E106: SBF's media strategy, FTX culpability, ChatGPT, SaaS slowdown & more

1. 0:00 – 1:05

   Bestie hangover!

   1. JCJason Calacanis0:01

      I'm now recording.

   2. DSDavid Sacks0:02

      Jesus, you look terrible.

   3. CPChamath Palihapitiya0:03

      What's going on? Did you sleep last night?

   4. JCJason Calacanis0:04

      Do I look tired?

   5. DFDavid Friedberg0:05

      You do look a little tired, yeah.

   6. DSDavid Sacks0:06

      You look unshaven.

   7. CPChamath Palihapitiya0:07

      Yeah. What happened last night?

   8. JCJason Calacanis0:09

      I had a holiday party at my house last night from my office and...

   9. DSDavid Sacks0:12

      You look destroyed.

   10. CPChamath Palihapitiya0:13

       Yeah, what's going... I mean, did you drink?

   11. JCJason Calacanis0:15

       I did drink, yeah.

   12. DFDavid Friedberg0:16

       What does vodka and oat milk taste like?

   13. CPChamath Palihapitiya0:19

       (laughs)

   14. DFDavid Friedberg0:19

       Does it taste like-

   15. CPChamath Palihapitiya0:19

       He had a White Russian. (laughs)

   16. DFDavid Friedberg0:22

       A White Russian Big Lebowski style. With oat milk. He's like, "I want a White Russian with oat milk." Oh my God.

   17. CPChamath Palihapitiya0:28

       Well actually, my White Russian is made with Oatly.

   18. DFDavid Friedberg0:30

       And please compliment that with a huge punch in the face.

   19. JCJason Calacanis0:34

       Give me five minutes. I'm gonna go, I'm gonna go shave and-

   20. DSDavid Sacks0:36

       It's called the hair of the dog.

   21. CPChamath Palihapitiya0:38

       Yeah.

   22. DSDavid Sacks0:38

       You could do a little Bloody Mary.

   23. CPChamath Palihapitiya0:40

       Banana bud. Banana man.

   24. JCJason Calacanis0:42

       Should I go get a beer? I might get a beer just to beat this hangover.

   25. CPChamath Palihapitiya0:45

       Go do it. Yeah, go get a beer.

   26. JCJason Calacanis0:46

       Hang on, I'll be right back.

   27. NANarrator0:49

       Going all in. So let your winners ride. Rain Man, David Sacks. Going all in. And I said we open source it to the fans and they've just gone crazy with it. Love you, S.I.D.E. Queen of quinoa. Going all in.

2. 1:05 – 21:09

   Analyzing SBF's media tour: his angle, media coverage, and more

   1. NANarrator1:05

   2. CPChamath Palihapitiya1:05

      All right, listen. Uh, we have to start with scam, bank run, fraud. I mean, Sam Bankman-Fried.

   3. JCJason Calacanis1:10

      (laughs)

   4. CPChamath Palihapitiya1:12

      I get that wrong sometimes. Uh, he was interviewed by, uh, Andrew R. Sorkin, the suit, uh, at DealBook, who gave him softball after softball. Then the next day, he was on Good Morning America.

   5. DFDavid Friedberg1:23

      You're being really passive-aggressive right now.

   6. CPChamath Palihapitiya1:26

      A little bit. A little chip over there. Little chippy, little chippy.

   7. DFDavid Friedberg1:30

      You're throwing a little shade at our friend, Andrew R. Sorkin. Stop.

   8. DSDavid Sacks1:30

      He's sticking the knife in. He's sticking the knife in.

   9. CPChamath Palihapitiya1:32

      That's it.

   10. DSDavid Sacks1:32

       But J Cal's got a point. He's got a point. A little bit.

   11. CPChamath Palihapitiya1:35

       Just a little bit.

   12. DSDavid Sacks1:35

       A little bit.

   13. CPChamath Palihapitiya1:36

       Little bit.

   14. DSDavid Sacks1:37

       (laughs)

   15. CPChamath Palihapitiya1:37

       Anyway, the New York Times continues to embarrass themselves, uh, by handling Sam Bankman-Fried with kid gloves. Wow. George Stephanopoulos, my Greek brother, Stephanopoulos the Spartan came in and absolutely fricassee-d and filleted Sam Bankman-Fried on Good Morning America. Very important to note that Good Morning America, uh, the segment was between holiday cocktails and the cast of The White Lotus. And Andrew R. Sorkin was at the DealBook Finance Conference.

   16. DSDavid Sacks2:07

       But you know, that, that, that Stephanopoulos interview was two hours, but they reduced it down to 10 minutes.

   17. CPChamath Palihapitiya2:13

       Yes.

   18. DSDavid Sacks2:13

       So, there were probably a lot of sort of-

   19. CPChamath Palihapitiya2:16

       Yes.

   20. DSDavid Sacks2:16

       ... cordial conversation, banter, and then softball questions. And then he does stick the knife in and, and does the fricassee, but he cuts out all the other stuff, so he just gets it down to the 10 minutes.

   21. DFDavid Friedberg2:27

       Absolutely.

   22. CPChamath Palihapitiya2:28

       What Stephanopoulos did to him was extraordinary in that he said over and over again, "In the FTX terms of service, you cannot touch the user accounts, but you, at Alameda, were taking them and you were loaning them out." I don't know who is advising, uh, Sam Bankman-Fried at this point, but why he is talking so much. He was also on a two-hour Twitter Spaces after all this. At this point, Sacks, what do you think is going on here in the mind of Sam Bankman-Fried, and also, the media, which seems to have a very veritable way of dealing with this obvious fraud and crime?

   23. DSDavid Sacks3:11

       Right. Okay, well, you know, I can speculate about SBF. I think if there is a strategy here, it is this. He is basically copping to criminal negligence in order to avoid the more serious charges of fraud. And I think, again, if there's a strategy here, it is he saw himself being defined as Bernie Madoff 2.0 in the press.

   24. CPChamath Palihapitiya3:35

       Mm-hmm.

   25. DSDavid Sacks3:35

       And if that image, which may well be true, uh, cemented around him, then prosecutors would never stop, they would never accept a plea that basically gave him anything less than a Madoff-like sentence, which would be, you know, decades in prison, maybe a life sentence. So, he is out there doing what lawyers would tell you never to do, which is basically incriminate yourself, create more of a record, but he's doing it to change the public perception, maybe muddy up the public perception, get people thinking that okay, he, you know, thi- this, that he, he's admitting he did something wrong, but it wasn't deliberate, it wasn't fraudulent. It was just basically carelessness or sloppiness. And if he succeeds in muddying the wa- waters enough, then maybe the prosecutors will give him a plea deal that allows him to have his life back at some point. I think that would be the crazy, like a fox explanation of what's happening. Now, there is, you know, an alternative explanation as well, which is, I just think that these types of guys, you could call it, you know, a, a narcissistic fraudster-

   26. CPChamath Palihapitiya4:40

       Mm-hmm.

   27. DSDavid Sacks4:40

       ... they think they can talk their way out of anything, you know?

   28. CPChamath Palihapitiya4:43

       Because they have.

   29. DSDavid Sacks4:45

       They have. Um-

   30. CPChamath Palihapitiya4:46

       Yes.
3. 21:09 – 53:41

   FTX culpability: media, investors, regulators

   1. DFDavid Friedberg21:09

      work. The problem that I think this allows us to put a fine point on is the following. You know, in society, we've confused a lot of people to think that the opposite of liberal is conservative or Republican. And I think that's the cycle that drives the mind virus inside the mainstream media. The problem is the opposite of liberal is illiberal, (laughs) okay? And what illiberal means is to be narrow-minded and unenlightened. It means to be puritanical, it means to be fundamentalist, and this is really what it allows us to see now. We have now had six years of data, case after case after case, where if you are woke, if you are a social justice warrior, if you have the right credentials that justify your upbringing, if you have institutional, uh, bonafides that come from your parents, you get to create the narrative and you get a hall pass. And everybody else basically is at the subject and the mercy of the mainstream media. And so if you don't kiss the ring and bow down to them, they will try to destroy you or run you out of town. But if you are one of them, they will give you a hall pass. And when it's time for them to change their mind in order to tell the truth, they won't do it. And so these types of grifts will continue, as Friedberg said, because there is no check and balance without a healthy independent media. There is no way for all of us to actually know what's really going on. Guys, some person in the media could have asked the question and dug in deeper around the connections between Alameda and FTX for the last 24 months. At no point-

   2. CPChamath Palihapitiya22:55

      They still could've diligence at a venture firm.

   3. DFDavid Friedberg22:57

      ... at no point could any person have asked these questions and found ex-employees and said, you know, "Are there any unseemly connections here between FTX and Alameda?" There was no disgruntled employee. I mean, every company has disgruntled employee whistleblowers. But here where there was billions-

   4. CPChamath Palihapitiya23:14

      Yeah.

   5. DFDavid Friedberg23:14

      ... of dollars being made by tens of people, not a single person who felt on the outs said anything? Well, he was also giving- It's because... Hold on.

   6. CPChamath Palihapitiya23:21

      ... millions of dollars to press outlets-

   7. DFDavid Friedberg23:22

      It's because... Hold on.

   8. CPChamath Palihapitiya23:23

      ... in donations.

   9. DFDavid Friedberg23:23

      It's because the questions weren't asked and then this kid paid hush money to the mainstream media.

   10. JCJason Calacanis23:28

       Let me ask a question of you guys. Do you think that it's the media's responsibility in this context, or do you think that there should have been a regulatory authority that had oversight of this business like there is for every bank and every trading operation in the United States? And every one of those businesses has a compliance officer-

   11. DFDavid Friedberg23:44

       There's a chicken and egg problem.

   12. JCJason Calacanis23:44

       ... and has regulators up the wazoo making sure that customers are kept safe and protected. Or do we think that, that should, should offshore vehicles be allowed like this that allow people to operate?

   13. DFDavid Friedberg23:54

       It's a reasonable question, but there is a chicken and egg question. We were all standing around holding our hands while the CFTC and the SEC were fighting. That's not something that consumers can be expected to adjudicate. So yes, we should have legislation that clearly defines all of this, but there were enough parameters that created regulatory frameworks where a bunch of good actors did operate in them and are continuing to do so, like Coinbase. So I don't think this is a regulatory issue. I think that if you believe there are people who are supposed to forensically examine things and get to the bottom of things and ask hard questions-... those people did none of that here. And, and what's, what's even more worrisome is what they're showing is now with an massive amount of data that shows that you could ask hard questions, they don't care to because it makes them look bad.

   14. CPChamath Palihapitiya24:44

       I disagree with this, Chamath. I think regulators failed here because they have been reactive to crypto, they have not been proactive, and they have not been clear with the crypto community that what they were doing was illegal and they should have put the regulations in quicker and they're playing catch-up. But all three groups failed. The media failed, the regulators failed, and VCs failed. Capital allocators failed, uh, ap- apparently to due diligence here and install proper governance. You cannot put a company like this, you know, in business-

   15. DFDavid Friedberg25:12

       But my only point, Jason, is that-

   16. CPChamath Palihapitiya25:13

       ... with billions of dollars and have no board of directors-

   17. DFDavid Friedberg25:15

       No, I agree with you.

   18. CPChamath Palihapitiya25:16

       ... or, or he lied to them, which is possible.

   19. DFDavid Friedberg25:18

       No, I agree with you, Mi- my point is that while regulators are, are basically fighting a territorial turf war-

   20. CPChamath Palihapitiya25:24

       Yeah.

   21. DFDavid Friedberg25:24

       ... okay, the media could have still done their job. They chose not to.

   22. DSDavid Sacks25:28

       Guys, it was worse than that because not only... It, it's not just a case where the SEC failed to exercise any oversight of him or dig into any of these questions. He was in the room with them crafting the next set of regulations. He was working on the regulations-

   23. CPChamath Palihapitiya25:42

       Yes.

   24. DSDavid Sacks25:42

       ... that you're talking about that are supposedly needed.

   25. CPChamath Palihapitiya25:44

       While breaking them.

   26. DSDavid Sacks25:45

       They let the fox in the henhouse.

   27. DFDavid Friedberg25:47

       Yeah.

   28. DSDavid Sacks25:47

       He was gonna craft a, a new type of regulatory license for these types of exchanges with the result that he was gonna get one and some of his competitors weren't. This is one of the things that triggered CZ to basically, you know, do what he did, which is-

   29. CPChamath Palihapitiya26:04

       He rug pulled them.

   30. DSDavid Sacks26:05

       ... uh, basically that SBF was trying to get, uh, Binance and, and competitors like that banned while SBF would be one of the sole people to get the license.
4. 53:41 – 1:10:04

   Challenging media coverage of other countries, China's current situation, Xi Jinping's standing

   1. DFDavid Friedberg53:41

      podcast. I was gonna tell you guys a story. So, I was in the Middle East last week, or this week, sorry. And, um, I had this crazy experience where I was trying to understand what was going on in China. And so I started on CNN, and the whole thing was the propaganda machine around a re- a, a democratic revolt, you know, pushing for democracy and trying to depose Xi. Then I moved to Al Arabiya, so one channel up. I went from Channel 10 (laughs) to Channel 11. And instead, what they were, uh, actually doing was interviewing people on the ground. And what they were talking about was literally how these PCR tests have become far too burdensome, and they just wanted it to end and more reasonable restrictions to get in and out of quarantine. Then I went from there to, uh, BBC. And at BBC, they had a China scholar who was talking about how, for decades actually, the Communist Party supports local level protests and demonstrations, because they've realized that it is a part of their political system to make sure that people feel like they have a say. And I was, like, taking a step back, and I'm like, if you listen to the US narrative, and even Jason, like, in our group chat, people fomenting for, like, revolution, and this is Tiananmen 2.0. And I'm like, "Well, I'm reading two other channels that tell us a completely different set of things." And I just thought, "Man, people just really fit the data-" Such a good point, yeah.

   2. JCJason Calacanis55:05

      "... to fit their bias."

   3. DFDavid Friedberg55:06

      Yeah, we, we are projecting. We want to see a revolution in China. The people in China want-

   4. JCJason Calacanis55:10

      Or you do.

   5. DFDavid Friedberg55:11

      ... to have their lives back.

   6. JCJason Calacanis55:12

      You do.

   7. DFDavid Friedberg55:12

      You know, I would love to see more democracy in the world. Yes, guilty as charged.

   8. CPChamath Palihapitiya55:17

      ... I would like to see people be more free in the world. Dictator.

   9. JCJason Calacanis55:21

      I think most people just want to improve their condition. And I don't think people are as tied up on the philosophy of the government as they are about improving their condition. And as long as-

   10. CPChamath Palihapitiya55:30

       Yeah.

   11. JCJason Calacanis55:30

       ... their condition is improving, they're willing to put up with any form of government. And history shows that.

   12. DFDavid Friedberg55:34

       By the way, the conditions in China have improved better than everybody's in the last decade.

   13. JCJason Calacanis55:38

       It's better than anyone, anyone in history.

   14. CPChamath Palihapitiya55:39

       They've moved 500 million people out of abject poverty, uh, and that's the great success of engagement. Isolationism, uh, would not have created that amazing outcome. 500 million people-

   15. DSDavid Sacks55:52

       Wait, by engagement, you're referring, you're referring to-

   16. CPChamath Palihapitiya55:54

       ... going out of abject-

   17. DSDavid Sacks55:54

       ... us throwing... Hold on a second.

   18. CPChamath Palihapitiya55:56

       To Apple building factories.

   19. DSDavid Sacks55:56

       You're saying-

   20. CPChamath Palihapitiya55:56

       Apple building factories is what I'm referring to.

   21. DSDavid Sacks55:58

       Oh, okay, fine.

   22. CPChamath Palihapitiya55:59

       Instead of you guessing.

   23. DSDavid Sacks55:59

       If, if they, if they want to build something over there, I guess, that's better than us throwing open our markets and giving China MFN status to destroy American manufacturing and build up their economy so they can become a peer competitor to the United States.

   24. CPChamath Palihapitiya56:13

       Yeah. I mean, this is the balance of engagement, isn't it?

   25. JCJason Calacanis56:15

       Sax, we're talking (laughs)

   26. CPChamath Palihapitiya56:15

       If you engage too much, you give everything up.

   27. JCJason Calacanis56:19

       You know?

   28. CPChamath Palihapitiya56:19

       Sax, which of the current Republican agenda do you disagree with most strongly? Just as an aside.

   29. DSDavid Sacks56:27

       Well, most Republicans are in favor of our Ukraine policy, this sort of unlimited appropriation of weapons and aid to them.

   30. CPChamath Palihapitiya56:35

       Don't you disagree with immigration policy of Republicans and Democrats?
5. 1:10:04 – 1:26:30

   What OpenAI's new ChatGPT tool means for the future

   1. CPChamath Palihapitiya1:10:04

      here.

   2. JCJason Calacanis1:10:04

      I just want to let you guys know I'm feeling a lot better after my beer. Let's talk about, uh-

   3. DSDavid Sacks1:10:07

      (laughs)

   4. JCJason Calacanis1:10:07

      ... OpenAI.

   5. CPChamath Palihapitiya1:10:08

      All right, let's go. All right.

   6. JCJason Calacanis1:10:09

      Come on, people. Let's go.

   7. CPChamath Palihapitiya1:10:09

      So listen, open-

   8. JCJason Calacanis1:10:10

      Let's talk about OpenAI.

   9. CPChamath Palihapitiya1:10:12

      All right. OpenAI is a, uh, a company that, um, builds, ah, artificial intelligence software and platforms.

   10. JCJason Calacanis1:10:21

       (laughs)

   11. CPChamath Palihapitiya1:10:21

       They have one platform called GPT. It is on its third version. As part of GPT-3, they created ChatGPT, which is a chat interface where you can ask questions to AI. The results are nothing short of stunning when they hit. Uh, some of them are a little bit mixed, but, uh, Friedberg has spent the last 48 hours, uh, drinking White Russians with oatly milk and playing with ChatGPT, including his question to the ChatGPT, which was, "Write a script of Chamath, Sacks, and J Cal, uh, talking about the future of AI in the style of a Quentin Tarantino movie." And I have to say, it was pretty great, the result. Go ahead, uh, Friedberg, tell us what you discovered.

   12. JCJason Calacanis1:11:07

       Well, I think you guys should read this real quick. We can cut it out if it's stupid, but, okay, Chamath-

   13. CPChamath Palihapitiya1:11:11

       You actually want to read the script?

   14. JCJason Calacanis1:11:12

       Yeah, read- read along.

   15. DSDavid Sacks1:11:13

       I don't think you got the Quen- Tarantino part right. I mean, I think it was, like, impressive, but it- there's no F bombs. There's no, like, Tarantino-esque dialogue.

   16. JCJason Calacanis1:11:19

       And by the way, they- they excluded all of that from OpenAI.

   17. CPChamath Palihapitiya1:11:22

       I don't think you just got this right at all.

   18. JCJason Calacanis1:11:22

       They took- they took out all cursing and violent- cussing and violence from OpenAI.

   19. CPChamath Palihapitiya1:11:25

       Yeah, that explains it, because if this was a Tarantino script, there would be some choice language in here.

   20. JCJason Calacanis1:11:30

       Totally. But it's interesting, it's like the PG Tarantino script-

   21. CPChamath Palihapitiya1:11:32

       It is. Okay, here we go.

   22. JCJason Calacanis1:11:33

       ... because with no cussing, no violence, no sex.

   23. DSDavid Sacks1:11:35

       There's no- there's no pop culture references.

   24. CPChamath Palihapitiya1:11:37

       You- you do the narrative. Yeah, you do the narrative. Go ahead.

   25. JCJason Calacanis1:11:43

       The scene opens on Chamath Palihapitiya, David Sacks, and Jason Calacanis sitting at a dimly lit table in a smoky bar. A bottle of whiskey sits in the center of the table, half empty. Chamath leaning forward, his eyes intense. "So what do you guys think about this ChatGPT thing?" David Sacks takes a sip of his drink.

   26. DSDavid Sacks1:12:01

       "It's impressive, no doubt about it. A large language model trained by OpenAI that can generate humanlike text in a variety of styles and formats is a game changer."

Episode duration: 1:41:58