E49: Coinbase CEO reflects on controversial blog, state of the markets, 1000 unicorns & more

1. 0:00 – 19:27

   Brian Armstrong follows up on his one-year old blog post "Coinbase is a mission focused company"

   1. CPChamath Palihapitiya0:00

      Guys, my (censored) dog-

   2. JCJason Calacanis0:01

      He's in jail? Joker's in jail?

   3. CPChamath Palihapitiya0:03

      Joker got in jail again, okay? So he's been jailed in Italy. He was jailed in Palo Alto because-

   4. JCJason Calacanis0:08

      When will that dog learn? I've spent quality time with that dog.

   5. DSDavid Sacks0:11

      Wait, why did he get jailed?

   6. JCJason Calacanis0:11

      He's out of control.

   7. DSDavid Sacks0:12

      Why did he get jailed?

   8. CPChamath Palihapitiya0:13

      He got jailed because, because-

   9. JCJason Calacanis0:13

      He's a runner.

   10. CPChamath Palihapitiya0:13

       ... he went to... He's a runner. He's a runner. He's a track star. He, uh, the, the, we, he, we, we sent him to like, a, you know, like, the dog walker where he goes and runs around. And they c- come pick him up, but then they, the guy opened the van door (laughs) and he bounced out.

   11. DSDavid Sacks0:29

       (laughs) He took off?

   12. JCJason Calacanis0:29

       (laughs) Took off.

   13. CPChamath Palihapitiya0:29

       Anyways, he gets found. They, they're trying to call me, um, because I guess my number is on the t- thing, which I hadn't realized.

   14. JCJason Calacanis0:37

       You don't pick up?

   15. CPChamath Palihapitiya0:38

       Can't reach me. Well, I'm in, I'm in DC and New York. And, uh, they put them in the kennel, and we get this picture. And Nick, you can post the picture, but, you know, 'cause I sent it to you. Poor, poor Joker in dog jail.

   16. JCJason Calacanis0:48

       He's a great dog. Uh, the, but he is a, he is a runner, and-

   17. DSDavid Sacks0:51

       Wait, is he back? Did, did you guys get him?

   18. CPChamath Palihapitiya0:52

       Now he's back. We got him back. But he's back. He's out of jail again.

   19. JCJason Calacanis0:54

       Honestly, he's only gonna learn if he goes to jail, that dog.

   20. DSDavid Sacks0:56

       You should get a little tag for him, those little, uh, remote tracking tags.

   21. CPChamath Palihapitiya0:59

       Bro, that's not... Uh, I mean, it's great, but it doesn't stop him from escaping. (laughs)

   22. DSDavid Sacks1:03

       (laughs)

   23. DFDavid Friedberg1:03

       That dog, there's something wrong with that dog.

   24. JCJason Calacanis1:05

       (laughs)

   25. DSDavid Sacks1:05

       (laughs)

   26. JCJason Calacanis1:05

       Remember when he came home and Sax came over?

   27. DFDavid Friedberg1:07

       Yeah.

   28. DSDavid Sacks1:07

       And the dog was, like, growling at him, and Sax was like-

   29. JCJason Calacanis1:10

       (laughs)

   30. DSDavid Sacks1:10

       ... all hunched in the corner, like, with the... (laughs)
2. 19:27 – 33:04

   Authoritarianism on the left

   1. DSDavid Sacks19:27

   2. DFDavid Friedberg19:27

      I thought this was a really great article. Do you wanna explain it, Jacob?

   3. JCJason Calacanis19:29

      Yeah, I'll just give you a quick overview and then you can ju- dive right in since you put it on the docket. Psychiatrist and author, Sally Satel, uh, hopefully I'm pronouncing that correct, wrote an article for The Atlantic entitled, The Experts Somehow Overlooked Authoritarians on the Left. The main point here is that Trump's presidency sparked a ton of research and coverage of authoritarianism on the right, but mostly ignored the left with some researchers even suggesting that the left-wing, that we- left-wing authoritarianism isn't real. In an email to Satel, uh, a social psychologist from Rutgers said the following, "For 70 years, the lore, the lore in the social sciences has been that authoritarianism has been found exclusively on the political right." Why is that? One reason left-wing authority authoritarianism barely showed up in social psychology research is that most academic experts in the field are based at institutions where prevailing attitudes are far to the left of society as a whole. Sax.

   4. DFDavid Friedberg20:20

      Well, actually, Chamath put this on the docket, so-

   5. JCJason Calacanis20:22

      Oh, okay.

   6. DFDavid Friedberg20:22

      ... C- Chamath, do you wanna introduce what, what you liked about it?

   7. CPChamath Palihapitiya20:25

      The reason I saw this and I thought it was so interesting was basically, we had an entire body of research trying to understand why some folks are attracted to, um, these authoritarian figures like Trump. And overwhelmingly, all the research at the time said they only exist on the right. And, you know, you w... And all of this started after Hitler. And so there was all this research around the, you know, social and attitudinal, uh, reactions to Hitler and how he came to power and then all of the iterations of folks like him on the right afterwards. And so people put Trump in that category, and then they said it can only exist there. But as it turns out, when this person did this research, and she surveyed 7,000 people, and all of this data was very s- well summarized in this Atlantic article, which I'm sure we can post in the show notes that folks should read. Lo and behold, it actually exists on both sides. So, as it turns out, the extreme right and the extreme left are exactly the same. They're moral absolutists. They believe in themselves and themselves only, and they believe anybody else that's outside of where they are is fundamentally in the wrong. And if you actually look at that and see how Trump behaved in his presidency, and now how you see how the left names and shames, you factually find a lot of commonality. So, the, the reason I found that article interesting is that it actually says again what we've been saying, which is coming down the middle and finding, you know, reasonable compromise is the only way forward because the s- minute you start moving in either direction, you are the same, and that person is an ugly person that we don't want around.

   8. JCJason Calacanis22:07

      Let me give the money quote and then get your feedback. Freedberg. "The similarities in the study included," quote, similarities between authoritarianism on both sides, left and right, "Preference for social uniformity," check. "Prejudice toward different gr- different others, willingness to wheel group authority to coerce behavior, cognitive rigidity, aggression, and punitiveness toward perceived enemies, outsized concern for hierarchy," and as Chamath pointed out, moral absol- absolutism. Uh, Freedberg.

   9. DSDavid Sacks22:36

      I think authoritarian figures resolve when, um, uh, a population feels, uh, insecure. So, I mean, we talked about this last pod, but I do think that, um, you know, the notion of freedom emerges after the comfort of security has been provided. And I think the absence of security drives people away from the drive towards freedom. It's like when you have a feeling of insecurity with respect to kind of your ability to get a job. I mean, remember Hitler rose to power when unemployment, um, you know, post, uh, Weimar Republic was skyrocketing. People, you know, couldn't get jobs, they couldn't afford food. And the authoritarian figure was going to provide the security needed, I think, to resolve the concerns that the population had. And then, you know, people latch onto that. So, you know, there are moments in time when I think authoritarianism can emerge with different forms of resolution. It doesn't necessarily mean that the authoritarian actor needs to take a, a left or a right point of view. They're just gonna give you a path to security when you're feeling insecure. If you don't feel insecure, you're gonna say, "That's ridiculous." So, countries that are wealthy, countries that are privileged with the opportunities that maybe the United States has, are less likely and less inclined to fall in, in, you know, in favor of authoritarian leaders. Uh, and then as we slip backwards economically, unemployment-wise, et cetera, we're more likely to be, uh, uh, to be in favor of, of, of those sorts of actors.

   10. JCJason Calacanis24:08

       ... um, and so I think that, you know, we'll see them emerge.

   11. CPChamath Palihapitiya24:09

       Yeah, but don't, but don't you think it's crazy that we actually, uh, didn't think it could exist in one end of the political spectrum and now it does? Do you have any point in that or no?

   12. JCJason Calacanis24:17

       I never really understood the whole, like, Hitler as purely a right-wing guy. (laughs) Like, uh, he was a- a s- you know, a socialist and he was trying to enable, like, uh, you know, socialized services and socialized systems for people. You know, in, in a lot of political circles that would be argued as being a very kind of left point of view. Um, and so I- I don't know if it... Yeah, I- I- I, yeah.

   13. DFDavid Friedberg24:37

       L- let's go beyond, let's go beyond Hitler. B- uh, you're, you're right, the, the Nazi Party was a national socialist party, that's what, that's what it, the name of the party was. But there's also Stalin, Pol Pot, Mao. I mean, if you're paying attention in history, you know that there's been authoritarianism on the left, not just the- the right. And s- but, you know, in the universities, um, and in the media, they only wanna focus on the right-wing version of it. And I think what this study does is it upends 70 years of dogma that- that, you know, authoritarian- uh, authoritarianism is only to be found on the political right. I mean, this obviously can be found on the political left as well, and you can see that in cancel culture, in speech restrictions, in, uh, these, um, very aggressive COVID mandates that are now happening. You can see it in the, um, the sort of, the, um, the- the ghoulishness anytime somebody in the right, you know, uh, dies from COVID. I mean, there's- there's always some, uh, chortling on the part of the left about this. Um, the harsh penalties for non-compliance. I mean, right now-

   14. CPChamath Palihapitiya25:41

       Cognitive rigidity is the one that stands out for me. Like, there is just, on the left, they make a decision Amazon is bad and they cannot move off of that, right, David? Like, even if-

   15. DFDavid Friedberg25:51

       Well, what about, what about willingness to wheel group authority to coerce behavior and what about aggression and punitiveness towards perceived enemies?

   16. CPChamath Palihapitiya25:57

       Cancel culture. That would be cancel culture.

   17. DFDavid Friedberg25:59

       That, that to me is cal-

   18. CPChamath Palihapitiya25:59

       Saks, it- it-

   19. DFDavid Friedberg26:00

       Yes.

   20. CPChamath Palihapitiya26:00

       ... i- i- it begs a good question which is, um, what socialist regimes have come to power without an authoritarian figure? Has there (laughs) I'm just wo-

   21. DFDavid Friedberg26:12

       None.

   22. CPChamath Palihapitiya26:12

       Right, none, uh, I mean-

   23. DFDavid Friedberg26:13

       Well, like, gen- they're all revolutionaries.

   24. CPChamath Palihapitiya26:15

       Right.

   25. DFDavid Friedberg26:15

       And actually the- the study has a really good point about this, which is they- they say that, um, the researchers describe what they called anti-hierarchical aggression. So one of the traits of authoritarianism is- is, uh, they call it an outsized concern for a hierarchy. But, you know, l- leftists think that they don't believe in hierarchy, but actually they do, they believe in an anti-hierarchical hierarchy, which is they wanna turn upside down the social hierarchy and they're willing to justify, uh, the- the- the ends justify the means. In other words, if you can turn the hierarchy upside down, they'll let you do anything. And it's actually pretty scary, that's where the sort of, the revolution comes from.

   26. CPChamath Palihapitiya26:52

       Here's a practical thing, J-Cal, about what you said, which illustrates this point even further. Right now we have a three and a half trillion dollar bill, um, kind of meandering, um, through Congress and, you know, it's very much a question mark about whether it gets passed or not. And one of the elements that's in there is free community college. Now, when it passes, if it passes, um, there's a lot of support that that's something that the government should do, it's a good thing. But if you're a private company like Amazon who just announced that they will give you free college, they're still a bad company. And- and this is the example of this intellectual rigidity that doesn't actually see the forest from the trees. What do you really want? Do you want the process where you control and you meter out progress? Or do you actually want the outcome where somebody can get a job where they make $15 or $20 an hour and also now get college paid for?

   27. JCJason Calacanis27:48

       Yes, it would be much better.

   28. CPChamath Palihapitiya27:49

       I personally want the latter.

   29. JCJason Calacanis27:50

       Yeah. Yeah, we'd much better if the government-

   30. CPChamath Palihapitiya27:51

       I want both.
3. 33:04 – 45:51

   Newsom's new vaccine mandate, NBA vaccine coverage, Merck COVID pill

   1. DFDavid Friedberg33:04

      that just announced by a pre- press conference, Gavin Newsom is now implementing mandated COVID vaccines for all public K through 12 schools in California starting this fall.

   2. JCJason Calacanis33:14

      Wait, wait. These students?

   3. CPChamath Palihapitiya33:16

      Yeah. All, all eligible kids in all, in all public schools need to get vaccinated.

   4. BABrian Armstrong33:20

      In all public schools, in order to go to school in California, you have to have a vaccine.

   5. DFDavid Friedberg33:24

      I mean, kindergarten?

   6. JCJason Calacanis33:26

      Wow, how do we feel about that?

   7. CPChamath Palihapitiya33:27

      Well, I mean, they're not eligible yet.

   8. JCJason Calacanis33:28

      If it's...

   9. BABrian Armstrong33:29

      When they're eligible, yeah.

   10. DFDavid Friedberg33:30

       They're... th- they're, they're going to be eligible very soon. I mean, look, I, I, I... I... so, so we have a 13-year-old, an 11-year-old, and a five-year-old. The 13-year-old, uh, got vaccinated. She wanted to. We supported it. The 11-year-old wasn't eligible. She didn't get a vaccine. She got COVID. For me, it was a mild case. And our five-year-old isn't eligible for the vaccine. He never got COVID. Now, if, if and when a new vaccine comes out that our five-year-old is eligible, I don't think he needs it. I mean, I'm not anti-vax. I mean, I'm glad I got the vaccine. I'm glad, you know-

   11. JCJason Calacanis34:01

       Is he going to school? Is he going-

   12. DFDavid Friedberg34:02

       My 13-year-old got the vaccine. Yeah, he goes to school.

   13. JCJason Calacanis34:04

       But I guess the question is, do you... i- if it is safe, do you want them going to school, catching it, spreading it, and do you want them to not have to wear a mask because-

   14. DFDavid Friedberg34:11

       H- how can you say conclusively, uh, what's safe for a five or six-year-old at this point in time?

   15. JCJason Calacanis34:17

       It's a... it's a little hard. Their bodies are developing and, yeah, you need some time to know.

   16. DFDavid Friedberg34:20

       I mean, do we really need to mandate this? I mean, why, why can't parents make up their own decision?

   17. JCJason Calacanis34:24

       Because of other people in society who would be impacted is the thinking, yeah.

   18. DFDavid Friedberg34:27

       I mean, you, you also see this... You know, look, I, I think, I think vaccines maybe are a complicated debate because vaccines do actually p- provide protection. Let's talk about these mask mandates, which I supported at the beginning of the pandemic because it's all we had to fight it, but you take an example like San Francisco, still has these stringent mask mandates.

   19. JCJason Calacanis34:44

       (laughs)

   20. DFDavid Friedberg34:44

       The mayor of London, Breed, was caught out at, um, a club-

   21. JCJason Calacanis34:47

       Dancing, singing, screaming. (laughs)

   22. BABrian Armstrong34:49

       At a club.

   23. CPChamath Palihapitiya34:49

       But in fairness to her, it was Tony, Toni, Toné. I mean-

   24. JCJason Calacanis34:51

       Yeah, I mean, (laughs) that's what she said-

   25. CPChamath Palihapitiya34:53

       That's pretty-

   26. JCJason Calacanis34:53

       ... as her defense.

   27. CPChamath Palihapitiya34:54

       You know.

   28. JCJason Calacanis34:54

       She was like-

   29. CPChamath Palihapitiya34:55

       She was basically like, "It's Tony, Toni, Toné, guys. What do you want me to do?"

   30. JCJason Calacanis34:57

       Yeah. I mean, I don't care. I'll risk the COVID. (laughs)
4. 45:51 – 57:45

   Golden Age of VC, 1000 unicorns & the impact on private/public markets

   1. DFDavid Friedberg45:51

      Okay, well, I th- there was, uh, there was a great article in the Wall Street Journal over the past week called, um, University Endowments Mint Mint Billions in the Golden Era of Venture Capital. It's basically talking about, I mean, these, these university endowments are, are, like, gaining 50% year over year. There's been, like, nothing like it before. There's so many unicorns being created. There's, and if you, there's a separate article in, I think PitchBook as well about the rate of unicorn-

   2. JCJason Calacanis46:13

      Crunchbase? Yeah.

   3. DFDavid Friedberg46:14

      Or Crunchbase, yeah, that the rate of unicorn creation, I think last year it was, like, one every few days. Now it's, it's more than one a day.

   4. JCJason Calacanis46:20

      Bonkers.

   5. DFDavid Friedberg46:21

      And so, you know, we're getting multiple unicorns now created every day this year. It's just this golden era of VC, this engine of wealth and prosperity creation. So that's the good news, and, and to connect this to a point we were talking about earlier, if the, the radicals on the left would just allow the golden goose to keep laying golden eggs, we're gonna have enough wealth and prosperity to pay for all these progressive programs in the long run, but they're not willing to wait. And so you have in Washington, for example, I think, um, a political program that really could upset the apple cart. I mean, you're talking about a $3.5 trillion reconciliation bill. It'll probably get brought down to somewhere between one and a half and two. Then you got a $1.2 bil- trillion dollar infrastructure bill. They've already spent 1.9 trillion on a COVID relief bill. This is after the six trillion from last year.

   6. JCJason Calacanis47:13

      What would you do? What would you advise should be the amount spent?

   7. DFDavid Friedberg47:16

      Well, okay, good question. So last year the federal government generated record tax receipts, the most revenue it's ever raised, and it was about 19.5% of GDP. When Bill Clinton left office, he bros- boasted about the fact that government spending was only 18.5% of GDP. Last year it was about 30% of GDP. My theory on this is that if you have, uh, government spending as a sh- you know, share of the economy at around 20% from a tax esp- spending standpoint, things basically work, okay? But as you try to go up to 25 and 30%, it starts to break. You have too much deficits and debt, too much money printing, too much taxation, too much inflation. You become more brittle and you start to, you basically are, you know-

   8. JCJason Calacanis48:07

      Unhealthy.

   9. DFDavid Friedberg48:08

      You're killing the golden goose, and so, you know, all we have to do is let the economy keep ripping. 20% of it is gonna, is gonna be government share, and you'll be able to fund more and more progressive programs over time as society gets richer. And by the way, this, this, um, prosperity that's being created in the tech ecosystem, it's available to anybody who has a good idea. I mean, this is not... So, so as we all know, so it's not just government that's creating advancement and, uh, economic opportunity for disadvantaged people. The tech economy is creating it as well. And what I worry about is, is why are we taking so much risk?... and upending this whole system that is working quite well.

   10. JCJason Calacanis48:51

       Well, the other thing is, this is all in the face of there being 11 million open jobs. There's 1.4 jobs for everybody who's unemployed, so the idea that in some way society's broken and people can't be employed, now these-

   11. DFDavid Friedberg49:04

       Right.

   12. JCJason Calacanis49:04

       ... might not be the greatest jobs in the world-

   13. DFDavid Friedberg49:05

       There's only, you're right, there's only four million, there's only four million people looking for work, there's 11 million outstanding jobs.

   14. JCJason Calacanis49:09

       Yeah. Uh, I mean, it, it is bonkers. Friedberg, uh, do you think this is sustainable? What are your thoughts on spending and turning over the apple cart, as Sachs would say?

   15. DSDavid Sacks49:19

       The longer you guys have me on this podcast, the more likely it is you guys are gonna unmask me as a die-hard libertarian. Um, I will not let my tendencies, um, you know, come out in full force. Uh, the, the spending is ridiculous and there's a lot of waste, so, I mean, I'll just leave it at that. What I think is interesting, though (laughs) is this unicorn creation system, um, this unicorn creation machine, you know, it's worth highlighting because I think that that Crunchbase article showed that these unicorns in aggregate were worth, like, what, $1.5 trillion or something. Um, and those... so those are all private companies-

   16. DFDavid Friedberg49:53

       $3.4 trillion. 3.4 trillion.

   17. DSDavid Sacks49:55

       3.4 trillion, yeah.

   18. JCJason Calacanis49:56

       So, is that the amount of both bills? (laughs)

   19. DFDavid Friedberg49:59

       3.4 trillion is the total market cap of all the private unicorns, not just in the US but the world. And right now in Washington they're talking about a $3.5 trillion reconciliation bill, same size. Can you imagine governments spending basically the entire value of the tech ecosystem in one year? It's bonkers.

   20. JCJason Calacanis50:17

       Right.

   21. DSDavid Sacks50:17

       And so this... The... But by the way, I mean, like, I think that that 3.5 trillion, you can kinda think about that as being the future economy of ... the, the future global economy, right? So, the entire, uh, I just pulled up the latest, uh, quarterly stat, but the entire, uh, market cap of public US companies, uh, today stands at $47 trillion. The top 500 are about $38 trillion. So, you know, these private companies that are kind of the emerging tech companies are, you know, call it 10% or, you know, 8%, uh, of, uh, of all-

   22. CPChamath Palihapitiya50:48

       Today. Today.

   23. DSDavid Sacks50:49

       ... all public pub- ... today, of all public companies today. And, you know, it used to be that technology companies started in Silicon Valley, sold technology to traditional industries. What's happening in Silicon Valley today and over the last 10 years or so is that technology, quote-unquote, companies are becoming the next industrial companies. They are replacing the traditional industries-

   24. JCJason Calacanis51:10

       Profound insight.

   25. DSDavid Sacks51:11

       Right?

   26. JCJason Calacanis51:11

       Profound insight.

   27. DSDavid Sacks51:12

       And so this is like what we saw, you know, Airbnb is a hotel chain without hotels, Uber is, you know, a transportation company without vehicles.

   28. JCJason Calacanis51:20

       DoorDash.

   29. DSDavid Sacks51:21

       DoorDash. But, but even more importantly, there's an entire emergent class of life sciences companies, of, of novel hardware companies, and these businesses are leveraging their core technology competence to create an advantage in replacing an old model of doing industry.

   30. JCJason Calacanis51:37

       Yes. They're not selling into the old school companies.
5. 57:45 – 1:06:36

   Corporate tax reform, Roth IRAs & the "Peter Thiel Provision"

   1. CPChamath Palihapitiya57:45

      selling stock.

   2. DSDavid Sacks57:45

      By the way, by the way, one other point I'd make, Chamath, like, you, you said that, you know, we should tax the, the, the wealth creation and distribute it. There's another way to get that redistribution of wealth, which is to enable access to the investments earlier by public pension funds, by the endowments, by the places where people... by the retirement funds-

   3. CPChamath Palihapitiya58:04

      Yes.

   4. DSDavid Sacks58:04

      ... where, you know, a broader swath of the population, you know, have savings sitting. And we've-

   5. JCJason Calacanis58:09

      Change the accreditation laws.

   6. DSDavid Sacks58:11

      We've, we've, we've historically kind of forced the narrative that everyone in the United States needs to have a home and have 80, 90% of their wealth tied up in a piece of real estate, and then we end up with these massive kind of inflationary bubbles to keep that value, that book value kind of growing for them. The reality is, if that money was put more productively into building businesses via retirement funds that had access to venture capital, the public pension funds already do, but they should... they probably underallocate to venture capital today relative to where they're putting their, their overall funds.

   7. JCJason Calacanis58:37

      And we, we talked about the endowments are crushing it.

   8. CPChamath Palihapitiya58:39

      Well, look at, look at the returns.

   9. DSDavid Sacks58:40

      But that's, that's another way, by the way. If that was the model, you wouldn't need to tax, right? You, you could basically-

   10. DFDavid Friedberg58:43

       Well, by the way, one of the brilliant provisions in this reconciliation bill is they're actually disallowing retirement funds to invest in alternative assets, including startups and, and, um-

   11. DSDavid Sacks58:54

       Insane.

   12. DFDavid Friedberg58:54

       ... venture capital funds.

   13. DSDavid Sacks58:55

       Insane. That is so wrong.

   14. CPChamath Palihapitiya58:57

       What?

   15. DSDavid Sacks58:57

       So frigging wrong.

   16. DFDavid Friedberg58:58

       Yeah.

   17. JCJason Calacanis58:59

       What?

   18. DSDavid Sacks59:00

       That is insane.

   19. DFDavid Friedberg59:00

       That's in there. That's in there.

   20. JCJason Calacanis59:01

       They literally are taking pension funds and saying, "You can't have access to the-"

   21. DFDavid Friedberg59:07

       No, no, no. Y- you as an individual through a 401 (k) or IRA-

   22. DSDavid Sacks59:11

       IRA. Uh-huh.

   23. DFDavid Friedberg59:12

       ... cannot invest in alternative assets.

   24. JCJason Calacanis59:14

       Oh, well, that's the Peter Thiel rule, right?

   25. DFDavid Friedberg59:15

       P- Yes, partly, in response to that. But the-

   26. JCJason Calacanis59:17

       Well, they should just make it a cap. Don't you think they should cap Peter Thiel's, um, uh-

   27. DFDavid Friedberg59:22

       I think... I-

   28. JCJason Calacanis59:23

       ... massive gain?

   29. DSDavid Sacks59:23

       Why? Why cap anything? Who's to- Who's to set this up? So, so-

   30. JCJason Calacanis59:26

       Well, because it was against the spirit of it. The spirit of the Roth-
6. 1:06:36 – 1:23:51

   Chances of a VC bubble, why notable VCs are retiring, building a modern venture firm

   1. DFDavid Friedberg1:06:36

   2. JCJason Calacanis1:06:36

      Chamath, what do we think of the number of unicorns being created in the private markets? Obviously, when a company hits unicorn status, I think they're going to start buzzing around and maybe, uh, knocking on your door and SPACs and boards might start thinking about that. These companies sometimes have $10 million, $30 million in revenue, $50 million in revenue, and they're becoming worth a billion dollars. Do these valuations make sense writ large? And are you concerned that this is a bubble?

   3. CPChamath Palihapitiya1:07:02

      I don't think there's a bubble.

   4. JCJason Calacanis1:07:03

      Okay. Explain why there's not a bubble in early stage private companies.

   5. CPChamath Palihapitiya1:07:07

      Well, I think it's because of what we just talked about, which is that these companies, by and large, are growing at incredibly fast rates and they are replacing legacy incumbents that are growing very slowly or not at all w- with... and who, who have basically won for a long time with inferior products.And so as these superior products with more nimble organizations, um, get capitalized to go to market, they're just gonna win. And so I think what we're seeing is a wholesale replacement of the economy, from the old to the new. And so that's why these companies will do well. And I think it's going to be a, a, a really powerful force in the world because, like, the world should be a little bit more efficient and fairer when you have all this modern technology working on your behalf. So I'm a real supporter of all of this. I think there's going to be even more, and I think, you know, the, the thing that we have to be comfortable with is whenever something goes from a fringe thing, which is what venture capital was, Jason, when all of us were, you know, first in Silicon Valley 20 years ago, to, you know, today in 2021, we're sitting here. Uh, this is going to become a fundamental part of the economy, and when that happens, uh, there'll be more and more money. The returns won't be as good. That'll be okay, but there'll be a lot of progress. And so, you know, we're going through the same transition that private equity did-

   6. JCJason Calacanis1:08:33

      Yep.

   7. CPChamath Palihapitiya1:08:33

      ... in the '80s and '90s, that venture ca- that hedge fund went through in the 2000s.

   8. JCJason Calacanis1:08:36

      Did you see all the different venture capitalists who are retiring? Bijan from Spark, the kid from, uh, Lightspeed, bunch of other folks. Obviously, our friend Bill Gurley-

   9. DFDavid Friedberg1:08:45

      The kid.

   10. JCJason Calacanis1:08:45

       ... is stepping back.

   11. DFDavid Friedberg1:08:46

       (laughs)

   12. JCJason Calacanis1:08:46

       Why did you call me, "The kid?"

   13. CPChamath Palihapitiya1:08:47

       Jeremy, Jeremy Lin is 50. He's 50.

   14. JCJason Calacanis1:08:49

       Yeah, that kid from-

   15. DFDavid Friedberg1:08:50

       Wait, am I doing something wrong here? I'm, like, busy creating a venture firm at age almost 50, and all these people are mature-

   16. JCJason Calacanis1:08:56

       You're on the wrong, you're on the wrong side of this distribution curve, Sax.

   17. CPChamath Palihapitiya1:08:57

       Well, I mean, so what, what, what do we think is behind this? They just made too much money and they're pulling back?

   18. JCJason Calacanis1:09:00

       They made a ton of money.

   19. CPChamath Palihapitiya1:09:02

       I, I think-

   20. JCJason Calacanis1:09:02

       Or is it because it's too competitive now and it's too hard?

   21. DFDavid Friedberg1:09:04

       And they're moving to, they're moving to Wyoming.

   22. CPChamath Palihapitiya1:09:06

       I would say it's slightly different than this. I don't know, I don't know the, th- Uh, I mean, I know all of those guys, uh, but I don't know what their motivation is. But what I would say is, I tend to think that the mindset of venture has a relatively short half-life, and I think it's about 15 years.

   23. JCJason Calacanis1:09:23

       Hm. Why?

   24. CPChamath Palihapitiya1:09:24

       And I think that there is a ... And because, you know, company building is roughly a 10-year arc, you know, like when you get into something early. And so I, I, I think that there is, like, a, a newness whenever you start. I don't think it matters what your age is, and then there is this sort of like, uh, death march that sets in by year eight or nine, and then you try to see it through to returning the capital and making sure all the employees and, and, uh, founders you've been invested with land the ship. And I- And I think what these guys did was get to that place and say, "Okay, I've had this 15-year beautiful arc. Do I want to do another 15-year arc?" And for a lot of people, um, it won't make much sense. And then, also, I think your patience to do it goes away, right?

   25. JCJason Calacanis1:10:13

       Yes.

   26. CPChamath Palihapitiya1:10:14

       Because it's like... You, you guys know what it... We- We all know what it's like.

   27. JCJason Calacanis1:10:16

       It's exhausting.

   28. CPChamath Palihapitiya1:10:17

       It is exhausting. It's grinding.

   29. JCJason Calacanis1:10:18

       It's exhausting. The amount of drama I'm dealing with right now in my portfolio is bonkers. The, the, the bad... I don't know if you're seeing this, Sax, but the amount of shenanigans, bad behavior, fraud, uh, lying, backstabbing is at an all-time high.

   30. DFDavid Friedberg1:10:33

       That would be your portfolio, JCal.

Episode duration: 1:28:59