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All-In PodcastAll-In Podcast

E1: US Response to COVID-19 & Impact on Startups, VC & Public Markets with David Friedberg

0:01 Jason & Chamath intro David and check in on each other's quarantines 2:26 Has the US overreacted or underreacted so far? David & Chamath give their opinions on new directives & statistics 13:15 Thoughts on potential treatment options & policy changes 22:25 Chamath explains the circumstances of recording a podcast while the Stock Market tanks in real-time 25:03 Should the US adopt Chinese & South Korean quarantine strategies? 29:53 What do the current market conditions mean for startups & VC? 41:24 Chamath explains what is currently happening in the capital markets 45:05 How close is the US on being able to do mass-testing? 54:13 Thoughts on bailouts for companies that manipulated their earnings-per-share ratio by stock buybacks? Impact on the global economy 1:03:14 Impact on luxury goods? Should there be a monthly stipend for low-income citizens? 1:12:10 COVID-19 exposing holes in the US healthcare system 1:17:44 Should we ban wet markets globally? 1:24:12 Over/Under: when Americans will be allowed to go out to restaurants again 1:28:18 When will the weekly poker game resume?

Jason CalacanishostChamath PalihapitiyahostDavid Friedberghost
Mar 19, 20201h 31mWatch on YouTube ↗

EVERY SPOKEN WORD

  1. 0:00 – 0:01

    Intro

    1. JC

      All right, everybody.

  2. 0:01 – 2:26

    Jason & Chamath intro David and check in on each other's quarantines

    1. JC

      Welcome to another edition of the All-In Podcast. We'll call this episode one. We did a test and, uh, over a hundred thousand of you listened to the test podcast that we did a few days-

    2. CP

      We did in a few days.

    3. JC

      ... in a few days...

    4. CP

      In a few days.

    5. JC

      ... in a few days. Uh, Chamath is already getting addicted to his statistics. Uh, a new podcaster I need to focus on something going up. Yes, exactly. (laughs) The... Our portfolios are getting crushed, but the podcast numbers are going up. They're-

    6. CP

      Hey.

    7. JC

      ... w- a meaningless victory to be sure.

    8. CP

      (laughs)

    9. JC

      Uh, but we got a lot of positive feedback and we're all sitting at home in quarantine. As you can see, I set up my home office. I got a microphone here. Um, and Chamath is in his bedroom, and Dave Friedberg, I think is in his wine room or something, in his, uh, in his compound. A- are you in the safe room? Is this the safe room? Dave Friedberg is with us again. Uh, he got a lot of great, uh, feedback and he's now on the Twitter. You can follow him @Friedberg. I don't know if he shut his Twitter down because he was, uh, getting harassed on Twitter. Welcome to the club. Are you in your safe room, David?

    10. DF

      Yeah. It's brutal on Twitter. I don't know how you guys do it. You put something up and everyone, you know, just goes after you. It's harsh out there in the Twitter world, in the Twitterverse.

    11. JC

      Uh, basically, you have to mute and block anybody who is under 100 followers and being an absolute jerk because it's likely a Russian bot, you know, being run out of like Manila or something like that. They- they've got all these like sophisticated rings of people that they just hire for 10 bucks a day to harass people online. I mean, I know it sounds like a crazy conspiracy theory, but it's actually true. (laughs) This large groups of bots who go after people, um, and try to ca- create chaos. But hey, we're sitting here, uh, it's, uh, today's Wednesday. We did our podcast on Saturday. The stock market has gone down another 20% since then, I guess, uh, or so. And we are looking like this is gonna be, uh, a 50% correction or something like that. We're now, you know, well past a 30 plus percent. And, uh, on the good news front, it looks like testing is actually occurring and that work on a virus... uh, uh, work on treatments is occurring. I don't know if we can call them cures, but treatments, uh, is occurring and quarantine in place is being taken seriously. And I guess the biggest thing is that Trump has basically admitted that this is a crisis and he's taking it seriously.

  3. 2:26 – 13:15

    Has the US overreacted or underreacted so far? David & Chamath give their opinions on new directives & statistics

    1. JC

      Uh, Friedberg, what is your assessment of where we are today versus when we taped on Saturday in terms of the resolution to this? We... Are we overreacting, reacting just enough, uh, or not reacting enough?

    2. DF

      There's three things to consider. The health, the policy, and then the markets. On the health front, it seems like we have done a lot in terms of containment and we're ramping up testing. We are still not doing broad, gen- general population testing, which is necessary for us to truly understand the dynamics of this disease and also to- to understand the contagion of this disease, and we need to fix that problem. There's a task force of 100 people out of DC being led by Jared Kushner and a number of people from the tech industry that are working on ramping up testing and doing broader general population testing. The policy decisions are what get quite scary, and that is all of the containment, shutting down travel, shutting down borders, shutting down bridges, and the economic ramifications of doing so are- are frightening. I think I mentioned the other day that 48% roughly of the US workforce works in small businesses. Another roughly 10% work in travel, another roughly 12% work in energy. And, um, you know, you kind of add this up and you can quickly see why, uh, Steve Mnuchin, the US Treasury Secretary, was saying that we should expect 20 to 30% of the workforce to be unemployed by this summer if we keep this up. So that is a frustrating and staggering statistic and something worth debating whether that policy decision is appropriate rel- relative to the potential, um, life and health and- and, um, health system impact. Uh, you know, which one is worse? And then the market question is just... I- I- I don't know how to address that, (laughs) but, um, things go from bad-

    3. CP

      I, uh, I-

    4. DF

      ... bad to worse, right?

    5. JC

      Right.

    6. CP

      I have eight things.

    7. JC

      Yeah. So let's, let's-

    8. CP

      I have eight things, sir. I have eight things that I want to cover today.

    9. JC

      All right. Hold on, hold on. We take one thing at a time here. Everybody, everybody is warned to go.

    10. DF

      I want, I want to say... I want to say one more thing. Uh, and it is-

    11. CP

      Yeah.

    12. DF

      ... I- I think the most important data to come out today. So the markets are fucked. We're all in trouble. We're, you know, yada yada. The most scary thing is Ford and GM just shut down their plants today. And the reason they shut down their plants is because out of fear of coronavirus and auto workers and the U- UAW basically forced them to do it. The- the world lives on a 30-day food supply. So if you stop food production today, there would only be 30 days of food for the whole world to eat based on our calorie consumption per day, and especially with an isolated border and we import a lot of food in the United States. If that means that we are then gonna shut down other factories, the Ford GM shutdown, and we're gonna shut down food production, processing and distribution factories, then we have a food security crisis, and this becomes a real societal problem. So the concern that I have with the factories being shut down today is the precedent it sets and the potential follow on from there, um, in the food system. And one thing we can't stop doing is making and distributing food to humans in the United States, or else we are gonna have problems.

    13. CP

      No, no, no, no. You're- you're right. But before we go there, the- the good news is that these directives don't apply to national critical infrastructure. And the food supply is covered within that. So unless something cataclysmic happens, those folks are still going to make sure that food supply is there. I do agree with you that the issue that we have to contend with is that, you know, there may not be as much. Um, and in the, you know, 30th to 90th day, that becomes a real issue if this thing becomes a very protracted problem. This sort of brings us back, David, without being too alarmist about how we started and how you started really importantly at the beginning, which is...There is a small but very credible body of evidence that is starting to show, and this is what you put out on Twitter and part of why you got, you know, attacked probably by the pharma lobby. Um, but that shows that there is a hu- hu- there is potentially an enormously large asymptomatic spreader dynamic in this disease. So, can you describe that and what that may mean and why there's a lot of silver lining and good news in that, if it's true?

    14. DF

      There are several data points that are showing us that there may be an unexpectedly high number of people that get this disease and don't have any symptoms and show it. The historical data that we've gathered to date has been largely symptomatic patients. And in some places, like in Korea, asymptomatic patients that had really close contact with symptomatic, um, patients that were confirmed to be positive. And in Korea in particular, they found a large cohort, nearly 40% of the infected population were people between 20 and 29 years old that did not exhibit any symptoms or had very mild symptoms, had a runny nose and didn't even know that they were sick. On the princess cruise ship, it turns out that up to 50% may have been asymptomatic. People were all tested on that cruise ship because there were so many people that were positive. And through that data set, that cohort, we found a very large asymptomatic population, 50% roughly. The NBA players have now been tested and out of seven players on five teams. So, out of seven players on those five teams that have tested positive, it seems like none of them are having any symptoms. There may be one person who's having a cough, but generally they seem, one of, I think it was Donovan Mitchell said, "I could go play a seven game series tomorrow." So, this data is really important and it hasn't been fully accounted for in the models and the predictions of the pandemic and the predictions of the fatality rate. We're assuming that, let's say 2% of people that get this disease end up dying. And by the way, that's also based on an age histogram that may not be appropriate for our particular cohort in the United States. If you took that data and then you adjusted it based on the fact that a large percentage of people actually don't die, but they end up just being asymptomatic, it really changes the denominator and it skews the results. A paper published showed that in China, up to 86% of people did not realize that they were sick or they were unreported and they had mild symptoms. If you take that high level, you take that low level, call it somewhere between 25 and 80%, 86%, maybe even as high as 86% of patients are asymptomatic, which means that the actual fatality rate, um, is much, much lower, even in a large cohort that gets infected here. So, we should be mindful of this new data that's emerging, and we're still racing and acting, um, from a policy basis as if 2% of people, 3% of people, 4% of people that get this are gonna die. And that may not actually be true based on what we're seeing in the last week.

    15. CP

      So... I have a comment and a statement. The comment is people will say, "David, you can't extrapolate from an NBA player who may just be in peak physical fitness." Although I think your answer is going to be, it's not clear that the, that the disease is, uh- uh, correlated necessarily with physical fitness or unphysical fitness at all. It's just maybe the strain and how your body processes it. Um, but then the question is, doesn't this mean that we need to have broad-based massive testing, not just of symptomatic population, so not just the PCR tests that we've heard a lot about, but also these antibody tests so that we know that people have had it?

    16. JC

      And what's the status of that, David? What's the status of it?

    17. DF

      That- that's exactly right, Hemant. And by the way, on the healthy NBA player point, it's absolutely true. People that are between 20 and 30, the average age in the NBA is 26 years old, people that are between 20 and 30 years old generally seem to have no to mild symptoms based on what we saw in Korea. The other data sets need to be taken into account. So- so the NBA is an interesting anecdote, sure. And you could discredit it all you want and say that it's a highly correlated, uh, class uh, and so on, 'cause everyone's together all the time. But we could look at the data that came out of China in a paper that was published in the journal of Science and a paper that was published in the journal Nature from Korea that showed very large percentages, anywhere from 20 to 50 to 80% or 90% of people being completely asymptomatic across an age spectrum. Certainly very heavier weighted towards the younger age, uh, bracket from, you know, children all the way up to 30 or 40 years old, you can be completely asymptomatic. Um, and so these are really interesting discoveries that have happened. And so to your point, we need more data and we need to confirm that hypothesis, 'cause that's how science works. So, we have a hypothesis, let's go test it. The problem is we're not testing it. And we should be as a priority right now because the policy decisions we're making are based upon a denominator that may be wrong. So, the correct action should be to go get those antibody tests, go out into the population and start testing the unsymptom- asymptomatic general population and see what percentage of people in these high-risk zones like Seattle and LA and New York and SF already have the antibodies to this virus, meaning they've been infected with this virus and have not, or are not showing any symptoms. And that gives us a better sense of A, how widespread this infection is, and B, the true dynamics of the fatality rate and the symptomatology of this disease and how it may affect people. Those IgG tests are being made en masse in China today. They're being shipped to countries like Italy, where they are in fact being used on the front line. They involve a blood draw, and then they have this lateral, it's there called a lateral flow assay in terms of how they're, um, uh, kind of tested. The- the blood runs across a strip and you see a value and you have a pretty good sense at that point. Those kits cost a couple of pennies to make in China. We could probably get a couple million of them. I don't understand why we're not. I don't understand why someone in the federal government isn't begging China and- and apologizing and appeasing to them to send us those kits. There are a lot of people I know that have bought them on the internet. I have a bunch of them. People that I know have bought them. They have been shipped in through brokers. They are not FDA approved. They cannot be used for diagnostic purposes because of FDA guidelines and how the FDA regulates these things. They can be used for research purposes. But...... they may not be very sensitive and very specific, and they don't have great testing on 'em. So we don't... They, they estimate the sensitivity and the specificity to be 90%, roughly 10% false positive, roughly 10% false negative. But for what we're trying to accomplish, that's good enough. We're not trying to give people a diagnosis of disease. We're trying to run an epidemiological study, and we should, on the general population, to figure out how many people out there are asymptomatic and have been infected. That is an important statistic that's missing.

    18. CP

      And to your point, if we find out that there is a large population of people that have actually felt this disease pass through them, it's faster that we can sort of get people back to work, out in the streets, which is now probably going to be the most important thing we can do to just prevent a complete economic calamity.

    19. DF

      Yeah.

    20. JC

      Yep.

    21. CP

      There are, uh, there are, Jason, uh-

    22. DF

      And treat-

    23. CP

      ... eight things-

    24. DF

      And by the way, and sorry, treatments, Chamath. Sorry to interrupt you, but treatments are the other thing and I think you're gonna talk

  4. 13:15 – 22:25

    Thoughts on potential treatment options & policy changes

    1. DF

      about that. Um...

    2. CP

      Well, tre- treatments are interesting. Let's talk about that right now because to me, what's incredible is, again, now what is emerging, um, and, and it's small in scale relative to how amplified it may, may should or should not be, is, uh, you know, remdesivir is very different but, le- it just seems like prophylactically even, there's some data that's showing out of France that chloroquine seems to be effective. These are, these are solutions that are pennies to make, and some of the, some of the feedback that I've heard is that part of why the FDA, the CDC, the, the federal apparatus is reluctant to embrace these things is in part because of pressure from those lobbies. But that seems, to me, uh, unfathomable in a moment like this. So, why do you think the government hasn't put out... The CDC has zero directive right now on the management and, and efficacious management of this disease. Why is that?

    3. DF

      Okay, what Fauci and others have said, and doctors around the country echo, is that these treatments have not been clinically tested through a blinded controlled study. And that is a very fair assertion, generally speaking, for doing good medicine. But we are in a crisis state, and in a crisis state, you have to triage, and you also have to triage policy. And we should be considering triaging policy and changing the way that we do policy under these extenuating circumstances. If doing treatment can reduce fatality rates by up to 4X as Korean doctors have claimed, it is worth taking the risk or perhaps it is worth letting the FDA say, "Remdesivir, Kaletra, chloroquine, and others are being widely produced, widely distributed, the government is mandating it, and doctors and their patients can decide if and when they want to use it," and let them take the risk without clinical trials and without data and the typical process of the FDA.

    4. JC

      Well, what's the downside of taking these drugs? Are they particularly dangerous? I mean, I, I've heard, uh, the coloquine... Am I pronouncing it correctly? Coloquine? Chloroquine. I've heard that this can be a little bit, uh, nasty in terms of side effects, so is there some major downside that... I mean, it's kind of like an off-use of a drug, right? Like this is an off-use of a drug as opposed to...

    5. DF

      It's o- it's an off-use of a drug and some of the antivirals aren't even fully tested in humans, so we don't yet know what the side effects, um, may be, and also remember, side effects can change based upon your health condition. So someone that's in respiratory distress may have different side effects than someone who's taking it in a healthy controlled clinical trial, so we're not really sure. That's the argument that doctors would make is, you know, "Our first mandate is to do no harm," and so they don't want to apply medicine that, that might do harm. Um, and so that is the standard protocol and practice and process. However, again, in a crisis state, China and Korea said, "Guys, we're trying this thing and it's working and we're adopting it. Let's go for it." And they raced forward. It could be that this is a good time for the United States to consider an emergency policy action where we make a lot of this stuff, make it available, and simply let doctors use their best judgment rather than have the FDA be the paternal state that makes a decision for the doctors, or makes a recommendation to the doctors.

    6. JC

      Well, what, um, do we think the fatality rate actually is? Like, David, if you were looking at this and you had to place a bet and put 100% of your net worth on it, uh, and be all in and have massive skin in the game, where do you think the fatality rate here in the United States winds up being overall? 'Cause the data that came out of Wuhan has been markedly going down as they get the numbers corrected. Who knows Chinese numbers, uh, you know, censored by the government and maybe perhaps massaged, it's gonna be hard to tell. What do you think the real fatality rate is? The first fatality rate I heard was 5.8% out of China.

    7. DF

      The Wuhan data-

    8. JC

      What do we think the-

    9. DF

      The Wu- The Wu- Based on the paper that came out in Science over the weekend, the Wuhan data was estimated to be 1.4%, and Wuhan was the worst data out of China. The quote unquote "rest of China" is still estimated at about 0.15% or 0.16% or 0.14%, something like that. So-

    10. JC

      Where's that versus, like, uh, the flu every year or something, or the normal flu?

    11. DF

      1.1% roughly.

    12. JC

      Yeah.

    13. DF

      And so, um, you know, if you're looking at somewhere between 0.2 and 1.5%, now in Italy, I think they're at over 7%. We talked about this on the last show, but Italy is a much older population and their health system is completely overwhelmed. Um, so there, there's some confounding data, there's confounding variables there that may be making Italy a very unique outlier on a distribution of what's gonna happen here. The United States has a population that's a little bit older than China, but much younger than Italy, so our health system is... And our health system is generally, um, more ICU beds per capita than Italy, so, so we should be in a better place. The thing we don't know that does concern me about the health system in the United States and the, the population of the United States is it seems that there may be a high correlation with severity of disease and A1C levels, and, um, and as a result, the US has one of the highest obesity rates of any country in the world and highest diabetes rates. And so we may have a population that has a very high percentage of people with a high A1C that may be at higher risk than, say, people in other countries. I don't know that for sure, but that is... Th- those are two kind of confounding statistics that may kind of make things a little bit worse. If I were to put my money on this, look, I- I'm a betting guy. I, I, I, I would be a little bit nervous at this point, but I'd say it's probably somewhere between 0.15 and, um...

    14. JC

      ... and call it 1.8%. You know, call it- that's an order of magnitude, I know (laughs) , so, you know, but you could do the math. That's probably somewhere between one and 10 times as bad as the flu. Um, and so that- that- that- that, again, leads to the big policy question about are the actions warranted and is it okay to let- All right. ... the health system crash? So that's a perfect, um, then flip to you, Chamath. You've heard his- basically his line at, you know, 0.1 to 10 times the flu, 1.8 or something. I- you know, if we split the difference of those two, it's 0.5, it's 0.6, 0.7 fatality rate. Is the reaction of sheltering in place, uh, and the economic turmoil it's causing worth it, yes or no?

    15. CP

      Uh, right now, uh, you guys need to keep talking. I need to jump off for two seconds and I'm-

    16. JC

      No problem.

    17. CP

      ... gonna be right back. I'll be right back.

    18. JC

      Okay, no problem. Um, and so what do you- what do you think now, if we were to look at your estimate, David, is it actually worth what's happening? Uh, would we- if you and I were making the policy or you and I and Chamath were, you know, the cabinet members as it were making this decision, is this decision and the economy crashing in a potentiality of 10%, 15%, 20% unemployment and all the downstream effects, would it be better to do what the UK was originally doing, which is just say, "Hey, let's get the herd mentality going and let's get the herd immun- immunity going"? I know this is, like, the most difficult question in the world, but, like, we're here, so let's-

    19. CP

      Look, there- there's a spectrum-

    20. JC

      ... let's speculate.

    21. CP

      ... of options. It's not binary, right? It may not be-

    22. JC

      Okay.

    23. CP

      ... lock everyone up and let everyone out the door. It may be that you have a- a more nuanced policy where you say, "Let's keep people over 65 years old, give them the strong recommendation to stay home, and make sure that you distribute chloroquine to doctors around the- the country." So as soon as elderly people start having symptoms, they- they maybe get some treatment, but, you know, that's kind of an option. You keep 65-year-olds at home. You do random general population, um, antibody testing, and once you hit a certain percentage of the population having been exposed to this thing, it may be that at that point, you say, "Okay, you know, the over 65, um, limit is lifted," um, or it may be that, you know, you do something similar to that at different age brackets, have different, um, containment recommendations. You also do it with, uh, with random gen pop screening. You also do it with medicine being distributed. So there's a nuanced answer to that where the policy should be a little bit more directed. It should be a little bit more, um, involved in terms of treatment, testing, and containment strategy, and it doesn't need to be so binary. Um-

    24. JC

      Right, it doesn't have to be everybody stay at home. If we get to the point where a population has very few people have had it, then more people should stay home so it doesn't spread? Or- And then if more people have it, so if 50% of young people in San Francisco have it already, we've got herd immunity, then maybe we could start saying, "Hey, if you're over 65, you can go out, but just stay out of restaurants or something." Is that what you're saying?

    25. CP

      Y- yeah, once you hit, like, 50 to 60% of the population having antibodies to a particular virus, you- you know, or like a- a flu, for example, you'll see that R naught number drop well below one and then basically-

    26. JC

      Explain R naught to everybody again just so we-

    27. CP

      It's- Yeah, it's basically like the viral coefficient, like for every one person that's infected, R naught tells you how many other people will get infected after them. And so if it's 2.5, which is what some estimates say it is for coronavirus right now, then for every one person that gets infected, roughly two and a half people get infected. And that number goes down as more people get infected because as more people get infected, there's less people to infect, and the rate at which you can then infect other people also drops, so your R naught collapses. Um, and so at a certain point, you have this kind of basis for saying, "Hey, guys, let's, um..." Okay, now I gotta step off. Sorry, guys.

  5. 22:25 – 25:03

    Chamath explains the circumstances of recording a podcast while the Stock Market tanks in real-time

    1. CP

    2. JC

      Yeah, no problem. Do your thing. So Chamath, what Dave was just describing-

    3. CP

      Um, this is incredible. I mean, what you are seeing in real time as we're doing this is literally like- I've- I've never seen this before. Uh, uh, we- we should probably explain what, uh, what is going on. So what is going on in the background is, um, the markets are just completely torn. Now, why are the markets important? Many people aren't invested at all in the stock market. I get it. Um, but it is where liquidity and capital markets function, and derived out of those capital markets is the money that then hits startups, it hits the banks which then lend to small businesses. Um, it is the functional, uh, machine, the undergirding of the US and the world economy. And, uh, we are in a moment that I have really not seen since '08 where, uh, there are seizures, uh, in this market in, uh, extremely violent ways. Uh, and so when I had to jump off the phone, it was me, uh, trying to do my part to kind of help, but also trying to make sure that, you know, we maintain, uh, full liquidity in times like this. It's incredible. Now, Jason, uh, on the assumption that, uh, you know, Friedberg may or may not come back, I mean-

    4. JC

      Yeah.

    5. CP

      ... what dramatic podcasting we're dealing with.

    6. JC

      I know. Well, you know, I mean, people also have their kids at home, so, you know, I might have to jump out and take care of the twins or- or my 10-year-old.

    7. CP

      Exactly.

    8. JC

      Um, so it is definitely-

    9. CP

      I think-

    10. JC

      ... having a psychological impact on everybody being home. You've been home for over two weeks. I've been home for a week. I went out once to do a podcast at my office with just one person there. Um, and so-

    11. CP

      What I- What I wanted to do was start, um, at sort of the 10-foot level, and I'd like to build up to the 100,000-foot level, and I think that'll be a good way of talking about, um, what we teased and talked about a little bit, uh, in episode zero, which is sort of these, uh, second and third order dynamics. So-

    12. JC

      Bef- Before we go to that, let me just- I wanna wrap up what Dave was saying about, um, what the change in policy should or could be. So right now we're having- we're having, um...... you know, this basically quarantine, in some cases it's a hard quarantine, in some cases it's a little bit softer, it's a recommendation and, you know, people are being told to, um, you know, stay at home. Uh, should this change? And if w- under what conditions do we start going back to normalcy? 'Cause I think that's what people want to know,

  6. 25:03 – 29:53

    Should the US adopt Chinese & South Korean quarantine strategies?

    1. JC

      is when is this gonna end and under what circumstances? And I'm just talking about, you know-

    2. CP

      Well-

    3. JC

      ... staying home.

    4. CP

      Well, look, if it, if it were me, um, I think what we would do is adopt some of the mitigation strategies of China and Korea and Singapore. Um, all of these countries have kind of showed us a way to deal with it now. We have to decide that a short-term suspension of typical civil liberties is worth the trade-off. Now, it's not worth it under the normal course under any, any, any, uh, imaginable way. But if we had to trade off some of those civil liberties in the short course so that we could get back to normalcy, I think most of us at this point, and definitely all of us after another week or two of home isolation, will do it. And what I think it would entail is setting up zones that we would understand to be uninfected. Uh, and what that means are people that don't have it or people that have antibodies and eventually allowing those zones to reopen so that we can actually have some amount of economic activity. And what that will require is massive testing of the entire population.

    5. JC

      Right.

    6. CP

      Testing, testing, testing.

    7. JC

      Right.

    8. CP

      I mean, there should be lines and lines and lines. It should be, you know, how we would've... And we know by the way how to mobilize this. It is no different than when we would go to vote.

    9. JC

      Right.

    10. CP

      And, you know, we could all be told based on birth year, right? Everybody go based on birth year to your local voting facility. There are phlebotomists there. They can run these LFIAAs, they can... And they can, they can allow you to be in a safe zone or not a safe zone. If you're found to be an asymptomatic carrier, then you can self-quarantine and socially distance. And we can really, um, you know, nip this thing in the bud in a, you know, four, five, six-week timeframe. (fingers snapping)

    11. JC

      Yeah.

    12. CP

      And because these tests are available at such large scale and because these tests are so insignificantly cheap, um, if it, if it were up to me, I would mobilize the military and the National Guard. I would mobilize our voting infrastructure and-

    13. JC

      I mean, another way to do this-

    14. CP

      I would do that.

    15. JC

      ... would be why don't we just have the National Guard or doctors or whatever just go to everybody's mailbox, put in the kits, and then say, you know, "Have your kit in here on this date."

    16. CP

      The-

    17. JC

      "... and we'll go pick up the kits."

    18. CP

      The problem with these LFIAAs, uh, is that the amount of blood that you need, you cannot draw by yourself. It's not a finger prick.

    19. JC

      Oh, but what about the swab stuff? I mean, if we just did the swab testing and we just said-

    20. CP

      Again, well, the swab-

    21. JC

      ... "Hey, we're coming by your house."

    22. CP

      The swab is a PCR test that's looking for RNA. And the problem-

    23. JC

      Right.

    24. CP

      ... with that is that it's effective in a window, it's uncomfortable to administer, and-

    25. JC

      Right.

    26. CP

      ... has to be done right away for those that are in the process of viral shedding.

    27. JC

      Got it.

    28. CP

      If you are not in the process of viral shedding, then that PCR test is effectively ineffective.

    29. JC

      Mm-hmm.

    30. CP

      And what I'm advocating for is move past the PCR testing. That should be done in an acute situation if you come into a hospital where you're exhibiting symptoms. The more important thing right now is to find people that don't have it or people who are asymptomatically spreading or those people that are immune. Because if we can re-baseline the denominator, as Friedberg said, we may (hands clapping) find some good news in that it's, uh, very much like the flu in terms of numerical distribution. In which case, we can make some policy changes and reestablish economic activity. If it turns out that it's not, at least we know that too.

  7. 29:53 – 41:24

    What do the current market conditions mean for startups & VC?

    1. CP

      listening, what does this mean for startups? And what should you do if you are a unprofitable, uh, s- well, I mean, by definition th- these companies are default dead. Uh, what if, what do you do if you're a startup CEO today?

    2. JC

      Yeah, I think it's a, it's a great question. I'm dealing with it, like, with about a dozen companies a day who are in this very acute situation. Um, you have to figure out how... You have to look at the instrument panel and then try to, like a pilot, uh, I use the analogy, understand exactly how much, uh, altitude you have, where the nearest airport is, how much fuel you've got on board. So I've literally told folks, "Listen, if you can close this money," 'cause a lot of people were in the middle of doing deals, "close it immediately." So that's number one. If you're, if you got a deal on the table, take the money. Number... And some people do, uh, but most people don't. And I- I'm already seeing people re-trading deal terms based... an- and backing out. So I had one person back out of a deal on thesyndicate.com, an angel investor said, "Because of market conditions, I'm backing out." Uh, and they had made the commitment they're backing out. So you're gonna see commitments broken. Um, so assume it's gonna... that no money is gonna get raised for the next three or six months at a minimum.... and then you have to ask yourself, "Well, how do I keep this company alive?" Um, I have people who are founders taking 80% salary cuts and then giving their staff 50% salary cuts. And then that takes their six months of runway and makes it nine. So that's number one. You have to just make the cuts. And if you've chosen to be the founder of the company that, that's, that's your job, is to get everybody to safety. And better to have four out of five or three out of five employees lose their job and the company be alive to come back and maybe get some stimulus later, than to have the company go out of business (clears throat) because you wouldn't make the cuts. So you got to just take the medicine. And then that's really with first-time entrepreneurs, they don't understand that. Um, and if they have, uh ... And, and you know, every business is different. We have some companies that are subscription-based business or delivery-based businesses. They're actually seeing an increase in utilization, increase of people trialing their software. So I have one company that's a consumer subscription. They had more trials this week than ever because people have free time. Uh, so that company is gonna be fine. But you got to make the cuts. David, I'm not sure what your advice is or what you're doing in your portfolio.

    3. DF

      Um, yeah, I mean, look, I'm on 12 boards. Four companies have been or are in the middle of term sheet or closing a deal. So it's been an unfortunate timing for all this stuff. Um, I think, I think-

    4. JC

      What happens to those four companies? Do you think they close the term sheets?

    5. DF

      Yeah, yeah, very different things. I mean, we've got one that I hope we close on Friday. We signed on Frid- last Friday, the, the final docs and money's not in the bank account yet. I've got another one that's, um, had a bunch of offers that got rescinded, but they weren't like signed yet. Uh, it's just all over the place. Um, and it... and I think, you know, one thing that's, that's worth kind of paying attention to for every company is you've got to ask yourself, firstly, the hard question of going into this and coming out of this era that we're kind of now entering that is a very bleak and dark era economically, where's your customer going to be? And what is your customer going to be doing? Um, the customer model is changing overnight. Uh, if you're a company that that sold, um, you know, uh, software into restaurants and restaurants are about to potentially go bankrupt or suffer absolutely loss of revenue and get, you know, debt payments restructured, they're not gonna necessarily be rushing to spend more money each month unless you can help them immediately save money. Um, if you're a company selling to consumers and you're selling to consumers that are gonna lose their jobs in the next three months or lending to consumers that are gonna be losing their jobs in the next three months, you've got to be asking yourself the question, "What can I be doing with my business?" So you got to start with your strategy question and you got to make sure that your cust- and you got to think about where your customer is going to be and how you can adjust your strategy as a result. The second thing I'd say is, um... And I sent out a note to my, uh, CEOs and I was like, "Guys, you gotta, uh, you know, cut your burn, and then you got to cut your burn and then you got to cut your burn if you've got burn." You got to do everything you can to give yourself the greatest chance of survival. And I think on the last All In podcast, Jason, you mentioned having a, you know, 36 months of cash, that's ideal. But if you can get your cash back, your cash to get you to an 18-month runway, uh, you know-

    6. JC

      Yeah, 18 is my average. Yeah. 18 is my, my record.

    7. DF

      Yeah. I mean, you should be, you should be doing everything you can to, number one, kind of give yourself that breathing room, even if that means trading milestones, trading features, trading revenue goals, trading all the things that you're expecting to do. Survival matters, um, more than growth right now. Uh, David Sinclair, who wrote the book Lifespan and is a Harvard, um, biochemist, has highlighted that there's basically a gene, the SIRT genes, there's about seven of them in humans, and the SIRT genes get turned on or off. And it turns out every biological organism on planet Earth has a SIRT gene. The SIRT gene tells the organism or tells the cell to either grow or heal. And this is a time for everyone to activate their SIRT genes and stop focusing on growth and focus on healing. It's really important to optimize your unit economics, to make sure you know where your customer is, to really reduce the burn, to reduce the spend, to reduce the push for growth and expansion. And just make sure you've got a core business, that you have a customer that you can make money from that customer, that you've really got unit economics right, and reduce your burn and give yourself that runway and, and extend your life. So that's my, that's my kind of advice.

    8. JC

      All right. Well, I think we got question one out of the way.

    9. CP

      Um, let me, let me give you my, um, (clears throat) my advice, um, which is building on the back of both of what you said, but I'm going to take it from a different perspective. So let's look inside of a VC firm. VC firms have limited partners, and those limited partners are the most sophisticated financial institutions in the world. Family offices of well-renowned individuals, foundations, uh, university endowments, nonprofits, you name it. And all of them are allowed to invest in this asset class because they themselves, uh, can prove that they're sophisticated. And one way in which they do it is they, they have what's called portfolio allocation theory. They construct a portfolio of every $100 they have, and they say, "Well, I'd like to have, you know, 70% of that in liquid instruments and that I'm gonna have 60% in bonds and, you know, 40% in equities." And then that 30% they'll take and they'll say, "You know, I want to have a mixture of all kinds of different stuff." Some real estate, some hedge funds, some private equity. And eventually, when all of those allocations are done, there's an allocation to venture. Now, in the last few years, what happened is all of these folks, you know, moved the dial, they pushed the risk meter so that the allocation into venture was upwards of 7, 8, 9% of their overall portfolio. Now, just to remind you guys, you know, basic theory, monetary theory would tell you when you put money in, into an illiquid instrument... Remember, venture doesn't return money until 13 years after it's done and you can't get it out. It's not like a bond where you can go and instantaneously sell it in a second. You have to get returns that are much better than the market.... because you need to be rewarded, paid back for that, uh, illiquidity. Now, in the last month, what you've seen are portfolios get completely turned upside down. If your bonds and equities before were worth 60 dollars or 70 dollars of that 100, it's now worth 56 dollars. It could be worth 40 dollars. What that means is that that other 30 dollars needs to be worth much, much less. Otherwise, your portfolio model is completely upside down and all of these limited partners become forced sellers as well. (smacks lips) So that can't happen.

    10. JC

      So what is the, uh... Eh, eh, my understanding is, uh, the last time this happened in 2008, uh, LPs kind of winked, uh, to the GPs and said, "Listen, it would be good if there wasn't a capital call right now." And then GPs not wanting to piss off their LPs, the VC firms not wanting to piss off the endowments as an example, said, uh, "Okay, we're just gonna not make any capital calls right now while the market recovers" so that your equities go up and the percentage of venture goes back down. Is that, is that the likely scenario, is LPs, um-

    11. CP

      It's worse than that. It's worse than that because right now, uh, these foundations and sovereign wealth funds are trying to just stay above water and as we get to the 10,000 and 100,000-foot view, I'll give you the picture-

    12. JC

      (clears throat)

    13. CP

      ... of what's happening in their offices. And again, it's important because it is what makes sure we come out of this reasonably well, which is a properly functioning capital market. And right now, uh, it is the most precarious that I have seen in 20 years. So basically, these LPs are gonna have to portfolio rebalance and they're gonna have to force, uh, venture capitalists to mark down their books and, you know-

    14. JC

      So wait, VCs are just gonna make that, um, decision to say, "Hey, my investment in Airbnb, Slack, or Uber is worth X now"? I mean, when they were private companies, so-

    15. CP

      N- Not Slack and not Uber 'cause they're public. Um-

    16. JC

      Right. No, but, but previously private, yeah.

    17. CP

      But Air- But Airbnb, can it be marked at 30 or 40 billion dollars? Uh, the auditors will probably say no. The LPs will say that it's not. The GPs will want to because it'll allow them to maintain their IRRs, their rates of return. And so what you're gonna have is when these, when these markdowns are forced to happen, which will take another six months, um, venture capitalists' returns will look terrible. And so their propensity to be able to add bad dollars after good, quote, unquote, you know, to defend every company-

    18. JC

      Hmm.

    19. CP

      ... is going to go to zero.

    20. JC

      Right.

    21. CP

      And, and as you said, Jason, there's gonna be a pall on, on activity. So I don't think 18 months is sufficient. I think you need at least 36 months.

    22. JC

      Double. You need to have three years of capital in the bank.

    23. CP

      (smacks lips) The worst thing that'll happen if you have 36 months is you think to yourself, "Wow, I was really conservative." The best thing that happens with 36 months is you survive.

    24. JC

      Hmm.

    25. CP

      The distribution of outcomes will tell you there is zero point in taking the risk if you don't have to. And this is why unfortunately it's gonna be a very difficult process of recalibrating all of this stuff. So for folks that are in these startups, um, we're gonna have to go through, uh, an unfortunate period of pain. And, you know, as, as Buffett said, you know, "Rule number one of our business is to not go out of business. Rule number two is not to forget rule number one."

    26. JC

      Yeah. All right, uh, I think it's well said and, um, are... Is there any chance while we're sort of at this, you know, uh, street level on the front lines, is there any chance that we, um, contain this very quickly, let's say under 60 days-

    27. CP

      No. No.

    28. JC

      ... and that it looks like-

    29. CP

      No.

    30. JC

      ... this, uh, virus, uh, mitigation through, uh, the various drugs we talked about actually starts to work? If that happens in the next-

  8. 41:24 – 45:05

    Chamath explains what is currently happening in the capital markets

    1. JC

      back?

    2. CP

      It cannot come roaring back. So let me-

    3. JC

      Okay.

    4. CP

      ... explain to you what's happening right now in the capital markets. So let's take a step back and first look at what, what the Fed has announced over the last couple of days. So... And, and here's why the Federal Reserve is important. So the Fed basically acts as a market making and liquidity function in what's called the overnight repo market. Now, that's an obscure market for the average individual on Main Street, but let me roughly explain why it ha- why it exists and, and at the end of it you're probably gonna have the same reaction as me, which is, "What the fuck fucking... What the fuck and fuck?" Okay?

    5. JC

      Right.

    6. CP

      But I'll explain it in, in English first. You're an LP, a limited partner, and you give a hedge fund a dollar and very much like last episode how I explained why hedge funds run levered, um, the hedge fund says, "Well, if I take this dollar, you know, the bank will give me some, some amount of, uh, leverage on it, but it would be much better if I, if I was able to basically, you know, give them, uh, an instrument like a bond or some sort of short-term commercial paper, um, and then they'll give me more because they'll believe in the quality of the instrument." Okay. So they go in the repo market and they basically do a transaction overnight where they basically, you know, buy some short-term commercial paper, they use it as collateral, and then they lever it up and then they go put it in the market. That entire dynamic works as long as the repo function works every day. Every night, you kind of go and you clean up your balance sheet, you look at how much leverage you have, you look at your leverage ratio, you make sure that you have enough money, and you go and you refinance your short-term paper that keeps, you know, JPMorgan, Goldman Sachs, Morgan Stanley lending to you.... but if that market seizes, when the repo market seizes and there's no way for you to either buy or sell commercial paper, buy or sell short-term money market instruments, and on the other side, the markets are whipsawing up and down and so you're being margin called, not being margin called, being margin called, not being margin called, the markets start to really seize and capitulate. And everybody is just losing enormous amounts of money. And what I mean by everybody, it's everybody. It's hedge funds, it's sovereign wall funds, it's foundations, it's central banks. Everybody is losing money. And if we don't figure out how to bring some calm into the financial markets, it will leave all of these limited partners and all of these other people, um, with not just a lack of liquidity and a lot less money than they had before, but the psychological pain of remembering what they just went through. And that'll prolong what we have to deal with to get out of it, right? So, you know, this is why I think it's really important to understand that, um, if we can nip the s- you know, stage zero of this problem, which is the disease itself in the bud, and I don't mean by curing it, and I don't mean with a vaccine, I mean by testing and data.

    7. JC

      Yeah.

    8. CP

      If we can understand and bound it, then everybody's psychology can move to fixing the capital markets and right now-

    9. JC

      How, how close are we to that, David?

    10. CP

      ... they need it to be fixed.

    11. JC

      How, how close do you think we are to having that mass testing done, and then I think we all think we're gonna have a low, uh, mortality rate and then go back to normalcy? Is that something that's happening in 10 days, 30 days or 60 days, if you had to pick a number? The, the, the march back to normality, David?

    12. DF

      I, I don't

  9. 45:05 – 54:13

    How close is the US on being able to do mass-testing?

    1. DF

      see any action to get the testing done, uh, that needs to get done right now.

    2. JC

      My mom got tested yesterday. It seems like there are more tests out there this week than previously.

    3. DF

      Oh, yeah. There's def-

    4. JC

      Stanford opened up the testing.

    5. DF

      ... there's definitely PCR testing available now and you can probably get your results in three to four days on average, although some labs are super backed up.

    6. JC

      Yeah. My mom said she's gonna take three days or four days.

    7. DF

      Three days. Yeah.

    8. JC

      Yeah.

    9. DF

      Um, but the, uh, the stuff that we're talking about, which is the general population testing, I'll, I'll keep saying it, it's so critical that we do this to figure out how many people have already been infected and didn't know it. We don't have that data. That, we don't even have a plan for and it's not on the radar. The task force in DC is focused right now on increasing the throughput and the availability of PCR or just in time, you know, PCR testing.

    10. JC

      The blood testing, let's again.

    11. DF

      Yeah. Yeah. It's all blood testing. Uh, it's just a matter of, like, like, the... Let me explain the, the, the PCR test involved, the, the RT-PCR test involves taking blood and then there's basically six steps that you have to go through with it in a lab. And, um, it's done on, like, three different machines, and the actual cycle takes 30 to 60 minutes, or 30 to 45 minutes. So by the time you have that backlog... And you can multiplex it, but meaning you can do multiple at the same time, and you can kind of do different things, but generally these machines are not highly automated. There are new machines that are allowing us to automate more of these steps and making them go a little bit faster and do more multiplexing, but it is still a multi-step cycle to take the blood and turn it into a test result once you've amplified the viral RNA and, and, and tried to measure, uh, its availa- its, uh, uh, its content. Uh, and so this t- this takes, this takes some time. And so it's a chemistry lab that's doing this work. Um, so until we have a point of care solution, which is like a test strip or something else, and, and these are technically possible, it's just that they're not FDA approved and so they're not getting made and distributed here. Whereas China and Korea and Italy are using them out of... And they're made in w- in factories in China, even though they're not tested and approved in the normal way just because we don't have the tests.

    12. JC

      Isn't the plan though to have these untested tests online this week? It's that what they're saying?

    13. DF

      Yeah. Yeah, a bunch of people are buying them.

    14. JC

      Yeah. Uh, but, uh, i- i- so I guess the question is, when do you think we will have these, you know, the general population taking tests and we get like a large scale testing like South Korea did?

    15. DF

      I do not-

    16. JC

      If we all agree that's the part of the solution, when does that happen?

    17. DF

      Unfortunately, we're not parallel pathing it. We're, we've put all of our resources into increasing the availability and throughput of the RT-PCR tests for acute infection cases. And as a result, we have everyone focused on this. There was some lab work and some research departments, I, I won't name them, that were working on doing this general population testing, but they got yanked into the, the getting the RT-PCR scaled up because, "Oh my god, we're behind the curve. We gotta fix this thing." So we gotta get over this first hump. I think once we get over this first hump, then you're gonna see people distribute and work on this. Um, and I think getting over the first hump is happening in the next, call it, seven to 10 days. And so then it's probably another 30 to 45 days before we get these tests for general population testing more broadly distributed. So call it 45 days out. Um, and then hopefully by then-

    18. JC

      Why can't we do this at the same time? I mean, why can't we parallel this? This makes no sense to me. We're the greatest country with-

    19. DF

      Totally.

    20. JC

      ... with so many scientists-

    21. DF

      We're one of the-

    22. JC

      ... and so many entrepreneurs in Silicon Valley that are banging their head on the wall asking this question. I've done so many phone calls over the last few days of people being like, "What can we do? How can we get these things made? Where can we go?" And everyone's just, like, flustered. It's really frustrating. Um, anyway, we, we've got a lot of individuals that we're trying to kind of collect together to do this work. Some folks are calling China today. We're trying to see if we can get big bulk orders out of China. We're just gonna pay for it ourselves and then try and get some research labs to run the, you know, research, uh, universities around the country to run the experiments for us, um, using these untested, unproven, you know, not FDA approved tests yet. Ha- Have you run one of these on yourself yet, one of these unproven tests yet?

    23. DF

      I haven't. I actually, um... A friend of ours, I did one with video on, with him this morning. Um, and so, you know, someone that we all know.

    24. JC

      A mutual friend of ours. Okay.

    25. DF

      A mutual, mutual friend of ours. Yeah. And so, um, and then I know lots of people that have them and have used them, and I've seen them and I've gone through, like, you know, I bought a bunch of them, they arrive tomorrow. Um, and so I see, uh... You know, we see, we, we know how these things work. They're actually from a reliable source. You know, these are not, um...

    26. JC

      Yeah.

    27. DF

      We... No, no one's actually done the testing to prove the specificity and sensitivity.

    28. JC

      Yeah.

    29. DF

      We're relying on a third party, you know, test. So we don't really know, but any data is better than no data.

    30. JC

      I keep hearing they're uncomfortable. I keep hearing they're uncomfortable. What's uncomfortable about them? They stick it very far up your nose? Is that the, what people are referring to or?

  10. 54:13 – 1:03:14

    Thoughts on bailouts for companies that manipulated their earnings-per-share ratio by stock buybacks? Impact on the global economy

    1. CP

      uh, let's talk about something that Mark Cuban said which I really agree with which is that if we're gonna do bailouts, they can't come where we also do things like, you know, allowing these companies to do buybacks, where CEO pay isn't curtailed. You know, it turns out that the airline industry which looks like is gonna be first in line for a bailout spent 96 cents of every single dollar of free cash flow they had on buying back stock which is only used to drive up earnings per share which is only relevant for CEO pay. So they have s- you know, they don't have the cash buffer, they don't have the 36 months of operating, you know, uh, window that everybody should have. They're not very-

    2. JC

      They blew it on trying to hit... They blew it on trying to have their earnings per share go up by reducing the number of shares in existence.

    3. CP

      Shares. Exactly. Yeah.

    4. JC

      Just so people understand.

    5. CP

      If you can't, if you can't... Earnings per share. You know, you take earnings, you divide it by the number of shares. So if earnings can't go up, just divide by the number of shares and earnings per share goes up and-

    6. JC

      Lower the number of shares. Yeah. If you had a million dollars in earnings-

    7. CP

      They have... They have more, it's- it's-

    8. JC

      ... a million shares, it was a dollar per, you get rid of half the shares, it now goes up.

    9. CP

      And, and so now, you know, you have CEO pay go through the roof, uh, but these companies are not any more resilient, uh, than they were before. Uh, and so now they're in line for a bailout and I think the... a large caucus of people across both aisles are very clear that these things need to be wipeouts of the equity versus bailouts where, you know, folks who, uh, took advantage of the financial system here continue to get rewarded. What do you guys think about that?

    10. JC

      Totally agree.

    11. CP

      I mean-

    12. JC

      I- if you wipe out the equity though, just pausing for a second and taking the other side of the argument, I'm not saying this is the side I would take-... if you wipe out the equity, would not some of the people who would hit that pain are, uh, shareholders from a retirement home or a retirement plan, like CalPERS maybe owns-

    13. DF

      Pension- pension funds, yeah.

    14. JC

      ... pension funds, et cetera. So, you know, it- it does seem like if you wipe out the equity, you could have some unintended consequences with equity holders. But I think what the other side of the argument is, we're gonna have to have there be repercussions for people running companies so close and recklessly to the cliff, and there has to be some pain, not reward, for doing that. And a bailout is a reward for operating irresponsibly. Is that what you're saying, Chamath?

    15. CP

      Yeah. I- I- I- I think that actually you have to wipe out the equity. And I think the reason why wiping out the equity is important is that it overwhelmingly does not punish the, you know, retiree in their... who owns, you know, Boeing stock in their 401 (k) . Boeing has not been held by retirees, uh, in their 401 (k) s for years as a cohort of, uh, impactful investors. Massive, large, institutional pools of money own these companies. These are the balance sheets of governments, these are the balance sheets of foundations, these are the balance sheets of a very few very, very wealthy people. And, uh, the reality is that for the broad-based population, for the 350 odd million Americans in the United States, uh, how many of them do you think are really active market participants? Meaning for every dollar of value creation or destruction, how much do they actually see? I would guess it's less than 10%, meaning 90 cents of every dollar are nameless, faceless organizations in a financial infrastructure. I think the lesson we have to- we have to- we have to tell, and the place we have to move to, is one of compassionate capitalism, which is that we have been so hell-bent on the use of leverage, on the use of these financial gimmicks, on the use of accounting tricks to enrich a few at the sake of the many, and this is the right time where you should nationalize some of these businesses. And when they eventually do get taken back out and floated publicly, all of those proceeds should go back to the United States Treasury, who should then use it to reinforce Social Security and Medicare, uh, and everything else. Because we are going to run a multi-multi-trillion dollar budget deficit to get out of this.

    16. JC

      And to just give people some context here, the- the US national debt is at $23 trillion, which is $72,000 per citizen, um, and $189,000 for each citizen who, uh, pays taxes. And we run, um, our- our- our spending, uh, our b- budget deficit is a- is a bill- is $1 trillion a year. We're gonna talk about here, I think, a $2 to $3 trillion stimulus package, which will increase the national debt load by only 10%. So it does seem like we can manage that. But boy, was this a strategic mistake for us to run up the debt...

    17. CP

      But, I mean, no, no, no.

    18. JC

      ... during good times-

    19. CP

      Hold on.

    20. JC

      ... was it not?

    21. CP

      It's- it's- it's- it's even simpler than this. Like, uh, and- an- and I hate to say this so bluntly, but the Eurozone is gonna collapse, okay? Japan is finished. So there are two economies that matter, there's China and the United States as of today. Um, and the great thing about that is in a set of two, there's only one instrument of safety which is the United States dollar, thank God. In that world, the United States has exceptional leverage, exceptional, exceptional leverage. It is, and it has always been, you know, the beacon, the light on the hill, et cetera. Now, in a moment like this, the United States has the most ability to reset how we think about things. It could run $5 trillion deficits tomorrow, it could run $10 trillion deficits, because it is still the backstop. I'm not advocating for that, but this is where I think you need bold, decisive action and not piecemeal strategies. I don't think $1 trillion is enough. I really think that if you think about what the Eurozone will have to do and what's gonna happen to the US dollar, we should be basically saying, right off the bat at a minimum, anyone who makes less than, you know, pick your number, $1 million a year, every man, woman and child, every... or every 18-year-old American man and woman should immediately get $5,000. Forget 1,000, 2,000, 5,000. And next month, if we're still out of business, 5,000. And all that does is just, it- it's $1 trillion. It's $2 trillion over two months. And then you add another trillion dollars and all this, you know, small business loans and all the other things, that's $3 trillion that you can deal with because we're the United States, and I think it's really important to keep it in mind. I know that sounds crazy-

    22. JC

      Well, I mean-

    23. CP

      ... and for some people they'll think-

    24. JC

      We-

    25. CP

      ... "Oh, you know, blah, blah, blah, you know, budgets and deficits," but it's not, because everybody else is just as fucked, if not more fucked.

    26. DF

      Well, let me give you- let me give you an- an- an- as- uh, another perspective. The GDP of the United States is $20 trillion roughly. Every mo- Let's assume the whole economy shuts down. Every month that we're shut down costs us $1.5 trillion. So if we're gonna have the country shut down for, say, three months, we're losing four and a half trillion dollars right there. The problem is economic growth and the economy is actually a- a first order of function, right? So the- the- the- the- the- the movement of cash drives the- the- the- the future economy. Um, and so if we were just needing to fill that hole, you would need to come up with a couple of trillion dollars and you would have the government going out and buying ice cream cones and paying hair salons and paying for dog walkers and, you know, paying for construction workers and paying for oil rig workers, and basically- basically employing and buying all of those goods and services for that functional equivalent of a $20 trillion GDP. That's what it would take to just fill the hole.

    27. JC

      Well, that's if you're assuming no economic activity. I mean, we- we don't think there's gonna, there's gonna be no economic activity with maybe, let's say it's a third less ec- economic activity?

    28. CP

      Jason, the shoe, guys the shoe that hasn't dropped is this idea that everybody is at home working-... nobody's at home working. That's a joke. That's a lie. Okay? Because as David said, companies are not, you know, self-contained units. Very few are. Many of them and most of them operate in a very interconnected, socially dependent way with other companies. They're your customers, you are their customers. Nobody is doing anything right now. There's nobody, there's nobody evaluating, uh, the next great SaaS tool. Guys, come on.

    29. DF

      (laughs) And the other issue is just, it's just leverage, Jason, right? So-

    30. JC

      Yeah.

  11. 1:03:14 – 1:12:10

    Impact on luxury goods? Should there be a monthly stipend for low-income citizens?

    1. DF

      and so on.

    2. JC

      Well, and there's no doubt that the, we all agree bottom up is the way to do this. So if we have 330 million Americans, if you just have the bottom half get a thousand dollars a month, that's, call it $160 billion a month, that's only over the year $2 trillion. So if we just did that and gave everybody a thousand dollars a month, that's $12,000 for the bottom half. They're not saving that money, they're gonna use it to-

    3. CP

      I think-

    4. JC

      ... they're gonna spend it in the market, correct? They're gonna pay their rent.

    5. CP

      I don't think so.

    6. JC

      They're gonna go get dinner.

    7. CP

      I don't think so. No, you're not allowed to go out.

    8. JC

      Do, do you think that poor people are gonna, who are laid off right now-

    9. CP

      If you-

    10. JC

      ... are gonna save the money?

    11. CP

      If you g- Well, if you gave me a thousand dollars or, you know, somebody a thousand dollars when they're in their house on the sixth week of their home confinement, what, what, what, you think there isn't like ju-

    12. JC

      Well, I'm assuming that we're in week 10 and we're, we're not in self-confinement anymore. We agreed in the first third of the program that we're gonna get there in whatever it is, 60 days, 90 days.

    13. CP

      You know-

    14. JC

      And we'll be back at work.

    15. CP

      You know what I've realized? You know what I've realized after wearing the same pair of jeans, um, four days in a row? I have too many jeans. That's what I've realized. And you know what I've also realized? That the, the cotton shirts that I buy from H&M, uh, are fucking perfect. And, uh, I've complicated my life with all kinds of bullshit that I've been buying, uh-

    16. JC

      Yeah.

    17. CP

      ... because I thought it meant something, and right now it means absolutely jack shit.

    18. JC

      Yeah.

    19. DF

      We, I would agree-

    20. CP

      So, you know, when-

    21. DF

      ... I'd agree with that perspective.

    22. JC

      I, that's what's really interesting. When you see your entire portfolio collapse, when you see, uh, this belt tightening, it's happening even amongst... And we have, you know, uh, w- listen, all three of us are lucky enough to be at the, you know, in the top of our careers and top of our income at this point in our lives, but we all came from humble beginnings as well. And if, if the people at the top are belt tightening and saying, "You know what? I, I don't need to buy a $60 T-shirt, I'm gonna buy a $16 T-shirt," boy does that have ramifications across the entire economy. Um, and this reminds me very much of the recession.

    23. CP

      I, I think it's-

    24. JC

      They said luxury goods would never rebound, and sure enough, the last 10 years, luxury rebound- luxury has rebounded massively.

    25. CP

      Because, because it was not a psychological broad-based impact to people's philosophy and framing of how they viewed the world.

    26. JC

      You think so? I thought-

    27. CP

      You know-

    28. JC

      ... after the economic crisis last time, people did say there would never be... People-

    29. CP

      No, no.

    30. JC

      ... specifically said there would never be luxury goods again. And that it was the end-

  12. 1:12:10 – 1:17:44

    COVID-19 exposing holes in the US healthcare system

    1. JC

      Freeberg, what, what do you think about the, what this is showing in the healthcare system and the holes in the healthcare system? The fact that we couldn't mobilize to deal with this after... S- we did scenario planning about this after SARS. We'd d- we've done scenario planning. We've had, uh, you know, I, I, I, I sent to our group, uh, list the, uh, link of Bill Gates talking about this (laughs) four or five years ago and how this would be an issue. I sent a couple of links to people writing about closing the wet markets in China after the SARS outbreak. Um, I'm curious, David, what you think the holes in the healthcare system are that need to be fixed and what we can learn from this, because I think we're now coming into the, you know, as we, as we got through the virus, we got through the economic second order effects. Let- let's talk about positively what we're gonna learn, because I think that's what Chamath's getting at, is that there's a personal, uh, recalibrating of what matters, maybe morality, ethics, focus in our lives. David, what can we learn from this on a health perspective? What should we do when this ends?

    2. DF

      Um, there's no easy answer to that, right? Nationalized healthcare systems in some countries you could say they're great. My brother, my family lives in London, I was talking to my brother yesterday and, uh, you know, they, they tried to go down and get, uh, tested for a, a, a tooth infection yesterday and, like, it's just brutal dealing with NHS in the UK. You know, people aren't telling great stories about NHS and they're not saying, "Oh my God, it's the best health system, I love it." Uh, healthcare is hard. People want personalized care, they want a lot of attention, there's only so many doctors, there's only so much beds. When you start giving people good care, it costs a lot. Solving this stuff and, and the R&D dollars required to enter markets is so, you know, so extraordinarily high, you end up charging a lot for products and services on the backend. It's a very complicated system and there's no simple answer. I do think that we're learning and realizing pretty quickly that the US... And we're gonna, we're gonna do some postmortems on this obviously as a world, as a, as a society, one thing that's clear is the Chinese response in part was driven by a lack of bureaucratic red tape and an ability to, um, manifest action and an ability to produce and distribute drugs and produce and distribute tests without needing approvals. I think that's something that's gonna change in the United States. It has to. The regulatory burden on healthcare companies, on pharmaceutical companies, on testing and diagnostics companies, um, is, is extraordinarily high, but the objective in the United States has been do no harm, which means don't let anyone die through the action, but it may be that many people are dying through the inaction. Um, and I think we're gonna maybe see a big shift in policy and allow right to try laws, um, that are gonna be federalized so, you know, states can make decisions about right to try laws and doctors and patients can try drugs on their own discretion without having a, a federal, um, oversight body. Perhaps the same will happen with diagnostics and testing, um-... and, uh, you know, the- the- with respect to what they- what services the government provides and doesn't provide, um, you know, uh, I- I'm not sure. There's a lot of data on either side here that nationalized healthcare systems do and don't work. So, um, it's- it's very hard to say what the right solution is, uh, is here. Um, you know, and- and I don't think that you want to try and take R&D and put it in the government. I think that's a terrible idea. Uh, I think that there's a financial, uh, and a capitalistic motivation to find, discover molecules, get them tested, and prove that they have a positive effect in human health. And we need to move this towards personalized medicine, which actually changes the construct and probably increases the cost of doing this about 10X. We're already seeing this with stem cell therapies and CRISPR-based gene therapies, uh, is they're so much more expensive. In order to get that stuff moving faster, we need to remove the regulatory burden and allow companies the ability to move quickly and make this stuff more affordable. The more we- the- the more barriers we put in front of companies, the- the harder it's gonna be. And if we try to do this with a top-down approach, with the government deciding what to do R&D on and what not to do R&D on, um, we're gonna be in a- in a fucking mess. So, uh-

Episode duration: 1:31:13

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