E58: November's CPI, preparing for a downturn, macro outlook, Better.com's botched layoffs & more

1. 0:00 – 7:11

   Bestie Intro: Chamath's happy hour and sweater feud

   1. CPChamath Palihapitiya0:00

      Actually, it's a funny story from the, from Art Basel. So I was hanging with, with J-Cal, and we're talking to Beeple.

   2. JCJason Calacanis0:06

      Yep. Great guy.

   3. CPChamath Palihapitiya0:07

      And for some reason, J-Cal was being nice to me and he said to Beeple, he said, "Do you know who this guy is? This guy is a legend in Silicon Valley." You know, he introduces me.

   4. JCJason Calacanis0:16

      Yeah.

   5. CPChamath Palihapitiya0:17

      And then I said to Jace, I'm like, you know, "This is Beeple." And he, who just sold like two $60 million, like, NFTs.

   6. JCJason Calacanis0:23

      Yeah.

   7. CPChamath Palihapitiya0:23

      I'm like, "This guy's a legend too." And without missing a beat, J-Cal says, "Well, maybe for the next year."

   8. NANarrator0:31

      I'm going all in. Let your winners ride.

   9. JCJason Calacanis0:37

      Rain Man David Sachs.

   10. NANarrator0:38

       I'm going all in.

   11. CPChamath Palihapitiya0:41

       And I said-

   12. NANarrator0:41

       We open sourced this to the fans and they've just gone crazy with it.

   13. JCJason Calacanis0:45

       Love you, bestie.

   14. NANarrator0:46

       Queen of Quinoa. I'm going all in.

   15. JCJason Calacanis0:49

       Hey, everybody. Welcome to episode 58 of the All In podcast. Yes, the podcast. I don't know if you guys have been watching the stats.

   16. DFDavid Friedberg0:58

       I'm drinking, boys. I'm drinking.

   17. JCJason Calacanis0:59

       Well, it's uh, Friday. We're, we're filming late on a Friday. You can tell from the backyard, uh, behind Chamath-

   18. DFDavid Friedberg1:05

       Mm, delicious.

   19. JCJason Calacanis1:05

       ... that it's the evening and he's cracked open a little something something.

   20. DFDavid Friedberg1:09

       A little, a little, little delishy poops. Little poops.

   21. JCJason Calacanis1:11

       Oh.

   22. CPChamath Palihapitiya1:11

       Oh, Bond?

   23. DFDavid Friedberg1:13

       2002 St. Eden.

   24. JCJason Calacanis1:15

       Hm. Hm.

   25. CPChamath Palihapitiya1:17

       That's a, that's a label of Bond, correct?

   26. DFDavid Friedberg1:20

       Yes, sir. Bond St. Eden 2002.

   27. JCJason Calacanis1:23

       Oh, very nice. Uh, thanks for the invite. I'll be right over.

   28. CPChamath Palihapitiya1:25

       (laughs)

   29. JCJason Calacanis1:27

       Uh, uh, episode 58 last week, episode 57 peaked at number 40 episodes in the world, so thank you to the fans. Uh, we broke 125,000 subscribers on YouTube and, uh, the pods over there are getting 150,000 views. So thank, just thank you to the fans. A lot of questions about the All In summit. I went to see the locations when I was in Miami. We've got the location we want, we're working on dates, and you'll have more information soon about that. Uh, so welcome back to the program. With us today, as always, is the sultan of science, the queen of quinoa himself, David Friedberg, the Rain Man. Yeah, he's definitely back from Art Basel. Of course, he went to Art Basel and I don't know if he bought any art, but I was on his boat with him, uh, or his rented boat. David Sachs and I were on a boat and-

   30. DFDavid Friedberg2:14

       Ooh, a rented boat? Wow.
2. 7:11 – 23:05

   Breaking down the new 6.8% CPI number, reflecting on old inflation takes, jobs report, understanding why CPI is misleading

   1. JCJason Calacanis7:11

      Uh, CPI, the past three months, today was 6.8 year of a year. It's the largest increase since 1982. We're getting back to the post Jimmy Carter era, uh, and when Reagan got in there, inherited that mess. September was 5.4, October 6.2, November 6.8 points up 0.6 or approximately 10% over October, 1.4% over September, and, um, here's the chart, uh, for those of you watching, uh, on the YouTube channel. This all started in March of 2021. That was the first month where the CPI rose over 2%. And who was wrong on inflation? Well, the Fed Chairman Jerome Powell called it transitory numerous times over the past two years, Treasury Secretary Janet Yellen. Uh, in her senate confirmation hearing in December of 2020, Yellen said she believed the Fed and Biden admin could take advantage of interest rates being near zero and spend more on stimulus. Economist Paul Krugman thought it was transitory in his op-ed, How Not to Panic About Inflation. That did not age well. "Are businesses actually starting to set prices and wages based on the expectation of high future inflation? If they aren't, and my bet is they won't be, then the lesson of 2010 to 2011 will remain. Don't panic." My God, he could not have been more wrong. Who's right on inflation? Jamie Dimon in March, "I would suspect there is a pretty good chance you're going to see rates going up and people are starting to worry about that." The American public, specifically Gen Z, has been on top of this issue. Uh, 77% of Americans were either somewhere or somewhat or very concerned about inflation back in March. And Gen Z, uh, people aged 18 to 24 had the highest rate of very concerned about inflation at 52%. Larry Summers also got this right. Sax, what are your thoughts on inflation, which now seems acute and permanent?

   2. CPChamath Palihapitiya9:05

      Right. Well, it's definitely not transitory. Um, remember when it was at about 5.1% over the summer that the administration said, "No big deal, this is transitory, don't panic." Um, then it went to 6.2, now it's 6.8, looks like it's headed to 7%. And the, the real problem here is that these guys, the administration have not adjusted course in light of this data. What they've tried to do instead is now speciously claim that the same bills that they had written and conceived, the Build Back Better bill, somehow, even though it was conceived at a time, uh, that was really deflationary, that somehow this is going to fight inflation and they're essentially repurposing, they're just changing their arguments they're using as opposed to changing their, their legislative priorities. And just today, we got a report from CBO saying that this Build Back Better bill wasn't gonna cost two trillion like the administration said, it's going to cost five trillion and add three trillion to the deficit.

   3. DSDavid Sacks10:00

      Over 10 years, correct?

   4. CPChamath Palihapitiya10:01

      Over 10 years if those programs are not sunsetted. So there's a bunch of budgetary gimmicks that were put in the bill. Basically, a lot of the programs would sunset after one year or three year or six years. And so that's the only way they've gotten it to this, you know, $1.9 trillion price tag. The reason why that's a gimmick is because once the programs are created, there's gonna be... it will create a special interest or constituency who is now dependent on those programs and no one's ever gonna want to cut them. Milton Friedman's, Milton Friedman famously said that there's nothing quite so permanent as a temporary government program. So that is the game that progressives are playing, is they're going to create the dependent, the dependency, the constituency who, once they receive the program, is never gonna want to give it up. And they're counting on the fact that these programs will not sunset, which means they will cost five trillion and it will add three trillion to the, to the debt, um, to the deficit. So, you know, the problem is, it'd be one thing if we were in a deflationary environment, if the economy was in the tank, but th- these guys are continuing to pump more and more stimulus into an economy that has enough. And really, Larry Summers made this point all the way back in February. I think this is worth reading what he said. He said, "There's a chance that macroeconomic stimulus on a scale closer to World War II levels and normal recession levels were set off inflationary pressures of a kind we have not seen in a generation." He said this in February. Everyone in the administration dismissed him. All the, uh, liberal economists that you mentioned basically derided him. He turned out to be exactly right. And he was just saying this about the, the one point... The roughly two trillion they passed back in February for, of COVID stimulus and, you know, since then, they passed 1.2 trillion for infrastructure and now it's this another five trillion for Build Back Better. So, you know, the, the real problem here is that they are not adjusting course in light of this data that keeps coming out that inflation is a bigger and bigger problem.

   5. DSDavid Sacks11:55

      So what's the right thing to do in your mind, Sax? And then we'll go to you, Chamath.

   6. CPChamath Palihapitiya11:58

      Well, Elon said it, "Can this bill. We don't need it." This is not what Biden was elected to do, you know? He was e- elected to provide normalcy, stop the chaos, and he, he never got a mandate for this kind of, you know-... whatever, $10 trillion in taxes spent.

   7. JCJason Calacanis12:13

      Well, I mean, we've been wanting to do an infrastructure bill for a long time, but we didn't, that was prior to pumping so much stimulus into the system, so-

   8. CPChamath Palihapitiya12:21

      If he'd just done the infrastructure bill and not the Build Back Better, it would have been one thing, um, but we're, this is basically the- the third hyper-stimulatory bill that- that they've sought to pass. First they did the COVID relief bill at a time when really the economy didn't need that stimulus. I mean, Dragomir-

   9. JCJason Calacanis12:38

      Right, and then just dovetailing this-

   10. CPChamath Palihapitiya12:40

       Yeah.

   11. JCJason Calacanis12:40

       ... and we can get Chamath involved in this, is the jobs report, uh, November nonfarm- farm payrolls increased only 210,000 they expected it to be 573,000 so it's a big miss. However, kind of a missed bag because there's over 11 million job openings and we're now at 4.2% unemployment rate, which is the lowest, which- which is getting towards the pandemic lows and, you know, this is like before the 2008 financial crisis. Chamath, how do you reconcile inflation along with this crazy bizarre job situation where people will not go back to work, people are planning on resigning, there continues to be resignations and there's too many job openings, and people are raising salaries and still can't hire people?

   12. DFDavid Friedberg13:20

       Well, I think we did a pretty good job of unpacking the great resignation, I think it was last pod. So right, remember like-

   13. JCJason Calacanis13:27

       Yeah.

   14. DFDavid Friedberg13:27

       ... there are three structural issues at play in the jobs front. One is that you have this really meaningful under-immigration that's happened because of Trump. The second was you've had a big mismatch between the degreed classes in America and the jobs that they can have for what they think they should earn, meaning you go to school, you get into all this debt, you try to become a teacher or something, and then you realize you can make more at an Amazon warehouse. Crazy.

   15. JCJason Calacanis13:57

       Strange.

   16. DFDavid Friedberg13:58

       And then the fourth is you have all these boomers with an enormous amount of savings, 30, 40, $50 trillion, who are pulling forward their retirement and also subsidizing their kids. You put it all together, there's less of an incentive to be in the job force unless you pay higher wages. Now, let's just put a pin in that for a second. I think the thing that Sax talked about is really important, which is that we have to really figure out whether inflation is transitory or it's persistent and it's here. And I just want to bring up, I'll, Nick, I'll send you these texts, uh, these, the- the Twitter links to this, but Bill Ackman tweeted out these two things today, which is that if you-

   17. JCJason Calacanis14:34

       Fan of the pod.

   18. DFDavid Friedberg14:35

       Brilliant investor, by the way. Uh, great human being, brilliant investor. Two very specific things. He actually called out something that we've, we also mentioned before, which is that CPI is horribly calculated and it's really imprecise, and if you unpack CPI, there's something-

   19. JCJason Calacanis14:54

       Consumer price index.

   20. DFDavid Friedberg14:54

       The consumer price index. There's something in there, a component of it, that's very important, which is called the owner's equivalent rent, right? How much can somebody basically charge rent to other people? The way that they calculate that, which is 30% of the, um, uh, 30% of the calculation, is they just survey a handful of people. The problem is, you don't need to survey because the actual exact data is available from single family rentals that report this number.

   21. JCJason Calacanis15:25

       Mm.

   22. DFDavid Friedberg15:25

       So their survey showed basically a, uh, much, much smaller increase than what the actual increase is. And let me just give it... So the largest owners of nationwide single family rentals are reporting a 17% year over year rent increase.

   23. JCJason Calacanis15:43

       Wow.

   24. DFDavid Friedberg15:43

       The- the OER that was calculated, quote unquote, by survey in the CPI was 3.5%. If you flow that through, it means that core CPI actually went from 4.9% today to actually 9%. And the CPI print, which was 6.8%, was actually 10.1%. So it just goes to show you, we have sources of data that the government is not in a position to collect or measure. We have horribly inaccurate econometric models that we use. You know, you know that phrase sort of shit in, shit out? So unfortunately, you get very bad-

   25. JCJason Calacanis16:23

       Garbage in, garbage out.

   26. DFDavid Friedberg16:24

       ... usage, you get very bad, crappy data, and now all of a sudden we're printing numbers, we're supposed to make policy against those numbers, but the numbers that underlie this decision-making is fundamentally flawed and it's flawed in the wrong direction.

   27. JCJason Calacanis16:36

       Okay, let's bring Friedberg in. Friedberg, what- what do you think is happening here vis-a-vis, uh, also the creation of companies and entrepreneurship? Because one of the weird things that's occurring is we're starting to hit a record number of LLCs, S Corps, C Corps being created. It seems like a lot of people are becoming freelance nation, uh, hundreds of thousands of new companies during the pandemic were started.

   28. DSDavid Sacks16:57

       That is probably one of many places where the water is flowing when you fill my cup and it shall overfloweth. Um, I was talking to a guy this week who has a-

   29. JCJason Calacanis17:11

       Juicy Smollett? (laughs)

   30. DSDavid Sacks17:12

       No, it's not that upsetting.
3. 23:05 – 40:12

   How growth stocks got overblown, current valuation outlook, government as capital allocators

   1. JCJason Calacanis23:05

      listen. Uh, I did a little bit of math. I've been watching, um, the, uh, price to sales ratios of some of the top companies. We can pull this up on the screen. Um, and the price to sales of, uh, companies, including Zoom, obviously, was ridiculous, uh, during the pandemic. That was a pandemic stock. So on top of all of this money being printed into the system, you had the participation of a bunch of stonk traders, you know, and that whole movement buying up meme stocks or others. We had the price sales ratio of Zoom. In other words, the value of the enterprise versus their actual sales was at 123. It's now at 14.7. Peloton was another one of those at 23, now down to three X, down 87%. Coinbase, uh, Square also. Uh, it drops off pretty significantly here. Um, but you can also, we looked at the peak price to sales, um, and how much larger it is then. And so some of these are now off eight X, four X, and then it drops off to two X, one X. Um, but it quite a, I- I don't know if you guys are looking at the numbers or if you have any thoughts on this, but we're re- it seems like there was a mispricing of certain equities, and now- It wasn't a mispricing. The Federal Reserve.

   2. DFDavid Friedberg24:24

      ... forced a lot of institutional investors to be out as f- long dated as possible, uh, in buying earnings because if you... You have to remember, it's not just that real rates were effectively zero, but if you wanted to own inflation-protected securities, it was actually a negative yield. So we were destroying people's savings. And there are a lot of individuals... Sorry. Well, not individuals, institutions that must own some of these inflation-protected assets, so we were already in a negative yield environment. What are those folks supposed to do if they have to fund an 8% return a year to pay the pensions of, you know, good people, firefighters, teachers, you know, it's you name it, policemen, et cetera, right? They were forced to invest in the kinds of funds that would then go out further and further out into the future to buy the promise of future cash flows. And when all of a sudden a whole bunch of other assets that, that they held which were supposed to be safe implodes on them, right, because all of a sudden inflation changes and the front end of the yield curve goes whoop, and all of a sudden all these assets when yields go up, prices go down, now the fireman's pension is like, "Oh my gosh, we just lost all this money we never thought we were going to lose and we're long all these, you know, crazy tech stocks." And so then they're forced to sell so that their overall exposure goes down. That's called de-grossing, okay? And we've been going through a very painful process of this de-grossing. Hedge funds are doing it, um, in droves.

   3. JCJason Calacanis26:02

      Can I ask you a question then, Chamath? I'm sorry to interrupt, but should they not have looked at these multiples and said, "You know what? Maybe this one's out of whack and I should buy the ones that are not as out of whack," because this to me seems-

   4. DFDavid Friedberg26:16

      Not really. Not really because-

   5. JCJason Calacanis26:16

      ... why not?

   6. DFDavid Friedberg26:17

      ... for the last 15 years if you had... You know, the, the problem with being a value investor over the last 15 years since 2008 is you were basically a dumpster diver and you got paid absolutely... You know, you didn't make anything because, because they misunderstood what value was. Value isn't necessarily things that are cheap. Value is things that are, are things that are valuable. And over the last 15 or 20 years, what was once a question is now definitive, which is that the things that are valuable tend to be technological because they're super high margin, they grow really quickly, they compound, they create enormous cash flows at scale. So-

   7. JCJason Calacanis26:53

      Agreed.

   8. DFDavid Friedberg26:54

      ... the point, the point is you couldn't own that stuff and if you sat on the sidelines, you weren't meeting your 8% hurdle. You were all of a sudden looking at some risk of defaulting on your pension obligations. So this is how this whole cycle brought us to today.

   9. JCJason Calacanis27:07

      So there was nowhere... What you're saying is, if I can summarize, there was nowhere else for them to put their money. Sax, price matters though. So is this just bad capital allocation, people weren't thinking about the, the entry price of their investments? We're giving too much credit?

   10. CPChamath Palihapitiya27:20

       Well, I think, I think what happened is that you had a liquidity-fueled boom, um, going on. So what we've seen over the past four or five weeks, about the first week in November, most... the market basically peaked and at least growth stocks did and SaaS companies did. If you look kind of November 8th was sort of the beginning of the downturn, and since then most of these growth stocks are down about 30% plus. Crypto is down now. I mean, it's sliding as we speak, 30, 40% off a, off a peak around the same time. What happened around the first week of November? Well, you had three Fed governors come out and make very hawkish statements about the fact that the Fed was gonna need to double the speed of its taper and that you're gonna have two or three rate increases next year. And so basically, we went from being in a low interest rate environment, which has been the case, w- uh, not only just low interest rate environment, low interest rates with massive stimulus and pumping out of Washington by both the Fed and by, uh, by Congress. Okay? And so you went from that environment to all of a sudden an environment of now we're expecting to have rate increases and that's gonna suck the liquidity out of the system. The, the amazing thing th- that I'm seeing right now is that every investor I know is having the same conversation. It doesn't matter whether you're a SaaS investor or a real estate investor or a crypto investor, they're all having the same conversation, which is, what are interest rates gonna do? How much liquidity is that gonna suck out of the system? And how much of the boom that we've experienced over the last couple of years has been because of this unnatural liquidity that's been pumped into the system? And so I've never seen i- i- I've never seen it be the case that investors across every asset category are having that macro conversation as opposed to talking about like micro stuff, right? Like which c-

   11. JCJason Calacanis29:05

       The specific company, the earnings-

   12. CPChamath Palihapitiya29:06

       Yeah, exactly.

   13. JCJason Calacanis29:06

       ... the product, who they're beating, the market share.

   14. CPChamath Palihapitiya29:09

       Right. Nobody's talking about that, like, "What building do I buy or what SaaS company do I invest in?" It's all about wha- what is happening in the macro picture, and this is where I think what Biden is doing is so unbelievably off base is, okay, look, he didn't start trillion dollar deficits. Um, you know, that happened under the previous president. I'm not saying that was good, but, but now what we have is a situation here of, um, of the Fed is getting extremely hawkish of tightening. Um, we're seeing inflation now out of control. And yet there's been no adjustment whatsoever on a policy basis.

   15. JCJason Calacanis29:42

       Nobody is changing-

   16. DFDavid Friedberg29:43

       Can we just say the ugly truth?

   17. JCJason Calacanis29:44

       Nobody is hitting the brakes, right?

   18. DFDavid Friedberg29:45

       Wait, let's just, let's just call, let's just call a spade a spade at this point 'cause I think we can. I think, and I think Biden was, is, and will ever be a really moderate down the middle centrist. I don't think there has ever been an extreme bone in that man's body. He has always come off as like, you know, the word that I think when I've always thought of Biden even now is equanimity. The guy is a really, um, down the middle person. He's not an extreme individual. I think that's the only kind of personality, by the way, that could have thrived for eight years as a VP with Obama and had been in every room in every meeting. The problem, Sax, and tell me if you think this is totally off base, is that there was a head fake after he won the presidency where there was this fake lurch to the progressive left.... and it turned out that it was a complete head fake because that whole cohort of people just totally jumped the shark. Because all that rhetoric then unfortunately turned out to be not worth much, it started to blow up in their face in every single election that's happened since then, at the local level in cities, at the state level in places like Virginia. And in the middle of all of that, I actually think what happened was that faction tried to push an extremely aggressive legislative agenda to paint Biden as the next Roosevelt, which maybe he didn't even have the, the desire to be because I, I t- think that he seems a very low ego kind of person. And now we're actually realizing, "Oh my gosh, this makes no sense." And so the... Part of why I think the markets are s- are are kind of like hand wringing, is you would expect at this point the federal bureaucracy to actually step in, but I think there's like a real lack of confidence because for, for example today, when there's a CPI print of somewhere between 7% and 10%, the only Democratic sounding, you know, the talking point, was one of the squad proposing a four-day work week. I mean-

   19. CPChamath Palihapitiya31:39

       Right.

   20. DFDavid Friedberg31:40

       ... that is insa- that, guys-

   21. JCJason Calacanis31:41

       (laughs) That's like you're in crazy debt and you're like, "You know what we should do?"

   22. DFDavid Friedberg31:44

       That's insane, guys. That's insane.

   23. JCJason Calacanis31:45

       "We should spend more money and work less."

   24. CPChamath Palihapitiya31:47

       Right.

   25. DFDavid Friedberg31:47

       When the CBO says, "We're about to go 3 more trillion into debt," the solution-

   26. JCJason Calacanis31:53

       Let's work less.

   27. DFDavid Friedberg31:53

       ... isn't to four... Well, it's... I, I actually think if you wanna work less, work less. You know, maybe you're lucky and your boomer parents can give you money, but there's a bunch of us like me who had to grind. I didn't have anybody to fall back on and if you all of a sudden passed a law that said, "Hey, Chamath, you can only work four days a week," I would be really angry because you're depriving me of 20% more of a chance to beat all those other l- soft candy asses that went to all those fancy schools that weren't willing to work.

   28. JCJason Calacanis32:20

       Yeah, ignore. That's the stupidest suggestion.

   29. DFDavid Friedberg32:22

       Let me work!

   30. CPChamath Palihapitiya32:23

       So I think, I think this, this proposal that came out to... Basically th- this was a new proposal that they were gonna limit the work week to four days (laughs) a week. Uh, wouldn't let people work five days a week. The reason why it's... Well, it, it's a bad idea in general, but it's a particularly, uh, sort of braindead idea to propose during, um, a high... sort of this inflationary period because, again, inflation is caused by too much money chasing too few goods. Well, so you have a demand component from the pumping and the stimulus, but you also have the supply component which is we don't have enough goods and services. Why? Because we've been, you know, passing out these stimu checks that pro- um, that disincentivize people from working, we have problems with the ports, we have these COVID restrictions that have all gone away.
4. 40:12 – 50:29

   Deficit trouble: will another president ever try and balance the budget? Areas of positivity in the economy

   1. CPChamath Palihapitiya40:12

   2. JCJason Calacanis40:12

      The increase in the deficit is just getting stunning. Uh, if you look back on the five or six last, uh, presidents, Reagan, 142% increase. Uh, he got us up to 1.42 trillion. He had to obviously, uh, combat what happened under Jimmy Carter. Uh, George Bush, George HW Bush, 30%... 36% increase. President Bill Clinton, a 1% decrease, the first time we've had a stimulus, uh, I'm sorry, a surplus in a long time. And then, uh, Bush II, 57% increase.

   3. CPChamath Palihapitiya40:43

      No, the economic results under Bill Clinton were amazing. I've been-

   4. DFDavid Friedberg40:45

      Amazing.

   5. CPChamath Palihapitiya40:45

      ... talking about it on this show before.

   6. DFDavid Friedberg40:46

      I was just about to say, he's a GOAT.

   7. JCJason Calacanis40:47

      Yeah, but I mean, at the time, what was very interesting is politicians actually took this issue of balancing the budget very seriously.

   8. DFDavid Friedberg40:54

      Really seriously.

   9. JCJason Calacanis40:55

      Deadly seriously. And thinking about how we would pay for things. And now we don't seem to think about who is gonna pay for these things-

   10. CPChamath Palihapitiya41:03

       Yes.

   11. JCJason Calacanis41:03

       ... which is gonna screw our children.

   12. CPChamath Palihapitiya41:06

       Okay, so you have to remember that Bill Clinton was the president who said the era of big government is over. And when he left office, he actually bragged about reducing the federal government's share of the economy from 22% to 18 and a half percent. You would never hear a Democratic president-

   13. DSDavid Sacks41:21

       It'll never happen again.

   14. CPChamath Palihapitiya41:22

       You'll never hear a Democratic president... Well, first of all, they wouldn't do it, but second, they wouldn't brag about it. You know, you can't even say something like that-

   15. JCJason Calacanis41:28

       They would be ashamed at balancing the books.

   16. CPChamath Palihapitiya41:29

       ... in the, in the d-

   17. DSDavid Sacks41:29

       So actually, let me ask you, do you think a Republican president would? 'Cause I'm not convinced that any party matters at this point. It feels to me like the incentive structure is such that the individuals who are representing constituents who get them elected and they can pass more dollars back to those constituents drives a systemic model of growth for the government, and therefore the government is complete, competing as a monopoly on the field for capital.

   18. CPChamath Palihapitiya41:53

       Yeah, look, I take

   19. DSDavid Sacks41:54

       And, and I mean, look, we, we, you thought Trump was gonna be this guy, and Trump came in and he ended up spending more. And I recognize there were extenuating circumstances and so on, but I thought he was gonna go in, I thought the, the premise was blow up the government, you know, cut all this nonsense and the deficit kind of shot up.

   20. CPChamath Palihapitiya42:08

       You're, you're right that Republicans have a very spotty record on, on, uh, government spending. And we did have trillion dollar deficits pre-COVID under Trump, and that was not, that was not good. Um, but what Biden is doing now in the, in the face of inflation is worse. And look, I mean, historically, the best, the, the, the only times that you really have, um, it seems like fiscal responsibility is when you actually have... The, the best track records have been when you have Democratic presidents, Republican congresses.... and the Republicans suddenly find their principles on spending when there's a Democrat in the White House. You're right that when Trump was in office and had Congress and, uh, George W. Bush, you know, had Congress, the Republicans spent a lot of money too, so it's absolutely a bipartisan problem. But what's happening now in Washington is, under Biden, is, is unprecedented. It is a breaking of the bank. They're talking about minting trillion-dollar coins. So yes, it was a problem under the Republicans, but this is even worse. Um, and here, here, here's another thing, is the Fed is now saying they, they're projecting two to three rate increases next year. So let's call that 75 basis points. Multiply that by the close to 30 trillion of government debt that you were talking about, Jason. That's about 150 billion a year of interest payments on the debt, of debt service. Okay, 150-

   21. JCJason Calacanis43:23

       Extra. Extra. Extra.

   22. CPChamath Palihapitiya43:24

       ... extra, extra that doesn't exist today.

   23. JCJason Calacanis43:25

       And it's not fixed rate, by the way. This is variable rate.

   24. CPChamath Palihapitiya43:27

       That's right, it's all short-term rates. It's all short-term rates 'cause, yes. So, so you're looking at 150 billion of incremental debt service-

   25. JCJason Calacanis43:34

       That could go up.

   26. CPChamath Palihapitiya43:34

       ... costs, right? So multiply that over 10 years, that's 1.5 trillion over 10 years. That's your Build Back Better right there. Where is this money for Build Back Better going to come from when we have 1.5 trillion of increased interest rate costs starting next year?

   27. JCJason Calacanis43:48

       And, and how do we get the cycle of people wanting to go back to work and be productive? It feels to me like this could be a gener- Raise wages. Which is what's happening, but people are still not going back to work. Have you been watching the, the, s- the, the- No, but Jason- People are offering $70,000 to be a manager of a Taco Bell and people won't take the job. I understand. Well, then you offer 75,000. I still don't think they fill it.

   28. DSDavid Sacks44:09

       No, I think, I think, I think, I think that model's dead. I think low-cost labor's inevitably, uh, be exp-

   29. JCJason Calacanis44:16

       Well, some low cost if they're making $75,000 a year.

   30. DSDavid Sacks44:17

       Well, I mean, I think, I think the, uh, in order for, for people to function-
5. 50:29 – 1:11:16

   Better.com's botched layoffs, impact of overcapitalization, macro outlook for founders

   1. JCJason Calacanis50:29

      listen, I don't know if you guys saw this better.com layoffs viral video, but it, uh-

   2. DFDavid Friedberg50:35

      Can you, can you break this down, J-Cal? I ha- I was not following this.

   3. JCJason Calacanis50:38

      All right, very simple. (sighs) There's a company called better.com. They get rid of origination fees or whatever, and commissions. They try to get you faster mortgages, insurance, whatever. Uh, they were gonna SPAC. SoftBank was gonna put in 1.5 billion in the pipe. Everything was going according to plan.

   4. DSDavid Sacks50:52

      SoftBank was already in the company, right? So they were trying to get their own company out.

   5. JCJason Calacanis50:56

      Yeah.

   6. DSDavid Sacks50:57

      Right.

   7. JCJason Calacanis50:57

      So, uh, obviously the market corrects. Everybody always asks us as a group, what happens when the market corrects? Well, here you're about to see it. This guy decides I gotta cut 10% of the company. Instead of having his managers go to each group and have a logical, small discussion about how they're gonna correct things and maybe some sort of thoughtful process, he decides he's gonna get on Zoom to the entire 900 people who are fired, and in a very bizarre way-

   8. DFDavid Friedberg51:22

      Sorry, sorry, nine- 900 people were fired?

   9. JCJason Calacanis51:24

      900 people but they also-

   10. DSDavid Sacks51:26

       Over Zoom?

   11. JCJason Calacanis51:27

       Over Zoom.

   12. DFDavid Friedberg51:27

       But how big is this company?

   13. JCJason Calacanis51:28

       10,000 employees. And he says to them that "The last time I had to do this, I laid people off. I was, I cried, and I'm gonna try to do better this time. But if you are on this call, effective immediately, you're fired."

   14. DSDavid Sacks51:41

       (laughs)

   15. JCJason Calacanis51:41

       It's- it's just another one of these crazy clips we have to respond to.

   16. DFDavid Friedberg51:43

       I want to see it.

   17. JCJason Calacanis51:44

       30 seconds, Chamath, give me your thoughts on the other side.

   18. VGVishal Garg51:47

       Thank you for joining. I come to you with not great news. The market has changed, as you know, and, uh, we have to move with it in order to survive, so that hopefully we can continue to thrive and deliver on our mission. This isn't news that you're gonna wanna hear, but ultimately, it was my decision, and I wanted you to hear from me. It's been a really, really challenging decision to make. This is the second time in my career I'm doing this, and I do not, do not want to do this. The last time I did it, I cried. This time I hope to be stronger.

   19. JCJason Calacanis52:22

       Okay. Then here's the second clip where he basically tells everybody over Zoom that you're not gonna be able to log in, and you got two-week severance, three weeks, or a month severance, and it's like three weeks before Christmas. Go ahead.

   20. VGVishal Garg52:35

       We are laying off about 15% of the company-

   21. DSDavid Sacks52:39

       (sighs)

   22. DFDavid Friedberg52:39

       (beep)

   23. VGVishal Garg52:39

       ... for a number of reasons.

   24. NANarrator52:40

       (beep)

   25. VGVishal Garg52:41

       The market, efficiency, and performances, and productivity. If you're on this call, you are part of the unlucky group-

   26. NANarrator52:50

       (beep) you, dude.

   27. VGVishal Garg52:51

       ... that is being laid off. Your employment here is terminated effective immediately.

   28. NANarrator52:56

       Are you (beep) kidding me?

   29. VGVishal Garg52:58

       What does this mean for what's next? You're gonna get an email from HR, askhr@better.com to your personal email address-

   30. NANarrator53:05

       (beep)

Episode duration: 1:21:02