E30: Ramifications of Biden's proposed capital gains tax hike, founder psychology & more

Jason Calacanis 0:00 Shout out to (beep) , uh, a company Sax and I-

David Sacks 0:04 What? What the hell are you doing?

Chamath Palihapitiya 0:04 What we're doing sodas? What are you doing? What the fuck are you doing?

David Sacks 0:08 What the hell? Are you doing, Sax? Can I drop a shout out for a founder? I'm not-

Chamath Palihapitiya 0:08 (laughs)

Jason Calacanis 0:08 No fucking way. You cannot do that. No.

David Sacks 0:09 Nick, Nick, cut that shit out. Nick, cut that shit out.

Chamath Palihapitiya 0:12 Shut the fuck up.

David Friedberg 0:12 Shove it in or what the fuck? (laughs)

Jason Calacanis 0:12 Shut the fuck up. Beat that shit out.

Chamath Palihapitiya 0:14 I just wanted to give a founder a plug because he did so good.

Jason Calacanis 0:16 You are such a scumbag.

David Friedberg 0:17 What the fuck?

Jason Calacanis 0:18 Despite how tired I am, you... I've woken up now. Now I'm awake. You've awakened the-

Chamath Palihapitiya 0:22 Okay. Oh, we have a drug?

David Sacks 0:22 Totally. I'm done. I quit.

David Friedberg 0:23 I'll give a shout out to (beep) , which just got acquired by (beep) .

Chamath Palihapitiya 0:27 Oh my gosh. Shut up. Shut the fuck up.

Jason Calacanis 0:30 More baby. We need plugs.

Narrator 0:31 I'm going all in. Don't let your winners ride. Rain Man, David Sax. I'm going all in. And I said we open sourced it to the fans and they've just gone crazy with it. Love you, S.I.D.E. Queen of Quinoa. I'm going all in.

Jason Calacanis 0:49 Hey, everybody, welcome to the All In podcast. I'm Jason Calacanis. With us today, the Rain Man himself, calling in from an undisclosed location, the Queen of Quinoa, and of course, the dictator himself, Chamath Palihapitiya. All right, boys, how are we doing?

David Sacks 1:06 Feels low energy today. What's going on?

Chamath Palihapitiya 1:08 We're great. How are you?

David Sacks 1:09 What's going on?

Chamath Palihapitiya 1:10 Let's go. Let's do this. Let's do this.

David Sacks 1:12 (laughs)

Chamath Palihapitiya 1:12 I love it. Let's go.

Jason Calacanis 1:13 You can love it? (laughs)

David Sacks 1:14 Ah.

Jason Calacanis 1:15 All right, you're hot. You're coming in hot. Well-

Chamath Palihapitiya 1:16 Yeah.

David Sacks 1:17 Yeah.

Chamath Palihapitiya 1:17 Breaking news.

Jason Calacanis 1:18 Yeah.

David Sacks 1:18 Yeah.

Chamath Palihapitiya 1:18 Breaking

Chamath Palihapitiya 1:19 news. Biden has announced, uh, his capital gains tax hike. I don't think this impacts any of us, but Biden will propose almost doubling the capital gains tax rate for wealthy individuals from 20% to... Not 25, not 28, 39.6% to help pay for the social spending, uh-

David Sacks 1:44 (coughs)

Chamath Palihapitiya 1:44 ... and in equality. For those earning one million or more, so nobody on this call, federal tax rates could be as high as 43.4%. The capital gains increase would raise 370 billion over a decade, yada yada. For New Yorkers, the combined state and federal capital gains rate could be as high as 52.22%, and Californians, 56.7%. Biden has previously warned that those earning over 400,000 can expect to pay more in taxes. This was just breaking news a couple of hours before we started the pod, and the stock market is, uh, down and people are freaking out.

David Sacks 2:25 We should do a-

Chamath Palihapitiya 2:26 Uh-

David Friedberg 2:26 Well, J Cal, J Cal, I want to hear your take on this actually. I want to start with your take.

Chamath Palihapitiya 2:31 Why didn't you, why didn't you, why didn't you tell me Biden was gonna do this?

David Friedberg 2:32 (laughs)

Chamath Palihapitiya 2:32 I would have voted for Trump. You didn't tell me this was going to hit me so hard.

David Friedberg 2:36 No, J- J- J Cal was ranting on this topic 15 minutes ago. We were talking, and I'm like, "Dummy what did you think was gonna happen?"

Chamath Palihapitiya 2:44 (laughs)

David Friedberg 2:44 You know? He's sitting there going off. He's sitting there going off. It's like, what did you expect?

David Sacks 2:49 Just before we get into it, we should do a quick primer on what this means, right? So capital gains taxes are the taxes you pay when you make an investment and then you sell that investment at a profit. The, the... You pay a tax on the profit you make, and there's a difference between capital gains on the short-term, which means less than one year, and long-term, which means you've had the investment for more than a year. So economic policy historically has dictated that having a low capital gains tax rate relative to what m- you know, an income tax rate might make, might be, incentivizes people to make long-term investments and it, you know, gets more money moving in the economy, and as a result, um, you know, the economy will grow. And so the idea of increasing the long-term capital gains tax from 20%, which it currently is, to 40%, um, is a real striking, you know, economic policy shift, rationalized as, you know, we're gonna save, uh, you know, we're going to use this money for social spending. But I think the historical context and, and what this is, is really important as we get into the conversation. Um, and just speaking historically, you know, the, the, the maximum tax rate on long-term capital gains got up to 40% tax. You probably have the history on this in 1978 for a year, right? Or like '76 to '78. And then it's been largely, you know, 15 to 20% for the last 20 years or so. Um, and so to jump up... Yeah, and prior to that, in the early part of the 20th century, it was like 25% pretty consistently for a long time. So to jump up to 40% is a really big shift, and the, there's a lot of debate around the economic implications of doing this. Uh, I thought that was important. Yeah.

Chamath Palihapitiya 4:21 Let's take a step back and actually see the forest from the trees. And the forest from the trees is that I don't think Biden, um, thinks that it's a credible plan, um, inasmuch as I probably think, uh, he needs... You know, this is like, it's performative, um, because it was a lot larger, the number, the headline number was a lot larger than, um, what people were whispering was gonna be the number, right? It was supposed to be like in the low 30s or maybe kind of like, you know, 33, 34, um, and then all of a sudden, like, to come out at 39.6, I think it's almost like, okay, he- he's- he's giving the pound of flesh to, uh, the- the left kind of like woke mob of the Democratic Party, who probably doesn't understand how capitalism works in the first place and doesn't care because they're not, they're not participants in it. Now, the- the... My reaction is I don't think it's gonna pass. I think it's gonna be really tough to get done, and I think it probably... You know, maybe, maybe there's a watered-down version, but this version I- I- I'm not super worried about. And then it just comes back to the same thing over and over. The- the fewer the number of people that get to participate in the growth and see the upside, the more there are that just wants to just kind of, you know, tear it all down. And so, I don't know, it's just yet another signal that we have these structural issues to fix. It's not reasonable that a few people get super rich and everybody else gets left on the sidelines.

Jason Calacanis 5:50 Sax, what are your thoughts?

Chamath Palihapitiya 5:51 It's not gonna pass, i- but it's not gonna pass. It's not gonna pass.

Jason Calacanis 5:53 Sax, is it gonna pass? Is it an opening salvo where he wants to get to 32, so he's starting at 39?

David Friedberg 6:00 I think it could-

Jason Calacanis 6:01 Okay.

David Friedberg 6:01 ... I think it could pass becau- I think they're, they're planning to do this tax increase as part of the, the second infrastructure bill. It's not really an infrastructure bill. They're calling it human infrastructure. We've talked about this. Infrastructure's one of the last categories of federal spending that's still popular, so they're rebranding a bunch of social programs as, as human infrastructure. Um, I think that bill will pass. I don't know if the, the rate will stay at 39.6, but I think there will be a big increase, clearly, in the, the cap gains rate. I mean, I think it's worth remembering how it got to 20%. It got to 20% because Bill Clinton lowered it from 28 to 20 as part of an overall package of, um, of, of tax reforms that he did in the, in the sort of the, the mid-'90s and, you know, that led to some of the best years of economic performance, GDP growth in the US, productivity growth, uh, deficit reduction, um, you know. And so, you know, I think we're, we're, we're, we are experimenting with breaking something that's been working, I think, pretty well since the, the Reagan, Clinton years, uh, which is to have, you know, reasonably low, uh, taxes on capital formation and investment. Um, I think it's a category error to treat capital gains or to think about it just as income. You have to remember that all this money has already been taxed once, right? So you make the money the first time as income. You earn it, you pay tax on it, then you decide to save some of it and then invest it, and then you get taxed again on that amount. And, um, so, so capital gains is a form of, of double taxation. Uh, that was the original reason, one of the reasons to, to have a different tax rate for it, and, um, you know, I think that this risks kind of messing up the economic recovery that's really underway already.

Chamath Palihapitiya 7:52 By the way, think about, um, what just happens to any organization that has to pay cap gains, right? It's not just individuals. Like, um, last time I checked, organizations aren't exempt from cap gains, um, for-profit organizations. Um, and I don't exactly know, um, what they will do as well. So, you know, you, you, you're putting a lot of people under a huge strain when you double the, the, the effective rate of return. So, you know, if you're, for example, like, um, a pension fund, right? And you have an enormous investment in a private equity fund or a hedge fund. Um, part of these things is that, you know, they're these complete pass-through vehicles. Um, and so as long as, like, you structured yourself in a way where you don't have to pay that tax, I think, I guess you're indifferent. But if you're any organization or institution or a person or collection of people that bears that tax, all of a sudden, you know, your returns have been basically cut in half. That's pretty nuts.

Jason Calacanis 8:50 Let's talk about the average Joe for a second, uh, or Jane, as it were. 401 (k) s would take a hit here, and then when you go to your retirement and you have to liquidate them...

David Sacks 9:00 No, you don't pay tax on the, on the gains.

Jason Calacanis 9:02 You don't pay tax on that.

David Sacks 9:02 You don't... Yeah. You don't pay tax on the 401 (k) gains during the investment.

Jason Calacanis 9:05 But your por- Oth- Other- Otherwise, your portfolio, because 401 (k) is going to be a small amount you can contribute every year, so retirees who happen to have stock market gains or cryptocurrency, people trading that, it's-

David Sacks 9:15 Yeah, you'll basically pay the same as income tax, as opposed to paying, uh, a lower tax.

Jason Calacanis 9:20 So would a-

Chamath Palihapitiya 9:21 It'll diminish investment, Jason. It's exactly what David says, which is that on the- on a marginal basis, what'll happen is inflation probably goes up because people just decide to consume rather than invest, because they think, "Well, what's the point? You know, there's already risk that I bear." And so, you know, the, the earliest risk assets, right? The riskiest ones that we all participate in, which is early-stage venture and company formation, there's... You, you may not be thinking about the capital gains rate, but it's implicit in the returns that you're expecting for the risk and the time you're gonna take. And, you know, we've been trained to feel that rate. And if you double that rate from 20 to 40, I suspect that there's a lot of people whose risk tolerance changes, and they're gonna feel their after-tax gains differently, and they'll wonder to themselves, "Is this worth it?" And then I think what happens as a result is entrepreneurship drags. I don't know if anybody's done, uh, an analysis, but I suspect part of the reason why America's such a, you know, an amazing, like, sink for capital, right, it absorbs capital all around the world, is that you've created incentives that get people very excited because they think they can get rewarded. If you take those rewards away, I think the implications are much bigger than just the cap gains rates here, because as the people change their behavior, then the capital formation pools outside of the United States change their behavior, and the whole thing has a knock-on effect. And it was more muted in Clinton. It was less muted in '78. It basically didn't exist in the '40s and '50s, but it is a huge force today. I mean, like, we are an indebted nation that owes money to all kinds of countries around the world, including China. We're supposed to generate growth and sort of pay it back.

Jason Calacanis 10:59 And where will the growth come from-

Chamath Palihapitiya 11:01 So they-

Jason Calacanis 11:01 ... if LPs don't want to back venture funds or venture funds-

David Sacks 11:04 But let's be-

Jason Calacanis 11:05 ... and people say, you know, maybe I'll check out?

Chamath Palihapitiya 11:07 ... uh, let's be honest and-

David Sacks 11:07 Let's be honest and direct.

Jason Calacanis 11:08 Yeah.

David Sacks 11:08 I mean, are any of you guys gonna change your investment behavior if the cap gains tax goes to 40%?

David Friedberg 11:15 No, but there'll be less of it, you know?

Chamath Palihapitiya 11:17 Yeah.

David Friedberg 11:18 So look, anything, anything-

Chamath Palihapitiya 11:20 So my behavior will change.

Jason Calacanis 11:21 I think my behavior will change, yeah.

David Sacks 11:22 W- W- How will it change?

Chamath Palihapitiya 11:24 B- It's exactly what David said. So I just put in $100 million into a climate change company two weeks ago. Uh, under this promise, um, I can only put in 50. So there's 50 million less progress that's gonna happen on that business. I'm not sure that that was- that's the right answer for what that company is trying to do in the world.

Jason Calacanis 11:42 And the way it will change-

David Sacks 11:43 'Cause you're saying, you're saying that- you're saying the profits you would have had from before are diminished in half, therefore you would only have half as much money to invest as an investor?

Chamath Palihapitiya 11:51 Right, so, so however way you want to cut it, whether it's like the, the, 10 companies gets cut down into five, or the five, 10 companies that I invest in get half my money, the point is at some point...... the money starts to run out. Not just for me, but for-

David Sacks 12:04 It goes to, it goes to-

Chamath Palihapitiya 12:04 ... everybody else.

David Sacks 12:05 Yeah. Basically, at the end of the day, the money goes into the hands of, you know, government legislators and administrators to decide how that money gets spent, and it's not in the hands of, uh, capitalist investors to decide where to invest. That, that's the fundamental kind of shift that, that's gonna happen.

David Friedberg 12:21 Right, right. Capital, capital's been taken out of the econ- risk capital's been taken out of the economy and it's now gonna be, you know, spent by, by government. Look, an- anything that you tax, you punish and disincentivize, and anything you subsidize, you, you create an incentive for there to be more of. And, you know, so this is just... We, we, we always talk about these things in terms of, "Well, who are they gonna hurt? Is it th- the, or the... This only falls on the backs of rich people, um, so we shouldn't care." The, but the real question is, what is this gonna do to the economy? And, you know, I think we've talked in previous podcasts, the, the last pod that we have with Brad Gerstner, it feels like everything in the American system is kind of broken except for one thing, which is this sort of opportunity economy that's, that's being created by risk capital, right? And, and people creating new companies. You know, like these big stultifying political corporations, the S&P 500 are completely broken, government's completely broken, the federal debt is out of control. Um, even-

Chamath Palihapitiya 13:18 The media.

David Friedberg 13:18 ... the media's broken. Everything in America is either broken or needs to be revitalized or reformed, except one thing is working really well, which is risk capital and its allocation to founders who have nothing but a good idea, right? And when all of a sudden you double the cap gains rate, that is an attack on th- that opportunity in society. Now, I think there is a legitimate conversation to be had about, how do we spread this sort of system of opportunity to more and more people? I think, like, Brad framed it really well in the last episode. Like, how do we get more people involved in that? I would submit the answer has a lot to do with s- school choice and charter schools. Giving people... Everyone in this country deserves to have a first-rate education. Um, and so that is a very legitimate conversation to have. But I think to have punitive taxation on it is... I think it, it risks breaking that last thing that is working so well in, in, in the American system.

Jason Calacanis 14:10 I, I think it's really well said, and, uh, I think this is gonna take re-domiciling to another level. I mean, if you're in New York or California right now and you were thinking about Wyoming or Utah or Texas or Florida, I mean, this kind of makes the decision for you, if it does go to 40 and... Because that's-

David Sacks 14:30 Let's, let's just-

Jason Calacanis 14:30 You could actually make... Would you get to neutral if you left? And so, I, I-

Chamath Palihapitiya 14:34 Well, I remember, I remember when I moved to the United States in 2000, the marginal tax bracket that I was in, and I was making maybe, you know, 100... No, I was probably making 80 or $90,000 a year, was 55%. And I remember coming to the United States and seeing my after, my take-home pay, my first paycheck, and I was shocked because I was like... You know, I was paying maybe 36% all blended in federal and local at the time in c- or state at the time in California. And slowly, slowly, it's creeping up with, with the... If you've played out today where we are, plus New York State just passed laws, you're gonna be sort of in the 50 to 55%, almost upwards of 56% for certain folks. And maybe the answer is that's the right thing, um, but I think we have to acknowledge that there's gonna be a bunch of unintended consequences. So, maybe the intended consequence is to actually create more, um, equality between the richest few and, you know, uh, not even the poorest, frankly. 'Cause but it'll just be the richest few and the, the next richest few, quite honestly. 'Cause like, you know, the investing class is still a small number of people. Um, but the unintended consequences of that decision, I think, is what, exactly what David said, which is that over the next five or 10-year period, you will, at a practical level, see less investment. And the, the only way to make that whole is if the government then takes all that money and all of a sudden allocates it from their own coffers back into the economy, and we know that that's not gonna happen well, right? That's just gonna be riddled with waste and graft and corruption. So, unfortunately, the setup is that, you know, you're gonna really impact entrepreneurship. And then I, and then I wonder to myself, by the way, guys, like, what was the actual goal of this? Meaning, there was 20 or 30 guys that were just making so much money on their equity, but then that's, then, then we need to blame, like, the, these lists, like the Forbes billionaires list, because those are inaccurate because a lot of these stuff is like un, uh-

Jason Calacanis 16:33 Realized.

Chamath Palihapitiya 16:34 ... realized paper gains (laughs) -

Jason Calacanis 16:36 Yeah.

Chamath Palihapitiya 16:37 ... right? And so th- they're not, they're not paying any capital gains because they haven't sold anything. And most of these guys that are uber, uber rich, you know, have no desire to sell because it's, for them, it's a control issue to sell.

David Sacks 16:48 I'm not sure the con-

Jason Calacanis 16:48 Right, so they-

David Sacks 16:48 I'm not sure the, the, the consequence of taxing uber rich people is the true motivation. I think for some people maybe it is. But, um, l- if we just take a step back, I mean, a year ago, the US debt level was significantly lower than it is today. We've taken on a tremendous amount of, of, of federal debt to fund a series of programs that we believe were gonna kind of keep, um, you know, the American population employed and keep our economy moving. Um, that was a massive burden we accrued and th- in the past year. So ultimately, over time, the only way to kind of support this, this new federal budget and, um, you know, the, the, this new servicing cost that we've taken on at the government level, you really only have kind of like three options. Option one is you're gonna continue to raise more debt and massively kind of inflate everything and the dollar declines in value. Option two is to reduce spending, which means starting to cut these programs. And option three is to raise taxes. And it's pretty clear that option one is one where we're kind of already at the economic limit. Option two is gonna be very hard to swallow at a time like this, so you can't just cut spending right now. Uh, across the board, so many aspects of the US economy and so many individuals in the United States are dependent on the federal government for support.And so option three is the only real one that's left on the table. And so then the question is, who are you taxing? You're not gonna go tax the people that are struggling. You're gonna tax the corporations and the wealthy. And the, and the capital gains tax is the one place where you can kind of say, "Look, the tax rate that you're paying today is half of what an income tax rate would be if you were earning that as income. Let's get it to be fair and even." And I think just, just to argue this other side, like, there's a motivation. There's a, there's a point of view where this is coming from. It's not just, "Let's go tax the rich. Screw the economy." It's that w- we find ourselves in a circumstance where we need to do one of those three things. The most rational to do is to, uh, or the most kind of sensible politically, uh, to do is to, is to increase taxation. And this is the, the, the first place to go, the most obvious place to go.

Chamath Palihapitiya 18:50 It's not. Because, so when you think about, like ... So for example, like, you know, you would say, okay, who are the folks that we're talking about? There can be entrepreneurs that are building companies. Again, they're never selling, so they're never gonna pay these taxes. Like, it's not the case that Elon Musk or Mark Zuckerberg is all of a sudden gonna write a $40 billion check, because that's, that's not how much they make. That may be how much they're worth-

David Sacks 19:13 Right.

Chamath Palihapitiya 19:13 ... but they will never sell a single share unless they have to to fund some other project. In which case, it's a d-

David Sacks 19:18 So, so which of those three things would you do, Chamath?

Chamath Palihapitiya 19:20 So, so, so what I was gonna say is-

David Sacks 19:22 Yeah.

Chamath Palihapitiya 19:22 So, and then, and then you look at somebody else, like maybe you say, "Oh, well, you know, the people that manage money, like, let's go after those guys, because, like, those guys shouldn't be, you know, rich." But then the problem is, those guys are already paying W2 income. They're already paying nominal income tax rates. That's how the entire hedge fund industry works right now. You know? Um, you get paid in current income. Um, and so, okay, so you're not getting their money 'cause they're already paying at the prevailing rate. So again, this goes back to if you actually trace the problem and see who it affects, it's exactly what David said. It's these folks that are in the middle that are actually putting the money to work, that are trying to invest in things that now have a very different return profile. And you're right. The core business that they do, they may still keep doing, but then all of the incremental things in the future that they want to do, they won't do. For example, look at all of the talk right now about how everybody needs to stand up, you know, more angel investing, more minority investing, more women GPs, all of this stuff. Well, all of the folks, let's just be honest, all the folks that, uh, were in a position to put money into those folks are now 50% on a dollar-rated basis poorer if this thing passes. And I bet you what they're going to do is they're not going to cut their allocations in Sequoia. They're going to cut their allocations to all these other folks. And so-

Jason Calacanis 20:37 Yeah, that's exactly what I was thinking, Chamath, is, I-

Chamath Palihapitiya 20:39 Who's it going to hurt? It's g- again, it's going to hurt all the people that you want to get into the game. It's going to hurt all the people that are here. But the richest, richest, rich folks, that is not-

Jason Calacanis 20:48 Zero impact, but fair enough.

Chamath Palihapitiya 20:49 Unless you ex- unless you ex-appropriate the money from them-

Jason Calacanis 20:51 Yeah.

Chamath Palihapitiya 20:51 ... that's not ... You're not gonna get a single cent.

Jason Calacanis 20:53 And then that was the-

Chamath Palihapitiya 20:53 And, and-

Jason Calacanis 20:54 W- that was the concept of the wealth tax. Wasn't it? That you would take the total value of what you have and just take away 1% a year from Bezos', you know, or Zuckerberg's $100 billion. So would that not have been a better solution than this if you had to pick one, a 1% wealth tax-

Chamath Palihapitiya 21:09 Well, that's a s- that's a slippery slope.

Jason Calacanis 21:11 ... for people over whatever.

Chamath Palihapitiya 21:11 Jason, then, then we're no better than a banana republic that could also then expropriate a mine because we don't like the way that the mining is happening or, you know, a- a- another critical asset because the government decides that it's important. I mean, what's the difference between a stock and any other asset that either a person or a, or a, or a corporation owns? It's, it's, it's very f- uh, br- uh, I, I think that the definitions are thin. They're all

Chamath Palihapitiya 21:33 the same things at the end of the day, so.

David Sacks 21:34 Let's go back, let's go back to the federal budget problem. Like, how do you address it, Sax? I mean, what's the right course here?

David Friedberg 21:39 What I think is amazing is we're, we're about to spend... We're raising this hundreds of billions of taxes in order to fund, you know, trillions of, of new spending. I don't really hear the administration selling these new programs, selling the-

David Sacks 21:54 Mm-hmm.

David Friedberg 21:54 ... spending. All we're really talking about is that there's too many rich people here. We have these millionaires and billionaires. We got to tax them more. And so all, all we're really talking about is whether it's appropriate to be punishing the, the rich and super rich. We're not really talking about, where's this money going? Are these programs justified?

Jason Calacanis 22:10 Now, what are we getting out of it?

David Friedberg 22:10 What do we get out of it? Exactly. And my point is, for- forget about, like, who it's gonna hurt. I think it's eventually gonna hurt the economy. Uh, and the question is, what do we get out of it? And I think what's amazing is this isn't even paying for the big ticket items on the progressive wish list. We're not getting to universal, um, healthcare with this. We're not getting to universal higher education. We're not getting to any of the... We're not getting to, like, forgiveness of, of student loans or anything like that. We're not getting to any of the really big ticket items on the progressive wish list, and yet we're maxing out the taxes relative to anything we've done historically. And so where do you go from here? You know, because this-

David Sacks 22:48 Yeah, my thinking is-

David Friedberg 22:48 This is just, this is just the tip of the iceberg in terms of, of the progressive agenda.

David Sacks 22:52 Doesn't that speak to the problem? Like, the fact that we have such an extraordinarily high, uh, debt burden and federal budget that we're kind of scrambling to figure out a way to kind of make ends meet effectively, right? I mean, 'cause our alternative, again, is to just let massive inflation run, you know, issue a ton of, uh, a ton of new debt, or to cut spending.

Chamath Palihapitiya 23:12 No, no, no. But David, D- but you're-

David Sacks 23:14 But neither of those seem to be on the table.

Chamath Palihapitiya 23:15 No, no, no. You're going to exacerbate this issue. I'm, I'm telling you, I know it doesn't seem likely, but I think on a marginal basis, this will be an incentive to spend. And the reason is that it's a very frustrating idea for somebody to think about putting money in the ground, especially a sophisticated investor, um, at a rate of return that just changed in half. And so from my perspective, I would be more likely to spend because I would rather just YOLO the money than I would rather put it into the ground, because I would be worried that that could then get taken away from me. It could also change even further and further, and I think that's a very frustrating idea. I'd rather take a vacation. Again, let's go back to the example. I'd rather take a vacation with that $10,000 than go on to Jason's syndicate and put it into the hands of folks, because I'm just like, you know what? It's gonna turn into... Even if Jason hits it and I get back, you know, I'd rather just go on vacation.... enough of those decisions, and I think, I think you have a very different kind of economy. You have? You know what you have? You have what everybody else has.

David Sacks 24:14 So do we reduce spending?

Chamath Palihapitiya 24:16 I think you have to reduce expenses. I think that we have an infrastructure that is not well-accounted for. Meaning, if you're a company, you can go to a company like Tableau, you can go to a company like, you know, pick your, pick your metrics company, and within, you know, a few weeks and months of work, you can literally understand where all the dollars are, right, you can understand your business, and you can figure out where money is being wasted and where it's not. In a government, that's impossible to do, right, because you have these laws, and these laws are artificial constructs that we construct, and those artificial constructs are influenced by money in and of itself. And so these dollar flows are impossible to map, so you don't know where it goes. So for example, the $700 billion budget in the Pentagon, does anybody have any idea what the ROI is on that or even a way to measure it? Like even to actually make it simple, what, like if you were, if you had $700 billion of investment capital, the, the market has a really simple way of saying, "Okay, David, what's your ROIC? What's your return on invested capital?" And you can say all kinds of fancy things, you can have all kinds of fancy projects or simple projects, but at the end of the day, what is measurable is a dollar in and what that dollar grew into, and that's a return on invested capital. It is impossible to know that. And so, you know, we could say, for example, you could define it and say, "Well, I'm going to basically get every single person to graduate high school, and now I'm going to spend $500 billion a year to make sure that the graduation rate is 100%." That would be an incredible goal. You know what? That is absolutely measurable, right? And, and you'd be able to back into all of these programs, and the one that's, ones that didn't work, you'd cut, you know, and you'd end up with what David said, which is school vouchers. (laughs) Uh, I mean just igni-

David Sacks 25:59 I think, I think the absence of that accountability, Chamath has led us to a, a, a scary dilemma, and the dilemma is, uh, over 10 million Americans are directly employed by federal government, and a large swath of the remainder of the economy is supported by federal government spending-

Jason Calacanis 26:15 Which is basically Europe.

David Sacks 26:16 ... at this point, right? So lar- lar- large amounts, de- defense and military, construction, healthcare and pharma. I mean, the list goes on, but like the direct employees of the federal government plus the amount of revenue that depends on federal spending is so significant now as a percent of the total income generated by Americans that it is very hard to say like, "Let's create accountability in a system when so much of the economy is functionally dependent on it." Am I missing something, Sax? Like, I mean, isn't that the circumstance we're in right now?

David Friedberg 26:44 Yeah, I mean, the thing that like i- i- is amazing to me is, you know, I lived through the 1980s and 1990s like, like you guys did. From 1982 to 2000, that 18-year period, we had sort of an unrivaled economic performance. It was roughly around... We had two bad years under George Herbert Walker Bush, that's why he lost re-election, but we had close to 40% growth in GDP every year, we had great productivity, um, and we had massive deficit reduction. It's the last years-

Jason Calacanis 27:14 You said 40% a year in GDP.

David Friedberg 27:15 Yeah, and we, and we had, we, we actually had government s- uh, surpluses, budget surpluses the last few years. So it seems to me that we had the winning formula as a country and, uh, look, this is not partisan. I think it's bipartisan. I think it, the, the, this right solution is somewhere between what, what Reagan and, and Bill Clinton did. And, you know, Clinton, uh, he rose... He increased the individual tax rate to 39.6, so he did do that fr- eh, from 36%, but he cut it from... He cut the investment, the cap gains rate, from 28 to 20. It was in that ballpark. You know, we know that works. You know, we know that works. I, and, and, and, you know, somehow, we've moved away from what we learnt in that time period because, you know, I think the, the, the left in this country has, has become kind of, you know, has embraced this, this-

Chamath Palihapitiya 28:05 We're saying the same thing. You set up the incentives for people to invest, they do. If you set up the incentives for people to spend, they will do that as well. And i-

Jason Calacanis 28:14 I, I see this... I think Chamath is exactly right. There are a lot of people, and you used the example of thesyndicate.com. When I do my syndicate deals, there are people who are recreationally saying, "You know what? I love the idea of putting 5 or 10K into a flyer." They're gonna... You know, half of them will go away, a third of them. All these people who are, you know, i- involved in tr- day trading or crypto or real estate investing, they're going to look at it and say, "Is this worth the time or is it worth this amount of time? Maybe I'll cut back from doing 40 hours a week of this to 20." A- and if you look at what happened with crypto people, they went to Puerto Rico. You look what happened to venture capitalists and CEOs, they went to Florida, Miami, Austin. This is gonna... If it does pass, you could be pushing people to Singapore.

Chamath Palihapitiya 28:55 Well, we have another very complicated problem, and this is what Friedberg brought up, which is... And I don't know the answer, David, so I'm d- trying to... I'm actually talking around your question 'cause I, I think it's a, it's, it's the right absolute question. But think about this. What happens in a world where now, let's just say, that the revenue of the government goes up, right? But outcomes stay the same or get worse, and at the same time... Now, and you could claim that that's effectively what's been happening over the last 20 or 30 years, right? Government revenues have gone up, impact has stayed the same or probably been net negative. But then at the same time, you have this, you know, program of quantitative easing where then you can essentially print money on demand. And when you think about that, it's like, "Wait a minute, I am giving you money, but then, then you are also going to the photocopy machine with my money to make more money, and all of that total money does less than what it did when it was half that or a quarter or a third of it?" That's a very scary realization I think that people, you know, will eventually come to. Um, and I don't know what the answer to that is. I, you know, I- I- I think David, uh, Saxypoo said it, which is like, you know, the states are this incredible A/B test, right? Because you get to test like theories, right? And you have, you have now every complexion of theory. You have like, you know, the low tax states, the no tax states, the mid-tax states, you have high real estate taxes, low real estate taxes, high estate tax, whatever. You get every grab bag of incentives.... and you're going to see, but the problem is, that was assuming that the federal government kind of mostly stayed out of the way. (laughs)

David Friedberg 30:22 Right.

Chamath Palihapitiya 30:22 (laughs) Wh- wh- when you have this massive overlay...

David Friedberg 30:24 Yeah, I just posted a chart in the, the chat, that Nick can put up, which is federal spending, federal outlays as a percentage of GDP. And it's really interesting because federal outlays as a percent of GDP have generally been around the 20% line, plus or minus a couple of percent since, you know, the 1980s. And last year, in 2019, it was 20.7%. It jumped to 31.3% under COVID. And it now feels like we're trying to make this new level of, you know, going from 20 to 30 permanent.

David Sacks 30:58 It's like mask- mask wearing.

Chamath Palihapitiya 31:00 Well, the- the pro- the problem is the only time we did that in history was in World War II. Now, we were trying to fight the Nazis, which was worth spending the money on.

David Friedberg 31:07 Yeah, I would say that was a good use of capital.

David Sacks 31:09 But it's very hard-

David Friedberg 31:10 Yeah.

David Sacks 31:10 ... to step back, right? I mean, once-

David Friedberg 31:11 Risk of ruin. (laughs)

David Sacks 31:11 ... what, what starts out as temporary becomes permanent? Is that kind of the concern? Yeah.

David Friedberg 31:15 Well, that's what, that's what Milton Friedman said is there's nothing quite so permanent as a temporary government program.

David Sacks 31:19 Right. (laughs)

David Friedberg 31:20 Uh, but, but, but what, but what-

David Sacks 31:22 (laughs) .

David Friedberg 31:22 ... what they're threatening to make permanent is this new permanently higher level of federal spending in the economy. And I think it's a very dangerous experiment because it either takes tremendous money printing to support it or a tremendous tax burden and neither one of them is good for the economy. By the way, you know, again, when Bill Clinton left office, I remember, you know, you can go to the, the, the time machine for whitehouse.gov when he left in 2000 and he bragged about how under his terms, under his eight years as president, they reduced federal spending from 22% of the economy- Yeah, what happened to that? ... to 18% of the economy. Can you imagine a Democrat today boasting of that? Or even a Republican. I mean, what, what, who was the guy who was your guy who w- was like, uh, the Tea Party people, who... There was- (laughs)

Chamath Palihapitiya 32:06 (laughs)

David Friedberg 32:06 ... somebody who was, like, in charge of the Senate.

Chamath Palihapitiya 32:09 Rand Paul?

David Friedberg 32:09 Ra- well, I don't know who it was, but it was just like, "We got to cut spending." The, "We have to cut spending." Uh- Oh, yeah, yeah. Uh, oh, yeah, R- Ryan, yeah, Speaker, uh, the Speaker of the House, Paul Ryan.

Chamath Palihapitiya 32:18 Paul Ryan?

David Friedberg 32:18 Paul Ryan was like-

Chamath Palihapitiya 32:19 Oh, right.

David Friedberg 32:19 "No, you're, you're right, you're right."

Chamath Palihapitiya 32:19 "Uh, he based on this and..."

David Friedberg 32:20 Yeah, sp- spending restraint's kind of gone out the window in, in both parties and the Republic-

Chamath Palihapitiya 32:25 It's weird.

David Friedberg 32:25 ... and it, it did, it did happen under Trump, the Republicans don't seem to find their principles on spending unless and until there's a Democrat in the White House so they definitely deserve their share of the blame on this, but, but we do seem to be entering a new territory here of, you know, this, again, levels of spending we've never seen before.

Chamath Palihapitiya 32:43 It's incredible. It's absolu- and the pro- the problem is, it would be so much better if we just said, "We're going to do this one very specific thing with a huge number attached to it." Like, I would rather say, "We're going to Mars. Here's f- a trillion dollars. We are cutting student debt, here's a trillion dollars. We're going to double down on cyber and we're going to get, you know, completely pivot the military or something, and here's $500 billion."

David Friedberg 33:06 Green, Green New Deal, whatever.

Chamath Palihapitiya 33:08 Something.

David Friedberg 33:08 Something aspirational that is not just anti-rich people, let's tax the rich.

Chamath Palihapitiya 33:12 Right now, we have, we have a labels, we have a label, and then we have a spaghetti mess of spending that just isn't really attached to what the label means and none of it is accountable and so you don't really get anything for it.

David Friedberg 33:24 I- I know this is a silly question but why wouldn't we test this and say, "Hey, 20, 40, there are numbers between these two, maybe we'll increase it 2% a year for eight years."

Chamath Palihapitiya 33:38 I'm sorry, but Jason-

David Friedberg 33:38 "And we'll see what happens."

Chamath Palihapitiya 33:39 ... this is the o- this is the other problem with, like, this idea of American exceptionalism. We believe that we can't learn anything from anybody else and that's also not true. We actually know what it looks like when you have government as a massive portion of the economy. When we also know examples where government basically enables human capital outcomes but remains relatively, you know, small and fixed. Singapore, right? Th- th- there's this, there's this incredible-

David Friedberg 34:04 Surging.

Chamath Palihapitiya 34:04 ... you know, there's this incredible example where I think, uh, right when Lee Kuan Yew became, um, the head of Singapore, the GDP of Singapore was the same as the GDP of Jamaica, right? And what you saw was this complete, just, just complete divergence in, in these two countries. And think about this country which is basically this like, you know, this little spot of land surrounded, you know, and, you know, apolitical, areligious, surrounded by these Muslim countries and they still thrived and they kicked ass. You know, they were never invaded, et cetera, et cetera. Um, and underneath that was this belief that it's what you said, Friedberg, where you focus on an outcome, you spend against the outcome and you try to measure in a reasonable way and you double down on the things that work. And then on the other hand, if you look at Europe, Europe is a good example when, you know, spending sometimes for the greater good in the best interest can run amok and really what happens is you start to stagnate.

David Friedberg 34:59 Mm-hmm. Yeah. And Singapore is only what, six million people? I mean, it's like Ireland or (laughs) Norway or Denmark. I mean, it's- this is not a huge place.

David Sacks 35:06 Sounds like we didn't solve any problems in that last piece. (laughs)

David Friedberg 35:09 Yeah, we didn't solve it.

Chamath Palihapitiya 35:10 (laughs)

David Friedberg 35:10 I mean, I mean, what do we think is going to happen in four years? Does Donald... does this give Donald Trump a clear path into office if he said, "Hey, we're all low taxes again"?

David Sacks 35:18 Well, you co- you co- you, you know, the worst case scenario is you see what happened in France when they had that 75% super tax and then they introduced a wealth tax and they had massive im- immigration of, of, uh, invested dollars out of the country and people out of the country.

David Friedberg 35:30 They did get rid of George, did- did Cardin.

David Sacks 35:31 And then they, they, they, they went to Russia.

David Friedberg 35:32 That was a bonus. He went to Russia. (laughs)

David Sacks 35:34 That was a bonus. Yeah, then... (laughs) Yeah.

Chamath Palihapitiya 35:36 At what point... How many red pills do you guys have to take-

David Sacks 35:39 (laughs)

David Friedberg 35:39 (laughs)

Chamath Palihapitiya 35:39 ... before you're willing to reassess your political party? Because it seems obvious to me... Now, look, we could talk about how bad the-

David Sacks 35:45 What political party do you think-

Chamath Palihapitiya 35:46 Hold on, hold on.

David Sacks 35:47 ... we're all okay with?

Chamath Palihapitiya 35:47 We can talk about, we can talk about how bad the Republican Party is, but there's no question in my mind that the Democratic Party, all the energy, the base, the activists and the politicians who have the microphone, they are woke socialists, okay? That is the dominant ideology in the Democratic Party and what Biden is doing right now is catering to that. He's compromising with it.

David Friedberg 36:06 Yeah, but he wasn't catering t- to that until this point. He, he didn't put Bernie or Elizabeth Warren into any cabinet positions. He kind of marginalized them and now he's like, "Okay, let's do something." I mean, would Warren and-

Chamath Palihapitiya 36:18 But this is, this is why I think-

David Friedberg 36:19 ... Bernie have done this?

Chamath Palihapitiya 36:20 Yeah. No, but J- Jason, I think you're right. This is why I think this is like a sacrificial lamb and I don't think anything's going to happen. I don't... I think Biden is a fundamental centrist. That's why I like him. I think he's a...

David Friedberg 36:28 Boring, yeah.

Chamath Palihapitiya 36:29 He's a stable, he's a stable, predictable figure and that's I think what you want in the, in the presidency. I- I think that this is sort of like, "Okay, you guys want a pound of flesh? Here you go." But I think he's so politically smart...... that he probably does have a bunch of millennial woke socialists whispering and chattering like, "Hey, do this, do that, do the other," but he's probably the only one there who's smart enough to realize none of this will get passed. You know, it's not going to muster enough support.

David Sacks 36:55 I don't know. I think- I- I-

David Friedberg 36:56 Biden is not governing like a centrist right now. He's- he's proposing, you know, what, 4 trillion of new spending, you know, new tax increases, and he's just getting started. But look, and I- I would challenge this idea just slightly of him being a centrist. What I would say is, he's always tacked to the center of the Democratic Party. So I- I do ag- I- I do think he's- he's a triangula- triangulator and a calibrator. He's not like a conviction politician the way that a Bernie Sanders is or an Elizabeth Warren. But what he's tacked to is the center of the Democratic Party, and the center of the Democratic Party has moved very far left because all the activists have moved to the left, and so he's been dragged left. Remember, Biden was Clinton's floor manager in the Senate when he passed all- all this legislation. And so now Biden is very far to the left of where Biden was in the 1990s, and the reason for that is because the Democratic Party has moved. So once again, I guess, you know, my question to all of you guys is, what does it take? How far does the Democratic Party have to go to the left?

Chamath Palihapitiya 37:54 Not Donald Trump.

David Friedberg 37:55 Okay.

Chamath Palihapitiya 37:55 Not Donald Trump, yeah.

David Sacks 37:55 I wouldn't, I wouldn't, I- I wouldn't call this- That's the problem, is Donald Trump, yeah.

David Friedberg 37:58 Mm-hmm.

David Sacks 37:58 I wouldn't call this as much of a radical policy shift as I think it's being framed. I honestly think this is a natural and inevitable consequence of the circumstances we find ourselves in right now with respect to the spending level, the dependence we have on federal spending across the board with respect to individual employment and the economy, the need for a variety of social services to get us through this COVID economic collapse. I- I just don't see another way out, and I feel like it's the natural course to do exactly what's going on right now. I- I think it's gonna pass. I think something like it's gonna pass, and-

Chamath Palihapitiya 38:30 I think something like it's gonna pass, but I don't think it's gonna pass.

David Sacks 38:32 Yeah. Yeah, yeah.

Chamath Palihapitiya 38:33 Where do we put it at? You think it's gonna be equidistant?

David Sacks 38:34 I'm not saying, I'm not saying it's good or bad. I think, obviously, we just find ourselves in this circumstance in this country, in this moment in time, that this is the only path. (laughs) I'm just not sure you can go in and go slash a ton of spending right now and- and, you know, and anyone would win re-election or any, you know, or most Americans would be anything but unhappy, uh, it's just-

Chamath Palihapitiya 38:54 Well-

David Sacks 38:54 It's just a consequence of where we are.

Chamath Palihapitiya 38:56 Let's play the glass half full. Here's a crazy idea, okay? You know, for example, somebody like me, what I would think about, which I think is- is a little, it's crazy but I would do it, is okay, I'm just gonna move literally every single thing, every dollar that isn't nailed down into a charitable vehicle, and I will invest through my charity because I still have to donate 5% a year but then I can compound tax-free. Now, I care more about the businesses that I'm a part of and the progress that I can create, so that may be okay and I'll just pay myself a salary to like fund my lifestyle. But that could be a way around this. To me, the biggest issue isn't how much money I have personally. The biggest issue is how much money I will have to put back into the world, and the idea that then it goes to a place where it's profligately spent in a way that isn't accountable really bothers me. That idea bothers me a lot. Um, David, that would cause me to tack, you know, more, even more to the right if I could find somebody who understood that principle because what I don't want to have is, you know, in the absence of social programs, like the- the- the problem that the Republicans leave is this no man's land where then you're forced to believe that this one man for yourself, it's all about you, you can figure it out, you know, the rugged individualism, that's just not realistic. Like I, I w- am a complete by-product of a social safety net, uh, that should exist. And the problem is that Republicans don't give you that option to have then accountability on spending. When, just somebody please just say that. I don't care what you call yourself.

David Friedberg 40:26 Yeah. Well, look, I think, you know, the, I think Republicans have gotten a lot more comfortable with the idea of entitlements and the- the social safety net. I don't really hear anyone opposing that anymore. Um, I mean, it's, the same thing has happened with like the Tories in- in England. You know, no- no one's really trying to roll back the social safety net. We need a Republican messenger to come forward and say, "Listen, we don't care, you know, who you love, what you smoke, where you're from, what you look like." You know, w- we believe in an opportunity society. We want to spread that opportunity to everybody but ultimately opportunity comes from the private sector. We're gonna have a strong s- social safety net, and we're gonna basically give everybody the- the most opportunity to participate by giving them a great education. That's basically what the agenda should be.

David Sacks 41:12 Yeah, I'm in. I'm in. I mean, I- I, to your point-

Chamath Palihapitiya 41:15 Even the starting line, hallelujah.

David Sacks 41:16 I like it. I mean, I- I would, I would you guys-

Chamath Palihapitiya 41:19 The problem is your boy tried to dismantle Obamacare, you know?

David Sacks 41:22 No, the problem is-

David Friedberg 41:23 Unfortunately, he-

David Sacks 41:23 ... Trump. Like Trump, I'm a never Trumper obviously, but I- I'm kind of purple. I would, you know, I'm considering Austin or Miami as a, as a place to locate myself and-

Chamath Palihapitiya 41:31 Mm-hmm.

David Sacks 41:31 ... a decision like this makes it easier.

David Friedberg 41:33 Mm-hmm. I would never do that (laughs) .

David Sacks 41:35 (laughs) I'm actually very, I- I love Texas. I love Austin. Uh, Austin's the kind of purple I like. Like, I like personal freedom and I like what you're saying, like love who you love, smoke what you want. What year did you move to the Bay Area? Five, six years ago. I was in LA for 10, New York for 30. I feel like it's a last in first out thing that's going on right now with respect to immigration out of California.

David Friedberg 41:56 Yeah. I've been here since 2000, I'm not leaving.

David Sacks 41:59 Yeah, I've been here my, since I was six years old in California and I'm not leaving. And I- and I've been in the Bay Area since college, so I'm not lea- you know, it, I feel like it's a lot harder to leave when you've been here longer. It's a lot easier to leave when you've been here less time. That certainly seems to be the pattern I've seen amongst friends and colleagues with respect to leaving the state.

David Sacks 42:16 Uh, all right. Uh, the Chauvin trial, uh, came back guilty, all three charges.

Chamath Palihapitiya 42:23 Very quick verdict.

David Sacks 42:23 What is there to even talk about here? What is there to talk about?

Chamath Palihapitiya 42:25 I don't, I don't even know.

David Sacks 42:26 (laughs)

Chamath Palihapitiya 42:26 I mean I feel like we should-

David Sacks 42:27 Why, why are we, uh, like-

Chamath Palihapitiya 42:28 Can I get, can I give a, can I give a shout-out to, um, a really good friend of mine? His name is Neal Katyal. He was the former solicitor general under Obama.

David Sacks 42:36 Mm-hmm.

Chamath Palihapitiya 42:36 Um, he, uh, he was, uh, one of the, uh, prosecutors that, that worked on that case. Um, he's a, he's a partner at Hogans,... um, runs a Supreme Court practice here, but basically went and did this pro bono trial, uh, on, on behalf of the state of Minnesota, uh, w- working with the, the, the district attorney. And I just, I just want to say, Neal, proud of you. It's an incredible thing. Um, thank you for keeping (laughs) America safe.

David Sacks 43:03 Yeah.

Chamath Palihapitiya 43:05 I mean, uh-

David Sacks 43:05 Let's, let's move on. (laughs)

Chamath Palihapitiya 43:05 You know, what's crazy is like, so like-

David Sacks 43:07 It's okay.

Chamath Palihapitiya 43:08 But then, you know, the same day, there was, there was a shooting of this un- th- this unfortunate shooting of this, I think, I think she was 16-year-old, 16 years old, this Black girl in Ohio. And then, you know, LeBron tweeted something out, and then LeBron had to basically delete the tweet 'cause it was causing people to go absolutely crazy.

Jason Calacanis 43:23 Well, I mean, each of these situations is unique. And in that situation, somebody was going to stab another person. The cop didn't know what was going to happen. And, you know, in a, in another time period, like, maybe that would have been saving somebody's life, who had potentially been stabbed and, you know, the, the George Floyd... I, I think you got to reserve judgment on each of these until you get all the information. But the information here was just super conclusive. Like I, the, the, the gymnastics, Ben Shapiro, and some of these far-right people had to go through to say what you saw in George Floyd being murdered was not what happened.

Chamath Palihapitiya 43:58 Well, that's, that's performative theater, trying to get people to watch something.

Jason Calacanis 44:01 Y- And it was, I mean, it was just gross to watch, like-

Chamath Palihapitiya 44:03 You might as well call it what it is. Like, that's acting. I feel like probably if, if anybody, if any one of us found Ben Shapiro in a bar and just hung out and had a beer, you'd find out that he was like, he was like the Meryl Streep of our generation. You know, like, this incredible actor, just-

Jason Calacanis 44:17 (laughs) What does that mean?

Chamath Palihapitiya 44:18 Like an incredible actor.

Jason Calacanis 44:19 Well, no, I mean, you know-

Chamath Palihapitiya 44:20 I mean, there are, I think there are-

Jason Calacanis 44:21 Scott Adams, hi- and his podcast, all these guys are just trying to figure out-

Chamath Palihapitiya 44:24 Right.

Jason Calacanis 44:24 ... how to say that this was a travesty of justice. And I'm like, "I, I don't know what you saw, but..."

David Friedberg 44:30 Yeah. Let, let me explain where they went wrong, okay? So, so look, I, I, I agree with you guys fundamentally. This was an easy... Th- th- look, this, this was, uh, you know, finding of fact by the jury, guilty on all charges, obvious, right? The tape shows it. His, uh, the... Chauvin's, uh, record as a cop, numerous complaints, you know, this was a bad apple. This was a bad cop. He deserved to be convicted, end of story. That's where the analysis should end. But, of course, the people on cable news would have nothing to say if that was the end of it. And so look, I think both the right and the left kind of went off the rails on this, where, you know, the right kind of went off the rails is you had... Well, what happened is you had Maxine Waters, you know, come out, and while the, the jury was still deliberating, she was basically calling for activists to get more confrontational in the streets if the verdict went the wrong way. And so then the defense-

Jason Calacanis 45:23 Not helpful.

David Friedberg 45:24 Not helpful, right? And so the, so then the, the defense made a motion saying that, uh, this, this was affecting the deliberations. There's no proof of that. The jewel- the, the judge ruled against that motion, but he did... The judge reiterated his desire for the politicians to stop talking about the case, right? And so then what happened is the, the right-wing commentators were criticizing Maxine Waters and implying that, that there was an effort to try and coerce the jury. And there's no proof of that, right? And, and, and, and I think there's... The mistake isn't somehow framing Derrick Chauvin as, like, a sacrificial lamb to the mob. He was not. He was guilty. He deserved it. That being said, I do think that the judge had a point that it'd be helpful if these politicians would just stay out of it, stop commenting on it while the jury is deliberating. I think there was a legit point there. Um, but, you know, the, the, the left made some, some weird comments as well. You had... Nancy Pelosi made this really bizarre statement.

Jason Calacanis 46:25 That was very strange. I think that was, like, a slip-up of, like, just trying to say something ni- I mean, being charitable, she was trying to say something nice, that George Floyd is going to create a wave of justice. And that would be, that's a great idea, but-

David Friedberg 46:40 She said... Yeah, she said, "Thank you, George Floyd, for sacrificing your life for, for justice." And it, it was-

Jason Calacanis 46:44 Yeah, but it didn't come out exactly as she intended it to.

David Friedberg 46:46 No, no, I mean, because, look, George Floyd did not go out that day intending to be a mar-

David Sacks 46:51 Martyr. No.

Chamath Palihapitiya 46:52 Um, you know. And, um, and so-

Jason Calacanis 46:54 No.

David Friedberg 46:55 ... it, it, it sort of ga- i- it expressed kind of what she's thinking, which is how am I going to use this politically? Uh, (laughs) you know?

Jason Calacanis 47:03 Eh.

Chamath Palihapitiya 47:03 That's how the press cycle goes.

Jason Calacanis 47:04 How they're trained. This is the-

David Friedberg 47:05 It came out pretty gross, right?

Jason Calacanis 47:06 I think you're right. It came out gross, for sure.

Chamath Palihapitiya 47:08 I think that's how they're trained. It's kind of like, you know, if you, if you take a finely tuned athlete in a sport and give them, you know... A- they're j- they just, they're reactive 'cause they're so instinctual. I think it's kind of like this. She's an incredibly finely trained athlete, and her domain is politics. And so, you know, ev- what, what is that phrase? Uh, uh, every crisis is an opportunity kind of thing, so I think you're-

Jason Calacanis 47:29 Yeah, I mean, they all flew there to be there for the, for the trial, et cetera, and that couldn't have helped the judge with, you know, the impartial jury. And maybe that causes a mistrial? Uh, I mean, I don't know, David, you're an attorney. Is there any chance on appeal that a Maxine Waters quote like that could result in, uh-

David Friedberg 47:48 Well, the jou- the judge actually said that, that, that the defense could reserve that issue and use it on appeal. So yeah, they could use it, but a- but I don't think it's go- I don't think it's gonna work unless they can prove that somehow the jury was contaminated by what they were hearing on TV or something like that.

Chamath Palihapitiya 48:04 The judge is in- the judge's instructions were pretty clear. Like I w- I watched a couple of the ending days, and he's very clear, like, he's like, "Guys, I don't want you to watch the news." You know, the stuff like that. He was very directive in making sure that they tried to be as uncontaminated as possible. So I think the, the surface area for an appeal is pretty thin here.

Jason Calacanis 48:19 The fact that the police chief and everybody who worked with them said, like, "This is not standard," this... And they just threw them right under the bus. They didn't want to be associated with this in any way.

Chamath Palihapitiya 48:29 By the way, well, you know, they're, they're not going to be able to hide much longer though 'cause the DOJ said they're opening an investigation into Minnesota police force. So I think they're just trying to crack open the police reform in that state and just get those guys on the right side. And it's going to be... Uh, i- i- you know, though, again, here's this other issue where it's like, okay, this is where, like, ver- it's very difficult for the federal government to do anything.... but, you know, so whatever they try to do won't really result in what- what you want to have because every state, again, Jason, to your point, has completely different political ideologies. Nobody wants to behave the same. Everybody wants to be independent. Everybody wants to get reelected as not kowtowing to somebody else. And so you just don't get these consistent outcomes. And then people are forced to vote with their feet and move across the country, you know, to get a bunch of simple things that I think should be pretty consistent across the entire country.

Jason Calacanis 49:16 The thing that I found-

Chamath Palihapitiya 49:17 Just not possible.

Jason Calacanis 49:17 ... particularly deranged was these people who are like, "Listen, he's a fentanyl addict. He's an opioid addict," which, by the way, there are tons of affluent people. Everybody in this country is addicted to opioids. Fentanyls are everywhere. Fentanyl is everywhere. And then you're trying to say, like, because he had that addiction, that in some way that negates the person kneeling on his back while he's in handcuffs? Like, you're, you have a duty as a police officer to take care of somebody. When he's in handcuffs, how is he any threat in any way? And then to listen to Scott Adams and Ben Shapiro on these absolute pieces of garbage try to say, "Oh, you know, there was the fentanyl that killed him," it's like, uh, yeah, no. The person on his back kneeling on him for nine minutes-

Chamath Palihapitiya 49:59 It's because it's about, it's about ratings. Now, uh, switching topics-

Jason Calacanis 50:02 Gross.

Chamath Palihapitiya 50:02 ... and to talking about ratings, something a little lighter.

Jason Calacanis 50:05 Ugh.

Chamath Palihapitiya 50:05 Um,

Chamath Palihapitiya 50:06 the most interesting popcorn thing that I watched, uh, was the Hulu documentary.

Jason Calacanis 50:11 You did watch the Hulu documentary on WeWork?

David Friedberg 50:13 (laughs)

Chamath Palihapitiya 50:13 I, uh, WeWork, yeah. I'll give it to you.

David Sacks 50:14 Oh, I gotta watch it. I gotta watch it.

David Friedberg 50:16 I haven't seen it yet, yeah.

David Sacks 50:17 Oh.

Chamath Palihapitiya 50:17 It is, it is, in a word, I think, I think the good... I think the right word is, like, outrageous. I think the guy who stole it, Jason, was the lawyer who they interviewed.

Jason Calacanis 50:26 Yep.

Chamath Palihapitiya 50:26 He, he had some incredible kind of, like, one-liners.

Jason Calacanis 50:29 One-liners. Yeah.

Chamath Palihapitiya 50:30 Uh, but-

Jason Calacanis 50:31 I think it's... yeah, the, the, the, the-

Chamath Palihapitiya 50:33 I had a key... I'll, I'll be honest, and this may sound crazy, but I actually had, um, a fair amount of sympathy for Adam Neumann in watching it. I think that he, at least in the documentary, it came out that he, you know, not, not that he didn't create this issue, but that I think it was a little overly scapegoated because it's very hard for you to incinerate $45 billion without the complicity, at a minimum, of your board of directors, right? And, and a bunch of, like, extremely well-heeled, thoughtful investors. Um, and so there was just, there was just... there's so much complicity in this thing. So if anything, my takeaway was that he, he shares a... he shares the blame with a lot of other people and it's not... it wasn't, you know, him and him only. But my gosh, that documentary, some of the things, guys, are just, uh, they're fabulous.

David Sacks 51:18 But this is, this is always true in these businesses that end up with, um, you know, bad actors that are enabled, right? I mean, it's been the case in public and... public success stories and failures, right? I mean, there's, uh, a, a cult of personality. The personality provides the, the... the high beta personality provides the alpha and-

Chamath Palihapitiya 51:38 Yeah, the-

David Sacks 51:38 ... it can also pro-... it can also compro- provide like a Theranos outcome and, you know, the, the-

Jason Calacanis 51:43 Yeah, but the thing that you... when you'll see when you watch this is... I don't know if you guys watched The Vow about that NXIVM cult, which is just equally loathsome, horrible people behaving badly. But he really targeted young people to work there and indoctrinated them into this, "We're changing the world." And then there were no adults there, and you see him behind the scenes when he's talking at the IPO roadshow, and he's having basically a panic attack, and he's psychotic. I mean, he was really deranged, and they have this video of him trying to get through the IPO roadshow and he can't.

David Sacks 52:16 What show is it? What movie is this?

Jason Calacanis 52:18 It, it's the WeWork documentary or Hulu.

Chamath Palihapitiya 52:19 The WeWork documentary. Oh.

Jason Calacanis 52:20 Just get Hulu.

Chamath Palihapitiya 52:21 It's on, it's on Hulu, yeah.

Jason Calacanis 52:22 It is so deranged, it's awesome. I mean, it's Fyre Festival level.

Chamath Palihapitiya 52:27 I- I will hold off on that. I- I... deranged is a big word. I don't... I'm not sure that it's deranged, but I think it's like, it's juicy. It's, uh, it's gossipy.

Jason Calacanis 52:33 What about his wife and, like, that whole thing (laughs) , like, WeSchool? They're like, "We have to democratize education for $60,000 a year." (laughs)

David Sacks 52:41 Talks to me. Have you guys, have you guys ever-

Jason Calacanis 52:43 You know, preschool. (laughs)

David Sacks 52:43 Have you guys ever regretted enabling, um, you know, quirky personality entrepreneurs that you've backed and then you've regretted it later?

Chamath Palihapitiya 52:51 Yeah, so, um, the, the problem is it's hard, it's hard to know in the midst of it, you know? I guess it's like kind of like-

David Sacks 52:56 Right. Right.

Chamath Palihapitiya 52:56 ... that line, like the line between genius and insanity is very thin. Um, but yeah, I mean, uh, the, the one thing I will say is I've only ever had one issue of outright fraud. Um, and so, you know, in-

David Sacks 53:08 Oh, do, do tell.

Chamath Palihapitiya 53:10 Well, no, I mean, in, in hundreds of, in hundreds of companies that, that I've, that I've invested in, luckily, I, I've, I've only, uh, I've only seen one issue where, you know, the CEO was extremely, I don't know, aggressive in how they accounted for and booked revenue and... You know, this is where one thing that we don't have at the early stage companies, we don't have the check and balance of a reporting infrastructure and a third-party watchdog and all these other people. And so, you know, you guys all know this. When we go in and we sit in a meeting, in a board meeting, and, you know, the entrepreneur puts slides up, there is an inherent 100% categorical belief that they're... that they aren't lying, right? Like, you don't, you don't even have to check that assumption. It's just assumed that nobody's lying. You know, good or bad, we're just presenting the data. And I had one case where the guy lied, and it wasn't one, was, it was. And our CFO and, you know, our team figured it out. And, um, you know, there were other investors, and it was, uh... we all were just really shocked, and we had to kind of clean it up as best we could and...

Jason Calacanis 54:14 I have literally a dozen, uh, and they... we didn't wind up investing in, I think, 10 of the 12. And the reason is, we took diligence, to your point, Chamath, like, do you... how do you even know in a board meeting? I just said, "Screw it. I'm going to build a diligence team," and we ask people for all their bank statements and for their iTunes account and for their Google Analytics. And if a company doesn't give those to us, we just know that something's up.

David Sacks 54:38 Mm.

Jason Calacanis 54:38 And we figure it out before we invest because the two times we did get dinged on this, we had one where somebody was giving themselves a loan and paying-

David Sacks 54:45 So you do diligence.

Jason Calacanis 54:47 We did... we, we've just basically have a diligence list-

David Sacks 54:50 (laughs) Okay.

Jason Calacanis 54:50 ... that says, "Give us the incorporation docs and all these bank statements." Now, somebody could...

Chamath Palihapitiya 54:55 ... fraudulently change a bank statement, that is possible. So there, it depends on how deep-

David Sacks 54:58 No, but I'm saying, like-

Chamath Palihapitiya 54:59 ... people want to go in the fraud.

David Sacks 55:00 ... but did you guys ever, like, enable a personality that was just, like, so over the top and then you're like, "Oh, shit. This is actually gonna ex- this is actually an explosion."

Chamath Palihapitiya 55:08 No.

David Sacks 55:08 Like, it's a total disaster.

Chamath Palihapitiya 55:09 No, that- Only with my top three investments. (laughs)

David Sacks 55:11 Right. (laughs)

David Friedberg 55:12 (laughs)

David Sacks 55:12 I mean, that's like walking into the-

David Friedberg 55:13 Well, actually wa- th- that's a good point there because-

David Sacks 55:15 That's a good point, right? Like, yeah.

David Friedberg 55:16 Yeah, so because... Okay, so I wrote about this in my blog post, Blitz Fail, about the- the sort of how-

David Sacks 55:21 Yeah.

David Friedberg 55:21 ... how founder psychology can actually cause a company to go off the rails.

Chamath Palihapitiya 55:24 Oh, the benefits.

David Friedberg 55:26 The- the- the thing, the thing is that founder- founders do need to be much more aggressive than the average person. You know, we like to think that a quality, that a personality trait like aggressiveness, there's like some sort of normal distribution of it and you kinda wanna be, you know, somewhere in the middle of the curve, and it's actually not true. You want founders to be much more aggressive than the average person because if they're not, they're just not gonna persevere and push hard enough, right? And J- I mean, we saw this with- with Uber, right? I mean, TK was a super aggressive personality. The company would not-

Chamath Palihapitiya 55:58 100%.

David Friedberg 55:58 ... have been as- as successful had he not pushed that hard. And so, the curve in the real world d- it's not a normal distribution. It mor- looks more like a curve where there are returns to aggressiveness and they keep bringing increasing returns to it until suddenly the person goes too far and then they jump the shark and the whole thing craters and crashes.

Chamath Palihapitiya 56:15 Wait, can I, can I, can I say something? Like, you know, having been in the engine room with Zuck in a critical moment, Zuck was an aggressive guy, but he wasn't over the top and he wasn't just this, like, crazy weirdo personality. He wasn't enabling sexual harassment. He wasn't doing- Was he thoughtful? ... any of that stuff. Would you say? Yeah. He was- Yeah. He was an i- he was, he was an intellectually incisive, he was an aggressive thinker, so, uh-

David Friedberg 56:38 Right.

Chamath Palihapitiya 56:38 ... this is why my reaction to David's question is, I haven't backed assholes 'cause I just think that, that archetype doesn't work.

David Friedberg 56:44 Zuck's a very cool analytical personality. There are these founders that, you know, we, um, I've heard the term wild stallion to, uh, to describe them, where they are, you know, they're like these- these wild st- stallions. They have tremendous upside, but they're also a little bit, you know, um, wild. And unless they sort of learn to-

Chamath Palihapitiya 57:02 You could get hit with the hoof.

David Friedberg 57:03 Yeah, I mean-

Chamath Palihapitiya 57:04 The hoof. (laughs)

David Friedberg 57:06 (laughs) They're, th- th- they're, they're, they're, they've got a lot of talent, right? Uh, the- the- the talent is, uh, that you're... The- the amount of talent you have is like the horse you're riding on, and some people are riding on a bronco. They got a lot of talent, but it might buck them off.

Chamath Palihapitiya 57:18 I just think, I- I- I just think the real, the real edge in investing is figuring out what is bluster and window dressing and show and what is actually aggressive thinking. Like John and Patrick Collison, there's zero bluster with those guys.

David Sacks 57:31 Yeah, those guys are-

Chamath Palihapitiya 57:32 Totally from Shopify.

David Sacks 57:32 Those guys, that company-

Chamath Palihapitiya 57:33 Zero.

David Sacks 57:33 That company is gonna be-

Chamath Palihapitiya 57:34 Totally Luki, zero.

David Sacks 57:35 That's gonna be the most valuable, valuable company that's private right now besides SpaceX, yeah.

Chamath Palihapitiya 57:38 Yeah, these gu- these guys are, these guys are incredible, intellectually thoughtful killers.

David Friedberg 57:42 Right.

Chamath Palihapitiya 57:43 That's what they are.

David Friedberg 57:43 That's true, but-

Chamath Palihapitiya 57:44 They out- they outthink everybody.

David Friedberg 57:45 But there's also a maturation process a lot of founders go through, right?

David Sacks 57:48 Yes.

David Friedberg 57:48 I mean, the Collisons and Zuck, I think, got very mature very young. I think there's other founders that it takes them a while to get more polished, get more disciplined, rein in the, you know, i- th- those emotions. I'm not saying they're fraudulent. We don't wanna bet f- on fraudulent founders, but some founders need to learn how to harness the talent they have. And-

Chamath Palihapitiya 58:11 Yeah, I agree with that. I agree with that.

David Friedberg 58:13 A- a- and those are the ones where it's very hard to know earlier in their career whether to bet on them or not, right?

Chamath Palihapitiya 58:18 I- I agree with that.

David Friedberg 58:19 Because, because they may- they may get it under control or they may not. It's- you can't tell at the beginning.

David Sacks 58:23 Mm-hmm.

Chamath Palihapitiya 58:23 Here's the analogy we use internally.

David Sacks 58:25 (laughs)

Chamath Palihapitiya 58:25 It's like being Professor X in the X-Men. You could have a Jean Grey or a Wolverine and, like, everybody's got a different superpower, but you need to teach them how to use that superpower so they don't self-destruct or cause chaos.

David Sacks 58:36 They could, they could, they could bifurcate the other way, right?

Chamath Palihapitiya 58:38 They could be Magneto, right? (laughs) Could, could go the other way. Now let's talk-

David Sacks 58:42 Not sure I get all the references, but I hear ya. (laughs)

Chamath Palihapitiya 58:44 I, uh, well, I mean, I'm-

David Sacks 58:45 Uh-huh.

Chamath Palihapitiya 58:45 ... kind of shocked given-

David Sacks 58:46 (laughs) .

Chamath Palihapitiya 58:47 ... how much of a huge nerd you are-

David Sacks 58:48 I love, I love-

Chamath Palihapitiya 58:48 ... that you don't understand the X-Men. (laughs)

David Friedberg 58:50 Jason-

Chamath Palihapitiya 58:50 I love that movie. I love that movie with the guy who's made of all the rocks and the little tree guy who's his buddy. That's who it is.

David Sacks 58:56 What's that?

Chamath Palihapitiya 58:56 Yeah. Guardians of the Galaxy, yes.

David Friedberg 58:58 I think, I think Jason's favorite character is the Blob.

David Sacks 59:01 (laughs)

Chamath Palihapitiya 59:01 (laughs)

David Friedberg 59:01 Is that the one?

David Sacks 59:02 If that's coming from you? You put on COVID-20. I dropped COVID-15.

Chamath Palihapitiya 59:07 (laughs)

David Friedberg 59:07 (laughs)

David Sacks 59:07 What are you talking about? How, w- how many, how many of those-

David Friedberg 59:09 Yeah, you're right.

David Sacks 59:10 ... cubano sandwiches are you having?

David Friedberg 59:12 Oh, cubano.

David Sacks 59:12 Look at your face, dude.

David Friedberg 59:12 I don't know. I don't know.

David Sacks 59:14 (laughs)

David Friedberg 59:14 How many cro- no croquetas, Sax. No croquetas.

David Sacks 59:17 No, you're right. I shouldn't have- I shouldn't have gotten there.

David Friedberg 59:19 Side salad.

David Sacks 59:19 Bad idea. Shouldn't have gotten there. You're right.

Chamath Palihapitiya 59:21 Yeah.

David Friedberg 59:22 Side salad.

David Sacks 59:22 Glass houses.

Chamath Palihapitiya 59:23 Sax, what- what is your, what is your-

David Sacks 59:24 I- I started training.

Chamath Palihapitiya 59:25 Well, Sax, what is your health plan? Are you, uh... Now that we're coming out of COVID, are you running or, like- Yes, we got an intervention right now now.

David Sacks 59:30 Yeah, what's the, what's the plan?

Chamath Palihapitiya 59:30 You look terrible.

David Sacks 59:32 (laughs)

David Friedberg 59:32 (laughs)

Chamath Palihapitiya 59:33 (laughs) You do look a little bloated.

David Sacks 59:34 Yeah.

Chamath Palihapitiya 59:34 You look like a, you look like a puffed fish.

David Friedberg 59:37 Oh, geez. I- I need to lose, like, 20 pounds.

David Sacks 59:39 (laughs) A puffed fish.

Chamath Palihapitiya 59:40 I'm down- I'm down 12 from my peak, of the COVID peak. I'm feeling good.

David Sacks 59:44 (laughs)

Chamath Palihapitiya 59:44 Just get a personal trainer.

David Friedberg 59:46 (laughs)

Chamath Palihapitiya 59:46 Speaking of COVID, what the hell is going on in India?

David Sacks 59:48 Oh, it's brutal.

Chamath Palihapitiya 59:49 Oh, my lord. It's scary.

David Sacks 59:50 I thought the whole thing was we w- they were taking hydroxychloroquine for totally different reasons and this is why it's all fine.

Chamath Palihapitiya 59:55 Or that they had some immunity or that it was hot. I mean, there was a million reasons of why they were not gonna get hit, and then now they're surging. And we have 60 million shots on the shelf, and the number of people getting shots is going down. This is America's chance to use... Uh, instead of battleships and nuclear weapons, we can use this COVID to shape global policy. We should be getting vaccines to other countries and be, once again, the shining light of the entire planet and humanity. Wh- why are we not bringing shots to India now? We have so many extra.

David Sacks 1:00:31 I'm not sure... I'm just trying to pull up the India vax data per day. I'm not sure that there's a, um... That's a- that's as much the issue, right?

Chamath Palihapitiya 1:00:40 I mean, it is scary to watch their s- their... I mean, you're, you're our- our go-to science guy, Friedberg. Tell us what we're looking at here on this chart. I mean, the daily COVID cases are now hitting 250,000.

David Sacks 1:00:52 300,000 a day, Jason, right now.

Chamath Palihapitiya 1:00:53 It broke 300? Oh, my lord. And the United States has gotten-

David Sacks 1:00:56 In India. In India.

Chamath Palihapitiya 1:00:56 ... down to, like, 50, 60.

David Sacks 1:00:58 Yeah, in India, our deaths-

Chamath Palihapitiya 1:00:58 Our deaths are under 800.

David Sacks 1:00:59 India has now passed the peak of the US. W- you know, India is now seeing more cases per day than any country has seen worldwide during the whole pandemic.... at over, um, you know, 300,000 a day right now, and it's, um, you know, it doesn't seem to be letting up. And we're now questioning whether it's testing that's the limiting factor in terms of reporting on these cases. So it's, uh, it's pretty nasty. Now there's a, um, a famous Indian politician who, uh, uh, who had been double vaxxed, uh, who claims that he is COVID positive as is his, um, mother and sister. And so it's also creating a little bit of a concern in the market about, um, you know, getting COVID. Now he doesn't seem to be having a severe case, um, which is, you know, one of the, the kind of important things to take note of i- in vaccination is, uh, is it's not necessarily binary, um, but it's certainly making a, a, a lot of, creating a lot of fear, uh, uh, as a result of his, um, kind of public statement about this.

Jason Calacanis 1:01:56 This isn't-

David Sacks 1:01:57 Um-

Jason Calacanis 1:01:57 ... just about cases either. Um, 30 days ago, they were at 200 deaths a day, and, uh, I mean, tragically, they're at 2,100. So it's 10Xed in 30 days. If it 10Xs again, tha- that's 20,000 people a day dying. This is a different level than any other country has experienced.

David Friedberg 1:02:16 Tragic.

Jason Calacanis 1:02:17 And they don't have-

David Friedberg 1:02:17 Look, at the end, at the end of the day-

Jason Calacanis 1:02:19 They don't have the h- the hospitals, hospitals to handle this, do they? This could become a, a crisis of epic proportions.

David Friedberg 1:02:25 A- at the end of the day, a country's success in battling COVID's gonna be about how fast they can get their population vaccinated. It's very simple, right? I mean, it... Israel was first. They got everyone vaccinated. Now their cases are down to almost nothing. The US is doing pretty well, although there's some room for concern. We were doing, you know, close to four million vaccinations a day. Now we're at, like, three, three and a half, where they're starting to slip a little bit. Um, which is not good.

Jason Calacanis 1:02:49 And that doesn't have to do with Johnson & Johnson, right? That has to do-

David Friedberg 1:02:52 No.

Jason Calacanis 1:02:52 ... with people not showing up for appointments.

David Friedberg 1:02:55 Yeah, and I think you gotta blame the media a little bit because they keep running all these vaccine scare stories about, you know, how this person or that person the vaccine punched through, and they got sick despite getting the vaccine. They keep selling-

Jason Calacanis 1:03:07 Fucking media.

David Friedberg 1:03:07 They keep selling all this, like, you know, COVID, um, scareient porn, you know, the, the, the fear porn.

Jason Calacanis 1:03:13 You're so right. Do you know what I noticed the other day on CNN? This is how insincere and, um, ratings desperate they are. When they put up their COVID stats, they put up cumulative cases and cumulative deaths. That's what they obsess on. And it's like, "Hey, dummies, we know what you're doing here. You're trying to scare people. You should show the graph of the deaths going down and then why can't you take your mask off if you're vaccinated and you're outside?"

David Friedberg 1:03:37 Right. Nate Silver-

Jason Calacanis 1:03:37 "Let's give a reward." You were talking about this last week, David.

David Friedberg 1:03:40 Yeah, N- Nate Silver had a really good tweet about this. He said that wearing a mask after you're vaccinated is now, it's like the, the blue equivalent of the red MAGA hat, where it's completely performative to say, "Hey, I'm on team blue." You know, even though, like, scientifically, it's meaningless. I, I... It's like the press, they keep talking about this possibility that even after you're vaccinated i- you could somehow, you know, tran- keep transmitting the virus to other people. Look, viruses, I mean, and Friedberg can explain this better than me, but viruses do not have in themselves the machinery for replication, right? They have to take over your cells, hijack your cells' machinery to replicate themselves. So first, they have to infect somebody. Then that person gets, you know, gets the virus, starts producing a lot of it. Then they start shedding it. If you don't get really sick, you're not gonna be shedding a lot of the virus. You're not gonna be transmitting it to a lot of other people. And, you know, they talk about this, this possibility as if it's, like, a real possibility that people could still be transmitting the virus after they're vaccinated. I mean, it's not a statistically relevant possibility.

David Sacks 1:04:43 Right. It comes down to this interpretation of everything being binary. And the reality is that all of this is on, um, you know, a, a, a, a statistical curve or on a kind of a gray scale. And, you know, uh, the... Sax's point is 100% correct, that the probability of someone who's been double vaccinated getting infectio- getting infected and then being infectious in a meaningful way is so remote, um, that it is not even worth kind of considering, uh, i- in a way. And, and being double vaccinated gives you such a significant... Typically, right? Not for everyone, right? All immune systems are different. And p- some of what we, we might be seeing is the difference in kind of how people develop immunity. Um, but it is such a rare case that one could have a severe infection after getting a, a, you know, a vaccination, um, is such that it, it, it shouldn't even be considered and kind of, you know, mentioned as being a reason for continuing to wear masks and not gather and not do things. And so, you know, we started out, as Sax pointed out, and I think this is such a true and important point, we started out with this, like, immediate politic- politicization of what's the right thing to do to reduce the spread of the virus, and then that became the mainstay for that political affiliation. And now the transition of the new world that we live in where most people are vaccinated, we have a better understanding of the science and the statistics and the mechanisms of transmission. We hold on and we grasp on to that initiating kind of belief system that was correct at the time, but isn't correct anymore. And it seems so difficult to get people to shift their mind. This kind of, um, this behavior is an ignorant behavior, and you see it in so many manifestations, um, uh, right now, uh, in particular with respect to masks and behavior after vaccination and so on. Uh, and it's, uh, it's really brutal to watch. Um, but we obviously digress a bit from the Indian, uh, circu- the India circumstance, which is, uh, a really nasty one. So it looks like-

Jason Calacanis 1:06:36 But why, why now and not a year ago?

David Sacks 1:06:38 You know, it's, it's not clear, right? So there's, um... Someone, uh, uh, provided a, a, an indication today that there may be as many as, uh, somewhere between 100 and 200 unique variants, uh, that, that we're seeing emerge in India. So there may be a, a, a lot of interesting varia- interesting technically, but not obviously for, for human life, but a lo- a lot of dramatic, um, variants or significant variants, uh, that might be increasing the, uh, the infectiousness right now. Um, and, uh, and in particular, uh, you know, behavior has shifted in a way that's enabling, you know, some of these transmissions to occur. You know, a lot of people let their guard down and so on in a way that maybe they weren't six months ago. Um, and, uh, you know, there may be some forced evolution associated with partial vaccination, uh-... totally a theory right now, where, you know, 110 million doses have been given in India so far. So, you know, in order for a virus to succeed, the viral variants that are going to infect more likely, um, you know, through a- a partially transmit- a partially vaccinated population are the ones that are winning out. So there's a lot of, you know, confounding factors here. We're not really sure. Um, but it is, uh, it is pretty brutal, um, what is, uh, what is going on. Um, I will say, like, this notion that vaccination does not prevent, uh, protection against variants is not a binary statement either. I- this is really, really important. I- I've been wanting to say this for a couple of ou- of our shows. When you get this vaccine, um, what you're doing is you're training yourselves, you're giving yourselves the RNA to print the spike protein, and that protein is now in your body. Everyone's immune system then reacts differently to create antibodies to that protein. The antibodies that Chamath makes and Jason makes and Sax makes and I make are all gonna be different. They're gonna-

David Friedberg 1:08:21 But if you had to pick, whose would be better? I mean, you'd probably-

Narrator 1:08:23 (laughs)

David Sacks 1:08:23 Yeah, I mean... (laughs) You could start with mine and then-

Narrator 1:08:24 (laughs)

David Sacks 1:08:24 I can tell you Sax is probably gonna be the worst off, but yeah.

David Friedberg 1:08:26 Jason's, Jason's are the most sluggish, for sure. They're the slowest.

Jason Calacanis 1:08:29 (sighs) Sure.

David Sacks 1:08:29 Yeah. But- but there are- there are likely tens of thousands of novel variants that our B cells will make that will f- that will bind to that spike protein and get rid of it. And we will each have many hundreds or potentially thousands of novel antibodies that our immune system will make. So keep that in mind. You now have a portfolio of antibodies that your body is producing to that spike protein. So now when- when a- when a COVID, uh, when a SARS-CoV-2 virus shows up in your body, some of those protei- some of those antibodies are gonna be really effective at getting rid of it. Some of them are not. Now, the protein in the SARS-CoV-2 virus changes slightly, some of the other antibodies you have are gonna