All-In PodcastBig Beautiful Bill, Elon/Trump, Dollar Down Big, Harvard's Money Problems, Figma IPO
EVERY SPOKEN WORD
150 min read · 30,030 words- 0:00 – 2:58
Bestie intros
- JCJason Calacanis
All right. Welcome to the show, everybody. The number one podcast in the world and, uh, man, gonna be really exciting come September. September 7th, 8th, and 9th, The All In Summit in its fourth year. This week, um, doing Friedberg's job for him because he's been a little bit busy.
- CPChamath Palihapitiya
No, you're not.
- JCJason Calacanis
Lockdown (beep) is in. Uh, looks like (beep) -
- CPChamath Palihapitiya
No, Jason, what are you doing?
- JCJason Calacanis
... from (beep) is in.
- CPChamath Palihapitiya
Why are you doing this?
- JCJason Calacanis
You can bleep it.
- CPChamath Palihapitiya
Nick, cut. Nick, beep. (laughs)
- JCJason Calacanis
And, uh-
- CPChamath Palihapitiya
Every year, (beep) you pre-announce a bunch of people who don't show up. It's literally... You literally pick people who won't show up.
- JCJason Calacanis
Ha! What are you talking about?
- CPChamath Palihapitiya
Like, yeah.
- JCJason Calacanis
I got Elon to come three out of three years. I have gotten a couple of trillion dollars in market cap for you, Friedberg, um, and more to come.
- CPChamath Palihapitiya
Don't worry about it. Don't worry about it.
- JCJason Calacanis
More to come.
- CPChamath Palihapitiya
This year is gonna be better than ever. Don't worry about it.
- JCJason Calacanis
Better than ever. Allin.com/summit. And lots of exciting news around the tequila, boys.
- DFDavid Friedberg
Friedberg, did you see MSN covered me sending a case of the tequila to Bezos? (laughs)
- CPChamath Palihapitiya
(laughs) I didn't see that.
- DSDavid Sacks
We're going all in. Let your winners ride. Rain Man, David Sacks. We're going all in. And I said, "We open source it to the fans," and they've just gone crazy with it. Love you guys. Queen of Quinoa. Going all in.
- JCJason Calacanis
We've, uh, been crushed with orders. Apologies if we're taking a little bit of time with customer support, uh, but you can go to tequila.allin.com. Deliveries begin in late summer, right around the time, I think, of the, uh, summit.
- DFDavid Friedberg
Friedberg and I were in Las Vegas this past weekend. It was a blast as always. We had a really good time. We had 20 of our besties or so with us. No?
- CPChamath Palihapitiya
Great, great time.
- DFDavid Friedberg
It was great.
- CPChamath Palihapitiya
Good time.
- JCJason Calacanis
I wish I could have been there, but I was on the Snake River doing a little-
- DFDavid Friedberg
You didn't invite me?
- JCJason Calacanis
I was invi... What are you talking about?
- DFDavid Friedberg
(laughs)
- JCJason Calacanis
I was getting lobbied, like, "Cancel your family trip, white water rafting, to come to Vegas." I was like, "Yeah."
- 2:58 – 14:10
Big Beautiful Bill: Senate revision, AI regulation moratorium killed
- JCJason Calacanis
All right, listen, the, uh, BBB has passed the Senate. Let's get into this docket. But there was a bit of drama in the House after an all-night session. And over 24 hours of deliberation, Senate passed the big beautiful bill on Tuesday. Friend of the pod, J.D. Vance, cast the tie-breaking vote after a 50-50 deadlock. Three Republicans voted no, and, uh, Trump won over Senator Ron Johnson. On this very podcast, he said he would be a no, unless more spending was cut. There were significant changes to the bill. We'll get into that in a minute. And so it's got to pass the House again before Trump can sign it into law. Lots of drama. Trump set the deadline for July 4th, which is Friday when you're listening to this. And it will, in all likelihood, get there. According to Polymarket, there is a 96% chance the bill will pass by Thursday, and a 97% chance it'll pass by Friday, July 4th, Independence Day, the day we publish the show. It looks like it's pretty much a lock. Some, uh, big changes in the Senate. Biggest change, the 10-year AI regulation moratorium, which we're going to talk about, for states was removed. Ted Cruz tried to negotiate cutting it to five years; suggestion I made. Uh, maybe 10 years was a little bit too long for folks, but that didn't work. According to an NGO called National Conference of State Legislatures, over a thousand bills related to AI have been filed by state lawmakers in 2025. So expect a lot of state-by-state AI regulation. I think this is a good place to stop. We don't have Sax here to talk about AI regulation, but he talked about it the last time. Friedberg, your thoughts on states. You know, we talked about state rights here in relation to abortion, guns, gun regulations, cannabis, many different, you know, debates over who should get to decide for the country. Where do you stand on this one? Should states have a voice in how AI is deployed in their, you know, borders, uh, within their borders, or should the federal government take this? And if so, for how many years, because that seemed to be a sticking point?
- CPChamath Palihapitiya
Look, I, I'm a big believer in the construct of our federated republic in the United States, where states can operate with as much kind of discretion as they choose to with the laws that they pass and how they intend to govern. There are, however, things that affect more than the state. We have interstate commerce, we have international commerce, we have the open internet, and we have a lot of other systems at play here that extend beyond the boundaries of a state. And the way that AI tools and AI systems and AI services and AI-related jobs are being deployed and activated, I do think it's critical that we treat AI regulation at a national level, at a federal level. To date, there have been, I believe, 70 state laws or statutes passed thus far in the United States with, I think, over a thousand having been proposed to date, if the numbers are right. And having a patchwork of regulations on, for example, model development or telling software companies what software they can deploy...... would make it practically impossible for internet service providers, like a Google or an OpenAI, to service customers across state boundaries in a way that is actually gonna meet the needs of the customer. This is a huge detriment to consumers and a huge detriment to the job market if we end up creating a patchwork of regulations on AI this early. One of the things that I would point out is that much of the early legislation, like for example, what we saw in California, if you read that legislation that did not get signed by Gavin Newsom in California, there was a definition on model parameters being a, a, a boundary condition for whether or not something would go through regulatory review process. That was such a naive assertion that early in the phase of AI technology development. And think about the implication was, okay, well, everything is LLMs, but there's other models, like vision action models that are gonna be used in robotics, models that might be used in predicting and driving physical systems, like in self-driving cars, for example. So the way that the regulation gets written will often be done in a naive context, in a limited fashion by regulators that don't fully understand the breadth of the technology that's coming our way. And I do think that it needs to be kind of leveled up and allowed to operate at a federal level. So I think it is absolutely critical, not just for technology companies, not just for the industry, but for the opportunity for job creation, for improving the economy, for driving GDP and productivity growth, that we get something passed that forces AI regulation to be done at a federal level. Even though I generally agree that states should be able to self-govern, this just has too much of a interstate and global interaction. So that was the biggest disappointment for me in the negotiation that's gone on with this bill, is that of all the things that I thought were gonna be passed that I thought were maybe not ideal, getting this AI federal preemption in that bill was probably the best thing at the top of the list for me, in terms of critically important for the US economy.
- JCJason Calacanis
Yeah. Chamath, your thoughts here? Obviously, abortion is, like, an interesting one to look at because that went to the states, uh, in furtherance of, uh, Friedberg's, you know, position here. You have just many different rules and regulations between Texas, Oklahoma, whatever it is, everybody's got a different view. It's chaotic, and we don't have a singular point of view on it, therefore, women in one state have very different rules than in another state. So where did you fall on this one? Federal legislation or is it just gonna take more time to figure this out? I mean, that, that's another, I guess, angle here, yeah.
- DFDavid Friedberg
This is nothing like abortion.
- JCJason Calacanis
Okay.
- DFDavid Friedberg
Abortion is an individual issue between a woman, her doctor, her partner, her god. And so a state being able to have rules and then h- allowing that woman to choose which state she can go to is quite reasonable, because I think that it acknowledges that there's no one size fits all. So that is clearly a state issue. But the reality is that AI is of national security importance. It is the tip of the spear of our ability to have technological supremacy. That is how we have economic supremacy. And so not governing it at the federal level, I think, is a mistake. And it makes as much sense for states to legislate AI as it would make sense for states to have competitive armies. It doesn't make sense. There are certain things that are just so fundamentally primary to American supremacy, and safety, and security that it needs to be regulated at the federal level. And I think AI needs to be at the top of that list. So I was disappointed that we weren't able to see the forest from the trees here. Now, I'm sensitive to part of the reasons why. Many of the states have very specific issues around child safety that they mentioned. In Tennessee, there was a lot about copyright ownership related to musicians and their content. I get all of that. Those are legitimate things that need to get ironed out. But I think that it could have been done in a federal framework. Not having it, I think the risk is that if you have 50 different sets of regulation, and it won't even just be 50 as Friedberg said, it's gonna be, you know, all kinds of pet organizations that pop up in all of these states, what happens, I think what it does is it slows down startups and smaller companies who won't have the economic heft to fight these regulations, or to work with them, or to figure it out, and it'll advantage a handful of incumbents. And the problem with that is that our incumbents aren't yet mature and this industry is still developing. So I think this is, um, this is one of the unfortunate parts of what is otherwise a, a pretty reasonable bill.
- JCJason Calacanis
Well, you, uh, can look at gambling, I guess, and cannabis legislation. These are things that Americans largely want to do, and they are fighting their way state by state. And at some point, we may have a federal regulation about online gambling, right? Uh, right now, it's a patchwork. Same thing with cannabis, uh, psychedelics, all a patchwork of different states.
- DFDavid Friedberg
Why do you lump together things that are about individual rights with AI, which I, I don't think is-
- JCJason Calacanis
Well, I mean, you-
- DFDavid Friedberg
... I don't think is about that.
- JCJason Calacanis
People might look at the rights of rights holders, cars. These AI things aren't gonna hit people on an individual level. So I, I think when you bring this up, this topic, there are people who feel this is an individual sovereignty issue.
- DFDavid Friedberg
Right. But then, you know, there are other issues of individual sovereignty, like the ability to take drugs, and there's still federal mandates that come through the FDA, you know. You're not allowed to...... short circuit or circumvent that framework at a state-by-state level.
- JCJason Calacanis
Yeah, that, uh, that actually is at the core of the cannabis debate is would they enforce the federal laws on cannabis? And they haven't, right? So that was part of it we went through.
- DFDavid Friedberg
No, I'm talk- I'm talking about more as it relates to AI.
- JCJason Calacanis
Sure. Uh, you know, I- because AI means everything, I think that's what makes this issue very difficult. AI is going to affect everything, right? So probably the people who want to slow this down and have the states do it are saying, "Let the states have their say on these granular issues." I'm not saying this is my position, but I think that's what I'm reading into their position. "Hey, this is gonna affect different states in different ways. Let them figure it out, take some time, and then we'll build towards a f- a framework nationally," which I think is what happened with the internet in Section 230 as well, although I don't know the entire history of it. We did come up with an idea that, "Hey, the federal government makes it common carrier to, you know, anybody can post anything on a website and then, you know, you can request to take it down." That was federal legislation. Those things could have been held also on a individual basis, and then what would have happened for the internet? You would have had to have AOL or GeoCities, have a different patchwork, like you're saying, in regulation. So I'm guessing the states probably do want to have a say on self-driving, that one specifically. And I don't know if they're wrong. What do you think on self-driving? Should it be federal? I mean, that's like an interesting lens to look at it through.
- DFDavid Friedberg
I don't know the details well enough. It seems to me that self-driving touches both the states and the federal.
- JCJason Calacanis
Sure, federal highways and local roads. Yeah. So but, uh, just from first principles, (laughs) you know, there's self-driving cars now in Palo Alto going up to the city from Waymo, you got Austin, you got three different providers. Should the s- should the city, the state have a say in that? Kind of feels like they should.
- DFDavid Friedberg
Yeah. Sure.
- JCJason Calacanis
Yeah. So I mean, I think that's-
- DFDavid Friedberg
But I don't, I don't think a city has any idea how to regulate a model.
- JCJason Calacanis
No.
- DFDavid Friedberg
In the AI-
- JCJason Calacanis
That's where it's obvious. The other side, yeah, like, how would they ever even
- 14:10 – 25:12
Clean energy subsidies phased out: What this means for energy production in the US
- JCJason Calacanis
know? And another piece that's in flux and has been changing is energy policy, solar, EV credits, and, uh, maybe even disincentives, the $7,500 credit for buying cars and then also carbon credits and a fee of $250 for everybody who owns an EV every year, Freeburg. Maybe you could talk a little bit about...
- DFDavid Friedberg
Okay.
- JCJason Calacanis
... this part of the debate because we've been spending and hitting incredible goals as a country in getting more renewables, more energy online, but that comes at a cost, right? And so that is, uh, a big part of the debate here. And that obviously is something that impacts Elon, and we'll get to him in a moment, but that impacts Elon and Trump's relationship in a major way.
- CPChamath Palihapitiya
The old school motivation and incentive for what people would call green energy or green tech was to decarbonize electricity production and develop and deploy at scale these new technologies at the time, like wind and solar, as an alternative to carbon-based technologies that put carbon dioxide in the atmosphere, like oil and coal and gas. So the IRA, the Inflation Reduction Act, created tremendous government incentives for building solar and wind farms to create electricity in the United States. This proposal that's been going back and forth in this bill and some of the debate that's triggered many folks online to denounce the bill takes away those incentives, takes away those credits, takes away the EV tax credit starting in September, as an example.
- JCJason Calacanis
Why can't they do these in digestible chunks? It should be no more than 300 pages per bill, no more than X number of issues, and break it into three.
- CPChamath Palihapitiya
Good conversation to have, good conversation to have...
- JCJason Calacanis
Right?
- CPChamath Palihapitiya
... another time, but we should talk to people on, uh, Congress, but there's a very specific reason why because of the, uh, the logjam that happens with the filibuster. So it makes it impossible to get things done in that traditional context. So what's happened in the last couple of years is you end up with these massive, massive mega bills where they jam everything into one bill that they can pass with 50 votes, which is what's just happened-
- JCJason Calacanis
And then in the middle of the night...
- CPChamath Palihapitiya
... or 51 votes.
- JCJason Calacanis
(laughs) They make these last minute changes-
- CPChamath Palihapitiya
And then they, then they...
- JCJason Calacanis
... and we have no say.
- CPChamath Palihapitiya
... all gets... Right.
- JCJason Calacanis
It's so dark.
- CPChamath Palihapitiya
And so there's, there's, there's no rigorous debate, there's no transparency into what's going on and why. And so the second argument away from the green stuff is the more modern stuff, which I've made, and I know Chamath agrees with me on this, which is we have to increase electricity production in this country. The current plan has been to move from one to two terawatts by 2040. Meanwhile, China's moving from three to eight, and China's adding an entire United States in electricity production capacity every 18 months right now. They are so far ahead of us. And ultimately, electricity production is what drops the price for things and increases jobs, increases GDP, increases your ability to make stuff. And so the more electricity production comes online, the more we will be able to be sufficient in an AI point. Now, the Secretary of Energy, uh, Secretary Wright gave an interview and he said, "We have more than enough capacity with, uh, gas, oil and coal, and nuclear." And so his argument at this point is that we don't need to subsidize solar and wind where the government pays for these programs and private equity investors can make money on them. This is a big part of the argument he's making. I'm not making it. But he's saying this will drive traditional energy investments in traditional systems that we can scale up quickly to meet our energy production goals. Now, I will say from my point of view, I'm not a huge fan of being dependent on government-subsidized energy at all. So if the government is having to play a role in funding stuff, there's something really questionable in terms of our sustainability on that energy production source. Over time, will it actually be able to make more of it? Because what you want is not just to make a bunch of energy in the next 6 years or 12 years, you want to make sure that you've got an engine for creating new energy production on a continuous basis so we climb non-linearly the energy production curve. That's what we need to do.And I hope that one of the key outputs of this, which a lot of people are really unhappy about the, the loss of the demand for solar and wind because of the loss of the government, uh, programs here. But what I'm hopeful for is it creates a natural market force for nuclear, and that we actually see a better proliferation in nuclear, which Secretary Wright has said, and President Trump signed these EOs a couple weeks ago, to reduce the regulatory burden on nuclear and increase the ability for nuclear to proliferate much more quickly than has been the case historically. So I... while a lot of people are saying, "Hey, this is gonna take away all this energy production capacity that's coming online in the next few years that were supposed to," the counterargument is, we're gonna create a natural market force because the energy demand will still be there. So someone's gonna show up and say, "Hey, I wanna make electricity 'cause there's so much demand for it." And maybe they say, "Hey, let's try this new nuclear dereg system and see if we can get it to work." And so I don't know. The, the jury is absolutely out. We have not seen this energy proliferation begin in this country. But I do think one of the potential benefits of removing those clean energy tax credits is that we actually see natural market forces drive demand for a more naturally sustainable, scalable energy production source. Chamath, your thoughts?
- DFDavid Friedberg
I announced this a few weeks ago, but I dipped my toe into real estate. I've never done real estate before, but just outside of Phoenix, we're building a one-gigawatt data center. That's a $25 billion total investment cycle of which we'll be into it for two or three billion of equity when it's probably all said and done. What I can tell you is the reason why you can underwrite that deal, or why I was able to underwrite the deal, was it's located downstream of a nuclear reactor and so there's effectively infinite energy that we can tap. But we still need nat gas and a bunch of other things. The problem is that, you know, if we put in an order right now, we can't get a nat gas turbine viable and turned on until 2030. It's not a technology issue; it's purely a supply chain issue. So I think what our energy policy needs to make sure we contemplate is that many of the things that we are debating are no longer issues of production, but they're issues of supply, transmission, and distribution. And as long as we can make sure that we allow energy to be made wherever and whenever possible and then stored however possible, we'll be on the forward foot. The big risk is that if we don't have that ability and then all of a sudden we have these incredible achievements in technology, in robotics and we don't have the electricity to power them, that's the big risk. As long as we can fix that, I still worry that with nuclear, the issue won't be the federal regulations. I think that it's good that the president cleaned it up. The real problem is gonna be the local and state regulators and how quickly they're willing to turn these on. And the reality is that, you know, these are 10-year projects. And so even if you say go from today, the earliest these things can be turned on really in 2032, 2033. That's far too late.
- CPChamath Palihapitiya
And that's a lot of risk too, Chamath, because what if you get blocked at the last minute? This is where solar and other projects, you know, we're pouring solar panels-
- DFDavid Friedberg
Look, I'm a big fan of coal as well. I'll tell you a story. In 2020, right before the pandemic, I... may... I don't even know if I should say the name of the company, but I almost went after a coal company to buy it. And I had been obsessed with this company for a year. And it was cheap. It fell on hard times. It was like a billion two, a billion three. And my team went up in arms. They were like, "Oh my God, it's so dirty. You can't own a coal company." And it was such a huge miss on my part. I should have just bought the bloody thing. Then we went into COVID, then, you know, everything went upside down. And lo and behold, that company's, like, quintupled since then. So I'm a fan of all forms of energy production.
- CPChamath Palihapitiya
Yeah.
- DFDavid Friedberg
I think the marginal cost of energy has to go to zero, which means that any single way you can get your hands on electricity production is a winning trade over the next 20 years in the United States.
- CPChamath Palihapitiya
This is... I was trying to wrap my head around people saying, "Oh, we shouldn't buy all these solar panels out of China because China is making them so cheaply and our trade imbalance," et cetera. And I was like, well, wait a second. What's more important? The trade imbalance and giving China some money for solar (laughs) panels or getting more solar panels to Arizona, you know, uh, to Utah?
- DFDavid Friedberg
Whether... Look, let's take the subsidies-
- CPChamath Palihapitiya
Yeah.
- DFDavid Friedberg
... off the table. Ultimately, you don't want any of these markets subsidized. The reality is, it is faster and more efficient to put solar panels up and start generating electricity.
- CPChamath Palihapitiya
Yeah.
- DFDavid Friedberg
It's just that. It's like 17 months from start to finish. 17 months.
- CPChamath Palihapitiya
And cheap.
- DFDavid Friedberg
So that's probably, in my opinion, the single most valuable underwriting feature of solar, which is you put a dollar in, you can start generating revenue in 17 months from that dollar going in. That's very different than when you're putting a dollar in and you're not gonna see it back for a decade plus. That's scary. And so you need to generate a rate of return that justifies a 10 or 15-year investment cycle. And that's hard to do because there's a lot of volatility in the world and things can go, you know, down as well as up. So I don't know. My, my perspective is get rid of all the subsidies at this point. Create a clean slate, but don't do anything to hinder the production of electricity because we need literally as much of it as we can get our hands on. And then we need to find a way of storing it in a safe way, and then we're off to the races.
- CPChamath Palihapitiya
And the battery technology, Friedberg, is just... keeps making great incremental proce- progress in terms of cost, you know, just going down, what, 15% a year?
- 25:12 – 43:26
Elon/Trump; US fiscal picture post-BBB
- JCJason Calacanis
Everybody wants to hear our take on what's going on between Elon and Trump in relation to this bill. We took a pass on it last time, uh, but we'll take a swing at it now. Uh, obviously there's been a bit of back and forth between, uh, two of our friends, uh, friends of the show. Both Elon and, uh, Trump are-
- CPChamath Palihapitiya
Are you friends with Trump, Jacob?
- JCJason Calacanis
Well, I'm- I'm speaking on behalf of the show. Um, I have never met Trump in person, but I did interview him here.
- CPChamath Palihapitiya
(laughs) He's- he's speaking on behalf of me and sex. (laughs)
- JCJason Calacanis
On behalf of the show.
- CPChamath Palihapitiya
I was-
- JCJason Calacanis
You guys are all Team Trump, so it's pretty obvious.
- CPChamath Palihapitiya
Just team Trump ... just him and sex, yeah.
- JCJason Calacanis
I'm friends with your team Trump too.
- CPChamath Palihapitiya
Mm-hmm.
- JCJason Calacanis
Elon has-
- CPChamath Palihapitiya
I'm not- I'm not... I've never met the guy.
- JCJason Calacanis
You've never met... (laughs) You've never met the guy?
- CPChamath Palihapitiya
We were in the White House, he took pictures in the White House with everybody. Never met the guy.
- JCJason Calacanis
Really?
- CPChamath Palihapitiya
Never met the guy.
- JCJason Calacanis
Never met in person? Okay, spent time in the White House but didn't meet him. Okay, no problem.
- CPChamath Palihapitiya
Yeah.
- JCJason Calacanis
Anyway, Elon has come out hard against this bill. He tweeted, "It is obvious with the insane spending of this bill, which increases the debt ceiling by a record $5 trillion, that we live in a one party country, the Porky Pig party. Time for a new political party that actually cares about the people." This escalated a bit, but this isn't as bad as the first time around when, um, asked if he would deport Elon, Trump said, "I don't know, we'll have to take a look," and said he might stick Doge on Elon since he gets a lot of subsidies. Freeburg, we skipped talking about it 'cause it was, uh, I think, a bit chaotic last time. But this time, I think maybe we'll chime in a bit. Things aren't as hot right now, and the bill's gonna get through. So let's take a swing at it. What are your thoughts, Freeburg, on the kerfluffle, the donnybrook, the brouhaha between Elon and President Trump?
- CPChamath Palihapitiya
There's a lot of people that are making accurate declarations that federal spending needs to be reduced, the deficit needs to be shrunk, we are in a debt death spiral, and they are absolutely correct. So I don't think that Elon is off the reservation when he makes those comments, and he's talked about this continuously, and he dedicated months of his life to operating Doge and trying to bring to light some of the extraordinary operating inefficiencies in the federal government that should be addressed, and I think, you know, we'll see what happens, jury's still out. For those actions to get permanent, they, I believe, need to mandate them in a appropriations bill, and the White House has publicly declared that they are going to move forward with an appropriations bill to try and cement some of the, uh, Doge actions. So I'm hopeful, but I think Elon's right with respect to the spending. I will provide the voice I have heard publicly stated from the alternative view from the White House, which is, this is not the bill to do that because it mostly focuses on these mandatory spending programs, and they are addressing cost savings to some degree in these mandatory spending programs, while keeping the tax rates where they are or reducing tax rates in some cases, which the expectation is will stimulate GDP growth. So the White House view is also a view that you could look at and say, "Economically, I could see a path here that does make sense." You're reducing spending only on mandatory programs, you're gonna come back with an appropriations bill to address discretionary spending. And then the final kind of action that the White House might take, which we've heard about separately, is impoundment. That at the end of the fiscal year, they may come back and say, "All the money that we saved by not spending it, we can actually recover through impoundment," and the CBO has not accounted for tariff revenue. And just looking at the recent deal done with Vietnam, Vietnam is about $130 billion a year of, uh, imports to the United States. And they did a deal that they announced two days ago with a 20% tariff on Vietnam, which, you know, if Vietnam's import volume does not increase, it's about 26 billion a year of incremental revenue for the federal government. So there's an argument that Bessen and Lutnick and others are making that you guys have failed to recognize that we've got a few other things we have up our sleeve that we're going to do. We're going to do impoundment, we're going to do this appropriations bill, we've got more revenue coming in. Net-net, we will get the deficit down to where we need to be. In fact, Scott Bessen was on TV saying over and over, "We're gonna get the deficit below 3% of GDP," which is the key target here. But the immediate reaction to this bill, I think, that Elon is having is the same that I've had, and it is the same that Senator Johnson had, and is the same that many others have had, which is, "What the F are we doing? We are in a fiscal emergency in this country and we're not addressing it." So I think both points of view can be valid, (laughs) and both sides can have a good kind of argument for why the bill should be passed and why the bill shouldn't be passed. The White House has declared that this is the only way they're going to get some of the programs done that they believe they need to get done for national security, like the ICE border stuff, and these are things that they believe they need to get done. But a lot of folks are looking at the numbers and saying, "This just isn't enough," and you're now increasing the deficit by cutting taxes. One of the things the CBO does not do though, is they don't have a strong model, and there's a ton of economic debate on this point, which is how do tax cuts stimulate GDP growth and job creation and income growth for people with jobs?... the one argument is when you cut taxes, more dollars flow into the economy, more jobs are created, more businesses are created, the GDP grows, income for other people grows. The alternative argument is it's a tax cut for the rich. What are you doing? They're going to put that money in their pockets. It's only going to benefit themselves. So that's, I think, a key crux in the argument that you'll never get to a resolution on. The one side will use that one argument, and the other side will use the other argument. So look, I mean, with respect to Elon and Trump, I will say one thing very importantly. I don't think MAGA can exist successfully without the tech alignment. I don't think tech can exist without MAGA because of the government alignment, and the importance of the government allowing these new technologies like AI to come to market and to proliferate. I don't think that these two can exist in isolation and in conflict with one another. Elon is the de facto king of tech. He is the person that is saying, "Look, if I'm in conflict with Trump, tech is in conflict with Trump," or at least that is the perception on the MAGA side. And I think that that is very risky for both sides to allow a conflict to kind of endure. And I do think that both sides have heads that are going to be cooler that will prevail here, and I do think that these two are going to recognize the importance of being codependent, if you will, in being able to progress their respective agendas.
- JCJason Calacanis
Chamath, your thoughts on the kerfluffle seem to be winding down and maybe reaching some sort of endgame. It feels like we're in some sort of an endgame here and if there is one, what is it?
- DFDavid Friedberg
I mean, I think it's just important to recognize that, on the one side, you have the most powerful person in the world, and on the other side you have the most important powerful entrepreneur and richest man in the world. And when you have people that are that accomplished, it's not as if you're going to get along 100% of the time. So I think a lot of the breathlessness around all of this stuff is overblown. I think the reality is that when push comes to shove, I think that they agree on more things than they probably disagree. And I think when everybody realizes that the alternative is essentially some insane form of socialism and redistribution, I think the alliance will hold and that they'll find some common ground. Jason, what do you think?
- JCJason Calacanis
Well, I think you're right. These two individuals are used to speaking their mind and they're both (laughs) really good at social media, and then there's no better media cycle than covering the two of them battling it out and trading barbs. But I think what Elon did this cycle was really interesting. Uh, he started a preference stack for Trump, and that cascade, preference cascade, preference stack, however you want to phrase it, you know, I think played a large role, if not the role, in getting Trump elected. People can debate that. I don't know that you can perfectly know what that $250 million and all that effort he put in, uh, you know, what that did in terms of Trump's chances. Trump probably would have won anyway versus Kamala, but maybe not. Putting that aside, the platform Elon has refined during this political cycle is one that resonates, and I think it's a really good idea for him to maybe, if he's going to be involved in politics, pull that string and just crisply define it. And I was thinking about it over the last couple of days, and I think it f- hits into four basic groups: balanced budget and government efficiency, that's kind of one; fiscal responsibility; sustainable energy, which obviously he's been passionate about and he's the leader in solar, batteries, EVs; and then manufacturing in the United States, which he also was the leader in; and pro-natalism, and just, you know, the, uh, the population crisis. He, he really cares about those four issues. So what I think he should do is take that America PAC, and instead of making it, like, just pro-MAGA, he should just clearly define what it is that he believes, small set of issues, and then he should go and back the people who are running to, to be in Congress and senators and just say, "Hey, here is what I would like you to be in favor of," and do what Norquist did with his no new taxes pledge. Do some sort of pledge like that. I don't know if it needs to be a new party, but just really crisply define what matters to him if he's going to be involved in politics, then get people to agree on it, and if he wants to give them donations, as is his right, as is his PAC's right, to raise money, he could represent, I think, a very world-positive view. Sustainable energy, just incredible execution, and a really efficient government. He should get behind- Technical excellence. Mm-hmm.
- CPChamath Palihapitiya
Technical excellence, excellence writ large, and-
- JCJason Calacanis
Technology writ large.
- CPChamath Palihapitiya
... America PAC. Just go for it. And, and, and it doesn't have to be personal against Trump. One of the big problems with Trump is he, he has a bunch of sycophants around him, and the more you kind of appease him and just blindly follow him, I think the closer you ... the perception is that's the closer you get to him. I don't know that that's true. I think he likes debating stuff. So I think he should embrace the people who debate it with him, and then those people should just crisply say, "Here's what I stand for, and I'm putting my money behind it. I hope we're in alignment, but I'm gonna stay in my lane and I'm gonna prioritize what matters to me." And Elon's priorities are exceptionally sharp and well-defined, and he should pursue them.
- JCJason Calacanis
Yeah.
- CPChamath Palihapitiya
Jury's out on where this ends up and the broader picture. You guys will get annoyed because I talked about Ray Dalio so much, but I think he's-
- JCJason Calacanis
Who? (laughs)
- CPChamath Palihapitiya
... done an amazing job in the last five years basically explaining everything we've seen from global conflict, to the internal conflict, the rise of socialism in the US, and the relationship to the debt and deficit cycle. He just posted on Twitter yesterday that he went to DC to discuss the budget deficit with senior people on both sides of the aisle, and he said, "It's clear to me that we are unlikely to change the debt trajectory we're on and avoid the painful consequences."
- 43:26 – 53:51
US dollar down over 10% in 2025
- JCJason Calacanis
- CPChamath Palihapitiya
If you want to pivot to the next topic, I mean-
- JCJason Calacanis
Yeah.
- CPChamath Palihapitiya
... one way to look at this is how the dollar is trading.
- JCJason Calacanis
Yeah, let's do it.
- CPChamath Palihapitiya
So the US dollar is now down 11% this year, and that's against every single major currency.
- JCJason Calacanis
Here it is.
- CPChamath Palihapitiya
Yeah, go ahead.
- JCJason Calacanis
So the dollar was down over 10% through the first half of 2025. This is the worst start in over 50 years. Now take a look at this chart and you can see it. It's kind of shocking. Keep in mind, the dollar jumped 7% after Trump was elected. It kind of peaked in mid-January. So if you take the pre-election dollar index number 103, it's down 6% since then, not record breaking, but significant. And obviously economists are saying tariffs and global trade are a big piece of this. And as we just discussed (laughs) and we'll keep discussing, the US debt load at $37 trillion. It's more expensive for Americans to travel abroad, and it's less attractive maybe to invest in the US.
- CPChamath Palihapitiya
Let me just follow up on the point I just made, but this is where, where the, the, you know, the... What do they say? The chicken comes to roost? What's the term?
- JCJason Calacanis
Chickens come home to roost? Yeah. The chickens have come home to roost.
- CPChamath Palihapitiya
This is it.
- JCJason Calacanis
The rubber meets the road.
- CPChamath Palihapitiya
Because now... This is where you start to see the inflationary effects of the spending and the spiraling debt, is things get more expensive and your earning power doesn't increase commensurate with the higher expenses. So, so what will happen is, you'll see here, the US today imports four to $5 trillion a year. So that's four to $5 trillion that US consumers and businesses are buying from abroad. And then we import into the US and, and use those products and services. So the cost of all that just went up by 11% as the dollar declined in value against the average of all these currencies. And that's outside of increase in prices that may arise because of the tariff effect where folks may say, "Hey, let's charge more for tariffs." Whether it's the cost of tariffs or the cost of the debt, the dollars that you have to spend now just went up by 11% to buy the same thing.
- JCJason Calacanis
Mm-hmm.
- CPChamath Palihapitiya
And if that compounds and that continues and your earnings are not growing and your assets are not growing commensurate with that, that's where dollar devaluation happens, and where asset devaluation and income devaluation, and that's where, again, we open up the door to a thing like socialism where people are like, "It's now twice as expensive to buy my groceries, it's twice as expensive to pay my rent, and I'm not making any more money. Man, I need a solution. We got to get together and get the government to make everything free." And that's why I'm so convinced that there's a rise in socialism in this country, because in this sort of an inflationary environment like we're seeing so far this year, you don't see it in the dollar inflation numbers, you see it in the dollar currency numbers. You're gonna say, "Man, I need an alternative." That's why I Well, and the paradox to that is free stuff is not free. It means increased spending, which means you're stalling the plane even more. (laughs) So... That's exactly right.
- JCJason Calacanis
Chamath, any thoughts here on the dollar?
- DFDavid Friedberg
I think the dollar has devalued 50% in the last 35 or 40 years. So I think it's somewhat useful to look at any single couple of months in time, but this has been a one-way trade for a very long time, and it's probably important to understand why that is. And I think it generally has to do with the fact that the United States finances a lot of growth, and that has been the right decision. So unless you see a complete collapse in the currency, I suspect that this decay continues to happen. So the question is, is it a bad thing? And the answer is, it depends. Because if asset prices increase faster than the dollar devalues, you're still ahead. You may not be ahead as much, but you're still ahead. And if you look at asset prices in the United States relative to asset prices any place else in the world, it is the flight to quality, which is to say that it is the thing that everybody wants to own. And you see that in the equity markets, you see it in real estate, you see it in hard assets. So I don't know, I think that it's part of the fact that until we run surpluses and/or completely eliminate the debt, there will always be a reason to be somewhat short the dollar. But the reality is that a lot of people still want to own these assets more than what they want to own any other asset and those assets are dollar denominated. And so as long as that continues to hold in the push and pull, it'll be a slow bleed, but it's probably manageable. And that's just sort of like the mathematical trend of it all. So I don't know, un- unless there's some like cataclysmic collapse in asset prices, I think that this is just a thing that you have to deal with. It's sort of like the carry of it all, and it happens. There's all kinds of other trades where you sort of pay a carry, and that's okay.
- JCJason Calacanis
Is there a relationship you can explain to the audience between the stock market ripping and the dollar devaluing?
- DFDavid Friedberg
Well, I think the reality is that, you know, if you think about a country that all of a sudden has to pay a tariff, so let's take the Vietnamese example that Friedberg said. Let's just say that they had to prepay one year of it, just to make the math simple so you can understand. They have to come up with $23 odd billion, I think is what, Friedberg, the number that you said or something like that? So-
- CPChamath Palihapitiya
Yeah, like 26 billion on 130. Yeah.
- DFDavid Friedberg
How do you do that? Well, the first thing that you're going to do is you're going to sell dollar denominated assets that you already own, and you're going to generate those US dollars, and then you're going to send it to the United States Treasury. So you may be selling bonds. So you would think, "Okay, well, that's not really good for asset prices."
- CPChamath Palihapitiya
Okay.
- DFDavid Friedberg
But then what you quickly realize is that all of that is far outweighed by the fact that all the rest of the stuff that you own, whether it's gold denominated or whether it's in local currency denominated, you wanna actually go and buy these dollars because you want assets that are safe in turbulence and volatility. And so would you rather be long the Vietnamese dong or the Vietnamese equity markets? To a degree, yes. But if you have obligations that the Vietnamese government needs to fund, their central bank is probably deciding that they need to be long U.S. bonds and fixed income and other people who hold assets in that country are probably gonna be, you know, on a weighted basis, adding exposure to the United States while all of this stuff is happening. Why? Because you're seeing the balance sheet of, of America burgeoning and growing, trying to be billion from Vietnam, tens of billions over here, tens of billions over there. It all adds up. So again, I, I think that this is like a very complicated multivariate problem but the net takeaway is that the dollar devaluation is not something that's new. It is a phenomenon that has existed through market cycles for 50 plus years. It's a decay that has happened and will continue to happen. So I think, the way that I think about it is, there is a drag but can the drag be overcome by the increase in asset values of the hard assets that are dollar denominated, and the answer is yes and meaningfully so. And so as long as that's the case, I think you're gonna continue to have a bid for equities. If all of a sudden the Mag 7 decided to delist and not be American companies and all of a sudden showed up in the CAC 50 in France, yeah, we'd be in big trouble, but I don't think that's gonna happen. And so as long as, you know, there's American ingenuity and American supremacy, again, which goes back to the other thing which is we can't kill these golden geese nor should we kill the emerging and growing golden goose, which is AI.
- CPChamath Palihapitiya
Mm-hmm.
- DFDavid Friedberg
And as long as those things are the same, there will be a constant bid for American assets and that will keep the enterprise of America going for far longer than most people would guess.
- CPChamath Palihapitiya
Up to a point but pull up, pull up this chart that I sent.
- DFDavid Friedberg
I think-
- CPChamath Palihapitiya
This is the ... yeah.
- DFDavid Friedberg
I think that this is why Buffett sort of speaks about this in these extremely long arcs, that you're always ultimately going to be on the wrong side of the trade betting against the United States and it's probably important to then say, "Well, what would a boundary condition be?" I don't think the boundary condition is the dollar. I actually don't think the boundary condition is the debt. I think the boundary condition is if something were to happen with the quality of the human capital inside of the United States and its inability to innovate, then we're probably in trouble, but even that story will take 50 to 100 years to play out. I just think for most of our lifetimes, this is a safe trade because it's a winning trade.
- 53:51 – 1:09:13
Harvard's money problems: bleeding $1B/year in fight against Trump, potential investigation over bond offerings
- JCJason Calacanis
Speaking of American exceptionalism, Harvard is, uh, still battling it out with Trump and their $50 billion endowment is, uh, being questioned, and it actually relates in many ways to what we're seeing in private companies, tech, and VC. This is gonna take a, a little bit of a circuitous route to get there. Since Trump has been inaugurated, Harvard borrowed 1.2 billion due to uncertainty around their federal funding. Remember, the Trump administration canceled over $2 billion worth of research grants to Harvard. Earlier this week, the administration formally accused Harvard of tolerating antisemitism on campus. The White House said it will file a civil rights lawsuit via the DOJ ASAP unless Harvard comes into compliance and does a deal with Trump. Here's what they're looking for, Trump White House, canceling DEI initiatives, third-party oversight of admissions, mandatory actions to combat antisemitism. Harvard has declined to do a deal so far. And, uh, you right, might remember House Representative Elise Stefanik. She asked the FCC two weeks ago to investigate Harvard's financial disclosures, so she got into the disclosures when they set up that one point whatever billion dollar line of, uh, credit and loan.
- DFDavid Friedberg
They did a bond deal, I think. They issued, like, $750 million in bonds.
- JCJason Calacanis
Yeah. So those 700, uh, 50 million bond offering on April 9th was sent out and six days later, they sent out a supplemental disclosure with more information about the White House civil rights investigation, which he claims -
- DFDavid Friedberg
Harvard's cooked, Jason. Harvard's cooked.
- JCJason Calacanis
... painted a much more dire financial picture.
- DFDavid Friedberg
Harvard's cooked, and I think this is really good for America.
- JCJason Calacanis
Explain.
- DFDavid Friedberg
It turns out, and there's been a lot of people that's posted about this on X, but there continues to be rampant Title IX violations with respect to admissions. I think Crème U, Nick, you can probably find it, I think he published one that Columbia was continuing to discriminate against Asian students. Harvard's original case was against Asian students. There was a bunch of woke stuff at other Ivy League schools like UPenn. There's all this rampant antisemitism. It all needs to get fixed. And so I think that if you get a deal done, Harvard will have to capitulate. I think President Trump holds all the leverage and all the cards and there's nothing mathematically that Harvard can do. They can stall for probably another year and a half, but at some point, they will not have the budget to sustain themselves and they're going to get into a huge world of hurt. What they will have to do in order to finance their budget in probably 18 months is start to actively sell their private equity portfolio, which, by the way, from 2019 to this year almost doubled from 20 to 40%. So an insane asset allocation, frankly, an asset misallocation at the top of the market to the most illiquid asset class. And when people sniff this out, what they're going to do is... Harvard was able to sell a billion dollars recently of private equity stuff and managers that they didn't want to support anymore at a 7% discount. There is no smart money on this street that's going to look at any private equity portfolio from Harvard without asking for a 20, 25, 30, 35, 40% discount because your back will be totally against the wall. And if you don't ask for that, you're just a bad businessman. So if you put all of these things together, they're going to need to reestablish federal funding, but in order to do it, I think the president has been very, very clear and for whatever reason, they've refused to want to address these issues. But the Ivy League, there's just something fundamentally broken.
- JCJason Calacanis
Well, and Freeberg, The Wall Street Journal reported on Wednesday that Harvard would face a billion-dollar budget shortfall every year if Trump followed through on his funding cuts and tax hikes. He was also, uh, saber-rattling that he would get rid of their nonprofit status or maybe change how the endowments worked. A lot of, uh, tools, I think, that he could deploy here and, uh, a specific-
- DFDavid Friedberg
There's an excise tax, by the way, in the BBB, that taxes foundation assets. I don't know what the final language was, but there is a, there was a version that I saw where excise tax on foundations was upwards of 8% a year. I don't know if that was the final version, but that's an enormous amount. Let's just say it's half that. Let's just say it's 4%. But if you're paying 4% tax on your endowment every year, it all of a sudden starts to add up. That's like, you know, for Harvard, like, two and a half extra billion dollars a year that they have to pay.
- JCJason Calacanis
And, uh, Freeberg, reportedly, Harvard is at the table and in discussions with the White House after a couple of months of defiance. What's your take on this? Is this an important priority for America and for the Trump administration? Is it a sideshow? What, what are your thoughts on the larger ramifications of this?
- CPChamath Palihapitiya
Let me just suspend the brand and history and legacy of Harvard for a second.
- JCJason Calacanis
Sure.
- CPChamath Palihapitiya
And just talk about these, call them prestigious higher education institutions. What are the two primary functions of these institutions? The first is to educate students and the second is to conduct research or to create facilities for research. Remember, these institutions do not direct research. They recruit and enable researchers who apply for grants to get funding to do their research and then they educate kids. I think the internet was the first leg on the stool to break higher education. The internet democratized access to information and knowledge. You can watch MIT graduate courses. All of the core kind of educational content that is delivered in prestigious higher education institutions has been largely democratized and is broadly available for free on the internet. That's an incredible transition that's happened for humanity, for society, for the world. AI is the next leg of the stool to break and I think that AI may actually break education. It may break higher education and then eventually, it may make its way all the way down to childhood. In terms of rethinking from first principles, how do we educate? How is an individual getting educated and what are the other benefits they get from an educational system besides just core domain knowledge? There's also socialization and experience with project-based work. But I think that AI fundamentally rewrites the ability for an individual to get a good quality education. And we could see kids in Africa and kids in South Asia getting the equivalent of a Harvard Graduate School degree at a cost of zero through personalized tutoring enabled through AI and the ubiquitous access to knowledge and information. So that core function of the university, I think, is broken and they're now starting to reconcile what that actually means for the long-term viability of all of these higher educational institutions in the United States. The research function, I think, is also being rewritten. Around the world in Europe and in China and in Asia, there are independent research institutions that get research funding that can show up and say, "Hey, this institution is just being used to run research. It doesn't necessarily need to be within an educational framework."It can be an independent research institution that focuses on either a topic or a domain. So I do think we're gonna see more and more independent research funding happening with the grants that come out from the federal government, from nonprofits, from endowments and foundations that fund research. So, I think that there's a real reckoning underway. It's almost like these guys have created a monopoly. They've accumulated this capital which allows them to build these great buildings, attract these great researchers, and then get the research funding to fund those researchers, and then use that to raise more capital in their endowment and build the next building and keep this thing growing. And I think that that's breaking.
- DFDavid Friedberg
I have one question for you. I like where you're going with this, but there's one hole that I would like you to address, which is, I don't think any of that is nearly as valuable to most of the kids applying, or the parents forcing the kids to apply, as it is brand and then the cycle that employers put back.
- CPChamath Palihapitiya
Yeah. Yeah.
- DFDavid Friedberg
So that, how do you fix that loop?
- CPChamath Palihapitiya
Yeah. Well-
- DFDavid Friedberg
I get it, like you can-
- CPChamath Palihapitiya
So- so-
- DFDavid Friedberg
... YouTube your way to something-
- CPChamath Palihapitiya
Well, I think-
- DFDavid Friedberg
... and you can-
- CPChamath Palihapitiya
Yeah.
- DFDavid Friedberg
... AI your way to something. But at the end of the day, Goldman Sachs loves to recruit from Harvard, and that's a really big deal because that's a wonderful company.
- CPChamath Palihapitiya
I think the Thiel Fellows program has highlighted that you don't get exceptional performance by exclusively going to people that have higher education degrees from prestigious institutions. The Thiel Fellows program, which for those who don't know, offered significant funding, uh, to kids that are coming out of high school, 18 year olds. And I think the Thiel Fellows, Jason you probably know better than I do, what they've created, right? Like ...
- JCJason Calacanis
Yeah, a lot of startups and, uh-
- CPChamath Palihapitiya
No, but like amazing startups. (laughs)
- DFDavid Friedberg
Yes. (laughs)
- JCJason Calacanis
Yes. Like ...
- 1:09:13 – 1:19:03
Figma IPO, Grammarly acquires Superhuman, future of SaaS in the age of AI
- JCJason Calacanis
All right, on Tuesday, Grammarly, I'm a huge fan of that product, acquired Superhuman. Uh, that's that amazing, superfast AI email tool from Raoul, of which I was the first investor in. Uh, Superhuman had raised 114 million, was valued at 825 million during peak zurp. According to Reuters, Superhuman has annual revenue of $35 million, and Grammarly seems to be building a little bit of a suite of AI workplace tools. They bought Coda, uh, was not an investor in, but I am a huge fan of that product as well. It's similar to Notion, another product I, I'm a huge fan of. They bought Coda back in December. And then on top of that, Figma filed their S1. Uh, Q1 revenue is 228 million. You remember they were gonna get bought by Adobe before, before it got stopped. And, uh, they have 13 million monthly active users, a billion and a half in cash, no debt. And, uh, turns out CEO Dillon Field has 75% voting power, so he's in founder mode. Very nice. And also a Thiel fellow, a really interesting cat. I've had him on, uh, my other pod. Figma is gonna try to raise 1.5 billion in their IPO. That would match CoreWeave. That was the biggest tech IPO of the year so far. And we are on a heater. Circle went public, that was up 7X, uh, from its IPO peak, and Chime went public slightly hig- higher than its IPO price. You had eToro. Uh, Hinge Health also went public. Wealthfront, which I was, uh, an angel investor in, they just filed to go public, yum yum. And, uh, bunch of M&A transactions. We talked about DoorDash made two purchases. Sam Altman bought two companies at OpenAI, and, uh, tons of M&A happening at the same time. According to Polymarket, 52% chance of a rate cut in September, 46% chance of no change. So we're definitely not getting an increase according to the sharp money. And I think Powell said he would have cut if there weren't the tariff, you know, curveball thrown into the system, which is, I think, what most of us thought. Um, and Chamath, you talked about all this sideline cash sitting there in money market accounts, markets (laughs) at an all-time high, Uber BLUE past 88, so I should be retired right now. What are your thoughts on M&A, IPOs? Feels like, man, we've got a really frisky hot market right now. Does it make you nervous or does it feel like this is where we should have been all along, and that Biden maybe was putting a headwind against all this? Yeah.
- DFDavid Friedberg
So here's the crux of the issue. I think this is the intersection of a lot of really interesting things happening right now.
- JCJason Calacanis
Yes. (laughs)
- DFDavid Friedberg
You have Meta giving individual human beings three hundred-
- JCJason Calacanis
(laughs)
- DFDavid Friedberg
... to $500 million packages, like they're NBA first team all-stars.
- JCJason Calacanis
(laughs)
- DFDavid Friedberg
OpenAI, their revenue numbers just leaked. They're forecasting 13 billion in '25, 2025.
- JCJason Calacanis
Wow.
- DFDavid Friedberg
Spiking to 125 billion in 2029. You have Anthropic. Their revenue by 2027 is forecasted to be about 35 billion. So what does all of this tell you? To be honest, it's telling me that the state of software is a little unclear, meaning I actually believe the OpenAI and Anthropic numbers. I understand why Facebook is now spending as if there's an existential risk. And I think the existential risk is that these models could be so foundational to how social experiences and work are done, that it starts to absorb a lot of other stuff. So the question is, how do other tools fit into a workflow when these things become so central to how people both enjoy their free time, as well as spend their productive time? And I think when you look at that, you look at Figma, what I would say is, on the surface, in the absence of these AI businesses, I would say, "Man, what a gangbusters business." Growing by 40-something percent a year at this scale, they're...... adjusted, I think operating margins are 18%. I don't like adjusted 'cause it's adjusted for stock-based comp. I don't know what it is when you add that back in. But the point is, it's a phenomenal business. The question that I think the institutional investor will have is, what am I buying?
- JCJason Calacanis
Hmm.
- DFDavid Friedberg
And does this revenue growth sit adjacent to core model revenue growth? Because the big question that we have yet to answer, and this is not a Figma-specific issue, it is an industry-wide issue, is how much do these foundational models absorb into what they do for what you pay them? And I don't think we know the answer to that yet. So if all of these things just become excellent coding tools, then all of this high-level software is free and clear, right? It's- it's- it's in the safe zone. But I think the problem is we don't know that that's the case, you know? And so I think in the IPO, what you're probably going to see is people approach this company the same way that they approach all non-core AI IPOs.
- JCJason Calacanis
Hmm.
- DFDavid Friedberg
Which is that it's a business that you love to own for a year or two, but if there's a depression in valuation, it's because people cannot underwrite years three, four, and five.
- JCJason Calacanis
Hmm. Uh, Freeberg, do you believe that the Star Trek communicator, just double-click on your pendant, ask the computer to do something, means there's one piece of software in the world (laughs) that does everything and all this long tail of business software just goes away? And if so, on what timeline?
- CPChamath Palihapitiya
No.
- JCJason Calacanis
Okay.
- CPChamath Palihapitiya
Yeah. No.
- JCJason Calacanis
I mean, this speaks to revenue quality, revenue stability. I think you used the term, how brittle is it? Chamath, uh, what are your thoughts on Chamath's angle here of that unknown? Where would you fall either way? Are we gonna have a suite of products or does it-
- CPChamath Palihapitiya
Yeah, I mean, look, I think-
- JCJason Calacanis
... kind of become more narrow?
- CPChamath Palihapitiya
Well, it depends for what application. I think Figma has done a classic, like, land and expand in terms of who they initially go after and then what the suite of tools that they offer does. By expanding that, they now can offer a bunch of different people within an organization a set of tools to help them all collaboratively develop products and services. And you can see that in some of the numbers. Revenue growth is on the order of 40 some odd percent. They were at a 43% operating cash flow margin in Q1. So in Q1 of this year, Figma generated $95 million of free cash flow. They've got net revenue retention of, like, 130%. So this land and expand is proven out and there's real durability, it looks like, to this business for now. But to Chamath's point, like, what does three to four years from now look like? Does this get absorbed into ChatGPT? You could say that about any software at any point in time. I think the thing that makes this AI era different is that that transformative shift can happen overnight, where suddenly someone else launches a service that completely obviates another service because of what AI can do. But I think Figma has done a great job staying out of the curve.
- DFDavid Friedberg
The free money I think trade, instead of having to bet up or down, Jason, on AI, I would... If I could get, like, $50 or $100 million of Figma, I would probably be long it and I would short an equivalent quantum of Adobe and I would just book the spread, and I think you make a ton of money that way. That's a safer trade because, you know, even if the AI model thing comes around the corner, we don't see it, the person who's gonna take a retrade on valuation faster than Figma will be Adobe. And so you'll be hedged and you'll probably make money that way.
- JCJason Calacanis
We look at something in terms of not just the quality of revenue in our investment firm, we look at the durability of it. Like, can this exist two, three, four years from now? And is the value accruing so much to the user that the amount they're paying, they just never think, "I should swap this out. I should replace it," right? And- And the revenue durability of your iPhone is a good example of it. Despite people not renewing your- your phone every year, you still can't think... There's no better option than an iPhone right now. Even my Google Pixel 9 Fold, as great as it is, it just feels like that revenue is still durable. I wonder when it becomes less durable.
- DFDavid Friedberg
Can I push back on this?
- JCJason Calacanis
Please.
- DFDavid Friedberg
I think that the... I think the question that it brings up is not whether the individual person can whip out a card and pay for it in four years. It's whether that individual person actually exists.
- JCJason Calacanis
(laughs)
- DFDavid Friedberg
And so that consumer-
- JCJason Calacanis
That consumer with that amount of money to spend?
Episode duration: 1:25:10
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