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E19: Robinhood's GameStop decision: Why did it happen and how can it be prevented in the future?

Follow the crew: https://twitter.com/chamath https://linktr.ee/calacanis https://twitter.com/DavidSacks https://twitter.com/friedberg Follow the pod: https://twitter.com/theallinpod https://linktr.ee/allinpodcast Intro Music Credit: https://rb.gy/tppkzl https://twitter.com/yung_spielburg Intro Video Credit: https://twitter.com/MikeSylvan Referenced in the show: David Sacks on Bloomberg https://www.youtube.com/watch?v=K2lJg4sxl2U Chamath for Governor https://www.chamathforca.com DeepFuckingValue's Reddit page https://www.reddit.com/user/DeepFuckingValue Show Notes: 0:00 Besties intro 2:11 Chamath breaks down the entire WallStreetBets/GameStop saga 15:38 Jason responds, debating Robinhood's liquidity crisis, Citadel's potential involvement & more 39:18 How can this be prevented in the future? Restructuring capital gains tax, censorship, where Robinhood can go from here 53:02 Major learnings from this week's events, risks of decentralization, do stocks need to be reflexive of the underlying business? GameStop's endgame 1:15:01 Chamath for Governor of California, Friedberg on leaders vs. managers & the problem with career politicians #allin #tech #news

Jason Calacanis (pre-recorded / parody intro bits)hostDavid Sacks (main long-form segments)hostChamath Palihapitiyahost
Jan 30, 20211h 26mWatch on YouTube ↗

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  1. 0:00 – 2:11

    Besties intro

    1. NA

      I'm going all in. Where you'll be, where you'll be, where you'll be.

    2. JC

      Besties are back.

    3. NA

      I'm going all in.

    4. DS

      We'll let your winner slide.

    5. JC

      Rain Man, David Sachs.

    6. NA

      I'm going all in.

    7. DS

      And it's said- We open sourced it to the fans and they've just gone crazy with it.

    8. JC

      Love you, besties.

    9. DS

      Queen of quinoa.

    10. NA

      I'm going all in.

    11. JC

      Hey, everybody. Welcome to the All-In podcast. It was a slow news week, so we decided we'd give you a special episode. We're gonna go around the horn with our special picks. We're each gonna pick three picks, everybody. We're gonna pick our favorite recipe, our favorite new hobby, and our favorite-

    12. DF

      (laughs)

    13. JC

      ... streaming guilty pleasure because there was no news. Uh, with us today, the Dictator Chamath Palihapitiya-

    14. DF

      (laughs)

    15. JC

      ... Rain Man, David Sachs, with his new track from young Spielberg, just ripping across the charts. Uh, young Spielberg at it again, this time with a, a track focused on the Rain Man himself, and the queen of quinoa, who everybody says we should upgrade to the king of quinoa, David Friedberg.

    16. DF

      That's so sexist. Why, why is that an upgrade? The queen of quinoa is better.

    17. JC

      I, I don't know. People just felt I was being... I, I don't know how people could say that anointing him as queen would be derogatory. I think these people are not woke and they need to be canceled.

    18. DF

      (laughs)

    19. DS

      Jason, here you go again, making a lot of assumptions about people's pronouns.

    20. DF

      Yeah.

    21. DS

      And-

    22. JC

      That's right. (laughs)

    23. DS

      (laughs)

    24. JC

      They, they, queen of quinoa? They, they, of quinoa?

    25. DF

      I take, uh, I take no offense- I take no offense to your insults to me. And, uh-

    26. JC

      Yes.

    27. DF

      ... today I'm having the emotion of excitement and I am ready, uh, for the conversation.

    28. JC

      Good. We got-

    29. DF

      Yeah.

    30. JC

      ... the firmware upgraded. All right. So, um, I think we might as well start with, uh, I don't know if you guys caught this, but there's a re- a subreddit called, um, WallStreetBets. And what they do on (laughs) WallStreetBets is they find angles and, uh, a thesis, and then they bet on a stock. The stock they picked, uh, for the past couple of months has been GameStop (laughs) , and boy did they-

  2. 2:11 – 15:38

    Chamath breaks down the entire WallStreetBets/GameStop saga

    1. DF

      um, do you... Uh, I had actually, uh, a guy on my team put together two really important documents and I'm just gonna read them 'cause it's s- full of so much interesting shit. And then we can talk about, um, uh, the s-

    2. JC

      Where are these documents from? Th- You're saying from the WallStreetBets?

    3. DF

      No, no, no. I, I had a guy go in, uh, one of my team members, one of my colleagues, and go and summarize the entire saga from the beginning. And then we can talk about the, the corporatist scumbags at Robinhood and other fucking people over. (laughs) So let's, let's do that in that order. Okay?

    4. JC

      (laughs)

    5. DF

      Um- This is why they call him the Dictator. Let's, uh, let's start with the, the-

    6. JC

      Okay. Go ahead. Read your biased and, uh-

    7. DF

      No, no, no. Shut up, Jason.

    8. JC

      ... boring, uh, document.

    9. DF

      Listen.

    10. JC

      Go.

    11. DF

      You're, you're an idiot 'cause you, you just- (laughs)

    12. JC

      ... wanted to defend people 'cause you blindly stumbled into a fucking trade that actually made a little money. Lo and behold, you actually invested in a company that literally, they got on television yesterday, and they fucking lied to Americans right to their face. This is a company that was insolvent because... Now, let's just put a pin in the following data point, which I believe to be true. I know more about this than you do because I live in these markets. Okay? So I understand what it means to be putting on trades, to being short, to being gamma squeezed, to have longs, to do all of this risk management. You're an early stage investor, so I know the intricacies of this stuff and what's happening in here. This company was insolvent. They did not have the capital requirements to post the margin that was being asked of them by their partners. And so this was a platform level decision to ban and block people from trading securities. It costs individuals hundreds of millions, probably billions, maybe even tens of billions. And these motherfuckers should go to jail. Now, let me give you the timeline before we get into that. June 2019. In June of 2019, a WallStreetBets user named DeepFuckingValue began buying long-dated January '21 calls. What that means is, in June of '19, this person was betting that the stock would go up by January of 2021. He spent $50,000, um, which, by the way, today is worth about $25 million, okay?

    13. DF

      By the way, Shabbat, you sh- we should just highlight that there are forums where individuals that are trading stocks talk to each other and share tips and promote things to one another. That's where this was taking place.

    14. JC

      Yeah. And by the way-

    15. DF

      Yeah.

    16. JC

      ... those forums exist, uh, in the professional organized world too.

    17. DF

      Right.

    18. JC

      Amongst hedge funds, you know, I've been invited to idea dinners where we all get together and we talk about the ideas that we have, and we're all expected to do fundamental analysis. Uh, but some of those ideas are actually momentum-driven ideas. And a lot of the biggest dislocations in the market, just as a setup here, have been because of momentum-driven trading by organized capital. Okay? So we've, we've been stuck with this for a while. So, so this guy DeepFuckingValue posts this, and every month since, he's posted a screenshot of his position and he's titled it "GME YOLO Update". August 22nd of 2019, Michael Burry, who is this guy famous from, uh, The Big Short, who's the guy that caught the mortgage thing, he discloses a 3% position in the company, and he highlights that 90%, nine zero percent, of GameStop's 5,700 stores are free cash flow positive. That's like pretty good. He urges a buyback, and he notes that the company was trading at or near net cash levels. So he's making a deep value-oriented fundamental thesis as well.

    19. DF

      Shabbat, I think also it's worth saying what GameStop is, 'cause even my wife asked me, "What the hell is GameStop?" last night. GameStop is a retail store where people buy video games. I used to go to the mall all the time-

    20. JC

      And consoles.

    21. DF

      ... and buy video games there.

    22. JC

      Yeah.

    23. DF

      And consoles and headphones and other stuff.

    24. JC

      And they'll buy back your old games.

    25. DF

      And so the stock got beat up over the last couple years as people stopped going to malls and stopped buying stuff in stores, and everyone thought this- the company was gonna die. And so these guys observed that maybe there's real value in this company and it's making money-

    26. JC

      And digital downloads are-

    27. DF

      And digital downloads-

    28. JC

      ... now the standard.

    29. DF

      No one buys D- DVD-ROMs anymore or anything like that, so.

    30. DS

      A- and, and the Chewy founder, who is very successful at e-commerce, came in...

  3. 15:38 – 39:18

    Jason responds, debating Robinhood's liquidity crisis, Citadel's potential involvement & more

    1. JC

      to you.

    2. CP

      Okay. Um, I think we probably agree on a lot of things here. Uh, thank you for the concise overview. We agree that WallStreetBets and retail investors are, uh, incredibly, um, powerful now, and we agree that that's a good thing. We also probably agree that there are shenanigans going on with shorting of stocks, i.e. 120% or 130% short, and we agree, I think, that some of these, uh, hedge funds do manipulate the markets with these. We all- also agree that it's unfortunate that, uh, in order to stay solvent, Robinhood apparently, uh, if this is the information, we don't have complete information right now, so the thing I do think that you're being tremendously unfair about, and I'll try not to make it personal, Chamath, is that you've been uncouth and you're attacking people without, with partial information. I'll let you respond to that in a minute. Um, and I think we agree that Robinhood is responsible, Robinhood is responsible for this revolution in retail trading. They created the platform and they created the innovation that got Millennials to, en masse, embrace trading stocks. How did they do it? They figured out a clever innovation of how to make it free and friction-free. They did that because they did this selling of the data and the order flow. Okay, we can debate whether that is fair or not, but Facebook did the same thing. They created a data business. They provided amazing products and services that you yourself built for five years and made a billion dollars off of, in order to make it free for consumers. Now, there are unintended consequences of any company at scale, whether it's Uber, Robinhood, Tesla, et cetera, and they all have to weather these storms. And I think that there are pieces of information that you do not have, Chamath. And for you to say that they're criminal and for you to say they're scumbags and to act this way, is, I think, unprofessional and does you a disservice and does your argument a disservice. And you did this as well with Uber, another one of my investments, and that company weathered the storm, and they've done great things in the world, and they- and I'm very proud-

    3. JC

      No, no, no, no, no, no, no, hold on. Hold on.

    4. CP

      ... of that investment, and I will be very proud of what I believe that Robinhood will do.

    5. JC

      Uber fired their CEO and they brought in Darah who cleaned it up.

    6. CP

      Oh, uh, uh, agreed, agreed, but they got there. And so, I believe-

    7. JC

      Well, let's see what happens.

    8. CP

      Exactly.

    9. JC

      So what do you know that I don't know?

    10. CP

      Well, I- I- I haven't talked to Vlad. I saw what he said.

    11. JC

      Who cares about Vlad? He lied on public... He lied on television, he lied on FOMO-

    12. CP

      I, I don't believe he lied. I think it's very-

    13. JC

      ... he lied on CNN-

    14. CP

      No.

    15. JC

      ... he lied on Fox. Where did he not lie yesterday?

    16. CP

      No. No. What is the lie? What is the lie?

    17. DS

      Well, Jason, let me actually-

    18. CP

      Ba- ba-

    19. JC

      Jason, he was confronted-

    20. CP

      What is the lie?

    21. JC

      ... he was confronted about-

    22. CP

      I think-

    23. JC

      ... whether there was a liquidity crisis and he said to their face, "No, that is not true."

    24. CP

      I think this is being misinterpreted and there'll be a clarification that'll occur. I think because they were able to draw down 600 million and because they were able to take down a billion-dollar investment from the top investors in the world, that they s- resolved their liquidity problem. Nobody in history has ever created this many retail investors than Robinhood. They are responsible for the movement. When they pitched me the company, they wanted to create this revolution. It is paradoxical that they are now the enemies of the revolution because they actually created and enabled this, and...... I pre- and they have been number one in the app store since this whole fiasco started.

    25. JC

      That's nothing, nothing you're saying convinces me.

    26. CP

      And that-

    27. JC

      This is the, they are the Lehman Brothers or Bear Stearns of 2008 to me.

    28. CP

      Uh, they will not be. They will get through this and there has, this is an unprecedented black swan event, I think we would all agree. Nobody has ever-

    29. JC

      That's exactly what Lehman and Bear said.

    30. CP

      And-

  4. 39:18 – 53:02

    How can this be prevented in the future? Restructuring capital gains tax, censorship, where Robinhood can go from here

    1. JB

    2. JC

      So we have to, we have to put leverage limits on top of hedge funds. The third is we need to improve disclosure. The, the rules at the SEC right now is to discourage disclosure. That doesn't make any sense. We should force everybody to publish what they own on a weekly or monthly basis. You have the ability to do it. The technology is simple. So you need to impro- improve disclosure, because then watchdogs and other people can basically be looking at it all day and identifying these risks faster, not slower. Um, the third is we need to do something around open trading. Like, why is it that you're, you know, people are allowed to go to casinos? Why can you, um, you know, buy lottery tickets, um, but all of a sudden, like, we're gonna decide who's financially literate? A platform like Robinhood can decide what's bought and what's sold. I don't think that's fair. Um, and then, uh, the, the last thing is I think that we should have a short-term trading tax. Um, d- we tried to pass one in 2018, 10 basis points. If you had passed this 10-basis-point tax in 2018 on short-term trading, it would have created a trillion dollars, almost.

    3. JB

      I did the math on this, 'cause I actually, uh, the reason I ran all the equity numbers was to figure this number out. So in the US, um, we generated $160 billion in capital gains tax last year. And if you look at the volume I described earlier, in terms of notional traded of equities and number of shares traded, if you charged 0.1% every time someone sold a share, on the value of the share they sold, it would equal the capital gains tax. So what you could do is you could charge 0.1% on every trade. It would reduce all of this high-frequency nonsense where people trade in and out of stocks. It would force people to trade for the longer term or basically invest in companies. And you could get rid of the capital gains tax. Think about that. If we didn't have to pay capital gains tax, and we were only taxed when we traded out of a stock 0.1%, you could see an incredible amount of capital making its way into businesses. And this would fuel economic growth and jobs and prosperity. Um, and so I think if you could pull that off, put the two together, a 0.1% sales tax on every share sold, and get rid of capital gains tax, uh, it'd be-

    4. JC

      The lobbyists-

    5. JB

      ... incredibly powerful.

    6. JC

      The lobbyists got to that bill, but that 10-basis-point tax on high-frequency trading, it just means, like, "Look, if you're gonna trade a whole bunch of shit every eight seconds, you just have to pay 10 basis points in and out." $777 billion of incremental revenue to the federal government, and it was lobbied out. And I agree with you. And by the way, the-

    7. JB

      More, more money goes in, more money makes its way into companies, right? And that's the be-

    8. JC

      Yeah.

    9. JB

      You, you stop all the nonsense where people are basically trading to bet that something will go up in the short term, and you get people to make investments in the business as opposed to the momentum. Uh, and-

    10. JC

      The, lowering the capital gains rate is genius, 'cause I think that if you, if you are a retail investor, and you can- For every year you hold, if you can decrease your cap gains rate-

    11. JB

      Exactly.

    12. JC

      ... by 20%-

    13. JB

      Exactly.

    14. JC

      ... by the fifth year, now all of a sudden, retail folks aren't necessarily gambling, they're owning, and their cap gains rate would be zero after five years. That would be amazing.

    15. CP

      I, I have a, a, a basic question. I'm interested in your position, Sax, and maybe even around the horn. What happens to the... If the short positions get covered, which they're going to be at some point in GameStop, I would think, or some large amount of them, when the short squeeze is off, what happens to the people who are buying in, you know, to the meme stock as a retail investor, let's say, over the next 10 days? Are they gonna be left holding the bags? Is there any way this company could be worth 20 billion or 25 billion? Because as Friedberg points out, they're, people are not buying GameStop. They're, they're trying to destroy a hedge fund, uh, who made a stupid, manipulative bet. Great. We all love the, the Robinhood story of that. (laughs) Not Robinhood TM, but the generic term Robinhood. Um-... what, what happens to those people? Are they gonna be the l-

    16. DS

      It's-

    17. CP

      ... last people holding the bag?

    18. DS

      Probably.

    19. CP

      I-

    20. DS

      This is not gonna end well. There's no question about that. I totally agree with you that people engaging in this kind of speculation and buying at these prices, it's not gonna end well. Now, I do think that the Redditors actually had a brilliant strategy, right? When they noticed that these hedge funds were over short, over exposed, and they seized on that vulnerability, they did to the hedge funds what the hedge funds usually do to everybody else, which is find the Achilles' heel, right, and pile in.

    21. CP

      Yeah.

    22. DS

      So, I think the strategy started brilliant. Now, anyone who's piling into it, I'd be real careful, because I think the hedge funds have regrouped, you know, and, um, you know, the, the idea that you're gonna beat, beat them at their own game? You know, when, look, I mean, Citadel is executing your trades. I mean, right? That the trades are... The order flow is going from Robinhood to Citadel. They're not gonna be caught flat-footed. They're on the other side of this trade. And so, you know, I, I just think the house always wins. I'd be real careful about getting into it at this point.

    23. CP

      I think what happens to

    24. JC

      Just so, just so you guys know-

    25. CP

      ... well, really... Yeah, go ahead.

    26. JC

      ... Robinhood j- Robinhood just tweeted that now the, the list of, uh, restricted names is now up to almost 35 or 40.

    27. CP

      I think it's worth, um, w- what-

    28. JC

      They're, they're randomly picking companies, guys. RLX? What is RLX? Uh, I think that's, uh, Ralph Lauren. Nope, you're not allowed to trade that. Um, SNDL, I don't know what that is, but you can only buy 10 shares.

    29. CP

      Would a better solution, Chamath, be for them, if they can't handle this and they have the risk of ruin, to just say, "We're not adding any more accounts until we can digest all this and raise enough capital to float all this"? And do you think there's a chance the SEC is telling them, "You gotta pump the brakes on this, because we can't have a market crash." Two questions, Chamath.

    30. JC

      Um, I, I, I think that the, the, the issue isn't, um, Robinhood, uh, its ability to grow. It's that they don't have their ability to run their business. And so their incompetence is gonna cause them to, I think, have to deal with-

  5. 53:02 – 1:15:01

    Major learnings from this week's events, risks of decentralization, do stocks need to be reflexive of the underlying business? GameStop's endgame

    1. CP

      theme.

    2. JB

      ... I think, I think th- this is the most important learning from this experience. Forget about the fiduciary and the governance responsibility of these companies. Whether they were good or bad will be resolved over the next couple of weeks and months, I'm sure, as more information comes to light. But what's super interesting about what happened this week, and I think it's the most impactful societally over time, um, is that we're seeing this phenomena where, um, individuals in aggregate can believe something to be true and make it true. And, um, we saw this with Tesla, and I, I don't think Tesla got this level of notoriety because it was such a, uh, a longer play out cycle, but Elon, you know, was not hitting numbers that people thought he was gonna hit, margins, production volume, et cetera. People were shorting the stock. But enough people believed in the story that Elon told about what he wanted the future to look like that they bought the stock, and that gave him the ability to do shelf offerings, raise additional capital, and ultimately build the business and make it manifest in reality that he said would happen. And the same is true of Bitcoin. Um, and the same is true of Trump, and the same is true of storming the Capitol. In all of these cases there was a belief in something and there was an aggregation of individuals using social media as a mechanism for sharing and talking and engaging and creating a collective outcome that wouldn't have happened through a centralized system or a centralized process and wouldn't have happened in the traditional way where history defines the future. And I think that is what's so powerful about what's happening right now, um, and we're seeing it in financial markets but we're also seeing it play out in politics and we're seeing it play out i- in the real world, um, in a, in a remarkable way. And it goes back to this notion that, like, a stock is worth the underlying value of the company, and that, that's not true. People can dream a stock to be anything as they did with Tesla. At the time that people were buying Tesla stock, the historical performance of that business was not what hedge funds considered to be a, you know, a profitable, good business. It shouldn't be worth anything. But the belief in what it could be i- is what drove the value of that stock, and ultimately that value enabled that business to become true. Um, and it's just ... It's, it's amazing to see it happening, and I think the, the counter, which is really what makes this so striking, is the centralized institutions that are trying to block this from happening, and, um, the shutting down of Parler and the shutting down of Robinhood Trading are, are equivalent-... from my point of view, um, or at least equivalent, I think, will be perceived to be equivalent broadly, which is if a group of people get together and try and use an online service to make a change in the world by sharing and talking with one another and communicating a belief, a collective belief, and that gets yanked away from them, the institution that has the ability to yank it away from them is evil and it will force people to decentralize and it will enable new ways of trading, new ways of communicating, um, new ways of building. Um, and, and that's the profound change that I think this decade is gonna realize, and we're just seeing it start now.

    3. DS

      I, I agree that Parler, or WallStreetBets is Parler 2.0, right? And, and what happened? As soon as WallStreetBets started th- which is the, the, the, the Reddit kids, they started threatening and they wounded these powerful insiders, these rich, you know, hedge fund magnates. What happened? They started getting banned off of Discord. They got Discord as a tech company to kick 'em off. How did that happen? They've been talking on there for months, and all of a sudden just magically right at the critical moment where they're also not allowed to trade, their free speech gets cut off? That's a de- that, that was deliberate. Now, and I'll tell you how it happens, is I guarantee you what these hedge funds did is they went through the Discord room and they screenshotted, you know, any post that they could plausibly characterize as, you know, hate speech or what have you. And, you know, and, and by the way, I mean, those, there's a lot of raunchiness in these rooms, but it's not hate speech and it's not organized for the purpose of hate. It's organized for the purpose of trades. But what they do is they weaponize these censorship rules and they go in and they screenshot and then they give it to Discord and they get these guys kicked off. And this is exactly what I've been talking about with censorship. It starts as something you like and then becomes something you don't. How many of the people who support these, you know, Reddit kids, were in favor of deplatforming Trump and Parler? And now they can see where it goes. This is a slippery slope, and we've only had to wait three weeks to see where it goes. It goes to the same place, which is when the people in power get threatened, they use these rules, they weaponize these rules to shut down the outsiders and the upstarts. That is a problem with censorship. That is why you cannot let the beast get started.

    4. JC

      I completely agree, and I think this is exactly why how, uh, I think where we came out was, you know, the deplatforming of Trump made no sense. I think the, the economic censorship of Robinhood makes no sense.

    5. JB

      Yeah, and you can argue it's the right thing to do with a narrow context, but when you take the broader point of view of the implications, that's where this becomes really shaky and really scary, and I think really enables a decentralized movement that is gonna be a lot broader, um, than, uh, than folks are really realizing at this point. You know, folks don't want to be trading, um, on a system that tells them how to trade, and folks don't want to be communicating on a system that tells them how to communicate.

    6. CP

      If I gave ... If I was running Robinhood and I said, uh, "We're gonna have two options. There's gonna be a Robinhood Diamond membership and you pay by the trade and, you know, you get these special features. And then the Robinhood Free, you know, you, you get, uh, your data is sold or however it works." Would that be a possible solution, I think, to the optics issue here where consumers could basically pick? Just like if Facebook or Instagram woke up one day and said, "For 9.95 a month, you can have none of your data, no advertising, ad-free," like Hulu does-

    7. JC

      I would, I would-

    8. CP

      ... you know, Hulu, Hulu Premium.

    9. JC

      I would ... So here's the thing, J-Cal. Um, I, I hope your Robinhood investment is successful. I just think that there are now three moments in Robinhood's life. There is pre this week and it is what it is, it's an $11 billion unicorn. God bless them. Then there was this week where we have to frankly hold people accountable for the economic damage that they created this week because it is measurable. Okay? It's not the, it's not like missing a, you know ... Um, uh, it's, it's, it's not like, you know, surge pricing in Uber. It's not, you know, uh, Facebook growing too fast and allowing, you know, pictures of breasts getting posted and all that to catch up. It's not that. Okay? It's not a bunch of like disinformation that we can't really judge. This is very discretely judgeable. And so in this week, Robinhood existed as a different company, and I think that there's an implication for that. Then to your point, honestly, I agree with you, it's what happens from here. And I ... And they should survive, but they have to learn. And I think what they have to learn is you have to stop the account growth. You have to massively shore up the balance sheet, take the dilution, get the capital you need because let's be honest, I'm sorry, but nobody's gonna show up with five or $10 billion at 11 billion pre. They'll show up with five or $10 billion at three billion pre and they should take the money, and then they should allow the platform to work as intended or at least as perceived it to be intended to their users and then they should reopen to everybody.

    10. CP

      What would you do, David, if you were in charge? And then let's move on to our next topic.

    11. DS

      Well, I, I mean, I, I, I, I, I feel like we probably talked about Robinhood enough and I kind of want to back-

    12. CP

      Yeah.

    13. DS

      ... go back to the point that, that Friedberg was making, just kind of upleveling this a minute, which is-

    14. CP

      Yeah.

    15. DS

      ... I, I definitely think this is part of this ongoing populism versus the elites war. And social media is now the tool that the people use to organize themselves against these powerful elites. It's why we cannot allow censorship because it always comes down, uh, it, to benefit the powerful, the elites against the people who are trying to organize against them. That was for, to me, one of the biggest takeaways from this week. And, and look, the reason why people are organizing is they're asking the question, what is the societal benefit of these big hedge funds in relation to the enormous sum- sums of money they make every year? You go to like the Forbes rich list or whatever, and every year these guys are taking down the most money. They're not creating companies, you know, and, and Chamath is right, we can't have founder worship because they make mistakes too. But at least founders are creating things, right? They're taking big risks. They're, they're not providing risk capital like what we do, okay?... we're investors, but we're funding people's... You know, we're, we're, we're, we're taking the risk of writing checks to f- to start the guy who's got nothing, right? So, we're-

    16. CP

      Or gal.

    17. DS

      Or gal.

    18. CP

      Yep.

    19. DS

      You know, the- they, them.

    20. CP

      Yep.

    21. DS

      It's all, all good. Um- (laughs)

    22. CP

      All of 'em. (laughs)

    23. DS

      All of 'em.

    24. CP

      (laughs)

    25. DS

      So, so, but, but, b-

    26. CP

      Trying to keep you from getting canceled here. (laughs)

    27. DS

      But, but, but, but, but, but, but what, what exactly is the societal value of these hedge funds? Now, I know that they provide some price discovery and they provide greater liquidity to markets. But is that really worth them really being the richest players in the game? It doesn't make any sense. And then when they lose, like in 2008, they get bailed out.

    28. CP

      It makes no sense.

    29. DS

      And so something... It makes no sense. Something is wrong here. Now, is this a right-wing view, a left-wing view? It feels to me like there's a political realignment happening here, where the left and the right, we're all getting on board with this idea, and it's gotta get fixed.

    30. CP

      Yeah, this, uh, this might be the legacy of Trump and the way, Sachs, that he created so much disruption over those four years that now we're actually finding out where the actual breaking points are in society and this is one of them. And the healthcare system is one of them, and freedom of speech is one of them, and we need to address each of these. A- and they're complex, but there is common ground. I mean, when AOC and Ted Cruz are both agreeing, uh-

Episode duration: 1:26:08

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