E105: Tech culture wars: Elon vs. SBF, Sabotaging Republicans with Trump

1. 0:00 – 2:19

   Bestie intros!

   1. CPChamath Palihapitiya0:00

      Can I tell you a funny story? So, I, uh-

   2. DSDavid Sacks0:01

      Please.

   3. CPChamath Palihapitiya0:02

      ... I was in, I was in (censored) , and then I, when I landed there was a, an, uh, a system message on the plane, and then, uh, the pilot texts me like, "Hey, bad news. We're not gonna be able to take you to (censored) tomorrow. There's an error message and if we can't resolve it, we can't fly." I said, "Okay." So, I text Saks, I'm like, "Hey, dude. I'm in a really tough spot. Is there any way that I, you know, I could catch a flight, you know, with you tomorrow?" Absolute dead silence.

   4. DSDavid Sacks0:33

      Uh-oh.

   5. CPChamath Palihapitiya0:33

      Three hours later, Paul, Pilot Paul texts me and says, "Good news. (Censored) cleared us. We're going tomorrow." I text Saks right away. "Hey, no worries. It's all resolved." In eight seconds, he responds, "Awesome!" With an exclamation mark. (laughs)

   6. DSDavid Sacks0:46

      (laughs)

   7. JCJason Calacanis0:46

      Yeah, yeah. No, he texted me like, also-

   8. CPChamath Palihapitiya0:49

      (laughs) He had zero intention of bringing me and my family with him.

   9. JCJason Calacanis0:53

      No.

   10. CPChamath Palihapitiya0:53

       Zero.

   11. DSDavid Sacks0:53

       I filibustered.

   12. JCJason Calacanis0:54

       He filibustered.

   13. CPChamath Palihapitiya0:55

       (laughs)

   14. DSDavid Sacks0:56

       (laughs)

   15. JCJason Calacanis0:57

       No, the truth is, the plane was with me, I was using it. I'd be happy to let you borrow the plane if I'm not using it. Here's Saks the last time we went to dinner. Ready? The check comes, Miller and Luxe lands on the table. Here's Saks. What you're seeing, see that? You know what that is? Saks going for his wallet. You can just count it.

   16. CPChamath Palihapitiya1:12

       (laughs)

   17. JCJason Calacanis1:12

       It's almost there.

   18. DSDavid Sacks1:12

       It's ironic because I- I can't remember the last time-

   19. JCJason Calacanis1:14

       He's going, he's almost there.

   20. DSDavid Sacks1:14

       ... I can't remember the last time you picked up a check, J Cal.

   21. JCJason Calacanis1:17

       What are you... Every time, I pick it up on the way in.

   22. DSDavid Sacks1:19

       Maybe for a slice of pizza.

   23. JCJason Calacanis1:21

       (laughs)

   24. CPChamath Palihapitiya1:21

       Come on. Saks is one of the most generous people I know.

   25. DSDavid Sacks1:24

       I remember we went to a bar once. We barely had time to get a glass of still water, a Diet Coke, and some of the free nuts.

   26. JCJason Calacanis1:32

       Yeah.

   27. DSDavid Sacks1:32

       And then J Cal was like, "Guys, it's on me." But we already did, so.

   28. JCJason Calacanis1:34

       (laughs)

   29. CPChamath Palihapitiya1:35

       I didn't, I pulled out a 20, I gave it right to the bartender.

   30. DSDavid Sacks1:37

       (laughs)
2. 2:19 – 26:07

   Trump announces 2024 presidential bid

   1. ICIntro/Outro Narrator (All-In soundboard clips, voiced by Jason Calacanis)2:19

   2. JCJason Calacanis2:19

      All right, everybody. Welcome to the All In podcast. We're Still Here, uh, episode 105. I don't know if you saw, boys, last week the pod hit a new high watermark, 16th overall in the world. So, congratulations.

   3. CPChamath Palihapitiya2:32

      That's incredible.

   4. DSDavid Sacks2:34

      I thought we peaked at 14, actually.

   5. JCJason Calacanis2:35

      Was it 14?

   6. DSDavid Sacks2:36

      It was 14, yeah.

   7. JCJason Calacanis2:36

      I don't know.

   8. CPChamath Palihapitiya2:37

      People listen to this pod?

   9. DSDavid Sacks2:38

      When I was in DC this week, I had a bunch of meetings and so many of the, of the staffers listen to the pod. And they came up to me, they're like, "Hey, love you guys. Listen every week. It's really great." It's really crazy actually, the reach of this thing. It's really cool.

   10. JCJason Calacanis2:52

       Now, when you were in DC, how gleeful were they about Saks' absolute shellacking last week?

   11. DSDavid Sacks2:59

       (laughs)

   12. JCJason Calacanis2:59

       That must have been high fives all over. The Dems, like, they won twice. Trump announced and Saks lost.

   13. DSDavid Sacks3:05

       Listen, we, uh, we talked a lot about- How nervous are they about SBF and how much money he gave them in order to, to stop that red wave?

   14. CPChamath Palihapitiya3:12

       (laughs)

   15. JCJason Calacanis3:12

       Whoa, oh, oh, oh. Ready to-

   16. DSDavid Sacks3:13

       Whoa, take it easy. I talked to, I talked to a lot of fukes- folks, and what I would say is we talked a lot about energy policy, life's-

   17. JCJason Calacanis3:21

       Hmm.

   18. DSDavid Sacks3:21

       ... life sciences, obviously two areas that I invest a lot of money in, and foreign policy and, um, actually, David, you'd be surprised about how many fans you have there.

   19. JCJason Calacanis3:29

       Cool. Well, I mean, like General Milley, like we talked about last week, he's come around. Jake Sullivan just this week said that, he told the Ukrainians it was reported that they can't have Crimea back, get realistic. So, Jake Sullivan and Milley are like the voices of reason now-

   20. DSDavid Sacks3:44

       Yeah.

   21. JCJason Calacanis3:44

       ... in the administration on this, and they're just saying the same thing I've been saying, for which I was excoriated by the foreign policy establishment. And I got into a little Twitter spat with Ian Bremmer this week, 'cause all of a sudden, he posted, "Oh, everybody has been privately saying that we need to negotiate." No, no you haven't. You were criticizing, you were denouncing Elon as a Kremlin agent when he posted that Twitter poll suggesting that the Ukrainians should negotiate. So, you were publicly denouncing those of us who were calling for negotiations. And now all of a sudden you're saying, "Well, this has always been the position." But I think what's significant about that is, the guy is just a weather vane for the blob, and the foreign policy establishment.

   22. CPChamath Palihapitiya4:24

       (laughs)

   23. JCJason Calacanis4:24

       And so the weather vane is now pointing towards negotiations. So that- that's the good news here.

   24. DSDavid Sacks4:28

       Do you think that if, uh, DeSantis wins the presidency, you will be nominated as, uh, Secretary of State?

   25. JCJason Calacanis4:34

       (laughs)

   26. DSDavid Sacks4:34

       (laughs)

   27. JCJason Calacanis4:34

       Treasury? What would you take? Treasury?

   28. DSDavid Sacks4:36

       No, no, no, no.

   29. JCJason Calacanis4:37

       Secretary of State?

   30. DSDavid Sacks4:37

       State, State.
3. 26:07 – 59:03

   Each bestie names their most important policy issue

   1. JCJason Calacanis26:07

      Democrats.

   2. DFDavid Friedberg26:07

      Let's go to number one issue for each person. Hold on. Number one issue for Friedberg is fiscal responsibility. I was going to say the same thing. It is my number one issue in this next election. I wanna see austerity, fiscal responsibility, and get this spending under control so that our kids do not inherit, you know, stagflation, hyperinflation, or whatever cocktail of disastrous economic policies we are handing to them. What is your number one issue, Sachs, for 2024? If you had to pick a number one issue, what would it be for David Sachs?

   3. JCJason Calacanis26:35

      Look, I think it's simple. The president's job is to ensure peace and prosperity, so you guys are talking about the prosperity side. I think we do need fiscal responsibility. We need to have a good economy. There's, like, a bundle of policies that go into that, starting with, I think, greater fiscal restraint. And then on the peace side, I think we need to adjust America's foreign policy to be less interventionist. We're, you know, we're involving ourselves here, there, and everywhere all over the world, and I, I'm hopeful that what I'm hearing out of the administration in the last couple weeks, from Jake Sullivan, from Milley, these are some good things that I'm hearing. But, you know, uh, I would like to see us dial back on the foreign interventionism.

   4. DFDavid Friedberg27:14

      If you had to 60/40 that or whatever, is, is one more important than the other? Are they both equal? And then we'll go to Chamath. Both equal for you? Which one's more important?

   5. JCJason Calacanis27:20

      I mean, they're both, they're both, I mean, look. H- h- how can you have a successful United States if we're either in a recession or at war? You don't want any, either of those situations.

   6. DFDavid Friedberg27:30

      Okay, so those are your top two, equally? What is it for you, Chamath? What, what, what, what are the three, which three are you most-

   7. JCJason Calacanis27:33

      There, there's also a third one, which is culture, J-Cal.

   8. DFDavid Friedberg27:36

      Hmm.

   9. JCJason Calacanis27:36

      So, this one's a little bit harder to categorize, but I do think culture matters. And, you know, I want us to have a culture of excellence. I want, in the schools, for example, I think schools should have grades. They should have advanced math.

   10. DFDavid Friedberg27:48

       What?

   11. JCJason Calacanis27:48

       We should hold our kids to a high standard. I think that we wanna have sa- cities. We wanna, you know, have cities where crime's not out of control. Uh, we need to have, you know, a sound border policy. So, I think there's, like, a collection of policies there under, you know, schools, crime, border that are sort of broadly cultural, I guess. But, uh, or maybe you could call them quality of life issues.

   12. DFDavid Friedberg28:10

       Hmm.

   13. JCJason Calacanis28:10

       So, you know, yeah, we need to have a good economy. We need to stay out of foreign wars, but also we need to have a high quality of life.

   14. CPChamath Palihapitiya28:16

       Can I steel man something for you?

   15. DFDavid Friedberg28:18

       Please.

   16. CPChamath Palihapitiya28:18

       'Cause I, I really agree with those three things, David, that you said, but I've, I've spent a lot of time thinking about this and my formation is that there's one thing that allows us to solve all three, if you bear with me for a second, and I think that that is the energy independence of the United States. If you look inside of what's happening in the US today, the cost of generating energy is effectively as cheap as it's ever been, and as close to zero as it ever has been, and it's only gonna get cheaper. The problem that we have is that we have all of these decrepit laws and infrastructure and regulatory capture that causes us to always be in an imbalance and as a result, we do all kinds of crazy things. We borrow enormous amounts of money to create subsidies. We go and we fight all of these, you know, foreign wars that don't make a, any sense. We wrap the energy problem in set in climate change language, which causes this cultural division. But my belief, quite honestly, is that the, the reason the IRA was so important is as, it is the most clarified piece of legislation we've seen that essentially puts all forms of energy on a level playing field and has the chance to get America to permanent energy independence. And if the cost of energy is zero and we can abundantly create it in the United States, what I think happens, David, is we have energy to rebuild our supply chain much cheaper, so inflation gets under control, we don't borrow as much. We have a completely different lens on foreign policy, so that this interventionism and fighting over resources is much harder to justify, and we put the climate change language aside and we use energy independence as a form of national security, which gives us the courage to battle all these other cultural taboos that we otherwise have to say we agree with, even if they don't necessarily make any sense. And there's a bunch of them. So, I don't know. My, my, my, my answer to your question, Jason, is that one thing, if we accomplish in the next five to ten years, has a chance to really change the course of the United States.

   17. DFDavid Friedberg30:20

       Right, and then Bi- so I, I'm guessing, then, Biden's your vote because, if it is, in fact, Biden, because Biden is the one who, who pushed for these-... clean energy tax credits a- and this policy. And it- Freiberg, what do you think?

   18. JCJason Calacanis30:31

       Yeah, but he also canceled, he also canceled our energy independence. I mean, look, we were energy in- independent based on fracking. You may not like fracking, but it did get us energy independent. You may think that there's environmental consequences to it that you don't like and, and that have to be balanced, but we did have energy-

   19. CPChamath Palihapitiya30:45

       I've never been against fracking.

   20. JCJason Calacanis30:46

       Okay.

   21. CPChamath Palihapitiya30:46

       I believe in nat gas. I believe in coal, actually, as a bridge fuel. I believe in all of these things. I believe that these are all more important than going off to all of these foreign lands and trying to justify spending trillions of dollars and putting tens of thousands of American lives at risk, essentially for resources that we can actually create for ourselves at home.

   22. JCJason Calacanis31:06

       Well, I agree with you on that, 100%.

   23. DFDavid Friedberg31:08

       I'm fine with, you know, clean-

   24. I mean, I will tell you, like, I-

   25. ... clean fracking as a way, as a bridge ... Go ahead ... to getting to, you know, more independence through nuclear and renewables. Go ahead, Friedberg.

   26. Like I said before, China's declared that they're building 450 nuclear power plants. The net cost, effective cost of electricity production out of a nuclear power plant is somewhere between one and five cents per kilowatt hour. The US on average is paying 11 to 15 cents per kilowatt hour. Nuclear is just under-

   27. CPChamath Palihapitiya31:34

       No, through utilities, though, Friedberg. That's with all-

   28. DFDavid Friedberg31:36

       Through utilities.

   29. CPChamath Palihapitiya31:36

       ... the regulatory capture and all that trash that-

   30. DFDavid Friedberg31:38

       You have-
4. 59:03 – 1:17:23

   Big tech belt-tightening, activist investor calls out Google, professional-managerial class culture

   1. DFDavid Friedberg59:03

      Speaking of austerity measures, I think, you know, we should just talk right, right up top here about what's going on at Google. Chris Hohn, uh, I believe is how you pronounce his name.

   2. CPChamath Palihapitiya59:13

      Chris Hohn, yeah.

   3. DFDavid Friedberg59:13

      Chris Hohn, he sent a letter to Google and Amazon. Amazon today, after already announcing 10,000 layoffs, they just said again, Andy said, "Prepare for more layoffs in 2023." And these are not factory workers. These are white-collar, high-paying jobs that are being laid off here.

   4. JCJason Calacanis59:31

      They're surplus elites.

   5. DFDavid Friedberg59:33

      Surplus elites. (laughs) Uh, it is definitely a, a part of the zeitgeist right now. So they're gonna reduce headcount massively, but in this letter to shareholders, he points out notably, not just, "Hey, Google needs to do a RIF, a reduction in force," but he points out a, a more granular point that I want the panel to talk about here, which is he says, "Hey, you need to reduce the actual salaries at Google." The average salary being $296,000, 67% higher than an incredibly well-paying workforce, Microsoft. Quote, "We acknowledge that Alphabet employ some of the most talented and brightest computer scientists and engineers, but these represent only a fraction of the employee base. Many employees are performing general, sales, marketing, and administrative jobs who should be compensated in line with other technology companies." And he says, "We need to establish an EBITDA margin target," as you can see in this chart, "and reduce the losses on other bets, perhaps increasing share buybacks as well." So what we're looking at here, now, after Facebook-

   6. CPChamath Palihapitiya1:00:37

      What an incredible business. My God.

   7. DFDavid Friedberg1:00:40

      I mean, the business is nuts. Uh, Freeburg-

   8. CPChamath Palihapitiya1:00:42

      Wow.

   9. DFDavid Friedberg1:00:42

      ... you worked there. What in this rings true to you, uh, or not? And then, how many people-... does Google need to employ to operate the business and invest in the future of the business in your mind? They have 187,000 employees at Google. It's grown 24.5%, rounded up, 25% year over year. They grew 25% year over year in their business. How many people need to run this business to have it aggressively grow?

   10. Look, I think there are, um, two main drivers of the issue that Google, maybe Meta, maybe Twitter, prior to Elon's involvement, and, and really Silicon Valley as a whole, uh, the bigger companies have faced. The f- the first is the war for talent. The war for talent started, I mentioned this last time, around 2004, 2005. Because prior to that, there weren't as many grads coming out of, um, undergrad with computer science degrees, right? I think 10% of, of grads in the Bay Area schools were finishing with computer science degrees. Today, the number is like 60%. So, you know, around that time, the war for talent led organizations, particularly Google, down a path of offering more perks and benefits to their employees to create a workplace that was more competitive. And that ends up being a slippery slope, because then other organizations try and find parody, and then other organizations try and overdo it and push it even further. So this leads to both wage inflation across the, um, uh, the, uh-

   11. Ecosystem.

   12. ... industry. But it's also led to almost, like, the acceptance or the allowance for degrees of complacency. And so I'm not saying that the workforce is all complacent, but I do think that complacency is forgiven, some amount of complacency. "I'm gonna take a Friday off." "I'm gonna take two Fridays off." All of a sudden, I'm not working any Fridays. The other thing that's happened is, as this workforce has aged, I worked at Google 20 years ago, and a lot of the folks I work with, almost all of them now have families. At the time, everyone was young, and as the demographics of Silicon Valley has matured, you have more people that are less about killing themselves and giving everything that they have to their organization, and they're more interested in being with their families and now spending less time at work. Especially in light of the fact that compensation has ballooned to a point that you can now live a very, very comfortable lifestyle. And you don't need to have a big payday in order to be able to take really good care of your family, which was the case as a startup. And then the other issue is just one of innovation. At Google, if you work on a new project and it doesn't work, there's no loss. You still have your job, and they've started programs where they'll give you equity and new startup ideas, or they'll give you all this stuff. So they'll give you upside if you win. They'll give you bonuses if it succeeds, but there's no downside. And so the pain and the burn that you would feel as a startup founder or as someone building a new business isn't experienced or realized. And I cannot, I don't need to tell you guys this, but for anyone else that's listening that may not really be fully aware, the lack of pain, the lack of risk, the lack of downside, the lack of having no safety net and, and falling through the pits removes all, uh, so much of the incentive to succeed and to drive and to innovate, and I think that's become part of the complacency problem that's caused larger organizations to simply say, "Let's throw more heads at the problem." And when you just throw more heads at the problem, you have more of kind of talent war problem that I mentioned, number one.

   13. CPChamath Palihapitiya1:04:16

       What is the average salary? 280,000?

   14. DFDavid Friedberg1:04:18

       300,000 rounded up, yeah. That doesn't incl- I, I don't know if that includes benefits, whatever. Let's just call it 300,000, yeah.

   15. And by the way, that doesn't mean that those people should all get fired. But I think-

   16. No.

   17. ... it speak, it speaks to the fact, I think they're wonderful people, they're, some of my best friends work at Google. It's a great organization. People do incredible work there. But in terms of return of dollars invested, as a shareholder, that's the question. That's the, that's the analysis, that's the scope that the shareholder is looking at is, "Do I wanna spend a dollar to make a dollar five, or do I only wanna spend a dollar where I know I'm gonna get a dollar eighty back?" And so if you just bucketed where the dollar is, are going, you would end up saying, "You know what? I'd rather just focus on the places where I spend a dollar and I get two dollars back or a dollar eighty back, and I don't wanna do any of the stuff where I spend a dollar and make a dollar five back." And that's called ROIC, or return on invested capital, and that includes return on invested human capital. And so the analyst in the stock that, that's an investor in the stock will look at it through that lens. Whereas everyone that's working there is still contributing meaningfully, they're still doing valuable work, but in terms of return on invested capital, a good chunk of the projects are not driving the majority of the value. A minority of the projects, a minority of the head count is driving almost all the value.

   18. CPChamath Palihapitiya1:05:30

       I mean, if you sensitized it to what you said, David, a, if it was just 75 or a half that number, then, you know, the stock goes up 35% overnight.

   19. DFDavid Friedberg1:05:41

       Mm-hmm.

   20. CPChamath Palihapitiya1:05:41

       And if it goes up to the full number-

   21. DFDavid Friedberg1:05:43

       Yup.

   22. CPChamath Palihapitiya1:05:44

       ... the stock goes up 65% overnight.

   23. DFDavid Friedberg1:05:46

       Mm-hmm. I think that's totally feasible. And then, and, and then I think what you do is you take $10 billion a year and you have a high accountability model that you speak to the street about. And you say, "Here's how we're gonna hold ourselves accountable to investing this $10 billion every year and not just have everything be a nebulous 15-year project." And then it's always a 15-year project and you're always just burning cash to, to go after those projects that are highly nebulous.

   24. CPChamath Palihapitiya1:06:11

       If you had to steel man the other side, I think the argument would be... I, I would say they, they would make probably three arguments. Argument number one is like, "Look, don't get overly distracted by other bets because it's a small category of spend and we've contained that cost pretty rationally relative to the rest of the core business." The second thing that they would probably say is, "There's an enormous amount of work that is never seen by Wall Street that explains how good our service is." Whether that's, you know, in, in early iterations of, you know, technical capability like GFS and BigTable, to things like TPU, to things like TensorFlow, and all of that builds up, um, all the things that DeepMind does, all the compute we have to throw against search.... to support that, so I think they would probably say, "Well, people probably don't have a great sense of today that it's not just 25% of the team that's required." And then the third thing is, what they would probably say is, "I- it's very hard to explain, but Google has all kinds of other things that they do for free to create the ecosystem so that the internet works well." You know, I, I heard this one thing where somebody was explaining that Google is like, you know, the, the, the DNS server, right? Google is the time server and all of this stuff they do for free. And all of it is just about making the internet work more efficiently and that has some cost. So, that's probably how they would steel man how to build back up to some number. But it's probably, there's still a gap between that number, David, and what their prevailing head count is.

   25. DFDavid Friedberg1:07:40

       Yeah, I think, I think that's, that's totally true because the infrastructure team led by Urs is the most remarkable engineering organization on planet Earth, in my opinion. And they have laid, um, fiber lines across the Atlantic. They have built their own data center infrastructure, their own switches, their own, um, silicon, like everything is built by this team from the ground up, from first principles and it gives extraordinary moats and advantages to the business. It makes the internet a better place. It allows, you know, ultra-fast, super cheap YouTube video viewing across the internet. I mean, there's just so much of, of these c- core advantages in the business. But if you look at the head count over time, you have to ask yourself the question, you know, how many of these investments that are core are really, you know, captured in the head count that blossomed from 2013, 47,000 people. So that the business has gone up in head count by 4X in the last nine years. One of the things that Jeff Bezos was always so incredible at, and I saw him give a speech on this at one point. Bezos gave a speech that I saw and he said, "We are really good at failing." And he showed all these projects that Amazon tried. And he said, "We tried A9, we tried to do our own search, we tried to build our own cellphone, the Fire Phone. We tried to do this, we tried to do that. When they don't work, we kill 'em." And when they did work, they became 100... multi-hundred billion dollar enterprise value creators for them, like AWS, which was one of these projects. And so Amazon was so good at taking the stuff that wasn't working, knowing when it wasn't working, and ending it. And they were still able to drive an innovation engine. One of the challenges I see with Alphabet is that they are so good at bringing the best talent to work on these innovation problems, but where they're not good is saying, "You know what? This isn't working. It's time to move on." And if they did just that-

Episode duration: 1:47:50