice calling you. And that's game over. So just people don't know that. Actually, Chmoth did talk about that public on episode 70 of All In. So

you can listen to that and you know, it's not the only person who has been told send the money back or you're not, that money's not going to clear wires. So you can rip up that agreement for them to be LPs in your fund.

Yeah. You can be sure the a U.S. government is on top of that. All right. So, complicated, super complicated. And, you know, we,

I don't know about you, Molly, but just having been around the block media-wise, I am very reticent to give specific advice, not knowing

what is actually going on. What percentage of knowledge do we have as American citizens as to what's happening? 30%, 20%, some very small percent. percentage. So we...

I mean, I feel like the best thing we could do, yeah, is sort of like, look, everybody's got a lot of opinions. It's just like with every other topic, everyone suddenly becomes an expert in this, that, or the other thing. The best thing we can do actually is probably not have the, right? Like, we don't know. There are probably 30 to 50 people in the world who really understand the history, the politics, the economics, and the ripple effects of what is happening. and I most certainly I'm not one of them. And even those people, when you do hear them

at a Stanford lecture or Hoover Institute or whatever institute or think tank when they come out, and they get asked whether it's on Meet the Press or by the New York Times or Washington Post and they say, what is Putin thinking? They're like, good question. Yeah.

We don't know. We'd love to know what the motivation. By the way he acted in the past because he's not acting the way he used to act in the past. Like no one knows. No one is. that inside that guy's head. Nope.

Very few of us know what this is going to mean for the future. It's, I don't, this is like, I'm going to sound like a child, but I woke up this morning with that song from Frozen 2 in my head, do the next right thing. Yeah.

That's all we got here. Yeah. Right? Just do the next right thing and then see what comes after that. Like there is some, there are hints in the cycles of history, but this is also like, this is our second hinge event this decade.

So, we are living in interesting times. Let's put it back there. We are living in wildly interesting times. And the world does go on despite COVID, despite this war. And so we will be covering things other than this. That doesn't mean we do not take this with the serious gravity that's going on. But part of living in the free world is enjoying the benefits of being in a democracy

and showing through how we live our lives and the joy. that you can have and the freedom you have in the democratic world. That is part of the concept here is that we get to lead by example, that we have the freedom to talk about these issues and to live our lives and have some amount of

agency. And we hope that the Ukrainians fight and continue to have that agency over their lives. So, hard segue. But we will talk about other news this week. Yeah. We're this weekend startups. We can still talk about startups

and we have a startup of the day. We do. Backbone. Yes. This is our producers pickbys and we share them with you. We're trying to do it every day. Yep.

Because honestly, people are working very hard. Yeah. On these. And with a show, with a title like, This weekend startups, it's the least we can do.

Backbone builds hardware. This is actually super interesting. They build hardware that basically lets your phone be a Nintendo Switch. It lets you turn your phone. And they're, been a number of runs at this. And so we're just waiting for the company that can get it right.

So far, the money seems to suggest that there's confidence in backbone. It lets you turn your iPhone into a handheld gaming device with buttons and joysticks. They just announced a $40 million series A at a $374 million dollar valuation. Hey, that's a series C. I know. What is going on? Is that the hardware talking?

Is that why this is so expensive? Yeah. You know, hardware is hard. That's the colloquialism in our business. But this is being led by index ventures. That's a very high-quality venture firm. Discord CEO Jason Citron is involved. Sono CEO Patrick Spence is involved.

And then they went the celebrity route and got Eshton Coucher, Amy Schumer, Kevin Hart, in the weekend. According to Pitchbook, device cost $100. Here's what it looks like. It looks like the Nintendo Switch, which, you know, if this is $100 to add it to your phone, is, I think the switch is $400 or something. $2.99 for a switch, so you can basically get

really? During the pandemic, they were up to like $400 or $500. $2.99. I think I found one for like $350. I tried buying a Corvette. I really wanted to buy the new Corvette,

but I just can't get my heart around buying a gas car. I'm really sorry, but I have a Corvette fetish. Yeah. And I want to buy some old Corvettes and I was going to transfer them to be EVs or something like that. That was another pipe dream I had.

Too hard. Too hard and too expensive. to do, so. It is kind of absurdly expensive, but didn't GM announce a kit? I'm interested in this too because a friend is trying to sell me her dad's Porsche Boxter, 1998. Yeah. And I'm like, well, that would be a ton of fun.

And it would be such a great little project to try to convert that to electric. Too hard right now. There needs to be somebody who will do it for 50 grand flat rate. Doesn't matter what car you bring. But there was somebody who is doing. Also, if you're that company, call me because I want. This actually is a company that I would consider investing. And actually, if there was somebody who had a credible way.

Yep. to make a conversion that was 50 grand, had a 30% margin or something like that. So every time they did a car, they made 15 grand. And they could take shells of cars so the engine blows and they could just rip the stuff out. But I just don't know if it's actually possible.

It's totally possible. You can buy like- Possible at that price and that margin. Oh, at that price. The kits are not the limiting factor. I mean, I think you can get like an EV conversion kit if you're a super gearhead and do it at home for like six to 12 grand. Really?

I thought the battery would be six to 12 grand. But I do like the idea of doing this with, you know, because a lot of times when you find, you know, what they call a barn find in the business, you find some car in a barn, it's in perfect condition, except the engine needs and the tranny and everything needs to be redone. This would be a wonderful, wonderful thing to do. I also saw the DeLorean is going to come back as an electric car.

I looked at the DeLorean assets and was considering maybe making a run at some point because I love DeLoreans. Really? Yeah, they're going to do a little bit. somebody email me like, hey, any interest in the IP of DeLorean? And then this person in Texas has all the car parts. They want to liquidate them or something. So it turns out when that company, that brand is kind of like Atari, I think.

It's like people keep buying this classic, loved iconic brand, but they can't seem to nail it. So Delorean is going to come out with an EV. They're getting a ton of attention for this. It's pretty amazing. Super limited. This is your chance. You should get one of those. You should get one of those.

I always love the DeLorean. It's like super impractive. tactical and it's awesome. Doesn't have the goal wing? It's got the goal wing doors. It's got the goal wing doors. Yeah. It's like the Falcon doors on the Model X.

I think the problem with these cars is like you're buying yourself a bunch of headaches. Like it's hard enough. Life is so hard already. Like I don't know if I have enough passion. I was, I know totally. Is electric? I mean, I'm just trying to get out on the ski slope for two hours.

Just get a couple runs in. I'm trying to get the podcast out on time. I'm investing a couple of companies. Raise three daughters. Deal with a bulldog puppy and a dying bulldog. 15 years old. I got a lot on my plate. I can't be under a car changing the suspension. No, definitely not. There are people who have like, they just hire somebody to be their full-time car person and then they get a barn or like a warehouse and they just put all their

collectible cars in that. I think I could see myself doing that like for the last 10 years of my life is just geeking out to cars in a garage somewhere. Yeah. But anyway, congratulations to backbone. I think this could be successful. Sorry, back on track. To backbone. We all want the one. that gets this right. And this is just such a no-brainer for kids. And then also for these big streaming platforms that keep saying they're going to get more into games, Netflix. Certainly Amazon and Sony already in this game, Xbox, you know, they've got these, they're going to potentially call them cross-functional game subscriptions.

That would be awesome. Like if you could plug this into your phone and just immediately start playing your Xbox games, like if I could go from Halo on the Xbox to Halo on the iPhone, because now they may have the processing power to pull it off, I would think. I think they do have the processing power to pull off most of these games. And then the only question I have is, how do these things attach to the phone? Because Apple is pretty notorious for changing the size of the phones.

And then you ever buy like a $30 or $40 case for your phone? You replace the phone and you're like, all right, I sold the phone back to Apple. I got a $200 credit. Now what do I do with the case? And the person was like, throw it in the garbage. And I'm like, can I just give it to the next person? They're like, no, that's gross. And I'm like, eh.

Or even they're notorious for changing the connector itself and the pins inside the connector so that like an old lightning cable won't work, even though a new one will or like the Apple approved one won't put the Amazon basics. It's just a giant pain in the ass. So that is a really, really, really fair and important question about the hardware integration. It's universal sizing. I would just worry about Apple's some software upgrade coming out and being like, Like now the connection doesn't, you know how like sometimes it's like this accessory is not approved because Apple doesn't feel like it anymore. I, and just to be clear for people who are listening, not watching, it's, this is supposed to be the backbone like a spring.

You know, like you have for your iPhone or, you know, phone cradling your car holder. Your car holder kind of has like a spring to resolve this problem of the phone size is changing. And so hopefully that works here. But it does also have the little dongle where it plugs into your light. So the second Apple decides that we're going to go USBC, which I think they're going to be forced to in the EU at some point. My lord, we're going to all throw away all these lightning connectors. Oh, damn it. I know.

They better have a, they had better have a program where we can box those up and send them to them because. No, they're not. And then they're going to throw it into a landfill. We're all going to think we're doing the right thing. And then they just throw it in landfill. What I like is the little tiny dongle. So I have, I always travel with ease. I'm like dangle guy when I travel.

I got like a little box of dongles. And one of the dongles I love most is this little dongle that goes on your lightning connector and turns it into a USBC. It's a little snap, a little snappy poo, so you don't have to carry two cables or whatever. So I love all of those. I mean, USBC to the USB 2, it's an easy one, you know, on the side of your MacBook Pro, whatever. You can get an old school one, but I like the idea of the lightning ones. Yeah, whatever it is, female lightning to male USBC is the, but I think Apple blocks.

those too. So when I buy these, I don't know if you ever seen this when you try to buy these things and you're on Amazon, you're not going to get them by Amazon Prime because I think Apple complains to them. So you got to use like the third party seller or you have to buy it off of eBay or whatever. And then sometimes they work. Sometimes they're the one I love. I don't know if you've ever had the triple

headed cable. Yeah, that's awesome. But they keep trying to and they keep messing with it. And they keep messing with it. I mean, I have been, I have now spent 23 years ranting about Apple's lack of universal standards compatibility. Apparently, I'm never, ever going to win this one. But I don't care, fanboys, I'll never not be mad about it. It's unconscionable from a divite, from a freaking waste perspective.

Unconscionable. Well, I think that's why the EU is putting the pressure to them to say, you've got to change this. Sorry. And even if you don't go to USBC, just you need to allow your old lightning cables to work With the, like, you got it. You give this authorized reseller and creator crap. Like, that's got to stop. Such BS.

I mean, this is why, like, when Tim Cook tweets, I always feel the need to dunk on him because I feel it's so insincere. Because there's so many layups where they could do the right thing and they don't. Yeah. They did the right thing with iPads and the MacBooks. You can plug your iPad. iPad uses USBC. And Macs. It's USBC now.

Oh, okay. And MacBooks use USBC. Yeah. But then I just bought that new MacBC. book and it has the lightning. It has the, what do you call that one? The MagSafe. They brought MagSafe back.

Yeah. Which I love. I love that. I love the fact that when I'm at a cafe, there were cafes, Molly, and we used to go to them and work with other people around, you know, in the time before masks and they shut everything down. On purpose? Yeah.

You just. Also, did you like my tweet to the group shot earlier today where I was like, people used to get in cars or take the subway and they would commute to a office and then they would trade labor for money. Yes, that was amazing. It was such a slow burn on my part, too. I was like, what? How did they try it for money?

Oh, we went to offices to work. Oh, yeah. I noticed some cities are up to 40% people going back to offices. There's a lot of trot. When I take my son to school, we pass by the San Francisco backup. And I know it's got the billboard that says the time. And it used to be, I mean, it was like, for the entire pandemic, right, it would be like, time to San Francisco downtown eight to 11 minutes.

Now it's like 23 minutes. Today it was 36 minutes. Like people are going back to work in the city, no doubt. And we're like a pretty holdout region, obviously. So that's a big surprise. Jeff, for people who don't know, the Bay Area,

I mean, I think this is, we're going to be. The Bay Area will cling to its COVID fear until the last. I want, I mean, people were getting so angry at me that I was like, take the win.

Yeah. Speaking of Take the win. I was at the win. I went to Vegas on Saturday. for a friend's birthday parties. It's a magical segue. I took the win for four dimes. It was a blackjack heater.

Nice work. Yeah. Anyway, I was there and there's no COVID in Vegas. Yeah, there hasn't been for. Nobody is wearing a mask. Not the staff, not the dealers. It is over. When I was in Arizona, I got to say,

I really liked the vibe around Phoenix because it was basically, and I think that it is fair to say, is where we are right now with COVID, it was do what you want. Like I was in a trader toes, everywhere I was, every restaurant, every store, it would be like half the people wearing masks, half not. Your call. Right?

And it's your call. And there was no, because the thing about the Bay Area is I went into a store the other day without a mask on and you would think that I had carried in like an AK-47 or a live cobra. I mean, people were literally looking at me. A lot of pet my cobra? Right. I wonder about my cobra?

And I'm like, I just see Molly Wood walking it with a king cobra around her neck. Just being like, hey guys. And also not a mask on. And they'd be like, that's worse than the cobra. And I'm like, I have had three shots and COVID. I am not a threat to you. Yes. And I am, and I myself am not concerned about this.

And I was like, just everybody do you at this point. And I appreciated actually the kind of like accepting vibe that I sensed in Arizona where it was like, if you want to wear it, great. If you don't want to wear it, great. great. That's okay. And take it seriously if you want to and if you're immunocompromised and you're, you know, please take it as seriously as you want to.

And also, let me live. I'm not a danger to you. Yeah, exactly. I mean, that's the, I have a dear friend who's a founder. And my cobra is super friendly. This is a, I don't know why I guess so worried about it. This is a well-behaved cobra. Yeah.

I named him Buffy. He's super nice. He's super. He likes a snobble. He likes to cuddle. He likes to cuddle. My cuddly cobra. It is.

But my friend, I have a friend who is a founder of a company, I wouldn't say his name, and he's immunocompromised. And, you know, before COVID, he needed to be careful not to get the flu. And obviously with COVID, he has to be careful, but we cannot. Even he was like, this is, you know, me being immunocompromised does not mean everybody else has to wear a mask. And, you know, he's pretty straightforward about that. All right. Listen, next up, we have this incredible interview. with Joel Greenblatt.

He is a famous investor, author. He was on the show a year ago. Y'all freaked out that he was one of the smartest people we've ever had on the show. So at 60 minutes into this news, we're going to give you an 80-minute interview. It's a long show today over two hours. But this is how it's going to be now that we got Molly here and Molly and I want to hang out. And when we don't hang out for two days, I think we didn't get a show on Friday, we didn't do on Monday. We're going to do a show because we want to talk.

And we want to talk about the news and what's relevant to you. So consider this a double episode for you on a Tuesday. Lots of news and a great interview. You're going to love this Joel Greenblatt interview. And I did ask him to come back in six months because he can speak on a lot of subjects. Enjoy. Enjoy. All right, everybody.

We had this guest on last year and all of you freaked out and said, you know, have this guy back on. He's so smart. He's quick. And you guys had a really great discussion. And so if you remember on episode 11, 59 last January, we had Joe Greenblatt on. He is the managing partner at Gotham Asset Management. And he's been investing for, let's see, 80s, four decades. He's a professor teaches about this kind of stuff. And he writes books, great books. The last book we talked about when he was on

the program, Common Sense, the Investors Field Guide to Quality Opportunity and Growth. And welcome back to the program, Joel. Thank you. When you were last on, we were experiencing a bull market of bull markets like we'd never seen after the pandemic shocked the markets for, I don't know, 60 days. And then here we are. The markets corrected again. And you were quite prescient when we talked last time about maybe some of these growth stocks and their valuations, their revenue didn't make a lot of sense. What do you make of the growth stocks from Zoom?

Basically, everybody across the board getting corrected, 50 to 85% Peloton. And have we, I think a lot of people want to know in the tech business, especially in the private markets, which then feed into the public markets buying business, capital allocation, venture capital. Have we hit the bottom? Are we in bargain hunting territory yet? How do you look at these growth companies that were trading at three, four, five times? their current value just last year when we talked. Sure. I appreciate that, and I appreciate that you think I know the answer to that question. But, you know, if you want to look at the major companies, the Amazon's, the Googles, the apples,

I still think they're reasonably priced here. You know, they've gotten a little cheaper. They haven't fallen the 80%, but they've started to fall, you know, 10 or 20%. And so I think those still represent good values in what was happening elsewhere in the market last year was that people thought hundreds of companies rhymed with these new economic models and they all end up being the next Amazon or Google. And that can't be. It's just not the way it works.

But, you know, hundreds of these companies were getting credit as if they were going to be these franchises and ecosystems that we've never seen before, meaning these are the best companies, those major companies, the Amazon's and Googles and Apples are some of the best companies that, you know, you mentioned four decades, that I've seen in four decades and possibly forever. And so what was going on last year is people were looking for the next ones and trying to say that this one rhymes with Amazon or this one rhymes with the next Google or just that things would go to the moon and that never happens. even though there will be some winners from the group of high flyers.

And that just tends to always happen. What's particularly interesting now is that, you know, we're cash flow-oriented investors, you know, no private equity firm is going to go buy a business because it's a low-price book or low-price sales, which is the traditional value metrics that people would look at. But we look at cash flows and real economic cash flows and what they're going to look like in a few years. And so we, you know, follow this fund that we've been running chosen from the Russell 1000, which are the thousand largest companies by market cap. And it owns about 750 of them.

They're not equally weighted. They're skewed towards what we believe are the cheapest, meaning the highest cash flow generating businesses, you know, with high returns on capital. But it's a very diversified portfolio. And we can track it over. the last 30 years to see where that sits on evaluation basis relative to the last 30 years. That does not adjust for the fact that interest rates are, even though they're rising, are still way below the average of the last 30 years.

That does not adjust for the fact that returns on tangible capital and, you know, the asset light businesses that are now the ones that make all the cash flow. The returns on capital over the last 30 years have gone from about 20% in the S&P to closer to 70%. So it doesn't account for that adjustment. And if you can, if your money's more efficient, you have to reinvest less of your earnings back into the business to earn the same kind of growth rate, which means you get to keep more of your earnings, which means your earnings are worth more. We don't adjust for that. Okay. And so not even adjusting for that. The S&P is in right now, over the last 30 years, in the 13th and a half percentile towards expensive. I mean, it's been

cheaper, 86.5 percent of the time. forget the half a percent part, but I'm just telling you what the stats were when I looked this morning. And expected returns without making the adjustments for interest rates are lower, that returns are capital higher. But when we've been at this valuation in the past, two-year-forward returns for the S&P have been about 8 to 10%. if you looked at this value portfolio I started talking about, chosen from the Russell 1000, but a lot of names, that's in the 70th percentile towards cheap.

When it's been here in the past year forward, two-year-forward returns have been about 44%. So you can construct. So when you ask about the market in general, or someone asked me about the market, it's always a market of stocks. So when you asked me, I said, well, some of the major companies, you know, the well-known companies are still reasonably priced,

where these other high flyers from last year have come down and are more reasonable than they were, but it's hard to tell because clearly they don't have the kind of franchises that the Amazon Google's have. And some of them will eventually have really good franchises, but many, most will fall by the wayside, or at least not be nearly as good. But in the value port of the portfolio, we're actually cheap historically. We're in the 70th percentile with expected returns, you know, towards cheap, with expected returns closer to 44% over the next couple of years versus 8% for the S&P. So it's very hard to say, you know, what's going to happen in the market otherwise.

You know, the S&P is still richly price. And even if we adjust up, I would still say, you know, you get a reasonable return, not negative expected returns over the next couple of years, but, you know, more muted than, you know, markets been up 10% a year for 50 years and actually 100 years. And so more expensive than that, probably expected returns lower than that for the S&P, much higher than that for the value component in the portfolio. And for some of these busted growth stocks, it's a, it's a stock picking game. It's not a, you know, overall answer to your question. Some We'll do okay, but most won't.

And so if we double click on that, maybe we look at an individual stock. I think you've been a big proponent of Amazon. Bezos had a really interesting strategy. Hey, let's just not make any money. Let's kind of break even, invest in the business. There's such a huge TAM here. There's such a huge customer base. Let's just focus on building that customer base.

And then we'll turn on revenue and cash flow, you know, maybe in decade two or three. and that's turned out to be a pretty brilliant playbook that I see in the private market all the time. Venture capitalists and founders are pretty well aligned. Let's not try to make a profit here. If we understand the unit economics and they're solid, great. And then at some point, when we think we've captured it off market share, we'll turn that dial. Of course, there are counter examples like Google, which always printed money and had absurd margins. Looking at Airbnb. This company has been amazing. They've, got a huge customer base, they're loved.

But they don't really make any profit. They lose money most quarters. They could make money, I guess, if they didn't want to grow. And they're trading at 16 times their 20, 21 revenue. What are your thoughts on the Amazon playbook and how it's infected, you know, this next generation of business leaders? Is it a good thing? Is it a bad thing?

And then as an investor, when you're holding these companies for the long time, is there some sort of signal that you see that says, oh, yeah, they're doing the Bezos playbook. correctly, I feel like I can get all in on this company. Well, that's a really great question. Big picture, what's changed in the economic models of these high-growth businesses with low capital or appear to be low capital intensity, at least tangible capital, is that when you have a big tangible capital business, you're investing in working capital,

which includes inventory as well as, you know, plant equipment. And you get to capitalize that, which means that you spend the money now, but it doesn't hit your earnings. It's spread over a period of time where you're going to use it. When you have a business that's more thinking of lifetime value of the customer, you're building, you know, acquiring those people, which is advertising spend. And research and development, which is developing your product, those are all expense items. You could argue they should be capitalized if you were looking at it from an economic standpoint, right? Because you're spending money now to get that person who's going to pay off over the next pile of years. So it's a mismatch.

You're spending money now. It looks like you're not earning anything. You get to deduct. It's great for taxes. I mean, if you're looking at cash flows and you're an investor, it's a great business model because you get to spend money. You get to deduct it. And you're going to collect over a period of time. And as long as you keep growing, you keep spending, showing no profits.

And yet you're building value over time because your customers last, because they get into your ecosystem for 5, 10, 15, 20 years. And so I think accounting doesn't pick up on that. Also, you know, the multiples of sales have to do with the margins. You know, a software business, for instance, you know, like Airbnb, you know, has historically ridiculous margins for incremental customers that we haven't seen in, you know, bricks and mortar businesses. And so all those ratios. really, you know, it all comes down to cash flow at the end of the day, and when are you going to get that cash flow? And so you have to really look at economic reality for all those. So the traditional metrics just don't work very well. You know, you're not capitalizing research and development.

You're not capitalizing your advertising spend. You know, you're not saying, oh, I spent now, and I'm going to collect that over the next five years as this customer pays me off. You just expense it right now. Which didn't AOL get themselves into a little bit of shenanigans, if I remember correctly, where they were saying, hey, it's $300 to acquire this dollar of customer, 200 from TV ads. And then they tried to amortize it and depreciate it over three years. And I think the SEC was like, no, bueno, we can't have you doing this. This is just charge it now.

Yeah, well, you know, bottom line is your business model has to make sense. It's not a question of how you account for it now. If you're investing a lot of money to get dial-up customers, that's questionable. If you don't have a good economic moat. If dial-ups going away. So, you know, you can make mistakes. I mean, it's scary. I mean, you know, most businesses will fail.

And that's history. Most businesses do fail, both because we have a capitalist system where if someone's doing well, other people come in and say, I want some of that. and so you need some kind of business that creates a unique setup. You know, and there are a number of them. You can do it in bricks and mortar like Costco, for instance, their model is be the low-cost provider. How do they do it?

Well, you become a member, and that's how they make their money, and then they sell everything just to break even. So it's tough to break, you know, it's tough to compete if you're bricks and mortar. with some places just trying to break even and give it you know pass on all their savings to you they're only getting paid on being a customer and and and being able to uh you know it's a virtuous circle where you the the better bargains you provide over time the more people want to join your your little club and you know it just spins on itself and if you're looking to make profits on those people directly without members uh you can't compete so everyone has their little

ecosystem and flywheel. And some make sense and some don't. You and I are big fans of this capitalistic system where people fight and they get in a dog fight and consumers win. We see it over and over in Costco. Great example. Amazon, great example. Amazon Prime. They keep battling it out. Consumers keep winning. The cost of buying a charging cable, you know, just keeps plummeting. And consumers keep getting delighted by shorter and shorter delivery times. I mean, we're living in like One of the best times ever to be a consumer, obviously. Lena Khan is now looking at our standard for antitrust. And our standard has been, hey, consumer harm.

Are consumers winning or not? Pretty clear test. She recently was interviewed, Carras Swisher and Andrew Or Sorkin did a good interview. I don't know if he caught it on CNBC, New York Times. But basically said, you know, the new lens we're going to look at this is, does this merger or does this behavior impede future competition as if we could look at a crystal ball

and say, hey, Amazon basics or Costco's business model or, you know, Google buying YouTube, Facebook, buying Instagram, five or ten years from now, there'll be less competition. I'm curious your thoughts

on this new lens of, you know, basically refereeing. We're basically refereeing a game here and the referee wants to say, hey, if this acquisition or this behavior reduces future competition, we're going to not allow it. What are the thoughts on that? I'm not a big fan of Soviet-style control of the economy, trying to make those future choices for the

very dynamic capitalist economy. I mean, you know, I mean, there was MySpace, there's Facebook, there's TikTok. I mean, People are smart. Capitalists are people who want to make money are smart. If someone entrenched gets abusive to their customers, that makes room for others all the time. So I really do think in general, and this is a very generalized observation, that consumer benefit was a very good standard, at least as a starting point. and trying to puppet master the economy and the future in a Soviet-style centralized planning way is fraught with, uh, I'll be nice complications. Yeah, I mean, you're basically picking favorites.

You're looking into a crystal ball. I understand the intent. Hey, these companies are getting very big. But then on the converse, how do you know what's going to happen? How do you know the acquisition of, you know, YouTube? is going to be better than the Motorola one that Google did. That was a complete utter disaster. How do you, I mean, and now we're looking at Facebook,

their dogfight with Apple, they're losing. And they got this crazy headwind now, and they lost a quarter billion dollars in market cap. By the time Lena Khan and the government, try to give out these fines or try to stop these companies, it's going to be like trying to, I don't know, redo the Vietnam War. Like, you don't get a do-over in business.

The business is run. competition happens, and there's winners and losers, just seems like a fool's errand to me. Well, you know, the old saying the road to hell is paved with good intentions. I mean, it's a losing battle to try to do that. If you remember, in the late 90s, Microsoft was in the crosshairs of antitrust, and they had a decade, at least, of their business being very challenged until, you know, new management took over and, you know, reoriented the business.

But, you know, sort of these antitrust issues will probably come out at the peak of popularity. And, you know, when things are in the headlines and if you've been investing for every period of time, something that everybody knows is usually is often wrong, is often already played out. You know, so whether it's in the stock market or in the business itself, I would say that regulators would be following all the wrong signals. at exactly the wrong time to try to crack down on what they perceive as monopolistic, as long as consumers are benefiting from good execution. Yeah, and the idea that we in the capital allocation business, people placing bets on these and the management teams, we can't figure out who's going to win. I mean, who saw a quarter trillion dollars getting lopped off of Facebook's market gap?

I don't think anybody saw that coming. We knew there were headwinds, but we didn't know it's going to be that disastrous. And I think this is like another good jumping off point. COVID starts to end. I think it's pretty reasonable say. We're now in the endemic phase. Obviously, we have this new Ukraine situation. We'll get to that in a moment. But looking at what happened over those two years, a group of market participants entered the market retail traders, which we had seen this movie before on the dot com era. Didn't end very well. That time looks like it's not ending well right now. But there does seem to be a new level of sophistication in this next generation, the Robin Hood traders, the crypto traders,

they're understanding things that, let's face it, trading options and margin. This wasn't even available to people with e-trade accounts, and they were throttled with $25 per trade charges. We've taken a lot of the friction out. We've got people who are becoming very sophisticated through placing bets. Net net, is it great, troubling, disturbing? How do you frame these new 10, 20 million Americans, young? young Americans participating in the stock market in college instead of maybe doing fantasy sports,

participating in crypto. What impact long-term does this have on the market and on American society, this level of sophistication and tinkering by these 20 million, I'd say, new market participants? Well, that's also a great question. I really have to go back to Ben Graham, who was Warren Buffett's teacher. and he made a distinction between investing and speculating. There's a difference. There's a not saying they both don't exist or that there's a place for both,

but you have to understand what you're doing. And so if you're just thinking about equities, the only intelligent way to invest in equities is to realize that a share of stock represents an ownership share of a business. and the intelligent way to invest is to be able to value that business, divide by the number of shares outstanding, and decide whether you're buying it at a discount to your expected value. And your expected value takes into account projections of what the cash flows are going to be for many years. It's not backward looking. It's forward looking. It's saying, you know, if you have a variant perception that's valuable and you're right. and you think this business is trading for a bargain price,

you figured out what's worth, pay a lot less or pay somewhat less, or pay a fair price on something that's going to be growing faster than maybe what people think. That's what investing is called, okay? You're actually realizing there's a business here and that you're valuing it in some form and you're either good at it or bad at it and trying to get a reasonable price when you buy in to take advantage of that your valuation is higher than what you're able to buy at, or at least fairly priced and you'll get a good return from there. Okay. So I would bet that 99.9% of the people you mentioned who open Robin Hood accounts, and it's a very hard job and it's kind of a full-time job.

And to know how to do it on dozens of companies, his experts can't even do that. But if you have a variant perception on one or two or an insight in a particular industry or something like that, you can do it. But 99.9% of those people do not. So what Buffett would say nowadays is most people, and that's 99% of the people. If you want to bet on, let's say you're buying domestic stocks, you want to bet on that, you know, we have a dynamic capitalistic economy with all its problems. That will grow over time and I want to participate over the next 10, 20, 30 years. We still have the best of the worst or whatever you want to call it. And historically, it's gotten people a good return. Then you should invest. And investing would be in an index type thing. If you know something about an industry or you

know, you have a variant perception in some ways and you're able to value businesses, which is what stocks are, their ownership shares of businesses. Then, of course, you can invest intelligently. Most people can't. So everything that's not investing is speculating. That leaves me, let's say I used to think of gold. I said, I can't invest in gold, not because I don't realize it bounces up and down and some people are good at it, but gold will never earn money.

You have to value something for me, it has to have earnings somewhere it's down the road. I can't value fine art. It's not going to have earnings. It still has a value. I'm not arguing it doesn't have a value. I'm not arguing gold doesn't have a value. What I'm saying is I have no way to value it because if something's not going to earn money over time, there's no way for me to discount those earnings.

and figure out what they're worth to me. And so gold is like that, and crypto falls in that category, that I can speculate in gold. I can speculate in crypto, and maybe I can speculate intelligently, okay, because I know it's going to have some uses or whatever it might be. But to me, that's not investing.

That's speculation because there's no attached earnings to it. You don't have to earn money now. You could be losing money now. But any business, the reason you're buying into it is you expect it one day to pay off. You're talking about Airbnb. Okay, it's not earning money right now. But the perception of those who are buying it is that they have a great franchise and over time it will earn money. At some point, they will get to Amazon was losing money for a while. Now it's starting to earn money. They could speed it up. But if they still want to keep investing

in their business and gathering clients and look at all the great things that come from clients, they now have infrastructure, you know, a software memory infrastructure that they, they rent out to other people, which is, you know, in many ways, even a better business than the business they started in. So you just have to value those things. Most people aren't capable of doing it.

So they are, in fact, speculating. And I have fun doing that, but you've got to understand what that is. I think you should have a core of investments that are, if you don't know what you're doing, your core of investment should not be in speculation. And we saw this. profoundly in many ways.

And I think your speculation versus investing rubric there is the perfect one because if anybody who's played poker knows there are people at the poker table who are just there gambling and having a good time, having a couple of drinks, they look at the two cards, they look pretty,

they put their chips in. And then there are other people who are actually doing math and thinking about people's previous behavior and they're taking an approach to it and saying, hey, you know, I know something about these players. I know something about how much money's in the pot and the expected value if I do win, if I should make this call or not,

if it's a marginal decision, they're being thoughtful. And here, people were a momentum investing. They're looking at things that look like it's an interesting story, and they're placing bets. And you can see that when logic gets removed. And the EV space was, we'll put crypto aside for a second, because that one made no sense. But the EV space, you could actually start to look at and say, well, Tesla has done incredible. They're delivering all these cars. The cars have a certain margin.

The cars are some of the best experiences you could ever have driving a vehicle. The software is unbelievable. And so all these also rants come into the market. I see Rivian, I see Nicola, we have the founder of that fraud on our podcast. That guy was a complete dips. And I'm looking at this space going, my God, people are just pushing all their chips in because they think that Jack Queen is a pretty looking hand up against Ace King. It's not. He's like, they both have pretty pictures, but these are not the same thing.

And the Rivian one, when it hit 140 billion, and I'm saying, this kind of, this kind of, companies delivered like a hundred cars or something? This makes no sense. Maybe you could talk a little bit about this SPAC movement and speculation in certain categories where it was obvious people were not looking at the fundamentals and, you know, how that could even happen. Because when I said, this makes no sense to me, I mean, I was getting absolutely savaged on, you know, Twitter and social media and CNBC when I was up like, how do you compare

these companies? One's delivered a million cars. ones to live at 100. We're giving far too much credit here. I think maybe that's the issue. How do you explain this mania that's occurred? I think it's helpful to look at history when you're looking at it and saying, you know, hey, I think there were over 100 car companies when, you know,

cars started coming out. And it's not like cars haven't taken off, so to speak. Pretty popular. Airline, you know, aviation was a big concept. you know, we didn't even, you know, have people who could fly in the air and, you know, a little over 100 years ago. And, you know, it's taken off, so to speak. And it's been a big business, but not really a profitable business for the most part,

for a long period of time. You know, a lot of waves of internet businesses. We know internet, you know, I'm old enough to know that wasn't always here. And I thought it was pretty cool when it got started. And, you know, there was a first bubble. And, of course, there's a lot of great things and a lot of great companies that come out of a result of the Internet and the networking effects that never existed before and everything else as a result.

But there are a lot of losers along the way. And so this has happened many times in television. I don't know. Home radio. You know, you can think of all these things that. We're big. There's no doubt. It was obvious that, you know, everyone's going to want to use this and it's a great thing and everything else yet. That doesn't mean the company you bought is going to be the winner in that space or even a good investment. And that's always the case. A lot of these developments, electric cars are going to be huge. I mean, self-driving cars will be huge one day. I'm not getting in one for a long time. But, you know, and they can show me that the percentages, they're much safer. Still not getting in one until everyone's testing them out because I don't want it to drive

through a brick wall and just have bad luck. But I admit that electric cars and also self-driving is huge and will be huge and everyone will use it. And it'll be good in so many ways. So that doesn't mean each company is going to be a winner. It's very hard to see the future. look, but, you know, Buffett called it a circle of competence. Okay.

You have to understand what it is. What are you able to analyze well? And if you looked at some of the advantages that Tesla had in the way they structured their business and the fact that they could make changes to their cars in 24 to 48 hours versus, you know, one or two years for the traditional car makers. you know, when they come up with an improvement. I didn't see that at the time that's not in my circle of competence, but they actually have some advantages that may stay,

certainly versus traditional car companies. Other electrics, most of them will probably fail. Some will be successful, and that's not in my circle of competence to decide, and it's important that I know that. It's not that I won't keep looking and try to say, you know, does this make sense or does that make sense and can I really see their edge here? I still try to analyze things because you never know when you'll find that pearl, but I realize it's going to be few and far between and I'm going to have to really feel like I have an insight or

someone gave me an insight. You know, I wrote in one of my books. You can't think of all the great ideas yourself. So a big part of it is stealing other people's ideas, stealing other people's good ideas, recognizing that they, that's a skill. You don't never have to think of a good idea yourself at all. If you were good at figuring out who had a good investment thesis and you read it, it makes sense to you. I made plenty of money following smart people that have insights that I don't have, but I can at least recognize that their insights are really pretty incredible. And often you have time to invest, even though you've been able to read it and it's out in the newspapers or you see interview or something like that. And so I'm always open to that. I just think it's a hard challenge.

And, you know, all those millions of people who are trading on Robin Hood and others are not likely to have it. And if you talk about momentum, if you just take a concept like momentum, which has worked for the last 30, 40 years on average, not just the United States, but across the globe, with one or two exceptions, but if I said to you, please give me money, I'm going to go out and invest in real estate, you know, in homes. And here's my strategy. I'm just going to buy all the homes that are up the most in the last year. Yeah.

Okay. I would hope you'd kick me out of your office and say, I'm not giving you money. What, that makes no sense to me. And just because stocks bounce around every day and, you know, maybe they're a little bit more removed from a tangible house, people all of a sudden, you know, check their common sense at the door and say, oh, well, they must know there's numbers involved and it's momentum and everything else. But if I put it into something very concrete and say, hey, my strategy is buy all the houses that were up the most, most people would probably say,

I'm not comfortable with that. It's a really profound insight because we have a generation that's only existed in an up market. You know, if you were, you know, became an adult in 2008, which is, by the way, in 2009, when I started angel investing in companies, I mean, what a time to start. The market's at a bottom. You know, I watched everybody who came after me as an angel investor and early stage startup investor basically think they were a genius. And I said, you know, think it might be because we started when the NASDAQ was at 2000 or whatever that horrific moment was when the NASDAQ just, you know, lost 70% of its value. And we've only lived in an up market. Therefore, you can buy the most expensive house because stocks only go up, houses only go up.

And here we are. Yeah, you know, we basically have a crash on our hands right now in the tech industry and these growth stocks. That is, I think, very analogous to the dot-com one when you lose 80% of your peak value. The insight I had or early on was, you know, companies in this space have to keep making great product. You alluded to it. Hey, there's some expense to building Airbnb or, you know, continuing to innovate. And so if you do see, you know, a really strong product cadence. Just every month, every week, every quarter, the product's improving in some way and you can actually see it and you have competent management improving that product. My God, for me as a private market investment, that was always my thesis. These are builders. The product has to touch customers at some point. And I'm always shocked that people don't actually see that. And you actually kind of alluded to with over-the-air updates. And that was such a great, this is why these conversations between capital allocators and people placing the bets become so powerful to me and I love having them.

It's because I was like, well, how do you not see that? Because we have over-the-air software in iPhones and in Windows now. And it's like getting a new computer every time you get the update, right? And so once you get that, you saw it on your phone. Like I'm getting new features every six weeks from Apple or Google. Oh my God, that's never happened in a car. Where else could that happen where you get new features for free? And the other people are not giving those free ones, which then leads me to

SPACs and people having access to private market companies. I believe, sure, Americans should be able to. to place bets wherever they want. If they want to bet on private companies, they want to go to Vegas, they want to bet on the Knicks or God forbid the Jets, they can make those terrible decisions in their life. But then combining SPACs, and I'll just take a company, Joby Aviation, which I really like. I think VTOLs, vertical takeoff and landing, these things are going to actually, I would predict you'll fly on one of those before self-driving cars on a regular basis because the technology is actually there and it's much safer than a helicopter, you know, because it has eight rotors versus

one or two, and if one fails, they just automatically adjust. But should the, it seems like the public can't process these SPACs or investing in a company like Joby Aviation. That is pre-product market, fit, not in the market yet. Should these be going public or not? Because we have this big debate going on. The company's worth $2.9 billion right now. It's trading at $4.80. Everybody knows SPACs tend to go out $10. So it's lost half. It's value if you invest it at the spec price. But I'm torn because I do think that company's got a great future. Do they think it's undervalued or private market company, probably going for five or six billion. How do you think about these companies? And do you participate in them and do you have any strong feelings of if they should be,

I mean, not legally, but is it wise for them to be public companies? Look, I'm not against SPACs in particular. It's just a structure that makes it easier for companies to go public. if there, it doesn't mean it can't be abused the process. But generally, there's been some money made in venture investing. Usually it's institutions and wealthy individuals who can participate in this market. If through a SPAC, a relative startup company can go public for it, the promoters of the SPAC do get, and it'll probably keep coming down how much they get, a healthy amount of money,

but obviously if there's 20% dilution in the SPAC, but you buy something that's 10 times the size of the SPAC, then it becomes 2% dilution. So, and when companies go public, the investment banks usually take 6% or 7% right there. So I don't think there's anything inherently wrong in the business, as long as there's disclosure as to what's going on. I also think there's a benefit to owning a lottery ticket.

There's a difference between putting 0.2% of your money, it's a portfolio bet. There's a difference between putting 0.2% of your money in it and something and 90% of your money. So when you say, oh, this thing's down by 50% or this thing's down by 70%. If you look at the insurance business, let's say you're selling term insurance. you know, if you're relatively young for a thousand bucks, you get a million dollars of insurance and you pay $1,000 to the insurance company. And if you're unlucky enough to die, your loved ones get a million dollars. It's really a stupid for your neighbor to take that bet.

Hey, you know, if something bad happens to me next year, here's a thousand dollars, give my wife a million dollars. You know, if, you know, take that bet. That's a dumb bet on an individual basis. if you put together tens of thousands of people and do this for a lot of 40-year-olds, it turns into a business. It's a portfolio bet where the individual bet makes no sense because it's too speculative. The payoff is unlikely, but mathematically it makes sense. Okay.

So that's the way I view venture capital in general, and the math would bear that out, that most venture capitalists make their money from a few big hits, and they have a pretty big portfolio of companies. And so if you want to look at SPACs that make it easier for companies that are more speculative to go public, and everyone can buy one share for $10 or they can put in $100 or $1,000 and they put those lottery tickets into a portion of their portfolio, you don't want to have 100% lottery tickets in your portfolio, but you could put 5 or 10% if you think you have an edge in this area. And I think it democratizes the ability to invest in venture. And I, in general, I think people should take care of themselves. I think as long as the disclosures there,

I think the fact that a lot of these SPACs have gotten burned, there's a learning exercise there. Oh, you know, I only started 2009. Everything goes up. Oh, well, when it starts going down, you learn what every other generation has learned. That's what happens. When I got started in the early 80s, the market, I got to go to Wall Street alone because the market hadn't gone up in 13 years. And then of course, the biggest, you know, it's basically if you really look at it, a 40 year bull market. I'm no genius. I came out of school at the exact right time and I went to the right place and things worked out very well for me. You know, I've tried to be smart along the way and learn lessons. But the, the, the, the, the, wind behind my back has been incredible and I realized that. Same when you started in 2009. You're thinking, you know, you know, that's a pretty good time to start. And, you know, I got lucky that I came of age and I started looking at this stuff at that age. And, you know, it's worked out. And there's partially luck involved there. There's, there's good luck. You know, Malcolm Gladwell wrote about, you know, hockey players in Canada where most of the good hockey players in Canada are born in January, February,

and March. And that shouldn't be. And the reason it is, is because when they're very young, age matters and they go by years. So if you're bigger, because you're older, by six or nine months, then the guys who were born at the end of the year, you get channeled into the advanced leagues and the, you know, the learning. And so you were born at the right time. And so I was born at the right time to come out, you know, in a good place. And so the wind was behind my back. I think, and I think it's very healthy for some of the, these SPACs to, I mean, the new, I mean, SPAC markets mostly closed, but it'll come back as long as the SEC doesn't close it down. I think it's a good thing if it comes back and people will do it more

intelligently and they'll have to give more value and they won't pay as much for these companies. But I think giving individuals the opportunity to buy these lottery tickets if they have insights is democratizing investing. Once again, it's it's caveat EMTOR. Most people are speculating on Robin Hood don't know what they're doing. Yeah. And they're getting a quick lesson. I mean, I always tell people, if you want to learn poker, find the lowest stakes game at your local card room, go to Hollywood Park in LA, where when I lived in L.A., we'd go play in the $1, $2 game. You bought it for $20, 30 bucks, so you can play in a tournament for $30 on a Saturday afternoon. You could re-buy-buy-buoy for $25. That's what it would cost you'd have a poker coach. It would cost you $100 an hour for

poker coach. You could just play and try different strategies and just play within your means. And they think bank role management and how you allocate a portfolio was not what people were thinking about. They were just thinking, this looks like a Tesla, or this is a flying car, or, you know, space travel is going to be awesome. I'm just going to put everything into one thing, or I'm going to buy three names, and I'm just going for the most alpha. Doesn't make any sense. Yeah, I'll just say one thing. I mean, we've seen this before. E-trade was the Robin Hood of the internet boom in 2000, you know, the end of the 90s and 2000. And I talked to one of the ex-CEOs of E-Trade, and the math was 90% of the people plus

ended up losing money, who, you know, if you look at the individual accounts at E-Trade, and their business really became, you know, after they get burned, they still leave their money there. And so they got below market interest rates. And, you know, that was E-Trade's business, collecting that spread, you know, with other people's money and that's what it became. But the math was that over 90% of the people who had accounts at E-Trade ended up losing money. And so this has happened before. I think we knew this train wreck was coming for the customers. I don't care about speculating Robin Hood's stock one way or the

other. But is there a business a casino that people are playing in? And if they view it as a casino and I'm here to have fun with a portion of my money. I think good luck and some people will be perceptive, but 90% will end up losing their money. And if you know that going in, and by the way, when you start a business, you know, some huge percentage, 80 or 90% fail. Okay, that's capitalism.

So are we going to keep people from opening businesses? You know, it's dynamic. It's a complex, adaptive system, the capitalism and and sort of the delusion that most people have that their business will be the beat the odds and be successful actually makes our economy dynamic and to try to cut everybody off at the knees so they don't lose a nickel will turn us into a less dynamic place and works for everybody yeah also also known as Europe yeah right i mean europe people look at entrepreneurs as like pariahs and why would you do that and aren't you think you're better than

And then here in America, we have this optimism. People try. And you know what? We don't need everybody to succeed. We need everybody to try and have optimism to try to solve big problems in the world. And I think that's why I'm still bullish on American exceptionalism, especially in the face of, you know, Europe, maybe not supporting entrepreneurship as much. And then China, bizarrely deciding to pull out of capitalist society, which they seem to have kind of gamed and mastered to a certain extent very quickly. Any thought? on China just retreating when they were basically running the table with Alibaba and all these great companies, Didi. I mean, they seem to have figured out capitalism, replicated it and figured out a way to make it exist inside a communist country and arguably have an advantage because, you know, they could pick winners and they could put their thumbs on the scale. And then they just decide to wholesale pull out when they're winning the game? I mean, did anybody see that coming?

How do you, how do you game theory? that move? Sure. Well, big picture. Our GP is still quite a bit larger than China's. They have four times as many people. So when you do the math, they're whatever they are, 20 or 25 percent of as efficient overall as we are. So I don't want to copy. They've really moved up in the world and you can probably adjust for the cost of living and maybe they're better than that. But it's not We're still many multiples more efficient economy than China is now, even after all their advances. They're very competitive. They're big.

You can't, you know, I think when, you know, if anybody of your listeners remembers Johnny Carson, he had a late night talk show and he had a comedian named Richard Pryor on right after Nixon recognized China. And so he asked comedian, what do you think of Nixon recognizing China and said, you know, my rule is I recognize a billion of anything. So I kind of feel that way about China. You have to recognize they're huge. They're going to be, you know, they're competitive. But as far as their system is concerned, is nowhere as dynamic and good as ours, even before they've made this latest turn towards authoritarianism and central control.

And when you look at all these countries that are run from centrally run, you know, maybe with a permanent ruler, let's put it that way. That is not conducive because there's only one person making the rules to a dynamic capitalist country that they can be, they can, because they're so big, they'll be important. But as far as competitive with the dynamics of our society, I mean, the best and brightest are not going to run to China to go live there, even if they spoke Chinese. they're going to leave there for more free societies over time. And so, you know, the economy has to do, they'll still have plenty of smart people left, but the best and brightest, it's not a good plan, what they're doing now. And I don't think that's their plan. I think if I wanted to answer your question is, what are they thinking?

Their optimization strategy is not let's be the best economy. It's like, how can we have the best economy subject to the current rulers staying ruling? And if other parts of society get too big or too powerful, that's not part of that optimization. Right. And it's just, that's another one of these crazy moments in time that none of us could have anticipated. The smartest people I know on China, people who are pouring money in their capital allocators, entrepreneurs, spending time there, building businesses there, investing, starting venture funds there. They did not see this coming. They thought this was going to be like the next great opportunity

and it's turned into the opposite. Their portfolios have been demolished. They have no insight. It's just crazy that we suspend disbelief with dictators and pretend they're not dictators until they do something that dictators always do, which is circle the wagons and preserve their own power, whether it's Putin or North Korea or MBS or China, that is Xi Jinping, they're going to do, as you point out, they're optimizing for staying in power. And you can't have optimism if some, you know, creepy dictator decides, I get to win, everybody else has to lose. That's not creating optimism, enthusiasm. Like you said, we have Americans who are delusional that they'll be the next Google, they'll be the next Tesla. They don't have that. And without it, you can't win. You can't win in this

game, at least versus optimistic people who are delusional. Well, one of the best books I've read on this was called Red Notice. Oh, yes. Bill Browder. Incredible. And about who is Putin? What is their system like? And I never invested in China because I read that book.

And, you know, it doesn't matter what the numbers are. to be dynamic economy over the long term, you need the rule of law and you need the enforcement of property rights. And they don't have either. Quite the opposite. And so that's the end of the story. And I don't care. I'm not saying, I would call it speculation.

That's what I would say, a combination of speculation in the greater fool theory. Can I get out before this is. taken from me. So I'm not saying people won't make money in China or investing in Russia or whatever it might be. I would just call it speculation. I'd call it what it is. And I'd call it the greater full theory.

Because you don't know what you're going to capture even if the economics end up being good. And so I cannot invest in a place without the rule of law or respect of property rights. And so I would just. use that as a general rule. It's a general rule. It doesn't mean there won't be exceptions. They're obviously phenomenal companies and, you know, the Chinese people are pretty amazing. Great work ethic and smart and, you know, all these great things. But their system is not something that I can invest in. Yeah. It's like I got invited when I was in L. When I lived in L. invited to a lot of underground card rooms back to the gambling and poker analogies.

And it was like, I don't know if this game's legit. I won the first two times I was here. I wonder if I won so that I'd come back at their time and get demolished by people who are in cahoots, right? And in red notice, you know, it's basically, you know, Bill's making some nice wins. And then maybe he won a little bit too much. And then, you know what? Somebody goes down to a central office. And an incredible moment in the book, they just changed the paperwork. at a central office of who owned the company. It'd be like all of a sudden if the shareholders of Amazon didn't own it anymore.

Absolutely incredibly riveting story. I can't believe they haven't made that into a movie or a series. And that's where the Magninsky Act comes from for those people who don't know tragically. No, it's incredible book. And just to use your poker analogy, one of my ex-partners who had been very, very good friends, was, you know, one of the finalists

in the U.S. Poker Champion. So he's a very good, very good poker player. And he once was in Vegas just playing at a table. And, you know, went home, came back eight months later. He walks into the same casino and the same guys are at the same table. And there's just one chair waiting for whoever's going to show up. And so that really does happen. It's basically you're playing eight versus one, or even if it's just three versus one,

with three people. What they're doing, it's a known strategy, and there are ways to detect against it. But when you're tipping the floormen and you're the regular there, it's pretty hard to catch guys doing this, but you've got three players, they can be signaling each other. And if one is going heads up with you and two others come along for the ride, even if you have aces, your, your, your 80% chance of winning just went down to 40% because you're up against three random sets of cards, which have a 20% expected value. And you're going to get to, She can't beat the game, period. Speaking of beating the game,

American companies at the top, some of the ones we mentioned earlier, Google, Apple, printing money, just huge cash hordes, hundreds of billions of dollars in some cases, and maybe we feel the tax system, or some people feel the tax system for corporations, a little too generous.

What should happen to these massive cash hordes at these companies? Does it feel equitable to you, the tax treatment. It feels, I mean, we both understand it, capital gains, losses, carry forward, all the stuff. But there does seem to be a feeling that companies maybe don't pay enough taxes. And it feels unfair to a large portion of people. And then there's just this pragmatic issue of what do they do with all that money and how should an Apple or Google redeploy that capital? Because they're not allowed to buy things anymore, which is also crazy. These companies could be growing and

becoming even more dominant if they were allowed to deploy this capital. So two questions. What should they do on a business basis, a capitalism basis? And then just on a fairness for the economy basis, any thoughts on minimum taxes or this sending your IP to Ireland running tax, you know, global revenue through tax loopholes? And the general feeling that Americans have that companies have gamed the system, not illegally, but efficiently, too efficiently. Well, I think it comes back.

A lot of their game has been growth. And so they take. all their what would be called profits and spend them getting more customers and that's expensed. So they take what would have been profits if they didn't want to grow as fast as they could and spend it on getting more customers or reinvest in customers or give more value to customers now, which costs them money, but over time will make them stickier and their lifetime value spend made sense. Okay.

And so that's a really tough question to answer because someday they will be paying their fair share. Are they investing it efficiently? And then is it fair relative to companies that, yes, you get to capitalize some of your expenses. You spent the cash now, but you don't get to deduct it now. You capitalized it and you only deduct your depreciation, maybe one-tenth of it. And therefore, it looks like you're earning more. So in other words, when you buy a machine that lasts for 10 years, the way accounting works, I was an accounting major.

So this is why, you know, I have to throw most of that out the door because I took it 40 years ago. But when you buy a machine that's going to last 10 years, it's not fair to hit you up for expenses this year for buying that machine because it's going to last over 10 years. So what depreciation would do is divide that expense over the next 10 years. but one of the things that and so it makes you look like you're more profitable and people will buy your stock and give you money because you're earning money but from a tax standpoint you only get you spent a hundred dollars but this year for a tax standpoint you only get to deduct ten

dollars your ten dollars of depreciation and therefore you show more earnings for taxes and you have to pay those taxes if you invest that hundred dollars into a customer that's going to last over 10 years, but get to expense, not $10 of that amount, but $100 today, you're not paying any taxes today. So you're sort of getting a free loan for the government for one day when you earn that. And as you grow, if you can keep up a certain pace, you're just never paying taxes because you're reinvesting every nickel into something that's expensed to get more customers. So you're asking, is that fair? Is that treatment fair between old style bricks and mortar type businesses and these businesses that are asset light. And their capital spending is actually

just expensed away. Yeah, it's customer capitalization. From at least a tax standpoint. And I haven't given it a ton of thought, but I would say, yes, there should be some happy medium between those two. And you should have to pay if you're only allowing companies that buy equipment that's going to last for 10 years to expense one-tenth of it each year, perhaps a fairer way for corporations to pay their way would be to do the same thing. But let me just point out that corporate taxes are only about 7% of the money we collect. Okay, so it's a very big political issue. it's virtually meaningless for the economy as a whole.

So, you know, one is sounding good. We're getting big, bad corporations to pay their fair share and pay for everything we spend. But in reality, it won't pay for anything. So I'm not saying it's not fair to talk about these issues and make adjustments. I'm saying, though, it'll be a little fairer, but it won't make any difference in the overall budget, whether we, 6.3% or 7.7% of the entire budget. budget of the money we collect. The real money we collect is from the people those businesses employ who pay taxes, the people who own their stock, who eventually will pay taxes on those

gains, in addition to the corporate tax, which is a very, very minor portion of the money we get. And there's a lot of confusion as to the good that corporations, I mean, that's really private enterprise between paying their employees and paying their taxes. That's really the only place we get money for the government to spend. It's the only place, you know, and that's all government employees, that's all government spending, that's the only place charitable dollars really come from. So corporations, business doesn't have to be incorporated, but business in general, those taxes are where everything comes from.

And we want to do things to support them as much as possible. It's not like money out the door. Or if that money went to government, that money ends up in someone else's pocket. It doesn't disappear. You know, it ends up in shareholders' pockets. It ends up in employees' pockets. It ends up someplace. You know, if we get taxed away, it'll come from someplace.

So the money doesn't disappear. So all I'm saying is I'm for things that keep our economy as dynamic as possible. You mentioned France before. I haven't updated my info for the last three, four years. But a few years ago, youth unemployment, you know, 18 to 25 was like, or even I think anywhere in your 20s, it was like 25% unemployment.

And it was only that low because people could move around the European Union and get a job someplace else. And they had a law that basically, if you hired someone, In most case, you can fire it. You have to give them three-year severance. Right. You got to basically go to court to fire them and eliminate the position. But even if you did, even if you did, you owed them three-year severance, which prevented companies from hiring new people, well, A, from getting rid of people, but also, if they weren't doing their job, but also prevented them from hiring people, because if you have to pay three-year

salary and you make a mistake, that's very expensive. So it sounds like, once again, intentions are good. Right. You want to give people job security. You want to take care of your employees. You want to do everything. But at the end of the day, you don't even get a job. And they go elsewhere where they're more friendly. And Italy has the same issues where if you're above a certain size, there's all kinds of government things that you have to do. So many of the businesses, Italy, have stayed family businesses below a very small level. And they can't compete. And so young people leave. And it's really a retirement home. It's turning into like Epcot or something. It's like Europe is becoming some, you know, version of Epcot where people go visit it like it's some antiquity. It's a museum. Yeah.

And if you think about at-will employment, it's actually one of the most beautiful things we have in our American system because either party can opt out at any time for no reason at all. No reason given. You do not need to give a reason to eliminate positions at a company. You could just be saying, you know what, I tried to do this new unit. We wanted to sell French fries.

at French fries stands, you know what? People don't want any French fries carbs are terrible. We're going to get rid of that and we're going to start another business and at home delivery business. And you can just fire the whole group of people. And by the way, if that whole group of people realizes DoorDash pays better than working at Starbucks, they can leave en masse. And if they have more flexibility.

Now, Starbucks has to raise their wages to keep up with Uber and DoorDash. Uber and DoorDash then are in a dogfight with each other. And lo and behold, Elizabeth Warren and Bernie Sanders demanding, all of these concessions from big companies. And Bezos did the most brilliant thing ever. He just came over the top. He's like, yeah, you know what? We're going to proactively pay people $18, $19, $20 an hour.

And we're going to pay for their college for their associates degrees. And by the way, Bernie and Elizabeth Warren, you haven't gotten that done in the government. I got it done in my company. So free market wins when the rules are fair and equally and fairly, you know, executed against. Well, I think it's a great point. And this whole thing about stakeholder capitalism is very confused. I think there is a problem with capitalism, but it's short-termism. It's agency problem.

If actually the goal was to create value over the long term, if you treat your employees badly, you're not going to get good employees. So that's why you treat employees well, because you're trying to create value over the long term. And management has to be incented over the long term. because there's an agency problem where if they get paid over the short term, they look for short term wins, where if everyone just thinks that your goal in capitalism, you know, Milton Friedman gets a lot of pushback for saying, you know, businesses about making money. But if you just convert that to businesses' job is to make money over the long term for shareholders, that if you say over the long term and you pollute, if you pollute or you cheat your customers or you cheat your employees or whatever,

that's not a way that successful businesses operate. And so if you just change the mantra, and it's very simple that we are here to maximize profits over the long term, not short term, but over the long term, then it makes everything clear. Everyone has a clear challenge. And by treating employees badly or polluting or by treating your customers, you know, oh, they'll just rip me off. Well, that doesn't last very long.

People, especially nowadays with the internet and everything else, you have to treat your customers as well. You have to treat your employees well because there's other places to go, as you're saying. So if we change the mantra, and there is a problem here, there's too much short termism in capitalism because there's an agency problem where managers who don't own a business in many cases get incented to maximize short term profits. They have to be incented to maximize long-term profits of the business. And that's the simple tweak that has to be made to make everything clear for stakeholders and everyone else. That's why equity participation in the private markets and venture capital has become such an amazing driver of long-term value because people are looking at a four-year vesting schedule for their shares. People might call it golden handcuffs, but it really does incentivize long-term thinking. We're not trying to goose the number of users by selling our product to people who don't need it.

You know, we're trying to make our product perfect for the people who do need it. And I see this all the time, you know, company in second or third year, they start looking at the wrong metric. And the sales team is not qualifying the customers. They're selling the product to people who don't need it. And you get the short-term spike in sales. And then all of a sudden next year, when the renewals come up, nobody renews because they didn't actually need the product.

And this is where understanding your customer base is so important. Let's end on this. This has been one of the most confounding moments in time as a capital allocator, as a an American to try to understand what's going on in the world. We got a once in a hundred year pandemic, hopefully, coming to an end. Putin just decided he's going to go to war with another country in the year 2022 with no clear off ramp, it seems. Who knows? Maybe this could be a Georgia situation in the last 11 days. Maybe this could be the start of something horrible. Let's hope it's not. Record number of jobs, unbelievably low unemployment, rising wages, personal balance sheets

that are pretty well balanced in record savings because people didn't go out and spend. Companies throwing off massive amounts of profits, but yet this crazy inflation, and we have $30 trillion in debt, which is just bonkers. How do you, Joe, make sense of this when you look at the next five years? Let's look at this next two to five year horizon, because for every time somebody list all the problems, I list all the things that seem unbelievable to me. 11 million job openings. And we haven't really let people into country. Immigration was muted over the pandemic. So wages have risen. People have so much money. They're not going to work. It's very weird

to understand this moment in time. How do you understand this moment in time? Well, I like the way you phrased the question, which is in five years. So what's going to matter in five years and what's going to matter now. If you, as horrible as the situation is in Ukraine and I wish them the best and I think it's very important that we make a stand for the free world here. And I acknowledge all that. But I remember I gave a talk when Brexit was the big issue, you know, three, four years ago and they had just voted for Brexit and no one knew what was going to happen because we'd

never seen this before and how it affects. So I went back in history and I looked at what has happened to the stock market, you know, after the start of World War II, you know, December 7, or the Cuban Missile Crisis, or, you know, go back to every bad news event. And you just see that it's really a blip over a period of time that usually gets resolved within the year, meaning we either bounce back. It's a, you know, there is, there is an effect to the market. but it's very short term. And we go back to trendline at some point. And I am not a macro investor, but I know to ignore as horrible as that I am watching the news like everybody else. And I'm horrified and, you know, all those things. And there's very important political decisions to make for the

long term right now. But history has shown that these news events, you know, it's a complex adaptive system where if you gave me one fact, I would only know one little small percentage of what actually is going to happen. So yes, that's bad. And I know. know the pandemic will end. It's ending. I don't know what's coming next, but if you give me five years, we will be back to trendline on that as well, whatever dislocations will have happened with inflation or supply chain or any of those things that will also be resolved. Do I think what happens in Ukraine will affect the if I own, I'm not a macro guy, so I'm buying individual stocks. I own Google. You know, they invaded Ukraine. What's going to happen to Google? Not a heck of a lot.

No. It's terrible. I'm not minimizing what's going on. I'm really not. But if I'm being a cold hard capitalist, I'm saying what will happen to their business long term? I don't think it'll have much of any effect. And so why should I react? Interest rates are very complicated. You know, because interest rates affect where valuations are. What are your alternatives from stocks if I'm looking at stocks? Well, one of the interesting things was when I went back and looked post-World War II, Two, you know, inflation was pretty high because everyone was back from fighting the war. And there was a lot of inflation, but government kept interest rates low, below inflation. And they can do that, A, because it was probably temporary. And B, they have different levers that they can use to provide cheap money. And I would say, given the debt that you mentioned and everything else, we're only going to let interest rates go up a certain amount to the extent that we can control them. and we can't totally control interest rates, but we can maybe control some amount of government bond rates and availability of money. And so I think that the skew will be towards keeping

interest rates as low as possible under the circumstances. And that should make equities relatively attractive. I don't know where they end up, but I think, you know, Japan's been in a low. They spending up the, you know, they have much more debt than we do. versus GDP, you know, like a multiple of maybe two to one, I'm not sure, but something like that. And yet they still have, you know, lower inflation and low interest rates. So once again, macro is, I don't know anyone who's particularly great at macro on a consistent basis. Otherwise, I just go find out what that person thinks. It's very hard, as I said, it's a complex adaptive system.

You give me the answer on four or five key inputs. I still don't know what's going to happen. But I do know that Google, if they continue to grow their business at a nice pace, you know, historically ridiculous pace for their scale. Unbelievable. Yeah. I mean, how do you grow 30% on those that large of a number? There are growth stock and a value stock.

It doesn't make any sense. It's unprecedented, isn't it? Yeah. There used to be a large numbers where you grow into your market share. And here, they still have a small market share relative to. to, you know, potential. And also, if advertising is more effective, you spend more. So it's not really, you know, I don't know how big the market really is,

depending on how good they get at it. So they could be, in fact, inducing a market to manifest, which is what Airbnb does. People looked at Uber and they looked at Airbnb and said, well, here's the number of cabs. And it's like, well, you're not taking into account that consumers might change their behavior and get rid of their cars or they might take more vacations because vacations are cheaper. So the best products, my oasis has always been, induce a market to grow or exist. You're right.

Still above my pay grade, but I'm always amazed. Like, I just took two Ubers yesterday and I came home and said, it was amazing. I got it in two minutes. And, you know, I didn't even know I needed it until two minutes before. So there are some amazing things going on that, you know, we're all privileged to live at this time to be able to take advantage of. I hope we'd use some of these tools. for the greater good. And I think it's important that, you know, I really chagrined by the polarization of society. And I hope we start pulling together because we have a great country.

And I love it. And I wanted to continue to thrive. And I think that'll be great for everyone. And so I hope people start appreciating, you know, we have a very flawed, we're just better than everybody else. I'm not saying we're not flawed and that we don't have a lot of improvement to do, but I think we are improving. I think we keep getting better and better in every way, almost every way. We're getting better and we're not good in many ways, you know, and there's a lot of reasons for the polarization. But I think as long as people see things getting better and realize that there's no place better, at least that's how I feel, people will start feeling proud to be American again and

that's just good for all of us, I think. I think that is the perfect note to wrap on here. You look at these incredibly vocal minorities on either side, crazy, alt-right Republican maniacs who are praising Putin, just absolutely disgusting and insane. And then these people on the historical left

who want to cancel everybody and can't take the win and want to ankle companies that are increasing wages and giving free college, it makes no logical sense. And then you have this giant, silent majority who are proud to be Americans and you and I get to see these great entrepreneurs build these great businesses while Europe is in some kind of regression turning into a retirement community in a museum as we discussed and China just opted out. To me, this is the ultimate

setup for another century of American exceptionalism. And so we might want to just look at this operating system one more time and be thankful for what we have. This operating system, seems as flawed as it can be and you can criticize it, but you're allowed to criticize it and you're allowed to improve it. I go try to improve the operating system in Europe, Russia, Saudi Arabia, North Korea or China, and you will be faced with a much different circumstance. I agree with you, Jason. Thank you. It's so great to have you on the program again. I'm going to go ahead. This has been such a great discussion. I'm going to ask you to come back at six months. I got you to come back in one year.

now will you agree to have this discussion again in six months? Yes or no? We'd love to. All right, there we go. Now we got them twice a year. This is how I get the smart people to just keep coming on the program and making me smarter in our audience. Thanks again, everybody for tuning in.

We'll see you next time. Bye bye. Hey, everyone. Producer Nick here. I want to tell you about the SaaS Syndicate. If you're a founder of a SaaS company with a product and market, our investment team wants to talk to you. Head over to the syndicate.com slash SaaS, S-A-A-AS, to apply to raise from

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