E134: Ukraine counteroffensive, China tensions, COVID Patient Zero, RFK Jr reaction & more

1. 0:00 – 12:36

   Bestie intros!: Bad conference lunches, hair fluffers, and focus groups

   1. JCJason Calacanis0:00

      So wait a second, you guys, I saw that you were at a KOTU conference or a TPG conference? You were at some banking conference? Sacks?

   2. DSDavid Sacks0:09

      Brad and I were both at the KOTU summit.

   3. JCJason Calacanis0:11

      KOTU. KOTU is, uh, an- a large investor? Is it a, a hedge fund? Private equity?

   4. DSDavid Sacks0:16

      They're a late stage fund. It's a big late stage fund.

   5. CPChamath Palihapitiya0:18

      Summit's a really big word. Uh, was it a summit or was it more like a meeting?

   6. DSDavid Sacks0:22

      Well, it's like a two-day conference in Santa Barbara.

   7. JCJason Calacanis0:26

      Ooh, nice.

   8. DSDavid Sacks0:27

      They've done it a number of years in a row now. Last year, Brad and I went and we met with SBF.

   9. JCJason Calacanis0:34

      (laughs)

   10. DSDavid Sacks0:35

       Did I ever tell you that SBF story?

   11. JCJason Calacanis0:37

       No, let's go.

   12. CPChamath Palihapitiya0:38

       (laughs)

   13. JCJason Calacanis0:38

       Who's got crazier hair right now?

   14. CPChamath Palihapitiya0:39

       Take the hat off. (laughs)

   15. JCJason Calacanis0:40

       You or SBF? Give us a quick-

   16. DSDavid Sacks0:42

       I think it's this.

   17. JCJason Calacanis0:42

       Take that hat off for a second. Take that Moncler off for a second.

   18. CPChamath Palihapitiya0:45

       (laughs)

   19. JCJason Calacanis0:45

       Let's get a side by side. Oh my god. (laughs) . Sachs is using-

   20. DSDavid Sacks0:50

       Let's see.

   21. JCJason Calacanis0:51

       ... no product.

   22. DSDavid Sacks0:52

       It's not bad.

   23. JCJason Calacanis0:53

       It's not that bad. You're starting to look like the emperor, like Senator Palpatine from Star Wars.

   24. DSDavid Sacks0:57

       (laughs)

   25. JCJason Calacanis0:57

       I mean, people are having a field day with his crazy hair.

   26. DSDavid Sacks1:00

       (laughs)

   27. JCJason Calacanis1:00

       But what was the vibe? If you said there was a vibe two years ago, the vibe was crypto mania, SBF was the belle of the ball. I suppose he'll be the belle of the ball when he goes in the, uh, hoosegow as well.

   28. DSDavid Sacks1:12

       (laughs) And now it looks like he's getting off.

   29. CPChamath Palihapitiya1:13

       He's getting up. I thought he was getting off for that thing.

   30. JCJason Calacanis1:15

       I guess is the fix in? Is the-
2. 12:36 – 15:50

   Zuck vs. Elon cage match

   1. GUGuest12:36

      in.

   2. DFDavid Friedberg12:36

      Let's talk about the Zuck-Elon cage match.

   3. DSDavid Sacks12:38

      Oh, yeah. Oh my God.

   4. JCJason Calacanis12:40

      This is a-

   5. DSDavid Sacks12:41

      I- I'm a little worried for my friend here.

   6. JCJason Calacanis12:43

      Yeah. Zuck looks like he's-

   7. DSDavid Sacks12:45

      I don't know if Elon is completely up to date on what kind of shape Zuck is in. Zuck is in tremendous shape. He's got like a dojo at his house. He's been getting training in, you know, mixed martial arts from-

   8. JCJason Calacanis12:57

      Jujitsu, from like-

   9. DSDavid Sacks12:57

      ... the Gracies or whoever, you know-

   10. JCJason Calacanis12:59

       Champions.

   11. DSDavid Sacks12:59

       ... Brazilian Jujitsu.

   12. JCJason Calacanis13:00

       Yeah.

   13. DSDavid Sacks13:00

       He's been competing in events. Zuck is in tremendous shape and, um-

   14. JCJason Calacanis13:05

       No joke here.

   15. DSDavid Sacks13:06

       Now E- Elon's a big guy. Elon's a monster. But-

   16. JCJason Calacanis13:09

       I mean, Elon's got-

   17. DSDavid Sacks13:09

       I don't think Elon's not ... Elon's not in this kind of shape. You don't have time to work out like this. I hope you get some sort of Gracie on your team to train you up-

   18. JCJason Calacanis13:18

       Definitely.

   19. DSDavid Sacks13:18

       ... for this thing. Also, Elon has a neck injury that he got-

   20. JCJason Calacanis13:23

       Yeah, from this-

   21. DSDavid Sacks13:23

       ... from that sumo thing years ago.

   22. JCJason Calacanis13:25

       Yes.

   23. DSDavid Sacks13:26

       And he's had to have surgeries on it. So it would really suck if that would get retriggered.

   24. JCJason Calacanis13:30

       Here's the thing though, he did take on a sumo wrestler. I w- we were there for that at his birthday party, and he held his own against a giant sumo wrestler. If Elon does get on top of, and do the walrus on top of Zuck, Zuck has no chance.

   25. DSDavid Sacks13:45

       (laughs)

   26. JCJason Calacanis13:45

       He will get walrused.

   27. DFDavid Friedberg13:47

       You're telling me what he should do is abandon the mission to Mars-

   28. JCJason Calacanis13:54

       Yes.

   29. DSDavid Sacks13:55

       (laughs)

   30. DFDavid Friedberg13:55

       ... stop electrifying the world-
3. 15:50 – 33:25

   Ukraine / Russia updates: underwhelming counteroffensive, reported peace deal rejection

   1. JCJason Calacanis15:50

      right. Well, listen, there's been some updates this, uh, war between Russia and the Ukraine, or the invasion of Ukraine by Russia. You wrote a piece abo- about it in, what was it, The Federalist I think this week? Titled The Truth About Ukraine's Falling- Failing Counteroffensive (and the Peace That Could Have Been) . Why don't you give us an overview of what you wrote and what your take is on the state of affairs right now?

   2. DSDavid Sacks16:17

      Well, the- the thing that's been going on since around June 4th or June 5th is this long awaited Ukrainian counteroffensive. This has been touted for a long time, is this is gonna reverse Russian territorial gains. Uh, Ukraine's gonna use all of this modern Western equipment, these Leopard Tanks that have come from Germany, and Bradleys from the United States, and a lot of other NATO or American equipment, and they're gonna push Russia out of their country. This has been told to us since the fall of last year, since that sort of Kharkiv counteroffensive produced some Ukrainian territorial gains. You've had former generals like Ben Hodges and Petraeus say that this counteroffensive is gonna be highly successful. Where it stands right now is that around 18 or 19 days into it, it has produced minimal gains. In fact, it's been somewhat of a disaster. It's hard to get conclusive estimates of personnel and material losses, but I think as many as a quarter of the tanks and armored vehicles have already been destroyed, and the casualties may be as high as around 10,000 out of an army that was trained up for this purpose of around 50,000. So, so far it has not gone well. The- the Ukrainian army hasn't even made it to the first line of defense. So what the Russians did is they created three fortified lines or belts of defense, and then in front of that is what they call a gray zone or security zone or crumple zone, which is an area they can test, but it's not technically a fortified line. The Ukrainians are still in that sort of gray zone. They are not punching through. They are not even at the first Russian fortified line. To give you some idea of what's involved here, the Russians have these obstacles. There's basically trenches that have been dug, there's-... ditches that would stop tanks or, sort of, force 'em to go in a certain direction, steer the traffic. There's extensive minefields. They've got these things called Dragon Teeth, which are concrete bollards that stop tanks or move them in a certain direction. Then the Russians have massive amounts of artillery. They've got infantry on the ground that help spot the artillery. And if all of that doesn't take out these Ukrainian tanks, they've got these attack helicopters that come in, almost uncontested, because at this point it doesn't look like the Ukrainians have any air defense. And they've also got fixed-wing aircraft that are capable of dropping precision munitions. So, it really seems like the Russians have fixed a lot of the problems that they had last fall in their army and so far, it seems like this counteroffensive's not going anywhere.

   3. JCJason Calacanis19:04

      We're 16 months into this, Chamath, and clearly fatigue is setting in. It's not commanding the news cycle here in America and on a percentage basis, even the Neocons and Republicans are dropping their support for this at a pretty precipitous rate, which, uh, is predictable. Americans don't want to be in forever wars. We all know that. So, what's your take on how this winds up, especially in relation to, A, our budget, and B, this upcoming election, which this seems to be, will be a major issue if this isn't resolved by the time we get into the '24 election cycle?

   4. DFDavid Friedberg19:44

      As part of answering this, I have a, I have a question for Sax. But is it true that there was a ceasefire? Like, Putin had a press conference where he showed a document that he said-

   5. DSDavid Sacks19:53

      Yes.

   6. DFDavid Friedberg19:53

      ... was a, was a ceasefire that then the United States apparently sent Boris Johnson over to Russia-Ukraine to basically blow it, blow up the agreement?

   7. DSDavid Sacks20:01

      Yes.

   8. JCJason Calacanis20:01

      Is that true?

   9. DSDavid Sacks20:02

      This is a-

   10. DFDavid Friedberg20:02

       This is a-

   11. DSDavid Sacks20:02

       Yes, this is formally correct.

   12. JCJason Calacanis20:04

       This wasn't a ceasefire. This was a peace deal before the war started, correct?

   13. DSDavid Sacks20:08

       No, it was after.

   14. JCJason Calacanis20:09

       Oh, this was a claim?

   15. DSDavid Sacks20:10

       So, there were rounds of negotiation before-

   16. JCJason Calacanis20:12

       Yeah.

   17. DSDavid Sacks20:12

       ... the war. Notably, there was a round of diplomacy between Blinken and Lavrov in January, the month before the war, where Blinken said that we cannot compromise on NATO's open door policy, that that sort of diplomacy fell apart. But then after the war, there was a meeting of the Russian delegation and Ukrainian delegation in Istanbul under the supervision of, of Erdoğan and Turkey. Naftali Bennett also had a similar process. In both cases, the West rejected a peace deal.

   18. JCJason Calacanis20:43

       Allegedly. We don't, this is Putin we're talking about, right? Like, nobody knows. Yeah.

   19. DSDavid Sacks20:46

       Let me, let me come back. Well, hold on a second. Let me come back to the evidence for it in a second.

   20. JCJason Calacanis20:49

       Yeah.

   21. DSDavid Sacks20:49

       But what the deal would have provided is that the Russians would move back to pre-war lines if the Ukrainians would agree not to become a member of NATO. However, the Ukrainians could still receive specified security guarantees from the West. That was the deal. Now-

   22. JCJason Calacanis21:06

       Allegedly.

   23. DSDavid Sacks21:07

       Well, we have now multiple data points. You've got Naftali Bennett saying that he thought a deal was taken along these lines, but it was rejected by the West. You also have now Putin showing the very document which was signed by the Ukrainian delegation, so this was-

   24. JCJason Calacanis21:22

       But he flashed the document, right? Nobody has this document.

   25. DSDavid Sacks21:24

       Hold on a second. It hasn't been released yet.

   26. JCJason Calacanis21:26

       Yes.

   27. DSDavid Sacks21:26

       I hope the Russian government releases it for the purpose of history so we can inspect it, but nobody contests that this document is real. Remember, if he's just making this up, you would think that Erdoğan would basically come forward and say, "No, this is fake." There's too many people who are in that room who'd be able to say this document is fake. No one has done that. So, I think there's every reason to believe this document is real. Now, it is not a final agreement. It appears to be a preliminary agreement or an outline, but the outline is that Russia is saying, "We will move back to pre-war lines if you agree not to become part of NATO." And that deal was rejected when Boris Johnson flew into Kyiv and basically told the Ukrainians, "We do not want to make a deal with Putin. We wanna pressure Putin." And the source for that is not the Russians. The source for that is a Ukrainian publication called, uh, Ukrainian Pravda, UP, and they ran an article in May of 2022 that I can put on the screen, and i- is the source for saying that Boris Johnson came in and told Zelenskyy, "We do not want to make a peace deal. We, the West, are not ready to make a deal with Putin. We want you to fight Putin or pressure Putin, and if you do, we will give you advanced weapon systems." And that is when the deal fell apart, if you look at the timing-

   28. JCJason Calacanis22:39

       Allegedly.

   29. DSDavid Sacks22:39

       ... of it.

   30. JCJason Calacanis22:39

       Yes, allegedly.
4. 33:25 – 51:49

   Blinken's China visit, Biden's "dictator" gaffe, Taiwan's future

   1. JCJason Calacanis33:25

      Okay. Blinken just went to China, and this was the first trip for an American secretary of state since 2018. Obviously, things have been strained with the spy balloon, uh, and the visits to Taiwa- Taiwan. Blinken gave some basic goals for this engagement with China, the fentanyl problem, some detained Americans, and protecting US citizens working in China. Those were kind of the easy checkboxes. But they wanted to create also an open line of communication between our militaries, which China wasn't super stoked on or wouldn't agree to.

   2. DFDavid Friedberg34:06

      Tony did a great job.

   3. JCJason Calacanis34:08

      Yeah.

   4. DFDavid Friedberg34:09

      Okay? I think what's really disappointing is that while Tony's over there doing this hard work, which is, must be tough to do because it must have been a little bit like dancing on eggshells a little bit, right? He had to be-

   5. JCJason Calacanis34:20

      It's intense, yeah.

   6. DFDavid Friedberg34:21

      He had to be very thoughtful, very measured. But as far as I could tell, he did a fabulous job. Now, full disclosure, he's a friend of mine, so maybe I'm biased. But then over here, Biden at some mid-level fundraiser in California is calling Xi a dictator. How hard must it be for you to try to do your job when your boss is just, like, completely undisciplined? Like, h- and here's the problem with that, is that if the United States actually thought that Xi was a dictator, do you think that a mid-level fundraiser that we were all invited to in Northern California that none of us said yes to is the place to announce a foreign policy shift like that? Absolutely not. So it just means that, again, there's just more evidence about Biden being very undisciplined. Now, again, that could be an age issue. It could be a mental acuity issue. We don't know because we're not given a chance to really prosecute that problem. Meanwhile, Tony's there trying to do the best job he can, and the sands shift underneath him. Thank God he was able to get the trip done before this thing happened, is what I think, but that gaffe was a very big gaffe and a very big problem, I think, because whatever goodwill he built up was practically flushed down the toilet if you saw the reaction from the Chinese, which was to be deeply offended. And it makes no sense to poke-

   7. JCJason Calacanis35:38

      It's no different than when... Yeah.

   8. DFDavid Friedberg35:39

      When he went to see MBS and they had to negotiate a fist bump versus a handshake. Like, what is all of this either unplanned or undisciplined theater? Why are we engaging in any of this stuff? It doesn't make any sense to me.

   9. JCJason Calacanis35:52

      He's been known... Chamath, he, Joe, Joe Biden's always been known for being a liability in terms of these statements. When he worked for Obama and he was the VP, he also said things, you know, he shot from the hip a lot. You should not be calling him a dictator when you're trying to do this critical work. It's a stupid move. I think everybody can agree. You were gonna say something, Brad?

   10. GUGuest36:10

       Yeah, I was just gonna say, you know, kind of market reaction going in. So the K Web, the Chinese index, was up about 20% heading into these series of meetings. Now, notably, Blinken was not scheduled to have a meeting with Xi.

   11. CPChamath Palihapitiya36:26

       ... and so what happened is on day one, there's a meeting with the foreign minister, right? And it seems that there was some positive trend lines coming out of these first two meetings with the top diplomat, with the foreign minister, which led to the meeting. And notably in the meeting, he did say, "The United States has not changed its policy on Taiwan. We don't support Taiwanese independence." Now, the market reaction post-visit was down 10%, and I think this is owing to what Chamath said, that people felt like, "Maybe we took a step forward here, that we at least had a meeting," but then it was, uh, another step back. And so I think where we sit at the moment is there're probably gonna be some follow-on meetings coming out of this. This was not, you know, a, a ba- a, a path back to where we were, but I think it was a stabilizing moment and, you know, again, we were just at the East Meets West conference where there were a lot of Chinese CEOs and founders who were there, and I think the idea there was, like, things are stable, like, not getting worse. And by the way, six months ago, there was a real concern that things were deteriorating quickly. So I think it's, you know, you can see something constructive coming out of this.

   12. JCJason Calacanis37:37

       Not getting worse was how I felt coming out of it, and then Biden then makes it worse. It's a really, it is a, I agree, it's just a stupid gaffe.

   13. DSDavid Sacks37:45

       Let me tell you about some of the reporting from the, the Chinese side. So after these diplomatic events, and, and you're right, Blinken met with Wang Yi for seven hours then he got in an audience with Xi Jinping. They do these readouts where each side basically produces a public summary of the meeting. In the Chinese readout, they said that US/Chinese relationships are at the lowest point they've ever been. I mean, since, I guess, diplomatic relations were kind of reestablished under Nixon. So that from the Chinese standpoint, they believe that relationships are at the worst they've ever been. Moreover, the US sought to put Ukraine on the agenda. The Chinese response to that was, "We are not interested in discussing our relationship with Russia. That is none of your business." So this idea, there's been this neocon fantasy that somehow China would help us in this war between Russia and Ukraine, and I've said all along that the last thing China wants is for neocons to achieve their objectives with respect to Russia, because then China alone will be in the gun sights of US hawks. So China will do what it has to do to support and even prop up Russia if they have to. Remember, China and, and Russia, and specifically Xi and Putin, they are the two leaders who've met with each other more often than any other leader, and they've called each other their best friends, or most, I think the, the language they used ver- was "most bosom-"

   14. JCJason Calacanis39:14

       Besties?

   15. DSDavid Sacks39:14

       Well, most bosom friends was what they called it.

   16. JCJason Calacanis39:17

       Okay. That's a little weird.

   17. DSDavid Sacks39:18

       Uh, bosom buddies, yeah. But, yeah.

   18. JCJason Calacanis39:19

       Bosom Buddy, a great TV show, good call.

   19. DSDavid Sacks39:21

       Yeah, exactly.

   20. JCJason Calacanis39:21

       Just to give people exactly what happened, Biden when he was at this campaign fundraiser in NorCal that, uh, again, you know, we probably invited two people on the show, he was talking about the military Chinese spy balloon and he said Xi got very upset, quote, that this was "a great embarrassment for dictators when they don't know what happened." And he continued to say that Xi didn't know the balloon had been over the continental US and was off course near Alaska. And this is the kind of thing where he's basically saying Xi is stupid or, you know, whatever, uh, uh, or there's some level of incompetence over there. It's exactly the wrong message you wanna send, calling him a dictator and calling him stupid and saying he was embarrassed. Like, why would you provoke that to raise money or to be a tough guy? It makes no sense. I mean, it sounds like Trump's version of foreign relations. (laughs)

   21. DSDavid Sacks40:08

       From the Chinese standpoint, they thought the whole balloon thing was a travesty. I mean, I, I don't know what the truth of it is, but they feel like it was just this continuous, uh, drumming up of outrage on the American side against China, and they wanted to put that behind us-

   22. JCJason Calacanis40:24

       Mm-hmm.

   23. DSDavid Sacks40:24

       ... in terms of the relationship. I heard Blinken interviewed about this. Chamath, I agree with you. I have no complaint with Blinken in terms of how he handled this meeting.

   24. JCJason Calacanis40:33

       Tony did a great job.

   25. DSDavid Sacks40:33

       I have a complaint about how, I, I have a complaint-

   26. JCJason Calacanis40:35

       C, and plus-

   27. DSDavid Sacks40:36

       ... about how he's handled Moscow but, but not Beijing. But they wanted to put this balloon business behind them. My guess, I've always said that it never made sense to me that the Chinese would use such a ham-fisted way of conducting espionage to fly a bl- deliberately fly a balloon over the US. It was never-

   28. JCJason Calacanis40:54

       Which was obviously not deliberate. They went off course, yeah.

   29. DSDavid Sacks40:54

       It never made sense to me.

   30. JCJason Calacanis40:56

       Yeah. It would be off course.
5. 51:49 – 1:09:59

   RFK Jr's Rogan appearance, big pharma's impact on media via advertising dollars, COVID origins

   1. JCJason Calacanis51:49

      here. This is a good pivot because this criticism of the Ukraine policy by Matt, uh, that Sax pointed out came because there is a belief on his part, and others', that the pod here, All-In, is putting its unilateral support behind RFK. That is not true. There are two people on the pod who hosted a fundraiser last week. And here is what Matt incorrectly said, because I have not put my support behind RFK. I think he's very interesting and I'm glad he's in the race, and neither has Friedberg, but Chamath and Sax did host one, and I'll hand it over to them. But here is what Matt said in his Substack. "And even though it's not the subject of this post, I do want to say that I think it's really sleazy and gross for the hosts of the All-In podcast to be engaging in this Kennedy boosterism as a bank shot way of harming Joe Biden's reelection prospects, not withstanding the recent conversions around Russia policy. Kennedy represents precisely the strand of progressive thought that right-of-center business people have highly... have rightly spent the better part of the century bemoaning. His is an anti-progress, anti-techonology, ultimately anti-human worldview-"

   2. CPChamath Palihapitiya53:06

      (laughs)

   3. JCJason Calacanis53:06

      "... that stands against biomedical progress, against energy progress-"

   4. CPChamath Palihapitiya53:09

      Yeah. Lord.

   5. JCJason Calacanis53:09

      "... and against human flourishing."

   6. DSDavid Sacks53:09

      The guy who wants to blow up as many Ukrainians as possible-

   7. JCJason Calacanis53:13

      As a meat shield.

   8. DSDavid Sacks53:13

      ... in order to deplete... Yeah. Exactly.

   9. JCJason Calacanis53:15

      Pretty gross, yeah.

   10. DSDavid Sacks53:15

       He thinks is anti-human. Listen, I don't even think we should be giving him this much time.

   11. JCJason Calacanis53:19

       Well, no, but I think it is important, uh, 'cause people now have s- connected this pod with the rise of RFK. This was the first-

   12. DSDavid Sacks53:25

       Well, listen, neither-

   13. JCJason Calacanis53:25

       ... major podcast he did.

   14. DSDavid Sacks53:26

       ... e- what, what Iglesias, Iglesias is accusing us somehow of do- of- of supporting RFK not because of issues, but somehow because it's a bank shot for Donald Trump, which is ridiculous. N- none of us support Donald Trump. He's not even my preferred candidate in the Republican lane.

   15. JCJason Calacanis53:41

       Well, what he said was a bank shot against Biden, just to be clear.

   16. DSDavid Sacks53:44

       I just-

   17. JCJason Calacanis53:44

       A bank shot against Biden.

   18. DSDavid Sacks53:45

       ... I would pre- I prefer-

   19. JCJason Calacanis53:46

       Or you're against.

   20. DSDavid Sacks53:47

       I prefer RFK to Biden. It's that simple. What's, what's wrong with that? He's not even making any arguments here. Look, we've explained in a lot of detail, and I explain in my response all the issues where I support RFK. He supports free speech over censorship, he supports civil liberties over the surveillance state, he supports peace instead of war, he supports sealing the southern border, virtually alone among Democrats in talking sense on that issue. And I believe that he's completely correctly diagnosed what we're doing in Ukraine. So on the issues I support RFK-

   21. JCJason Calacanis54:18

       You disagree, and you disagree with him on some issues, right? You disagree with him on nuclear and you may disagree with him in his anti-vax stance, if he is, in fact, anti-vax.

   22. GUGuest54:26

       Can I just-

   23. JCJason Calacanis54:27

       Hold on, let Sax finish those two.

   24. DSDavid Sacks54:28

       I think he was right about COVID lockdowns and I think he was right about-

   25. JCJason Calacanis54:31

       Right.

   26. DSDavid Sacks54:31

       ... COVID, the so-called COVID shot that wasn't even a vaccine, that that should not have been required.

   27. JCJason Calacanis54:36

       But what about those two issues? You obviously disagree with him on some things. Do you disagree with him on his anti-vax stuff and his nuclear stuff?

   28. DSDavid Sacks54:44

       I don't know-

   29. JCJason Calacanis54:45

       And Daniel Finamore.

   30. DSDavid Sacks54:45

       ... enough about those issues to have, like, a firm stance. What I would say is that every candidate represents a bundle of issues.
6. 1:09:59 – 1:16:36

   Secondary market for depressed startup shares heats up

   1. JCJason Calacanis1:09:59

      decision, folks. According to Bloomberg, there is a ton of action for startup shares in secondary markets. If you don't know what a secondary market is, that's when one investor buys shares in a company that's not yet public directly from another investors on the cap table. So if Stripe, which is not yet public, or Reddit, if there are shares floating around in those companies, either previous employees or previous investors, one firm might see an opportunity there and buy them. As this process of bottoming out has occurred, PitchBook reported Tiger Global told secondary investors, and that's a class of people who like to buy these, uh, that they could bid on any individual private company in its portfolio. They tried to sell a bundle of these, um, shares, about 30 startups at a time, but they couldn't find buyers according to the reports, so now they're allowing people to bid on per-company, on a per-company basis. Some of these are being marked down a third, 50%, uh, et cetera. Here's the quote from Bloomberg. "As of May 31st, shares of startups were trading at a median discount of 61% compared to valuations at their latest funding rounds, according to a report by Forge Global Holdings." A16, according to the report, is actively buying shares in Secondary. Accel, Bain, Bessemer, Kleiner are also using Secondary to grow stakes in their existing investments, doubling down, as it were. Crossover firms like Coatue, Tiger Gro- Global, and even Brad's Altimeter are actively searching for deals. So Brad, your thoughts on this? Is this sign of a bottom? And why are you doing this?

   2. DSDavid Sacks1:11:26

      Well-

   3. JCJason Calacanis1:11:26

      Or is it true you're doing it? Yeah.

   4. CPChamath Palihapitiya1:11:28

      Yeah, it is tr- it is true. I mean, our job is to look at all these companies, understand their value.

   5. JCJason Calacanis1:11:32

      Okay.

   6. CPChamath Palihapitiya1:11:32

      You know, I'm sitting here looking at a list that I was given this morning, 125 companies, secondary. You know, the Goldman Sachs unprofitable tech index in the public markets, uh, is down 64% as of this morning.

   7. JCJason Calacanis1:11:46

      Unprofitable public companies.

   8. CPChamath Palihapitiya1:11:48

      So this is a, they, they put together a basket, they track unprofitable public companies, down 64 p- percent off of its peak as, as of this morning. So you just quoted the Bloomberg article saying, yeah, these unprofitable tech companies in the private markets are down about 60, 61%. That smells right to me. The repricings have to occur. These have to occur. All right? There were 1,400 unicorns at the end of 2022, and 100% of them will likely do a down round. And if you said, "What is the average that they're gonna be down?" It's over 50%. You saw the repricings out of some of the best ones, like a Canva or a Stripe where it was down, let's call it 30, 40, 50%. But, you know, there are gonna be companies, like in the public markets, that are down 80 or 90% and disappear altogether. So we didn't see the repricings, okay? And by the way, when we say i- you know, that article quotes Forge, that is what the sellers are offering to sell shares for. That is not where transactions are clearing. Right? So why hasn't Altimeter purchased any of this? Because the prices aren't low enough to induce me to get off the sidelines to purchase the shares. But we're within, kind of, you know, we're starting to get in the zone...... where we can underwrite to a margin of safety, competitive or better than the public markets, for companies that we think are great companies. Now, out of those four hund- 1,400 unicorns at the end of '22, they're probably less than 5% of those companies I would even want to own at the right price. Right? So it's a small subset of companies. The price has to get to this clearing point. But, you know, I think over the course of the next, uh, 18 months, we're gonna see an acceleration of market-clearing events as these companies need to raise capital, as their employees want to get liquid on shares. And it's, uh, uh, probably see some great opportunities, but most of these things that get put on sale should not be purchased, right? Most of 'em, even, uh, you know, the first sale price is never the last sale price. The markdown on the black T-shirts will continue.

   9. JCJason Calacanis1:14:01

      Chamath or Sacks, any thoughts? Are you buying in secondary? Are you looking at this? Yeah.

   10. DSDavid Sacks1:14:05

       We'll look at secondary deals. It's not primarily what we do, but we're open to it. But Brad, if you were to categorize the 1,400 unicorns into one of three categories, what do you think the percentages would be? Those three categories being zombiecorns, like unicorn companies that just don't deserve to exist, they don't have product market fit and they're gonna go away. Category two would be viable companies that are just overpriced and are headed for a down round. And then number three would be the ones that are actually headed for an up round.

   11. CPChamath Palihapitiya1:14:35

       Yeah, I'd say 30 to 40% are these companies that were valued over a billion dollars that don't have product market fit. They'll disappear.

   12. JCJason Calacanis1:14:44

       Zombie companies that will disappear?

   13. CPChamath Palihapitiya1:14:46

       Right, and that, uh, listen now, just-

   14. JCJason Calacanis1:14:47

       Walking dead.

   15. CPChamath Palihapitiya1:14:48

       Just to be fair, let's explain. Most of these companies, right, have less than 200 million of preference, preferred shares, that venture capitalists invest into the company. And many of those companies in that 30, 40%, there's a team, there's some asset of value. They may be able to, you know, sell the talent or the team and recoup, David, let's call it 30, 40% of the pref stock, right, in that transaction. We're starting to see some of those occur. Then I think the lion's share of the companies that are left, let's call it, you know, another 40%, these are companies that should never have been marked at these prices, right, but they do have a business and they're gonna be marked down, you know, 50 to 80%. But all of th-, like none of those have been able to grow through it. Then there's less than 10% of the companies, right, whose growth has been so robust through this period that they've actually grown into or are within 10, 15% of those prior prices. And if you do all of that work, it puts us back on trend line, right? The only thing unusual here is how uh, far off trend line. We had 1,400 unicorns, right? In 2020, we had, I think, 145 IPOs. In the last two years, we've had four, okay? So there's a huge backlog. These companies aren't getting public. Why? Because public market buyers like ourselves were not willing to pay the prices that were in the private market. So the first step is to just have these clearing events. And as, David, you and I heard sober talk over the course of the last couple of days, I think they, you know, said to founders very clearly, "You need to sell your businesses or you need to get profitable. There is no middle

7. 1:16:36 – 1:16:36

   Ford to receive $9.2B federal loan to build out three EV factories, industrial policy to on-shore US supply chain

   1. CPChamath Palihapitiya1:16:36

      ground."

Episode duration: 1:33:31