E89: GDP growth negative in Q2, $SHOP layoffs, Alzheimer's fraud, Ginkgo acquires Zymergen & more

1. 0:00 – 2:19

   Bestie intros!

   1. JCJason Calacanis0:00

      All right, his monthly burn rate would make even Bezos wince. He's living the life of a Sri Lankan prince. He drinks nothing but the absolute highest top shelf. He's lifting Italy's GDP by himself. The dictator is back. Chamath Palihapitiya, back to the program.

   2. CPChamath Palihapitiya0:16

      That's good. (laughs)

   3. DSDavid Sacks0:16

      Thank you, Jake.

   4. CPChamath Palihapitiya0:17

      Okay.

   5. DFDavid Friedberg0:17

      When, uh, you mentioned that burn rate, I thought you could be talking about me.

   6. DSDavid Sacks0:19

      I thought you were talking about him, yeah. (laughs)

   7. JCJason Calacanis0:21

      (laughs)

   8. DFDavid Friedberg0:21

      Sometimes these intros, you're not sure which, which way they're going to go.

   9. DSDavid Sacks0:24

      It's a misdirect, it's a misdirect.

   10. DFDavid Friedberg0:25

       (laughs)

   11. DSDavid Sacks0:25

       It's comedy, a misdirect. It is inconceivable that my burn is higher than David Sacks.

   12. DFDavid Friedberg0:30

       (laughs)

   13. DSDavid Sacks0:31

       I have... I own one house. How is it possible?

   14. JCJason Calacanis0:34

       Mm. And maybe, mm, one or two next to it.

   15. DSDavid Sacks0:38

       (laughs)

   16. DFDavid Friedberg0:38

       (laughs)

   17. DSDavid Sacks0:39

       You're such an ass.

   18. JCJason Calacanis0:39

       He's analyzing macroeconomic charts and grids, while at the same time ignoring his kids. He's the sultan of sass, it's no surprise.

   19. DSDavid Sacks0:47

       (laughs)

   20. JCJason Calacanis0:47

       The only thing heavier than his pockets, the bags under his eyes. The Rain Man is back, David Sacks.

   21. DSDavid Sacks0:53

       (laughs)

   22. DFDavid Friedberg0:53

       It's not bad.

   23. DSDavid Sacks0:55

       Oh, here we go. Here we go.

   24. DFDavid Friedberg0:58

       (laughs)

   25. JCJason Calacanis0:58

       The admiral of anxiety, he's rife with strife. He plays a (beep) on his PS5 and he also plays one in real life. Meow. The commander of the cat boys, David Friedberg.

   26. DSDavid Sacks1:08

       (laughs) I mean, I'm totally cool with that opening because you're going to look like an asshole.

   27. DFDavid Friedberg1:11

       (laughs)

   28. DSDavid Sacks1:11

       It's all good.

   29. JCJason Calacanis1:12

       I mean, more of an asshole? I mean...

   30. DSDavid Sacks1:15

       If you didn't ignore it, every time Friedberg spoke, you would have heard that the guy from Annapurna Pictures reached out to him, gave him a link to download a free game about cats, which he downloaded and he's been playing. It's now the most popular video game in the world.
2. 2:19 – 22:45

   GDP growth is negative for a second consecutive quarter, but is the US actually in a recession? How has the White House controlled the narrative?

   1. JCJason Calacanis2:19

      GDP fell by 0.9% in Q2, marking two straight quarters of negative growth. In Q1, we all know GDP fell 1.6%. Here's the real GDP chart. Current dollar GDP increased 7.8% at an annual rate of 465 billion in Q2 to a level of 24.85 trillion. Home construction down 14%, ostensibly because of the interest rates increasing. Inventories which helped boost GDP in 2121 dragged down growth in Q2. So supply chains easing, taking away two percentage points. Uh, Chamath, what's your take? Do these year over year comparisons work? We were talking in the chat a little bit about the spike, uh, in 2021 versus the, the dip in 2020. What's your take on this?

   2. DSDavid Sacks3:09

      I mean, I think you just summarized it. People are really fixated on these numbers without understanding, uh, basic statistics. So just taking a step back, if you go to the Bureau of Economic Analysis, which is an official website of the government of the United States that posts GDP, the title makes it pretty self-obvious what we're dealing with here, which it says... Nick, you can put it up there. Real GDP, the percent change from the preceding quarter. So things can still go up positively but still be negative if it doesn't go up by the same or more than the quarter before it. The thing that we really have going on is that over the last eight quarters, we've had all kinds of very turbulent data that's made the trend line unpredictable. And the most obvious way to see this is actually in one specific subsector, which we'll get to in a second, which is around US e-commerce adoption. You see this one huge spike coming out of nowhere, and then eventually everything has settled back to trend. The same way, I think what we're waiting to figure out is how many quarters does it take for us to get back to on-trend growth in the economy? We had a massive shortfall in Q2 of 2020. We had a massive surplus in Q3 of 2020. We've had a country that's been getting back to finding equilibrium over the last five quarters. So we don't really know what the steady state growth should be. This is why I specifically had such an issue with the tone the White House took, which was trying to explain away this, that this isn't a recession by trying to create doubt in the definition. Instead, I think it would have been much better off just repeating what I just said and explaining basic statistics and actually showing that the country is headed in the right direction, largely speaking from a really crazy one-time externality that nobody could have predicted, that it's going to take some number of quarters. And so really what you should look at, and Jason, you've pointed to this, is employment and wages and try to be a little bit more circumspect in overreacting to any one quarter of data. By the way, the Fed exactly just said the same thing yesterday when they raised 75 basis points. They said, "We are not going to give guidance anymore because things are too turbulent. We're going to remain vigilant on inflation, but mostly we're going to be very near-term data dependent." So I would boil all of this in saying let's not overreact to a quarter's print here or there, and specifically the label. I think the White House made a mistake in trying to basically think, you know, we all didn't understand what a technical recession was. I think instead, we should just focus on what we have to do to get back to solid state equilibrium.

   3. JCJason Calacanis5:59

      Yeah. And just to put a pin in the definitions...We all know the common definition, two suc- successive quarters of, uh, negative GDP. However, people have said it's a, a temporary economic decline during which trade and industry activity are reduced. So, there's a sort of debate and splitting hairs going on, Sax, uh, which was kind of stupid.

   4. DFDavid Friedberg6:22

      The big news this morning is that we no longer know what a recession is. This is such a vast and complicated question. You might as well be asking, "What is the meaning of life?" Now, I remember in the days of Republican presidents, we had a very simple definition of recession, which was two quarters of negative GDP growth, but now that we have a Democrat in the White House, we just can't know these things. Why even ask such difficult questions, right?

   5. DSDavid Sacks6:46

      (laughs)

   6. DFDavid Friedberg6:46

      I mean, that's basically the media coverage today, and it's absurd. I mean, and you saw for the last week, the administration and its spokespeople have been trying to muddy the waters on the definition of a recession, and it was laughable as they were doing it. But now you see the media coverage today, and you realize, like, they've bought into this nonsense, and they're carrying so much water for the administration. Look, the headline should be, "The Biden Recession Has Begun." That's it.

   7. JCJason Calacanis7:10

      If you had 3 minutes and 45 seconds for your Biden over-under with Sax, you took the under, you won. (laughs) Go.

   8. DFDavid Friedberg7:15

      We're in a recession. He's the president.

   9. JCJason Calacanis7:18

      Of course, we're in a recession. (laughs)

   10. DSDavid Sacks7:18

       Yes. (laughs)

   11. DFDavid Friedberg7:18

       And if we had a Republican in the White House, it would be, "Republican President Recession Has Begun."

   12. JCJason Calacanis7:23

       Yeah.

   13. DSDavid Sacks7:23

       (laughs)

   14. DFDavid Friedberg7:23

       So, the media here is carrying so much water to try to avoid-

   15. JCJason Calacanis7:27

       What do you mean by that?

   16. DFDavid Friedberg7:27

       ... the obvious headline. I just explained it. Instead of reporting the obvious headline, they're now saying that we're approaching recession, or we might be in recession.

   17. JCJason Calacanis7:36

       Oh, got it.

   18. DFDavid Friedberg7:36

       We have all these difficult technical issues. Listen, listen, we're in a recession. It's started. It might be a shallow recession. We don't know yet.

   19. JCJason Calacanis7:44

       Yeah.

   20. DFDavid Friedberg7:44

       Um, the, it's, it's, uh, it's a recession in which the unemployment rate, as of today, is low, although the labor participation rate is also low. So, listen, we're at the beginning of a recession. It might turn out we might have a bounce in Q3. This might be more of a double dip. I suspect that's what it'll be. But we know the cause of this. The cause of this recession is inflation. If you look at the economy's growth on, in nominal terms, it grew at seven point something percent, but because inflation was at 9%, you have to subtract them in real terms, the economy is shrinking. And who is ab- to blame for reces- uh, for inflation? Well, Jay Powell at the Fed, 'cause he reacted way too slowly, but also the Biden administration for all the spending they did.

   21. JCJason Calacanis8:25

       How much sooner do you think they could have reacted? Two quarters?

   22. DFDavid Friedberg8:28

       No, like nine months earlier.

   23. JCJason Calacanis8:30

       So three quarters.

   24. DFDavid Friedberg8:31

       We got the, we got that first surprise inflation print last summer. It was May, I believe, that 5.1% price print.

   25. DSDavid Sacks8:37

       We started to talk about 10-year breakevens, uh, tips-

   26. DFDavid Friedberg8:41

       Yeah.

   27. DSDavid Sacks8:41

       ... in May of last year.

   28. JCJason Calacanis8:43

       Yeah. So they could've gotten-

   29. DFDavid Friedberg8:45

       Exactly.

   30. JCJason Calacanis8:45

       ... quarter or two- quarter or two quicker.
3. 22:45 – 36:33

   Looking at COVID trends with a post-COVID view: e-commerce, remote work, and how they correlate

   1. DSDavid Sacks22:45

      fit."

   2. JCJason Calacanis22:45

      Freeberg, when we look at these, uh, trends, okay, uh, commerce, seems like people are going back to shopping, but I want to ask you about two specific ones. Healthcare, it does seem like telemedicine was one of those things that got, got, got accelerated during COVID. Do you think that's gonna revert to the mean? Or do you think that, you know, doing doctor's visits over, you know, FaceTime and text and all these consultations are gonna stick with us? And then what about work from home? Because that does not seem to be, uh, shifting all that much. Freeberg?

   3. DSDavid Sacks23:18

      The work, the work from home is not shifting?

   4. JCJason Calacanis23:21

      Well, I mean, it's... People are still staying home, uh, and, you know, uh, Amazon just put a hold on six buildings where they said, "You can finish the outsides, but let's not do the insides because we don't even know what we're going to do with these buildings and what hybrid's gonna look like." And Zuckerberg hasn't been able to get people to come back to the office, and Apple seems to be getting people two or three days a week. So, it seems like it's still been a struggle, and downtown San Francisco is empty, so we, we're getting mixed... We're getting mixed results back now, I would say, is the best way to, to describe it. So work from home and, and telemedicine. What do you think, Freeberg?

   5. DSDavid Sacks23:53

      I mean, certainly the knowledge economy seems to prefer work from home. I mean, if you're working on a computer and you don't need to interact with people and you got kids or family, you're inclined to stay home. So that seems to be a sticking point. Um, you know, younger people...

   6. CPChamath Palihapitiya24:12

      ... probably have their own motivations. But there was a good stat on telehealth, I'm just trying to find it, and I think telehealth surged during COVID. And 36% of patients used a telehealth service in 2021, 420% increase over 2019. And so despite some reversion post-COVID, post-lockdowns, um, there is a significant sticking point that, uh ... And I think 60% of telehealth patients are women, so there's particularly female services that are being rendered through telehealth at an increasing rate than pre-COVID. And so there's a lot of stuff. I mean, look, we've all had to go sit in the doctor's office for two hours to get some prescription or get a doctor to give us some advice on something they don't need to physically check us out for. So, you know, it certainly seems to be a acceleration in that department. Offices... Wasn't the, Amazon like was working on 15 warehouses they shut down as well, right? I mean, if you guys remember, at the start of COVID, when you'd place something on Amazon, it was like a two-week delay because they didn't have enough capacity to fulfill the order volume. You know, you looked at To- Toby's chart, it's nearly a doubling in e-commerce volume in a week. When that happens, Amazon's, you know, plus or minus 5% supply chain has to revert to servicing twice as many customers. It's just not gonna happen. So they overbuilt, tried to get ahead of the curve. Remember they hired like a m- you know, 100,000 workers and, you know, they, they, they had to make a pipeline for quarters ahead to build warehouses. Now they're realizing that demand's not gonna be there and they're cutting back on 15 warehouses around the country and not gonna build them.

   7. DSDavid Sacks25:48

      They were buying up so many warehouses. I had a couple of companies that were looking for warehouses in Los Angeles, Northern California, and Amazon just bought an option on every single warehouse they could find, and now they're putting them back on the market. So they, they definitely, um, went too heavy and then everybody started betting on Peloton and Teladoc. And if you look at Teladoc, I mean, it's off 90% from the peak. I, I, I would show the, um, I would show the Peloton chart as well, but that would just be gratuitous and-

   8. CPChamath Palihapitiya26:15

      I think some o- some of the stuff to note i- like at the end of the day, whatever product is better for the consumer, they're gonna pick. You know, what's the better way to buy shirts? You know, what's the better way to get, uh-

   9. DSDavid Sacks26:27

      Well, define, define better.

   10. CPChamath Palihapitiya26:29

       Yeah, I mean for the consumer it's like, do you wanna try 'em on or do you know your size, right? Do you... Buying a brand that you know and a size you know you're gonna buy it online at this point. Th- I mean the one thing COVID did is it basically created a trial by fire. My parents never used DoorDash before COVID, so then they were forced to use DoorDash during COVID. Now they know what it's like. And so, you know, there are now people that never trialed a lot of these services that have trialed them and are now making decisions based on that experience.

   11. DSDavid Sacks26:55

       But that's a beautiful example. So, um, just use your parents. Why do you think... Let's assume they did. Why do you think they mean reverted to now using DoorDash only in the same percentage as they would have otherwise x-ed out a little bit of

   12. CPChamath Palihapitiya27:06

       That's my point. Like I think, I think the quality of the food, the, uh, the time to wait, the experience of going out to dinner. There's a lot of motivating factors that are different by different demos. And so whatever the consumer wants, they're gonna pick. If I want to go have a dining experience in person with my friends, I'm gonna go do that instead of sitting at home ordering DoorDash and having everyone come sit on the couch and eat dinner together. So I think that there's this, um, you know, this, call it mean reversion, but we have seen, call it a broader exposure, and we're really gonna see the true market dynamics, uh, play out. I don't think everyone wants to buy shoes online. I don't think everyone wants to buy every piece of clothing online. I think people want to go to the store and try stuff on.

   13. DSDavid Sacks27:42

       I think it's that, and I think that there's a lot of ancillary social benefits that come with a lot of these activities that you lose if you just optimize for efficiency. So, to your point, like, yeah, you can get a burrito, but even going to Chipotle with your friend is more fun.

   14. CPChamath Palihapitiya27:58

       Totally. Get out of the house. Yeah.

   15. DSDavid Sacks27:59

       You could p- get out of the house, shooting the shit. You know?

   16. CPChamath Palihapitiya28:02

       Yeah.

   17. DSDavid Sacks28:02

       Yep.

   18. CPChamath Palihapitiya28:02

       Um-

   19. DSDavid Sacks28:03

       Seeing people.

   20. CPChamath Palihapitiya28:03

       It's just, it's... And the serendipity. Yeah, you may run into somebody, th- you... Nothing beats that. I will tell you-

   21. DSDavid Sacks28:08

       But-

   22. CPChamath Palihapitiya28:08

       ... by the way, I, I, I do believe that there is a counter-narrative to the idea of work from home and e-commerce moving together. I think as people work from home, they want to go be in person for other activities more.

   23. DSDavid Sacks28:21

       Yes. Yes.

   24. CPChamath Palihapitiya28:21

       So the m- the more you're working from home, the more you want to go to dinner with people or lunch to people.

   25. DSDavid Sacks28:25

       Yes.

   26. CPChamath Palihapitiya28:25

       The more you want to go shop in person because you're stuck in the house all day and you wanna go do other stuff. And so if you're working in the office, you're gonna do more e-commerce, and if you're working at home, you're probably gonna do less e-commerce. So there's probably some net-net balance. We saw both of them rise together during COVID, but now there's more of a equilibrium being reached.

   27. DSDavid Sacks28:43

       Well, I mean, if you don't look after-

   28. CPChamath Palihapitiya28:44

       And by the way, I think we're-

   29. DSDavid Sacks28:45

       ... change or behavior, you may stay home for three days straight and all of a sudden you're like, "Whoa."

   30. CPChamath Palihapitiya28:48

       Remember it's... And, and just remember, 60% of the US population lives in urban areas where this is kind of an effective kind of conversation we're having. I think outside of that, it's a very different world. And so for 40% of Americans, this is not like the conversation that, you know, in, in, in deeply suburban and rural areas.
4. 36:33 – 59:50

   "Inflation Reduction Act", how government subsidies can stifle innovation

   1. DFDavid Friedberg36:33

      is. And let's just bring up one other thing that just happened today. So Manchin cut a deal with Schumer...

   2. JCJason Calacanis36:39

      Oh, yeah.

   3. DFDavid Friedberg36:39

      ... to bring back, to bring back a slimmed down version of BBB. Thankfully, it's not 4 trillion like Biden wanted. It's 750 trillion, okay?

   4. JCJason Calacanis36:48

      Yeah.

   5. DFDavid Friedberg36:48

      But what are they calling, bill- billion, right. Okay, so, you know, thankfully it's, it's a slimmed down bill. But what are they calling this? They're all of the sudden calling it the Inflation Reduction Act-

   6. JCJason Calacanis36:57

      Wait, what?

   7. DFDavid Friedberg36:57

      ... of 2022.

   8. JCJason Calacanis36:59

      What, what?

   9. DFDavid Friedberg36:59

      It's like, are you kidding? This doesn't pass the laugh test.

   10. JCJason Calacanis37:00

       Why, why do they, are they trolling us with the names of these bills?

   11. DFDavid Friedberg37:04

       (laughs)

   12. JCJason Calacanis37:04

       The bills are never what's in the bill. Why don't they just call it the Green Energy Bill and the Screw Private Equity Bill?

   13. DFDavid Friedberg37:10

       (laughs)

   14. JCJason Calacanis37:10

       I mean, that's basically what it is.

   15. DFDavid Friedberg37:12

       Yeah, you're right.

   16. DSDavid Sacks37:13

       Well, inflation reduction sells to everyone, right?

   17. DFDavid Friedberg37:15

       But, Jason, the media, the media-

   18. JCJason Calacanis37:16

       It's so dumb.

   19. DFDavid Friedberg37:16

       ... the media's not holding the administration accountable. If we had, if we had an honest media, they, the, the headline today would be-

   20. JCJason Calacanis37:24

       You're not gonna get it from the media.

   21. DFDavid Friedberg37:25

       ... the Biden recession begins.

   22. JCJason Calacanis37:26

       That train's left the station, Sax. We, you, you can only get it on this pod or other podcasts.

   23. DFDavid Friedberg37:30

       Yeah.

   24. JCJason Calacanis37:30

       What did President Manchin get for this deal?

   25. DFDavid Friedberg37:33

       (laughs)

   26. JCJason Calacanis37:33

       He agreed to it. What did, what did President Manchin get?

   27. DFDavid Friedberg37:36

       Well, I mean, look-

   28. JCJason Calacanis37:36

       'Cause he got, he secured some bag, right? Did you see what I sent you-

   29. DFDavid Friedberg37:39

       Oh, my God.

   30. JCJason Calacanis37:39

       ... in the group chat?
5. 59:50 – 1:17:36

   Alzheimer's fraud, Ginkgo acquires Zymergen for $300M

   1. DSDavid Sacks59:50

      One of the, one of your exceptions there was investments in science. You wanna talk about your opinion on the quality of the grant process at the NIH and whether we're doing the real work necessary to get the right things funded?

   2. CPChamath Palihapitiya1:00:10

      Yeah, I mean, I think it's a good transition to what happened this week, which was that there was a, a major, uh, potential fraud uncovered in Alzheimer's research, which has led to over a billion and a half dollars of, uh, funding and grants being given out to follow on Alzheimer's research programs in the years that followed this initial paper. So, you know, in, um, 2006, there was a paper, uh, published in the journal Nature, um, about amyloid beta, uh, proteins, uh, that impaired memory in brains, which then became kind of the leading theory for the cause and the driver of Alzheimer's disease. And much of the research and funding that followed from there, which is now up to nine-... seve- several billion dollars, uh, in, in total funding in, in private and public, uh, institutions. Last year alone, the NIH funded $287 million in research into amyloid beta. And it turns out that the initial paper was shown to be fraudulent. Uh, and so, you know, just, uh, recently, uh, the journal of science published in detail an analysis of the photos of the western blot measurements, the protein recognition images that the scientist used in this initial paper were forged, and that many papers of his were then forged years later. And, um, this paper is one of the most cited papers in Alzheimer's research and much of the work that's been done on Alzheimer's came out of this. Um, and if you guys remember last year, we talked about that Biogen drug. That Biogen drug is meant to stop amyloid beta plaque, and, you know, the projection is that Alzheimer's drug... And, and remember, there was a panel of scientists that looked at the data for that drug that Biogen got approval for from the FDA, and they all said this does not show conclusively in any way that it improves Alzheimer's. And the FDA still approved the drug because so much of the NIH funding went into the research, uh, for a- uh, amyloid beta. And so the assumption has always been this is the cause of Alzheimer's, this is the way to resolve it, and everyone gets so strongly held in that core belief and there's so much money behind it that we can't turn away and say maybe we're wrong. And this is the problem when science meets money, um, once you go from funding something and then sci- suddenly a whole bunch more money pours into it, everyone's gonna look bad and everything's gonna fall apart and everyone fears that the system fails if you realize that something you did and said was so totally wrong. We could even argue this is what happened recently with COVID, the masks, the vaccines, all of the statements that were made, that you have to keep doubling down.

   3. JCJason Calacanis1:02:55

      Every system has bad actors. You know, people plagiarize, fraud, whatever. Is this like a systematic thing and doesn't science protect against this because people then do double-blind studies and try to replicate studies?

   4. CPChamath Palihapitiya1:03:08

      Two things-

   5. JCJason Calacanis1:03:09

      Because like Jason Blair eventually got caught, right? At the New York Times. It was only a matter of time before somebody said, like, "His description of my back porch was not accurate and I never talked to this journalist."

   6. CPChamath Palihapitiya1:03:17

      So let's say, let's say that you're a smart up-and-coming scientist.

   7. JCJason Calacanis1:03:20

      Yeah.

   8. CPChamath Palihapitiya1:03:20

      Your job is to, is to publish research that gets attention and that you can then go raise grants from the NIH and others fr- on. So you want to get some good papers out, you want to get attention, and then you want to forward the research that's already being done. It is to no one's incentive to go out and try and retest something that someone's already published on, even though that's what you're supposed to do in science. There's no motivation, there's no dollars to do this. It's, um, it's a disincentive to your career. It's a disincentive to your ability as a scientist to source funding and to source grants to go back and retest assumptions that are already strongly held beliefs i- in the industry. I'll give you another strong example that just came out, um, two weeks ago. You know, um, you guys heard of SSRI anti-depressant drugs, right? 37 million Americans are on these drugs. Uh, the market is, uh, is projected to be at about 25 billion in the next few years. That's how much, um, Americans, uh, are spending on these, uh, on these anti-depressant drugs.

   9. JCJason Calacanis1:04:16

      Half a sex, but yes, go on.

   10. CPChamath Palihapitiya1:04:18

       (laughs) Right. Um, so there was a paper published in Nature a few weeks ago, and the Nature journal pulled all the research and all the data from 17 other studies that was across several hundred thousand patients, and their conclusion was, um, uh, that there is, uh, effectively, uh, no proof that these SSRI drugs have an effect on depression, have a positive effect on depression, that, um, you know, serotonin and the idea that, you know, serotonin uptake should kind of have a, a, a driving effect on, on depression. And this has been the assumption that's been held now for, you know, for many years. I mean, you know, I think the original paper on this was published, uh, probably north of 20 years ago. But the industry is so big, right? The drug companies are making 20, $25 billion a year, uh, on this drug, on these drugs, and scientists are incentivized to further that research that supports that research and so they can go out and get NIH grants because it's already an assec- accepted proven belief that this is driving, that this is-

   11. JCJason Calacanis1:05:19

       Is, is there a solution to this? Like, for every dollar that's spent on primary, you know, a dollar needs to be sent on double-blind testing it and making sure that it's accurate should there... 'cause we have this issue in journalism, right? Everybody's a content creator, re-blogger, an opinion journalist, but there's very few now investigative journalists left. s1: The actual problem-

   12. CPChamath Palihapitiya1:05:39

       Yeah, investigative journalists.

   13. DSDavid Sacks1:05:39

       ... is the peer, is peer review systems entirely, in my opinion. Like, the, the problem with this study is that this was done by an up-and-coming researcher in 2006 at the University of Minnesota, uh, under a researcher who was well known, and so there was zero incentive, as Friedberg said, to really push back. When well-credentialed scientists tried to find this amyloid beta star 56, they couldn't find it. And, you know, lo and behold, those articles don't get published because they don't get accepted. Why? Because it unravels the entire game that folks will play. So, you know, if you're a well-educated PhD with post-doc in the right places, um, supporting other people, it's just a loop that goes on forever. The article goes on to talk about how that person who wrote that initial article eventually got this very prestigious multi-year grant from the NIH by a person who was his reviewer who worked on the 2006 paper with him. I mean, these are some pretty blatant conflicts of interest, but the reason they don't get uncovered is, like, who is, who's gonna step in and all of a sudden become the-

   14. CPChamath Palihapitiya1:06:47

       Let me strike an analogy here. You know, there's a seedling of fraud here, obviously. Some guy took some friggin' photos and Photoshopped them and doctored them and whatever. But we then tell ourselves stories, and those stories get us access to money, which allows us to pursue more science, which is meant to forward the market.... and then eventually the market gets forwarded so much and you spend a billion and a half dollars, and it turns out the whole thing doesn't work. Just like stock markets, it starts out as a voting machine in the beginning and it's a weighing machine over time. The same is true in science. You will have a voting machine in the beginning where everyone has some belief, some theory, some hypothesis, and they all want to believe it, and they forward it, and they fund it, and they fund it, but ultimately if it's not true and it doesn't actually resolve in real world change, the market will collapse, the stock will collapse. And that's what just happened with, um, amyloid beta and Alzheimer's to a large degree. There's a billion and a half dollar market cap you can think about it, or a billion and a half dollars of funding that's gone into this-

   15. DSDavid Sacks1:07:47

       No, that's per year.

   16. CPChamath Palihapitiya1:07:47

       ... product idea.

   17. DSDavid Sacks1:07:48

       That's per year.

   18. CPChamath Palihapitiya1:07:48

       Well, no, no, there was a billion and a half of NIH funding over time. This is just the NIH money. Uh-

   19. DSDavid Sacks1:07:52

       No, no, what I'm saying is the NIH budget per year for Alzheimer's and dementia is 1.9 billion dollars.

   20. CPChamath Palihapitiya1:07:57

       Yeah, yeah, if th- and it's a-

   21. DSDavid Sacks1:07:59

       Half of it... And half of it, if you look at the tags, if you just search the tags, half the money has gone into Alzheimer's disease, amyloid beta. So the point is, you could orient the terms you used and the way in which you wrote your grants to disproportionately affect the, the likelihood of getting money. Separately, there's a whole body of researchers that have felt for a very long time that specific forms of infection, viruses, um, Lyme disease could actually be a precursor to Alzheimer's, and it has been poorly researched because the funding dollars weren't there. So the, the-

   22. CPChamath Palihapitiya1:08:32

       There's a lot of other theory. Mitochondrial dysfunction.

   23. JCJason Calacanis1:08:35

       So Freeburg-

   24. CPChamath Palihapitiya1:08:35

       Yeah.

   25. JCJason Calacanis1:08:35

       Yeah.

   26. DSDavid Sacks1:08:35

       Yeah.

   27. JCJason Calacanis1:08:35

       So Freeburg, when we look at this, a bad actor committing fraud can send the entire, uh, deployment of capital in science on a multi-billion dollar-

   28. DSDavid Sacks1:08:46

       No, it's the trajectory of the human race.

   29. JCJason Calacanis1:08:47

       Yeah.

   30. DSDavid Sacks1:08:47

       Come on. Like, it's not just about, like, we didn't get the dollars in. It's if you don't take the path, the drug doesn't get discovered. That's a really big deal.

Episode duration: 1:27:54