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

Chamath Palihapitiya 0:00 Can I tell you a funny story? So, I, uh-

David Sacks 0:01 Please.

Chamath Palihapitiya 0:02 ... 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.

David Sacks 0:33 Uh-oh.

Chamath Palihapitiya 0:33 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)

David Sacks 0:46 (laughs)

Jason Calacanis 0:46 Yeah, yeah. No, he texted me like, also-

Chamath Palihapitiya 0:49 (laughs) He had zero intention of bringing me and my family with him.

Jason Calacanis 0:53 No.

Chamath Palihapitiya 0:53 Zero.

David Sacks 0:53 I filibustered.

Jason Calacanis 0:54 He filibustered.

Chamath Palihapitiya 0:55 (laughs)

David Sacks 0:56 (laughs)

Jason Calacanis 0:57 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.

Chamath Palihapitiya 1:12 (laughs)

Jason Calacanis 1:12 It's almost there.

David Sacks 1:12 It's ironic because I- I can't remember the last time-

Jason Calacanis 1:14 He's going, he's almost there.

David Sacks 1:14 ... I can't remember the last time you picked up a check, J Cal.

Jason Calacanis 1:17 What are you... Every time, I pick it up on the way in.

David Sacks 1:19 Maybe for a slice of pizza.

Jason Calacanis 1:21 (laughs)

Chamath Palihapitiya 1:21 Come on. Saks is one of the most generous people I know.

David Sacks 1:24 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.

Jason Calacanis 1:32 Yeah.

David Sacks 1:32 And then J Cal was like, "Guys, it's on me." But we already did, so.

Jason Calacanis 1:34 (laughs)

Chamath Palihapitiya 1:35 I didn't, I pulled out a 20, I gave it right to the bartender.

David Sacks 1:37 (laughs)

Jason Calacanis 1:37 That's true, that's true.

David Sacks 1:38 My turn, my turn.

Jason Calacanis 1:39 I got it, my turn. (laughs)

David Sacks 1:44 (laughs)

Chamath Palihapitiya 1:44 (laughs)

Jason Calacanis 1:44 Chemath, you got the, the white truffles and the filet mignon last week.

David Sacks 1:48 (laughs) I think these bar nuts are on me. It's, it's only fair.

Chamath Palihapitiya 1:52 I think some cashews. (laughs)

David Sacks 1:52 Yeah, throw in some cashews too. Throw in the cashews and raisins, a trail mix.

Jason Calacanis 1:56 (laughs)

David Sacks 1:56 I'll get the trail mix- (laughs) ... 'cause you got the truffles last time, Chemath.

Intro/Outro Narrator (All-In soundboard clips, voiced by Jason Calacanis) 2:01 All right. You want to let your winners ride. Rainman, David Sacks. I'm going all in. And I said- We open sourced it to the fans and they've just gone crazy with it. Love you, Sacks. Queen of quinoa. I'm going all in.

Jason Calacanis 2:19 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.

Chamath Palihapitiya 2:32 That's incredible.

David Sacks 2:34 I thought we peaked at 14, actually.

Jason Calacanis 2:35 Was it 14?

David Sacks 2:36 It was 14, yeah.

Jason Calacanis 2:36 I don't know.

Chamath Palihapitiya 2:37 People listen to this pod?

David Sacks 2:38 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.

Jason Calacanis 2:52 Now, when you were in DC, how gleeful were they about Saks' absolute shellacking last week?

David Sacks 2:59 (laughs)

Jason Calacanis 2:59 That must have been high fives all over. The Dems, like, they won twice. Trump announced and Saks lost.

David Sacks 3:05 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?

Chamath Palihapitiya 3:12 (laughs)

Jason Calacanis 3:12 Whoa, oh, oh, oh. Ready to-

David Sacks 3:13 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-

Jason Calacanis 3:21 Hmm.

David Sacks 3:21 ... 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.

Jason Calacanis 3:29 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-

David Sacks 3:44 Yeah.

Jason Calacanis 3:44 ... 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.

Chamath Palihapitiya 4:24 (laughs)

Jason Calacanis 4:24 And so the weather vane is now pointing towards negotiations. So that- that's the good news here.

David Sacks 4:28 Do you think that if, uh, DeSantis wins the presidency, you will be nominated as, uh, Secretary of State?

Jason Calacanis 4:34 (laughs)

David Sacks 4:34 (laughs)

Jason Calacanis 4:34 Treasury? What would you take? Treasury?

David Sacks 4:36 No, no, no, no.

Jason Calacanis 4:37 Secretary of State?

David Sacks 4:37 State, State.

Chamath Palihapitiya 4:38 Saks, if you were offered-

David Sacks 4:39 No.

Chamath Palihapitiya 4:39 ... a cabinet position, would you take it?

Jason Calacanis 4:40 He should. He should take it.

David Sacks 4:41 What you, what you have to understand is that my position on foreign policy, or Ukraine specifically, is not, it's not, uh, it's not adopted by either party. I mean, McConnell and the Senate Republican leadership are very much on board with the Biden administration's policy on this. They are very, very hawkish. It's really the uni-party on this issue. There's really just one consolidated blob.

Jason Calacanis 5:04 Okay, but back to the question. Would you, would it be a dream of yours, would you find great joy in having a White House position?

Chamath Palihapitiya 5:12 To serve your country.

David Sacks 5:13 (laughs)

Jason Calacanis 5:13 When DeSantis goes in.

Chamath Palihapitiya 5:14 To ser- serve your country.

David Sacks 5:15 (laughs)

Jason Calacanis 5:15 Would you serve?

David Sacks 5:17 Would I serve? If, if, if the President of the United States-

Jason Calacanis 5:20 Would you consider it?

David Sacks 5:20 ... calls you up a- and asks you to do something, obviously you have to, you have to-

Jason Calacanis 5:24 You do.

David Sacks 5:24 ... serve your country. But it's not something-

Jason Calacanis 5:26 Mm-hmm, that's a yes.

David Sacks 5:27 ... I'm actively looking for.

Jason Calacanis 5:28 That's a yes.

Chamath Palihapitiya 5:29 What if he asked you to serve as the US Ambassador to Burkina Faso?

David Sacks 5:35 Where? (laughs)

Chamath Palihapitiya 5:37 (laughs)

Jason Calacanis 5:37 What? (laughs)

David Sacks 5:40 (laughs)

Chamath Palihapitiya 5:40 (laughs) The ambassador roles are so funny. It's like, you have to compete for the good ones and then some people get stuck with the bad ones.

Jason Calacanis 5:46 Those are, those are available for purchase.

Chamath Palihapitiya 5:49 Yeah.

David Sacks 5:49 Yeah, exactly. You know, there's like a, there's like a menu of these things, like these ambassadorships, like-

Chamath Palihapitiya 5:55 Yeah.

Jason Calacanis 5:55 Yeah.

David Sacks 5:55 I don't think it's like, written down anywhere but it's kind of like, unspoken. It's like, if you want the ambassadorship to the UK, that's like $10 million. And then, you know, like-

Jason Calacanis 6:05 Affordable for France.

Chamath Palihapitiya 6:05 No, no, no. The, the, the thing with UK and France, it's every, every embassy, every ambassadorship comes with an annual budget.... but the cost of actually running that embassy and really throwing the parties is much more. So for the UK and France, the gap is 10 million a year that you have to fund out of pocket. So you gotta be really willing, you know-

Jason Calacanis 6:25 Right.

Chamath Palihapitiya 6:25 ... to put the money up. Uh, but apparent-

David Friedberg 6:27 Oh, you've gotta pay for the parties? Oh.

Chamath Palihapitiya 6:28 My, my, my friend, my friend was, was the ambassador to the UK, uh, under Obama, and I went to a party there. It's unbelievable. And he has the best life because like, you know, he was meeting everybody in the world you can imagine goes through the UK-

Jason Calacanis 6:40 Huh.

Chamath Palihapitiya 6:40 ... and then wants to meet the US ambassador. It was a great job for him.

Jason Calacanis 6:44 Right. But the money I'm talking about is the cost of buying one of these sinecures. You have to typically raise that much money.

Chamath Palihapitiya 6:50 You gotta bundle. You gotta bundle.

Jason Calacanis 6:50 Yeah. You bundle that much money for whoever.

Chamath Palihapitiya 6:53 Yeah.

Jason Calacanis 6:53 This is what I've heard. I mean, I don't know. This is what I've heard is that-

Chamath Palihapitiya 6:56 Well, does that mean that SPF's parents, if Elizabeth Warren-

Jason Calacanis 6:58 (laughs)

Chamath Palihapitiya 6:58 ... wins the presidency, SPF's (laughs) parents are gonna get some ambassadorship?

David Friedberg 7:02 Right now, the Illuminati right now just revoked-

Chamath Palihapitiya 7:04 (gasps)

David Friedberg 7:05 ... all of our Illuminati cards. We're not supposed to talk about this, guys, uh, that you can buy (laughs) an ambassadorship. But speaking of buying politicians and coverage, uh, (laughs) let's get an update on FTX. So, uh, what was-

Chamath Palihapitiya 7:16 Wait, what about Trump? Speaking of politics, I mean-

David Friedberg 7:19 I know. Uh, you bring it up.

Chamath Palihapitiya 7:20 Do you four talk about it?

David Friedberg 7:21 'Cause if I bring it up, Sa- I didn't wanna tell Sacks in the first five minutes.

Chamath Palihapitiya 7:24 I'll bring, I'll bring it up.

Jason Calacanis 7:24 The only thing I wanna bring up is, is, is-

David Friedberg 7:26 I mean (sighs) . Tilt it up.

Jason Calacanis 7:26 I think I'm entitled to, and I told you so on this. There was a story-

Chamath Palihapitiya 7:29 Cool.

Jason Calacanis 7:29 ... where the FBI said that the reason why Trump kept the boxes in his basement, they've now ... the FBI has definitively said it's 'cause he was just trying to preserve mementos, not try to sell state secrets to the Saudis or something like let, that, like some people were making wild conspiracy theories about. So, J-Cal, it looks like I was, I was right about that. In fact, I think we had that very discussion on this pod.

David Friedberg 7:55 Yeah. I mean, uh, we, I, I said I thought he was keeping it for like keepsakes, like mementos. That was my position too 'cause he's important.

Jason Calacanis 8:01 Oh, really? You didn't, you didn't support this Saudi conspiracy theory?

Chamath Palihapitiya 8:03 Sacks, let me ask, let me ask you a question 'cause I've heard that- (laughs)

Jason Calacanis 8:05 (laughs)

David Friedberg 8:05 I mean, I wouldn't put it past him. He's a maniac.

Jason Calacanis 8:07 I think if you believe that this was about mementos, which the FBI has now said it was, I think you also have to say that the FBI's approach in raiding his home with armed, you know, soldiers was heavy-handed. Now, I'm not saying they didn't have the legal right to do it. I'm sure they checked all the right boxes, but it was heavy-handed. But look, that brings me to another point. Why do they do it? I actually suspect now that what the Biden administration's trying to do is keep Trump in the news. I think they actually want to provoke him.

David Friedberg 8:33 They want him to run. They want him to run.

Jason Calacanis 8:34 They want him to.

Chamath Palihapitiya 8:35 They don't give a-

Jason Calacanis 8:35 It's the exact, it's the exact same thing. Remember the, the 50 million that went into Republican primaries to support the, you know, the, the election denier candidate? Turns out that was a successful strategy for them, as much as I hate to admit it. It's, as reckless as I think that was and hypocritical, because I don't think you can be out there claiming that these candidates are a threat to democracy at the very same time you're funding them. So, I think it was completely hypocritical and sort of Machiavellian, but it worked. And I think in a similar way, what the Democrats are gonna try to do over the next few years is, is keep Trump in the news as much as possible. And in fact, CNN ran his entire speech announcing last Tuesday, I think for this reason.

Chamath Palihapitiya 9:15 If Trump wins the Republican nomination-

David Friedberg 9:17 He's going to.

Chamath Palihapitiya 9:19 ... then he will lose the presidency because if you look at all of these exit polls that came out of these midterms, he's just so massively unfavorable. But, that's not what's going to be, you know, litigated in the primaries. In the primaries, it's just Republican on Republican, and there are a non-trivial number of paths where Trump actually beats DeSantis. And I think that's very scary to the Republicans who wanna just move on and have a chance of actually consolidating power. And it's gleefully blissful for the Democrats because if again-

David Friedberg 9:51 Hmm. (laughs)

Chamath Palihapitiya 9:51 ... and we saw this. Look, if, if, if the Democrats were able to fund and field MAGA candidates in the Republican primaries that then lost in the general election, well, the best MAGA candidate of all is Trump. So it ... David Sacks is completely right. Now, like, the balance of power here should be, if you're the Democrats, whatever you can do to keep him in the news, whatever you can do to induce him to run makes a lot of sense because he will-

David Friedberg 10:18 Let's go.

Chamath Palihapitiya 10:18 ... he'll cripple the Republican Party.

David Friedberg 10:21 Let's go.

Chamath Palihapitiya 10:21 He'll split, he'll split and fracture the vote.

Jason Calacanis 10:23 Yeah, but look at, look at, look at how J-Cal's got a big grin. He's admitting to the hypocrisy-

Chamath Palihapitiya 10:26 Yeah. Absolutely.

Jason Calacanis 10:26 ... which is, for years, he's been-

David Friedberg 10:28 Let's go.

Jason Calacanis 10:28 ... screaming about what a threat-

David Friedberg 10:29 This is your boy.

Jason Calacanis 10:30 Hold on a second. You've been screaming about what a threat-

David Friedberg 10:32 (laughs)

Jason Calacanis 10:32 ... to democracy he is, how he's secretly on the payroll of the Kremlin or foreign governments, and yet, and yet you wanna keep him in the news, you want him to be the nominee-

David Friedberg 10:40 And you Republicans-

Jason Calacanis 10:41 ... 'cause you think ... Hold on a second.

David Friedberg 10:41 ... don't have the common sense-

Jason Calacanis 10:43 Because you think-

David Friedberg 10:43 ... to kick him out of the party.

Jason Calacanis 10:44 No, I do. I do, I do.

David Friedberg 10:45 You're cowards. Kick him out.

Jason Calacanis 10:46 Come on. I was on the DeSantis train before-

David Friedberg 10:48 Yeah.

Jason Calacanis 10:48 ... the midterms election.

David Friedberg 10:49 But you won't kick Trump out.

Jason Calacanis 10:51 And you know that.

David Friedberg 10:51 You w- You on this pod will never kick him out of the party. You should say, "I think we-"

Jason Calacanis 10:56 How am I supposed to kick him out?

David Friedberg 10:56 "You guys should all-"

Jason Calacanis 10:57 How am I supposed to kick him out?

David Friedberg 10:57 "... disavow him." Publicly disavow him.

Jason Calacanis 11:00 How? How? I've already said I support DeSantis. I said it before the midterms. What else do you want me to do? But by the way, I don't think-

David Friedberg 11:06 I'm talking about the party writ large.

Jason Calacanis 11:07 Hold on a second.

David Friedberg 11:07 Writ large.

Jason Calacanis 11:08 I, I think, I think you're, I think you and many other people on the Democratic side in the media are being very hypocritical about this because you want to claim that he's this unique threat to democracy while playing this game where you wanna keep him in the news, you wanna basically provide him with as much-

David Friedberg 11:23 Yes.

Jason Calacanis 11:23 ... oxygen as possible because you think he's more beatable. And by the way, I agree that he's less electable than DeSantis, which is why-

David Friedberg 11:30 Yeah.

Jason Calacanis 11:30 ... part of the reason why I'm on the DeSantis train.

David Friedberg 11:33 Actually-

Jason Calacanis 11:34 I also think DeSantis ... Hold on. I also think DeSantis would get more done. But look, um, I don't think it's a foregone conclusion that he's gonna be the nominee. Did you see the new polling that came out after the midterms? DeSantis is now the favorite in r-

David Friedberg 11:45 Yeah.

Jason Calacanis 11:45 ... among Republican primary voters, among every different slicing that you wanna do of whether-

David Friedberg 11:50 Yeah.

Jason Calacanis 11:50 ... it's likely Republican voters, primary voters, whether it's Fox News viewers and on and on and on. DeSantis is now ahead of Trump by about-

David Friedberg 11:58 Okay, wait, hold on.

Jason Calacanis 11:58 ... 14 points.

David Friedberg 11:58 I need to be able to state my position 'cause Sacks interrupted me seven times.

Jason Calacanis 12:01 Yep, yep.

David Friedberg 12:01 So I just would like to get my position on here. Number one, you all backed somebody who is a horrible human being, who made terrible decisions, and now you guys keep supporting him. At some point, you have to put your foot down and say, "Listen, we don't want this guy." You have to publicly say-... January 6th, you know, and this guy's approach, uh, the election denial. You guys have to come out and just say, "We don't want this person to run." I think you've been hedging too much, I think that's the problem. Now-

Jason Calacanis 12:26 Who has?

David Friedberg 12:27 I am not-

Jason Calacanis 12:28 How can I have been clearer?

David Friedberg 12:28 I think the Republican Party. Yeah. No, you always were a little bit, like... Because I did, I did ask you on this very pod-

Jason Calacanis 12:33 No, no, no, no, no, no, no.

David Friedberg 12:33 Hold on, hold on. Hold on. On this very pod, I asked you, "If he run, would you support him? Would you ever vote for him again?" And you were like, "Well..." And you would vote for him again. If he wins the nomination, you'll vote for him. That's the truth. Republicans will still vote for him.

Jason Calacanis 12:44 Look, you know that before it was popular, before the midterms-

David Friedberg 12:47 Mm-hmm.

Jason Calacanis 12:47 ... I was on the DeSantis train.

David Friedberg 12:48 Yes.

Jason Calacanis 12:48 And I was saying so on this pod for over a year, when it was very unpopular, certainly in the area in which I live.

David Friedberg 12:54 Mm.

Jason Calacanis 12:54 And so, you know... And there are a lot of Republicans now, most Republicans now agree with me on this issue, according to the polling that just took place. Now, as-

David Friedberg 13:02 But if he wins the nomination, you will vote for him?

Jason Calacanis 13:04 Now, as... No, look, the issue, Jason, is that you want us to buy into every bullshit narrative that you've ever told about this issue, about Trump.

David Friedberg 13:11 January 6th is bullshit?

Jason Calacanis 13:12 No, it's-

David Friedberg 13:12 Jake Kell-

Jason Calacanis 13:13 It was an election denials-

David Friedberg 13:14 Jake, let him finish. This is bullshit.

Jason Calacanis 13:14 Let me finish.

Chamath Palihapitiya 13:15 Hey, Jake Kell-

David Friedberg 13:15 I'm gonna interrupt. Let him finish. Let him finish.

Chamath Palihapitiya 13:16 He's interrupting me every two seconds.

Jason Calacanis 13:18 Listen.

Chamath Palihapitiya 13:18 Stay out of it, Freeburg.

Jason Calacanis 13:19 (laughs)

Chamath Palihapitiya 13:19 Oh, I just want you guys to... Uh, guys, I just want you guys to speak and then let the other person speak, that's it. I don't-

David Friedberg 13:23 Okay. (laughs)

Chamath Palihapitiya 13:23 I'm not on any side. Go ahead.

Jason Calacanis 13:24 Listen, my, my point is just-

David Friedberg 13:26 Here we... Oh, here we go again.

Jason Calacanis 13:27 I, I don't, I don't wanna rehash every single thing in the past-

David Friedberg 13:29 Yeah.

Jason Calacanis 13:29 ... but, but look, the, the point is that I think we have more electable candidates. I think we have candidates that would get more done-

David Friedberg 13:36 Yes.

Jason Calacanis 13:36 ... in office. But... And I've already said so. But I, you know, but I... That doesn't mean I believe this whole, like, threat to democracy thing. I think that is massive inflation of the actual threat. But, but look, if you want me to say that we have more electable candidates, we have candidates who will get more done, who frankly would be less alienating to moderates and independents, and could even win over some moderate Democrats the way that DeSantis did in Florida to win by 19 points, yes, happy to say that.

David Friedberg 14:05 (laughs)

Jason Calacanis 14:06 And I've been saying that.

David Friedberg 14:07 I- I will just say if I, if I'm, if I'm... If Freeburg allows me to make a point, I would like to say it is a threat to, to democracy, January 6th and election denial. Those two things are acute threats to democracy.

Jason Calacanis 14:17 Then why did, why did the Republican Party fund over $50 million for those candidates?

David Friedberg 14:21 Cynical, because they wanted to win. Cynicism, pure cynicism. Yeah.

Jason Calacanis 14:24 Okay, we're on the same page about that.

David Friedberg 14:26 Yeah, yeah. It's pure cynicism. Um, but do you... Let me ask you a question, is it? And then we'll wrap on this, because I know it's uncomfortable for Freeburg to watch mommy and daddy fight.

Jason Calacanis 14:32 (laughs)

Chamath Palihapitiya 14:32 (laughs)

David Friedberg 14:32 Um, do you- (laughs)

Jason Calacanis 14:35 You have to turn down the volume.

Chamath Palihapitiya 14:36 It's okay, mom and dad.

David Friedberg 14:36 I know we're triggering some childhood trauma. Freeburg, I know this has to do with-

Jason Calacanis 14:40 You gotta play the mommy-

David Friedberg 14:40 ... some childhood trauma. It's cool.

Chamath Palihapitiya 14:41 Yeah.

David Friedberg 14:42 It's okay. Mommy and daddy still love each other, even if we fight sometimes.

Chamath Palihapitiya 14:46 It just makes me want to turn the volume down. Go ahead. (laughs)

David Friedberg 14:49 (laughs)

Jason Calacanis 14:49 We're almost done.

David Friedberg 14:49 Anyway. I do think fielding moderate candidates is the path, and I, I think, Chamath, you brought this up a ton of times. Who, the... It's the race to whoever can get that moderate middle, and I hope that they field better candidates. But do you think, Sachs, he's running... This is one of the cynical takes, is that he's running because it will help all the legal cases against him. Do you think there's anything to that?

Jason Calacanis 15:11 My guess is that, that they see him as an easier candidate to beat, and they're going to do everything they can to try and keep him in the news. And, and I don't... I actually, I don't think that's your position. I actually think that you're being sincere, that you don't want him to win a second term. I mean, remember, like, we don't know... I think we all believe that we're gonna have a pretty severe recession next year. So, just because the Democrats' cynical strategy in the midterms of promoting, you know, what they called election deniers in the primary, that happened to work. But just because it worked last time doesn't mean it's going to work next time.

Chamath Palihapitiya 15:41 And abortion absolutists and a whole bunch of other things. I think the, I think the point is pretty much this, which is that people gave Trump a lot of credit for being an idiot savant, but it looks like he's more of an idiot savant minus the savant, okay?

David Friedberg 15:55 (laughs)

Chamath Palihapitiya 15:55 This is a, this is kind of a goofball who has a brilliant media strategy, and he had his finger on the pulse in a moment, and then he just couldn't execute, couldn't put two and two together, couldn't put one foot in front of the other. And he was way too divisive, and he got booted out, and he lost fair and square. And now what the Republicans have to realize is if they don't figure out how to field somebody out of the primaries that is tr- different than Trump, the Democrats will win. Because if it is Trump, whoever the Democratic candidate is, I don't think it really matters, we'll crush Trump.

Jason Calacanis 16:31 Yeah. Look, I, I think that's likely correct. I mean, I think, I think that... We talked about it last week, you cannot win the presidency with, call it, 45% of the vote. I mean, Trump is capped at that amount.

Chamath Palihapitiya 16:41 And the scary thing for Republicans, by the way, is Trump does a much better job than anybody else in getting his base activated. So, the thing that all these polls get wrong, and I think they've consistently gotten wrong and, and as a result have underestimated him, is they don't give him the credit he deserves duly for being able to curate a fervent base of that 30 or 40% of America that will show up for him. And even if they didn't show up as much in the midterms, they sure as hell showed up in the primaries for his candidates oftentimes, so I just think it's a very dangerous cocktail that, that you can't sleep on. So, the Republicans have to take this really seri-... If moderate Republicans want to have a chance of winning, you guys have to figure out how to beat Trump in a ground game. Because if his base shows up, he has a decent chance of winning the nomination, but then you will lose the general.

Jason Calacanis 17:32 Yeah, I think that's, I think that's pretty much spot on. I think Republicans really have to be smart and disciplined and think about, we have to nominate the, the most electable candidate. Um, but here, here's the thing, is we're not even debating policy right now. No one-

Chamath Palihapitiya 17:46 No.

Jason Calacanis 17:46 ... no one really says that, "Hey, on a policy basis, there's a huge difference between, say, Trump and DeSantis," or some other folks. It's all about personal style, and is it really worth it to the Republicans to potentially lose the next election based on personal s- based on style points? It's a silly reason to lose. You know, William F Buckley a long time ago said that he would always support the most electable conservative candidate. He didn't always go with the most conservative candidate. He wanted to go with the most electable candidate who met a basic policy bar.... and he sometimes got in trouble for that. For example, he supported Bush 41 over Jack Kemp. I know I'm going back a long way. But, but in any event, you know, having, thinking about electability is just really important.

David Friedberg 18:32 There's one silver lining here. The head of the Republican Party, Rupert Murdoch, has, uh, absolutely dissed Trump. I don't know if you saw the New York Post, but he put (laughs) on the cover of the New York Post-

Chamath Palihapitiya 18:41 Oh my God, it's incredible.

David Friedberg 18:41 ... a little lower, like, tenth. "Florida man makes announcement," and on page 26-

Chamath Palihapitiya 18:46 (laughs)

David Friedberg 18:46 ... he had the announcement of Trump running for president.

Chamath Palihapitiya 18:49 And the funny thing was, the last-

David Friedberg 18:51 You lose Rupert Murdoch!

Chamath Palihapitiya 18:52 He didn't even name Trump as the presidential.

Jason Calacanis 18:55 (laughs)

Chamath Palihapitiya 18:55 The absolute last line of that column, and he said, "Oh, and he also happened to be the 45th president of the United States."

David Friedberg 19:01 Yeah.

Chamath Palihapitiya 19:01 It was very funny to read that.

Jason Calacanis 19:02 What you're seeing a lot of Republicans saying, I think correctly, is that if you wanna win elections, you have to look out the windshield. You know, not in the rearview mirror. And what we saw in the midterms is that even talking about 2020 was, at minimum, a giant waste of time and a distraction, and at maximum, potentially caused these candidates to lose. I mean, the fact of the matter is that, that a lot of candidates, including some I supported, in battleground states, who got lured into trying to re-litigate 2020, they all got vaporized. And I just think it's stupid to be talking about the past. Va- uh, voters want you to focus on the future, and especially when there's no policy outcome that matters, that's at stake. For you to be talking about a past election instead of the future and the current election you're in-

David Friedberg 19:47 Let me ask Friedberg a question, Friedberg.

Jason Calacanis 19:49 ... it's just, it's just politically stupid.

David Friedberg 19:50 Friedberg, if I may bring you into this discussion, uncomfortably as it mi- (laughs) as uncomfortable as it might be, would you vote for Biden? Incredibly old, I don't know, he's gonna be 81 or 82 in the next election. Would you vote for Biden or DeSantis?

20:05 As I go through the list of things I'm most concerned about-

20:08 Mm-hmm.

20:08 ... in the world today, number one is the debt and spending cycle of the federal government, uh, in the US. I'm, uh, I think it, it's the most, kind of, scary set of facts and conditions that we're getting set up for. Kind of a major crisis 10 to 15 years from now because, uh, you can't afford all the debt that we've taken on as a country, as well as the entitlement as well as defense. And so, something's gotta give, and there's a bunch of paths that, that could emerge from that set of conditions that are all really scary paths and n- not good. I'm more concerned about that than I am about nuclear war or climate change, uh, just to be clear. Because I think that the social effects and the, the, the global geopolitical effects that arise from the US kind of destructuring because of our, our, our debt and spending cycle that we're in right now are, are far more significant than what we'll experience over the same period of time. And again, I do think that technology is gonna resolve a lot of our issues with climate change, and I think nuclear war, cool heads will prevail. Everyone's got a family. So, that's what I'm most concerned about. So, any kind of voting decision I make is made with that lens, which is what's the, the best path to supporting some, some sort of step-

21:18 Fiscal responsibility?

21:19 ... setback or step back to resolve those issues. As Charlie Munger said so well in this interview that was published this week, and I, I said it a few times on the show, but he, he did a, he's, he's a much better speaker than I. Uses far fewer words. But, uh, you know, in democracy, eventually the populous realizes they can vote themselves all the money, and, you know, that's what we see happen in an accelerated way in Latin America. We've seen that with a lot of these democracies that ultimately resolve to kind of socialism. And in, in the US, we're seeing a lot of this behavior where we're kind of voting ourselves all the money. We're putting in place politicians and the populous is saying, "I want, I want, I want," and more money comes out. And it, it, um, it totally decreases the strength and the resiliency of our nation and our economy, and it's the most concerning thing to me because the, the incredible e- innovation and economic engine that is the United States is threatened, and it really threatens a lot of stability, uh, in the world today.

22:13 Chamath, any, any final thoughts here as we wrap up the political discussion? Who-

Chamath Palihapitiya 22:17 I, I, I think that when-

David Friedberg 22:18 I- you're obviously a Democrat, so you're voting for Biden, but you also care about fiscal responsibility. So, where are you at with your vote for 2024?

Chamath Palihapitiya 22:25 I don't think that we know who's actually running on either ticket yet, just to be completely honest. So, that's my perspective. My other comment is, I think what David said is so spot on. The single biggest issue that we have is that we have made a huge decision to de-globalize, and that de-globalization has the risk of introducing a hyperinflation loop. And we won't know how bad that is for another year or two.

David Friedberg 22:52 Why would it do that? Why would it-

Chamath Palihapitiya 22:54 Well, think about it this way-

David Friedberg 22:55 ... uh, de-globalization cause hyperinflation? Explain that.

Chamath Palihapitiya 22:56 Yeah, so, so today, let's just say you buy a chip to make the iPhone. You buy that chip from, you know, TSMC that makes it, uh, in Taiwan, ships it to China, and the entire world is serviced with that supply chain that keeps that chip as cheap as possible. Now, with the CHIPS Act as an example, we will build resilient supply chains where now instead of one place, it'll come from six places. Five of those six will be in allied territories. The United States, Western Europe, potentially Mexico. The thing with that is that that now is six acts more equipment that you're buying, right? Instead of one machine, you now have six machines. Instead of one person operating the machine in one country, you have six people in six countries. As you can imagine, when you layer up all these costs, there is no world in which that chip is as cheap as it was before. And so, the cost of that has to be borne either by the consumer who pays a higher price, that's measured as inflation, or by the government who subsidizes it at the point of import, that'll be measured by debt. And so, one way or the other, in our, in our path now towards more resiliency and national security, which by the way I think is the absolute right decision. Okay? Energy independence, all of this stuff we have to do today. We are at risk of a hyperinflationary loop if not managed well.... and so you have to be really on the levers of the economy, and you have to understand it deeply. The person that deserves the most credit of preventing this hyperinflationary loop right now is Joe Manchin and hopefully the history books. Whatever Jay Powell does, I think, has been good, but the fact that Manchin prevented six trillion more dollars of being pumped into the economy in the last two years is probably the single thing that prevented inflation, instead of being peaking at nine, from peaking at 15 or 16. It- I think it would have been a national disaster without that.

Jason Calacanis 25:00 Chamath is right. That extra six trillion that Manchin stopped would have been a national disaster, but let's also give credit to every Republican because they also voted against it. I mean, the fact of the matter is that-

Chamath Palihapitiya 25:09 Yeah, but Manchin, the pressure was on Manchin to do the thing and see the forest from the trees, and he didn't.

Jason Calacanis 25:13 Yeah, no, look. I agree, I, I agree that-

Chamath Palihapitiya 25:15 Profile in courage.

Jason Calacanis 25:16 ... I, I agree-

Chamath Palihapitiya 25:16 That's a profile in courage.

Jason Calacanis 25:17 I agree that he was in the hot seat. Well, so was Sinema, by the way. Sinema didn't go for the three and a half trillion Build Back Better, but then Manchin, you know, went along with the $750 billion version, uh, w- of BBB, which they renamed the Inflation Reduction Act. That was kind of a, a disappointment. So frankly, like, I give more credit to the Republicans. They were against all of it, and the Democrats jammed it through. So, if you're worried about all of this trillions and trillions of unnecessary spending, why don't you give the Republicans a chance?

Chamath Palihapitiya 25:45 No, David, I'm talking, I'm talking about the delta between what was spent and what could have been. The entirety of the gap is really- was prevented by Joe Manchin.

Jason Calacanis 25:53 I know, but it was Joe Manchin siding with the Republicans.

Chamath Palihapitiya 25:56 Okay.

Jason Calacanis 25:56 My point is just-

Chamath Palihapitiya 25:57 So, yeah, w- we got your point.

Jason Calacanis 25:58 ... look, neither party is perfect on spending.

Chamath Palihapitiya 26:00 Yeah.

Jason Calacanis 26:00 They both wanna spend too much money, but at this particular moment in time, the Republicans are more restrained about spending than the

Jason Calacanis 26:07 Democrats.

David Friedberg 26:07 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?

Jason Calacanis 26:35 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.

David Friedberg 27:14 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?

Jason Calacanis 27:20 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.

David Friedberg 27:30 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-

Jason Calacanis 27:33 There, there's also a third one, which is culture, J-Cal.

David Friedberg 27:36 Hmm.

Jason Calacanis 27:36 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.

David Friedberg 27:48 What?

Jason Calacanis 27:48 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.

David Friedberg 28:10 Hmm.

Jason Calacanis 28:10 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.

Chamath Palihapitiya 28:16 Can I steel man something for you?

David Friedberg 28:18 Please.

Chamath Palihapitiya 28:18 '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.

David Friedberg 30:20 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?

Jason Calacanis 30:31 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-

Chamath Palihapitiya 30:45 I've never been against fracking.

Jason Calacanis 30:46 Okay.

Chamath Palihapitiya 30:46 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.

Jason Calacanis 31:06 Well, I agree with you on that, 100%.

David Friedberg 31:08 I'm fine with, you know, clean-

31:10 I mean, I will tell you, like, I-

31:10 ... clean fracking as a way, as a bridge ... Go ahead ... to getting to, you know, more independence through nuclear and renewables. Go ahead, Friedberg.

31:17 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-

Chamath Palihapitiya 31:34 No, through utilities, though, Friedberg. That's with all-

David Friedberg 31:36 Through utilities.

Chamath Palihapitiya 31:36 ... the regulatory capture and all that trash that-

David Friedberg 31:38 You have-

Chamath Palihapitiya 31:39 ... you have to spend. For example, we have to spend $220 billion a year-

David Friedberg 31:42 You have to-

Chamath Palihapitiya 31:43 ... to replace the power lines in America by law. That's $2.2 trillion-

David Friedberg 31:46 I mean, yeah.

Chamath Palihapitiya 31:46 ... just there.

David Friedberg 31:47 Right. And so the cost for solar and wind off grid, I think is around three to seven cents a kilowatt hour, in that range, right? So it gets... Nowadays, it's gotten much more competitive. But I think that the, the nuclear solution is just not even being engaged in the conversation. Now, I wanna go back to the previous point, which is, uh, 'cause I didn't state the numbers before, so I just wanna state them 'cause th- they're so shocking, and this is what, what shocks me. The current, uh, federal debt is $30 trillion. Our GDP is around 23 trillion. 5% interest rates on $30 trillion is one and a half trillion dollars in interest payments alone every year. And our Social Security ... So, so one and a half trillion dollars, I mean, that alone is about 6%, 7% of GDP. So you have to tax every transaction in the country by 6 or 7% just to pay the interest payments on the debt. And then we have Medicare and Social Security

Jason Calacanis 32:43 Sorry, that-

David Friedberg 32:43 ... which are now s-

Chamath Palihapitiya 32:44 That, that math is wrong 'cause you have maturities of all different types with different yield to maturities and different coupons. So that's not-

David Friedberg 32:50 Right. So on fast forwarding, right?

Chamath Palihapitiya 32:51 That's not accurate.

David Friedberg 32:52 So that's ... It's not today's numbers. It's what's happening over time. So as you look out and you look at the, the yield on Treasuries and you apply that to the current debt level and the increment in the debt level, you'll get to that level, right? You'll get to a, a trillion five a year in interest payments that need to be made, plus another, call it, $3, $4, $5 trillion a year in mandatory spending. And so that's where the country starts to run into a problem 'cause at some point, when you have to tax so much to cover the cash payments that need to be made by the federal government, the economy really gets hurt and things start to cripple. And then if you were to take those entitlements away, Social Security, Medicare, you have a real problem with people's ability to support themselves in an economy where they're not working. These are elderly retired people. So the- there is a ma- at work to pay these expensive medical bills. So there's a major crash coming if we don't figure out how to bridge our way to this gap. So if someone wants my vote and they're gonna run for president, they would put up a simple chart like Bill Clinton used to do and show me a 10 to 30-year plan and just say, "Here's where we're headed and here's what we're gonna do to make sure that doesn't happen." And that chart alone, I think, can win the vote.

33:59 Okay. Let's pull up the chart then. So here is the federal debt, total public debt as a percentage of gross domestic product. As you can see in the '70s and '80s, uh, we were at under 50%. The '90s, we started, you know, growing mostly-

Chamath Palihapitiya 34:11 I don't, I don't think this matters. I think everybody-

David Friedberg 34:12 Yeah.

Chamath Palihapitiya 34:13 ... every self-proclaimed intellectual looks at this chart and says, "Oh my God, we've exceeded 100%. You know, the, the empire is gonna go to ruin." That's not why the empire goes to ruin. We have the reserve currency of the, of the world, and there's an enormous amount of power that comes from that position. So what the right number is, is TBD. That's the most honest way to think about it. It was 100. It's at 150. It could, could go to 200. Many countries operate at levels above us and still haven't imploded per se. The real thing is what, part of what Friedberg said, is look, if you really wanna look at what we pay, today we pay $400 billion this year. That's the interest payments, okay? That's when you calculate all of the different maturities we have, with all of the different coupons we have, that's what we owe today. And David is right, mathematically, that if interest rates go to 5% and stay there forever, but we know that that's not how economies work. They ebb and flow. Okay? So the real problem that we have to understand is how do you actually create enough growth and then the next time that we have a meaningful fall in interest rates, like every other person does ... You know, look, a lot of people in America know how to refi their credit cards, refi their home loans, refi their mortgages. The United States could have had a much more aggressive and thoughtful strategy of refiing by pushing out these maturities way into the future. And again, Trump actually suggested that, but because he sounded like a goofball, everybody said, "Absolutely no way." But in hindsight, that one move would have saved us trillions of dollars over the next decade if we had done it. And this time around, we have to have politicians who are smart enough and have the wherewithal to say, "It doesn't matter where this idea came from. It's really smart. Rates are now back to 2% or one and a half percent. Let's now issue 50 and 100-year bonds and let's refi this problem out into the future." That makes a ton of sense and we have to do it.

David Friedberg 36:07 The refi makes a ton of sense. Um, just to pull up a chart here, and to counter your position there that it doesn't matter ... Chamath, maybe you can respond to ... If you look at GDP ratios here, number one, two, and three, Japan, Venezuela, Greece, Sudan and, you know, you know, some smaller countries there, but the United States currently number 12.

Chamath Palihapitiya 36:29 None of these countries, none of these countries ... Look, the e- This entire, this entire world runs on the US dollar complex.

David Friedberg 36:36 Okay.

Chamath Palihapitiya 36:36 Whenever we raise rates, yes, it is true that on the one hand-... our interest payments go up, but proportionately and on a relative basis, he- I think, I think maybe, let me take a step back. Look, one, one of the most important things in investing, which is appropriate here, is that people ask, "What is the price of a stock?" Well, before you go public, you're calculating what the intrinsic value of a company is, okay? All the things that they do, all the money that they make, here's what we think it's theoretically work, worth. But the minute it goes public, the intrinsic value no longer matters. It's what is it valued relative to everything else. Okay? The United States is a relative s- if it's a stock, if all these countries are stocks, we are valued relatively to others, not n- not intrinsically. And the reason why we have so much power is because everybody else is actually valued relative to us. So this is why I think the right thing to look at, Jason, is the rate of change of debt to GDP for the entire G8 or G20 or the rest of the world, and what you'll see is something that goes up and to the right. Nobody in the world has been rewarded for not investing in their populations and sp- and basically borrowing f-f from tomorrow to invest in today's human capital.

David Friedberg 37:52 Okay, so we have a disagreement here. Friedberg, you think this is a major issue, and-

37:55 Yeah, 'cause I think they're also ag- Yeah.

37:57 ... Freeburg, you have the floor.

37:58 I think there's two things that are missing. One is the inflationary effect. So you look that list of countries that are there, they're paying higher interest and they're paying, uh, in the form of inflation, so they have less that they can spend on their people. And ultimately what ends up happening, w- it's just simple arithmetic, it's not about relative value of a currency, it's the arithmetic that we have a check we have to write every month to pay for Medicare and Social Security, and it is written into law what that check needs to be. And the rate at which we're having to write those checks, the, the, the, the increment of those checks is going up so significantly that when you add on the interest payments, and you look at those checks, and then you add on defense, something's gotta give because you cannot raise taxes in the amount that's needed to fund all of that outlay without this causing either, number one, massive, uh, inflation, if you just take on more debt, or number two, you know, significant loss of services, either Social Security, Medicare, or defense. And so something's gonna give. And the, the distribution, I think, is not being discussed.

Chamath Palihapitiya 38:58 Sorry, just one, just one point. The president's-

David Friedberg 38:59 Okay.

Chamath Palihapitiya 39:00 ... budget-

David Friedberg 39:00 Can we, can we- Our counterpoint.

Chamath Palihapitiya 39:00 Anybody who is a president of the United States gets hold of their annual budget, it's about five and a half trillion dollars this year. So you're talking about interest payments that are still less than 10% of their total budget. Now, that includes the entitlement payments. Okay? So it's about $3 billion, 3 trillion, sorry, three and a half trillion is what you have to pay for-

David Friedberg 39:17 No, it's 20%.

Chamath Palihapitiya 39:19 No, $3 trillion is the sum of Medicare and Social Security. Okay? So the president still has one and a half to $2 trillion of leeway, of which a quarter are debt payments. So my, my perspective, quite honestly, is mathematically, there's a lot of room to run here before these things get really out of control. And even if they do, I think the relative problem is for the rest of the world will be so egregious that the ability for the United States to go to those banks and those economies and basically sell in more US debt is quite high, because they cannot afford to own debt in their own country. So if you think that i- the United States is bad, go back to that list. Guess what? Those central banks in those countries are gonna be buying US dollars faster than they can go out of stock.

David Friedberg 40:02 Unless we see some union of India, China, Saudi Arabia, Russia, Japan, Brazil ... obviously not Japan, but some, some of that consortia will become a closer trading partner and perhaps could cause a shift in the balance of the dominance of the US dollar, and that's one path to, to consider.

40:23 Sachs, what do you think of the balance sheet here? Obviously we have two opposing opinions here from Chamath and Friedberg. Where do you stand on the United States' balance sheet? Are we over-

Jason Calacanis 40:30 The balance sheet-

David Friedberg 40:30 ... our skis?

Jason Calacanis 40:31 Yeah.

David Friedberg 40:31 Do we need to-

Jason Calacanis 40:31 The balance sheet's a disaster. What, what are we at, like 130% of debt to GDP? I mean, we have like 30-

David Friedberg 40:37 And our spending ex-

Jason Calacanis 40:37 ... 30 something trillion of-

David Friedberg 40:38 Sorry.

Jason Calacanis 40:39 Yeah, it's not even stable. I mean, we keep adding to it.

David Friedberg 40:41 Our spending is 27% of GDP right now, 27%. It should be 15%. Right? So the spending is-

Chamath Palihapitiya 40:47 Where does that number come from? Why?

David Friedberg 40:48 There's a, I, there's a bunch of economists who have shared these papers that have shown over time-

Chamath Palihapitiya 40:51 They are morons, morons, morons, fake experts.

David Friedberg 40:53 All right, listen.

Chamath Palihapitiya 40:54 Fake experts.

David Friedberg 40:55 Let's let him-

Jason Calacanis 40:55 No, no, no, hold on.

Chamath Palihapitiya 40:55 Okay, so-

Jason Calacanis 40:55 Hold on. Hold on. If you look at-

David Friedberg 40:57 Go ahead, Sachs.

Jason Calacanis 40:57 If you look at government tax receipts over time with all different kinds of tax rates, including very, very different top marginal tax rates, what you see is that a fed- federal tax receipts as a percentage of GDP is in the 17 to 19% range. And like the best years you make 19%. It's usually in a good economy. And in a bad economy, it's like 17%. And it really, it doesn't matter whether Reagan was president or Clint- Bill Clinton and so on. So there's only so much blood you can get from a stone. And historically, spending was around 19% of GDP, and so you would have a 1 or 2%, you know, deficit every year. And that really accelerated. First you had the, the financial crisis of 2008, and then you had COVID. And Friedberg's right, you know, we, we went from, call it, you know, 20% of GDP spending to roughly 30% or more during COVID as kind of this emergency measure, but like everything else in government, you know, the emergency measure becomes a permanent program. So now we're at 27%. It doesn't seem to be going down. And the Democrats won a lot more. I mean, we talked about it. Build Back Better would have been three and a half trillion instead of 750 billion if they had just had one or two more votes to the Senate-

David Friedberg 42:09 Guys, guys, hold on.

Jason Calacanis 42:09 ... which they now have. So ho- so hold on. So, so Friedberg is right. There's like nothing stable about the point we're at. It's, the point we're at is bad on its own terms, having 30 trillion of debt. Let's say that interest rates stabilize at 3%. That's still a trillion a year of debt service, which is more than the entire-

David Friedberg 42:27 It's not a trillion.

Jason Calacanis 42:29 If interest rates stabilize at 3%, which is optimistic, and we're servicing a trillion, sorry, 30 trillion of debt, that's roughly a billion dollars a year of debt service payments.

David Friedberg 42:37 Trillion. Trill-

Chamath Palihapitiya 42:38 Trillion.

Jason Calacanis 42:38 That could be spent-

David Friedberg 42:39 A trillion. A trillion.

Jason Calacanis 42:39 It could be spent on other things.

David Friedberg 42:40 You guys keep saying billion when it's a trillion. (laughs)

Chamath Palihapitiya 42:42 The average yield-

Jason Calacanis 42:43 Sorry, trillions, trillions.

Chamath Palihapitiya 42:43 The average yield to maturity needs to be factored in there, so over a 15-year period, David, you would be right mathematically if all matured.... but that's not what this is, 'cause you re- you'd have to refi and reissue a bunch of debt that is at lower yield right now at these interest rates. I wanna be clear, I'm not in favor-

Jason Calacanis 43:00 I don't actually know if any of this is good. I mean, remember, we- we haven't-

Chamath Palihapitiya 43:02 Hold on, hold on, hold on. I understand.

David Friedberg 43:03 All right. Let Chamath say why it's good or controllable.

Chamath Palihapitiya 43:06 I'm not... No, no, no. I'm not saying that this is a good or it's a trend. What I'm saying is I have this issue that all of a sudden people make up, and you guys are doing it now, an arbitrary number with no rooting in history or fact and say, "This is bad." And all I'm saying is I know it feels bad to us, and I think we would all run this country differently if we could get control of the balance sheet. I would as well. I would try to get debt way, way down. I would try to get deficits way, way down. But all I'm saying is using this justification of an arbitrary number always falls flat. So, I'm encouraging us all, let's find a better model of reasoning because every time-

David Friedberg 43:42 Okay.

Chamath Palihapitiya 43:42 ... we point to some rando's book and say, "127% is bad," nobody listens. And I think the message that you should take away is it's because it's imprecise and it's not rooted in any actual logic. And if there's a better building-

David Friedberg 43:54 But it's not true. The reason I believe that this is concerning is I look at the top 10 countries (laughs) that have, you know, debt ratios that seem out of whack, and I think, "Wow, what has their fortune been for the last 10 years vis-a-vis Japan and Venezuela?"

Chamath Palihapitiya 44:06 That's not the right comparison. The right comparison would be to go back and say, "Look at- look at the British Empire, and when... And what was the debt to GDP when it started to actually fall off?"

Jason Calacanis 44:15 Yeah, the British empire collapsed.

Chamath Palihapitiya 44:15 Does anybody of this know?

Jason Calacanis 44:17 It collapsed.

Chamath Palihapitiya 44:17 No.

David Friedberg 44:17 Okay, Freeburg. (laughs)

Chamath Palihapitiya 44:17 No, I'm saying was it... Was it triggered, was it triggered by debt to GDP? And I think your answer will be-

Jason Calacanis 44:23 In part, in part.

Chamath Palihapitiya 44:24 I feel... Again, I- I just think-

Jason Calacanis 44:25 No, they took on ruinous, they took on ruinous debt, and they couldn't maintain their empire anymore, and the whole thing collapsed.

Chamath Palihapitiya 44:30 I'm just asking for-

David Friedberg 44:31 Okay, Freeburg.

Chamath Palihapitiya 44:31 ... some numerical specificity.

David Friedberg 44:34 All right, listen, let's-

Jason Calacanis 44:35 Does any of you have numerical specificity?

David Friedberg 44:35 We're not gonna get there right now. Freeburg, last word for you.

Jason Calacanis 44:38 The last, the last time that we are-

David Friedberg 44:39 Yes, there is a lot of numerical specificity. There is a ton of work that's been done on this.

Chamath Palihapitiya 44:42 What is the work?

David Friedberg 44:43 It's not people pulling shit out of their ass.

Chamath Palihapitiya 44:45 So, tell us.

David Friedberg 44:45 The work shows that his- historically, the best way to manage the growth in an, in an, in a, in a country is to have deficit spending be equal to or less than the growth rate of the eco- economy of that country. So, for example, if your income, the, the tax revenue that's being generated by the government is equal to, say, 15% of GDP, you do not want your spending to be more than 17 or 18% if the economic growth rate is 2 to 3%. That's it. If you do anything more than that, you're borrow-

Chamath Palihapitiya 45:12 So, what happens?

David Friedberg 45:12 No. If you do anything more than that, you're borrowing from the future to pay for today. That's the simple truth.

Chamath Palihapitiya 45:17 Okay, so what happens?

David Friedberg 45:19 And when you... And, and when you do that, the rates go up, and the prices go up. And eventually, your currency doesn't work anymore.

Chamath Palihapitiya 45:24 What does eventually mean?

David Friedberg 45:25 So, you're make... So, you're making a bet. Read the book that I talked about last year, the, the Ra-

Chamath Palihapitiya 45:29 What book?

David Friedberg 45:29 ... the most recent Ray Dalio book. He goes through six stories with the economic data to prove it, the factual data, the history of what's happened with six empires over the last 500 years where this exact same scenario has played out. This isn't some random arbitrary story.

Chamath Palihapitiya 45:44 Oh, has ev- I read that book? I just wanna be clear.

David Friedberg 45:45 Everyone and everyone in that... E- everyone had the exact same perspective that you have when they were living in those days.

Chamath Palihapitiya 45:49 No.

David Friedberg 45:49 And they said, "You know what? We're gonna be okay 'cause we're the reserve currency-"

Chamath Palihapitiya 45:52 Can, can I-

David Friedberg 45:52 "... and the world loves us. And we're the empire, and we have influence everywhere." And they all lost primacy, and their currencies collapsed, and they all broke apart. And that was it.

Chamath Palihapitiya 45:59 I'm not saying that that can't happen in America. What I'm saying is you get so full throated. I read that book. It's great narrative, but the numbers are brittle. Okay? They're fragile, and they're mostly made up. Okay?

David Friedberg 46:10 Everyone can read it and make their own opinion on that.

Jason Calacanis 46:13 I think I- I-

Chamath Palihapitiya 46:13 So, I'm... I- so all I'm saying is in the absence, in the absence of numerical specificity, I agree with you that this trend is alarming, and it's bad. I agree with you, and I agree that we should spend a lot less. What I'm saying is when you say to the world, "Stop spending because XYZ number is bad," you have no credibility because it's not something that you can actually back up. And all I'm saying is if you could find a better logical argument, you would probably get a lot more people to- you would convince a lot more people.

David Friedberg 46:42 I've shown it to you. You're just being ignorant. You're ignoring it. You're saying you don't wanna actually believe it. The numbers are there.

Jason Calacanis 46:47 (laughs)

Chamath Palihapitiya 46:47 Show me the numbers.

David Friedberg 46:48 And I'm not, and I- and I'm not saying ignorant in a disparaging way. I'm saying you're literally just ignoring the data.

Jason Calacanis 46:52 Show, show me the numbers. Show it to me. Show them to me.

Chamath Palihapitiya 46:55 Sax, they get upset at us for fighting. (laughs)

David Friedberg 46:57 I'll make you a PDF, Chamath. I'll send it to you tonight, I promise. And I'll post it on our frigging thing so people can watch it.

Jason Calacanis 47:03 All right. Well, listen, the, the group chat's gonna be on fire this weekend. Sax, final word for you before we move on. Okay, final word. Okay.

Chamath Palihapitiya 47:08 Final word, please.

Jason Calacanis 47:09 So, so, so first of all-

David Friedberg 47:10 Chamath and I have never gotten into it before like this, but-

Jason Calacanis 47:12 No, it's great.

David Friedberg 47:13 ... we obviously w- obviously, we're on opposite sides.

Jason Calacanis 47:15 I think it's great.

David Friedberg 47:15 I still, I still respect and love you, Chamath. Go ahead.

Jason Calacanis 47:17 If you, if you go back in history and look at jet- debts to GDP levels, the only other time we were anything remotely like the level we're at right now is right after World War II when we had just saved the world from Nazism, okay? That was worth going into debt for. You look today, what is it that we've gotten into this 130% debt to GDP? What is this $30 trillion of debt for? What have we bought with all that money? Huge amounts of it have been squandered.

Chamath Palihapitiya 47:42 You're right.

Jason Calacanis 47:42 And Biden wanted more. If, if the courts didn't stop him, he would have spent a trillion.

Chamath Palihapitiya 47:46 David, you're, you're arguing-

Jason Calacanis 47:47 Hold on, forgiving, forgiving a bunch of student loans to, for basket weaving degrees-

Chamath Palihapitiya 47:51 You're right.

Jason Calacanis 47:51 ... or liberal studies or what have you.

David Friedberg 47:53 (laughs)

Chamath Palihapitiya 47:54 David, bite the real out of me.

Jason Calacanis 47:55 So, look, I mean, it's, it's-

Chamath Palihapitiya 47:55 Graduate degrees and proud.

Jason Calacanis 47:56 Somebody, hold on, let me finish. The, that's point number one is that this money is being squandered at levels we've ne- never seen before. And the squandering is continuing. It's not like we've reached a steady state. It just keeps going and going, and it will break at some point.

Chamath Palihapitiya 48:09 The grift goes on. Okay.

Jason Calacanis 48:09 I can't precisely say... Hold on a second. I can't precisely say when it's gonna break, but I do know it's gonna break. The other thing, point number two, is about consequences today. There is a phenomenon economists call crowding out, where when interest rates go up, more and more money flows into the risk-free rate of return, and then that crowds out investment capital. And we've talked about it on the last pod, where if the risk-free rate is 5% and then c- like, high-quality corporate bonds are offering 8 to 10%, w-... now equity investments must generate 15% and VC must generate 20%, and there-

David Friedberg 48:47 25.

Jason Calacanis 48:47 ... are very few VC investments that can generate that kind of IRR, so what happens? The money flows out of VC and there's less money for risk capital. What drives our economy? Risk-taking-

David Friedberg 48:57 David-

Jason Calacanis 48:57 ... and entrepreneurship.

David Friedberg 48:58 Can I, can I just say-

Jason Calacanis 48:58 Hold on, so... Hold on a second, so this massive debt service that we have, which drives up interest rates, will crowd out the very kind of economic activity that th- the United States needs to stay on the cutting edge. And this just, that is-

David Friedberg 49:10 Chemath, rebuttal. Rebuttal to the rebuttal to the rebuttal.

Chamath Palihapitiya 49:12 No, you're so right, so why don't you just bookend the argument exactly the way you just did? My point is not that... You said it, just before, that we don't know at what upper bound these things break or don't break, and all I'm saying is every time you throw up a random number, you guys sound like the boy who cries wolf, okay? And you're shouting into a vacuum, is, is just the, it's the advice that I'm trying to give you guys. I agree with you, I spend my entire days investing in and trying to figure out what is the risk-adjusted rate of return of the things that I'm doing, and I'm trying to tell you as somebody with some reasonable financial numeracy, every time I hear you or Ray Dalio or somebody else say, "This number is where th- it all breaks," and it doesn't, you lose a little bit of credibility. Then you go to this number and you're like, "Oh, at, at 127% it breaks."

David Friedberg 49:55 Okay, we get your point, Chemath.

Chamath Palihapitiya 49:57 So let me ask, let me, let me put it back to you, Chemath.

David Friedberg 49:59 But the number you're making up.

Chamath Palihapitiya 49:59 No, let me put it back to you, Chemath.

David Friedberg 50:00 Oh. Here we go.

Chamath Palihapitiya 50:00 Chemath, how much is too much? How much debt can we handle and how much spending as a percent of GDP should we handle? What is the limit in your mind? And how do you decide what that limit can or should be? I think the honest answer is every time that I have been alarmed that we had hit a threshold that was meaningful, so for example, like, I think under Obama, we passed 100 and it felt very scary, because I was like, "Wow, that seems like a demarcation." It turned out to not be a demarcation at all, because it's relative to every other country and what they're going through. And I u-understand that you don't want to believe that, but I do think that America's economic vitality is not an independent, uh, function. It is a dependent function on everybody else. We are relative to everybody else. If there's a, a different cosmos and a different planet somewhere, maybe this will all reset, but right now, it's not, and so we all trade relative to the United States. And in as much, I would like to just say I don't know enough to guess what this number is and I'd rather focus on what David said, which is, there are things that we need to do, that we need to incentivize people to invest in, extreme risk-taking that create new businesses that move the world forward. You can have that conversation without bellyaching and crying to mommy about a GD, debt-to-GDP number because every time you throw it out there, nobody knows what you're talking about, nobody knows what reaction to have, and everybody feels over time, David Friedberg, that you're crying wolf. So all I'm saying is, I get that it's concerning to you and it creates anxiety, but every time, yeah, and you probably, this is not the first time you've had anxiety. You probably had anxiety at 50, 75, 100, 125. Guess what? I bet you'll have anxiety at 150. I don't know what it means. I do know what Sax means though, which is that right now, we have a risk-free rate that's going to 5. We have corporate bonds that'll be at 10. We have equity investing at the most risk-taking, which is the early stage venture that has to return 25, and that is an incredibly high bar, but we need to do it, and we need to do maybe fewer investments, quite honestly, with fewer participants, with less dollars that are more effectively put to work, okay? Maybe this is a good jumping-off point to talk about-

David Friedberg 52:12 Yes.

Chamath Palihapitiya 52:12 ... all the waste in Silicon Valley. And that stuff can happen without debating incessantly this debt-to-GDP number, which, honestly-

David Friedberg 52:19 All right, look, I'll say, I'll s- I'll say one thing, one thing-

Chamath Palihapitiya 52:20 ... this is, it's subjective, it's objective.

David Friedberg 52:21 No, no, hold on, Sax. One thing I agree with you, Chemath-

Chamath Palihapitiya 52:23 All right, Friedberg, Sax, and then we're gonna move. Go. Friedberg, Sax.

David Friedberg 52:25 I agree with you. I've n- I have never had anxiety about debt-to-GDP. It's never been anything on my radar. The conversation I'm trying to have today is the amount of spending, the federal spending, including interest payments, as a percent of the GDP, as a percent of how much we can tax to pay all those, to make all those payments every year. And so what I'm concerned about is the ballooning cost of paying out all the obligations the federal government has to pay out every-

Chamath Palihapitiya 52:49 Oh, but now you're saying something different than what you were just saying. That's, if you were caring about only that, then refinancing the debt is an equally valid proposition, and changing the duration.

David Friedberg 52:57 It's not the only expense, it's not the only expense. So interest payments are ballooning. In addition to interest payments, Social Security and Medicare payments are also ballooning, and defense spending-

Chamath Palihapitiya 53:05 And out of control spending, everybody has their hand out.

David Friedberg 53:08 And so when you add, when you add, when you add those four-

Chamath Palihapitiya 53:08 Everybody wants an air drop.

David Friedberg 53:09 When you add those four big categories together-

Chamath Palihapitiya 53:11 Yeah.

David Friedberg 53:11 ... you don't have any room left over to do all the stuff you're talking about.

Chamath Palihapitiya 53:14 I get it, but you're talking about, you're talking about discipline in spending in defense. Great, I agree. You're talking about discipline in capping healthcare costs. Great, I agree. What does that have to do with this other orthogonal thing you've been talking about, which is this random number, debt-to-GDP? It doesn't mean much.

David Friedberg 53:29 Okay, okay, we, okay, we, let, let's move on from that discussion. Sax-

Jason Calacanis 53:33 Well, le- le- let me make one final point and then we can move on.

David Friedberg 53:34 Okay.

Jason Calacanis 53:34 So, so look, I think-

David Friedberg 53:35 S- six times is the final point. Go. (laughs) It's important discussion, apparently.

Jason Calacanis 53:39 Okay, look, in the, in the interest of bestie harmony-

David Friedberg 53:42 Okay.

Jason Calacanis 53:42 ... I will partially agree with the point that Chemath is making, which is that for a long time in American politics people have sort of cried wolf about debt-to-GDP. For example, if you remember way back in 1992, Ross Perot basically based his candidacy on the idea that the US was racking up way too much debt. You know what debt-to-GDP was in 1992? 41%, okay?

David Friedberg 54:06 Yeah.

Jason Calacanis 54:06 So-

David Friedberg 54:06 Manageable.

Jason Calacanis 54:06 ... people used to care a lot about this. I remember when Reagan was president and debt-to-GDP was 30%, people were saying that he was this, like, you know, wild spender, okay? But I think that precisely because nothing broke at 30, 40, 80%, 100%, you then had the rise of this theory called MMT or modern monetary theory which said that the debt-to-GD, debts don't matter. Gov- if you're the reserve currency, you can print as much money as you want. And so people started indulging in this, and so now I actually think we are at a point, I can't say precisely where it breaks, but I do think that because-... debt to GDP didn't seem to matter for so long. I actually think we got carried away and now we're at levels which are just gonna be ruinous, if for no other reason than our debt service is gonna crowd out whether you want more guns or more butter in our federal budget, if you want more defense spending, you want more entitlements, you want more discretionary spending. There's no question that debt service is getting bigger and bigger, it's gonna crowd out those programs.

Chamath Palihapitiya 55:08 There's no question we need to spend less. I 100% agree with you.

David Friedberg 55:12 Okay.

Chamath Palihapitiya 55:12 Okay? But all I'm saying is, we should spend less on defense because we have different ways of defending ourselves.

David Friedberg 55:18 Okay.

Chamath Palihapitiya 55:18 That should be the logical argument for less defense spending.

David Friedberg 55:20 And your energy independence is defense and a balanced budget could be defense as well.

Chamath Palihapitiya 55:25 If you look at the IRA, that was less than a trillion dollars over a decade. Okay?

David Friedberg 55:29 Managable.

Chamath Palihapitiya 55:29 That has the potential to shift trillions of dollars a year in defense spending.

David Friedberg 55:35 Yes. Okay.

Chamath Palihapitiya 55:35 Okay? It's incredible.

David Friedberg 55:36 So, let me wrap... Okay, let me wrap here for a second. Thank you everybody, this is an important debate.

Chamath Palihapitiya 55:40 All, all I'm saying, sorry, you, you can look at these bills-

David Friedberg 55:41 (laughs)

Chamath Palihapitiya 55:41 ... in and of themselves and try to actually do the right thing for the country-

Jason Calacanis 55:45 (sighs)

David Friedberg 55:46 He lost control.

Chamath Palihapitiya 55:46 ... without, without wrapping up all of these random arguments. And I... by the way-

David Friedberg 55:49 Well...

Chamath Palihapitiya 55:49 ... just to be clear, I don't believe in M-

David Friedberg 55:51 Oh, come on.

Chamath Palihapitiya 55:51 MMT either.

David Friedberg 55:52 Sax, don't do it. Don't do it, Sax.

Jason Calacanis 55:54 (laughs) .

David Friedberg 55:54 The world's worst moderator. Come on, J-Cal.

Jason Calacanis 55:55 Worst. I want, I want a shot at this. (laughs) You know what I wanna go back to, actually?

David Friedberg 55:58 Oh, no!

Jason Calacanis 55:59 During the Obama presidency, we had a thing called the Sequester. I don't know if you guys remember this.

David Friedberg 56:03 Yeah.

Chamath Palihapitiya 56:03 Yeah.

Jason Calacanis 56:03 But Repub- Republicans and Democrats agreed that basically that b- because we had just had like, these trillion dollar, uh, deficits because of the 2008, you know, global financial crisis, they got together and said, "Listen, we're gonna hold the line on spending and there'll be no increase on defense spending in exchange for no increase in discretionary spending social programs." And for a few years, we held the line on spending actually. And then of course, both Democrats, Republicans didn't want that, for different reasons and the Sequester went away. We need to go back to something like that.

David Friedberg 56:37 There are two things here that are gonna get us-

Chamath Palihapitiya 56:38 By the way, just, just one, one, one detail.

David Friedberg 56:40 Sure.

Chamath Palihapitiya 56:40 Like, when you go and send a bill... So, look, the way you pass a bill, right, you have to send it to the CBO to get scored. Yeah. One of the things that I learned this week is that, sometimes the CBO, and they're not really empowered to actually tell you how things get offset. So, for example, like, if you have a medicine, what they will s- do is say, "Well, we'll look at, at the population level, how much would this medicine cost if it's taken by the population?" But if that medicine then all of a sudden has the potential to actually off-ramp you over here, those savings are not really factored in as well. So, David, to your point, another way that we can refine how we build budgets to make sure that we're not overspending is to actually improve the toolkit and the data that, like, the CBO is given so that when they score things, they can actually look at the total impact. Like, for example, like the IRA, again, one of the biggest benefits will be to defense spending. If we choose to make those cuts, you will be able to do it differently once we have, you know, no reliance on foreign energy.

David Friedberg 57:38 Okay. To wrap this segment, the first segment, which took 57 (laughs) minutes, so obviously-

Jason Calacanis 57:43 Wow.

David Friedberg 57:43 ... uh, uh, really... Well, I think it's an important discussion.

Jason Calacanis 57:45 Hey, J-Cal, would you vote for DeSantis if he promises fiscal responsibility?

David Friedberg 57:49 Well, here's the thing. I am gonna take a look at the candidates, I'm gonna make the best decision in terms of what I think is at best for the country.

Jason Calacanis 57:56 (laughs) . Five minutes ago, you were saying I wasn't denouncing Trump strongly enough.

David Friedberg 57:56 (laughs) I'm answering like you, Sax. I'm answering like you, I'm giving no answers.

Jason Calacanis 57:59 What bullshit is this?

David Friedberg 58:00 (laughs)

Jason Calacanis 58:01 What's your problem?

David Friedberg 58:02 It depends on-

Jason Calacanis 58:02 If DeSantis gives you everything you want on fiscal policy, why wouldn't you vote for him?

David Friedberg 58:06 Uh, if he stays out, if he, if he's in favor of a woman's right to choose-

Jason Calacanis 58:10 For the first 15 weeks, that's Florida policy, are you... yes?

David Friedberg 58:14 You know, I would take a look. I would take a look. I, I, honestly, would take a look.

Jason Calacanis 58:17 What would cause you not to vote for him? 15 weeks right to choose combined with fiscal responsibility?

David Friedberg 58:23 I, I, uh, yeah.

Jason Calacanis 58:24 What's not to like?

David Friedberg 58:25 I, I'm, I'm voting for a moderate this time. I want a moderate.

Chamath Palihapitiya 58:28 And, and tax cuts. And tax cuts.

David Friedberg 58:29 Okay. But to wrap up here, the two things that matter, I believe, uh, and based on our panel's discussion, austerity and excellence are what are gonna get us out of this mess. Here is what the platform seems to be shaping up, our 2024 platform. Control spending, everybody here thinks that's important. Energy independence, everybody here thinks that's super important. Stop fighting unnecessary wars, uh, and maybe rethinking our foreign policy. I think we all agree on that. And the cultural focus on excellence, not excess. This is shaping up to be a little bit of an all-in platform here. Great discussion, everybody.

David Friedberg 59:03 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.

Chamath Palihapitiya 59:13 Chris Hohn, yeah.

David Friedberg 59:13 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.

Jason Calacanis 59:31 They're surplus elites.

David Friedberg 59:33 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-

Chamath Palihapitiya 1:00:37 What an incredible business. My God.

David Friedberg 1:00:40 I mean, the business is nuts. Uh, Freeburg-

Chamath Palihapitiya 1:00:42 Wow.

David Friedberg 1:00:42 ... 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?

1:01:16 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-

1:02:20 Ecosystem.

1:02:21 ... 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.

Chamath Palihapitiya 1:04:16 What is the average salary? 280,000?

David Friedberg 1:04:18 300,000 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.

1:04:24 And by the way, that doesn't mean that those people should all get fired. But I think-

1:04:29 No.

1:04:29 ... 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.

Chamath Palihapitiya 1:05:30 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.

David Friedberg 1:05:41 Mm-hmm.

Chamath Palihapitiya 1:05:41 And if it goes up to the full number-

David Friedberg 1:05:43 Yup.

Chamath Palihapitiya 1:05:44 ... the stock goes up 65% overnight.

David Friedberg 1:05:46 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.

Chamath Palihapitiya 1:06:11 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.

David Friedberg 1:07:40 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