E143: Nvidia smashes earnings, Arm walks the plank, M&A market, Vivek dominates GOP debate & more

Jason Calacanis 0:00 Sultan of Science, what- what's going on here? You still riding high after your big NASA Zoom interview? Your space station Zoom interview?

David Friedberg 0:06 That was really fun. Shout out to Woody Hoburg from the International Space Station, astronaut, Cal alumni. Woody listens to the pod on the ISS while he works out, the astronauts work out. He said two hours and, uh, 15 minutes every day to, you know, obviously your body can, after a few, you gotta work out a lot. And it's like when he's working out, he listens to old episodes of the All In pod.

Jason Calacanis 0:27 Hmm.

David Friedberg 0:27 A buddy of his put him onto it, he's become a big fan.

Chamath Palihapitiya 0:30 Right on. Shout out to Woody.

David Friedberg 0:31 Yeah, I got a DM from NASA astronauts. I thought it was, like, some sort of scam or something.

Jason Calacanis 0:36 Hmm.

David Friedberg 0:36 I clicked on it 'cause I follow NASA astronauts. They DMed me and I'm like-

Jason Calacanis 0:39 Obviously.

David Friedberg 0:40 ... "What? This, this astronaut wants to chat? That's so crazy." I looked the guy up, seems legit. He's following me on Twitter. So we did a Zoom call yesterday and I put it on Twitter. The call I did with him is really fun, honestly, like a thrill for me. An amazing individual, this guy. Got his PhD at Cal in computer science. Did a thesis on convex optimization applied to aerospace engineering, became a professor at MIT for three years, and applied to the astronaut program and got in.

Jason Calacanis 1:10 Hmm.

David Friedberg 1:11 Fast-forward 2023 in March, he is the pilot of the Crew-6 mission, the SpaceX Crew-6 mission to the ISS. And he's been on the ISS since March, and he's coming back in a couple of days. An incredible individual, amazing story. It was super fun to chat with him.

Jason Calacanis 1:26 I don't think I've ever seen you smile or be more excited about anything. You look absolutely ecstatic.

David Friedberg 1:34 Oh, it was amazing.

Jason Calacanis 1:35 Did he have any comments on Uranus? Any thoughts on Uranus or no?

David Friedberg 1:41 (laughs)

Jason Calacanis 1:41 We didn't get there.

David Friedberg 1:41 You didn't get to Uranus?

David Sacks 1:42 Jake L, you blew that. Let's try that again.

Jason Calacanis 1:44 I blew it? Okay, you wanna try?

David Friedberg 1:45 You wanna try again? You take a swing at it.

David Sacks 1:46 Let me take a shot at this. Freeburg, so did he talk about going to the moon?

David Friedberg 1:49 Yeah, he's actually on the Artemis mission.

David Sacks 1:51 And what about Uranus?

Jason Calacanis 1:53 (laughs)

David Friedberg 1:54 (laughs)

Jason Calacanis 1:54 Well done, well done.

David Friedberg 1:55 We didn't get that far. We didn't get that far.

David Sacks 1:57 (laughs)

David Friedberg 1:58 It was a first date, it was only 20 minutes, guys.

David Sacks 2:00 (laughs)

Jason Calacanis 2:01 Oh, it was a first date in 20 minutes? Did he go for Uranus?

David Friedberg 2:03 Hey.

Jason Calacanis 2:04 Hey-o.

David Friedberg 2:05 (laughs)

Chamath Palihapitiya 2:05 I hear that we're trying to actually land on the south side of the moon.

David Friedberg 2:10 That's right.

Chamath Palihapitiya 2:10 The dark side of the moon?

David Friedberg 2:11 Yeah, so he's actually on that mission.

Chamath Palihapitiya 2:12 So would he have a, an opinion on the dark side of the moon, or, I don't know, the dark side of Uranus?

David Friedberg 2:22 (laughs)

David Sacks 2:23 (laughs)

Jason Calacanis 2:23 (laughs)

David Friedberg 2:23 Oh. Three for three, man. Three for three, everybody. (laughs)

David Sacks 2:29 Let your winner slide.

Jason Calacanis 2:32 Rain Man, David Sacks.

David Sacks 2:36 And it's sad. We open source it to the fans and they have just gone crazy with it.

Jason Calacanis 2:40 Love you,

David Friedberg 2:41 Queen of quinoa.

David Sacks 2:42 I'm going all in.

Jason Calacanis 2:45 I just wanna explain. Somebody was like, "Why are you bullying Jake L? Why are you bullying Freeburg? Shamaah's bullying this person, bah."

Chamath Palihapitiya 2:50 He loves the attention.

Jason Calacanis 2:51 Our love language is breaking chops. That's it. We like to laugh and take the piss out because, uh, everybody takes

Jason Calacanis 2:58 themselves too seriously. And then what's going on with the tequila? Are you guys serious about this? 'Cause now I'm getting, like-

David Friedberg 3:02 No, don't talk about that right now.

Jason Calacanis 3:03 I'm getting 50 emails a day with people-

David Friedberg 3:05 Yeah, we'll talk about that later.

Jason Calacanis 3:07 ... talking about tequila. All right.

David Friedberg 3:07 Let's talk about it later. Yeah.

Jason Calacanis 3:08 Enough with the... We'll talk about it later. (laughs)

David Sacks 3:09 I did run a poll, asking people if they would try an All In tequila, and the poll, it narrowly won.

Jason Calacanis 3:14 Okay.

Chamath Palihapitiya 3:14 And then I ran a poll asking what the most they'd ever spent on a bottle was.

Jason Calacanis 3:18 Mm-hmm.

Chamath Palihapitiya 3:19 If you price it around two, 200 bucks, you can, um, you, you can really maximize demand. I think the demand maximizing function is probably around, uh, $180, $190 a bottle.

Jason Calacanis 3:28 Right.

David Friedberg 3:28 You do not need a majority of people to wanna buy your tequila. You just need enough that are willing to pay the right price for it to work.

David Sacks 3:34 For real, I agree. I was just trying to see how much interest there'd be out there. And in this poll, I think it was 41% said they would try it, 40% said they wouldn't, and then the remainder was just kind of, you know, show me the answer.

Jason Calacanis 3:47 I think if we don't have advertising ever, but we have a nice sipping tequila, 'cause you know, I don't drink a lot, but I do like when Sax gives me a nice Bourbon.

Chamath Palihapitiya 3:55 So if you look at this, guys, 32,000 votes. So if you look at 18.8; so it's 79% is 200 or less. That's the, the sum of both of those two cohorts. So, like, if you priced it at, call it 189...

Jason Calacanis 4:09 150, yeah.

Chamath Palihapitiya 4:10 ... you probably can get 15%.

Jason Calacanis 4:13 Mm.

Chamath Palihapitiya 4:14 And so, you know, you could probably sell several hundred thousand bottles a year. I mean, that's like a pretty real business.

Jason Calacanis 4:19 Okay, but I need something smooth, and I, I like it a little sweet. Is that a problem?

Chamath Palihapitiya 4:25 Can I just give you my opinion?

Jason Calacanis 4:26 Yeah, please.

Chamath Palihapitiya 4:26 I think that the thing that people get wrong just as a, as a consumer, and I think, like, I'm a pretty discerning consumer. The thing that I don't like is that people focus on all of this window dressing and they don't focus on the core. And the core is that, for example, in wine, there's seven or eight rating systems. And over time, if you buy enough wine and taste enough wine, you can really figure out who's good at what, and there's just nothing that replaces a highly-rated wine that's exceptional. And that kind of discernment is now moving itself into tequila. And so I would just encourage us, if we're gonna make a bottle, just make it an exceptionally good-tasting bottle. And one of the things that I saw in the comments was that people said, "Oh, you can't differentiate." But then I see some other articles like Komos, which is the one that I tasted at the one and only Mandarina. That was the first 100 point tequila that had ever been given out. And so there are people that are starting to rate it and create these rankings. And if we were gonna put out a product, I would err on extreme product quality versus price point.

David Friedberg 5:38 I invested in a tequila company, I shared this with you guys, called 21 Seeds. It was started by my friends Nicole, Kat, and Sarika, and they spent a lot of time in Mexico finding the right producer, and they put fresh fruit... It's, it's a, it's a female, uh, niche tequila. So the goal is to create a tequila that will appeal to the female demographic. And they spent quite a lot of time trying to figure out how to actually get the flavor of fresh fruit without using artificial flavoring.... into the tequila. And so there was this big investment in trying to get this thing to work. This thing worked, it took off and, uh, Diageo bought the company. But it was because they spent so much time on the quality of the product that I think they were successful. And that's... Everyone else puts their name and label on a, on a bottle of tequila and says, "Hey, this is my tequila." But if you don't get the quality right, Chamath is totally right, people don't buy a second time. You gotta get it right.

Chamath Palihapitiya 6:27 If you look at what Ro- The Rock did, The Rock went in a different direction, which is, I think, he has a very accessible and affordable tequila, which I think makes sense as well. It's just a different strategy. And that also works for The Rock because he has almost 400 million followers, and so he can really play a volume game. Uh, but I don't think that that's what we should ever do. In fact-

Jason Calacanis 6:47 No, we should stand for exceptional quality.

Chamath Palihapitiya 6:48 Exceptional quality. And this speaks to something else, which is one of the biggest points of feedback that I get... So for example, I took three days... Nat and I took three days, we took a little bit of a, our own little honeymoon away from all the kids, and we went to Villa d'Este just to kind of hang out in Lake Como because I was flying out of Milan and ran into a few people there. And the consistent feedback that I get from those folks is, like, they love hearing about these different places, whether it's different brands, different kinds of wine, all of these things, because all these folks are a little bit left out in the cold now. They don't have, like, how to live life well. And if you work really hard and you're lucky enough to then also have some amount of success, why should you feel ashamed about it? Why shouldn't you be allowed to enjoy that and actually, like, pamper yourself and celebrate yourself? And I say go for it. So if we can find high quality products... Like, this is the thing, for example, like, I think there's different ways of expressing success. When I was poor, I was poor in wallet, and I was also poor in mind. And then somewhere along the way, I actually became rich in wallet, but I was still poor in mind. And so I would wear these clothes that were gaudy and had these-

Jason Calacanis 8:05 Oh, God. You looked terrible.

Chamath Palihapitiya 8:05 ... huge labels written up.

Jason Calacanis 8:06 Terrible.

Chamath Palihapitiya 8:07 Mason's, Dior, and Valencia.

Jason Calacanis 8:09 Yeah. All this crap.

Chamath Palihapitiya 8:11 All this terrible-

Jason Calacanis 8:11 Don't pull it up, man. The haircut looked like Friedberg's. It was disgu- It was gross, man.

Chamath Palihapitiya 8:15 And then I learned how to be rich in wallet and rich in mind, which is then you go totally brand off and you can actually find things that are just, like, really well-tailored, well-made. They can be almost generational pieces of clothing or whatever. And I think that it's great that you can find these things and tell other people because you find that there's a latent so many number of people that want that. So at Villa d'Este, as an example, that is probably the Harvard of hospitality. I've never been to a hotel that is more on point anywhere in the world than that one place.

Jason Calacanis 8:46 Hmm.

Chamath Palihapitiya 8:47 Incredible, incredible ways in which all the waiters-

Jason Calacanis 8:49 Say the name of it again one more time.

Chamath Palihapitiya 8:51 Villa d'Este. Villa D-apostrophe-E-S-T-E on Lake Como.

Jason Calacanis 8:54 Can't wait. Uh, yeah.

Chamath Palihapitiya 8:55 I'll give you one simple example. Matt and I were, like, talking about this one kind of olive oil. And the waiter at the other table heard. He went to the kitchen, brought back, and he said, "Here. I heard, I just overheard, I apologize, but..." And I thought, "This is incredible." You feel so pampered and loved and taken care of. The level of service and quality there was incredible. And I think that there are so many examples of this where-

Jason Calacanis 9:19 Hmm.

Chamath Palihapitiya 9:19 ... if you can have elements of that-

Jason Calacanis 9:23 Whoa.

Chamath Palihapitiya 9:23 ... in your life, you should do it.

Jason Calacanis 9:23 Wow.

Chamath Palihapitiya 9:23 By the way, there's a very high chance that this is where I took-

Jason Calacanis 9:26 That's beautiful.

Chamath Palihapitiya 9:26 ... all of you guys for the All In Summit in 2025.

Jason Calacanis 9:29 Okay.

Chamath Palihapitiya 9:30 I'm still figuring out all the details. Like, my-

Jason Calacanis 9:31 I'm picking 2024 as the-

Chamath Palihapitiya 9:32 But my point is, whether it's Loro Piana, which is, in my opinion, the top of the top in terms of brand off, really high quality clothes.

Jason Calacanis 9:41 Wow. Look at that place.

Chamath Palihapitiya 9:42 The point is, like, there's all these brands that exist that take enormous amounts of time to exemplify craftsmanship and care. And I think that it's appropriate for people who can participate in those experiences to be able to have them and not feel ashamed and actually, like, enjoy it and celebrate themselves and do it. So let's go. High quality stuff, not shitty big label tacky

Chamath Palihapitiya 10:04 crap.

Jason Calacanis 10:04 Okay. NVIDIA has smashed their earnings. Massive interest coming into this earnings report, obviously, because we've been talking about NVIDIA. They've had a massive run up. Everybody's trying to buy capacity to run language models, et cetera, self-driving, yada yada. And it's not just the Googles and Amazons of the world. You have startups trying to buy H100s, A100s, and buy this infrastructure. You also have sovereign wealth funds and countries buying these in the Middle East and Europe, and you have traditional corporations buying them. This is the blowout of all blowouts in terms of performance. Q2 revenue, 13.5 billion, up 101% year over year. That's extraordinary on that large of a number. But up 88% quarter over quarter. High growth in stocks is 20, 30% year over year. So this is, yeah, just very uncommon, obviously. Uh, Q2 net income, $6 billion, up 843% year over year. NVIDIA is now worth 1.2 trillion. It's closing in on Amazon, 1.4 trillion, and Google at $1.7 trillion in terms of market cap. And here's the kicker. They're printing up so much money, and so much profits rather, that the NVIDIA board is approving a $25 billion share buyback. That's a very large number in terms of share buybacks. That's six times higher than what they were currently allotted. Yeah. I guess, Chamath, when you see this kind of extraordinary run up, what is the ramification gonna be in terms of for the industry, competition, and then just trading this name? Is this peak NVIDIA or is the peak yet to come?

Chamath Palihapitiya 11:37 Well, I think it's peak in one way, but this is less about a commentary on NVIDIA because they're clearly firing on all cylinders. But, you know, it's a pretty well established rule in capitalism, which is when the market observes that there's a company just printing enormous revenues and profits, they want to compete with them naturally to get their share of those revenues and profits. And that typically happens in all markets. And the result of that are just decaying margins. In the, in the absence of a monopoly, this is what you should expect. And so because in this market there's nothing really monopolistic about what they do, what they do is exceptional and good, but there are other ways and other systems and other...... companies that are developing chipsets and capabilities here to compete with NVIDIA, so it probably just motivates them even more and accelerates the path where you see competition. I tweeted this out yesterday, but one of the most interesting things that could happen is somebody like Tesla decides to either open source their chip or actually starts to sell their platform. Because if FSD gets to a reasonable level of scale, that entire platform system is a learning and inference system for the physical world, and I think that has tremendous applications. You have something called RISC-V, which is an open architecture spec to essentially compete and create different versions of different chips. That has implications more, I think, to ARM. You have companies like Google that, you know, frankly, spun their own silicon a long time ago, TPU. You have Amazon now talking about doing the same thing. Microsoft has invested a lot of money in FPGA technology. So it's just yet another accelerant in this trend to create many forms of AI-enabled silicon. And so I think that that sort of... it, it pulls that reality forward, and I just think we're gonna have to figure out when the market prices that in, because I think that that probably decays the NVIDIA margin and upside over time. Again, that is not a commentary on them. That's just a market reality.

Jason Calacanis 13:28 Yeah, margins get competed away. For folks who don't know, Tesla is making something called Dojo. It's their own supercomputer. Here's a picture of it. They showed that at Tesla AI Day last year. And you have ARM's open source competitor is the RISC-V chip you're talking about. It's an open source architecture for doing large jobs and so... I guess, my question to you, Friedberg, is, if you look at all this capacity coming online, do you think we're going to be in a situation where the amount of capacity, compute being put online, is going to outstrip the need for that compute because software is getting so much better, and then maybe, you know, people are running Hugging Face jobs and, and various LMs on the new silicon from Apple, and they're running it on their M2s. And so do we need this much capacity? Are there enough interesting jobs in the world to- for all this capacity, and then might that also be a headwind against NVIDIA when people say, "You know what? I got enough. I got enough capacity here."

David Friedberg 14:25 I think the rational way to think about this is to try and calculate the efficient frontier on compute use. So the more compute you use, the more it costs you. The question then is, if you double the amount of compute you're using for a particular application, do you get twice the return on the investment? If you triple it, does your ROI per- on a percentage basis, you know, go up or go down? So at some point, you reach an efficient frontier, which is you start to see a declining or negative rate of return on the investment in the compute that you're using for a particular application. And this is certainly going to be application and market specific. It's going to be largely driven by the data that is available in that market to do training, to do tuning, the market's appetite to spend money for that particular set of applications that emerges from that compute that's being used. And so we don't know today where the efficient frontier is across each of these different markets and sets of applications, and the market is finding that out. In the process of finding that out, everyone is spending a shit ton of money on compute, and they are trying to get as many server racks as they can. They are trying to get as many chipsets they- as they can. They're trying to get as much server time as they can, and everyone's got this idea that the more compute I can throw at a problem, the return is going to scale linearly, and it turns out that, like with most, most things, the answer is likely not. So we're at this point right now in, I would argue, a bit of a cycle that the- there looks to be a bubble, and what I mean by that is that there's a lot of inefficient spending going on as the efficient frontiers are discovered across all these different application sets. And so my intuition, without a lot of actual data to back this up, is that bas- just anecdotally on what I'm hearing people doing in the market, what companies are doing, what startups are doing, et cetera, everyone is throwing everything they can at compute, and they're gonna realize that they're gonna need to rationalize those expenses at some ti- at some point. So I would, I would envision NVIDIA's probably writing a l- writing a little bit of a discovery of the efficient frontier wave right now, and that this probably is not necessarily steady state.

Jason Calacanis 16:42 Sachs, we, uh, experienced this before. As you remember from the dot-com era, there was a massive investment, very similar to this, in fiber and the overspending of building the fiber infrastructure so everybody could get broadband and they could stream movies, et cetera, happened in that '97 to 2002 time period. A lot of those companies went out of business. A lot of that fiber never got used. People were working on compression algorithms while they were building out massive fiber, and a lot of that fiber got sold. I think Google bought up a lot of it. Other people bought it up, and it was just a massive overspend. So is this like the dark fiber of, uh, this era where we're just gonna build so much capacity that there's just gonna be not enough jobs to run on it in your mind?

David Sacks 17:25 Well, I think it's a little different than fiber in the sense that every year there's gonna be a new generation of chips, and so these cloud providers who are providing GPU compute, they're gonna want to keep upgrading the chips to be able to address the next generation of applications. So I don't think it's quite as static as fiber where you kind of build it once, and you're right that there was kind of a glut of capacity was created. Eventually though, the internet usage grew into that capacity. But I think this is a little different because, again, you're gonna need to upgrade the chips every year or two. I think Friedberg is right that this is clearly a spike in demand that may not be sustainable. I mean, recall what happened here is that ChatGPT launched on November 30th last year and really caught everyone by surprise. It kinda took the world by storm. And over the next few months, you had hundreds of millions of users discover AI. I think it surprised even the OpenAI team. I think when they launched ChatGPT, they thought it'd be more of a proof of concept.... but it ended up being a lot more than that. And so everyone has scrambled all of a sudden in the last nine months or so to develop their own AI strategy. And so, again, it was this giant platform shift that happened overnight. So, there is a tremendous GPU shortage right now. And that's also what's leading to these almost software-like profit margins by NVIDIA because when everyone's clamoring to get a limited supply of these chips and there just aren't enough, NVIDIA can almost charge whatever they want. And so, I think even more than the demand, the profit margins might not be sustainable. But I think the reality is, we just don't know what the steady state of demand in this market's gonna be. I think we can say that it can't continue at these growth rates, but probably there will be some steady state of demand that's, you know, it probably is at least where we are today.

Jason Calacanis 19:19 Yeah. I don't think it's perfectly analogous, Chamath, but just to, to, to bring up some historical context, check out this article I was reading the other day. The Dimensions of the Collapse of the Telecommunications Industry. This is August 20, 2002. And it says, um, "The, uh, dimension of the collapse in the telecommunications industry during the past two years has, have been staggering. Half a million people have lost their jobs. In that time, the Dow Jones Communication Technology Index has dropped 86%, the Wireless Communication Index, 89%. These are declines in value worthy of comparison to the Great Crash of 1929. Out of the 7 trillion decline in the stock market since its peak, about 2 trillion have disappeared in the capitalization of telecom companies; 23 telecom companies have gone bankrupt in a wave capped off by the July 21st collapse of WorldCom, the single largest bankruptcy in American history." So, just a little history there of this. It- it's not perfectly analogous, obviously. We don't... NVIDIA's not going bankrupt or anything like that. But th- this overcapacity issue is definitely gonna be something. But you had mentioned that, i- in one of your tweet storms in the past couple of weeks or these long form that you're doing on X, s- previously known as Twitter, you mentioned that what are the jobs that could be pushed to this compute? And, and what if one of them works? I think you were doing a speaking gig that somebody tweeted out a little clip of. So, let's, uh, unpack that. What do you think are some jobs that people might push here that we don't anticipate, that could solve something miraculous in the world?

Chamath Palihapitiya 20:40 Well, yeah, the framing is really like, if you, if you go back to, like, the, the Gold Rush of the 1800s in San Francisco, the people that made the money were the platform enablers, right? They were the ones that sold the picks, the shovels, the pans, and the jeans, right? And that's where, that's where Levi Strauss was born. The, the equivalent analogy, the equivalence in that analogy today is NVIDIA because they are the, the dominant pick and shovel provider. So, the question is, well, what are we going to use these picks and shovels to create? Are we gonna find gold? And I think the question is unclear. And where will that gold be found? Will it be found inside of a big tech company or will it be found inside of a startup? If you look inside of where these resources are being used inside of big tech, it is to completely scorch the earth on the economic value of large models. And I think that that's very, very good for all of the startups that come after it. So, what do I mean by this? You know, we were all so wrapped around the axle around ChatGPT and then GPT, in general. And now, you know, if you look at the quality of LLaMA, LLaMA 2, basically these big companies have decided, no, we're just gonna make all these models extremely good, extremely useful, and very, very free. And so a lot of the resources are going there to subsidize, economically subsidize, and by implication, economically destroy the value of that category. That's going to be good for startups. And so the question is, what will you then build on top of these quasi-free, almost free tools? And so one area that I have been looking at for a while is in computational biology. I think that that clip that you're talking about was just me talking t- with Oren Ziv, just around the ability to compute large complex spaces with very sparse information. It's not... It's, it's a very difficult task today, but tomorrow in an AI model that you can train, you can literally characterize every single molecular permutation you could imagine. You combine it with something like AlphaFold and you can understand protein folding, and all of a sudden you can sequentially start to put tools together that could theoretically give you much higher probability guessing for specific compounds that could actually cure disease. A different version of that is a company that myself and a few other people started, I tweeted that out, which is more in the material science space. And we've had some pretty important breakthroughs there, which is really about trying to invent next generation battery materials. And we have one candidate that could be pretty revolutionary if it turns out to work. We don't know yet. Some positive signs. So, there are, there are some of these green shoots. So, my perspective is that a lot of the money that NVIDIA makes today is going to be money well spent because it'll be going to the big guys, big tech plus Tesla. They are then going to create some really foundational platform technologies with it, whether it's Dojo, whether it's FSD, whether it's the full platform inside of Tesla that is the cameras, plus the inference, plus the training for all forms of physical world interaction, whether it's LLaMA 2 and all of that stuff will be given away essentially, I think, open source, quasi-free to the ecosystem over the next few years. And I think that'll be a really important moment, which will create hundreds of new companies doing really clever and cool things. So, we haven't yet seen the big breakout company yet. And so I think that right now most of this CapEx is going to the big guys, but the dividends of all the work that these big guys are doing will be seen over the next few years in the startups that get started in the next four or five years.

Jason Calacanis 24:25 I love the California analogy. Ultimately, what all that prospecting for gold did was create the state of California. (laughs) ... putting aside the Levis and the jeans. And, uh, if you know anything about California's GDP, (laughs) it would be, yeah, I think these statistics are always talked about, fifth, tenth, eighth largest, uh, it has a bigger GDP, California, than some of the largest, uh, countries in the world. So this is a 2015 chart. Uh, it's hard to find the updated, uh, information on this. But ultimately, that was the product of the Gold Rush, (laughs) is this incredible state. Any other thoughts on NVIDIA before we move on to ARM?

David Sacks 24:59 I think OpenAI had a potentially significant, uh, product announcement that, that's related to this. So they just launched fine tuning for ChatGPT, actually version 3.5 Turbo. It says here, "Fine-tuning lets you train the model on your company's data and run it at scale. Early tests have shown that fine-tuned GPT-3.5 can match or exceed GPT-4.0 on narrow tasks." So you can do things like fine-tune the formatting of the output, you can fine-tune the tone. "Fine-tuning also allows businesses to make the model follow instructions better." So I think the point of this is that we're still at such an early stage of this, and there are so many applications that are gonna be developed, and they're making the models more and more useful. So Jason, to your analogy about fiber, what happened with fiber is there was a big buildout of over capacity, but then the number of applications kept growing until that capacity got used. And I think we're probably gonna see something like that here, where there is a big buildout going on of capacity bu- and capabilities, and that's gonna lead to the next generation of applications. And, and I just think we don't know yet what the steady state of either demand or supply for these chips is gonna be. Obviously, the market got taken by surprise over the last year or so. You've seen, again, this huge spike in demand. The supply cannot react fast enough. That's led to gigantic profits for NVIDIA. But it's hard to know exactly, again, what is the steady state gonna be? Is it gonna be like this or is this a one-time spike? And we also don't know what the supply will be once the manufacturers all adjust, because now they know that the demand is there.

Chamath Palihapitiya 26:39 And to your point, like, the, the big use cases are pushing us well past chips to, to really be more like entire systems and these racks. And so if you look, like, at Grace Hopper, which is their next gen design, it's, like, a bunch of chiplets plus memory all on a huge board. It's not a chip. You're talking about system-level manufacturing at this point. And that will also create different kinds of use cases, because for example, today, right now, when you look at simple things like probabilistic tasks, I think ChatGPT and all these GPTs are, are pretty marvelous and pretty inspirational. But deterministic tasks, they're shit. Like, you know, they hallucinate on simple things like multiplication. Why? Because you infer multiplication and you try to (laughs) calculate it probabilistically, and you get these simple math functions wrong. And so these are all these things where y- the, the software has to become more and more sophisticated and actually be able to path and tunnel code into different ways of getting it executed and then bringing it back and stitching it together. All of these things don't exist. Those are very rudimentary things that were solved in V1 of compute. So I think that, to your point, David, like, we don't know where this goes. We're probably gonna go to a place that it's not just about chips, but it's about systems. But that's gonna create this weird Balkanization almost, and I think that's where a lot of the profit margins will get eroded away, because that will make it a much more competitive industry. And there just isn't a lot of margin to capture when you actually stitch all these things together.

Jason Calacanis 28:09 Yeah. A- and if you think about what were the massive wins for all that extra fiber, it was really two companies. The first was YouTube, which stopped charging people for transport on their videos. Before that, if you had a video go viral, your, your server got shut down, because you, you hit your $5,000 a month limit or whatever you had set with your ISP. And then Netflix, of course, right? Netflix couldn't exist, and all that dark fiber built that. So we'll see, with all this extra GPU, what could happen. And to your point about the, the, the breakthroughs there, you can now go into your ChatGPT, and you can put in custom instructions. And so it asks you, "What would you like ChatGPT to know about you and provide better responses?" And you know, for example, I told it I'm a venture capitalist, I live in the Bay Area, I'm looking for concise business information. And then it says, "Well, how do you like, how would you like ChatGPT to respond?" And I said, "I like to see data in T- uh, table, I like to see data in those tables with hyperlinks. I like citations when possible."

David Sacks 29:09 Yeah, just to be clear, what, what you're describing with custom instructions-

Jason Calacanis 29:12 Yeah.

David Sacks 29:12 ... that was a feature I think they launched, like, a month or two ago, and-

Jason Calacanis 29:14 A couple weeks now.

David Sacks 29:15 ... what that is doing is, uh, prompt engineering basically.

Jason Calacanis 29:18 Yes.

David Sacks 29:18 It's pre-saving, like, all that preamble that you would have to put in every single one of your prompts.

Jason Calacanis 29:23 Yep.

David Sacks 29:24 Whereas, this fine-tuning, as I understand it, is more about fine-tuning the model to-

Jason Calacanis 29:29 Your dataset.

David Sacks 29:29 ... to improve the model for a certain kind of data or certain kind of output.

Jason Calacanis 29:32 Right. So the example there would be if you had your email box or you had your Google Docs or you had a repository of all your Slack messages or something in your company, you had comp- company handbooks or, you know, all of, uh, Chamath's letters he writes every year, you could have that uploaded to ChatGPT.

David Sacks 29:46 It's potentially very powerful, I think-

Jason Calacanis 29:48 Yes.

David Sacks 29:49 ... for enterprises. I think the big enterprise use case, the most obvious one, is that every enterprise wants its own internal chatbot, it wants-

Jason Calacanis 29:57 Mm-hmm.

David Sacks 29:57 ... its own internal ChatGPT, where the employees can ask questions and the AI has access to all of the company's information and it understands permissions and privacy, so it only reveals information to people who have the right to see it. That's kind of a tall order, but I think that's what the market wants.

Jason Calacanis 30:14 Yeah.

David Sacks 30:14 They want the ChatGPT for the company intranet.

Jason Calacanis 30:17 Yes. And so if you asked it-

David Sacks 30:18 And so I think there's a lot of people racing to provide that. And there was a interesting tweet by Nathan Bernaitz. Anyway, he just said, "Bye-bye," a bunch of startups, 'cause I guess a lot of startups were working on this fine-tuning problem. That may be too glib.... a reaction.

Jason Calacanis 30:30 Yeah, it's way too (overlapping dialogue)

David Sacks 30:31 Because I think there's just a lot of enterprises who do not want to share all their corporate information with OpenAI.

Jason Calacanis 30:36 Of course. What if it's HR information? Then you have people asking, like, "Who are the o- most overpaid people in this company?" You know, what if it's like the badge information and how many hours people are working or-

David Sacks 30:45 That's more about permissions, Jason. But even-

Jason Calacanis 30:46 Sure.

David Sacks 30:47 ... if OpenAI can nail the permissions problem, I think there's just a lot of enterprises who will not want to trust their data to OpenAI.

Jason Calacanis 30:53 Of course not. Yeah, of course not.

David Sacks 30:53 They're gonna be afraid about where it goes. This is why I think open source is taking off in a big way, is that I think big enterprises would much rather roll their own models and control it and do the fine-tuning. And that's why they're using tools like Mosaic and Hugging Faces. They wanna have control over it themselves.

Chamath Palihapitiya 31:09 That's a excellent point, and that has implications as well into the hardware, which is also probably a good jumping off point for Arm. Because this, that, what you said is, exactly must happen for the integrity of an organization, to, to wanna use these things. And if that happens, then it just further and further accelerates, I think, how the hardware will get abstracted and frankly, quasi open sourced as well.

Jason Calacanis 31:31 All right. Let's talk-

Chamath Palihapitiya 31:32 Facebook did a great job of this because, like, when Facebook was building data centers, they had to invent tremendous capabilities that didn't exist before. And the market was really fragmented. It was very expensive. And what they did was they basically created these reference designs for servers and blades and the whole nine yards and open sourced the whole thing. And it just, you know, in, in essence destroyed a market, but it created a hyper efficient market that then everybody could use. And I think the question is that if it's happening at the software layer already now, just like it did in Web 2.0 software, and then we see certain elements of Web 2.0 hardware have been open sourced, I think it makes pretty logical sense that you can expect the same things to happen in the AI world. The AI models and the AI platforms and the A- all of that stuff will first get open sourced because it's a data integrity security issue. And then the hardware will get, uh, open source as well because you just want simple reference designs you can use and plug and play.

Jason Calacanis 32:30 Yeah, if you wanna look at that, it's called the Open Compute Project, opencompute.org. Just a way to use open source to grind down the prices, take out the margin, I guess is what you're saying, Shamath, to make all these data centers, uh, scale, right? And so-

David Sacks 32:46 Well, yeah, so one related story here is, this, this happened in the last few weeks. There's a company called CoreWeave which provides cloud infrastructure for AI training. It secured a 2.3 billion dollar investment in the form of a loan. What CoreWeave is trying to do, it's kind of like, uh, AWS but for GPUs. So essentially, instead of having to buy your own GPUs in order to, you know, set up your own infrastructure, you just basically rent compute from these guys.

Chamath Palihapitiya 33:16 But this, this is exactly why, like, none of these m- none of these companies will really be allowed to exist in this exact way four or five years from now because ultimately what people want is massive throughput, right? Tokens per second, give me as many tokens per second as possible. And they don't particularly care, again, if you understand the model, do they really care what the underlying substrate hardware should be? I, it doesn't seem like they should. They should care what is the throughput, what do I pay for it? And by the way, that is exactly what happened when AWS really started to scale because if you guys remember, when we started to first abstract code into AWS, what did we care about? How much did an EC2 instance cost? How much did an S3 bucket cost? And that's all we cared about because that abstraction allowed us to not care about the underlying hardware. Who was the vendor? What was the con- configuration? It didn't matter. And so in an interesting way, we're gonna go through that same evolution here because it's just economically rational that that kind of a market exists. You should only care tokens per second, I think.

Jason Calacanis 34:13 All right. In other news... Oh, and by the way, there's a, something called Common Crawl, which is another interesting open source project that'll, it's getting a lot more attention today because they have crawled the web and you can use this Common Crawl. They release it monthly and, um, that's what a lot of people are training their data on now. They don't have permission from all those people to do training data, but they do have the ability for you to download an Open Crawl, essentially what Google has and y- you have a, an open source version of it. So, um...

David Friedberg 34:42 Common Crawl was started and funded by Gil Elbaz.

Jason Calacanis 34:46 Yeah.

David Friedberg 34:46 He's a, he's a friend. Gil sold his company, Applied Semantics, to Google back in '02, '03. And a big part of his effort with, uh, Common Crawl is to-

Chamath Palihapitiya 34:59 That's AdWords, right?

David Friedberg 35:00 ... yeah, effectively-

Chamath Palihapitiya 35:00 Is it AdSense or what did he buy?

Jason Calacanis 35:02 Uh, applied, that's AdWords, yeah.

David Friedberg 35:03 It was AdSense. Uh, AdSense. So basically, Applied Semantics could read a webpage and then create the keywords associated with the content on that webpage and then those keywords would trigger AdWords ads on the, on the webpage. They called it AdSense. So AdSense started and the whole publisher network at Google was born from the Applied Semantics acquisition. And Gil was obviously a pretty significant shareholder of Google. He's even in the S1 as one of the major shareholders. He's a, a really great human being and his intention with this Common Crawl project was, you know, to make the crawling of the web, the index and the caching available, uh, for all these different projects that might exist. And he didn't, at the time, anticipate the, uh, the OpenAI application becoming, you know, the big breakthrough, but when GPT-3 was published, I think they said that 80+ percent of the weighting came from the content out of Common Crawl. And so it's really been this, uh, this amazing project, completely non-profit, all funded, mostly funded by Gil and, um, has really unlocked this opportunity for a lot of the open source alternatives to now try and provide solutions that can exist and co-exist with OpenAI and others in the, in the commercial options in the world.

Jason Calacanis 36:16 A small piece of trivia. (laughs) We were one of the first AdSense publishers and so here's a story from October of 2005. Weblogs, Inc., which Shittingagget, uh, the blogging company I started, hit $3,000 a day in AdSense thanks to Gil and the team over there and we wound up selling it to AOL.

David Friedberg 36:33 That's awesome.

Jason Calacanis 36:34 And this is the story about it. And, and we were included-

David Friedberg 36:36 That's awesome.

Jason Calacanis 36:37 ... in the S1, they had two examples of publishers. One was New York Times.... and then one was Weblogzing. They-

David Sacks 36:43 That's awesome, bro.

Jason Calacanis 36:43 ... went to show like an upstart and this one. And so-

David Sacks 36:45 That's awesome.

Jason Calacanis 36:46 ... a lot of history here, and it's fun to go back, uh, down to. And we were, we were in the S-1 for, uh, Google.

David Sacks 36:50 By the way, Gil is gonna be at the summit, so, uh, you can say hi.

Jason Calacanis 36:52 Oh, he's gonna be at the summit? Oh, I'm gonna give him a hug-

David Sacks 36:54 Yeah.

Jason Calacanis 36:54 ... and take a picture.

Chamath Palihapitiya 36:55 Charles Barkley had this great story which is like he is like over the moon about being a grandfather. I saw this on 60 Minutes. And he said, "It's because I want my grandchild, grandson, to google me and notice that I did some things and then we can talk about it."

Jason Calacanis 37:12 Mm-hmm. Yeah.

Chamath Palihapitiya 37:12 And J- uh, Jcal, the, I had this thought th- for you. Like, that's like, that's a cool piece of-

Jason Calacanis 37:17 Yes.

Chamath Palihapitiya 37:17 ... internet history that you're a part of. You know?

Jason Calacanis 37:19 Yeah.

Chamath Palihapitiya 37:19 Hopefully your, your, your grandkids will google that and you can tell them that story. That's pretty cool.

Jason Calacanis 37:24 Or, you know, 1,800 episodes of This Week In Startups. (laughs) I just tweeted, uh, an episode with Garry Tan from 2009 that I recorded at Sequoia's office, and I just put it on the, uh, This Week In Startups Twitter account. It's pretty funny to have baby face Garry Tan from Posterous

Jason Calacanis 37:39 on there. All right, Arm officially filed its S1. It's kind of like an S1 for a foreign company, and they plan to go public next month. Arm's revenue last quarter, 675 million, down 2% year over year, up 7% quarter over quarter. Fiscal full year 2023, 2.7 billion-ish, down 1% year over year. Arm's major business, uh, just so you know, is, uh, smartphones. 99% of smartphones, uh, are built with Arm's chip architecture.

Chamath Palihapitiya 38:06 Embedded systems. They, they have an eye, I should say, for embedded systems.

Jason Calacanis 38:08 They have embedded systems, yeah. We'll get into it.

Chamath Palihapitiya 38:09 The problem is the market has totally moved. When, when SoftBank bought Arm, it was probably like the last year where, you know, there was so much focus on the hardware and platform technologies inside of mobile and tablets and all that stuff. But in these last few years, think of what's happened. We've had a massive shift to AI, right? And so that's pushing a lot more pressure on GPUs and whatever comes after that. We have had a reemergence of the popularity of RISC-V, which is an open source competitor to Arm. We have had Apple insource a whole bunch of their own architectural decisions in silicon design because-

Jason Calacanis 38:45 They don't want the dependency, they want the profits.

Chamath Palihapitiya 38:46 They have a tightly coupled philosophy. Yeah.

Jason Calacanis 38:48 Well, also, they also care about different things, like they care about battery life. So that's why, you know-

Chamath Palihapitiya 38:52 Yeah, I know.

Jason Calacanis 38:52 ... that's the focus of their chip architecture.

Chamath Palihapitiya 38:54 And so all of this just means that that market, embedded systems, becomes more and more constrained and commoditized over time, which again, as we said, in capitalism means that future profits will be less than historical profits. And so I think this is a very tough valuation to get right. And trying to stretch to a 60 or $70 billion print I think is really tough. This is a, honestly, a 15 to $20 billion company.

Jason Calacanis 39:24 Ouch. So, uh, question for you, uh, Chamath, then I'll open it up to, to the Davids. Why would SoftBank... Uh, I know the answer, but I'm asking you so you can explain it to the audience. Why would SoftBank take a company public with these headwinds, with no growth, being flat? Why are they taking it public now?

Chamath Palihapitiya 39:43 Well, Soft- SoftBank has to delever, right? They have a, they have a very big problem, which is that they have this... Forget SoftBank Vision Fund for a second, but SoftBank itself is a telco operator that has ginormous piles of debt that they've used to finance the building of their business. And so when you have contraction in your core business, you become more and more at risk of breaching the covenants of all that debt and/or you just like run out of free cash flow. Like, all of these things really hurt your future ability to invest. And so SoftBank is under a lot of pressure to just clean up the balance sheet and delever. And so when you have an asset like this sitting there, if you can sell, you know, 20 or $30 billion of that, call it, to somebody, and then replenish your balance sheet, that provides tremendous liquidity and relief. And they did that as well a few months ago with Alibaba. They've started to... I think now they may have sold out of the overwhelming majority of their position in Alibaba, again, because they have massive liquidity needs because they have so much debt. So this is just part and parcel of them delevering the balance sheet.

Jason Calacanis 40:54 So they're forced to get it out is, I guess, what you're saying.

Chamath Palihapitiya 40:56 Yeah.

Jason Calacanis 40:56 And then we've talked Sacks a little bit about other companies that are gonna be forced. They're on the... What do they call it when you're on a pirate ship, they make you walk the plank? I'd say this is like the walking of the plank to, to an IPO. You got other companies that have issues where they just have to get public at some point. So maybe the public markets are gonna open up and, uh, in some cases, it's gonna be because people are walking the plank. Other cases, it's gonna be opportunistic. So maybe you could talk a little bit about your thoughts on that.

David Sacks 41:24 I think it's hard to walk the plank into the public markets. I'm not sure exactly what you mean by that, because the public markets have to want to buy your issuance.

Jason Calacanis 41:31 Yeah.

David Sacks 41:31 So if it's not a good company, then, you know, in this environment, they're not gonna be able to IPO.

Jason Calacanis 41:36 Well, they're gonna be able to IPO. I think the question is the price. They have no choice but to get this out.

David Sacks 41:39 Sure. So, yeah, there may be a lot of down rounds into an IPO from the last private round, which was two or three times what the IPO price is gonna be. Maybe what you mean by walk the pr- plank is that... Well, you tell me, but there are a lot of companies which have built up huge pref stacks-

Jason Calacanis 41:55 Correct.

David Sacks 41:55 ... because they raised too much money at the peak, at valuations that were too high. And going public does allow you to reset your whole pref stack, because all the preferred with all of the rights and preferences converts to common.

Jason Calacanis 42:07 Mm-hmm.

David Sacks 42:08 So post-IPO, you just have common.

Jason Calacanis 42:10 Yeah.

David Sacks 42:10 And so it is a way to like clear out all the structure and all the mess that has built up in a company, and you can get to a real valuation that reflects basically the truth of what the company is worth.

Jason Calacanis 42:22 Another analogy might be if a house is on fire. You gotta... You're on the balcony. You gotta jump or you gotta stay in the burning building?

David Sacks 42:28 Yeah, but, you know, listen, if your company is on fire, I don't think you're gonna be able to IPO.

Jason Calacanis 42:31 Mm-hmm.

David Sacks 42:31 I mean, it's, it's gonna be a tough scrutinizing public market for new offerings. I think that the scenario in which you can IPO is if the company is fundamentally good.

Guest 42:43 ... it will be able to IPO at some valuation, and that valuation may be a significant down round from their last private round. Those will be able to get out.

Jason Calacanis 42:52 Yeah. And that's Stripe, I guess. Uh, uh, now are you seeing-

Guest 42:54 That could be Stripe, yeah.

Jason Calacanis 42:56 ... are you seeing, David, the M&A activity starting to bubble up in your portfolio or in, you know, the back channels? 'Cause I'm starting to see that a bit. Founders are packing it in, in some instances and saying, "You know what? We wanna try for M&A." Or, you know, some companies are getting a little bit frisky and saying, "Hey, what, what's available in the market on the small side?" So are, are you seeing an M&A, any M&A action?

Guest 43:17 Not a ton yet, but there's definitely a growing number of startups who are realizing that what they're doing is not working, and they're not gonna be able to raise another round. And so therefore, figuring out a graceful exit, whether it's an acquihire or some other type of landing.

Jason Calacanis 43:32 Ah, got it. Those are, those might be the accurate walking the planks.

Guest 43:35 Yes, those are the walking the planks. You're gonna start seeing a lot more of that, for sure.

Jason Calacanis 43:39 Freeberg, your thoughts on the, in the, on the public markets here in r- and in relation to privates e- and people walking the plank?

David Friedberg 43:46 I don't think there is a public market right now. There's no IPO window. This Arm thing is, you know, pretty forced. It seems s- not like there's a ton of pent-up public demand to buy these Arm shares, at least that's what it seems. So, you know, they're, they're gonna go shop it. They're gonna find out what the market tells them it's worth and, and then we'll see. NVIDIA's gonna help buoy it, I'm sure. There'll be an argument that, uh, you know, all boats will rise and Arm will be a beneficiary. But I don't know if that necessarily leads into the IPO window being open again. I think we've all heard the commentary from Morgan Stanley that they don't think the window's opening until Q2, Q3 of next year maybe. I, I, I can't remember the exact commentary. But as, as we all know, a lot of LPs in venture funds and private equity funds are waiting for the IPO window to reopen before they're gonna start reallocating capital back into the private venture funds, because they need to get liquid in order to be able to recycle capital back into the next class of, of funds. So this glut right now, this inability to kinda get companies public is certainly weighing on folks. You know, you effectively have three options when you're running a private company. You gotta keep raising money, which means either raise private capital or go public. And we've talked about the challenges of late- raising late-stage private capital if you've had a high private valuation in your prior round. Going public is very difficult right now because a lot of folks are still digesting and having indigestion from the last couple of years. Or you gotta sell the company or you gotta get profitable. Now on the, the sell the company side, many of the acquisitions that we're seeing, with a few exceptions, are generally more bolt-on and less like, "Hey, I'm gonna pay some big strategic premium for some big strategic game-changing company right now," because all the buyers are dealing with their own shareholder issues and their own public stock issues right now. And the, you know, can you get profitable is really, as you guys know, where a lot of folks are going, which is totally restructure your ambition, restructure your plans, and build a business where customers are willing to pay you money and where you can then take that profit and only reinvest that profit and not invest more than that profit. And if you can get to that steady state, you know, you can live to see another, another day, another year, another decade. And those businesses, by the way, that we saw in the dot-com boom and the global financial crisis that, that were able to do that during the, the doldrum Death Valley march that everyone's going through right now, they emerged victorious. They learned how to be frugal. They learned how to be nimble. They learned how to really focus on customer experience because they had to increase retention, and they had to increase the prices they were charging. They learned how to be efficient with allocating resources. And so profitability became a, a core part of their DNA and their ability to succeed. So I think this is really a, a, a trial era. And, you know, on the other side of this trial era, a number of very high quality companies will emerge. But in the interim, I don't think that there's a, an IPO path that a lot of folks can just check the box and say, "Hey, let's go ahead and go public even if the valuation's not great." Remember, an IPO process, you gotta oversell your book or the bankers won't underwrite it. So and if there... You know, you can't just say, "Hey, the price is now five bucks," and expect bankers are there. If a company's burning money, the big concern with going public right now is that there is no pipe market. There is no ability to do secondary, to do follow-on offerings, so the company can't raise capital after it's public. So unless you're actually profitable, your option of going public right now really isn't there 'cause shareholders don't wanna buy shares in a company that may run out of money.

Jason Calacanis 47:24 Yeah. So does-

David Friedberg 47:24 And that's gonna end up... Yeah.

Jason Calacanis 47:25 ... and to your point, if you take this third option and you, you, you become really resilient and you have profits chamoff, that seems to me to be the setup for the next boom that we could experience in the coming years, hopefully, which is we don't have companies that are burning, you know, mountains of cash. People are getting to profitable. These businesses look great. And then if the big companies are now, you know, having their stock prices recover, and they've laid off 20,000 employees, and they got people returning to the office, and they're fit and they're strong, hey, that's a setup for strong companies buying strong companies or those strong companies that are private.

Guest 48:00 The M&A market is dead as a doornail. It's more-

Jason Calacanis 48:02 Right now.

Guest 48:02 ... dead than the IPO market. So two days ago, the European Commission and the CMA in the UK said that they're probing Adobe Figma because they have some concerns that it's gonna limit competition in the market. It looks like Microsoft will have to give a 15-year license to video game streaming to Ubisoft in order to get the UK folks to agree to Activision, to their Activision acquisition. So you're talking about, in the first case, a 20-billion-dollar merger that may not happen because the CMA, they've found their footing. They clearly had a win in the Microsoft/Activision thing, and now they're probably going to find issue with the Adobe/Figma thing. And the Europeans don't wanna be left out in the action, so they're jumping in. So I think the M&A market is effectively dead.

Chamath Palihapitiya 48:54 What it leaves is an IPO market, but that is very tenuous because you don't have a leading candidate that can really catalyze something. And I made this prediction earlier, but I think the only company than can really catalyze things would be if people-

Jason Calacanis 49:06 SpaceX?

Chamath Palihapitiya 49:06 ... were ready to do Starlink. I mean, it, it's the most obvious, natural, logical thing that would just get everybody excited and off the sidelines and into the arena.

Jason Calacanis 49:17 Mm.

Chamath Palihapitiya 49:17 But that may take another year. It may not, but it may. In the meantime, I don't think there's any company, like Instacart, I don't think people are gonna be jumping off the sidelines. Arm, it'll be tough. Even Stripe now is like a very complicated valuation trade, and I think that that's a really technical thing to be involved in, in an IPO like that.

Jason Calacanis 49:38 Interesting.

Chamath Palihapitiya 49:38 A technical valuation. And so companies have no choice except to get profitable and get to default alive, to use the-

Jason Calacanis 49:46 Love it.

Chamath Palihapitiya 49:46 ... famous Paul Graham quote. Because that's the only path.

Jason Calacanis 49:49 That's it. Yeah, I mean, suck it up.

Chamath Palihapitiya 49:50 That's the

Chamath Palihapitiya 49:51 only path.

David Sacks 49:52 You either have to be default alive, which means profitable, or default investible, which means that you're capable of producing metrics that a VC will fund. But really, that starts with 100% year-over-year growth. There's a lot of companies that aren't growing very fast, that are growing 20, 30, 40, 50, 60% growth. That's not VC fundable.

Jason Calacanis 50:11 Or they're, or they're flat.

David Sacks 50:11 Yeah. Or they're flat, even worse.

Jason Calacanis 50:12 Yeah, yeah.

David Sacks 50:12 Some are shrinking. So those cases, they gotta think more like a PE model than a venture model.

Chamath Palihapitiya 50:18 Yeah.

David Sacks 50:19 And PE companies are cash flow positive. They don't burn cash. I put out this video-

Jason Calacanis 50:23 Welcome to the new world. Mm.

David Sacks 50:25 I put out this video a few months ago called "VC or PE: What's the Right Framework for Thinking About Your Startup?" This was a, um ...

Jason Calacanis 50:32 Oh, Craft Ventures, YouTube.

David Sacks 50:34 This was a talk, uh, that I gave to our portfolio of companies. We recorded it and then published it. Really, it should've gotten more attention. Uh, but this was basically recommending to all those slower-growing companies in our portfolio, stop thinking that VC funding is always gonna be available, and start thinking more like a PE-funded private equity company. Which is to say, you need to cut your burn to get cash flow positive. You will then be able to, uh, control your own destiny. So yeah, this slide here, if you're not VC-eligible, act realistically. So we provided some guidance on what makes a company eligible for VC funding, and you can see there's a good column, there's a great column. Good starts at 2X growth, great is 3X. Gross margins, good starts at 50%, great is 80%. Net dollar retention, good starts at 100%, great is 120%. CAC payback, good is 12 to 18 months, great is 6 to 12 months. Burn multiple, good is one and a half, great is one or less. And then there's some danger zones as well. This was to provide them with some realistic guidance in terms of whether they'll be able to raise another VC round or not. And I can tell you, like, most startups in startup world right now are in the danger zone. It's a really tough environment. And so, you know, listen, if you're a startup with sub-one million of ARR and you're in the danger zone, you're probably just gonna have to pack it in, or maybe you package yourself up for an acqui-hire. But if you're a startup that has 50 million of ARR, but you're in the danger zone, just cut your burn. You could basically make yourselves-

Jason Calacanis 52:08 Totally.

David Sacks 52:08 ... cash flow positive, and you could engineer an outcome for yourself, a pretty good outcome.

Chamath Palihapitiya 52:12 My anecdotal experience is, uh, one of our larger investments, we brought in a private equity firm, or they came in. And my God, it's been an incredible experience. Because the combination of how, like, a VC looks at a business and how a PE firm looks at a business, in a moment like this, is hyper additive because it's super clarifying, it's very straightforward, and it gives a CEO an extremely clear mandate from which to operate, and then they become very measurable. And I found it to be a really, really healthy thing. Now, PE guys can only get involved in companies of a certain size, so it limits-

Jason Calacanis 52:52 50 million and above in revenue? 100 million?

Chamath Palihapitiya 52:54 Yeah, in our case it was a 400 million, 380, 300... More than 300 million in revenue, so it's a big, it's a big company. But my point is just, just more that we were moving along a trajectory to getting to default alive, but by adding that PE partner-

Jason Calacanis 53:09 Discipline, discipline.

Chamath Palihapitiya 53:10 ... to our board, boom. I think we were able to focus on it probably a year to 18 months faster, and with v- specific precision because they have a very different toolkit and reaction to misexecution, and that's extremely healthy.

Jason Calacanis 53:26 Yeah, we had this happen. You know, meeting with, uh, just from the front lines, we, um, we meet with, we have 20,000 people apply for funding from our firm. In large part, I would say we doubled the number of applications after All-In started, so shout out to my besties here. It's really helped our deal flow. And we find companies, and we found a company that was obsessed with All-In, and the two founders were quants, and they made this company called Stone Algo. We meet this company. They- they've got very little money. It's a bootstrap company, and they got to a half million dollars in revenue, you know, just on sweat equity. And we find this company. It's not part of the Silicon Valley, you know, accelerator system. It's basically Kayak for diamonds. Uh, shout out to the team over there. And we were able to place a nice bet on this company that was breakeven, and, you know, put in, uh, you know, a couple of hundred thousand dollars to, to start, start them down this, um, road to growing faster. But what a delightful thing to find a profitable company in the world. And so if you have a profitable company, like, and it's just 50,000 a month or 25,000 a month, please email me, Jason@Callaghanis.com. (laughs) I want to invest in your company. When you have that company, small amount of revenue, profitable, yo- you're not burning a ton, you are so attractive to investors right now. It's the, it's the highest attractiveness in the world. And I just wanna point out, David, as this market has, you know, completely gone from absolute chaos, the hair has gotten tighter and tighter. You were in crazy bannon-

David Sacks 54:55 (laughs)

Jason Calacanis 54:55 ... and now you are tight, tight is right.... Sax is focused. He's deploying that LP capital, he's deploying that advice to SaaS companies-

David Sacks 55:04 Yeah.

Jason Calacanis 55:04 And it's no joke now, folks. General Sax is here. He is not crazy history uncle. He is SaaS Sax. He is... SaaS Sax is back.

David Sacks 55:15 This is like when, uh, Mark Zuckerberg started wearing a tie to work to start showing that it was serious.

Jason Calacanis 55:21 Yes. Yes.

David Sacks 55:22 (laughs)

Jason Calacanis 55:22 Sass is... SaaS Sax and Serious Sax is back with that slicked-back hair.

David Sacks 55:27 (laughs)

Jason Calacanis 55:27 All right, listen, we gotta get going here. We got a lot more on the docket. I, I, I think we just...

Jason Calacanis 55:33 Maybe I'm gonna jump the fence here and we just go right to the Republican primary.

Chamath Palihapitiya 55:37 The funniest thing last night was that poker, we watched it.

Jason Calacanis 55:41 You watched it during poker? Did... Were you able to focus?

Chamath Palihapitiya 55:44 You have to hear Kevin Hart react when all these guys are doing... It's one of the funniest things I've ever heard. And the worst part of the poker was (beep) .

Jason Calacanis 55:57 Oh, the magician. Here we go.

Chamath Palihapitiya 55:59 (beep) says, "Chamath, how can you both be playing poker here, but also on the debate stage at the same time?"

David Sacks 56:06 Oh. (laughs)

Chamath Palihapitiya 56:08 Which I thought, which I thought was a really funny joke. I thought that was really good.

Jason Calacanis 56:13 It's a little racist, but it's a little bit funny. (laughs)

Chamath Palihapitiya 56:14 It's a little racist, but it was funny. But it was funny. It was very funny.

Jason Calacanis 56:17 All right, listen, we... I know everybody is... I just wanna go around the horn here. Friedberg, did you watch the debate? Who won the debate? Who had the largest gain, net gain, in terms of their profile, in your mind, after watching debate number one of the GOP? David Friedberg, biggest gain.

David Friedberg 56:37 I watched the debate. I kinda think about these guys on three dimensions, which is the content, how dynamic they are, and, and their personality.

Jason Calacanis 56:46 Mm-hmm.

David Friedberg 56:46 I think those are the three dimensions that people are gonna be kind of assessing them on. I think Nikki Haley did a tremendous job gaining interest with respect to her personality and her content. Burgum, Hutchinson, I don't think had a chance to move the needle on any of them. I think Vivek was by far the winner on dynamic. He had the, the hardest hitting, biggest comeback, with a very close second being Chris Christie. But I do think that Vivek got taken apart when it comes to content and I have real concerns about his personality. There's a lot of people that are just turned off by him, that he seems a little too eager, that he seems a little too smart for his own good.

Jason Calacanis 57:34 Hmm.

David Friedberg 57:34 The commentary about him being so junior and doesn't have experience, I think standing next to those guys on stage, really showed, to be honest. Nikki Haley tearing him apart on his, uh, point of view on Russia. And Sax, you know, we can debate the point or not, but I think she did a masterful-

David Sacks 57:52 I don't think she tore him apart.

David Friedberg 57:53 Yeah.

David Sacks 57:53 I think the biggest dunk line of the evening was when he congratulated her on her future appointments to the boards of Raytheon and Lockheed.

David Friedberg 58:03 Yeah, that was pretty good.

David Sacks 58:03 I thought that was brilliant.

David Friedberg 58:04 I just think he's the most dynamic character. And I think people, people do, in a democracy, vote on that. They vote on how dynamic someone is.

Jason Calacanis 58:10 So-

David Friedberg 58:10 They vote on their personality and whether they can trust the person. I think Nikki Haley shines there. She seems extremely trustworthy and personable.

Jason Calacanis 58:18 Okay.

David Friedberg 58:18 Chris Christie came across as very personable.

Jason Calacanis 58:20 So your big winners...

David Friedberg 58:22 Yeah, Mike Pence I would say under- underwhelmed. And Ron DeSantis, man, it's like he didn't show up, so yeah.

Jason Calacanis 58:29 A bit si- silence from him, yeah, okay.

David Friedberg 58:30 I would say Haley, Chris Christie-

Jason Calacanis 58:33 Vivek.

David Friedberg 58:34 ... Vivek, and Kim Scott-

Jason Calacanis 58:35 Got it.

David Friedberg 58:35 ... are probably, like, you know, across those dimensions, like, you know, the four runners and everyone else-

Jason Calacanis 58:41 Okay.

David Friedberg 58:41 ... is probably off.

Jason Calacanis 58:42 Now let me get Chamath, and then Sax you get to comment on both of theirs, so I wanna go to you last because you have the most passion here. Chamath, who are your big winners coming out of it? In other words, who gained the most last night?

Chamath Palihapitiya 58:54 What can Brown do for you? What can Brown do for you? I think that-

Jason Calacanis 58:57 Okay, UPS settlement, great.

Chamath Palihapitiya 58:59 I thought that, I thought that Nikki Haley did an incredible job. And I do think that Vivek did a very good job. And I think what's interesting is that I'm fascinated to see what the Republican reaction over the next few weeks will be to Vivek. And specifically what I'm interested in seeing is do the Trump loyalists start to... Were they incepted with an idea yesterday, which is that this guy can give us a lot of the talking points we want without some of the heartburn and agita that we don't want?

Jason Calacanis 59:36 Mm.

Chamath Palihapitiya 59:36 And if he is able to thread that needle, which is what I think his effective strategy has been, he could really build momentum going into the fall. So that was my, that was my real takeaway is that he is refining a playbook. Look, the guy is a, clearly a really brilliant person, well studied, well prepared, and dynamic, as David said, so he can, you know, clap back at people, which I think is important. But the most important thing that he's done is he has defined a very precise strategy to thread this needle of being close enough to Trump to, frankly, eventually go after him-

Jason Calacanis 1:00:27 Hmm.

Chamath Palihapitiya 1:00:27 ... but do it in a way where he's slowly building credibility among Trump loyalists. And I think if you look at where other people made huge gaffes, unnecessary gaffes, was they took their beliefs and they confused them with the strategy of winning. And that doesn't work in the Republican Party. So when the candidates were asked about Trump and the ones that drew a hard line and said that this guy's gonna go to jail, what happened? They got booed, and it just ended their ability to be credible-... for what they said afterwards. I'm not saying that that's right or wrong, it's just an observation. So I think Vivek is doing the smartest job of understanding the rules on the field, and he's in the arena to win.

Jason Calacanis 1:01:11 Okay. So now we-

Chamath Palihapitiya 1:01:12 And that gives him a lot, that gives him a lot of chance.

Jason Calacanis 1:01:13 Now hold on, now we go to Sachs. Sachs, you heard Nikki, Vivek, Christie from Freeburg, you heard Vivek, Nikki-

David Sacks 1:01:20 And Tim Scott. Yeah.

Jason Calacanis 1:01:20 ... and Tim Scott. So, Vivek clearly, uh, on, the buzz and the search terms and everything, it seems to be favoring Vivek as the big lift here. Do you think Vivek is the Trump change agent without the indictments, without the baggage, without the Trump derangement syndrome insanity? Is, is, is Chamath correct here that he's a more palatable version of the change agent that is Trump?

David Sacks 1:01:43 I think he's positioning himself as the backup plan to Trump. So he's not criticizing Trump, he is cultivating support within Trump's base. Again, not to supersede him, but I think to perhaps be a backup plan. I think that is a smart strategy. But let me back up a little bit here.

Jason Calacanis 1:02:00 Who won for you?

David Sacks 1:02:02 Well, let me, let me make a couple of points.

Jason Calacanis 1:02:02 Who had the be, who had the best gain? Before you make your points, who had the biggest gain?

David Sacks 1:02:05 Well, first of all-

Jason Calacanis 1:02:05 Everybody else played the game. Biggest gain last night.

David Sacks 1:02:07 Well, clearly the biggest gain was Vivek, that's-

Jason Calacanis 1:02:10 Okay, great.

David Sacks 1:02:10 ... reflected in, in the polling. There was a poll on Drudge Report in which 33%, which was the highest number, said that he won the debate, 22% for Haley, 18% for DeSantis. Christie got 16%. The rest were just non-factors. So, Nate Silver-

Jason Calacanis 1:02:24 Not scientific, but pretty interesting.

David Sacks 1:02:26 It's not scientific, but this is corroborated by Nate Silver.

Jason Calacanis 1:02:28 Yes.

David Sacks 1:02:29 Had a Substack this morning-

Jason Calacanis 1:02:30 Great Substack.

David Sacks 1:02:30 ... basically saying that based on the buzz on social media and the sentiment that he predicted-

Jason Calacanis 1:02:36 And Google Trends. And Google Trends.

David Sacks 1:02:37 ... Google Trends, he predicted that Vivek would... We keep saying Ve-vake, Vive-vake. It's, it is, it is Ve-vake, yeah.

Jason Calacanis 1:02:43 Like cake. It's Ve-vake.

Chamath Palihapitiya 1:02:45 It's Ve-vake.

David Sacks 1:02:45 It is Ve-vake.

Jason Calacanis 1:02:46 Ve-vake or cake?

David Sacks 1:02:46 He's going to have the biggest bounce out of the debate.

Jason Calacanis 1:02:48 Hmm.

David Sacks 1:02:49 Partly that's a function of the fact that he was the least well-known candidate.

Jason Calacanis 1:02:53 Okay.

David Sacks 1:02:53 So this gave him a lot of exposure. And he is a good orator. I mean, just the way he talks-

Jason Calacanis 1:02:58 Ooh, a debate club.

David Sacks 1:02:59 ... the energy, the timbre of his voice, he projects well. And he had a clear point of view in this debate. You may not agree with everything he said, but he had a very clear point of view. And I expect that both the number of people who like him and the number of people who dislike him will go up as a result of this. But I think the net effect of that will be positive. Now let me back up, just give you a couple more thoughts on the debate. First of all, in terms of winners, I think the Republican Party, in a way, demonstrated that it is the party of ideas, where there actually are debates happening. Because you saw here, I think real differences between the candidates. And I could break them up into really three categories, if you like. There's this neo-con wing of sort of hard-line foreign policy hawks. And you saw Nikki Haley as part of that, and Chris Christie and Pence, and Tim Scott. Then you had this religious right faction, where you've got Pence and Scott. And then you've kind of got the MAGA wing, which Vivek really took up the mantle of opposing Ukraine and defending Trump. So you have three very different groups within the party who are battling, I think, for mindshare within the party and to be the future of the party. So it's not just about candidates and personal style, but it really is about ideas. You compare that to the Democratic Party, they're not even having a debate. They're protecting Biden from a debate. There could be a real debate, because RFK Jr. has really different ideas, and he would like to take the party in a very different direction, the direction of his father and uncle, Bobby Kennedy and John F. Kennedy. He's saying that we have moved away from where we should be as a party. But the people who control the Democratic Party do not want to have that debate. They have shut it down completely. There is no debate. They're just protecting Biden. So, that's number one is I think we should give the Republican Party some credit for being willing to discuss and debate ideas.

Jason Calacanis 1:04:52 I agree with you on that. I love the fact that you had a vibrant debate, you had differences of opinions. Now it was a little like a UFC fight and, you know, zingers and back and forth. But I, I did like the fact that you had people who i- i- and the moderation was actually surprisingly good. When they forced them to say, like, "Would you give Trump a pardon?" Or, you know, "What would you do in terms of support for Ukraine?" Th- this was, like, really well done. And they had that 30-second thing where they stop people, they said, "This is a 30-second one," and they had to rein in Pence because he kept, you know, interrupting, i- and they were kind of respectful about it. So I just want to shout-out to Fox for good moderation. Uh, there were some crazy zingers in there as well-

David Sacks 1:05:33 Yeah.

Jason Calacanis 1:05:33 ... and it seems like we live in zinger culture. I think the, the best zinger goes to the moderator who said, "Let's talk about the elephant that's not in the room." (laughs) And then they brought up Trump.

David Sacks 1:05:42 Well, frankly, that's, that's-

Jason Calacanis 1:05:42 I don't know if you caught that one, but that was pretty hardcore.

David Sacks 1:05:44 Yeah, no, I did. Well, so let's talk about winner number two, which was Trump, because Trump did not participate-

Jason Calacanis 1:05:50 Okay.

David Sacks 1:05:50 ... and he didn't pay any price whatsoever for that. He barely got mentioned or attacked on that stage, and then he did this interview with Tucker, which started five minutes before the debate-

Jason Calacanis 1:06:00 On NX, Tucker on NX.

David Sacks 1:06:00 ... which was kind of brilliant, because once again, Trump was able to suck up a lot of the oxygen. Maybe not all of it, but a lot of oxygen without even participating in the debate.

Jason Calacanis 1:06:08 It was a perfect bookend. I watched both. It, it was a perfect bookend. You got Trump over here saying, Chamath, I, I'm interested in your position on it, but he said, "Listen, I don't need to be in there with these guys mudslinging to have zero or one percent, uh..." And I, I think he got the sense that he's excited to debate them when there's two people left, or something like that. What, what did you think of... Did you watch Trump's thing, uh, Freeburg or Chamath?

David Sacks 1:06:28 No.

Jason Calacanis 1:06:28 Did any of you watch it?

Chamath Palihapitiya 1:06:30 I watched the debate.

Jason Calacanis 1:06:31 Did you watch a Freeburg?

Chamath Palihapitiya 1:06:31 I watched the debate only.

David Sacks 1:06:31 I watched both the debate and then I watched- I do think Trump effectively won the debate night because you had all these guys going at each other, and then you had Trump playing the trump card, "I'm not even gonna show up-"

Jason Calacanis 1:06:45 (laughs)

David Sacks 1:06:45 "... because I don't have to." He literally made himself better than everyone else in the room by saying, "I'm not even, it's not even worth my time to show up to talk to you guys. Go ahead and fight with each other." I'll also just restate this, this point about Vivek. I think it became abundantly clear that his strategy-

Jason Calacanis 1:07:01 Ve-vake, Ve-vake.

David Sacks 1:07:01 Ve-vake. His, his strategy...

David Friedberg 1:07:03 ... is to pander to the Trump audience, that his commentary about, you know, "God is real. Climate change is a hoax-"

Guest 1:07:11 "There's two genders."

David Friedberg 1:07:13 "... there's two genders," he knows through polling, through his understanding and his intelligence, that this is what this audience, that is the bulk of the voting members of the Republican Party, want to hear, and he is telling them what they want to hear. And then-

Guest 1:07:29 Uh, isn't that the job-

David Friedberg 1:07:30 ... he is-

Guest 1:07:30 ... of a politician?

David Friedberg 1:07:31 Yeah.

Guest 1:07:31 I mean, isn't that better than pandering to the military industrial complex, like Nikki Haley did?

David Friedberg 1:07:35 There was a comment last night that I thought was really important, which is that leadership is not about consensus. And what he is doing is he is reflecting back the consensus view of the majority of people in that party in order to get himself elected, rather than leading with a different message that casts a different opportunity and a different light on the opportunity for this nation. And I think that's really where he and others on that stage, or he particularly, fall short, is that he speaks too much to what people already believe and say because he knows that that's what they're voting for Trump about. And then the bet is that there's some chance, not 100%, but some chance that Trump doesn't make it all the way. He ends up in jail or people start to turn on him, and then he's the front runner because he's basically captivated that audience with the same message.

Chamath Palihapitiya 1:08:18 I wanna address this.

Guest 1:08:18 Yeah. Hold on. But, but Freeburg, and, and I will let you address it here, Chamath just said the brilliance of Vivek and his positioning here is that he understands how to win-

David Friedberg 1:08:28 Yeah.

Guest 1:08:28 ... and he is playing this game, and you call it pandering. Sachs, as I've been saying, it's understanding the needs of that audience. It, the job of a politician, Sachs, is to win and to stay in office. So, I don't believe Vivek's positions on a lot of this stuff, I think he is pandering. I think he wouldn't do what Trump did. I think, you know, he's, he's doing the pardon promise because he knows it gets him votes. So, how do you reconcile this? You, your, your job is to win, right? And you would rather see DeSantis maybe pick up on some of this action, no? As your preferred candidate?

Chamath Palihapitiya 1:09:00 Well, and, and that's, that's a, actually, that's a g-

Guest 1:09:01 And is DeSantis still-

Chamath Palihapitiya 1:09:01 That's a g- No. That's a good question. Freeburg, do you think that a politician's job when they are running for President of the United States, is it to understand the conditions on the field and win or not?

David Friedberg 1:09:13 I think the politician's job, or I, I, I don't wanna say the job, I think the opportunity to get elected in a democracy is to provide leadership, to cast a light on where you think the country or whatever constituency you're supposed to lead can go, to sh- to provide a sense of opportunity, to provide a sense of optimism, to provide a sense of what's not happening today that should be different, rather than reflecting back to those people exactly what they want. Now, the flip side of that is exactly what you're saying, Chamath, which is that I think what happens in a democracy is that people elect people that represent what they believe. And I think that's what's gonna happen.

Chamath Palihapitiya 1:09:48 I think there's a lot of, I think there's a lot of room-

David Friedberg 1:09:49 And he's, he's raising, he's raising his hand and he's saying, "I believe these things," and he's gonna get elected, or he's gonna put himself in a position to get elected if Trump drops out.

Chamath Palihapitiya 1:09:57 I just think there's a lot of people who are very smart, who, if they are too idealistic, will achieve nothing in their lives, and I don't think Vivek is one of those people. Idealism has a place in the world. It's not on the debate stage when you're running for President of the United States.

Guest 1:10:10 Okay. Sachs, you wanted to get in here. Go. Okay. Let's take the issue of Ukraine, because that was one of the main issues that Vivek differed from the rest of the people on that stage. There is polling by CNN that a majority of Americans have now turned against the idea of giving more aid to Ukraine. I am sure that number is much higher in the Republican Party. If you remember, there was an event, Charlie Kirk, who is a conservative influencer, has an event called Turning Point USA, and they did polling of their conference attendees. The number one issue that everyone agreed on was Ukraine. 95% of the attendees opposed giving more aid to Ukraine. Donald Trump only got 85% popularity. So, the base of the party is even more united against Joe Biden's policy in Ukraine than they are on loving Trump. Okay? That tells you something. And yet, Vivek is the only candidate (laughs) on that stage that was willing to raise his hand, like aggressively, like full-throatedly, not kind of a half-hearted, to saying that he did not agree with Biden's policy on Ukraine. What is wrong with all these other people on the stage that they cannot understand what is wrong with Biden's Ukraine policy, which by the way, is the signature policy of his presidency? What is the point of Republicans nominating a candidate who's just gonna agree with Joe Biden on providing aid to Ukraine as much as it takes for as long as it takes? Is this your position here, Freeburg, is that, you know, win at all costs, let's call it, the Vivek win at all costs, play the game on the field as Chamath is saying, and, and just win the game, versus being principled? Because you did have a group of-

Chamath Palihapitiya 1:11:49 No, no, no. I, I think that that framing is such a setup. Can, can I, can I just say something?

Guest 1:11:52 Okay. Frame it how you want. You, you said playing the game on the field, and Freeburg said having a principle here and having like, uh, an actual vision for the country. So I'm taking both of yours. Look, I think the framing is not as, not what is wrong with Vivek, but what is wrong with candidates like Christie and Pence and Haley and Scott, where even though 95% of their party is opposed to Ukraine, they are adopting Joe Biden's policy, and their only criticism of Joe Biden is that he's not doing enough fast enough for them. Okay. Let's let Freeburg get in here. They're completely out of step- We got your point. We got your point. ... with the Republican Party as it stands today. We got your point. But is it not, Freeburg, what you're saying is that there is this profile in courage, to, to invoke that book, where you... there's something that's unpopular that you have to do, and I think Nikki Haley, Pence, Christie, and the other ones who are pro-defending Ukraine from Russia, their profile in courage, uh, Freeburg, is that they will go against that 95% polling and say it's the right thing to do. "We should defend Taiwan. We should defend Israel. We should defend Ukraine against-" Those are three different issues. "... dickens." I know it's three different issues, but they were all evoked by Vivek, Vivek himself. So Freeburg, your chance.

David Friedberg 1:13:03 I think...The West Wing does a great job of exploring both sides of this, which is when do you have to break th- the mold and break the expectation of th- the people to do the right principled thing, and when do you have to do the thing that you don't think is right, but it's what the people want to have happen?

Chamath Palihapitiya 1:13:20 Mm.

David Friedberg 1:13:20 Um, and I- I think that that's a- a- obviously a balance that needs to be struck when you're in this position of being an elected leader in a democracy. And so there's no, there's no real answer. I wish that there was, like, I wish MrBeast had, like, a presidential process like he... You guys saw his Olympics video that he did last week, where he brought people and he created this, like (laughs) , these, like, five things. I wish that we had something like that to elect president, that it was more than just oration. Because we elect the president today based on their oratory skills. They go on stage and who has the best quippy comment. The person who would be the most decisive under pressure doesn't necessarily win. The person who can inspire and attract and retain the best leadership, the person who can have the best foreign policy interactions with other leaders doesn't necessarily win. Those are skills that show up in other contexts. And when we put people on a stage and we say, "Okay, speak to the audience," the guy who speaks the best looks the best. It's not necessarily the guy who is best equipped to handle the challenge of the Bay of Pigs or, you know, the decision on whether or not to go in-

Chamath Palihapitiya 1:14:27 I think you're being very dismissive.

David Friedberg 1:14:28 ... integra-.

Chamath Palihapitiya 1:14:28 I think you're being very dismissive. Okay, Chamath, you have the floor. Go. Chamath, go. This is th- like, it, that's kind of like saying, why isn't it that it's the quarterback with the strongest arm that isn't the most successful? Why? Because that person is a fucking loser. And the person that's the winner is the one that can thread together a multifaceted set of skills to win the game. Tom Brady was drafted in the seventh round, not the first round. He wins the game because he has the requisite skills, which is a basket of things and a nuance of skills in different moments at different times. And so I think that you're being a little glib by saying the