E112: Is Davos a grift? Plus: globalist mishaps, debt ceilings, TikTok's endgame & more

Chamath Palihapitiya 0:00 J Cal, you have a really long nose hair.

Jason Calacanis 0:02 Thank you. (laughs)

Chamath Palihapitiya 0:03 On your, on your left nostril.

Jason Calacanis 0:04 (laughs) This one here? This side?

Chamath Palihapitiya 0:05 Yeah, yeah.

Jason Calacanis 0:06 Okay, hold on one second.

Chamath Palihapitiya 0:07 Do you see it, Nick? You see it? See that? You can see it.

David Friedberg 0:09 Take care of it.

David Sacks 0:10 Every (beep) show we have this issue.

Chamath Palihapitiya 0:12 Every show, he's got all this, like-

Jason Calacanis 0:14 I'm getting old man hairs. I feel like Sax.

David Friedberg 0:16 You gotta get a grooming tool.

Chamath Palihapitiya 0:17 I am tired of treasure hunting your nostrils.

Jason Calacanis 0:18 Send me a link for what he uses.

David Sacks 0:19 Get a lawnmower.

David Friedberg 0:20 Manscape makes one.

David Sacks 0:22 (laughs)

Jason Calacanis 0:22 I'm gonna get it.

David Friedberg 0:23 Yeah.

Chamath Palihapitiya 0:23 Just look in a mirror, bro.

Jason Calacanis 0:25 Can you come over on the way to poker, Friedberg, and help me Manscape?

David Sacks 0:28 (laughs)

David Friedberg 0:28 Yeah.

Chamath Palihapitiya 0:28 You're not coming to poker. Don't come to poker, you're sick.

Jason Calacanis 0:30 I just, if I Manscape, can I come to poker?

Narrator 0:34 Let your winners ride. Rain Man 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, Wes Eisinga. Queen of Quinoa. I'm going all in.

David Friedberg 0:49 Okay, so J Cal, you're gonna be a participant today. The world's greatest moderator is taking a week off to allow his voice to recoup, to recover, to heal.

Jason Calacanis 0:58 Yes.

David Friedberg 0:59 So he can come back blaring with his usual mid-sentence interruptions and excellent moderating tactics next week. We-

David Sacks 1:07 With his foghorn, leg horn moderation.

David Friedberg 1:09 (laughs) Yeah. We are gonna, we are gonna miss you at the moderation podium today.

Jason Calacanis 1:12 Yeah, welcome to the top 20, Sax. You're welcome.

David Sacks 1:14 (laughs)

Jason Calacanis 1:14 Welcome to the top 20 podcast in the world.

David Friedberg 1:16 Okay.

David Sacks 1:16 Oh, hold on, who should be thanking whom?

Jason Calacanis 1:18 Mm.

David Sacks 1:18 I mean, you've been doing this for 10 years. I walk in here off the street, all of a sudden we're top 20.

David Friedberg 1:23 (laughs)

Jason Calacanis 1:23 Yeah, let me explain something to you.

David Sacks 1:24 (laughs)

David Friedberg 1:24 (laughs)

Jason Calacanis 1:24 Number one blog in the world, I created with my guys, Engadget. Okay, top five magazine in the world. Then I do a podcast with you three idiots, and all of a sudden I drop down to top 20 in this medium, so.

David Sacks 1:34 Drop, what are you talking about?

Jason Calacanis 1:35 Yeah, exactly, I drop.

David Sacks 1:37 This has been A/B tested.

Jason Calacanis 1:39 No, I mean, This Week in Startups is a niche pop culture-

David Sacks 1:41 I don't wanna embarrass you, but look at Twist's ratings compared to ours.

David Friedberg 1:43 (laughs)

Jason Calacanis 1:43 This Week in Startups is about startups.

David Friedberg 1:45 Twist.

Jason Calacanis 1:45 It is a niche audience by design.

David Friedberg 1:47 Twist.

Jason Calacanis 1:47 And it's the number one startup podcast in the world.

David Sacks 1:50 That's what you wanted this show to be.

Jason Calacanis 1:51 No, I didn't. This show is about all topics, all topics by design.

David Sacks 1:54 Not in your view. Every time we try to talk politics, you're like, "It's too much politics, Sax."

Jason Calacanis 1:58 I think you're talking about Friedberg.

David Friedberg 1:59 (laughs)

Jason Calacanis 1:59 I think you're talking about Friedberg.

David Sacks 2:00 Let's focus on narrow, legalistic, tech issues.

David Friedberg 2:03 Ugh.

Jason Calacanis 2:03 That's not true. You, we had this discussion, Sax, and I said we should always do the top story of the week, even if it's politics. I was in agreement.

David Sacks 2:09 And now you're taking credit for my insight about McLaughlin Group.

Jason Calacanis 2:13 Okay, uh.

David Sacks 2:13 I saw you on some pod. Who was it?

Jason Calacanis 2:15 I absolutely designed this pod around McLaughlin. The fact that you also watch McLaughlin-

David Sacks 2:19 You didn't design around McLaughlin Group.

Jason Calacanis 2:20 Of course I did.

David Sacks 2:21 I'm the one who said McLaughlin Group.

Jason Calacanis 2:22 Okay, it's possible for two people to have the same idea, Sax. We both grew up on McLaughlin Group, that's why we're both cantankerous assholes.

David Friedberg 2:30 Moderator intervention, cut it out.

Jason Calacanis 2:32 (laughs)

David Friedberg 2:33 No one is individually responsible for this podcast.

David Sacks 2:36 It was Tim Ferriss.

David Friedberg 2:37 Yeah, Tim Ferriss.

David Sacks 2:38 Here's what happened. So, I was on YouTube, and, um, you know, I'm not gonna watch some two-hour, like, podcast with J Cal, of course. But for some reason-

David Friedberg 2:46 (laughs)

Jason Calacanis 2:47 (laughs)

David Sacks 2:47 ... for some reason, Tim Ferriss clipped-

Jason Calacanis 2:49 Let me check, Sax. (laughs)

David Sacks 2:51 He clipped 10 minutes of J Cal.

Jason Calacanis 2:53 Oh, shit.

David Sacks 2:53 And it wa- the video is called The Origin of the All-In Podcast.

David Friedberg 2:56 Oh, I can't stand when he does that.

Jason Calacanis 2:57 Oh God, here we go.

David Friedberg 2:57 I can't stand when he does that.

Jason Calacanis 2:59 Oh.

David Sacks 2:59 Yeah, so I'm like, "Okay, well I gotta watch this."

David Friedberg 3:01 So Mammoth wrote this in the partnership agreement. He said, "Here's the, the party line," and J Cal will not stick with it. Like, go ahead. Yeah, go ahead, Sax. Oh.

David Sacks 3:05 Yeah, I'm going to recreate history. I gotta watch this. I gotta see this alternative reality that J Cal's-

David Friedberg 3:09 Right. (laughs)

David Sacks 3:09 ... trying to create about the origin of the All-In Podcast.

Chamath Palihapitiya 3:11 Excuse me, I wrote, I wrote in our legal agreement-

Jason Calacanis 3:14 A fake history, yes, and then changed it, yeah.

Chamath Palihapitiya 3:15 Uh, no. The origin story that you signed up to, are you saying you changed the origin story for lawsuit purposes?

David Sacks 3:21 No, the origin story remains the same.

David Friedberg 3:22 No, it doesn't.

David Sacks 3:23 You call me after CNBC, I can't remember.

David Friedberg 3:24 Okay.

Jason Calacanis 3:24 Yeah, the origin story that he-

Chamath Palihapitiya 3:25 Ugh.

Jason Calacanis 3:25 ... told Tim Ferriss, which is like a 10-minute story of how he created the whole thing, the concept was his. It was based on McLaughlin Group, which I'm the one who suggested that. And-

David Sacks 3:32 Well, the moderation concept is mine, obviously, by default. How I moderate the program is by my design, yes.

Jason Calacanis 3:38 You didn't come up with this concept.

David Sacks 3:39 Much to your chagrin.

Jason Calacanis 3:41 Of course I did.

David Sacks 3:42 No.

Jason Calacanis 3:42 Of course I des- designed my moderation. Who designed my moderation?

David Sacks 3:44 Shamath was the first one who said, "We should record us having conversations at the poker table."

Jason Calacanis 3:50 No.

David Sacks 3:51 That idea came from him, right? That's why it's called the All-In Pod.

Jason Calacanis 3:54 No, no. I came up with the name All-In, number one.

David Sacks 3:56 (laughs)

Jason Calacanis 3:56 Number two, it was his idea to tape a pod, because he came out of CNBC... Anyway, who cares? The pod's here, it's successful.

David Sacks 4:02 Who cares? (laughs) Who cares? Move on.

David Friedberg 4:03 No, but why do you keep going on podcasts telling everyone that you're the mastermind of the All-In Pod? What, what do you, what do you have to gain?

Jason Calacanis 4:08 People are saying, "J Cal..." Other podcasters... I'll explain it to you. Other podcasters are in awe of my ability to moderate you three malcontents.

David Sacks 4:16 You did not have the idea for the foursome based on McLaughlin Group. That happened, that happened spontaneously as a result of the fact that, no, Friedberg was, I think, the first guest. I was the second guest. Then we did the four of us together.

Jason Calacanis 4:30 Okay.

David Sacks 4:30 That was not your concept.

Jason Calacanis 4:32 The moderation-

David Sacks 4:32 It evolved spontaneously.

Jason Calacanis 4:33 How does this moderate?

David Friedberg 4:34 It was a jam session that worked out. That's it.

Jason Calacanis 4:36 Okay, fine. It, the way that, the way I moderate this is of note to the world's greatest podcasters. They wanna know, J Cal, how do you take three misanthropic malcontents-

David Friedberg 4:46 (laughs)

Jason Calacanis 4:47 ... and make them actually palatable to the world? And I say, you know what? Because I am the world's greatest moderator, and someone like Tim Ferriss wants to know.

Chamath Palihapitiya 4:53 Excuse me, excuse me. What makes me a misanthropic malcontent exactly?

Jason Calacanis 4:58 Just your behavior and worldview.

Chamath Palihapitiya 5:00 Wha- what is, what is... Describe that. What is my behavior and what is my worldview?

Jason Calacanis 5:04 Your absolute contempt for humanity. (laughs)

Chamath Palihapitiya 5:07 I don't have contempt for anybody.

Jason Calacanis 5:07 Your mourning over everybody. (laughs) No, you're amazing.

David Friedberg 5:11 Wow. Wow.

Jason Calacanis 5:11 I'm, it's a joke. It's called a joke.

David Friedberg 5:13 Wow.

David Sacks 5:13 It's called a joke.

David Friedberg 5:14 Uh, now you set him off, J Cal. You really, that, that hurt. You should apologize.

Jason Calacanis 5:19 It's called a joke. I think you guys are wonderful. I think you guys are wonderful.

Chamath Palihapitiya 5:22 Well, I ma- I may be misanthropic, but malcontent I'm not.

Jason Calacanis 5:25 No, Sax and Friedberg are the malcontents, for sure, I'm just being-

David Friedberg 5:28 I'm not malcontent, I'm pretty damn happy.

Jason Calacanis 5:29 You're happy? The last descriptor anybody who knows you would ascribe to Friedberg was happy.

Chamath Palihapitiya 5:35 No, I would say, no, I think he's happy. He's anxious, but he's happy.

Jason Calacanis 5:38 Yeah.

Chamath Palihapitiya 5:38 He's anxious, but happy.

Jason Calacanis 5:40 Did you see the roast? That was not a happy man.

David Friedberg 5:44 That was tearing you up. That was funny, yeah.

Chamath Palihapitiya 5:47 That was the misanthropic part of him.

David Friedberg 5:49 Eventing, that was more eventing.

Chamath Palihapitiya 5:49 Yeah, that was venting, he was venting.

David Friedberg 5:50 Yeah, we've all vented. I'm not unhappy.

Jason Calacanis 5:51 That was rage. It was all pure rage.

David Sacks 5:53 No, I think, I think when Friedberg tries to be funny, it comes out kinda mean.

David Friedberg 5:57 Yeah, maybe that's true.

David Sacks 5:59 Just his sense of humor is just-

Jason Calacanis 5:59 It's a little bit of rage.

David Friedberg 6:01 The only person that sets me off and making me unhappy is you, J Cal. I mean- (laughs)

Guest 6:05 (laughs)

6:05 The four of us could go to therapy, or we could keep recording this podcast every week. (laughs) Which is cheaper? I think it's cheaper for us to just record the pod.

Chamath Palihapitiya 6:13 You know what? I, for one, am thankful to whoever gave you whatever sickness you have that causes you to not be able to talk this week.

Guest 6:20 Okay, great. Thank you.

David Friedberg 6:21 Yeah. You're talking a lot for a guy who can't talk.

Guest 6:23 (laughs)

Chamath Palihapitiya 6:23 Let's cut it out. Okay.

Guest 6:24 You guys are coming at me. I'm sick, be nice to

Guest 6:27 me.

Chamath Palihapitiya 6:27 While we're talking about all kinds of random stuff, the- the number two thing that I see in the What's Happening tab on Twitter right now is how Ron DeSantis is getting blasted for banning AP African American Studies because he thinks it falls under the STOP WOKE Act. That's this, the headlines. It's going absolutely nuclear on Twitter right now. Here's some of the quotes. "Shocking. Ron DeSantis has banned," all caps, "the teaching of AP African American Studies in Florida. Florida has gone from don't say gay to don't say Black." Next tweet. "Claiming it violates the STOP WOKE Act and has no educational value, Florida Governor Ron DeSantis has banned AP African American Studies from schools."

David Sacks 7:08 Let me-

Chamath Palihapitiya 7:08 Crazy.

David Sacks 7:08 ... make a prediction right now. This will all redound to his advantage. The- the same people who said that he was Death Santis for basically not instituting COVID lockdowns, he was proven correct. Then they said that this bill that prohibited the teaching of gender fluidity to five-year-olds, they claim- tried to claim that was a don't say gay bill. 70% of Florida supports that. That redounded to his advantage. I don't know the story behind this particular course, but if the question is whether CRT is gonna be funded by the state and he's preventing that, again, I think that'll be a 70% popular issue. So let's just wait and see how this plays out.

Chamath Palihapitiya 7:44 Fair enough. I just want to claim that my spread trade may be- It's tough to be the leader in the Republican nomination process in January of 2022. It's starting.

David Sacks 7:56 Yeah, I agree-

Chamath Palihapitiya 7:56 Sorry, 2023.

David Sacks 7:57 It's tough to be the front runner-

Chamath Palihapitiya 7:57 It's starting.

David Sacks 7:58 It's tough to be the front runner in either party. But I- I'd say the bigger threat to DeSantis is there's a new poll where Trump came out on top. So Trump's still his biggest threat. Yeah. So unfortunately, J Cal may be right that the Republicans may do something stupid here and, uh, nominate a candidate who's, I think, less electable than DeSantis.

Guest 8:19 I actually don't take any joy in it. I actually-

Chamath Palihapitiya 8:21 I think Nikki Haley is gonna come out of nowhere and win this thing.

Guest 8:24 Well, th- it's possible. I, you know, I- I really would like to see some non-political, non-career politicians run for office, the Bloomberg, you know, sort of category. It feels like these career politicians are just really, really bad at executing and, uh-

Chamath Palihapitiya 8:40 Scumbags.

Guest 8:41 Yeah.

David Sacks 8:41 You know- you know who likes Nikki Haley?

Guest 8:43 Who?

David Sacks 8:45 Democrats. Democrats.

Guest 8:46 Why?

David Sacks 8:46 You guys.

Chamath Palihapitiya 8:47 Why?

Guest 8:47 Why do we like her? I'm an independent.

David Friedberg 8:49 Because she's polarizing. She's polarizing.

David Sacks 8:51 No, she's a safe establishment Republican who basically is not gonna put up, uh, any fierce resistance to what the Davos crowd wants to do.

Chamath Palihapitiya 9:00 I don't think that's true. I think she was pretty-

David Sacks 9:02 She's not gonna win the Republican nomination.

Chamath Palihapitiya 9:03 I don't think she cares about Davos people to save her life. I think that she is a moderate, reasonable person who had to govern in a southern state and got everybody on board. That's- that's pretty crazy. She's a pro-life person who negotiated a 20-week support for abortion in 2014. So this is a person that knows how to get stuff done. South Carolina happens to be the state that's actually at the leading edge of climate transition. She's had more jobs and more money come in, into a southern red state of people and companies willing to build for climate change than any other state in the country.

David Friedberg 9:41 So you like her as a candidate?

Chamath Palihapitiya 9:41 So I don't know. She's just- she's- so I- I just think that she's actually, like, normal and sane and not an idiot.

David Friedberg 9:47 Would you vote for her?

Chamath Palihapitiya 9:48 Absolutely.

David Friedberg 9:48 Over Biden?

Chamath Palihapitiya 9:49 Absolutely. Absolutely.

David Friedberg 9:50 Yeah. Interesting. Sucks.

Chamath Palihapitiya 9:52 100%.

David Sacks 9:53 Yeah, look, if you're really willing to vote for her, then that's interesting. I think that-

Chamath Palihapitiya 9:57 Absolutely, I would. She's- you know, she's young. Her parents had a small business. She was a small business person. Uh, it's tough to be a winner at all of those levels, and she managed to do it. I mean, how do you, as a brown woman, get elected to governor (laughs) of South Carolina and do a lot of really good stuff? That's kinda tough.

David Sacks 10:18 Yeah.

Chamath Palihapitiya 10:19 So I don't know. I think she deserves a closer look. And she's the only one that didn't kowtow to Trump. She was able to play the game, manipulate him, get him to be on her side, and then still told him to go pounce in. That's pretty cool.

David Sacks 10:31 Well, a lot of- a lot of governors managed to do that. I mean-

Chamath Palihapitiya 10:34 No, no, I'm saying- I'm saying she got- she- she went to the United Nations. She did what she needed to do there. That's an important role at that time.

David Sacks 10:42 Actually, Nikki Haley expressly has said she will not run if Trump runs, so she's kowtowed to Trump too.

Guest 10:47 Mm. Mm.

Chamath Palihapitiya 10:47 She wanted to be his VP, right? Like, she was trying to shank, uh, Pence, right? That was her plan.

David Sacks 10:52 Maybe it's a smart strategy, but she said she will not run against Trump. The main alternative to Trump in the Republican Party is DeSantis, and then I'd say the number three in the Republican Party after Trump and DeSantis is Glenn Youngkin right now.

David Friedberg 11:03 Huh.

Chamath Palihapitiya 11:04 Based on what metrics?

David Sacks 11:05 Based on interest in the party. And, you know, I've talked to people and I think the polling will eventually reflect this. He's very talented.

David Friedberg 11:12 J Cal-

David Sacks 11:13 You talk about w- appealing to independence, he was able to win a blue state. Remember, Virginia went for Biden by 10 points and Youngkin was able to win that state. If you ever listen to him campaign, he's a very talented campaigner.

Chamath Palihapitiya 11:26 I think Youngkin is very, very talented. Don't get me wrong. And I think that he would be an extremely credible candidate for president. Here's the thing that Youngkin will get destroyed on is he's literally not been in the job for but for a few, you know, 18 months. So he hasn't done anything. And I think that if it does boil down, now, it may not matter, right? Because look, Obama was a senator for two years or whatever, right? So it may not matter, but to the extent that Republicans demand some bonafides, I think that you'll see Trump and DeSantis attack Youngkin more viciously in a presidential primary than they attack...... Haley on that dimension of you have no experience. And it'll be hard for him to back it up.

David Sacks 12:09 Just one final point, you know, Virginia has this-

Chamath Palihapitiya 12:10 If you had to steel man the other side, that's what they would say.

David Friedberg 12:13 Guys, final, final point, we gotta, we gotta get started.

David Sacks 12:14 Yeah, final point, Virginia has this-

David Friedberg 12:16 Let's go.

David Sacks 12:16 ... wonky, one-term term limit on governors. So, y- you know, he's got no choice but to make a play in 2024-

David Friedberg 12:24 Right.

David Sacks 12:24 ... 'cause he's gonna be termed out anyway.

David Friedberg 12:26 Okay, J Cal, as a lifelong-

Jason Calacanis 12:28 Yeah.

David Friedberg 12:28 ... independent who's only ever voted Democrat-

Jason Calacanis 12:30 (laughs)

David Friedberg 12:30 ... which of these Republican candidates would you vote for?

Jason Calacanis 12:32 75% Democrat, 25% Republican, to be clear, is, is, is-

David Friedberg 12:34 Yeah, sure. So which of these candidates would you vote for-

David Sacks 12:36 He, he voted for Republican one time when he was 12.

David Friedberg 12:38 Yeah.

Jason Calacanis 12:38 No, no, I, I voted it three times.

David Friedberg 12:40 You like Nikki Haley, you like Glenn Youngkin?

Jason Calacanis 12:42 Three times-

David Friedberg 12:42 You like Trump?

Jason Calacanis 12:43 ... I voted Republican. I would like somebody who's younger, and actually I've been quite influenced by your framing of a person who can control the budget and reduce spending-

David Friedberg 12:54 Yeah.

Jason Calacanis 12:54 ... because I do think it's kinda the most existential risk we have right now. So I might be moving to more of a single issue, uh, vote for this presidential election.

David Friedberg 13:03 Ooh, I love that issue, I love that about you now.

Jason Calacanis 13:04 Which is-

David Friedberg 13:05 Oh my God.

Jason Calacanis 13:05 ... I just think, like, we, we have to have somebody younger who is not going to bankrupt the company. And the more these candidates talk about social issues and not economic ones, I think it's a tell that they're not the right person for the job. That-

David Friedberg 13:19 Ah.

Jason Calacanis 13:19 ... that's where I'm personally at, is that-

David Friedberg 13:21 All right, get ready.

Jason Calacanis 13:21 ... this country has a serious financial, existential crisis on its hands and we have to get off social issues and we have to get onto financial austerity.

David Sacks 13:31 Ex- excellent point. So I assume then you support-

Jason Calacanis 13:33 Yeah.

David Sacks 13:33 ... the Republicans in this looming, uh, budget showdown?

Jason Calacanis 13:37 I actually do, yes. I do think we should-

David Friedberg 13:39 All right.

Jason Calacanis 13:39 ... hold the line on spending.

David Sacks 13:41 So you support the Republicans voting no on raising the debt ceiling?

Jason Calacanis 13:46 Yeah, I actually do. I think we should-

David Sacks 13:48 You do? Okay.

Jason Calacanis 13:48 ... start pumping the brakes on spending, and I do think the Tea Party... Uh, now that doesn't mean I like those candidates, they're kinda whack jobs actually, but-

Chamath Palihapitiya 13:58 Wait, you think George Santos is a whack job?

Jason Calacanis 14:01 (laughs)

David Friedberg 14:01 (laughs)

Jason Calacanis 14:01 Listen, it's the whack pack. The Republican Party has turned into some crazy Howard Stern whack pack. Sacks is appalled by it. He just can't-

David Friedberg 14:09 Some elements of both parties look that way.

Jason Calacanis 14:11 Sacks, would you, would you ever invite George Santos-

David Friedberg 14:14 ... but moderates.

Jason Calacanis 14:14 ... to your house? Who would you invite... Okay, actually I have a real, legitimate question. He'd steal the silverware. (laughs) Are you kidding me?

Chamath Palihapitiya 14:18 Who, who would you be willing-

Jason Calacanis 14:19 He'd steal the silverware. (laughs)

Chamath Palihapitiya 14:20 ... to host a dinner for at your house? Not a fundraising dinner, but just invite to the house. You, you can pick between two people.

Jason Calacanis 14:25 Oh no.

Chamath Palihapitiya 14:25 Alexandria Ocasio-Cortez or George Campos. Who would you pick?

Jason Calacanis 14:28 Oh, AOC for sure.

Chamath Palihapitiya 14:29 George Santos, like, who do you prefer?

David Sacks 14:31 I'd rather probably meet and talk to AOC.

Jason Calacanis 14:34 Of course.

David Sacks 14:34 Because it would be interesting. Do I want-

Jason Calacanis 14:36 Yes.

David Sacks 14:36 ... to fundraise for her? No, but...

Chamath Palihapitiya 14:37 No, no, no, I'm not asking fundraising. Who would you-

David Sacks 14:39 Okay, yeah.

Jason Calacanis 14:39 Just let in the door, front door, unlock the front door for her.

Chamath Palihapitiya 14:42 Unlock the front door of the mausoleum-

David Sacks 14:44 Yeah, I would talk to, I would talk to AOC. Yeah, I would talk to AOC.

Chamath Palihapitiya 14:45 But what would you do to George? Would you not even return the email if he said, "David, I'm in town."

Jason Calacanis 14:49 I wouldn't let him in the main house.

Chamath Palihapitiya 14:50 "I'd love to come for dinner."

Jason Calacanis 14:51 Don't let him in the main house.

Chamath Palihapitiya 14:52 Keep it a little yard.

David Sacks 14:52 I wouldn't want to, I wouldn't want to deal with him. Yeah, he might, he might steal the silverware or something.

Jason Calacanis 14:56 (laughs) It's so crazy.

David Sacks 15:00 (laughs)

Jason Calacanis 15:00 I mean, it's so nuts.

David Friedberg 15:01 Listen, hold on, hold on, hold on, we gotta get started. Um, as your moderator, I'm gonna try and keep us on track.

Jason Calacanis 15:06 Good luck.

David Sacks 15:07 (laughs)

David Friedberg 15:07 Uh, yeah, no, look, it's a, it's a energetic day.

Jason Calacanis 15:10 Welcome to my world.

David Friedberg 15:10 I appreciate, I appreciate my co-hosts and their enthusiasm for, for all topics no matter.

David Sacks 15:13 By the way, we didn't give J. Cal enough recognition for supporting the Republicans in this budget showdown. I mean, I'm like blown away by this.

David Friedberg 15:20 I think it's great. I think it's great. And as you guys know, just to restate, it's my number one concern on Earth today.

Jason Calacanis 15:26 Yep.

David Friedberg 15:26 And I, I think that the importance of this topic really needs to kinda rise above politics.

Jason Calacanis 15:31 Of all the things you've said, Friedberg, in the last like six months on this program, it's the one thing that's stuck with me and it's the one thing that has like actually now I realize is the most important thing for this country, is fiscal responsibility, austerity measures, and looking at how we're spending money and looking at immigration and looking at economic velocity and employment. And competing on the world stage with a solid balance sheet is... The balance sheet is how you compete. The balance sheet is how you compete.

David Friedberg 16:00 I think it rises above social issues and it rises above climate change.

Jason Calacanis 16:03 It dwarfs them.

David Friedberg 16:04 Because you cannot, you, you cannot address climate change or social issues or infrastructure or unemployment-

Jason Calacanis 16:10 Yes.

David Friedberg 16:10 ... unless we have the ability to operate as a country over the long term and have the ability to have fr- the, the continuing credit of the United States dollar. And that's why I think it's so important.

Jason Calacanis 16:21 Friedberg, I'm dealing this with, with startups I have right now, and I tell them, "The balance sheet is how you compete." If your balance sheet is flipped upside down and you're gonna be out of business in nine months, you're not competing with these two other companies in your sector. You have to have a strong balance sheet, take the austerity measures, make the cuts, and then compete with a strong balance sheet. It's just so obvious. This country's balance sheet is getting flipped upside down, and we are gonna have so many-

David Friedberg 16:47 Yeah.

Jason Calacanis 16:48 ... very complex second and third order effects with the interest payments.

Chamath Palihapitiya 16:53 If you value austerity, if you value austerity, if you go back in history and you actually ask of the prime ministers or presidents of various countries, particularly First World countries that have actually had an impact in implementing austerity, you know what the unifying thing that I can say is? Women do a much better job than men. Okay? You want austerity, you're better off with a, with Margaret Thatcher-

David Friedberg 17:15 Margaret Thatcher.

Chamath Palihapitiya 17:15 ... than you are with a d- with, than with a dude, AKA Nikki Haley, enterstage right now.

Jason Calacanis 17:21 I, I, I, I'm totally up with Nikki Haley.

David Friedberg 17:22 I think, I think it's, look, it's a, it's a very hard position to be in as a politician because you have to position your objective as one of taking things away. And the primary way-

Chamath Palihapitiya 17:33 Mm-hmm.

David Friedberg 17:33 ... to get elected in a democracy, just like in junior high when you run for president of the junior high class is, "I'm gonna make the vending machines free," you get elected. And when you run in politics, you always promise your constituents what they're gonna get that they don't have today. And that's the model for getting elected. Whatever the issue is of the day, whatever the issue du jour de decade, whatever, it's all about what I'm gonna give you that you don't have today. And so to flip that conversation around we all have to sacrifice together for the long term viability of our economic prosperity, we need to do, we need to give up the following things, that is a very hard platform to run i- on when someone on the other side of the, the podium, on the other side of the stage is saying, "I'm gonna give you these 10 things." And it's very hard to get elected. And that's why democracies ultimately eat themselves. And I forgot who said it, but ultimately all democracies end up realizing they can vote themselves all the money.... and then you have this big cycle. And that's, that's the biggest-

David Sacks 18:23 Yeah, yeah. No, I think so.

Jason Calacanis 18:23 The, the, the Republicans did the most brilliant thing ever recently. They moved from Stop the Steal to Stop the Spend. This is a genius thing they stumbled into. Nobody wants to hear them talking about the election being stolen. That's complete nonsense. But Stop the Spend, we all understand that. Everybody is seeing it in their own personal balance sheets. They're seeing it in their companies. They're seeing it in their families. They're seeing it with their mortgage payment. They're looking at their, you know, uh, college tuition bills. They're looking at their car payments going from $400 to $700 and they're seeing what variable interest does. We have variable interest debt. This stuff is gonna skyrocket, whether it's Elon's payments for Twitter, or your payments for your mortgage, or our country's payments for our debt, we have to stop the spend.

David Friedberg 19:10 I wanna, I wanna- so you guys-

David Sacks 19:10 You're talking about the effective interest rates.

Jason Calacanis 19:12 Yes.

David Friedberg 19:12 Yeah,

David Friedberg 19:13 but guys, let's just continue the conversation and talk a little bit about this World Economic Forum gathering that, that took place in Davos. I know you guys wanted to, to talk about it this week.

David Sacks 19:24 Can I just applaud Jake L's intellectual honesty? I'm, like, blown away right now.

David Friedberg 19:27 Well, it's 'cause he's sick. Okay, so look, um-

Jason Calacanis 19:29 No, it's 'cause I'm not moderating.

David Friedberg 19:30 (laughs)

David Sacks 19:30 (laughs)

Jason Calacanis 19:30 When I moderate, I'm always trying to get the best out of you, Sax.

David Friedberg 19:33 The budget conversation is an important one, as it relates also to the global economy and growth. So Davos took place, uh, you know, over this past week, just so everyone knows, and I remember, you know, working at Google 2004. I remember, like, how exciting it was for the executives to kind of start to transition into the Davos stage. It became this moment where you're kind of finally on the world stage. It's an exciting moment for CEOs, for world leaders, for global economists to get together, talk about the state of the global economy, where the world is headed, what we can and should be doing about it. And Davos is also this, this place of pride and prestige for being invited and being a part of the party, the global elite party, as some people are now calling it. And that's what I think is the important conversation, is that the World Economic Forum gathering in Davos has recently been cast as this gathering of the global elites, those who are trying to take control and run the world a- as they see fit. And Sax, I'd love your point of view on how that transition has happened. Because one of the important ways that the Davos gathering has been cast, and the World Economic Forum has been cast, is in the negative light of being globalists. And globalism has had a really important role in driving global economic growth and prosperity. And it has had these adverse effects in the US, as we've seen, with wealth inequality, loss of jobs, offshoring, gutting of industries, and so on. I think that there's a really important way that Davos has been politicized, but the risk of that is significant. Because if we do lean into this globalist notion and say it's all about elites trying to take control of our world, and we all become isolationists, that countries around the world can suffer deeply from the economic consequences of that shift. So maybe, Sax, you can kick this off, and es- especially in light of our conversation today about the need for economic growth and the reduction of global debt to support, you know, a more prosperous world in the future. This idea that right now we're talking about Davos and the World Economic Forum as a gathering of global elites, and maybe, Sax, you can kind of give us the history and the point of view on how that positioning has come about.

David Sacks 21:38 Well, it's a meeting of, of global business and government leaders, so they are the elites. I mean, you add them all together and they do control a substantial portion of the world economy and most of the, you know, nations with the biggest economies. So there's no question, these are some of the most important people in the world. A bunch of the articles coming out of Davos reported the somber mood and tone of the conference. The level of anxiety and worry was very high. And I think that, for a brief moment, it looked like these people were staring in the mirror and realizing that their management of the global economy over the last couple of decades has been a bit of a disaster. I mean, you do have ruinous deficits and debts piling up in bo- the US and across the world, something like 350% debt to GDP globally. So we've talked about that. You've got this war in Ukraine that I and many people around the world think was easily avoidable and was a diplomatic failure. You're coming off of two years of badly botched COVID mismanagement, where the governments of the world pursued a horrible policy on COVID and made everything worse. You've got decades of energy policy promoted by the World Economic Forum where they want to get people off fossil fuels and natural gas and get them on to less dense, less reliable energy, including promoting things like organic farming in Sri Lanka, which we talked about-

David Friedberg 23:03 Right. Right.

David Sacks 23:03 ... on the show, caused their economy to collapse. You've got the World Economic Forum promoting ideas like, "You're gonna own nothing in the year 2030 and you're gonna be eating insects because no one should be eating meat." So you've got these, like, wacky, extreme, you know, environmentalist ideas and anti-capitalist, anti-property ideas coming out of Davos. So I think the whole thing's been a bit of a disaster. And for a brief moment, it looked like these people, again, were self-reflecting on their role in creating these disasters. But of course, the tone quickly shifted to blaming disinformation on social media as the root cause of all these problems, as opposed to their decades of decision-making running, you know, the leading nations of the world and the leading companies of the world. And I think that the blame is properly put not on social media, but on these leaders for making, you know, bad decisions.

David Friedberg 23:57 Do you believe in the benefits of global trade, where countries trade with one another and shift the sourcing of supply and labor to the cheaper source so that the buyer can benefit from having things at a lower price, and ultimately the global economy grows, as kind of being beneficial to the US over the last 30 years? Or net negative? 'Cause we talked, you know, about the, the obvious...... consequences of global trade, where we've had industries gutted in the United States and now we're trying to onshore them again and build redundancy and so on. But that's becoming very expensive and ultimately leads to the inflation of goods and services. And so as you look at kind of the, the-

David Sacks 24:37 Yeah.

David Friedberg 24:38 ... the positive agenda of the World Economic Forum over the last 30 years being about improving global trade and global relations to enable global trade, are you an anti-globalist? And, you know, do you start to see yourself falling more in that camp as you see and hear more of what comes out of Davos and from these organizations like them?

David Sacks 24:56 Well, look, all economic prosperity comes from trade. If we didn't have trade, then we would all be subsistence farmers and hunters and gatherers. So we basically specialize in something and then create an overabundance to that and trade it for the rest of our necessities. The issue is that trade not only creates prosperity, it creates dependencies because you're dependent on the people you're trading with, and also it has distributional f- effects in terms of geopolitical consequences. So, trade with China has created some prosperity, but it's also hollowed out the American manufacturing sector while also making China very rich, which has basically turned China into a major geopolitical competitor for the United States. So I'm not like a free trade fanatic. I mean, I understand the ways that trade creates wealth, but I think it can also create these downsides that have to be managed. And the fact of the matter is that this unfettered free trade ideology contained the seeds of its own destruction because all the revisionist powers who are seeking to revise the US-led global order, they were basically enriched and built up by the very free trade ideology that neoliberals were promoting. So this neoliberal wor- world order has kind of created the seeds of its own destruction. I think that it would have been much smarter for us two decades ago to be much more restrained in the China trade and to not throw open our markets to Chinese products. We basically gave them MFN status. This is back in the early 2000s and it was a bipartisan project and bi- a bipartisan decision. But the result of that has been the rapid rise of China at the expense of our manufacturing sectors.

David Friedberg 26:40 And to the benefit of our consumer class, right? I mean, we do have $600 iPhones because of it and we do have cheap TVs and there has been a consumer market that's demanded these low price goods to, you know-

David Sacks 26:51 Yeah, but I mean-

David Friedberg 26:51 ... live a better life, right? Like-

David Sacks 26:52 So, yeah, but so, so everyone gets cheap goods at Target, but in exchange for that, we now have a real peer competitor to the United States which is capable of disrupting, let's say, our primacy in East Asia and, you know, is creating a much more challenging world. So look, I, I can understand the reasons why people bought into this two decades ago, but I think that if we had it to do all over again, I think most people would recognize that we should not have given China permanent MFN status and we should have been more temperate in our willingness to throw open our markets to these countries.

David Friedberg 27:28 Chamath, do you think that the World Economic Forum has kind of transitioned into this kind of neoliberal organization now that's promoting these neoliberal beliefs that aren't really tied to the original construct of global tr- enabling and supporting global trade and supporting the global economy and creating more prosperity and security around the world?

Chamath Palihapitiya 27:49 I think it appeals to the insecure overachiever elite.

David Friedberg 27:54 Yeah.

Chamath Palihapitiya 27:54 You know, nobody building anything really gives a shit about Davos. Nobody is thinking, "What's going on?" Nobody even knows when it happens.

David Friedberg 28:01 Right.

Chamath Palihapitiya 28:02 So who cares about it? People who like status and went to fancy schools and wants to feel like they're in the club and that's how they've made it is going to this place which underneath is a membership organization where people pay based on the number of people that get to go. So is it really that important? Substantively, no. But overachieving surplus elites in the West really value the signal that it represents to other overachieving surplus elites in the West. So that's what Davos is. That's what the Allen and Company Conference has become. A lot of these things started off much purer than what they are today, but these are all membership-driven, revenue-generating efforts. In 30 or 40 years, the All In Summit will probably become that too.

David Friedberg 28:53 (laughs)

Chamath Palihapitiya 28:54 It's just the nature of things. So I wouldn't spend so much time focused on a group of people getting together. The funniest thing about Davos that I saw was Zero Hedge, which said that the amount of prostitution is at record levels in Davos. And so it just kind of boils down to what it is, which is like any other conference, it just happens to be with more security guards and less security guards. And the same stupid stuff happens at Davos that happens in Vegas at name your conference, CES. It's just a different kind of attendee. So I think the bigger thing is that we are learning that the world tends to have these policy perspectives that swing in a pendulum, and the problem with the pendulum is that it, it is at extremes. And Sachs is right. We went from an extreme where we were very closed off and we were essentially subsistence farmers, all of us were, and then the pendulum has essentially peaked probably in the mid teens of this decade or of this century, where we realized too much globalization actually hollows out local economies. So we need to find the equilibrium point, and that inherently has more inflation, that inherently has higher prices, and that inherently has slower progress, but more consistent progress that benefits more people. And this is what is so ideologically disruptive to, again, surplus elites, because they need the $600 iPhone. The idea that they can't upgrade every year...... drives them into such a tizzy that they need to export all the jobs. Whereas, a $1,000 iPhone or a $1,500 iPhone may just mean that your upgrade cycle is two years. And just ask yourself, how many times have you upgraded as soon as the phone came out to realize, "Man, this phone is actually worse than the previous version and I probably could have just waited"? And there's a lot of work that actually goes into building these things to actually make them better. So all you're doing is you're giving up optionality, you're allowing your brothers and sisters to struggle, to basically feed the profit motives of one company. That, in hindsight, doesn't need to happen. So there's an equilibrium and I think that these next few decades will be about finding it. We have decided, it's categorical, that that level of globalization that we have had, this unitary, singular, monocultural way of thinking about things, is over. And David's right, it's because that system has created too many threats to the hegemony that brought us there.

David Friedberg 31:30 J-Cal, do you-

Chamath Palihapitiya 31:31 And that's the good thing, I think, in general.

David Friedberg 31:33 Yeah.

Chamath Palihapitiya 31:33 It'll be, it'll be more prosperity for more people, but it'll be slower and it will create points of friction that are represented in inflation and higher prices.

David Friedberg 31:42 Right, that's right. So as, J-Cal, as, you know, Chamath points out, like, if you're upgrading every two years instead of one year, your economy doesn't grow as fast, you have less spending.

Jason Calacanis 31:50 Yeah.

David Friedberg 31:50 If the price of things go up, you have inflation. The net cost of de-globalization is higher prices and lower economic growth. That's just fundamental kind of macroeconomics that, that-

Chamath Palihapitiya 32:02 No, that's not true.

David Friedberg 32:03 Well-

Chamath Palihapitiya 32:03 That's not true because the de-globalization in an individual economy will actually create GDP because you'll have to rebuild the things...

David Friedberg 32:09 That's right.

Chamath Palihapitiya 32:09 ... that you used to import.

David Friedberg 32:11 That's right, yeah. And over a period of time, theoretically, you could catch up and accelerate. But J-Cal, like, when you weigh this conversation about Davos and globalization...

Jason Calacanis 32:21 Yeah.

David Friedberg 32:21 ... and US security against the one we just had, which is why I wanted to talk about this, we're running into a debt crisis. We have limited spending capacity. We have a significant amount of investment needed if we are going to cut global trade ties that we've depended on historically and start to build redundancy. Can we afford this as a country? Can the West afford this, given the economic slowdowns and inflation right now? And, you know, how do we balance kind of these conversations against our domestic challenges economically?

Jason Calacanis 32:53 I think Davos has a, a pretty serious PR problem. They have dubbed themselves, like, essentially a self-appointed illuminati for the rest of us, and that they're gonna set some global agenda. I think this year's agenda was, like, finding the future or defining the future. Nobody asked these people to be in charge. And if you look at what's happened in the world, the chaos of COVID, and you look at what's happened in terms of energy policy in Europe and then this obsession with social issues and being told, you know, "These farmers, these truckers, you're bad people, you're not woke," whatever it is, I think the public looks at Davos as the manifestation of these global elites who are lording over them some master plan, whether it's real or not, that they're not part of, and that doesn't take them into consideration, and that takes into consideration only their profits. And when you actually peel it back, as Chamath correctly pointed out, Davos is a huge grift. Uh, they, they recruited me to be part of their world leaders 15 years ago after I had sold-

David Friedberg 33:59 You, did you go?

Jason Calacanis 34:00 ... my second company. And I met Claus, the guy who runs it, at some New York Four Seasons event, and, uh, then I got the bill. And to be a world-

David Friedberg 34:10 (laughs)

Jason Calacanis 34:10 ... leader-

David Friedberg 34:11 You got the bill. (laughs)

Jason Calacanis 34:12 ... was forty-fucking-thousand dollars. And I was like, "What? A global future leader? I don't know what that means, uh, but I'm not giving you $40,000."

Chamath Palihapitiya 34:21 Sorry, you had, you had to pay?

Jason Calacanis 34:24 You had to pay to be a global-

Chamath Palihapitiya 34:26 Oh, what a grift.

Jason Calacanis 34:26 ... future leader. And you didn't have to pay for a $6,000 TED ticket at the time.

David Friedberg 34:30 What a, what a joke.

Jason Calacanis 34:31 This was 40 large. And, uh, I just thought, "You know-

David Friedberg 34:36 What a joke.

Jason Calacanis 34:36 ... this is not for me." Uh, and-

David Friedberg 34:39 What a joke.

Jason Calacanis 34:40 ... I think people would much rather see some resiliency in the supply chain and they would rather see the origins of COVID and why we spent two years in a lockdown, and was that a cover-up of the United States funding gain of research, you know, being done in Wuhan? Like, and, and why are we shutting down nuclear power plants and what exactly is the energy policy in Germany? People are looking at incompetent elites going to Davos, having a big party, and then setting an agenda for them that they don't understand or want. And I think this is where, you know, the, the, the contempt for Davos is peaking this year. And it should. If you're being invited to Davos and other people are not being invited and they don't have a seat at the table and a voice at the table, you can tell that all the journalists there are on an access journalism pass. What does that mean, access journalism? They get to come there and they get to hang out with elites if and only if their coverage fits a certain profile. And if you find me the top 10 most critical anti-globalization journalists in the world, I can guarantee you that they don't have credentials. I think it's like a bankrupt organization that should just be shut down, and the people who are going there are involved-

David Friedberg 35:59 (laughs) Like, uh-

Jason Calacanis 35:59 No, I think it's culturally bankrupt.

David Friedberg 36:01 You guys have so much disdain, it's interesting.

Jason Calacanis 36:03 No, I do.

David Friedberg 36:03 Like, like let me ask, let me ask you a question <|agent|><|en|>

Jason Calacanis 36:04 I think it's, I think it's, like, not what the world wants right now. The world wants transparency and the world wants ownership of all the screw-ups. You know, from COVID-

David Friedberg 36:15 Yeah.

Jason Calacanis 36:15 ... to energy policy. We want ownership of those issues, not a bunch of elites drinking champagne.

Chamath Palihapitiya 36:21 I'd rather spend a week with entrepreneurs or, frankly, spend a week with my kids, or, frank-

Jason Calacanis 36:25 Yes.

Chamath Palihapitiya 36:25 ... spend a week playing poker with my friends.

Jason Calacanis 36:27 Of course, let's do it.

Chamath Palihapitiya 36:28 There, there are, like, umpteen things that are above the list. So it's kind of like, let them get together. I think it's fine for them to get together. They should do it. I just think that if you're not there, I would not weigh these things so heavily, 'cause it speaks more to your own insecurity than it does to their actual influence on things.

David Friedberg 36:42 Yeah, the term elite is an interesting one. You, you, com- companies need a CEO to run the company. It's not run by 10,000 employees. And governments need a president...... to oversee the government. And I think the idea that some small number of people that are in charge getting together is now being cast as an elite gathering and elitism in itself is the failure is I think like a really-

Chamath Palihapitiya 37:05 I don't think it's an elite gathering. I think it's very important to get this nuance right. It's a gathering of elites and that's very different than an elite gathering. An elite gathering is when like Michael Jordan and LeBron James and Steph Curry get together and work on their basketball game, that's an elite gathering. A gathering of elites is what's happening in Davos. (laughs)

Jason Calacanis 37:25 (laughs)

Chamath Palihapitiya 37:25 That's a fair point.

David Friedberg 37:26 But they are the presidents-

Chamath Palihapitiya 37:27 Go ahead, Sax.

David Friedberg 37:28 ... of their companies and the presidents of their countries, right?

David Sacks 37:30 Yeah. So I would differentiate between the people who are merely attending, who are paying the $40,000-

David Friedberg 37:35 Right. Right.

David Sacks 37:35 ... who are probably a bunch of hangers-on-

Jason Calacanis 37:37 It's now 250, by the way.

David Friedberg 37:39 $250,000, yeah.

David Sacks 37:40 250,000. Yeah, anyone willing to pay that is like, you know, totally an insecure, you know, surplus elite.

David Friedberg 37:46 By the way, I just got back from Davos.

Jason Calacanis 37:48 (laughs)

David Sacks 37:48 Oh, you did? Okay. Well, congratulations.

David Friedberg 37:50 (laughs)

David Sacks 37:50 Looks good on you, though.

David Friedberg 37:52 (laughs) Right. Go ahead, go ahead.

David Sacks 37:52 Looks good on you.

David Friedberg 37:53 Yeah, right.

Jason Calacanis 37:53 Did you spend your own money or your LPs money?

David Friedberg 37:56 No, I didn't go to Davos. (laughs)

Jason Calacanis 37:57 Oh my Lord. (laughs)

David Sacks 37:59 (laughs)

David Friedberg 37:59 Find me one person that went to Davos that spent their own money. There's like probably none.

David Sacks 38:03 Right, exactly. So the- there's the- the hangers-on who are spending $250,000 to feel important, but then there's the people who are invited, who probably don't spend any money, who are basically speaking, right? And you gotta say that the- the group of people who are speaking at Davos individually and collectively are quite influential. They are the leaders of countries and- and Fortune 500 companies.

Chamath Palihapitiya 38:26 Sure, but you can agree that they literally don't say anything that's noteworthy.

David Friedberg 38:29 (laughs)

Chamath Palihapitiya 38:29 Because they're not allowed to.

David Sacks 38:30 They're not saying anything that's that different of what they would say the previous week or the following week. So... But it's-

David Friedberg 38:35 It's a forum. It's a platform for getting-

David Sacks 38:36 It's a f- it's a f- Yeah, it's a forum for all these-

David Friedberg 38:38 Getting amplification. Yeah. Yeah.

David Sacks 38:38 ... people to get- to- yeah, to get together. Look, in terms of the critique of it, Friedberg, you asked, "How far back does this go?" It's- this is not like a new thing. The- the term Davos man was coined back in 2004 by a Harvard professor named Sam Huntington, who wrote a book called Clash of Civilizations. He's the professor of international relations at Harvard, and he coined the term Davos man to refer to a globalist who, quote, "had little need for national loyalty, who viewed national boundaries as obstacles that are thankfully, uh, vanishing." That's how Huntington defined Davos man. And there's been a reaction to these Davos men that's been growing for a couple of decades. I mean, obviously, the election of Trump was a reaction to that. Brexit was a huge reaction to that. And I think that the resistance to the imposition of their, again, their- their globalist policies, which I guess you could define as believing in this like borderless world, you know, economically and politically, I think that's been receding in favor of more nationalist leaders who want to promote their own country's interests. And I think that- that trend is going to continue.

David Friedberg 39:51 Well, Chamath, let's- let's transition this to the- the broader question that I think we got into it a couple episodes ago on how can we afford this transition if there is this mounting kind of trend against globalization, this mounting de-globalization movement and effort, particularly in the US. And again, as Sax pointed out, global debt to GDP is something like 300 to 350% depending on how you count, and we're running into a debt ceiling here in the US. I guess the question is, how do we afford to build the infrastructure redundancy and make the investments at home to replace global trade? Can we afford to do it? And how's this going to play out as we run into this, you know, s- uh, debt ceiling vote?

Chamath Palihapitiya 40:37 I don't think that's the right question. I think it's the-

David Friedberg 40:39 Yeah.

Chamath Palihapitiya 40:39 ... inverse of that question. How can we afford not to? With the amount of discontent and the amount of economic strain that people feel, if you want to really quell populism, you're going to have to create economic vibrancy at home. When people are making money and they find purpose, they're less agitated, they're not storming the Capitol, they're not electing fringe candidates, they're not doing domestic terrorism, they're just going to work and building a life, right? We know that. So how can we afford not to? How can we afford not to, like, bring back jobs to the heartland of America? So the reality that I have, and I think a lot of people have, is that this debt to GDP thing is a bit of an intellectual red herring. And the reason is people talk about this thing constantly in these absolute terms with no historical precedent that relates well to our current moment. There is no magic number at which thing this experiment that's called America fails. So I think that you have to be a little bit more intellectually honest and say that at best, it's a relative problem, and it's relative to the countries that have already established dominance, of which there are eight or nine, and then the emerging economies, and then thinking about what critical things will they bring to the table in 15 or 20 years from now. And in that context, I think that people will hem and haw, but ultimately they'll capitulate, they will raise the debt ceiling, and they'll continue to fund this transition away from globalism. And I think that's the argument that will get the Republicans over the line, because it's going to bring a lot of spending and stimulus and jobs to frankly a lot of red states that would otherwise kind of continue to wither and die on the vine.

David Friedberg 42:26 I think here's my biggest concern. We're either trying to walk a tightrope or there's no tightrope to walk. And if we make these investments and they're not economically viable investments, it's a path to ruin. And what I mean by that is if we're building factories, manufacturing facilities, infrastructure that relies on yesteryear's technology and systems of production and glo- and- and- and kind of economic systems-... and there are alternatives that are competing on a global stage that are better, more productive, more advanced, then we lose, and we've made an investment in a negative ROI way.

Chamath Palihapitiya 43:07 But hold, hold on a second.

David Friedberg 43:08 Because those jobs won't last.

Chamath Palihapitiya 43:08 Can I, can I ask you a question?

David Friedberg 43:10 Yeah.

Chamath Palihapitiya 43:10 See, when, when you say that though, you're making a very basic assumption, which I think you can question, which is you are underpinning that on fundamental economics that can change if we choose to. For example, let's take like natural resources, okay? Every time you do a plan, the industry, and I define the industry as every for-profit company and Wall Street and the debt markets, they refuse to underwrite this thing at a higher cost of capital. They use a WACC of six or seven or eight, and they will fight tooth and nail to use the smallest discount rate possible, because it allows them to capture more of the profit dollars. But if you actually had a realistic WACC of like 10% on an, on a massive infrastructure project, guess what? You're actually pretty equivalent to a government, and in fact, in many cases, the government becomes cheaper. So I think the thing that is worth debating, and I'd like your reaction to this, it's not that what you're saying. It's we refuse to change the guardrails on our profit-making ability, and if you extended the window, if you changed the discount rate, if you said PEs can be different, you would have a very different economic justification for what you just said. It completely changes, a hundred basis points changes everything you're saying by tens of years.

David Friedberg 44:25 One way to describe that, yeah, is, uh, uh, another way to reframe what you just said is that the useful lifespan of an investment isn't 40 years or 50 years, but it may be 12 years. And if you, if you recast the investment decision as this has to be a 12-year return instead of allowing it to be modeled as a 40-year return, then you start to really filter out a lot of the nonsense, and you can actually see real payback. It doesn't make sense to spend $100 billion on a train to take people from LA to Fresno or whatever craziness the, the California high-speed rail program has turned into. It was originally like a billion dollars to go from LA to, to San Francisco. There was economic justification. To get payback on $100 billion or whatever it's ballooned into, the whole system should be shut down. So I guess there's a, from a policy perspective and accountability framing that's missing, but also bringing in the time horizon on which we need to get paid back for these things. My point was that in China, and I've, I've made this point many times, but I just think it's a really important one that'll play out over the next couple of years, they're building 450 nuclear power plants. They're gonna get the cost of industrial power below five cents or four cents a kilowatt hour, and they're electrifying all their factories. As they do that, it's no longer a unit of human labor that's needed to produce goods. It's a unit of electricity, and if they're driving down the cost of electricity and all products can be made using electricity, you have a huge economic advantage.

Chamath Palihapitiya 45:52 It's not the cure-all that you think that is. Even if you have free energy, you have to think about the inputs and the thing that China-

David Friedberg 45:58 Sorry, I, but no, no, sorry. I, I'm not talking about energy. I'm just saying a general framing, like...

Chamath Palihapitiya 46:02 No, no, I understand. I-

David Friedberg 46:03 My point being like, the investments we should be making are where is the puck headed? Not where has the puck been?

Chamath Palihapitiya 46:09 No, no. So I just, I just wanted to comment on where the puck is heading. Even if energy is zero in China, you have to think about inputs, meaning factories make things with inputs. And if you look, for example, in natural resources, the inputs by and large don't exist in China. And so all I'm saying is that all of these inputs, whether again, you can take natural resources that proliferate massively in the United States, it turns out that India is utterly, utterly, utterly poorly addressed in a geographical survey perspective. And we are finding that India's raw resources are off the charts, okay? There's certain places in Africa, tons of stuff in Indonesia and Australia. All of those things may not have to go to China because there are subsidies or there are equivalently cheaper decisions that governments can make so that they choose not to send it. And all of a sudden, all of that spending doesn't matter as much because the Australian government makes a trade-off that says, "You know what? I'd rather have these jobs here, and I'm willing to have a longer payback cycle for these jobs to be here than instead of ship it to China." And he, they tell the, they, they tell the Australian citizens, "I'm sorry guys, but you're gonna have to replace your car every seven years as opposed to every five. I hope you're okay with that. But that'll mean full employment and it'll prevent fringe candidates and populism and let's go forward."

David Friedberg 47:30 Where do you invest-

Chamath Palihapitiya 47:33 I am investing-

David Friedberg 47:33 ... to support your thesis?

Chamath Palihapitiya 47:34 I am investing a lot of money in those places that control the natural resources that are poorly understood, meaning there are places like India where our geological survey capacity is relatively naive, and it turns out that in critical parts of the energy supply chain or other places, they can play a huge role. And the Indian government's cost of capital has an element, they're sophisticated enough to add a f- an element to the formula that accounts for full employment. If I build it in this state and if I try to get this many jobs created, the full circle feedback of that allows me to actually transfer price it into the Indian market at this price, which is cheaper than anything that China can do, even at zero energy. That's the kind of sophisticated decision-making that is emerging because of this de-globalization trend, and it's happening everywhere. So the Indians are doing it, the Germans are doing it, and then the US is doing it. And then on top of that, what they're, what they're doing in terms of game theory, which I think is even more sophisticated, is they're not letting China be alone. They're actually now slowing China down, because China, turns out, actually needs inputs from these Western economies, and they're like, "We're just not gonna give them to you anymore. So do the best you can." For example, in semiconductors, the Dutch, the Germans, the Americans, we've now essentially embargoed all of our most sophisticated equipment from ever getting in there.That will increase, even with zero energy, the cost of what comes out of there. And that will balance the playing field so that the Germans, the Dutch, the Americans can bring other partners in at a different cost of capital to make it economically neutral and at parody. And the reason they'll do it is to create jobs for Americans, or the Dutch, or for the Germans.

David Friedberg 49:30 Okay.

Jason Calacanis 49:31 I think the most-

David Friedberg 49:32 Yeah, go ahead, J-Cal.

Jason Calacanis 49:32 ... uh, Freeburg, I, I, I just, I, I think the most important thing here isn't, like energy, I don't think it's infrastructure, I don't think it's natural resources, at least for America. It, it's entrepreneurs, and, and that's what it's always been for this country, and its immigration is the silver bullet here and inspiration. And, and the freedom that this country has for entrepreneurs and founders to pursue a vision, to start a company, that's why we've won so big historically, is the, the combination of immigration and the inspiration that these entrepreneurs do on a global basis to get more entrepreneurs to come to this country, to go to Stanford, to start companies. And that's why China is now losing. Uh, they cribbed this incredible formula we had of letting Jack Ma do Alibaba, and then they decided to, for whatever, you know, insecure or stupid reason or pragmatic reason, to consolidate power. A- and that's what will push the world forward and, and make our country thrive. We have to fix immigration. We have to keep letting entrepreneurs define the future because the government can do so much. They, they can underwrite a couple of chip factories here or there. Sure, we could put money into nuclear or fission or fusion, whatever the next technology is, but you need a singular person who wants to make it their life's mission, who wants to have their sense of pride and innovation push the world forward, and those people are rare. And we are in a competition globally that we are not focused on, uh, that we need to get refocused on to recruit the greatest minds in the world who want to change the world, to do it on American soil.

David Friedberg 51:14 I do not disagree with you, J-Cal. I think, you know, to my earlier comment about how do we walk the tightrope of the debt burden, the de-globalization and populous and movements and the, and the challenges and opportunities ahead, it has to come through innovation. I think that's how you, you have to invent a new tightrope, basically.

Jason Calacanis 51:31 I think the challenge though is, Freeburg, that it takes a recognition that there are singular individuals in the world, one in a million, one in 10 million, one in 100,000, whatever it is, who can just drive an entire economy forward, whether it's Gates with Microsoft or Steve Jobs with Apple. There are singular individuals who come to this country-

Chamath Palihapitiya 51:53 Bam, Bam Brogan with, uh, the tunneling company.

Jason Calacanis 51:56 (laughs) Nice follow-up. Nobody knows what you're talking about except for me.

David Friedberg 52:02 (laughs)

Jason Calacanis 52:03 There are people who will push these things forward a- and, and take risk. And we have to-

David Friedberg 52:08 Yeah.

Jason Calacanis 52:08 ... recognize that it's a small number of individuals backed by a large amount of capital that create massive jobs and great prosperity. It's an uncomfortable conversation for people to realize that it might just be a couple of dozen people a year immigrating to this country that changed-

David Friedberg 52:25 Yeah.

Jason Calacanis 52:25 ... the fate of this country.

David Friedberg 52:27 Yeah, that's fair.

David Sacks 52:27 Then why do you need to allow three million migrants to stream across the southern border every year?

Jason Calacanis 52:32 Because you don't know which one it's gonna be, that's why.

David Sacks 52:35 Really?

Jason Calacanis 52:36 You don't.

David Sacks 52:36 That's, that's your immigration policy is open border so that one in a million-

Jason Calacanis 52:40 Why does it open border? I said recruitment.

David Sacks 52:42 Now you're recruiting.

Jason Calacanis 52:42 That's the opposite of open border.

David Friedberg 52:43 So your im- your immigration-

David Sacks 52:45 Now you're recruiting.

David Friedberg 52:45 Yeah, your immigration system-

Jason Calacanis 52:45 Okay, so there, I can explain that. It's a great question, Sax. There are, there are two things to look at here.

David Friedberg 52:49 (laughs)

Jason Calacanis 52:49 There is the pragmatic-

Chamath Palihapitiya 52:51 Jason, Jason, hold on one second.

Jason Calacanis 52:51 Hold on, let me finish my sentence.

Chamath Palihapitiya 52:52 No, I was just gonna ask you to just-

Jason Calacanis 52:53 Yeah.

Chamath Palihapitiya 52:53 ... clarify, as you say, it's, you're, are you saying that the PhD student that starts Google is streaming across the border or-

Jason Calacanis 52:59 No.

Chamath Palihapitiya 52:59 ... actually applying for-

Jason Calacanis 53:01 No, absolutely not. And each one decides to parse for you.

David Sacks 53:03 And 3:01 AM says like, "He ought to apply to go to college here."

Jason Calacanis 53:05 Let me parse it for you. Let me parse it for you. There's immigration and then there's recruitment. And if we frame this process with those two different words, there are people who are, yes, immigrating, streaming across the border, however you want to frame it, Sax. I don't look at it in a political way. And then there's recruiting the most elite talent in the world. We can do both of these things. One of them, you know, uh, helps farmers have people to work the fields, to have people take entry-level jobs, to work in the service industry. We should bring in two or three million of those people per year. We should make it legal, and we should celebrate it because we have so many of those positions open that Americans don't want to take. We should then also, in parallel, and without confusing the issue for political reasons, recruit people to come to our universities and when they graduate, have their citizenship stapled to that diploma and not let them leave the company, country, and let them start companies here. Instead, what we do is we make them fight to stay here. We should be recruiting the smartest, most talented people that will be hundreds of thousands of people per year, low hundreds of thousand.

David Friedberg 54:12 Okay, okay, Sax, response?

Jason Calacanis 54:12 And then we should have millions coming across the border.

Chamath Palihapitiya 54:14 Sick J-Cal is very reasonable, no?

David Friedberg 54:16 Yeah.

Chamath Palihapitiya 54:16 Sick J-cal is great.

David Friedberg 54:17 Yeah.

David Sacks 54:18 I, I think that-

Chamath Palihapitiya 54:19 He's so much better when he doesn't moderate.

Jason Calacanis 54:21 Yeah.

David Friedberg 54:21 Yeah. Go ahead, Sax.

David Sacks 54:23 You know, I'm an immigrant. You know, my, my dad-

David Friedberg 54:26 Three of us are.

David Sacks 54:27 ... came over, yeah, my dad came over in 1977 when I was five years old. Of course, he had an MD. He was a doctor. He actually had like skills and wasn't immediately gonna become a net government dependent. So, I think that it makes sense to allow immigrants who can actually add something into our economy and bring skills and all the rest of it. But the problem we have is that if you want to take that reasonable position, you're told that you basically have to accept a situation of de facto open borders, which is ridiculous.

Jason Calacanis 54:57 No, you don't. No, you don't.

David Sacks 54:58 Well, but-

Jason Calacanis 54:58 These are two separate things. And I'll just say your party-

David Sacks 55:01 But they've become, they've become conflated. Can I, can I finish?

Jason Calacanis 55:03 But your party is the number one...... party that conflates these two issues. You know-

David Sacks 55:07 No.

Jason Calacanis 55:07 ... they're a two separate issues.

David Sacks 55:07 The Democrat Party has conflated these issues.

Jason Calacanis 55:10 Okay, both parties are conflating them. Here at the All-In podcast, can we agree that-

David Sacks 55:13 Yeah, let's unravel them.

Jason Calacanis 55:14 ... one group of people could recruit-

David Friedberg 55:16 A more nuanced-

Jason Calacanis 55:16 ... people for PhD programs-

David Friedberg 55:17 A more nuanced-

Jason Calacanis 55:18 ... while one group of people allows-

David Friedberg 55:19 A more nuanced policy-

Jason Calacanis 55:19 ... people to cross the border to take service jobs?

David Sacks 55:21 Yes, obviously, the more nuanced policy-

David Friedberg 55:23 A more nuanced policy is the way to go.

David Sacks 55:23 is the way to go, but, but look, let me tie this back to, to Davos man. What was the definition of Davos man? It was somebody who was pushing this ideology of free trade and open borders to such an extent that it creates a nationalist backlash or populous backlash.

David Friedberg 55:38 Fair enough, fair enough, yeah.

David Sacks 55:39 That's exactly what's happened at our southern border is you have the people who believe in immigration push that ideology to such an extent that they won't create a rational, sensible, uh, southern border and process at our southern border. It's chaos down there.

David Friedberg 55:55 And the re- and the response is that, the response-

David Sacks 55:55 So look, I'm in favor of bringing in the dream team. Yeah, I'm in favor of bringing in the dream team.

David Friedberg 55:59 But the response of open borders is the creation of this nationalist movement, right? The nationalist movement only exists in the face of open borders. I think that's, that's the point, right? Like, the extreme bears the extreme.

Jason Calacanis 56:12 I think the immigration system should be based on points, just like Canada.

David Sacks 56:16 Well, if, if the, if the Davos men don't, if the Davos men don't start take in, start taking into account these national considerations around the defense of their borders and these issues around trade hollowing out the middle class, then there's going to be an intense backlash. And I don't think those elites have been managing the situation very well. It would've-

Jason Calacanis 56:35 We want-

David Sacks 56:35 It would've been better for them to pursue the more nuanced policy you're talking about.

Jason Calacanis 56:38 Why are we conflating the issue then? Why do the Democrats and the Republicans, Sax, make this such a polarizing issue instead of stating it the way I did? Recruament-

David Friedberg 56:46 Oh, my God, it's so, it's so easy.

Jason Calacanis 56:47 ... and the southern border.

David Friedberg 56:48 Because, because-

Jason Calacanis 56:48 It's so easy to separate them.

David Friedberg 56:51 You, no, no, no. You know when you, when you conflate them, you can incite an emotional response from your voting base. That's it.

Jason Calacanis 56:57 Totally.

David Friedberg 56:57 That's why all of these-

Jason Calacanis 56:58 100%.

David Friedberg 56:58 ... issues, that's why all of these issues get based out. They get based out-

Jason Calacanis 57:01 That's 100%.

David Friedberg 57:01 ... to the point that then you can drive someone to vote for you because you've now framed the other side as this extreme side. And that's it.

David Sacks 57:08 Yeah, but JCal, you earlier said, hold on, before you got suddenly very reasonable, you said that we had to allow two to three-

Jason Calacanis 57:13 I've always been this reasonable, you haven't listened.

David Sacks 57:16 Well, I'm going to quote something you just said a minute ago. You said that we had to allow two to three million-

David Friedberg 57:21 (laughs)

David Sacks 57:21 Two to three million completely destitute, practically illiterate migrants to stream across our border because one in a million of them might be an Elon Musk.

Jason Calacanis 57:29 No, no, they're, you're-

David Sacks 57:30 You said that.

Jason Calacanis 57:31 No, no, hold on. I was talking about the broader-

David Friedberg 57:32 You can, you can take it back, JCal.

Jason Calacanis 57:34 Hold on.

David Friedberg 57:34 No, no, you can take it back.

Jason Calacanis 57:35 Immigration typically includes, when you say that word, the corpus of people coming in for education and the people coming across the southern border. So if you were to say immigration, most people would reasonably say, "That's both of those buckets." I separated them out here so we could have a reasonable discussion. Recruitment of higher education, talented people, with low education migrant workers. They are two different buckets. And you have to be able to say, "These are two different buckets and that we should have a point-based system." If, and this is the conversation that doesn't happen amongst politicians, but can happen here. Look at Canada, look at Australia. They have what's called a point-based immigration system. They give you points for everything that you bring to the country. If you bring money, if you, uh, speak the native language, if you have a degree, if you have a higher education degree, or you have skills that that country needs. Our country needs to move to a point-based system. If you're coming across the border and you don't speak the language and you don't have an education, you have zero points. If you have a master's degree-

David Sacks 58:33 How about we just defen- well, yeah, s-

Jason Calacanis 58:34 ... and you speak the language, you have two or three points. And you can let in buckets of people based on compassion, based on needing service workers-

David Friedberg 58:41 Okay, that's your point. Got it.

Jason Calacanis 58:41 ... and based on needing the next Elon Musk or the next David Sax or Chamath Palihapitiya.

David Friedberg 58:46 I think the, the argument, JCal, is that the compassion argument falls on deaf ears in a time where people feel we cannot afford it and it's a luxury to embrace that model-

Jason Calacanis 58:55 Absolutely.

David Friedberg 58:56 ... of immigration right now.

Jason Calacanis 58:57 Just pick a number we can reasonably absorb. This is what Finland does.

David Sacks 59:00 People look at the southern border and see chaos. Obviously, they want to get that under control before they're going to adopt your, you know, point-based system that they don't trust.

Jason Calacanis 59:07 We can do two things at once. We could do... No, the point-based system-

David Sacks 59:10 No, first get that southern border under control.

Jason Calacanis 59:11 ... would solve the whole problem. Are you opposed to the point-based system, Sax?

David Sacks 59:13 No, I like the idea of, I don't know if my points are the same as your points, but in concept, I like the idea-

Jason Calacanis 59:17 Define your points.

David Friedberg 59:19 No, no, we don't need to, we-

David Sacks 59:20 I like the idea of admitting immigrants based on skills the country actually needs-

Jason Calacanis 59:24 Great.

David Sacks 59:24 ... and a simple recognition that it's better to bring in people who are immediately productive, hold on, and could add to our economy, as opposed to being net government recipients, dependents.

David Friedberg 59:33 We're done. We're done.

Jason Calacanis 59:34 There are countries, I just want to make a point, there are countries, the Scandinavian countries specifically, that have said, "We can accept up to this many folks who are uneducated, who don't speak the language, because we have this many teachers and this many slots in school." And so if you, I think it was Finland and Sweden, they said, "We can accept 50,000 per year of this type of immigration based on compassion." That's the reasonable discussion that has to happen here.

David Sacks 59:58 But, JCal, did you just say-

Jason Calacanis 59:58 And we are not having it.

David Sacks 59:59 Did you just say that we have to do these two things at the same time, meaning that until we impose a, uh, an overhaul of our entire immigration system to be based on skills and points, that we can't enforce the southern border?

Jason Calacanis 1:00:11 No, I think you can enforce the southern border and do it. I, I think you can do these things at the same time.

David Sacks 1:00:14 Okay, so you agree that that all should happen.

Jason Calacanis 1:00:15 It's not rocket science. Canada's doing it.

David Friedberg 1:00:17 Guys, hold on, let me just tell you, there's going to be no- Guys, I gotta move us.

Jason Calacanis 1:00:19 Canada and Australia are already doing it.

David Sacks 1:00:21 Let me just tell you, there's not going to be a broad-based constituency in this country for the type of immigration reform you're talking about until you get the southern border under control. Because people look at that on the news and see chaos. And there's no excuse for that.

Jason Calacanis 1:00:32 Yeah, and, they should be thoughtful. They should be thoughtful-

David Friedberg 1:00:34 Okay, f- fair enough.

Jason Calacanis 1:00:34 ... and they should just look at what Canada and Australia have done. Those countries have actually controlled this, and it's not a polarizing issue there. It's a pragmatic

Jason Calacanis 1:00:42 issue.

David Friedberg 1:00:42 Okay, guys, I'm going to move us forward to the, uh, the banning of TikTok. So I want to kind of change the, the tone a little bit. This, uh, story recently is that, uh, TikTok has been banned for use on the campus Wi-Fi networks-

Jason Calacanis 1:01:00 Let's go.

David Friedberg 1:01:00 ... at a number of universities, including UT Austin, Auburn, Boise State, the University of Oklahoma. So college students can't access the app when they're on the campus network.This is following 19 states that recently banned TikTok in government devices. As everyone knows, TikTok is a product from ByteDance, which is a Chinese-based company. And there's been quite a lot of political and regulatory huffs and gruffs about ByteDance having this level of insight and access to users in the United States, with the assumption being that much of the data that they're pulling out of the app is available to the Chinese Communist Party, which creates a security threat to the United States. That's one argument. I think there is also a significant tie-in to ByteDance. There's over $8 billion of capital invested in ByteDance by firms that we know well, like Sequoia Capital, Tiger Global, Coatue, Susquehanna, and others. They're trying to find a way to monetize their investment in what is truly the most viral, fastest growing, highest revenue-growing, biggest startup in the world right now, in ByteDance. So there is a restructuring proposal apparently underway that's being discussed in Washington, D.C. right now, to try and restructure the organization and the ownership structure and the oversight of, uh, TikTok and ByteDance, such that US regulators and US companies can oversee the data, the use of the data, the algorithms underlying TikTok, and monitor 'em from within the United States. Question for this group here on the McLaughlin Group of 2023 is, does that do-

Jason Calacanis 1:02:37 McLaughlin.

David Friedberg 1:02:37 ... enough for you? McLaughlin, do you guys think that that's enough? First up is, uh, Chamath, who's been silent for a bit.

Chamath Palihapitiya 1:02:45 I think this is really bad news for ByteDance. Basically, what's happening is that, and TikTok, all the frustration that all these legislature, legislators and politicians have had over Facebook and Google and other sort of big tech companies is gonna get focused on ByteDance because you have this common enemy that you can point to as a boogeyman of sorts. And I'm not saying that it's right, but I think that what you're starting to see is it's much easier to pick a fight with a Chinese company and win, and get broad-based support, than it is to pick a fight against an American company with a bunch of American employees and American market cap and American know-how and American IP that gets impacted. So, I don't think this is going to end well for TikTok and I think the goal, if I were any of these people on the cap table, would be to sell it in secondary to somebody else and get out. I think the next big shoe to drop is going to be advertisers who come under a lot of pressure. So for example, think of all the advertisers that have left Twitter. There is a point of efficiency where you can live with all of the mess that Twitter has because it comes with a lot less scrutiny and oversight and political pressure than advertising on TikTok. And that, I think, is the next kind of like big wave here so I think it's very, very bad. I think, I think the enterprise value of this company is quite challenged and these guys should try to sell and get out.

David Friedberg 1:04:18 Who are the buyers in that secondary market though? I mean, that's a lot of capital.

Chamath Palihapitiya 1:04:22 The thing is, the cap tables haven't been segregated so what you own is equity in ByteDance.

David Friedberg 1:04:27 Right.

Chamath Palihapitiya 1:04:27 But the problem is, the look through ownership would, will discount a lot of TikTok if they see a lot more of this stuff happening. You guys have to remember, this is the first three or four weeks of 2023. Wait till we're here in September and October and November, wait till the election year starts. It's not good. So it's a discount on ByteDance that probably takes ByteDance down by 70 or 80 billion.

David Friedberg 1:04:52 Yeah.

Chamath Palihapitiya 1:04:52 So that's a 35, 40% discount to their last mark. So, you know, if somebody can sell in the high hundred billions of dollars, I think you should, I think they should prob- they should consider it. There's, it's worth it, I think.

David Friedberg 1:05:04 Jakew, I know you've got strong opinions on TikTok and the-

Jason Calacanis 1:05:06 Well, no, I, I think you have to be incredibly pragmatic here. This is the same as the 5G issue. You cannot trust the Chinese government to not steal intellectual property or to put back doors into the software. It is common business practice there. Huawei was banned. They basically stole the source code from Cisco, that was proven, and it was proven that they were spying on people. Canada, the UK, the United States, Vietnam, everybody has banned using 5G technology from China for a reason, because they will use it to spy on you. This is, uh, the nature of an authoritarian government. It is far too powerful to have a, uh, not only the surveillance capabilities that are built into owning TikTok in the hands of the Chinese Communist Party, to have the ability to very, uh, in a very nuanced fashion, trend certain videos that would steer the United States in a certain direction politically or-

Chamath Palihapitiya 1:06:02 Into stupidity. (laughs)

Jason Calacanis 1:06:03 Yeah.

Chamath Palihapitiya 1:06:03 Into stupidity.

Jason Calacanis 1:06:03 Towards stupidity is one, of course, right?

Chamath Palihapitiya 1:06:06 Yeah.

Jason Calacanis 1:06:06 They're, they're letting their, you need to only look at what-

Chamath Palihapitiya 1:06:08 That 60 Minutes, that 60 Minutes clip is incredible, right?

Jason Calacanis 1:06:10 Yeah. You need only look-

Chamath Palihapitiya 1:06:10 It's like they show, they're showing science videos to the kids in China-

Jason Calacanis 1:06:14 Exactly.

Chamath Palihapitiya 1:06:14 ... and they're showing stupid nonsense to the kids in America. What do you think over millions of videos-

Jason Calacanis 1:06:19 They're trying to do sci-

Chamath Palihapitiya 1:06:19 ... that does to our children versus their children?

Jason Calacanis 1:06:21 You can be 100% certain they're doing psyops on our children as we speak. They are trying to make us dumb and distracted while they get smart and sharp.

David Friedberg 1:06:29 And by the way-

Jason Calacanis 1:06:29 It's very simple.

David Friedberg 1:06:30 ... if you're, if you're, if you're a Zuck or Sundar-

David Sacks 1:06:31 How do you know that's not the choices of our kids? The algorithm just gives you more of what you want.

Chamath Palihapitiya 1:06:36 Of the-

Jason Calacanis 1:06:36 It's the, it's the one. Exactly, but-

Chamath Palihapitiya 1:06:37 Of course, but that, that, that's like saying if you gave kids a choice between broccoli and chocolate bars, of course they're gonna pick chocolate bars.

David Friedberg 1:06:42 Yeah. (laughs)

Jason Calacanis 1:06:43 If you put the kids in the supermarket and say, "Eat," they're gonna go right to the cereal aisle.

Chamath Palihapitiya 1:06:46 The job of the parents acts is, number one, know their name.

David Sacks 1:06:49 (laughs)

Chamath Palihapitiya 1:06:49 And then number two, differentiate between-

Jason Calacanis 1:06:51 You need a pen and pad section.

Chamath Palihapitiya 1:06:52 ... good things and bad things.

David Sacks 1:06:53 Let me ask you a question. I agree with Chamath that the future is not bright for TikTok here because it's gotten caught up in the geopolitical rivalry between China and the United States, and that's only gonna keep getting more and more intense. The US and China are headed for a big security competition and ByteDance is caught in the middle. So, I agree with Chamath about the future, but, you know, this claim is made that TikTok is spyware.And, you know, it's listening to you, it's surveilling you, it's keeping track of you. Like, what is the evidence for that claim? I just wanna understand that a little better. Like, has anyone ever proven that, like, TikTok is spyware? And if it is, why doesn't Apple stop it? Can you just explain that to me?

Jason Calacanis 1:07:33 Well-

Chamath Palihapitiya 1:07:33 Yeah, I think that-

Jason Calacanis 1:07:34 ... Apple has a complicated-

Chamath Palihapitiya 1:07:35 I think-

Jason Calacanis 1:07:35 ... relationship with China, so, let's-

David Sacks 1:07:36 The claim, the-

Jason Calacanis 1:07:37 They're not gonna believe you.

David Sacks 1:07:39 So, wait, wait, wait. So, J-Cal, your claim is ... Let, let me, I just wanna pin J-Cal down on this for a second.

Jason Calacanis 1:07:42 Sure.

David Sacks 1:07:43 Your claim is that 100% TikTok is spyware and Apple is letting it happen because of their relationship with the CCP.

Jason Calacanis 1:07:51 I do not have the evidence of specific instances of them spying, but I do know that this is what the Chinese government, uh, is, aspiration is, is to be able to have backdoors to spy on all Americans. That's why they, you know, are trying to get Huawei into as many places possible.

David Sacks 1:08:05 But does iOS allow that to happen?

Jason Calacanis 1:08:06 Well, th- you don't even need to know that because you can just open your eyes and look at ... And I, I mean that as an insult. But you can just look at what TikTok has the access to. It has access to your location, has access to your camera roll, and it knows, you know, uh, everybody in your social c- circle because it has your address book. So by having your address book, having your location, and having access to your photo roll, they have you compromised by default.

Chamath Palihapitiya 1:08:31 The default settings f- when you install TikTok, it turns on local network, turns on microphone, turns on camera, turns on background app refresh, and turns on cell data. So, TikTok is no worse than anybody else in that, because a lot of other apps are very aggressively trying to harvest all that data as well, Sachs. Like, it's like Alexa's always listening to you, right? But you feel s- but you feel safer with Alexa because it's a, it's an American company, or the perception of safety is there. So, I don't think there's a huge thing to prove other than, yeah, there's a setting that allows you to turn on the microphone-

Jason Calacanis 1:09:06 But they were caught, actually.

Chamath Palihapitiya 1:09:07 ... and it's a default, and they do it.

Jason Calacanis 1:09:09 But they were caught. I just wanna make sure you guys understand this. According to The New York Times, ByteDance, the Chinese parent company of TikTok, said on Thursday that an internal investigation found that employees had inappropriately obtained the data of US TikTok users, including that of two reporters. Over the summer, a few employees on a ByteDance team responsible for monitoring employee conduct tried to find the source of suspected leaks of internal conversation and business documents to journalists. In doing so, the employees gained access to the IP addresses and other data of two reporters and a small number of people connected with the reporters via their TikTok accounts. They were trying to determine if those individuals were within the proximity of ByteDance employees, according to the company.

Chamath Palihapitiya 1:09:45 I just think that-

Jason Calacanis 1:09:46 So there's an example of them using the technology to try to track down leaks.

David Friedberg 1:09:49 Hold on a second. That's exactly what any app, uh, company can do. The photos, the screenshots we got from Twitter, um, that were shared in all those files or whatever-

Jason Calacanis 1:09:59 Yep.

David Friedberg 1:09:59 ... that happened a few weeks ago showed that e- that many Twitter employees were able to log in and just view the direct messages between Twitter users, and that there's no necessary l- logging or, um, access privileges required to have access to that information. There are these holes in all of these social networking and consumer, uh, digital consumer product companies that allow individuals to go in and do things with consumer data.

Chamath Palihapitiya 1:10:22 No, it's not a hole. It's a feature.

David Friedberg 1:10:24 It's a feature, sure, but it doesn't reference, like, some systematic, um, utilization.

Jason Calacanis 1:10:28 Yeah, but those aren't controlled by a government agency.

Chamath Palihapitiya 1:10:30 No, but that's, that's the key thing.

Jason Calacanis 1:10:32 Or a government.

Chamath Palihapitiya 1:10:32 What J-Cal just said is the key thing. Everybody tries to get these things turned default on. Every app tries to get access to your camera roll, to your contacts, to turn on the microphone. The problem isn't that those settings exist, because Apple created them, and Apple created a f- privacy framework where you have to opt out of it. Okay? The issue is that that data, instead of going to an American company with American, on Am- with American data centers and American servers, it's going to somebody in China. Or it's the perception that that's happening that I think is a death knell. And this is also excluding all of the work that every single big tech company must be doing to point the finger away from them, and this is something they can all agree on. If you got-

Jason Calacanis 1:11:15 Yeah, sure.

Chamath Palihapitiya 1:11:15 ... if you got Andy Jassy and Zuck and Sundar and Satya Nadella in a room, what do you think y- they could all agree on? "Hey, guys, are we better off pointing the fingers at each other? Or should we just point it over there to a company based in China?"

Jason Calacanis 1:11:28 So, so do you think-

Chamath Palihapitiya 1:11:29 Of course.

Jason Calacanis 1:11:29 ... do you think that TikTok, in a way, is being scapegoated here, or do you think it's a real security threat?

Chamath Palihapitiya 1:11:34 Both.

Jason Calacanis 1:11:35 Both. Yeah, that's yes to both. And you know what? I think what we saw with the, the Twitter files, for me, personally, the one that, uh, was most concerning was the fact that the FBI was being treated ... They didn't have control of it, like the Chinese government has control over ByteDance at a wholesale level, but they were being given, you know, pretty, um, close to-

David Sacks 1:12:00 They have massive influence.

Jason Calacanis 1:12:00 ... they weren't given god privileges, but they had more influence than they should've, and they should've gotten subpoenas. Right? So even in a democracy like the United States, you can see the FBI using techniques to get employees on their side, to get information on specific users. Imagine if the FBI just had god mode for Twitter or Facebook. Like, what would happen in a, even in a democracy, we see it happen. We see abuse. The Chinese government is a communist party. They have no problem sucking the data down of every single person and using it however they want.

Chamath Palihapitiya 1:12:33 I think the, the problematic thing is that when you look at the capital structure of these Chinese companies post now Xi being ruler for life, is the Chinese government has typically a seat on all of these boards. They also typically have a golden vote. And so, when you think about the governance, the governance of these companies has tilted far away from a normal cap table where it's one shareholder, one vote, to you are allowed to exist on this cap table at the benevolence of the government. And so I think that you have to factor that in as well, Sachs. So, you know, is it amplified? Probably. But is there also non-trivial risk that we would never give to any other company? Absolutely. Like, you know, take the opposite example.How would we react if the government had a golden vote and a board seat on Meta? Going into an election? I mean, one party would be crazy, and the other party would stay mum's the word. (laughs) That's what would happen. Right? (laughs)

David Friedberg 1:13:38 Well, I mean, let's talk about ... But let, let's, let's, let's be pragmatic. The news reports that came out this week indicate that they're talking about restructuring ByteDance. So let me propose this to you guys. If TikTok US were set up as TikTok US Inc., it's its own C-corp, it's based in the US, and ByteDance owns passive non-voting shares in TikTok US Inc.

Chamath Palihapitiya 1:14:01 It's totally fine. It's totally fine.

David Friedberg 1:14:01 All the software, all the services, the algorithms are all run in the US, the data's only sitting on servers in the US.

Chamath Palihapitiya 1:14:07 Yeah, totally fair. Totally fair.

David Friedberg 1:14:07 And the Chinese have an economic interest ultimately in what happens with that asset, but that asset is entirely managed, run, controlled-

Jason Calacanis 1:14:13 Yeah, that's totally fine. That should be a goal.

David Friedberg 1:14:14 ... in the