All-In PodcastE129: Sam Altman plays chess with regulators, AI's "nuclear" potential, big pharma bundling & more
EVERY SPOKEN WORD
150 min read · 30,076 words- 0:00 – 5:14
Bestie intros!: Reddit Performance Reviews
- JCJason Calacanis
I have a little surprise for my besties. Everybody's been getting incredible adulation. People have been getting incredible feedback on the podcast. It is a phenomenon, as we know. And I thought it was time for us to do performance reviews of each bestie. Now I, as executive producer-
- DFDavid Friedberg
(laughs) Oh, God.
- JCJason Calacanis
... I'm not in a position to do, uh, your performance reviews. I too need to have a performance review. So I thought I would let the audience do their performance reviews. So we went and we're debuting a new feature today at this very moment. It's called Reddit Performance Reviews.
- DFDavid Friedberg
Oh, God.
- JCJason Calacanis
Cue some music here. (instrumental music plays) Some graphics. Reddit Performance Reviews. And so we'll start off-
- DFDavid Friedberg
Oh, God.
- JCJason Calacanis
... with you, David Friedberg.
- CPChamath Palihapitiya
This proves why you haven't been successful in life so far. (laughs)
- DFDavid Friedberg
(laughs)
- JCJason Calacanis
I haven't been? Are you kidding me? I'm on house money.
- CPChamath Palihapitiya
When you're trying to build a successful enterprise, instead of keeping the judgment to yourself, which is what all elite performers do-
- JCJason Calacanis
Yes.
- CPChamath Palihapitiya
... you turned it over to a bunch of mids on Reddit-
- JCJason Calacanis
Yes.
- CPChamath Palihapitiya
... to tell you how to run something?
- JCJason Calacanis
No, they were already doing it. They were already doing it. We just collected it.
- CPChamath Palihapitiya
What elucidation were you going to get from Reddit?
- DSDavid Sacks
Yeah, really.
- JCJason Calacanis
Let's not ruin the bit.
- DSDavid Sacks
Do you think Elon does 360 performance reviews?
- DFDavid Friedberg
(laughs) On Reddit? On Reddit?
- CPChamath Palihapitiya
On Reddit of all things?
- DSDavid Sacks
(laughs)
- CPChamath Palihapitiya
You know how many 360 performance reviews I've done in my life? Zero.
- JCJason Calacanis
Of course. And that's why this will be so entertaining.
- CPChamath Palihapitiya
Fucking zero.
- DFDavid Friedberg
Okay, go, go. Start off with me. Let's hear it. Okay, okay.
- JCJason Calacanis
But here's how it's going to work. You are going to be presented with the candid feedback that you've gotten in the last 30 days on Reddit, but for the first time. And you have to read it out loud to the class. Friedberg, you'll go first. Here's your first piece of candid feedback in your 360 from the Reddit incels. Go ahead, Friedberg. Read it out loud.
- DFDavid Friedberg
David Friedberg deserves more hate. He and the others have made it their mission to convince us that reforming Social Security is the only way forward to survive. He hides behind this nerdy apolitical persona-
- JCJason Calacanis
Hmm.
- 5:14 – 6:27
Quick AIS 2023 update
- JCJason Calacanis
All right, everybody. Welcome to the All In Podcast. We're still here. Episode 129. All In Summit 2023, general admission sold out. Too many people applied for scholarships, that's on pause. And there's a couple of VIP tickets left. Get them while they're hot. Just search for All In Summit. Friedberg, anything to add? We'll just get through the grift real quick here in the beginning.
- DFDavid Friedberg
That's it. No, it's gonna be great.
- JCJason Calacanis
Did I get it all right? That was it?
- DFDavid Friedberg
No, I mean, just more demand than we predicted. We looked for a bigger venue, couldn't find one. We're, we're, I think we're excited about Royce Hall. It's still, as you pointed out, two and a half times the size of last year. So we wanna make sure it's a great quality event. But unfortunately, way too many folks want to go, so we had to kind of pause ticket sales.
- CPChamath Palihapitiya
What's my wine budget?
- JCJason Calacanis
$300 per person per night, $1,000 per VIP per event.
- CPChamath Palihapitiya
Thank you.
- JCJason Calacanis (soundboard / clips)
Okay.
- CPChamath Palihapitiya
I will handle it from here. (laughs) So there's 750 of them so I think you have $750,000 in wine budget.
- JCJason Calacanis (soundboard / clips)
(laughs)
- JCJason Calacanis
Thank you.
- JCJason Calacanis (soundboard / clips)
I don't... I mean, I just can't believe I just gave Chamath $750,000 to buy wine.
- JCJason Calacanis
No, we gotta... Yeah.
- CPChamath Palihapitiya
Bye, guys. I'm gonna curate an incredible wine hearing.
- JCJason Calacanis
Josh is here today, by the way.
- CPChamath Palihapitiya
Oh.
- JCJason Calacanis
Uh, he's-
- CPChamath Palihapitiya
Oh.
- JCJason Calacanis
... he's doing a-
- CPChamath Palihapitiya
Sommelier Josh?
- JCJason Calacanis
Yeah, he's doing a... Yes, Sommelier Josh.
- CPChamath Palihapitiya
Sommelier Josh. All right, let's get to work.
- JCJason Calacanis
We're swinging back.
- CPChamath Palihapitiya
Let's get to work. Okay.
- 6:27 – 21:25
AI Senate hearing: Sam Altman playing chess with regulators, open-source viability
- CPChamath Palihapitiya
The Senate had a hearing this week for AI. Sam Altman was there as well as Gary Marcus, a professor from NYU. That's an overpriced college in New York City. And Christina Montgomery, the Chief Privacy and Trust Officer from IBM, which had Watson before anybody else was in the AI business, and I think they deprecated it or they stopped working on it, which is quite paradoxical. There were a couple of very interesting moments. Sam claimed the US should create a separate agency to oversee AI, I guess he's in the Chamath camp.
- JCJason Calacanis
Hm.
- CPChamath Palihapitiya
He wants the agency to issue licenses to train and use AI models, uh, a little regulatory capture there, as we say in the biz. He also claims, and this was interesting, dovetailing with Elon's CNBC, uh, interview with, I think, Dave Farber, which was very good, um, that he owns no equity in OpenAI whatsoever and was, quote, "doing it because he loves it." Any thoughts? Chamath, you did say that this would happen two months ago, and here we are two months later, and exactly what you said would happen is in the process of happening; regulation, licensing, and regulatory capture. Sam went a little further than I sketched out a few months ago, which is that he also said that it may make sense for us to issue licenses for these models to even be compiled. Mm. And for these models to actually do the learning. And I thought that that was really interesting because what it speaks to is a form of KYC, right? Know Your Customer. And again, when you look at markets that can be subject to things like fraud and manipulation, right, where you can have a lot of bad actors, banking is the most obvious one, we use things like KYC to make sure that money flows are happening appropriately and between parties that where the intention is legal. And so I think that that's actually probably the most important new bit of perspective that he is adding as somebody right in the middle of it, which is that you should apply to this agency to get a license to then allow you to compile a model. And I think that that was a really interesting thing. The other thing that I said, and I said this in my... in- in a tweet just a couple days ago is, I'm really surprised actually where this is the first time in modern history that I can remember where we've invented something, we being Silicon Valley, and the people in Silicon Valley are the ones that are more circumspect than the folks on Wall Street or other areas. And if you see, if you gauge the sentiment, the hedge funds and family offices right now are just giddy about AI. And it turns out if you look at their 13Fs, they're all long Nvidia and AMD. But if you actually look at the other side of the coin, which is the folks in Silicon Valley that's actually making it, the rest of us are like, "Hey, let's crawl before we walk before we run."
- JCJason Calacanis
Yeah, let's think about guardrails, let's be thoughtful here.
- CPChamath Palihapitiya
Yeah.
- JCJason Calacanis
And so the- the big money people are saying, "Let's place bets." And the people building it are saying, "Hey, let's be thoughtful, Sachs, you-"
- CPChamath Palihapitiya
Which is opposite to what it's always been, I think.
- JCJason Calacanis
Right. We're like, "Hey, let's- let's run with this," and Wall Street's like, "Prove it to me." Sachs, you are a less regulation guy, you are a free market monster, I've heard you've been called. Uh, you don't believe that we should license this. What do you think about what you're seeing here? And there is some cynical, cynical thoughts about what we just saw happen in terms of people in the lead wanting to maintain their lead by creating red tape. What are your thoughts?
- DSDavid Sacks
Yeah, of course. I think, you know, Sam just went straight for the end game here, which is regulatory capture. Normally when a tech executive goes and testifies at these hearings, they're in the hot seat and they get grilled. And that didn't happen here because, you know, Sam Altman basically bought into the narrative of these senators and he basically conceded all of these risks associated with- with AI. He talked about how ChatGPT-style models, if unregulated, could increase online misinformation, bolster cyber criminals, even threaten confidence in election systems. So he basically bought into the senators' narrative and, like you said, agreed to create a new agency that would license models and can take licenses away. He said that he would create safety standards, specific tests that a model has to pass before it can be deployed, he says he would require independent audits who can say the model is or isn't in compliance, and by basically buying into their narrative and agreeing to everything they want, which is to create all these new regulations and a new agency, I think that Sam is pretty much guaranteeing that he'll be one of the people who gets to help shape the new agency and- and the rules they're gonna operate under and what these independent audits are gonna... how they're gonna determine what's in compliance. So he is basically putting a big moat around his own incumbency here.
- JCJason Calacanis
And?
- DSDavid Sacks
So yes, it is a smart strategy for him. But the question is, do we really need any of this stuff? And, you know, what you heard at the hearing is that just like with just about every other tech issue, the senators on the Judiciary Committee didn't exhibit any real understanding of the technology. And so they all generally talked about their own hobby horses. So, you know, you heard from Senator Blackburn, she wants to protect songwriters. Hawley wants to stop anti-conservative bias. Klobuchar was touting a couple of bills that...... have her name on them, one's called the JCPA, Journalism Competition Preservation-
- JCJason Calacanis
What does Bernie Sanders wanna do? He wants to-
- DSDavid Sacks
Yeah.
- JCJason Calacanis
... protect the 1% of the 1%?
- DSDavid Sacks
Yeah. Durbin hates Section 230, that was the hobby horse he was riding. And then Senator Blumenthal was obsessed that someone had published deepfakes of himself. So, you know, all of these different senators had different theories of harm that they were promoting and they were all basically hammers looking for a nail. You know, they all wanted to regulate this thing. And they didn't really pay much, if any, attention to the ways that existing laws could already be used-
- JCJason Calacanis
Absolutely.
- DSDavid Sacks
... to, to stop any of these things.
- JCJason Calacanis
If you commit a crime with AI, there are plenty of criminal laws.
- DSDavid Sacks
Every single thing they talked about could be handled through existing law, if they amount-
- JCJason Calacanis
Copyright.
- DSDavid Sacks
... to being harms at all.
- JCJason Calacanis
Yeah, yeah. They, they-
- DSDavid Sacks
But they wanna jump right to creating a new agency and new regulations-
- JCJason Calacanis
All right, here we go.
- DSDavid Sacks
... and Sam, I think, did the, you know, expedient thing here, which is basically buy into it in order to-
- JCJason Calacanis
If this was a chess game-
- DSDavid Sacks
... b- be an insider.
- JCJason Calacanis
If this was a chess game, Sam got to the mid-game, he traded all the pieces and went right to the endgame. "Let's just try to checkmate here. I've got the lead. I got the 10 billion from Microsoft. Everybody else, get a license and try to catch up." Friedberg, we have Chamath pro-regulation licensing, I think, or just being pretty thoughtful about it there. You got Sachs being typically a free market monster, let the laws be what they are, but these senators are gonna do regulatory capture. Where do you, as the sultan of science, stand on this very important issue?
- DFDavid Friedberg
I think there's a more important kind of broader set of trends that are worth noting, and that the folks doing these hearings and having these conversations are aware of, which implies why they might be saying the things that they're saying, that's not necessarily about regulatory capture. And that is that a lot of these models can be developed and generated to be much smaller. We're seeing, you know, models that can effectively run on an iPhone. We're seeing a number of open source models that are being published now. There's a group called MosaicML. Last week, they published what looks like a pretty good quality model that has, you know, a very large kind of token input, which means you can do a lot with it. And that model can be downloaded and used by anyone for free. You know, really good open source license that they've provided on that model. And that's really just the tip of the iceberg on what's going on, which is that these models are very quickly becoming ubiquitous, commoditized, small, and effectively are able to move to and be run on the edge of the network. As a result, that means that it's very hard to see who's using what models how behind the products and tools that they're building. And so if that's the trend, then it becomes very hard for a regulatory agency to go in and audit every server or every computer or every computer on a network and say, "What model are you running? Is that an approved model? Is that not an approved model?" It's almost like having a regulatory agency that has to go in and audit and assess whether a Linux upgrade or some sort of, you know, open source platform that's, that's being run on some server is appropriately vetted and checked. And so it, it's almost like a fool's errand. And so if I'm running one of these companies and I'm trying to, you know, get Congress off my butt and get all these regulators off my butt, I'm gonna say, "Go ahead and regulate us." Because the truth is, there really isn't a great or easy path or ability to do that, and there certainly won't be in five or 10 years once these models all move on to the edge of the network and they're all being turned around all the time, every day, and there's a great evolution underway. So, I actually take a, a point of view that it's not just that this is necessarily bad and there's cronyism going on. I think that the point of view is just that this is gonna be a near impossible task to try and track and approve LLMs and audit servers that are running LLMs and audit apps and audit what's behind the tools that everyday people are using. And I wish everyone the best of luck in trying to do so, but that's kind of the joke of the whole thing is like, let's go ahead and pat all these congresspeople on the shoulder and say, "You, you got it. You're right."
- JCJason Calacanis
And there you have it, folks. Wrong answer, Chamath and Sachs, right answer, Friedberg. If you were to look at Hugging Face, if you don't know what that is, it's a, uh, basically an open source repository of all of the LLMs. The cat is out of the bag. The horses have left the barn. If you look at what I'm showing on the screen here, this is the Open LLM Leaderboard. It's kind of buried on Hugging Face. If you haven't been to Hugging Face, this is where developers show their work, they share their work, and they kind of compete with each other in a, uh, social network showing all their contributions. And what they do here is, and this is super fascinating, they have a series of tests that will take an LLM, a language model, and they will have it do science questions that would be for grade school. They'll do a test of mathematics, US history, computer science, et cetera. So they have this-
- 21:25 – 43:33
Regulatory capture angle, "preemptive regulation," how AI relates to nuclear, insider insights from the White House's AI summit
- JCJason Calacanis
all three of you?
- DFDavid Friedberg
Yeah.
- JCJason Calacanis
Do you guys think that this was Sam's way of pulling up the ladder behind him?
- DFDavid Friedberg
No.
- JCJason Calacanis
Of course, 100%, just like-
- DFDavid Friedberg
No.
- JCJason Calacanis
Oh, absolutely it is, and it's because-
- DFDavid Friedberg
No.
- JCJason Calacanis
... you can, he, you can prove it. He made OpenAI closed AI by making it not open source.
- DFDavid Friedberg
If you're Sam, you're smart enough to know how quickly the models are commoditizing and how many different models there are that, you know, can provide similar degrees of functionality as you just pointed out, J Cal. So I don't think it's about trying to lock in your model. I think it's about recognizing the impracticality of creating some regulatory regime around model auditing. And so you're very... So that in that, in that world, in that scenario where you have that vision, you have that foresight, do you go to Congress and tell them that they're dumb to regulate AI? Or do you go to Congress and you say, "Great, you should regulate AI," knowing that it's like, "Hey, yeah, you should go ahead and stop the sun from shining"? You know, like it, it's just, yeah, go for it.
- JCJason Calacanis
So basically, he's telling him to do that because he knows they can't.
- DSDavid Sacks
No.
- JCJason Calacanis
Therefore, he gets all the points, all the joy points, all the social credit. I don't wanna say virtual signaling, but he gets all the credit, relationship credit with Washington for saying what they wanna hear, reflecting back to them-
- DFDavid Friedberg
I'll, I'll say this.
- JCJason Calacanis
... even though he knows they can't compete-
- DFDavid Friedberg
I'll say this.
- JCJason Calacanis
... with Facebook's open model, which is number one.
- DFDavid Friedberg
Yeah, there is historical precedent-
- JCJason Calacanis
Interesting idea.
- DFDavid Friedberg
... for companies that are facing congressional scrutiny to go to Congress and say, "Go ahead and regulate us," as a way of-
- JCJason Calacanis
For preemptive.
- DFDavid Friedberg
... creating relief. Yeah. And I think that-
- JCJason Calacanis
Ah.
- DFDavid Friedberg
... it doesn't necessarily mean you're gonna get regulated. But it's a way-
- JCJason Calacanis
Right.
- DFDavid Friedberg
... of kind of creating some relief and getting everyone to take a, a breather and a sigh of relief and be like, "Okay, the industry is with us." You know, they're-
- JCJason Calacanis
Gardez.
- DFDavid Friedberg
... not gonna -
- JCJason Calacanis
What do you think of the Gardez strategy?
- DFDavid Friedberg
... say it's too complicated -
- 43:33 – 48:46
Elon hires new Twitter CEO
- JCJason Calacanis
Elon hired a CEO for Twitter, Linda Yaccarino, I hope I'm pronouncing that correct, was the head of ad sales at NBC Universal. She's a legend in the advertising business. She worked at Turner for 15 years before that. She is a workaholic, is what she says. She's gonna take over everything but product and CTO. Elon's gonna stick with that. She seems to be very moderate, and she follows people on the left or right. People are starting the character assassination and trying to figure out her politics, that she was involved with the W E- uh, World Economic Forum, which anybody in business basically does. But your take, Sacks, on this choice for CEO an- and what this means just broadly for the next six months. Because we're sitting here at six months, almost exactly, since Elon took over. Obviously, you and I were involved in month one, but, but not much after that. What do you think the next six months holds, and what do you think her role's gonna be? Obviously, there's some precedent this, for this with, you know, Gwen at, at SpaceX.
- DSDavid Sacks
Listen, I think this choice makes sense on this level. Twitter's business model is advertising. Elon does not like selling advertising. She's really good at selling advertising.
- JCJason Calacanis
(laughs)
- DSDavid Sacks
So, he's chosen a CEO to work with who's highly complementary to him in their skillsets and interests. And I think that makes sense. I think there's a lot of logic in that. What Elon likes doing is the technology and product side of the business. He actually doesn't really like the, let's call it the standard business chores, and especially related to, like we said, advertising, and he loves to offload-
- JCJason Calacanis
It's his worst nightmare, advertising-
- DSDavid Sacks
... that stuff. Yeah, so he wants to offload that stuff.
- JCJason Calacanis
Meeting with advertisers, I think, is his personal nightmare.
- DSDavid Sacks
Right.
- JCJason Calacanis
(laughs)
- DSDavid Sacks
Right. So I think the choice-
- JCJason Calacanis
Yeah.
- DSDavid Sacks
... makes sense on that level. Now-
- JCJason Calacanis
Yeah.
- DSDavid Sacks
... instantly, you're right. Her hiring led to attacks from both the left and the right. The right, you know, pointed out her views on COVID and vaccines and her work with, uh, WEF. And then on the left, I mean, the attack is that she's following Libs at TikTok, which you're just not allowed to do, apparently.
- JCJason Calacanis
A follow is not an endorsement.
- DSDavid Sacks
Well, if you're just following Libs at TikTok, they wanna say you're some crazy right-winger now.
- JCJason Calacanis
Well, she also follows David Sacks. So that does mean-
- DSDavid Sacks
(laughs)
- JCJason Calacanis
... that she's pretty ... that, that is a signal. But the truth is, if you ... Sacks, correct me if I'm wrong here, or Chamath, maybe I'll send it to you, if you pick somebody that both sides m- d- dislike or are trying to take apart, you probably picked the right person. Yeah?
- CPChamath Palihapitiya
Here's what I think.
- JCJason Calacanis
Okay, go ahead.
- CPChamath Palihapitiya
We're not gonna know how good she is for six to nine months, but here's what I took a lot of joy out of. Here's a guy who gets attacked for all kinds of things now, right? He's an anti-Semite apparently, and then he had to be like, "I'm very pro-Semite." He's a guy that, all of a sudden, people think is a conspiracy theorist. He's a guy that people think is now on the raging right. All these things that are just like inaccuracies, basically firebombs thrown by the left. But here's what I think is the most interesting thing. For a guy that theoretically is supposed to be a troll and everything else, he has a female chairman at Tesla, a female CEO at Twitter, and a female president at SpaceX.
- JCJason Calacanis
Of course. It's a great insight. It's the same insight I think a lot of these virtue signaling lunatics on the left.
- CPChamath Palihapitiya
Virtue signaling mids. They're all mids.
- JCJason Calacanis
They're lunatics. And you know what?
- CPChamath Palihapitiya
Oh.
- JCJason Calacanis
Like you, you, you have-
- CPChamath Palihapitiya
They're all mids. They're also mids.
- JCJason Calacanis
... Elizabeth Warren and, and, and Bernie Sanders giving, you know, the CEO of, uh, Starbucks a hard time when he doubled the pay of the minimum wage, gave them healthcare-
- CPChamath Palihapitiya
Friedberg loves it. Friedberg, you love mid, right?
- 48:46 – 1:02:30
Lina Khan moves to block Amgen's $27.8B acquisition of Horizon Therapeutics
- JCJason Calacanis
Lina Khan-... who has been the least effective FTC chair, I think started out pretty promising with some interesting ideas. She's now moved to block a major pharma deal. In December, Amgen agreed to acquire Dublin-based Horizon Therapeutics for 27.8 billion. This is the largest pharma deal announced in 2022. FTC has filed a lawsuit in federal court seeking an injunction that would prevent the deal from closing. The reasoning is the deal would allow Amgen to entrench the monopoly positions of Horizon's eye and gout drugs. The agency said that those treatments don't face any competition today, and that Amgen would have a strong incentive to prevent any potential rivals from introducing similar drugs. Chamath, the pharmaceutical industry is a little bit different than the tech industry-
- CPChamath Palihapitiya
Sheer insanity.
- JCJason Calacanis
Explain why, and then, Sax, we'll go to you on the gout stuff-
- DFDavid Friedberg
Well-
- JCJason Calacanis
... 'cause I know that personally impacts you. Go ahead, Chamath. (laughs)
- CPChamath Palihapitiya
I think that this is a little, like, scientifically illiterate, to be honest.
- JCJason Calacanis
Unpack.
- CPChamath Palihapitiya
The thing is that you want drugs that can get to market quickly, but at the same time, you want drugs to be safe and you want drugs to be effective. And I think that the FDA has a pretty reasonable process, and one of the direct byproducts of that process is that if you have a large indication that you're going after, say, diabetes-
- JCJason Calacanis
Hmm.
- CPChamath Palihapitiya
... you have to do an enormous amount of work. It has to be run on effectively thousands of people. You have to stratify it by age. You have to stratify it by gender. You have to stratify it by race. You have to do it across different geographies, right? The bar is high, but the reason the bar is high is that if you do get approval, these all of a sudden become these blockbuster 10, 20, $30 billion drugs, okay? And they improve people's lives and they allow people to live, et cetera, et cetera. What has happened in the last 10 or 15 years because of Wall Street's influence inside of the pharma companies is that what pharma has done a very good job of doing is actually pushing off a lot of this very risky R&D to young, early-stage biotech companies, and they typically do the first part of the work. They get through a phase one. They even may be able to sometimes go and start a phase two trial, a 2A trial, and then they typically can get sold to pharma. And these are, like, multi-billion dollar transactions. And the reason is that the private markets just don't have the money to support the risk for these companies to be able to do all the way through a phase three clinical trial 'cause it would cost, in some cases, five, six, seven, $8 billion. You've never heard of a tech company raising that much money except in a few rare cases. In pha- in biotech, it just doesn't happen, so you need the M&A machine to be able to incentivize these young companies to even get started in the first place. Otherwise, what literally happens is you have a whole host of diseases that just stagnate, okay? And instead, what happens is a younger company can only raise money to go after smaller diseases which have smaller populations, smaller revenue potential, smaller costs because the trial infrastructure is just less. So if you don't want industry to be in this negative loop where you only work on the small diseases and you actually go and tackle the big ones, you need to allow these kinds of transactions to happen. The last thing I'll say is that even when these big transactions happen, half the time, they turn out to still not work. There is still huge risk, so don't get caught up in the dollar size. You have to understand the phase it's in, and the best example of this is the biggest outcome in, in biotech private investing in Silicon Valley was this thing called Stemcentrx, and that thing was a $10 billion dud, right? But it allowed all these other companies to get started after Stemcentrx got bought for 10 billion.
- JCJason Calacanis
Friedberg, I wanna get your take on this, especially in light of maybe something people don't understand which is the, the amount of time you get to actually exclusively, uh, monetize a drug because y- my understanding, and correct me if I'm wrong, you get a 20-year patent, it's from the date you file it, but then you're working towards getting this drug approved by the FDA, so by the time the FDA approves the drug, this 20-year patent window, how many years do you actually have exclusively to monetize that drug? And then your wider thoughts on this FDA thing.
- DFDavid Friedberg
Yeah, I'm not gonna answer that question right now 'cause I do wanna kinda push back on-
- JCJason Calacanis
Okay.
- DFDavid Friedberg
... the point. I, I'm generally pretty negative on a lot of the comments Lina Khan's made and her positioning, and obviously, as you guys know, we've talked about it on this show. But I read the FTC, uh, filing. It's in, um, federal court, and if you read the filing, let me just start, the company that Amgen's trying to buy is called Horizon Therapeutics, which is a company that's doing about 4 billion in revenue a year, about a billion to a billion and a half in EBITDA. So it's a, it's a business that's got a portfolio of orphan drugs, meaning drugs that treat orphan conditions that aren't very big blockbusters in the, in the pharmaceutical drug context. And so it's a, it's a nice portfolio of cash-generating drugs. Amgen buying the business gives them real revenue, real EBITDA, and helps bolster our portfolio that, you know, is aging, and I think that's a big part of the strategic driver for Amgen to make this m- massive $28 billion acquisition. The FTC's claim in the filing, which I actually read and, and I was like, "This is actually a pretty good claim," is that the way that Amgen sets the prices for their pharmaceutical drugs is they go to the insurance companies, the payers, and the health systems, and they negotiate drug pricing, and they often do bulk, multi-product deals. So they'll say, "Hey, we'll give you-"
- JCJason Calacanis
Ah, bundling.
- DFDavid Friedberg
"... access to this product at this price point, but we need you to pay this price point for this product." And over time, that drives price inflation. It drives costs up, and it also makes it difficult for new competitors to emerge because they tell the insurance company, "You have to pick our drug over other drugs in order to get this discounted price." And so it's a big part of their negotiating strategy that they do with insurance companies. So the FTC's claim...... is that by giving Amgen this large portfolio of drugs that they're buying from Horizon, it's gonna give them more negotiating leverage and the ability to do more of this drug blocking that they do with insurance companies and other payers in the drug system. So they're trying to prevent pharmaceutical drug price inflation, and they're trying to increase competition-
- CPChamath Palihapitiya
Okay.
- DFDavid Friedberg
... in their lawsuit. So I felt like it was a fairly kinda compelling case. I'm no lawyer on antitrust and monopolizing-
- CPChamath Palihapitiya
I think that-
- DFDavid Friedberg
... practices and the Sherman Act, but this was not, sorry, let me just say, this was not an early stage biotech risky deal that they're trying to block. This actually is-
- CPChamath Palihapitiya
No, no, but I mean-
- DFDavid Friedberg
... a mature company with four billion in revenue and a billion and a half in EBITDA.
- CPChamath Palihapitiya
I understand. And I read it too, but two comments. It is because the people that traffic in these stocks are the same ones that fund these early stage biotech companies. And I talked to a bunch of them, and they're like, "If these guys block this kind of deal, we're gonna get out of this game entirely." So just from the horse's mouth, what I'm telling you is you're gonna see a pall come over the early stage venture financing landscape because a lot of these guys that are crossover investors, that own a lot of these public biotech stocks, that also fund the private stocks, will change their risk posture if they can't make money. That's just the nature of capitalism. The second thing is Lina Khan did something really good about what you're talking about this week, actually, which is she actually went after the PBMs. And if you really care about drug inflation and you follow the dollars, the real culprits around this are the pharmacy benefit managers. And she actually launched a big investigation into them. But this is what speaks to the two different approaches. It seems that, unfortunately for the FTC, every merger just gets contested for the sake of it being contested. Because I think that if you wanted to actually stop price inflation, there are totally different mechanisms because why didn't you just sue all the PBMs while there's no merger to be done? But you can investigate and then you could regulate. And I think that that's probably a more effective way. And the fact that she targeted the PBMs says that somebody in there actually understands where the price inflation is coming from.
- DFDavid Friedberg
Mm-hmm.
- CPChamath Palihapitiya
But I don't think something like an Amgen Horizon, 'cause what I think will happen is all the folks will then just basically say, "Well, man, if, if, if these kinds of things can't get bought, then why am I funding these other younger things?"
- DFDavid Friedberg
Yeah, but you know, we're not-
- CPChamath Palihapitiya
But you know if these-
- DFDavid Friedberg
Yeah, we're just not seeing a lot of the younger stuff get, get, get blocked. I don't think we've seen any attempts at blocking speculative portfolio acquisitions or speculative company acquisitions, so-
- CPChamath Palihapitiya
I think these guys are getting caught up in the dollar number, you know? Yeah. So I think the problem is they see 28 billion, they're like, "We need to stop it."
- JCJason Calacanis
You know what's amazing? I'll just wrap on this 'cause it's a, it's a good discussion, but I think we gotta keep moving here, is I took the PDF that you shared (laughs) and I put it into ChatGPT now.
- 1:02:30 – 1:07:45
Apple's AR goggles are reportedly being unveiled at WWDC in early June, platform shift potential, how it deviates from Apple's prior launch strategies
- CPChamath Palihapitiya
- JCJason Calacanis
All right, here we go. Apple's long anticipated AR headset, that stands for augmented reality, which means VR, you can't see the real world, you're just in a- in a virtual world. AR lets you put digital assets on the real world so you can see what's happening in the real world, but you can put graphics all around, that's expected to be revealed as early as June. The projected cost is gonna be around $3,000. It won't ship until the fall. This is a break from Apple's typical way of releasing products, which is to wait till it's perfect and to wait until all consumers can afford it. This is a different approach. They're gonna give this out to developers early. And Tim Cook is supposedly pushing this. There was another group of people inside of Apple who did not want to release it, Chamath. But there is some sort of external battery pack. It seems like a bit of a Franken-product, Frankensite kind of project here that, you know, may- perhaps Steve Jobs wouldn't have wanted to release, but he needs to get it out, I think, because Oculus is making so much progress. The killer app supposedly is a FaceTime-like live chat experience. That seems interesting. Uh, but they look like ski goggles. Your thoughts, Chamath, on this as the next compute platform, if they can get it, you know, to work. Would you wear these? Would they have to be Prada? What- what- what's the story here?
- CPChamath Palihapitiya
No, no.
- DFDavid Friedberg
Does this seem like a weird conversation? Because none of us fucking know, none of us have seen this product.
- CPChamath Palihapitiya
Yeah.
- DFDavid Friedberg
And none of us have used it. So like, this is just weird.
- JCJason Calacanis
Friend of the pod, friend of the pod, friend of the pod, Palmer Luckey, friend of the pod, Palmer Luckey says it's incredible.
- DFDavid Friedberg
So what? That's just like commenting on one guy's five-letter, five-word tweet.
- JCJason Calacanis
Let's just, let's-
- DSDavid Sacks
Palmer knows. I mean, Palmer invented Oculus, so...
- DFDavid Friedberg
Great, but what are we talking about? We have nothing to say about it. Like, what do we know about it? Well, no, but, okay, I'll-
- JCJason Calacanis
Give us an example.
- DFDavid Friedberg
... form a really good question here. Do you believe this is going to be a meaningful compute platform in the coming years because Apple is so good at product? How do we know until we see it? We got to see it.
- JCJason Calacanis
I think it's Facebook-
- DFDavid Friedberg
Of course they're- of course they're good at product. Let's- let's see the product though. Like...
- JCJason Calacanis
All right, fine. Sachs, what are your thoughts?
- DSDavid Sacks
I think it's a good thing that they're launching this. Like you said, it is a deviation for what they've normally done. They normally don't release a product unless they believe the entire world can use it. So their approach has been only to release mass, mass market products and have a very small portfolio of those products. But when those products work, they're, you know, billion user home runs. This obviously can't be at a $3,000 price point, and it also seems like it's a little bit of a early prototype where the batteries are like in a fanny pack around your waist. And there's a ways to go arou- on this. But I- I- I give them credit for launching what is probably going to be more of an early prototype so they could start iterating on it. I mean, the reality is the Apple Watch, the first version kind of sucked and...
- JCJason Calacanis
Ugh, first five versions.
- DSDavid Sacks
Yeah, now they're on one that's pretty good, I think. So look, I think this is a cool new platform. Uh, they get knocked on for not innovating enough. I think, good, let them try something new. I think this will be good for Meta to have some competition.
- JCJason Calacanis
Yeah, it's great.
- DSDavid Sacks
Having two major players in the race, maybe it actually speeds up the innovation, and maybe we get somewhere.
- JCJason Calacanis
Chamath, anything to add here?
- CPChamath Palihapitiya
I mean, I- I think they should have done something in cars. I- I agree with David, like-
- JCJason Calacanis
Hm, what should they do in cars? Well, if you were going to talk about the car, what would it be? How- tell me what you think would be the right approach. You- you were going to do the Facebook phone, that could have changed the entire destiny of Facebook.
- CPChamath Palihapitiya
They should have bought Tesla when they could have the chance for four or five billion dollars.
- JCJason Calacanis
They could have bought it for $10 billion, $20 billion, and so on.
- CPChamath Palihapitiya
Yeah.
- JCJason Calacanis
And then it got to 50, 60, then it got out of reach. What do you think the car should have been?
- DSDavid Sacks
No, they could have bought it at $100 billion.
- CPChamath Palihapitiya
They could have bought at $100 billion. Tim Cook famously wouldn't take the meeting. Elon said it. He wouldn't, he wouldn't meet with him.
- 1:07:45 – 1:15:29
Residential and commercial real estate headwinds
- JCJason Calacanis
for you. All right, listen, let's wrap up with this G- uh, Gallup survey. The number of Americans (laughs) who say it's a good time to buy a house has never been lower. 21% say it's a good time to buy a house, down 9% from the prior low of a year ago. Prior to 2022, 50% or more consistently thought it was a good time to buy. Significantly, significantly fewer expect local housing prices to increase in the year. Hey, uh, Sacks, is this like a predictive of a bottom and pure capitulation? And then that means maybe it is in fact a good time. How would you read this data?
- DSDavid Sacks
I don't see it as a bottom necessarily. The way I read the data is that the spike in interest rates have made it very unaffordable to buy a house right now.
- JCJason Calacanis
Yep.
- DSDavid Sacks
You've got, you know, the, the mortgages are what, like 7% interest rate or e- even slightly higher. So people just can't afford the same level of house that they did before. I mean, m- mortgages were at three, three and a half percent-
- JCJason Calacanis
Two, three, four-
- DSDavid Sacks
... like a year and a half ago. Now, I think what's kind of interesting is that even in the 1980s, the early 1980s, when interest rates were at like 15%, you still had 50% thought it was an okay time to buy a house or an attractive time to buy a house. So for the number to be this low tells me that it's not just about interest rates. I think consumer confidence is also plummeting and people are feeling more insecure.
- JCJason Calacanis
Mm-hmm.
- DSDavid Sacks
So I think it's just another economic indicator that things are looking really shaky right now. And I'll tell you, one of the, the knock-on effects of this is going to be that people can't move because in order to move, you have to sell your current house and then buy a new one. And you're not going to want to sell your current house when prices are going down. And then for the new one, you're going to lose your 3% mortgage and have to get a new one at 7%.
- JCJason Calacanis
Yeah.
- DSDavid Sacks
So you're not going to be able to buy anything like the house you currently have.
- JCJason Calacanis
Freezes the whole market. Frees the home market.
- DSDavid Sacks
So it freezes the market, it freezes mobility. I think over the last few years, uh, during COVID, you saw tremendous movement between states. I think that's going to slow down a lot now because people just can't afford to trade houses. So as a result of that, I think discontent is going to rise because I think one of the ways that you create a pressure valve is when people are unhappy in a state, they just move somewhere else. Well, now they're not gonna be able to do that.
- JCJason Calacanis
Well, and you can also move to a better opportunity for you and your family, whether that's schools, taxes, a job, lifestyle. So yeah, you can, you're gonna, you're going to reduce joy in the country and it also, it screws with price discovery, doesn't it, Chamath? If you, if you don't have a fluid market here, then how does anybody know what their house is worth? And, and this just, again, creates more, uh, frost.
- CPChamath Palihapitiya
I think Freedberg has said this a couple times... Freedberg, you can correct me if I'm wrong, but like the, the home is like the disproportionate majority of most Americans' wealth, right?
- DFDavid Friedberg
Mm-hmm. It's all their wealth.
- CPChamath Palihapitiya
All their wealth. Yeah. So, I mean, there's that factoid.
- JCJason Calacanis
Yeah.
- CPChamath Palihapitiya
I don't know.
- JCJason Calacanis
And then what does that do for their-
- CPChamath Palihapitiya
I wasn't paying attention, so.
- JCJason Calacanis
... savings or whatever? Yeah, it's okay. No, you got incoming? What's going on? They bringing you lunch?
- CPChamath Palihapitiya
No, I was looking, I was looking at, uh, some mansion-
- JCJason Calacanis
What are you looking at me? Be honest.
- CPChamath Palihapitiya
... mansion that's for sale.
- JCJason Calacanis
(laughs)
- DSDavid Sacks
(laughs)
- CPChamath Palihapitiya
It's like a, it's like $175 million.
- JCJason Calacanis
Oh my God.
- CPChamath Palihapitiya
But they just cut the price to 140, so I'm just taking a little gander.
- JCJason Calacanis
I mean, there-
Episode duration: 1:28:04
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