E88: First principle politics, China chaos & outlook, state of private/public markets & more

1. 0:00 – 1:45

   Bestie intros

   1. CPChamath Palihapitiya0:00

      Two days ago...

   2. JCJason Calacanis0:02

      Oh, here we go.

   3. CPChamath Palihapitiya0:03

      In the piazzetta, I got into a fight.

   4. JCJason Calacanis0:06

      You got into a fight?

   5. CPChamath Palihapitiya0:07

      I got into a fight.

   6. JCJason Calacanis0:08

      Like, a physical altercation?

   7. CPChamath Palihapitiya0:10

      A physical altercation.

   8. JCJason Calacanis0:11

      Really?

   9. CPChamath Palihapitiya0:12

      This chick shows up wearing a white wife beater, talking all kinds of shit. And I said, "Listen, lady, you zip it." And she just kept jawing and jawing, and here she is again, she's back for more. And so I was like-

   10. JCJason Calacanis0:28

       Aw.

   11. CPChamath Palihapitiya0:28

       ... "Listen!"

   12. JCJason Calacanis0:29

       (laughs)

   13. CPChamath Palihapitiya0:29

       Now, have you ever seen-

   14. JCJason Calacanis0:30

       Aw, there she is.

   15. CPChamath Palihapitiya0:30

       Have you ever seen a, a one, a onesie wife beater?

   16. JCJason Calacanis0:34

       Look at that little sweetie. Aw.

   17. CPChamath Palihapitiya0:35

       (sweet baby voice) I'm just gonna look at you. I'm just, you should sit there, and then you just sit there. And then, look. And then you can just say hi to everybody.

   18. JCJason Calacanis0:41

       There's your cold open, everybody. That's the good stuff, right there.

   19. CPChamath Palihapitiya0:43

       Say hi to everybody. I know I'm not a beagle. I know I'm not a beagle, but I'm even better, I have my own thoughts.

   20. JCJason Calacanis0:49

       Sacks, what you're seeing here is called affection between a parent and a child.

   21. DSDavid Sacks0:54

       Just let me know when it's over. Just let me know when it's over. (laughing)

   22. DFDavid Friedberg0:59

       You're the worst. You're the worst human being in the world.

   23. DSDavid Sacks1:03

       I don't need to watch Chamath boost his Q rating by using his kids as props, okay?

   24. JCJason Calacanis1:10

       Oh, Friedberg, where's your puppy that you saved from being tortured with Kim Kardashian's lip gloss?

   25. DSDavid Sacks1:18

       (laughs)

   26. DFDavid Friedberg1:18

       Nick, we gotta get this guy in 'cause he hasn't been in the show in a while. There he is, there he is.

   27. JCJason Calacanis1:23

       Aw, Monty. Aw, your belly rub.

   28. DSDavid Sacks1:26

       Get the props outta the shot.

   29. DFDavid Friedberg1:28

       (upbeat music) I'm going all in. Don't let your winners ride. Rain man, David Sacks. I'm going all in. And I said, we open sourced it to the fans, and they've just gone crazy with it. Love you guys. Queen of quinoa. I'm going all in.

2. 1:45 – 48:07

   First principle politics, analyzing each party's cynicism

   1. DFDavid Friedberg1:45

      Sacks, what's up with, uh, JD Vance in Ohio? Is he gonna pull this thing off, or is he getting beat up? I read an article about him getting beat up, uh, with the Peter Thiel connection being...

   2. CPChamath Palihapitiya1:55

      He got physically beat up?

   3. DFDavid Friedberg1:57

      No, no, no. Like, in the polls.

   4. JCJason Calacanis1:58

      No, no, no, no.

   5. DSDavid Sacks1:58

      No, I think JD should win.

   6. DFDavid Friedberg2:00

      He's gonna win, right?

   7. DSDavid Sacks2:01

      Yeah, I think so.

   8. JCJason Calacanis2:02

      And what about Blake Masters? These, these are the two guys that Thiel is backing.

   9. DFDavid Friedberg2:06

      Should we start the show?

   10. JCJason Calacanis2:07

       We kinda did, yeah.

   11. CPChamath Palihapitiya2:08

       Can I just ask you a question? If any of us entered porn, wouldn't one of our names be Blake Masters? Like, it's just, wouldn't it be on the list?

   12. JCJason Calacanis2:18

       (laughs)

   13. CPChamath Palihapitiya2:18

       Like, doesn't it sound like a great-

   14. JCJason Calacanis2:19

       I'm kidding. I've seen it.

   15. CPChamath Palihapitiya2:20

       Isn't it a great name for porn?

   16. JCJason Calacanis2:22

       It's a great name, Blake Masters.

   17. CPChamath Palihapitiya2:23

       It's a great name.

   18. JCJason Calacanis2:25

       And, and JD Steel, I'm sorry, Vance. Yeah, go ahead. Explain what's going on with this, uh, Manchurian candidate.

   19. DSDavid Sacks2:30

       JD, what, what'd you, what'd you, what'd you accuse him of without any evidence? What, what'd you say?

   20. JCJason Calacanis2:33

       I'm not accusing anybody of anything. I'm just saying, t- tell us about your Manchurian candidates. Go ahead. (laughing)

   21. DSDavid Sacks2:39

       Well, so JD's already won the primaries.

   22. JCJason Calacanis2:42

       Got it.

   23. DSDavid Sacks2:42

       And I expect he will win. I mean, it's gonna be, I think, a red wave in November, and Ohio is a pretty red state these days. Blake still has to win the primary in Arizona. It's a little bit more of a toss-up, but I think he'll do well.

   24. JCJason Calacanis2:57

       All right. Well, I had a followup question, but I'm, I'm not allowed to mention the T-word, so let's just get started.

   25. DSDavid Sacks3:01

       Why is it such a big deal that, like, Peter supports candidates? You got all these-

   26. JCJason Calacanis3:04

       Yeah.

   27. DSDavid Sacks3:04

       ... like, crazy left-wing radicals-

   28. JCJason Calacanis3:05

       No, no, I think it's interesting.

   29. DSDavid Sacks3:06

       ... like Soros gives unlimited amounts of money to, you know, crazy progressives, like Gascon in LA and a zillion others. I mean, why, why is it such an obsession that we have to focus on who Peter supports?

   30. JCJason Calacanis3:17

       No, no, I just think it's fascinating that he...
3. 48:07 – 1:09:21

   Chaos in China: bank protests, housing protests, slowing economic and population growth, future outlook

   1. JCJason Calacanis48:07

      let's pivot to another society that we thought was gonna roll over ours but, um, and that we were in, uh, we were behind on in terms of competition. China's in chaos right now apparently, um, in terms of slowing economic growth, bank protests, mortgage protests, exactly what I predicted last year when you guys were talking about China was gonna dunk on us. And I said, "You know, it's very hard to run these authoritarian countries, and, uh, the citizens like to protest when they get the short end of the, uh, the stick." And here we go. Chinese economy is, is growing very slowly. They were gonna do 5.5% this year. They were only 0.4% in Q2. COVID has a lot to do with this. But there's been a series of bank protests, and, uh, the media has been trying to figure out exactly what's going on here. To just set the stage here, rural banks in China, uh, in a couple of provinces froze a bunch of people's, uh, withdrawals in April. Okay? Sounds like the crypto, uh, contagion, uh, in many ways.... they had been offering unusually high interest rates, also sounding (laughs) like the DeFi, uh, grift going on here.

   2. DSDavid Sacks49:08

      No, no, I think it's, I think it's more like 2008, Jason. I think the financial-

   3. JCJason Calacanis49:10

      Yeah.

   4. DSDavid Sacks49:10

      I think it's more like the financial crisis in 2008 that was driven by the real estate bubble.

   5. JCJason Calacanis49:14

      Yes, which we'll get to.

   6. DSDavid Sacks49:15

      They've got their own real estate bubble, which is collapsing there.

   7. JCJason Calacanis49:17

      Correct. And so, there's, there's multiple things going on at once. The authorities haven't said how much money is frozen. Uh, protestors claim it's billions of, uh, yuan, but it's hundreds of millions in the US. After weeks without a resolution, customers have been, began protesting. Plainclothes thugs have been hitting and kicking the protestors. And as of Wednesday, a video went viral of the CCP bringing in tanks to protect the banks. Very, uh, evocative of Tiananmen Square.

   8. DFDavid Friedberg49:46

      Jakab, I have a question.

   9. JCJason Calacanis49:47

      So... Go ahead. Yeah.

   10. DFDavid Friedberg49:48

       So China has a very explicit zero-tolerance policy on COVID.

   11. JCJason Calacanis49:53

       Mm-hmm. Correct.

   12. DFDavid Friedberg49:53

       Why do you guys think they are so extreme in that policy? Like, w- uh, any, any ideas? Like, uh, have they explained why it has to be zero tolerance?

   13. JCJason Calacanis50:05

       They have not explained that, um, and if you believe that they are the origin of COVID, maybe they have some insider information about long-haul COVID, and that was something I wanted to talk to Friedba- Berg about, if he thinks this, you know, long-term COVID stuff is a really acute issue. But Friedberg, what do you think?

   14. DFDavid Friedberg50:22

       Yeah, I don't... Uh, let me... I don't wanna answer that question yet.

   15. DSDavid Sacks50:26

       Can I, can I answer, can I answer that if you don't want to?

   16. DFDavid Friedberg50:28

       G- g- go ahead, Sax. Yeah, go ahead.

   17. DSDavid Sacks50:28

       Listen, uh, I, I think the answer is very simple, which is-

   18. DFDavid Friedberg50:31

       But I do wanna talk about the Chinese economy. I, I, I, I-

   19. DSDavid Sacks50:33

       Oh, yeah, yeah. No, there's, there's a lot going on.

   20. JCJason Calacanis50:33

       Yeah, we got, we got two more cards to turn over too. Yeah, this is a complex issue.

   21. DSDavid Sacks50:37

       There's a lot more going on there. So on, on zero COVID, I think this is coming directly from Xi. This is his policy. And I think that earlier in the pandemic, they were hailing their response, which they saw as orderly and effective at controlling COVID, and they were contrasting that with the chaotic Western response. And so, I think that the, uh, credibility of the CCP and Xi himself got tied up in this idea of stopping COVID entirely, of zero COVID. And so, I think this is coming directly from the top and it's having a huge impact on their economy. And I think this is one of the dangerous aspects of a autocratic system, is you got one guy at the top making the decisions, and if he's wrong, there's not really a great feedback loop for correcting him.

   22. JCJason Calacanis51:22

       And nobody can question him. Yeah.

   23. DSDavid Sacks51:24

       Yeah, exactly. So-

   24. JCJason Calacanis51:24

       There's no questioning the God-King, yeah.

   25. DSDavid Sacks51:26

       You know, it sort of recalls, um, a situation in China, I think this was about 500 years ago, there was a Chinese emperor who banned shipbuilding and banning having a navy. And because of that, China shut itself off from global trade, and it fell well behind the West, which then explored and captured the New World. There's this question about, you know, the Chinese, uh, Chinese culture and civilization was much more advanced than the West, than Europe, a thousand years ago but basically, it fell behind. And a big reason is because of this unilateral decision by one emperor to basically close themselves off from the rest of the world. So, you have to wonder, does this, um, autocratic move by Xi basically doom their economy to a recession? It seems like they're not learning from our experience. These lockdowns didn't work. I mean, you can't stop the virus. It's eventually gonna get out. Even, I saw Biden got the virus this week. I mean, it's out, right? It's endemic now.

   26. JCJason Calacanis52:19

       It's out. Of course. Yeah, everybody's gonna get it, is, uh, basically what's happening.

   27. DSDavid Sacks52:21

       And, um, Xi has been making a bunch of heavy-handed decisions like this. So you got... Besides lockdowns, it was, it's also the crackdowns. It's the crackdown on the tech industry-

   28. JCJason Calacanis52:29

       Yeah. The venture funding-

   29. DSDavid Sacks52:31

       ... and tech entrepreneurs.

   30. JCJason Calacanis52:31

       ... has plummeted, uh, and so has... So LPs are no longer investing in funds there, with the exception of Sequoias, which seems to be struggling but is still able to raise some money. And then additionally, uh, founders can't raise money, and founders are questioning when they meet with VCs if they can actually... if the VCs are just meeting with them theatrically, uh, the story that came out this week in the FT. If they're just meeting with them theatrically because they want to still hold out hope that there'll be a venture capital industry, but there may not be a VC industry in China anymore. Let me just give you the housing stuff, and then Friedberg, I know you wanna chime in on this. So there's also mortgage bo- boycotts happening at the same time as this fugazi bank stuff happened. The bank stuff seems to be not the national banks. These are local banks that apparently could have been running some kind of, uh, grift where people deposited the money and they ran away with it.
4. 1:09:21 – 1:16:31

   Automation and the impact of the information economy

   1. JCJason Calacanis1:09:21

      the next card that turns is, well, what happens to those factory workers if they've been automated out? What do you do with hundreds of millions of people working in factories who-

   2. DFDavid Friedberg1:09:27

      Yeah.

   3. JCJason Calacanis1:09:27

      ... now have been turned into robots? And then if they're gonna be in an inf- and the answer is information economy, if it's gonna be an information economy, you need venture capital and you need new companies to s- create those jobs and they just killed that. So I-

   4. DFDavid Friedberg1:09:39

      Yeah.

   5. JCJason Calacanis1:09:39

      ... I don't know what strategy Xi is, uh, pursuing here, but it seems like a bad one.

   6. DFDavid Friedberg1:09:43

      We could talk about this one at length, but, um, we were gonna bring this up, but, you know, generally speaking, technology drives productivity gains, but it's p- it's deflationary in the short term.

   7. JCJason Calacanis1:09:53

      Explain what that means on a, in like a practical sense. Maybe, uh, you know, that the technology, uh, is deflationary.

   8. DFDavid Friedberg1:09:59

      So let's say, let's say that you have to pay-

   9. JCJason Calacanis1:10:01

      Example maybe.

   10. DFDavid Friedberg1:10:01

       ... a bunch of people to make a T-shirt and then a machine is built that makes the T-shirt. The cost of the T-shirt goes down because one machine can just print out 100 T-shirts an hour, whereas it would take five people, you know, 10 hours to make those-

   11. JCJason Calacanis1:10:13

       Yeah.

   12. DFDavid Friedberg1:10:13

       ... 100 T-shirts or whatever it is. Right? So a technology of, um, uh, kind of emerges and those people are now theoretically out of jobs. But what ends up happening is those people transition into new jobs that didn't exist before and we end up seeing higher order work take place. Think about the, the world 200 years ago. Do you think we would have had any concept of people being Uber drivers or people, um, uh, you know, creating crafts and selling them on Etsy? Um, or-

   13. JCJason Calacanis1:10:41

       YouTubers, content creators. Podcasters.

   14. DFDavid Friedberg1:10:42

       Or p- people being y- yoga teachers or yoga t- or yeah, yoga teachers or psychotherapists.

   15. JCJason Calacanis1:10:48

       OnlyFans. OnlyFans. Oh, okay. Well, there you go, Josh. OnlyFans.

   16. DFDavid Friedberg1:10:50

       Or do- or OnlyFans or dog walkers or all of these, um, these service businesses or, you know, industries that simply did not exist before. And so the labor that those... that that l- percentage of the population was involved in historically has gone away because it's been automated. As that automation has happened, it's allowed higher order services jobs to emerge and that will be the progression of humanity forever. I will tell you guys, um, I- I was gonna mention this. Have you guys played with DALLE 2?

   17. JCJason Calacanis1:11:18

       Yeah.

   18. DFDavid Friedberg1:11:18

       The other day? Um-

   19. JCJason Calacanis1:11:19

       Yeah, sure.

   20. DFDavid Friedberg1:11:20

       I got the, the login. I was, uh, my brother-in-law was visiting. We were playing with DALLE 2 and making funny kind of photos and-

   21. JCJason Calacanis1:11:25

       Explain what it is. Yeah.

   22. DFDavid Friedberg1:11:26

       So, so DALLE 2 is developed by OpenAI. Um, we all know Sam Altman, he's been leading that organization to great effect over the last couple of years. And, um, and what they're doing is they- they've basically scanned the web for images, tagged them, and then applied, you know, uh, uh, machine learning, uh, to, um, you know, to, to basically allow natural language creation of images from scratch so the AI can generate an image. And you can go to, you know, uh, the, the internet and look at a bunch of these. But the imagery is incredible. I mean, the, the, the creative output wh- what feels like creative output from the system where you just say, "Hey, you know, make me an image of four guys doing a podcast on Zoom in the style of Van Gogh." And it creates this (laughs) image that is unique, has never been created or seen on Earth before, and is a function of the, um, the learning that's been done in these neural networks to, to develop this AI that can, that can create no- novel stuff is really amazing. And I started to think about like, what are the implications for this over time? Think about, you know, um, the original movie Ben-Hur in today's dollars would have cost a billion dollars to make. They had thousands of people, I think tens of thousands of people on that set. It took years to make. They built giant sets. They could only, you know, make one film.It was an incredible feat and an effort. That's what movie-making is, you know, um, still today. There's, there's teams of people. Now, what if you could speak to the AI and say, "Make photo realistic, you know, Jason and Chamath having a battle on a field in the middle of nowhere, and now an airplane flies over." And you can instruct the AI, and the AI can generate photo realistic visuals, audio. The AI can even generate scripts and, and narrative for you. Um, it really starts to change the role of the creator, the director. The director is no longer doing this thing where they have to get it just right, make the perfect 90 minutes, and then line up all the money and all the people to do that work on that plan, on that program. They can be much more iterative, and they can be much more creative on the fly. They can create a two-hour movie by speaking to the AI, and then edit the movie by speaking to the AI. Change the actors, change the color, change the voices, change the music, just speaking to AI to generate creative output. And people will consume that output. And I think it's amazing to think about what creators will end up doing 10 years from now as AI and these tools proliferate, and you see version 12 of this, which is version two, and what version 12 might enable. And so the role, um, the number of people that can do that job goes from Steven Spielberg and Bob Zemeckis and a few other people, to suddenly thousands or tens of thousands of people around the world making incredible movies. That's just one-

Episode duration: 1:44:01