E70: EMERGENCY POD! Russia invades Ukraine: Reactions, Putin's ambition, Biden's response and more

1. 0:00 – 17:03

   Ukraine invasion: how should the US respond?

   1. DSDavid Sacks0:00

      ... besties are back-

   2. CPChamath Palihapitiya0:01

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

   3. JCJason Calacanis0:06

      Rain Man, David Sachs.

   4. CPChamath Palihapitiya0:09

      I'm going all in. And I said- We opened source just for the fans and they've just gone crazy with it.

   5. JCJason Calacanis0:14

      Love you, bestie.

   6. CPChamath Palihapitiya0:15

      Queen of Quinoa. I'm going all in.

   7. JCJason Calacanis0:19

      All right, everybody. Welcome to another episode of the All-In Podcast, episode number 70. We made it to 70 episodes, which is just shocking to me. And we're recording a little bit earlier, uh, because one of our besties, uh, had to change their schedule, Chamath. And, um, it's, um, a crazy day to be doing this. Last night, Putin decided to invade the Ukraine, um, late Wednesday night, early into Thursday morning. Putin, uh, started a special military operation, in quotes, "to demilitarize" the Ukraine, and, uh, we've been watching this build up for weeks. You're missing a... He said to demilitarize and de-Nazify. And de-Nazify, yes, of course, um, because the Ukraine was filled with so many Nazis. Uh, his trolling continues. I guess, just starting it off, um, Sachs, you're a big Putin fan, uh-

   8. CPChamath Palihapitiya1:15

      (laughs)

   9. JCJason Calacanis1:15

      ... along with Trump and, uh... You're the right wing, so tell us how glorious is, uh, this invasion for the Republican Party?

   10. DSDavid Sacks1:24

       Well, it's, it's, it's interesting what... It, it's... Well, that's funny, but it's also, it's also kind of sad, because what you're doing right there is exactly what the whole Twittersphere is doing, which is anybody who wants to actually de-escalate and defuse this war before it escalates and metastasizes into something much worse gets denounced as a Putin apologist. I have no dealings in either, you know, Russia or Ukraine, for that matter. Ukrainian cash is not lining my pockets, like many of our politicians and their families in Washington. I have no interest, except preserving the safety of the United States of America. And the point is that I think Biden... The, the one clear elusive point that he made in his last speech, I know he's giving one today, is that the United States of America would not intervene militarily in Ukraine. We should all understand that. He made it very clear. The troops that were being sent over there were to defend our NATO allies. Ukraine is not one. We do not have a treaty obligation to defend them. What is happening right now is tragic. Putin is the aggressor. It's a humanitarian disaster. I do feel bad for the people of Ukraine. Our thoughts and prayers are with them. However, we are not going to intervene militarily in that conflict, nor should we, because we cannot risk starting World War III. It is not a vital American interest. Who rules the Donbass in a way that it is a vital American interest to avoid a war with Russia? And the tragedy here, the second tragedy, is that we did not do everything we could to diplomatically try and solve this problem. And what do I mean by that? On this pod three weeks ago, I said that Ukraine was never going to be part of NATO. Why? Because Biden just said it. We can't defend them militarily against Russia. We were never going to admit them. Why didn't we give up that card? That... I'm... We don't know for sure what would have happened, but if we had been willing to basically affirm that we believe in Ukraine's sovereignty, but they are not-

   11. JCJason Calacanis3:20

       Yeah.

   12. DSDavid Sacks3:20

       ... going to be part of NATO, that might have diffused this conflict.

   13. JCJason Calacanis3:23

       I, I think we had consensus on that. We said, like, "Hey, what if..." I think actually I suggested, what if we said a five-year, you know, moratorium on them joining or something like that.

   14. DSDavid Sacks3:30

       Absolutely.

   15. JCJason Calacanis3:30

       If we put that out there. Can I just ask Sachs one question on this? Okay, yeah. Sachs, do you not think that the US, you know, regardless of the obligations under, uh, um, NATO, faces a little bit of an issue on a global stage where, you know, we, we told this leader, "Back down, don't do this," and then we don't respond militarily? That that action effectively reduces America's influence and credibility when it comes to these sorts of defensive statements in this kind of global theater. And our primacy is being challenged because we laid down the law. We said, "This is not allowed. You cannot do this. There's going to be repercussions." And then it happens and there are economic sanctions, and, you know, maybe we'll talk in a second about some other potential repercussions. But by not doing something militarily, we weaken ourselves and we weaken our position, and it gives permission to others to take action that may be counter ultimately to kind of the US interests, uh, abroad.

   16. DSDavid Sacks4:30

       Okay, so in response to that, I have to... We'll quote what Barack Obama said, um, and we- we've mentioned this on a previous pod. He said, "The fact is that Ukraine," which is... And this is back in the, the Atlantic interview he gave. "The fact is that Ukraine, which is a non-NATO country, is going to be vulnerable to military domination by Russia no matter what we do. This is an example of where we have to be very clear about what our core interests are and what we are willing to go to war for." The fact of the matter is, none of us on this pod want to send our sons and daughters to go fight and risk their lives and die to determine who rules the Donbass or even Ukraine. We sympathize with them. We may impose sanctions on their behalf. We may arm them militarily. But we are not willing to fight. And so therefore, us trying to lay down this law to Putin was a bluff, and he called our bluff. And the smart thing we can do right now is not to escalate. Look, we've already gone to the river. He's g- (laughs) You know, we basically tried to barrel and bluff him at every street. We got to the river. He has now invaded. We're now in a showdown. What do you want to do now? You want to escalate this even more? The only way that we could make this worse is to precipitate a world war.

   17. JCJason Calacanis5:37

       Now, if-

   18. DSDavid Sacks5:37

       Our absolute priority, our absolute priority right now should be to make sure that this war doesn't spread.

   19. JCJason Calacanis5:43

       My prediction is, as of right now, it would be very unpopular to go to war, uh, or for the US to enter the war, uh, in a, um... on the battlefield. I, I do think, and I don't know if we're going to hear more about this today, but I do think that the cyber war is beginning today. Uh, the United States has talked at length about having-

   20. DFDavid Friedberg6:03

       ... uh, you know, uh, tremendous cyber capabilities and my understanding is, as of this morning, a number of state websites were down in Russia and a number of, um, uh, you know, Russian cyber interests were under attack. And so we may see the US kind of confront Russia, uh, on another battle stage, not on the, uh, uh, you know, on the field, on the physical field. But i- if over the next couple of weeks this continues, or days, and I was just looking at CNN this morning and BBC and there were these images that started to come out of, like, you know, Ukrainian, um, airplanes that- that had been downed, um, and if you start to see images of children, um, you know, helpless children, buildings being bombed, bodies strewn on the street, does that not change kind of the American opinion on whether or not we should do something here? And will that not kind of lead us potentially into a war that, you know, today I think we all, you know, or many people would say strategically it doesn't make sense, economically it doesn't make sense, you know, we're only gonna lead to kind of escalation. But don't you think that American opinion typically changes when imagery arises, when, you know, the sort of brutality of war-

   21. JCJason Calacanis7:09

       Well, I mean, that's why they block images out- out of some wars (laughs) and we have in the past, yeah.

   22. DFDavid Friedberg7:13

       But even today, it's like the first day and there's, like, these really gruesome, awful photos coming out and I- I could see people getting sympathetic to that and starting to kind of, you know, bang the- the war drum saying, "This is ridiculous. We can't let this tyrant do this. It's awful. Oh my gosh."

   23. DSDavid Sacks7:26

       Well, it's already, it's- it's already happening, you know, but this is why we should not conduct foreign policy by Twitter. We should not Twitterize the situation. Yeah, this is when-

   24. JCJason Calacanis7:36

       Too late.

   25. DSDavid Sacks7:36

       This is when cooler heads need to prevail. The fact of the matter is, when Soviet tanks, they rolled into Hungary in 1956 or Czechoslovakia in 1968 to crush the Prague Spring or Poland in 1981 to crush Solidarity, we did nothing because avoiding war with the Soviet Union was more important, even though we sympathized with those people. And in 2008, we've been in this situation before. 2008, Georgia, the Republic of Georgia, Putin invaded on behalf of these breakaway Russian sort of dissident, uh, provinces, South Ossetia and Abkhazia. Why did that happen? Well, if you remember, back in 2008, there was a lot of talk about Georgia joining NATO and you had, you know, the war hawk senator, John McCain, go over there and declare, "We're all Georgians now." And th- so what happened? All of a sudden, these breakaway provinces, the Russified provinces of South Ossetia and Abkhazia started rebelling. That gave Putin the excuse to roll in there and the tanks... A year later, he left, but there was no more talk of Georgia joining NATO. So, and again, we'd... George W. Bush was president at the time. We did nothing militarily. We just sent humanitarian assistance. That was it. So we've been in this situation before. We should not... I keep hearing in the media, on cable news and on Twitter, "This is historically unprecedented. We must act." No. We've been in this situation before in 2008 and all those previous times. We were in this situation in 2014 when Putin invaded Crimea.

   26. JCJason Calacanis9:03

       Let me, let me ask you a question, Zach. Um, we- we had this concept of, hey, maybe if we said, "Hey, we won't admit them into NATO." And, uh, do you think that if we had actually made that concession or said we're not gonna let them into NATO for a decade or whatever, do you think that would have changed Putin's behavior, yes or no?

   27. DSDavid Sacks9:20

       Well, it's- it's... Honestly, it's hard to know. I mean, I can't, I can't prove a counterfactual. However, I think it was tragic not to try.

   28. JCJason Calacanis9:27

       Okay.

   29. DSDavid Sacks9:27

       I do think, I think, I think it should be the goal of diplomats-

   30. JCJason Calacanis9:30

       Sure.
2. 17:03 – 32:51

   Importance of energy independence when dealing with Russia; solutions: Solar, Natural Gas, Nuclear, etc

   1. DSDavid Sacks17:03

      think so. There was a very good article by, uh, Niall Ferguson and Ken Griffin actually in the Wall Street Journal talking about what we should do. They made the point that sanctions don't usually work. However, what we should really be s- uh, striving for is energy independence. So-

   2. JCJason Calacanis17:18

      100%, yeah.

   3. DSDavid Sacks17:19

      So, yes. But the crazy thing is America, despite having these huge, um, natural gas reserves, 7% of our natural gas is coming from Russia right now. So why? Because we stopped fracking, we stopped the... you know, Biden canceled the Keystone Pipeline. And then y- in Europe, the situation is even worse, which is they're completely dependent on, on Russian natural gas.

   4. JCJason Calacanis17:39

      Germans are and the UK, yeah. Not France.

   5. DSDavid Sacks17:42

      The op-ed made the point that we could be investing in liquefying natural gas and exporting it to Europe to create more energy independence and that would remove their dependency on Putin. That... Energy independence here-

   6. CPChamath Palihapitiya17:52

      Problem with energy independence is it takes too long, and we went through a massive capital underinvestment cycle over the last six or seven years. And so, you know, in order to start this up, you need to have started actually putting money in the ground six or seven years ag- And the problem today is if we put money into the ground now, that's not gonna yield any sort of return on invested capital-

   7. DSDavid Sacks18:11

      Yes. Right.

   8. CPChamath Palihapitiya18:11

      ... for another six or seven years. And so when you look at these nat gas companies, e- every single one to a name has basically said, "We are not gonna put every, any incremental capital into US domestic nat gas or shale or even offshore." The real solution is to actually go fully alternative and to go to renewable energy.... because you can today, right, uh, deploy solar vastly more aggressively in the United States. Look, at the end of the day, the thing that is completely abundant and has the best implications all around is solar.

   9. JCJason Calacanis18:40

      And it's gotten cheaper than coal and- and- and fossil fuels.

   10. CPChamath Palihapitiya18:43

       And- And- And- yeah, you have to ask yourself like, "Why- why are we only 3% penetrated in the United States?" Right? We can manufacture these panels. We can deploy them broadly. Right now, you know, we're in this situation where California is actually revisiting the ITC credit, or the- the net metering laws... sorry, rather, um, which would have huge implications for the California solar market. It could actually destroy that whole market. And so, you know, we have to get really organized, David, to your point, but there is a path to energy independence. I think it's alternative energy. It's wind and solar, um, because we can do it today, and you can do it really quickly. And you can basically leapfrog the entire capital investment cycle that you would need to do for net gas. We- We've already missed the train.

   11. JCJason Calacanis19:20

       Well, and also you could have... Germany could start turning back on nuclear power plants if they could get their citizens to pick nuclear over war. Uh, that seems like a pretty easy choice.

   12. CPChamath Palihapitiya19:30

       It takes too long. Look, Germany has been denuclearizing-

   13. JCJason Calacanis19:32

       Well, no, no, but they've- they've recently turned theirs off though.

   14. CPChamath Palihapitiya19:34

       ... for 20 years.

   15. JCJason Calacanis19:34

       No, they've been doing it for 20 years.

   16. CPChamath Palihapitiya19:37

       Yeah.

   17. JCJason Calacanis19:37

       They've been turning them off for 20 years.

   18. CPChamath Palihapitiya19:39

       I know. They could... The- That means they don't have to rebuild them, Chamath. They could just turn them back on, y- y- which is a-

   19. JCJason Calacanis19:44

       It's not a light switch, Jason.

   20. CPChamath Palihapitiya19:46

       Which we haven't- That's not... No, but that's not how it works. It's not a light switch. It takes years to reconnect-

   21. JCJason Calacanis19:49

       I know, but it's not the same as building a new one in the US. That's the point. They could put them back on.

   22. CPChamath Palihapitiya19:53

       No, it's, it's still years... it's still years to turn these things back. It's not days.

   23. JCJason Calacanis19:56

       But the threat of doing it... But you gotta think, Chamath, the threat of doing it would terrorize the Saudis and the Russians if all of a sudden the EU said, "We are gonna go massive solar, massive nuclear, and we're gonna be energy independent."

   24. CPChamath Palihapitiya20:10

       I'm not sure- I'm not sure any-

   25. JCJason Calacanis20:12

       Just the threat of that, I think, had a dramatic effect.

   26. CPChamath Palihapitiya20:14

       I'm not sure any country- I'm not sure any country is gonna, is going to really, uh, all have a massive reaction to any other country talking about a multi-year investment cycle. I do think, Jason, to your point, solar is not a multi-year investment cycle. It can literally happen in months.

   27. JCJason Calacanis20:27

       Yes, and it's cheaper now.

   28. CPChamath Palihapitiya20:28

       And so that is much more disruptive. So for example, you could... if you took $3 trillion and built back better and instead said, "You know what? We're just gonna actually put solar everywhere."

   29. JCJason Calacanis20:35

       Everywhere.

   30. CPChamath Palihapitiya20:36

       That would be... Y- You take $3 trillion of solar and you put it literally everywhere in the United States, I think everybody would support it. You would have domestic job creation like nobody's business. You would take so much carbon out of the air, and you would-
3. 32:51 – 42:20

   Reflecting on the media coverage so far, Putin's ambitions

   1. JCJason Calacanis32:51

      thing that is confounding is, like, Americans, a- a- and this is another thing, I was just watching the media and I did exactly what you did, David, is I put on Fox and I was like, "Let me get their interpretation of this." Because the Trump folks are praising Putin and then these guys are wanting to go to war. So it feels like there's some inner conflict or civil war going on in, in the Republican side of things. But even on the, on the-

   2. DSDavid Sacks33:09

      There is.

   3. JCJason Calacanis33:10

      Yeah, and then on the left you have this craziness, uh, they were... I mean, Wolf Blitzer and everybody was so excited about this war. They were like, "Stay tuned," and, "Oh my God, we're gonna be 24-hour coverage." They were, like, orgasmic in, in, in their coverage of this.

   4. CPChamath Palihapitiya33:25

      Remember CNN got their, got their big, um-

   5. JCJason Calacanis33:27

      Yeah, Gulf War.

   6. CPChamath Palihapitiya33:27

      ... start with the Gulf War. That was it. Wolf Blitzer, remember that?

   7. JCJason Calacanis33:29

      So there was their chance to shine. And, and that's-

   8. CPChamath Palihapitiya33:30

      I remember being a kid watching that.

   9. JCJason Calacanis33:32

      That is the language, Freeberg ............................ That was the language they were using. So Don Lemon was saying, "And we have the full resources to give you blow by blow coverage of everything happening. Stick with CNN. This is where we do our best work." And it was literally like war porn and it was really uncomfortable to watch combined with, Sax, and this is what I wanted... Well, maybe Freeberg I'll throw this one to you. They kept talking about how Americans were gonna suffer at the pump. And I just thought, this is so crazy and disturbing. There's 190,000 young Russian men who are gonna die, countless Ukrainian civil- civilians who are gonna die potentially, and this thing could escalate, as Sax said, you, you know, you, you can't play games with war. It could... The dominoes can fall in all directions. You have no idea when you light off these grenades. And, and we're talking about our pain at the pump? Very weird. Very weird times. Freeberg, any thoughts?

   10. CPChamath Palihapitiya34:28

       America's weird. (laughs)

   11. JCJason Calacanis34:29

       It's weird. (laughs)

   12. DSDavid Sacks34:29

       Well, I wanna... Uh, if, if, if Freeberg doesn't wanna respond to that, I wanna, I wanna talk about the media coverage. I'll add to that.

   13. JCJason Calacanis34:35

       Yeah.

   14. DSDavid Sacks34:35

       I mean, you flip over to MSNBC, John Bolton is on MSNBC. And one of the weirdest things happening in our politics now is that all the Neocons who used to be members of the Republican Party who worked for George W. Bush-

   15. JCJason Calacanis34:47

       Yes.

   16. DSDavid Sacks34:47

       ... and got us into the Iraq War, have now all become Democrats. And they're all over... They're, they're supposedly the, the conscience of the country over on CNN and MSNBC, and beating the drums of war. It's absolutely unbelievable. And one of the, the, um... One of the tactics they use that I think we should talk about is, and this goes all the way back to the Vietnam War, is that anybody who merely tries to, let's say, understand the other side or wants to de-escalate or get out of a conflict, they try to portray as unpatriotic. I mean, this, again, this goes all the way back to the Vietnam War where the Vietnam protesters were portrayed as un-American and unpatriotic. Well, it turns out they were right. That was a mistake for us to get embroiled in Vietnam. And similarly, the Iraq War, it turns out that was a gigantic mistake. But in 2003, David Frum, who's like one of the leaders of this group, wrote an article called Unpatriotic Conservatives, in which he attacked and sort of Mao Mao'd the... There were, you know, conservatives like Pat Buchanan and Robert Novak who were against the Iraq War. And he called them unpatriotic and implied that they were un-American becau- and somehow in the pocket of Saddam Hussein because they were against us, our involvement in the Iraq War. Well, they turned-

   17. JCJason Calacanis35:56

       And they were right. Yeah.

   18. DSDavid Sacks35:57

       They turned out to be right. And yet they were demonized and called unpatriotic. And where are we today? Those same people... I'm seeing David Frum on Twitter now, impugn the patriotism of people who merely want us not to escalate this, not to get involved, and maybe to try and understand our enemy. Because, I mean, this is one of the problems with Twitterizing our foreign policy is, look, we can see Putin as an aggressor. We can see him as a thug or an authoritarian or as a dictator. But nonetheless, we should still try and understand our enemy. And anybody who tries to promote a greater degree of understanding or diplomacy gets attacked by these people as being Putin apologists.

   19. JCJason Calacanis36:35

       Chamath, you, you said you didn't see this coming, you thought this was a very small probability. I think we all felt it was a pretty small probability that Russia would actually-

   20. CPChamath Palihapitiya36:42

       No.

   21. JCJason Calacanis36:43

       ... go through with this. You thought it was actually something... Uh, actually, I do... Freeberg, you did think it was going to happen.

   22. DFDavid Friedberg36:47

       It's a certainty.

   23. JCJason Calacanis36:48

       Yeah. Well, wait, you thought it was a certainty that America would get involved because of the wag de- dog scenario or that Putin would do it because-

   24. DFDavid Friedberg36:55

       Both.

   25. JCJason Calacanis36:56

       Both, okay.

   26. DFDavid Friedberg36:56

       Putin's just, th- th- yeah, th- put- this is not, like, a surprise that Putin did this. I mean, this has been a long time coming.

   27. JCJason Calacanis37:01

       Yeah. I mean, it just felt like I, I, I, I thought that he would save a rattle and we'd come to some resolution here and... But what does he want? It seems like nobody c-... And, and this is what everybody keeps saying on, on TV-

   28. DFDavid Friedberg37:12

       Listen, I think that's a really... By the way, I think that's a really complicated question.

   29. JCJason Calacanis37:15

       Yes.

   30. DFDavid Friedberg37:15

       I, I, I feel like there's decades of... and layers of, like, um, to this story. It's like, you know, War and Peace and then you read, like, one half of the final chapter and you're like, "Oh yeah, okay." Like, th- there's a lot to the story that's going to be really hard for us to unpack.
4. 42:20 – 53:19

   Biden's new sanctions, Chamath's Russia story, doing the math on how the US can leverage energy independence

   1. JCJason Calacanis42:20

      here. As we're discussing this on a Thursday, February 24th, uh, Biden has announced a coalition of partners, EU, Australia, others are doing pretty significant sanctions it seems, limiting Russia's ability to do business in dollars, euros and yen, imposing major sanctions on the Russian banks, trying to cripple the ruble, blocking four major Russian banks, freezing all of their assets in America, adding sanctions to Russian elites, I guess that's the oligarch, uh, class-... and, uh, Russia's largest state-owned enterprises will no longer be able to raise money from, uh, a coalition of governments. Biden assumes this will degrade their military advancement. And, uh-

   2. CPChamath Palihapitiya43:00

      I have a funny Russian story to tell.

   3. JCJason Calacanis43:02

      Oh.

   4. CPChamath Palihapitiya43:02

      So, um-

   5. JCJason Calacanis43:03

      Great.

   6. CPChamath Palihapitiya43:03

      ... when I was, when I was still running, when I was managing, uh, not just my money but other people's money and I was raising funds, uh, eventually, you know, you, uh, you get, uh, LP commitments, um, from all kinds of people interested in investing with you if you're generating great returns, right? Meaning, you know, rich family offices all around the world want to give you capital. And there's a very strict process in America where when you get capital in, um, you have to make sure that those folks basically pass a, a, you know, an anti-money laundering check and a know your customer kind of check-

   7. JCJason Calacanis43:36

      KYC checks.

   8. CPChamath Palihapitiya43:38

      And one of these checks, and one of these checks is actually a, a gray list and a blacklist that Treasury and the DOJ kind of manage. Um, and every now and then they'll put people on or off the list. And there's a very famous person in Russia, um, who I will not say. When I was raising money for my last fund, this is probably in 2014 or '15, he was on the, um, he was not on the list, you know, very well-known person.

   9. JCJason Calacanis44:02

      Yeah, yeah.

   10. CPChamath Palihapitiya44:03

       And I thought, "Wow, this is a great opportunity to get somebody who seems to be doing a lot of really interesting good work in the world." And not less than two or three weeks after we had signed our LP agreement, uh, I think it was DOJ or Treasury put him on this list and we get a, we get a, you know, an email basically saying, "Hey, tear up the LPA and, uh, you can't take the capital." And we had to undo the entire, uh, limited partner agreement.

   11. JCJason Calacanis44:25

       Oh, Lord.

   12. CPChamath Palihapitiya44:25

       And, um, crazy. Yeah.

   13. JCJason Calacanis44:28

       What percentage of the fund would that person have been, ballpark?

   14. CPChamath Palihapitiya44:31

       I, I, I don't remember. But he was a, he's a significant person investing, I mean, significant-

   15. JCJason Calacanis44:36

       5, 10% or something, so I would guess. Yeah.

   16. DFDavid Friedberg44:39

       Hey, Jason. I just want to, going back on a point I made about energy and energy independence-

   17. CPChamath Palihapitiya44:43

       Yeah. Sure.

   18. DFDavid Friedberg44:43

       ... um, earlier 'cause I actually pulled up the numbers. So, you know, the average cost, um, per kilowatt hour, uh, in the, uh, in China right now is about Nine Cents, uh, for, um, for energy production. It is estimated, uh, that, um, nuclear power production should drop to about Four Cents, but could be as low as One Cent per kilowatt hour if operated at scale with perfect efficiency. Just to give everyone a sense of where, um, not just security risk and kind of, you know, the g- the green opportunity lies, but also where economic advantage lies, uh, in investing in nuclear infrastructure. And so as China builds out 140 nuclear plants here over the next two to three decades, they're gonna see their energy cost decline from about Nine Cents for industrial use, um, potentially, you know, into the sub Five Cent per kilowatt hour range, which makes them tremendously competitive, o- on a manufacturing point of view.

   19. JCJason Calacanis45:38

       That's a lot of Bitcoin servers. (laughs) That's a lot of hash. (laughs)

   20. CPChamath Palihapitiya45:41

       I think it's never gonna happen. Um, I'm not, I, I love nuclear, I just think that America-

   21. DFDavid Friedberg45:45

       I, what, what's not gonna happen? Nuclear?

   22. CPChamath Palihapitiya45:47

       I, I think America, America's, America's ability to scale nuclear, I think is a very difficult proposition and I think our real solution is solar.

   23. DFDavid Friedberg45:54

       Is solar?

   24. CPChamath Palihapitiya45:55

       It's practical, it can be done today, and it can be done right now.

   25. JCJason Calacanis45:58

       And just to look at the EU versus the US in terms of gas mileage, um, which is just stunning. The EU has mandated average-

   26. CPChamath Palihapitiya46:08

       America doesn't have the, America doesn't have the resolve. It's like, it's like we, we have to, we have to cross so many bridges and, you know, we have to really confront a bunch of issues that we, um, that have been riddled with so much inaccuracy. You know, for example, like the environmental impact, the understanding of how nuclear energy works, you know, the nimbyism, Jason, that you referred to about not being able to build these things all around the country. And so reducing the form factor, in my opinion, is a technical challenge that I think we can overcome. But it still leaves the policy and the societal level challenges that I think are very difficult to overcome because you're talking about rewriting-

   27. JCJason Calacanis46:44

       Yes.

   28. CPChamath Palihapitiya46:44

       ... history in many ways and, and convincing, you know, hundreds of millions of people that things that they had thought were true were no longer true. And I think that's much, much harder than we give it credit for.

   29. JCJason Calacanis46:53

       And cars is the perfect example. Americans now, we're averaging 24 miles to the gallon. The EU has mandated, uh, 57 miles per gallon in 2021. They're getting it done in the EU, they're twice as effective. I tweeted, "Hey, listen, Americans, we, we need to buy better gas mileage cars and move to EVs." And I was faced with-

   30. CPChamath Palihapitiya47:11

       Well, hold on, Jason.
5. 53:19 – 1:11:17

   Markets signaling a potential turnaround, great businesses are available to buy at compressed prices, is Putin mad?

   1. JCJason Calacanis53:19

      All right, the markets are, uh, tanking, uh, obviously over the last couple of months. DOW is down 11% year to date. And of course, a lot of the growth stocks we talked about this over and over again from Zoom to Netflix, Facebook, Spotify, Coinbase, Twilio, all down over 50%. Uh, today the market went down five, six percent on the news and then rebounded. Is this all priced in and is this the bottom of the market? Cathie Wood is supposedly, um, buying, and I don't know if it's net buying or she's just reallocating, but, uh, are, are we now in the bargain hunting period of the market and, and we've bottomed out?

   2. CPChamath Palihapitiya54:02

      The s- the smart folks that I talk to who I really, you know, uh, look up to and respect think that the bottom in the S&P is around 3,800 and that, um, what we still need to do is this one last flush and that last flush will really touch the big cap, um, companies, but that, uh, growth is largely, um, done sort of getting taken to the woodshed. So, um, in general-

   3. JCJason Calacanis54:29

      So-

   4. CPChamath Palihapitiya54:29

      ... I think that, so generally buyers are broke now, um, sellers are value and waiting for this one last, you know, 400 point move down the S&P and I think people think it's roughly the bottom. Now if there's a world war obviously, who knows, all bets are off, but, um, yeah.

   5. JCJason Calacanis54:45

      So Sachs, what's more shocking that we're almost at the bottom or there's people in the markets that Chamath really respects?

   6. DSDavid Sacks54:50

      (laughs)

   7. JCJason Calacanis54:52

      Which is him.

   8. CPChamath Palihapitiya54:52

      Well, speaking, speaking of people that we respect, so I think, uh, Brad Gerstner has a really interesting take on this, which is that- Oh sorry, I, I should, I should also be clear that I'm recruiting this one person who I really respect, he knows who he is.

   9. JCJason Calacanis55:03

      I got it, so they're pushable. Got it. (laughs)

   10. CPChamath Palihapitiya55:04

       Yeah.

   11. DSDavid Sacks55:05

       So, uh, Br- Brad Gerstner's published a couple of charts showing, eh, basically multiples in the internet index and among SaaS companies over the last, whatever, dozen years or so. And what you can see is that over the last two years, during COVID, there was a huge spike in multiples for internet companies, for SaaS companies. And that, over the last, really since November, the last three, four months, has now come down. And as of, I would say, last week, it was right at about the historical trend and now it's starting to go under the historical trend. So from a bargain hunting standpoint, you'd have to say that this is the first time that we've been below the, the average, um, for a few years. Now, that's not to say it can't go down even more, because in the same way that you can be above trend, you can also be below trend. And if this war escalates and metastasizes, it will go down more. But if this conflict can stay localized, um, and the economy doesn't go into a recession because of everything that's happened, then yes, this might be bargain hunting.

   12. JCJason Calacanis56:09

       Here is the chart for everybody to take a look at, um, from January '20 to January '22, the two years of the pandemic. And I think this is times forward-looking sales, if I'm, if I'm reading it correct. I don't have the full chart here, I just have a screenshot of it, a portion of it.

   13. DSDavid Sacks56:23

       Yeah, I think it's enterprise value-

   14. JCJason Calacanis56:24

       It's not earnings.

   15. DSDavid Sacks56:25

       Yeah, it's enterprise value divided by, like, forward-looking revenue, which is, you kind of say as, like, ARR.

   16. JCJason Calacanis56:32

       Forward-looking top line?

   17. DSDavid Sacks56:32

       Yeah, it's sort of like ARR. It's like recurring revenue.

   18. JCJason Calacanis56:35

       Got it. Um, and so yeah, we, we had this 15X. We went up to 40, 50X. Private market deals going at 100, 200X.

   19. DSDavid Sacks56:42

       Mm-hmm.

   20. JCJason Calacanis56:42

       Um, those days are over big time.

   21. DSDavid Sacks56:45

       Over.

   22. JCJason Calacanis56:45

       Uh, and, uh, it's, we've talked about that ad nauseum. One of the interesting things that I'm seeing is, I think people are looking at businesses that have been corrected and, uh, saying, "Hey, what is the true value of this?" And the, I think the best example is Peloton. New CFO, the CFO of, uh, Netflix- Boys, I gotta go. All right. Well- I gotta go, Jacob. I love you. Stay, uh, love you gu- love you, Chamath. Love you too, bro. Love you guys. And stay safe and enjoy your vacation. Cheers now. So I just, w- without Chamath here, I just wanna talk a little bit. Have you guys watched what happened with Peloton and the CFO coming in and just really revitalizing that business very quickly?

   23. DFDavid Friedberg57:17

       By the way, Jason, I'll say one thing. I think, um, two weeks ago, uh, if you polled the market, I, they would probably have, or if you looked at the, the trading prices of bonds, you probably would have assumed a 95% chance of a half point rate hike in March. And, um, as of today, my guess is that the probability of that is below 5%. And you're probably assuming, you know, um, a quarter point rate hike or maybe even a deferral, uh, at this point. And I think that's one of the things that's keeping the market up instead of tanking so much, uh, this morning.

   24. JCJason Calacanis57:56

       Oh, people are predicting that it's been such bad news that they'll push it out.

   25. DFDavid Friedberg57:59

       Yeah, they're assuming that under the conditions of great uncertainty like this, the Fed cannot act as aggressively as they were planning to act.

   26. JCJason Calacanis58:06

       Interesting.

   27. DFDavid Friedberg58:06

       And as a result, that, that rate hike, um, would be pushed out and it would continue to kind of keep prices, uh, somewhat inflated, uh, and continue to support the market with cheaper, uh, capital and, and liquidity. So, you know, a lot of, uh, capital around the world is gonna get locked up as armed conflict kinda comes to bear. Um, and when that happens, you know, markets will tighten up and prices will be affected. And so the Fed, in, in traditional, in typical times, would wanna have an incentive or, or would have a motivation to, uh, you know, inject liquidity into the markets. Um, and so this is not a great time to do a half point rate hike. And so it's almost certain at this point that they're not gonna do a half point rate hike, uh, next month.

   28. JCJason Calacanis58:44

       Feels to me like huge setup right now. People have capitulated, the market's gotten demolished-

   29. DFDavid Friedberg58:50

       I just think there's some, there's some-

   30. JCJason Calacanis58:51

       ... and, and these companies are still great. Like Zoom is still a great company.

Episode duration: 1:11:17