E103: Tech layoffs surge, big tech freezes hiring, optimizing for profits, election preview & more

1. 0:00 – 1:18

   Jason's new brand deal

   1. CPChamath Palihapitiya0:00

      What the f- What are you wearing, Jason?

   2. JCJason Calacanis0:03

      What? Oh, Uber had a big week, so this is the Uber/Moncler crossover hat.

   3. CPChamath Palihapitiya0:07

      Oh, look at that.

   4. JCJason Calacanis0:07

      And I also bought a Moncler shirt.

   5. CPChamath Palihapitiya0:09

      You bought that? Or I sent it to you? Oh, what?

   6. DSDavid Sacks0:11

      Are you-

   7. CPChamath Palihapitiya0:11

      You got the watch and the mug?

   8. JCJason Calacanis0:13

      Oh, you don't know about-

   9. DSDavid Sacks0:14

      (laughs)

   10. CPChamath Palihapitiya0:14

       (laughs)

   11. JCJason Calacanis0:14

       ... the Apple Moncler watch?

   12. NANarrator0:17

       (laughing)

   13. JCJason Calacanis0:18

       Or the commemorative mug?

   14. NANarrator0:19

       (laughing)

   15. CPChamath Palihapitiya0:21

       (laughs)

   16. JCJason Calacanis0:21

       Or the new tat? You don't know about the new neck tats that are coming from Moncler? It's actually a neck tat.

   17. NANarrator0:29

       (laughing)

   18. DSDavid Sacks0:29

       Oh my god. (laughs) Oh, it's so good.

   19. JCJason Calacanis0:31

       Let's just say somebody got their beak wet.

   20. NANarrator0:33

       (laughing)

   21. JCJason Calacanis0:33

       I'm not saying that I got $100,000 sponsorship-

   22. NANarrator0:37

       (laughing)

   23. JCJason Calacanis0:37

       ... but (laughs) we don't have a rule in the agreement about logo placement, do we?

   24. CPChamath Palihapitiya0:43

       Listen, J-Cal, if anyone was willing to sponsor you, every square inch of your clothing would be covered in ads like a racecar driver.

   25. JCJason Calacanis0:50

       It is, look.

   26. CPChamath Palihapitiya0:51

       It'd be like wearing a jumpsuit every day.

   27. JCJason Calacanis0:53

       These, these, you know, Moncler sponsorships are great. This is five, $5 plus $17 of shipping from France on its Etsy.

   28. DSDavid Sacks1:00

       (laughs)

   29. NANarrator1:01

       What's going on here? I'm going all in. Let your winners ride. Rain man, David Satterfield. What's going on here? And I said we open source it to the fans and they've just gone crazy with it. Love you Betsy. Queen of Kinwah. Going all

2. 1:18 – 9:12

   Bestie updates

   1. NANarrator1:18

      in.

   2. DSDavid Sacks1:19

      How was everyone's week? What'd you guys do this week?

   3. JCJason Calacanis1:21

      Uh, just busy working, um, trying to be helpful where I can. Uh, and that'll be the extent (laughs) of my comments today.

   4. DSDavid Sacks1:28

      How is Market Street this time of year?

   5. CPChamath Palihapitiya1:29

      Look, there's all sorts of wild report- I've gotten all sorts of inbound from people asking me if I'm, like, leaving Craft Ventures to do something at Twitter. No, it's not true. We're just, Jason and I are just pitching in and helping out while Elon establishes his permanent team at that company. Elon's the CEO, he's running it, he's the decider, he's making the decisions, and there, some of us are just kinda helping out in any way we can, and that's really the extent of it. It's a, you know, very much part-time thing where we're just helping a friend. Uh-

   6. JCJason Calacanis1:57

      Yeah.

   7. CPChamath Palihapitiya1:57

      ... but it's been, like, blown up in, by the media into something much more than it actually is.

   8. JCJason Calacanis2:01

      It is 100% accurate. I am still doing my day job, podcasting, investing in 100 companies a year, just helping out on the margins. Uh, that's it. The end.

   9. CPChamath Palihapitiya2:10

      I do wanna try talking about one issue that's already public, because it's already been tweeted. So Elon had a tweet this morning about how there's now, like, an advertiser boycott going on. And this falls on the heels of a bunch of reports that came out over the last couple of days that supposedly there's been a big influx of, like, racist tweets. And Jason and I actually saw what was really going on, which was, it- it's all not true. I mean, what happened is that within hours of Elon taking over the company on Friday, there was a 4chan attack, where basically people from this message board created bots to post hundreds of thousands of spam messages that contained racist words and epithets. And within hours, this had been detected and Yoel, who runs the, the trust and safety implementation, he met with me and Jason, and Elon directed him to shut it down. And he, Yoel actually posted a tweetstorm about it. That's the only reason I feel comfortable talking about it, is 'cause Yoel already posted the tweetstorm, but maybe people don't, haven't seen it or they haven't connected all the dots here. But what's really, I think, unfair about this is that as you've, as you've seen, it's not like your feed was all of a sudden filled with racist things. These were spam accounts or bot accounts that were posting to zero followers. They generally have zero followers, or if they do have followers, it's other bot accounts, right? So they're posting racist tweets into the ether, so to speak. It's not degrading anyone's experience. It was shut down promptly. But then what happens is these activist groups, they're monitoring the fire hose, right? And so they publish a report saying that racist tweets have gone up 500% since Elon took over Twitter. The truth is, Elon hasn't even had a chance to change anything about the content moderation policies. He's posted that, like, "Guys, I haven't even, I haven't changed anything about content moderation." Whatever the rules are, they're the same rules that existed prior to he, to him taking over. And this is just an organized operation by people who want to create that report. So then these activist groups basically publish this report, they feed it to news outlets, and then somebody then takes those reports and then feeds 'em to advertisers, and you get a boycott. But I think the, the point here is that Elon didn't do this. This is being manufactured by people who are not operating in good faith. They are trying to manufacture an incident that they can u- then use to hurt the company.

   10. JCJason Calacanis4:32

       Yeah, a- and it was thwarted immediately and fixed.

   11. DSDavid Sacks4:34

       Have you guys seen episode 333 of the Lex Fridman podcast? He, um, he interviews Andrej Karpathy, who is really, I mean, one of the great minds of our, of our time, particularly around AI and ML. And the question that Lex asked which Andrej expounded on, which I think is really interesting, is what does the next generation of bots look like? And I think where the problem gets very hard for all platforms, so this is not a Twitter, Twitter-specific discussion, is that you can now generate such real, lifelike human images that are unique.

   12. JCJason Calacanis5:12

       Mm-hmm.

   13. DSDavid Sacks5:13

       And you can also generate high-quality text through things like GPT-3 that's also, you know, that can effenti- essentially push the boundaries of, you know, a low-level touring test. But I think the real problem over time for bots, for spam, for coordinated attacks on any platform, is that when you use these tools, you're gonna have to become very sophisticated in how you try to detect them and then to block them. It's a really interesting discussion between, you know, two pretty meaningfully smart people.

   14. JCJason Calacanis5:47

       Karpathy was the head of, uh, autopilot at Tesla, right?

   15. DSDavid Sacks5:51

       Yeah.

   16. JCJason Calacanis5:51

       Autopilot and vision, yeah.

   17. DSDavid Sacks5:52

       Yeah.

   18. JCJason Calacanis5:52

       So he's really smart, yeah.

   19. CPChamath Palihapitiya5:54

       I have no doubt that Elon is going to do a much better job stopping bots on Twitter once he has a chance to do it because he's got this amazing team.... of AI engineers and, and he's just gonna be more focused on it.

   20. DFDavid Friedberg6:08

       You know what I like the most about, about what I heard this week is the idea that you can do either micropayments or subscription to third-party content providers, 'cause I think so much of my newsfeed is delivered to me through the Twitter app, and then I click on a, on an article and then it's, like, a paywall, or it's some sort of difficulty in kind of accessing the content. Having some integration there or some ability to kind of make a micro-purchase to read an article is gonna be, uh, I think a super feature.

   21. DSDavid Sacks6:35

       The other thing that I would love Twitter to experiment with is, if you have a micropayments model to publishers, it would be great if you could publish content without a byline, a la The Economist, and see what that does to, uh, information quality.

   22. DFDavid Friedberg6:48

       Right.

   23. DSDavid Sacks6:48

       You know? If you, if you, if you do not get any credit to your individual name for writing stuff but instead it goes to the masthead publication, whatever it is, The Times, The Post, I think it could have a really important behavior change in how journalists cover the news. It's worth experimenting with, at least, and if you're paying them enough money, I think that you could probably demand that. Facebook could probably demand that today. You know, strip the byline away and just, it just says New York Times, just like today it just says The Economist.

   24. DFDavid Friedberg7:18

       Yeah, it is a, um, The Economist is a very polarizing gig in journalism for that reason. Uh, there are going to be actually a lot of journalists who would prefer to have their byline taken off. One of the problems with journalism today is even if you're doing reporting in good faith, Chamath, and you put your byline on there, harassment, you know, threats, et cetera, can become very acute if you're just covering certain topics. And so, I actually think a lot of, you know, writers and journalists would opt into this. They might prefer it.

   25. DSDavid Sacks7:47

       I think they should because I think the two ends of the spectrum are better than this, you know, gross middle that we have. The end of the spec- one end of the spectrum is you have The New York Times, The Washington Post, and The Economist with no byline and no attribution to reporters. The other end is if you want to build a brand that's based on your name, go start a Substack.

   26. DFDavid Friedberg8:06

       Yeah.

   27. DSDavid Sacks8:06

       And I think that there's a very good balance there. And, and The New York Times could syndicate that as well. But if you separate the two, all of a sudden the news becomes more likely to be truthful news versus, you know, well-disguised opinion.

   28. DFDavid Friedberg8:19

       The, the other issue is, you know, for readers, if you do choose to do a no-byline publication, you're really gonna need time to build trust and for people to understand what you're doing, because they will think you're taking the byline off in order to pursue a certain agenda. Right, right. So that is the, the, that is the suspicion that can build up. The Economist has been able to do this over decades with trusted reporting. Yeah.

   29. DSDavid Sacks8:39

       And Substack proves that you can have no reputation whatsoever, and if you're publishing great content, you can build a great business from scratch. So-

   30. DFDavid Friedberg8:47

       Yes, you get done both ways.
3. 9:12 – 15:38

   "Ligma/Johnson" blunder outside of Twitter HQ

   1. DSDavid Sacks9:12

   2. DFDavid Friedberg9:12

      Can we talk about the reporting that happened with the two guys that trolled the journalists and pretended to be fired employees? 'Cause I actually thought that was such an interesting moment this week, that all the journalists immediately parroted it because it fed their narrative, but there was no-

   3. DSDavid Sacks9:29

      Ligma Johnson?

   4. DFDavid Friedberg9:29

      ... fact-checking done, there was no reporting done.

   5. CPChamath Palihapitiya9:31

      (laughs)

   6. DFDavid Friedberg9:32

      And then several of them, including, I think, Deirdre Bosa from CNBC, came out and publicly apologized for that report, and if folks, uh, listening aren't familiar with what happened, these two guys came out, they pretended to be fired Twitter employees on Monday, walked out with a box-

   7. DSDavid Sacks9:47

      Oh, what's funnier-

   8. DFDavid Friedberg9:48

      ... holding a Michelle Obama book up, and they were like, "Hey, like, we just got fired. It's terrible. Life is awful."

   9. DSDavid Sacks9:51

      No, it's even worse.

   10. DFDavid Friedberg9:52

       "I gotta go see my husband and wife," you know?

   11. DSDavid Sacks9:54

       The guy's name was, one guy's name was Rahul Ligma, and the other guy's name was, like, Mike Johnson, so the whole thing was Ligma Johnson. So I-

   12. CPChamath Palihapitiya10:02

       (laughs)

   13. DSDavid Sacks10:02

       ... now here's what's so funny about due diligence.

   14. DFDavid Friedberg10:05

       (laughs)

   15. DSDavid Sacks10:05

       Hold on. I read this story without giving away that punchline to my kids. All of my kids immediately started howling. They're like, "Dad, if you say, these two names are Ligma Johnson." And I was like, "Oh, my God." And so, you know, when, when, like, you know, preteens can figure this out, but the journalism-

   16. DFDavid Friedberg10:24

       Well, this is the-

   17. DSDavid Sacks10:24

       ... industry could not-

   18. DFDavid Friedberg10:25

       No, no, but-

   19. DSDavid Sacks10:25

       ... is kind of a very telling sign.

   20. CPChamath Palihapitiya10:27

       Freeberg made the key observation which is, they didn't figure it out 'cause they didn't want to, 'cause it fit their narrative, so they don't-

   21. DFDavid Friedberg10:32

       Exactly.

   22. CPChamath Palihapitiya10:32

       ... they don't fact-check things that fit their narrative.

   23. DFDavid Friedberg10:35

       This was my point about journalism. I, it just, it was so poignant to me this week when this happened, particularly as it relates to Twitter and the importance of, call it open journalism or citizen journalism and the integrity of kind of, you know, uh, of the voices that we all kind of trust as our, our kind of journalistic authorities, that these guys came out and they were pawned right outside Twitter's offices into telling a story that fit their sensational narrative, and it was really a kind of poignant moment for me.

   24. CPChamath Palihapitiya11:02

       Well, do you remember that story, I think it was originally in Rolling Stone and then Rachel Maddow amplified it-

   25. DFDavid Friedberg11:07

       Yeah. Right.

   26. CPChamath Palihapitiya11:07

       ... where it was in Oklahoma City-

   27. DFDavid Friedberg11:09

       Right.

   28. CPChamath Palihapitiya11:09

       ... where supposedly all these MAGA Republicans were eating horse paste because Trump told them to, and they were... and this is basically, they thought it was like a COVID therapy, and then they were going to the emergency rooms of all the hospitals, and then they were turning away heart attack victims because there were so many of these, these people going to the emergency room. Anyway, it all turned out to be, like, a made-up story, like a hoax, but the media reported it because the story was too good, right? It just, it fit too many of their preconceptions, too many of their priors.

   29. DFDavid Friedberg11:34

       Well, there's also one, there's another vector of sex, which is live coverage, is, um, you know, you really have to be careful, because when doing live, people will call in and say, "Oh, they're at the scene of an accident," and then they will do a bah-bah-buie or whatever, you know, kind of charades. And so without fact-checking and without saying, "Hey, we haven't confirmed this yet, but these two employees are claiming this," people want to get real-time coverage. It's fine to do real-time coverage. I think everybody in the audience has to understand-

   30. DSDavid Sacks12:02

       You're giving them so much credit. What about the copyeditor?
4. 15:38 – 35:28

   Surge of tech layoffs at Twitter, Stripe, Lyft, Opendoor, Chime and others; preparing for a longer downturn than originally anticipated

   1. JCJason Calacanis15:38

      All right.

   2. DSDavid Sacks15:38

      Well played.

   3. JCJason Calacanis15:38

      We should talk about layoffs in tech. Lyft, 13%. RIF, 700 employees let go yesterday. Stripe, 14% RIF, 1,000 employees. Opendoor, Chime, Dapper Labs, all hundreds of employees. Opendoor the most significant, they were 550, 18%. Dapper, 22%. Uh, and Twitter, we'll see what the RIF winds up being, but that's occurring as we're taping here, so...

   4. DSDavid Sacks16:02

      And then, Jason, Apple did a pause. Amazon did a pause, right?

   5. JCJason Calacanis16:07

      And Google and Facebook have-

   6. DSDavid Sacks16:10

      Hiring pause. Hiring pause.

   7. JCJason Calacanis16:11

      Yeah, maybe trying... uh, maybe signaling a pause, but haven't. They've been hiring like in... absolutely, uh, at an cr- crazy pace, and we'll pull up the chart here actually. It's instructive to look at Facebook and Google because they have not slowed down m- by any stretch of the imagination. Just by the raw numbers, uh, this all started to peak in June, and now it's starting up again. So, there's a website, uh, layoffs.fyi, that's been tracking all these layoffs. You can see the n- number of layoffs. These are kinda major layoffs, and the number of employees impacted. Been pretty consistent in the third quarter. It started to die down in September from the peak in May and June, and now, uh-

   8. DSDavid Sacks16:54

      Now, this is gonna spike this month, right?

   9. JCJason Calacanis16:55

      ...seems to be picking up. Yeah, feels like this is the double dip we were talking about.

   10. DSDavid Sacks16:59

       (sighs) I think this is the beginning. This is-

   11. JCJason Calacanis17:00

       Yeah.

   12. DSDavid Sacks17:00

       ...not even-

   13. JCJason Calacanis17:01

       Unpack it.

   14. DSDavid Sacks17:01

       Well, I think that we had... if you take a very balanced view of what happened this week, you have to start, I think, with the Federal Reserve. And really what they said is rates will probably be higher than all of you think, and they'll be higher for longer than all of you want. And again, without debating whether, you know, that's gonna come to pass or not, the thing that you can do is you can build a little sensitivity model to understand the mathematical implication of it. And basically what it means is that the dollar that's right in front of you is now meaningfully more important than the dollar that's far, far away from you. So, let's just assume that, you know, the Fed funds rate goes to 5.5% or so, even 5%. Let's, let's, let's go to the optimists and say it's only gonna go to 5%. Tech companies have to achieve 500 basis points above that, minimum. So, we all have to generate 10 to 11% returns for us to be on a risk-adjusted basis better than a government bond. The problem with that is all of a sudden, you know, if you're trying to generate cash even three or four years from now, it's not worth that much. You need to generate dollars today. And so, you know, they are really reprioritizing the value of short-term profits.And that's gonna affect how companies get money, the cost of capital, so how much dilution you have to take. So, I think this is what companies are now bearing down for. They're realizing, "Oh, man, I need to get my cost structure way in line." It is way better now, just to put... think about this contrast, it's way better to grow at 20% and be profitable than it is to grow at 100% and burn money, because it's not clear where that second company is gonna get the incremental dollars they need for growth. And that's just a mathematical realization when rates are 5%, risk-free rates are 5%, so-

   15. DFDavid Friedberg18:55

       Yeah. I think this is, this is that moment where you see that pivot from-

   16. DSDavid Sacks18:58

       Pivot.

   17. DFDavid Friedberg18:58

       ... growth to profit.

   18. DSDavid Sacks19:00

       Yeah. Yep. You know-

   19. DFDavid Friedberg19:01

       We, we can talk... We've been talking about it for six months, but this is m- this is th- this is how it is manifest in Silicon Valley companies, is... Uh, of scale, is through layoffs and cost reductions and, and cost savings, so the investments in future growth are reduced and the timeline to drive greater profits is improved. I think what... if what Elon is gonna do at Twitter, or what is reported, so this is nothing to do with anything anyone told me, just what I've read in the reporting, is accurate, that he's gonna cut so deep, he's gonna cut 30, 40, 50% potentially of the employee base. It really sets a new standard for how profitable a tech company can get. And again, I'll give credit to a, a Twitter poster named Postmarket, who I didn't give credit to a few weeks ago when I read this tweet, which I think was a good one, which was that Elon's really gonna show everyone just how profitable these tech companies can be, just how lean they can be run. And, you know, when you're doing a 10% RIF or a 13% RIF, you may or may not even be getting to profitability with that RIF. When you cut 30, 40, 50% deep and you could actually turn a real profit on a business, an enterprise scale business, like a Twitter or like many other enterprise software companies that are out there right now, it really kind of sets a new standard that a lot of folks might then end up saying, "You know what? Maybe we should go deeper." And there could be the case that private equity firms take a look at this. And there's a lot of these distressed mid-cap and small cap software companies out there that private equity firms now realize, "Wow, you don't actually need 50% of the workforce in order to keep the product running and to drive to profitability." And you could see a bit of a flurry of buyout activity as more folks come in and maybe try and mimic the Elon playbook. So, you know, that's one kind of prediction I think may arise. If Elon is successful in making Twitter a much more profitable enterprise, it could set a new model that catalyzes a lot of other M&A activity, a lot of other buyout activity of these distressed small and mid-cap companies, uh, by, uh, by other actors.

   20. DSDavid Sacks21:08

       Can I build on what you're saying?

   21. DFDavid Friedberg21:10

       Yeah.

   22. DSDavid Sacks21:10

       Nick, could you please just throw up that tweet that I sent just for all of these guys to look at? 'Cause I think it's incredible. So to your point-

   23. DFDavid Friedberg21:16

       Yeah. This is an incredible, uh, slide.

   24. DSDavid Sacks21:18

       This is an incredible slide. And essentially what it shows, for those folks that are not, uh, watching this on YouTube, is, um, it essentially shows the private software universe and then the public software universe at different levels of valuation. So as an example, right now, there are 15 companies, private companies that are valued greater than $10 billion, and there are 40 public ones that are valued greater than 10 billion. There are 50 companies between, you know, more than five billion, uh, but only 60 that are public that are valued more than five.

   25. DFDavid Friedberg21:53

       Mm-hmm.

   26. DSDavid Sacks21:54

       And here's what's crazy. There are 400 companies who have an average valuation of three billion, and then there are already 70 companies in the public markets where they have a billion dollars of next 12 months of revenue. And it just goes to show you, to your point, Freiberg, if these folks have to generate an 11% hurdle rate, their cost of capital is 11%, the companies on the left will have to go through a lot of very difficult cost cutting, potentially headcount reductions, you know, repricing of the product, all kinds of things-

   27. DFDavid Friedberg22:33

       And many of them have.

   28. DSDavid Sacks22:34

       ... so that they-

   29. DFDavid Friedberg22:34

       Yeah.

   30. DSDavid Sacks22:35

       No, not... none of them have.
5. 35:28 – 54:04

   Macro trends, big tech freezes hiring, how founders can think about the last 3 years and the next 3 years

   1. CPChamath Palihapitiya35:28

      So there is news this morning that we added 261,000 jobs in October, and obviously given that there's an election in a few days, then, you know, the administration is eager to point to this, but if you dig a little deeper in the report, I just posted the link there, you see in the raw numbers that there's actually 328,000 fewer employed Americans, and the number of unemployed Americans actually increased 306,000, so... And the labor force participation rate declined for the third consecutive month to 62.2%. So, like, I don't really understand, like, how all these numbers add up, but the point is, like, the data is very mixed, starting to... And it... And there's-

   2. JCJason Calacanis36:07

      Very mixed.

   3. CPChamath Palihapitiya36:07

      ... definitely negativity in there.

   4. JCJason Calacanis36:09

      Very mixed.

   5. CPChamath Palihapitiya36:09

      And this feels to me like the last gasp of the bull market where there's, like, this residual job creation, but you look at, like, just what's happened in the last week, where it's stripe cutting. I mean, Stripe's probably the single highest quality, I think it's probably the most valuable private company in Silicon Valley.

   6. DFDavid Friedberg36:27

      No, it's SpaceX.

   7. DSDavid Sacks36:28

      Yeah, it's... No, it's SpaceX.

   8. CPChamath Palihapitiya36:28

      Yeah. Well, SpaceX, okay, but, but, like, software, pure software company, they had a 14% cut. You're starting to see now the rifts really start to pile up.So I think we're at the beginning now of a long cycle of the unemployment rate going up. I mean, it just feels like the economy is slowing so fast, the markets are, you know, they've been puking now for six months. It just feels like this is the beginning of a, like, really serious recession.

   9. JCJason Calacanis36:54

      Yet we had GDP growth, yet we had job, uh, openings increase.

   10. CPChamath Palihapitiya36:58

       Well, no, remember, we had two quarters, we had two quarters of net negative GDP growth.

   11. JCJason Calacanis37:02

       Right.

   12. CPChamath Palihapitiya37:02

       This is when we had the debate about what a recession is.

   13. JCJason Calacanis37:04

       Yeah.

   14. CPChamath Palihapitiya37:05

       It, it was true that if you looked at growth in nominal terms, it appeared to be strong, and then it was net negative once you subtracted the inflation rate. You know, w- we said several months ago, my prediction was a double-dip recession, where you had this shallow technical recession, then a bounce back in Q3, but now I think we're headed into the second part of it, which is the real recession, a recession characterized by joblessness. And you're starting to see economists say we're gonna go from three point something percent unemployment rate to, say, 5 or 6% unemployment next year. So I think we're just beginning to see the, the job cuts start to add up.

   15. DSDavid Sacks37:40

       This is, I think this is what Powell meant, which is, you know, he'll take it as far as it takes, and then he can fix it on the backend by reintroducing, you know, quantitative easing and reintroducing lower interest rates to stimulate demand. But there's resolve-

   16. CPChamath Palihapitiya37:56

       What are the, what are the odds he gets this right? It seems to me that the Fed has a habit of reacting too slowly. They were too slow to react to inflation. My guess is that they'll be too slow to react to the recession. So we'll end up with a period of rates being higher than they should too long, and then they will correct, they will drop rates, but that could be two years from now, and meanwhile we could be in a pretty deep recession.

   17. JCJason Calacanis38:18

       I think you're probably right.

   18. DSDavid Sacks38:19

       Here are the two charts for you to look at, the GDP, uh, by quarter, and then after that the f- labor participation rate. So there's your GDP, Q1, Q2 being negative, Q3 bouncing back, we'll see what happens in Q4.

   19. JCJason Calacanis38:31

       You know, the odd-

   20. DSDavid Sacks38:31

       And here's your fed force participation rate for labor, as we discussed. The thing with the labor participation rate that we're still not sort of, like, truly factoring in is, like, you know, we had a million Americans die because of COVID, and, you know, starting in that Trump presidency, we lost, like, seven or eight million immigrants. So those eight million people have a huge effect on this number.

   21. CPChamath Palihapitiya38:52

       Yeah.

   22. DSDavid Sacks38:52

       Right? And it's not properly really factored in, because if, if, if you see that at the start of the Trump presidency, it's just, it's, it just fell off a cliff, basically.

   23. JCJason Calacanis39:01

       And you also have people who retired early, that was a big trend, and this all peaked in 2000, labor participation hitting that, like, 67, 68% I think is the peak, and just slowly going down as Boomers retire early 'cause they made so much on their 401Ks and homes. And then, you're, you're right, Chamath, we've had negative... We- we've really cut immigration in the last, whatever, five, six years now in a row. I do think, I think there's an element in here that's missing on how much people individually are finding other ways to earn income that doesn't qualify- That's big.

   24. CPChamath Palihapitiya39:31

       ... and show up in the labor force numbers. People have set up Etsy stores. Shopify stores have tripled since COVID. People are making more money on YouTube, on Instagram, on TikTok than ever before. There's a whole new class of work that revolves around the individual creating, um, their own business, creating their own income stream, that's simply taken off, and has taken off... It was, it was kind of a trend pre-COVID, but it really took off during COVID. And there's an element of this that's really more about the transition of how people work and how they earn that isn't reflected in these numbers. I don't think that the idea that everyone should go be an employee at a company is necessarily the right way to think about labor going forward. Look, the amount of money that individuals are earning is probably the better way to frame this up going forward and, and really thinking about the earning power and the economic health of this country.

   25. JCJason Calacanis40:25

       This is something, uh, important you're bringing up here. Gig workers are about 9% of the, uh, workforce, and, uh, Uber and Dara had, um, they, they grew over 70% this year, but I think the big number that I watched for was drivers were making $36 an hour in the United States working for Uber, so you're exactly right. People are finding other options, whether it's DoorDash, Uber, Etsy- And that doesn't qualify in labor force, right? Because they're independent contractors. No, it does. They're con- Independent contractors are counted, yeah. Um- They are counted. I- that's based on my preliminary research. Uh, if somebody wants to fact-check us, that'd be great, but I- my understanding is independent contractors, which is what gig workers are classified under, are counted in labor participation. I don't know how they're counted. So, uh, we'll, we'll look that up and figure that out.

   26. CPChamath Palihapitiya41:09

       There was a story in BBC that the Bank of England has now warned that the UK is facing its longest recession since, uh, records began. Some of this is getting to be fear porn. (laughs)

   27. JCJason Calacanis41:21

       Yeah.

   28. CPChamath Palihapitiya41:22

       But look, here's what I think is scary about going into a recession is, number one, you don't really know how long it's gonna take to get out. We know the average recession lasts about 18 months, but the truth is once it starts you just don't know. And the second thing is you don't really know who's been stress tested. People claim that they can weather the storm, but the truth is that un- there's no, there's no way to simulate, truly simulate a stress test. They claim they can, but the only way is to really subject, you know, an institution to that pressure and that stress, and then you see if they come out the other side. So that's the issue is you're just going into this, it's, there's, there's all- there's a lot of unknown unknowns. And, and this is why I would just urge founders to be cautious is because if the recession ends up being shallower and shorter than people expect, great, you'll be surprised to the upside. But if the recession ends up being deeper and, and longer than expected, you don't wanna go out of business. You wanna be protected against that. So again, you know, we've been saying this since February and May, but again, I'll just reiterate, I think it really makes sense for founders to be conservative, prioritize your survival above all else. You know, this recession probably will last about two years. You wanna make sure you survive it. And to Chamath's point, if you survive it with lower growth, that's fine. You can keep growing on the other end of this thing. But if you go out of business...... because you grew too fast, then you're not gonna get the chance to fix that problem when the recession is over.

   29. DSDavid Sacks42:44

       I just don't see anybody rewarding hypergrowth that is burning a ton of cash where you have to be back in market every year because it's- it's just very hard to feel comfortable that the conditions on the field aren't gonna be drastically different a year from now, right? It's not like we know that it's gonna be better or worse, and I think that that uncertainty is actually really bad for companies. So to your point, it's just, like, a lot of folks have tried to shy away, David, from actually revisiting their valuations. They've done these complicated converts and they've- they've tried to basically, you know... It's- I think it's sort of like managing their ego or the board's ego, and I think, like, the next shoe to drop has to be these founders and these boards just saying, "Okay, let's just take the hard medicine. What's the real, you know, market-clearing price in valuation? Let's get a third party to price it, and let's get new, fresh equity and then move forward." Because if you don't do that, and you wait until everybody's trying to do it, then it's gonna be a really tough scenario. So better, to your point, you know, this is why, like, Stripe, it's so smart. Better to cut now. Again, it's always hard to let people go, but it's better to do that now than 18 months from now, because you just have no idea how much more expensive or hard it's gonna be then. And who's gonna even be in the business of lending money or investing money in 18 months? And, you know, that- that sounds pretty crazy but it's- it's like, I think that that's- that's the moment that we're in.

   30. JCJason Calacanis44:15

       To your point, uh, Friedberg, I did a little research here and, um, according to the Fed of St. Louis, if you counted, uh, casual workers, informal workers, over... Doing t- over 20 hours a week of informal work, AKA gig work, you would increase labor participation between a half point and a point if you counted all of them, maybe even, uh, slightly more than two percentage points higher. So probably about a point, uh, seems like a realistic way to look at labor participation and of the-
6. 54:04 – 1:17:32

   Midterm election preview, understanding the shift toward populism

   1. JCJason Calacanis54:04

      All right, everyone, let's talk about the midterms. A lot of big, uh, Senate races and obviously governors. Uh, Pennsylvania, Georgia, Arizona, Wisconsin, Ohio, all really important races. Sax, what do you think?

   2. CPChamath Palihapitiya54:20

      Well, it looks to me like there's gonna be a Republican wave. There was an interesting article actually on CNN where they... It's called Five Scary Numbers for Democrats. And what they point to is that Biden right now has a 42% approval rating. 61% of the American people say he hasn't focused on the key problems, so this is called the Out of Touch Index. 51% say the economy is the number one issue compared to only 15% for abortion, and then 78% say we're on the wrong track. I don't think I've seen a right track, wrong track index that was so negative.... and 75% of the country says we're in a recession. So, you know, when you look at polling numbers like that, it must translate, I think, into a Republican wave, and you have now Real Clear Politics currently has the GOP gaining four Senate seats. So winning in Arizona, Nevada, Georgia, and New Hampshire, that's a big change from just a couple weeks ago, and winning 31 House seats. So this is, this is kinda what it's looking like right now. But look, the, the, the margin is still within the, within the margin of error on the polling. So Nate Silver's pointed out that within one standard deviation, you could either have a Republican wave or you could have basically the Republicans fizzle out. So it's gonna be very close, but ultimately, I think this breaks Republican.

   3. DSDavid Sacks55:41

      Yeah, the... To me, the way that I've, I, I'm looking at it right now is that it seems like most scenarios, the Republicans will have the majority in the House, and the real question is what happens in the Senate. It's really, really kind of a coin flip, and that's gonna be really interesting to see. So, you know, things where I thought would break Republican in the Senate, like Pennsylvania, are now back to almost a, you know, a statistical dead heat. So it's a really interesting moment, actually. It's, uh... But most scenarios, David, I think you'd agree, is that the Republicans win the House, and then there's a non tr- there's a plurality of scenarios where they also win the Senate.

   4. CPChamath Palihapitiya56:21

      The House will almost certainly go R- Republican, but I think the Senate now, the, the official percentages are 55% likely to tip Republican, but I- I just think that in a wave year like this where the wrong track sentiment is so high, I think all these races that are a dead heat, they're more likely to break in one direction as opposed to, like, a random distribution.

   5. DSDavid Sacks56:41

      Right.

   6. CPChamath Palihapitiya56:41

      Which is why I think you could just as easily end up with an- you know, instead of it being a 51-49 Senate, it could be 55-45 'cause all these things could break the same way. So right now... So I, I, I would slightly disagree in Pennsylvania. I think Oz has improved as a candidate. Fetterman did that debate, and since he suffered that stroke, he kinda came across as somebody-

   7. JCJason Calacanis57:03

      But h- how do we feel about that? That, I, I, I had very... Very hard to watch that happen and... Yeah.

   8. CPChamath Palihapitiya57:10

      I mean, the guy, the guy has suffered a stroke and it's sad, but he, you know, he doesn't present as someone who can be a senator right now. I think Oz is gonna win that race-

   9. JCJason Calacanis57:16

      What does the science say about that? Like, are we as a society... Is this a good idea to have somebody post-stroke be in office? I'm not picking any political side here, I'm just talking about the medical issue.

   10. CPChamath Palihapitiya57:26

       Oz is actually doing the right thing right now, which is he's not actually focusing on that issue because it's so obvious. He doesn't wanna be seen as beating up on Fetterman and instead he's focusing on-

   11. JCJason Calacanis57:35

       No, of course not. As a human, yeah.

   12. CPChamath Palihapitiya57:36

       He's focusing on the issues. And actually, Fetterman's issues are very unpopular in a state like Pennsylvania.

   13. JCJason Calacanis57:42

       Mm-hmm.

   14. CPChamath Palihapitiya57:42

       So I actually think for both reasons, Oz is gonna win that. I think Fetterman's manifestly unqualified, but also I think his positions are fairly unpopular. So I think Pennsylvania will, will, will almost certainly tip Republican.

   15. JCJason Calacanis57:54

       So let me pull up the chart here just so people can see.

   16. CPChamath Palihapitiya57:56

       Ohio is going Republican. And then Arizona, I think, is really the interesting one where Blake Masters is now tied. After being behind Mark Kelly throughout this campaign, he is now tied in new polling at 47-

   17. JCJason Calacanis58:09

       He's tied now?

   18. CPChamath Palihapitiya58:09

       Yes, he is tied.

   19. JCJason Calacanis58:09

       Oh God, he's so unpopular. Your guy is really unpopular and now he's tied?

   20. DSDavid Sacks58:14

       It's the Peter Thiel-

   21. CPChamath Palihapitiya58:14

       He was never that unpopular, JCal.

   22. DSDavid Sacks58:15

       It's the Peter Thiel wave.

   23. CPChamath Palihapitiya58:15

       That was your interpretation.

   24. DSDavid Sacks58:17

       It's the Peter Thiel wave.

   25. JCJason Calacanis58:18

       Well, no, but he was- he was doing really poorly, I think, because he was anti-choice.

   26. CPChamath Palihapitiya58:20

       Blake- I think Blake is gonna- I think... Listen, I think that- I think that Arizona's probably gonna be the closest race in the country and it's gonna be a nail-biter, but I think Blake's gonna pull that out.

   27. DFDavid Friedberg58:29

       Sax, what do you think are the biggest policy shifts that take place in this country post this predicted red wave? Is there anything that changes? So just, you know, t- talk to folks about what's on the docket from a legislative point of view going into the next Congress with all these new candidates.

   28. CPChamath Palihapitiya58:48

       The reality is we have a separation of powers in this country, and you're gonna have divided government. The Republicans will, will control Congress. The Democrats will control th- the presidency, and so as a result, you're gonna be largely in a gridlock situation. But gridlock may be a lot better than what we've had over the last couple of years. So, you know, you've had basically this orgy of spending and money printing, and I think that's gonna stop obviously. The other thing that's gonna happen is Republicans may not be able to pass much legislation, but they're gonna be able to do investigations, and there's a lot of questions that need to be answered, I think, about- still about COVID. You know, th- these lockdown policies that we had that started at the top at NIH, why did they happen? We need to start having accountability for some of these horrible decisions that were made during COVID, and there's been no willingness in Washington to hold anyone accountable. At a minimum, they need to have some Congressional investigations and find out why we pursued such bad policies over the last couple of years.

   29. DSDavid Sacks59:41

       By the way, did you see- did you see what happened, uh, this week where the CDC, you know, after this entire opioid epidemic and all of these, um, lawsuits, the CDC came out and actually said, "Hey listen, we need to really make sure that we're getting access, putting opioids in the hands of Americans who are really suffering with pain management and whatnot." And I didn't read the article to really understand the details, but I just thought it was an incredible headline where it's like- it's just sad. It's so counter to the narrative of what we've been told is happening, which is like, you know, over-prescription and misprescription. Um, so-

   30. JCJason Calacanis1:00:14

       If we learned anything during COVID is to question every organization, everybody, and to really collect your own information while, you know, looking at these organizations we trusted over time. I- I know I look at the world differently now that you couldn't say COVID was possibly a lab leak without having your podcast taken down or being banned on YouTube. And now ProPublica has done an investigation and they're saying, along with Vanity Fair, and they're gonna win a Pulitzer for this, I bet, that this conspiracy theory from two years ago is probably actually the leading theory in that- in that the-

Episode duration: 1:28:50