E91: SoftBank's $21B+ Vision Fund loss, signals of a bubble, macro picture, Trump raided by FBI

Chamath Palihapitiya 0:00 How mad is Sachs gonna get when he sees my button situation today?

Jason Calacanis 0:03 I'm gonna join you. Hey, Chamath, how are you doing?

Chamath Palihapitiya 0:05 Oh, my God. Look at the collar situation. Look at the button situation. Look at that. Oh, this is fantastic.

Jason Calacanis 0:12 Oh, hey, besties.

David Sacks 0:14 (laughs)

Jason Calacanis 0:14 So, I just got off the lake.

Chamath Palihapitiya 0:16 We're at the lake?

Jason Calacanis 0:17 I just got off the lake, yeah. I was just on the lake with the boat.

David Sacks 0:19 Lake Como? Where, where were you?

Jason Calacanis 0:21 I was doing a little wakeboarding in Tahoe. Yeah, I was still wakeboarding. Me and Zach.

Chamath Palihapitiya 0:24 Me and Nat took all five kids, and we navigated the entire island of Sardinia for eight days.

Jason Calacanis 0:31 Amazing. And by, when you say, "We navigated," you mean the crew navigated and you ate seafood?

Chamath Palihapitiya 0:37 We are... Yeah, it took, it took a village but- (laughs)

David Sacks 0:39 (laughs)

Narrator 0:40 Let your winners ride.

Jason Calacanis 0:43 Rain Man, David Sachs.

Narrator 0:46 I'm going all in. And I said- We open source it to the fans and they've just gone crazy with it.

Jason Calacanis 0:51 Love you, besties.

Narrator 0:52 Queen of Quinoa. I'm going all in.

Jason Calacanis 0:56 All right, everybody. Welcome to episode 91, episode 91 of the All In podcast. Yeah, we're still here. Uh, lots of news to discuss this week. With me, of course, to chop it up from his deposition room, uh, the war room, the Rain Man himself, David Sachs. How are you doing, brother?

David Sacks 1:11 Good.

Jason Calacanis 1:11 Big week for you?

David Sacks 1:13 They're all big weeks. They're all big weeks.

Jason Calacanis 1:14 They're all big weeks?

David Sacks 1:15 (laughs)

Jason Calacanis 1:15 Yeah? You look tired.

David Sacks 1:17 Well, we were recording pretty early today.

Jason Calacanis 1:19 It's a little exhausting.

David Sacks 1:20 You actually look really tired.

Jason Calacanis 1:22 What are you talking about? I just got off the lake. I, I feel fresh. I was just wakeboarding this morning on Lake Tahoe.

David Sacks 1:27 Oh, okay.

Jason Calacanis 1:27 I feel refreshed. I'm refreshed. Uh, and of course, in front of his, uh, $9 clip art, uh, that he blew up on easyprints.org, the Sultan of Science himself, David Friedberg. How are you, sir?

David Friedberg 1:38 Always great to be with you, J-Cal.

Jason Calacanis 1:40 Are you working?

David Friedberg 1:41 It boosts my self-esteem and my morale to be with you every morning-

Jason Calacanis 1:45 (laughs)

David Friedberg 1:45 ... that we get to connect over Zoom.

Jason Calacanis 1:47 Well, I'm glad that your performance has been stratospheric the last three weeks. You're going on a hot streak. Let's see if you can continue it on episode 91. And missing many buttons this week.

David Sacks 1:56 (laughs)

Jason Calacanis 1:56 Uh, we've got, we've got at least a three or four button August going. How are you doing, uh, dictator, uh, from your island-

David Sacks 2:04 (laughs)

Jason Calacanis 2:04 ... your remote island? Did you, uh, you, you invaded an island?

Chamath Palihapitiya 2:08 Market's go up another 5% and one more button comes undone.

Jason Calacanis 2:11 Oh, I love it. So this is 20% up-

David Sacks 2:13 (laughs)

Jason Calacanis 2:14 ... and we could go to 25?

David Friedberg 2:15 That's a bull shirt.

Chamath Palihapitiya 2:16 Daddy's back.

David Friedberg 2:17 The more bullish he gets on the market, the more he unbuttons.

Chamath Palihapitiya 2:19 Daddy's back, so the buttons (bleeps) .

Jason Calacanis 2:20 What, are the low rise jeans on right now or are you wearing shorts? What are you wearing? Show us those stick legs.

Chamath Palihapitiya 2:25 I'm wearing these beautiful linen shorts.

David Friedberg 2:27 Can you stand up and show us?

Jason Calacanis 2:28 Yeah, come on.

Chamath Palihapitiya 2:29 Yeah, yeah. I'll show you.

Jason Calacanis 2:29 Give us a 360. Come on. Let's see. What's going on?

Chamath Palihapitiya 2:31 Totally. So, look, I have the, I, but these are the most beautiful-

Jason Calacanis 2:33 Oh, whoa.

David Friedberg 2:34 There they are.

Jason Calacanis 2:34 Whoa.

David Friedberg 2:34 Oh, inner thigh. Inner thigh.

Jason Calacanis 2:36 That's a little too much thigh.

David Friedberg 2:37 Yeah.

Jason Calacanis 2:37 That's like a chicken wing.

Chamath Palihapitiya 2:38 Y- you guys like this?

Jason Calacanis 2:39 It's nice.

David Friedberg 2:40 They look tight, too.

Jason Calacanis 2:41 Very tight. Are you...

David Friedberg 2:43 Yeah, those are definitely yours?

Jason Calacanis 2:44 Are you wearing like, a children's size or something? Is that a junior size?

Chamath Palihapitiya 2:47 I like, you know, I like the tighter sizes.

Jason Calacanis 2:49 You do?

David Friedberg 2:50 (laughs)

Chamath Palihapitiya 2:50 I do like the tighter sizes. I think they, uh, they, they fit my-

Jason Calacanis 2:53 One person doesn't.

Chamath Palihapitiya 2:54 ... body type.

David Friedberg 2:54 Accentuate all the little bumps and- Ugh. ... and nodules?

Jason Calacanis 2:58 Too much information. All right, let's start with, um... There's a lot to talk about this

Jason Calacanis 3:02 week. I think one of the most interesting things last week we were talking about it in the group chat, uh, that doesn't exist. Uh, Vision Funds' $21 billion investment loss for the quarter. Masayoshi-san did a really great, uh, YouTube video. I sent it around. Did any guy- any of you guys watch the video?

David Friedberg 3:19 Yes.

David Sacks 3:20 Nope.

Jason Calacanis 3:21 Oh, okay. It's, it's really interesting to watch. We'll put it in the show notes.

David Friedberg 3:23 It's like a six-minute interview he put on his earnings page, right? Like right when they put out quarterly earnings, he's like, "Here's my interview."

Jason Calacanis 3:30 Yeah, the, y- you know, he comes to a podium and basically talks about, uh, the Vision Fund. Obviously, if people don't know, the Vision Fund 1 was $100 billion, the largest venture fund ever raised. Um, and SoftBank's current market cap is $66 billion. Here's the quote from the FT article. "Sun set on Monday that SoftBank would now subject itself to dramatic cost-cutting exercise, uh, after a $59 billion investment gain at the two Vision Funds almost completely reversed over the past six months." They were up almost $60 billion at the peak, and it came crashing down. Masa kicked off the presentation showing portraits of Tokugawa... Tokugaga... Gawa, uh, Ieyasu. This is the, uh, founding shogun of Japan's, uh, Tokugawa shogunate. And, uh-

David Sacks 4:16 (laughs)

Jason Calacanis 4:16 ... he ruled Japan for six... I mean, I'm killing this.

David Friedberg 4:18 (laughs) It's such a long intro. (laughs)

Jason Calacanis 4:20 God, it's so hard. Yeah, I mean, it, but it was just-

David Friedberg 4:22 (laughs) Just-

Jason Calacanis 4:22 ... so great. Let me just play a clip for you. Here, here's a 68-second clip and we'll, we'll talk about it right after and then we'll get into what all this means.

Narrator 4:30 This is a portrait of Tokugawa Ieyasu. He actually made a big loss against Takeda Shingen and came back. In the background of that, Tokugawa Ieyasu had to face Takeda Shingen, which is much, much larger army than theirs. And most of the allies actually said this is gonna be the losing battle so that they should not go for it, but actually it's better to stay at the castle. However, Tokugawa Ieyasu didn't want to lose his face, so that he get out from the castle, had a battle, made a complete loss and suffer, uh, and came back. And that actually learn lesson. He tried to remember and remind, uh, his own learnings and put it into this drawing. So since the foundation of SoftBank Group, I made a two consecutive quarters loss. So previous quarter and this time quarter, consecutively we made 3 trillion yen level of the loss. So in total, 6 trillion yen loss, uh, was made in the past six months. So I believe I need to remind that myself.

Jason Calacanis 5:39 Pretty spectacular loss. And then he, he goes on to take some Q&A, and this is the, I guess, the, the killer quote. "When we were turning out big profits, I became somewhat delirious. And looking back at myself, I am quite embarrassed and remorseful." You remember, of course, uh, and, and he complained a little bit in the, in this whole thing about how there was a giant bubble without ever recognizing that he kind of created the bubble with a $4 billion check, uh, to WeWork at a $47 billion valuation after a 20-minute (laughs) meeting with Adam Neumann.This chart is pretty incredible. This is the, uh, net income quarterly. Essentially, you can think of SoftBank as, like, a holding company of a bunch of, um, different assets, including Alibaba, previously Uber, and all of this Vision Fund stuff. 97% decrease in terms of deployment of capital. So if you look at capital deployment as well, nobody ever put this much money to work, especially in privates. The second chart, if you look in Q1 of 2021, they put $20 billion into work, and then Q1 this year, they're putting $600 million to work. Uh, just quick reflections on this. What we saw here with Masayoshi-san deploying $100 billion at the top of the market into, and mai- basically creating the market up top, Chamath, what, are there lessons here, uh, or takeaways for you?

Chamath Palihapitiya 6:53 I mean, I think that people don't seem to understand that if you're gonna attempt to be great, there are gonna be moments where you look the exact opposite of great. You know, the guy that takes the final shot is the same guy that can miss the final shot. And here is a guy over his y- you know, 50-year career, has had some huge ups and downs. This is also the same guy that found a way to rip in $25 or $30 million and made $125 billion off of Alibaba. That's the same kind of person who has that kind of risk tolerance. He was, for seven minutes or something, the richest person in the world-

Jason Calacanis 7:34 Yep.

Chamath Palihapitiya 7:34 ... and then lost 99% of his wealth in the dot-com bubble. I have enormous respect for a person like this because I feel like it takes enormous amounts of courage. I've said this before, most people jibber-jabber about investing and all of this stuff, and when push comes to shove, they crumble like little bitches and run into mommy's coattails. It's hard to put lots of money to work, and this is a guy that's done it. So the same person that can make $125 billion turns out is the same person that can lose $30 billion. And so one thing is, I would just keep in mind that this is a resilient guy who seems to land on his feet. And the second thing that nobody talks about is how smart Saudi Arabia and Abu Dhabi were in how they structured the investment into the Vision Fund, because half, more than half their investment is in preferred equity, which is effectively debt that pays a coupon. And you see it now, where SoftBank, by the way, who has been pretty smart in how they've managed their Alibaba position, have been using these derivatives and forward swaps to be able to sell and manage their liquidity. So it turns out that, you know, even if the Vision Fund breaks even, Saudi Arabia and Abu Dhabi will have made money, because I think they gave, paid a 6% coupon on, you know, $50 billion is a lot of money over six, seven, eight, nine years. It's a lot. SoftBank has found a way to sell down 25% of Alibaba, which is no trivial feat for a half a trillion-dollar company, and this guy gets to keep swinging, and if he, you know, hits it one more time, he'll end up with half a trillion.

Jason Calacanis 9:10 This chart is pretty great. Um, Sax, if you look at this, this is the gain and loss on investments at the Vision Fund. Uh, you can see the first Vision Fund racing up, uh, then coming down, I think, after that summer of IPOs, uh, that we had in the Airbnb, Uber days, um, and then a huge peak run-up in 2021, and then coming, crashing down. Apparently, he wasn't selling, uh, any portion of this. That, to me, was a big lesson of, like, maybe pairing some of these winners. If he had sold 10 or 20% on the way up, this could look like a completely different outcome. Uh, but I agree with you, Chamath. He, he swung for the fences, and there was downside protection built in for the LPs into some of these. Sax, what are your thoughts? Any lessons here in terms of the impact on our overall ecosystem or that you can take as a capital allocator yourself?

David Sacks 9:56 Well, uh, Jason, I think Masa did something you could never do, which is admit a mistake.

Jason Calacanis 10:02 Oh, here we go. (laughs) Wow.

Narrator 10:04 (laughs)

David Sacks 10:04 (laughs)

Jason Calacanis 10:04 That burned real quick. (laughs) Well, when I have my first mistake, I'm certainly-

Narrator 10:10 Oh.

Jason Calacanis 10:10 ... willing to admit it.

David Sacks 10:10 Yeah.

Jason Calacanis 10:10 I'm waiting.

David Sacks 10:11 Imagine that you ran $100 billion for sovereigns instead of $100,000 for doctors and dentists, and then-

Jason Calacanis 10:17 (laughs)

Narrator 10:17 (laughs)

David Sacks 10:17 ... you can kind of, you can kind of put yourself-

Jason Calacanis 10:19 Wow. Coming in hot.

David Sacks 10:19 You can put yourself in Masa's position.

Jason Calacanis 10:21 Yeah. (laughs)

Narrator 10:23 Oh, I love Sax in the morning. Sax in the morning is like a hot cup of coffee.

Jason Calacanis 10:26 Don't wake Sax up early, Ben. That's the big lesson here.

Narrator 10:28 Oh, my Lord.

Jason Calacanis 10:28 You make Sax go to a 9:00 AM.

Narrator 10:30 (laughs)

David Sacks 10:30 (laughs)

Jason Calacanis 10:30 He's coming in surly.

Narrator 10:30 It's like a bear, a bear has been hibernating and you poke him. (laughs)

Jason Calacanis 10:34 Jesus. Wow.

David Sacks 10:34 You know, look, I think that SoftBank obviously made some decisions that were, you know, they were, they were sort of peak decisions. Um, they were, they were a little bit bubbly. They didn't take chips off the table when they probably should have. It's easy to, to fall into these bubbles, because the psychology of it is so powerful, and as, you know, Bill Gurley's pointed out, these bull markets are more like a sawtooth, which is they gradually go up for nine, 10, 11, 12 years, and then when they end, they just, you know, it's like an elevator going down. So, you know, if the market had continued for another couple of years, Masa probably would have made a lot of money. But in any event, look, he took responsibility for the losses. This was a very, you know, sort of culturally Japanese speech. I mean, he didn't-

Jason Calacanis 11:18 Yeah.

David Sacks 11:18 ... commit seppuku at the end, but-

Jason Calacanis 11:20 Yeah.

David Sacks 11:20 ... it was kind of the, the-

Jason Calacanis 11:21 It was heading that direction. They might have had to-

David Sacks 11:23 Yeah, it was-

Jason Calacanis 11:23 ... move the camera off. (laughs) "Oh, my God, what is he doing with that sword?" (laughs)

David Sacks 11:27 It was the verbal equivalent, basically.

Jason Calacanis 11:29 Yeah.

David Sacks 11:29 And, uh, look, he took responsibility. What else can you do?

Jason Calacanis 11:32 Yeah.

David Sacks 11:32 Um, now one, one thing I would quibble about is the idea that, that SoftBank caused this bubble. Um, you know, it wasn't just SoftBank. We had tons of new money-

Jason Calacanis 11:41 Tiger comes to mind. Yeah.

David Sacks 11:42 Tiger had huge funds they were deploying very quickly, but there was a lot of so-called tourist money, basically money from crossover funds, investors who are not primarily VCs came into the ecosystem over the last few years, and a lot of that was driven by sovereigns and by liquidity. So, you know, you can't forget that we had $10 trillion of liquidity pumped into the system over the last couple of years, and many billions of that found its way into the tech ecosystem, and fundamentally,... you know, VC is not that scalable. There, there was an attempt to make it scalable. There was an attempt-

David Friedberg 12:15 Yeah.

David Sacks 12:15 ... to push more money into VC based on-

David Friedberg 12:19 Why isn't it scalable? Why isn't it scalable? 'Cause people have tried, right? Uh, this is not the first time.

David Sacks 12:23 Well, because it's, it's a craft business. I mean, that's why we-

Narrator 12:25 What does it mean?

Chamath Palihapitiya 12:26 It is scalable. It's just that if you try to scale it, your returns will go to zero.

David Friedberg 12:32 Explain what that means.

David Sacks 12:32 Yeah. Well, it's kind of the same thing, right?

David Friedberg 12:33 Like I wanna, I wanna just critique the strategy for a second because, um, you know, we're talking about as if market conditions caused these massive write-downs, and that is the only reason that these funds have suffered. But, you know, if you read a lot of the stories of Masa's investments in a number of these companies, and the full list is available and how much he invested, there are many, many stories. And I've heard many of them personally from CEOs that have met with Masa and raised money from him. You go into Masa. You tell some... The bigger the story you tell, the more excited he gets, the more of the world you can capture. And you go in and you're raising $100 million, he's like, "I'll invest 400 million." You say you're raising 25 million, he's like, "I wanna give you 150 million." And, um, his, his motivation (laughs) was always give you more capital so you can go capture the market. Yes.

David Sacks 13:20 And the problem in that model is that by giving you so much money, capital becomes your primary asset as a business, and capital needs to be the fuel that enables your assets as a business to accelerate. But as soon as capital itself becomes your primary asset, the business is doomed to fail, and that's a really key point. If you, let's say, uh, and let me, let me be very specific about what I mean. Let's say you have a, a direct-to-consumer business that requires online marketing, and your, your, your business grows well. You spend $100 to acquire a customer. Suddenly someone says, "Here's a billion dollars to spend on acquiring customers." As soon as you have to start deploying a billion dollars, your cost of acquisition goes up, the number of customers per dollar spent goes down, and the business itself starts to look upside down and fail. And that's what happened with a number of these businesses that Masa put in, and he put oversized checks in. WeWork is a really well-documented example in terms of what happened. When they started to accelerate their growth beyond the natural course of the business because of the amount of capital that they took, it really started to hurt the fundamental profitability and unit economics of the core assets of the business. And, um, this strategy theoretically can work to a degree, but Masa took it to a level that had not been seen before. I think I, I highlighted for you guys, like, back in 2011, I think, when Andreessen Horowitz, they, they pitched me on this idea. I was trying to raise $25 million for my company. Mark was like, "We'll give you $40 million. You can accelerate your growth." And, and he's like, "We want you to go capture the market." And Peter Thiel always used these terms, "Go capture the market." And these, um, the-

David Friedberg 14:48 And blitzscaling, Reid, Reid Hoffman. And blitzscaling, yeah, and Reid Hoffman with blitzscaling. And, and the motivation is, "Look, we'll give you more money because the, the core asset of the business works, the core assets of the business work. So the money should be more fuel for the fire." The problem is if you overindulge, if you put too much money in and the, the asset cannot handle that much capital, the whole thing collapses. Yeah, and I, I'd say it's even-

David Sacks 15:10 Yeah.

David Friedberg 15:10 Yeah. And there's so many documented examples of this in his portfolio, and I think that the strategy is worth highlighting, that there are some issues with that strategy across all these business categories. It doesn't always work.

David Sacks 15:19 Right.

David Friedberg 15:20 The core issue here, I think, is... And then I'll, I'll go to you, Saxon, and then Chamath. The core issue here that you're describing, at least, is exactly correct, and it really is up to the founder to decide what they're gonna do with that capital. It, the WeWork example is so instructive because they were buying under-market, uh, buildings in the, in the Tenderloin and then marking them up to, you know, class A office space and getting those prices. Once they got the Masa money, he started buying class A and offering it (laughs) at class B prices-

David Sacks 15:44 Right.

David Friedberg 15:44 ... and flipped the whole business upside down. The rate at which you can deploy capital- Yeah. ... does not flex, right? And so in, in all businesses, understanding the rate at which you can deploy capital to grow is critical to understand how much capital you can raise. And the distraction on the founder. And then if you raise too much money and you, and you flex beyond what the natural condition of the business is in terms of capital deployment, the economics fall apart, and the business itself looks terrible, and eventually you will have a write-down. And the distraction on the founder is the key. I mean, look at what Adam Neumann... He was easily distracted. He started buying surf machines and companies and starting kindergartens and everything else. Yeah, 'cause, 'cause you can't naturally deploy that much capital, so you find unnatural ways to deploy it.

David Sacks 16:19 Let me build on that point. I think there was a belief on the part of SoftBank that they did publicly espouse, which is that they could be the kingmaker.

David Friedberg 16:26 Totally.

David Sacks 16:26 And in fact, you know, we had some startups that were in competitive markets, and SoftBank would basically announce that we're gonna be anointing... We're gonna be picking a winner, anointing a winner, and writing them a huge check. And everyone kinda had to play along because if your competitor got that 100 or $500 million check, then you would be presumably way behind. So there was this belief that they could be a kingmaker and make the difference, and I think that what we saw is that for whatever reason, uh, partly because of the dynamics that Freeberg's talking about, that that strategy just didn't really work that well. And it, what it really goes down to is that VCs can be helpful, but they don't ultimately, uh, cause the, the, the winning companies to be the winner. Um, so this idea that you could be a kingmaker, I think was a little bit flawed. And I think one way that Tiger actually improved on this model was that they never tried to be a kingmaker. They just, they actually went the other direction, which is, "We're gonna own less of your company." They tried to be passive, non-dilutive, uh, capital. And they would do high-priced rounds but, you know, with, with reasonably sized checks, but they didn't try to go for 25, 30% ownership at a late stage. And founders did like that model better. Now, as it turned out, they both had the market timing wrong, but I think this kingmaker aspect was, was a problem. And one, one other aspect of that, I think, is that... And I, I don't wanna beat up on SoftBank too much. I'll say something nice about them in a second. But I think one of the mistakes they made is you'd see them writing multi-hundred-million-dollar checks into companies that were at a very, very early stage. That com-

David Friedberg 17:59 Pre-product market fit.

David Sacks 18:00 Pre-product market f- fr- companies, frankly, that we thought were like seed investments.

David Friedberg 18:03 Brandless was the perfect example. They were, it was a, it was a company that made, like, soaps and dishwashers and cereal, but they had no brand on it. It was like Uniqlo of this.

David Sacks 18:12 Yeah.

David Friedberg 18:12 And they gave, they gave them, I think, $200 million, and I was like, "This is a seed-stage company. It makes no sense."

David Sacks 18:16 Right, right. There were... I mean, look, they wrote, like, $500 million seed checks into robotics companies, effectively.

Chamath Palihapitiya 18:22 ... and it's because that, you know, the SoftBank had a thesis. And I think sometimes if... Again, this goes back to Kingmaker. If- if you're a VC and you think you're the one with the thesis and you're the one who's gonna make the difference, it's actually a seductive fallacy to fall into. It's the founder who has the thesis, and you can't, you can only do so much to help and you can't really force it. And so I think they ended up making some- cutting some really big checks into some companies that were really risky. And, you know, the way that we do growth investing is that, you know, it's milestone-based. We're writing... The- the size of the check is proportional to the amount of proof that the company has. Right. And- and look, the- the nice thing I'll say about SoftBank is recently we've actually done some SaaS deals with them that I think are some really good deals, and they've written checks that I think are appropriate to the size of the- of the company and the amount of proof they have, and they've been really easy to work with and I look forward to doing more deals with them, but I think it would behoove them to do more deals like that where, again, check size is related to proof. I think that SoftBank in hindsight made one critical, critical error and only one, and everything else was sort of a fait accompli with that one error, which is that in their fund documents, they made this a 10-year fund. Now let me explain. Why is that an error? That is the status quo for all these funds, and the more nuanced part of that decision to make it a 10-year fund is that your investment period is only five years. So you're only allowed to put the money in for the first five, and then you have to basically manage the portfolio because there's an expectation that you raise a new fund. So if all of a sudden you have $100 billion in a five-year investing life, the math says, "Oh my gosh, okay, well, I need to put 20 billion out per year." And then you try to look for, I don't know, let's say 50 companies a year while the mean check size now all of a sudden balloons to 400 million. That was the error. You see afterwards the very, very smart private equity folks who saw that that was the error fixed it. So Blackstone, Silverlake, when they came on the heels of SoftBank, what they did was they raised funds with a 15 and 20-year life. And what that allows them to do and what would, it would have allowed Masa to do in this situation was just slow it way, way down. Pace yourself. Yeah. Yeah. And do fewer deals with much more capital and then be patient and say, "I'm gonna have a 10-year investment life." And I think that that would have saved them and they would have looked incredible right now because they would be the kingmaker in a moment where there is no money flowing into venture and early-stage tech. So in my opinion, I think it was just that it was such an ambitious feat that when it came time to execute, whoever was really in charge of those details kind of fucked it up, and they should have realized the math didn't work for a five-year fund life, and they should have made it a 10-year fund life or 10-year investment life, which would have put a 20-year fund life on the thing, and I think they would have been fine. Yeah, I mean, if you look at it as 60 months, maybe you take out August and, like, the holidays, you got basically 50 months to deploy 100 bi- 100 billion. It's two billion a month. It's impossible. 500 million a week. I mean, how do you even process that many deals? Impossible. It's impossible. Uh- The quality of the diligence, by- by necessity has to go to zero. Yeah, it's- it's- it was a crazy strategy. It- it- If you can breathe, you get money. (laughs) If you can get a meeting, you get the money. I mean... Basically, I mean... And- and if they had just... I- I'll say, there's- there was one... Sorry, Jason, one last thing. You got it. No, and it forces you to have a team that is so broad and large and diffuse. That is not this game. This is another thing I would love to, you know, for us to talk about. Correct, correct. Investing has never, will never, and is not ever a team sport. Okay? Explain. It is like basketball. You can be on a team, but you are Steph Curry or you're not Steph Curry. You are Draymond Green or you're not Draymond Green. You are LeBron James or you're not. There are J.R. Smits on a team. There are Tristan Thompsons on a team. Ugh. And you come together and the team can win a championship, but there are these exceptional individuals. Yes. And the firms that have really done well consistently over decades embrace that philosophy. Benchmark, Sequoia, you know, these guys don't try to create this team-oriented glad-handing approach, but they also don't allow the teams to get so diffused that there's 500 people running around ripping money in because you basically then return the beta of the market. And if the market doesn't look good in that vintage, then all of your returns look pretty crappy. The lesson for me in all of this is, I think, we- we talk about riding your winners on the show. That came from, just so people understand, when we said ride your winners, and it's famously in the- in the opening song here, what we were talking about was, like, don't sell your entire position, like when Sequoia sold their entire Apple position or- or other people have done, but pairing your position would have changed this whole story. If he had paired 10%, 20% of some of these names that were breaking out- I- I disagree with that, too. ... along the way- I think that that's unsustainable. Oh, uh, why? Go ahead, 'cause I- That's the dumbest idea in the world. I think that's the... I think the opposite. He would have had it up- A year ago, Sequoia just put out an entire document and a roadmap for becoming an evergreen fund, but... And I read that document, and what I thought to myself is, all of this looks incredible unless the market goes down. And then the market went down. Why? And then the market went way, way down. Why? Because their whole thesis is we're going to park and hold money. Well, okay, but they also allowed a revolving liquidity mechanism for their LPs. Every year. So, you know, you're a cancer foundation and you want to fund cancer research and you expect Sequoia to give you back money, you fill out a form- Yeah. ... and Sequoia basically fronts you the money. Well, excuse me, but you can see how all of a sudden this can very quickly get out of control because then where does Sequoia get that money? They'll have to borrow it. Or liquidate some positions. But the whole point is to not liquidate positions. This- this is what they said. Yeah. So my- my point is, I really think, and David said this before, I think a VC's job is to be a VC. It's hard enough to do that job well.... and if you think that you're going to cascade across all asset classes and do better than the market, it's an extremely high bar that creates tremendous pressure and forces you to bring things on like debt and all of these leverage lines, which when markets go up will work in your favor, but can very quickly turn against you.

Jason Calacanis 24:47 Yeah, I disagree completely because when, if you look at when you're in a private company and you're, you own some private shares, you know the revenue, you know the velocity, you know the management team, you have more insights than everybody. You got a massive information edge because it's all based on insider information before it's public. And pairing your positions in privates, uh, can be amazing because you have some overvalued company because someone like Masa or Tiger comes along and overvalues it. So for venture funds, I think when you start hitting these 50, 100 X's, paring 10%, paring 20% along the way, which Masa could have done in these private names especially, would have been brilliant.

Chamath Palihapitiya 25:19 You're saying don't distribute and just hold on and use debt and give people, give your LPs of all liquidity? What are you saying?

Jason Calacanis 25:26 No, no, no. I'm saying if you have the opportunity to sell in secondary, you should pare your position in your winners 10 or 20%, two or three times. That's what I'm talking about.

Chamath Palihapitiya 25:34 No, I'm not, I'm not saying that.

Jason Calacanis 25:35 I'm saying if SoftBank did that, this would be a different position.

Chamath Palihapitiya 25:38 No, but like you're using Soft... You're using Apple and Sequoia as an example. You do remember the trajectory of Apple basically went to a four billion dollar market cap for years languishing. I mean, the idea that Sequoia would have held those shares because they had some proprietary view is ludicrous. That's not true.

Jason Calacanis 25:54 Why is it ludicrous? What if they just had a philosophy of keeping 20-

Chamath Palihapitiya 25:58 That company was on, that company was on death's doorstep. You can see the YouTube videos. When Steve Jobs came back, he said, "Uh, we may not make it."

Jason Calacanis 26:05 Yes, but Chamath, that in, that- that is part of the opportunity. But putting that aside, that's exactly what Sequoia is doing, is they're saying, "We want to hold the legendary companies, the legendary brands with the great founders forever."

Chamath Palihapitiya 26:16 That's all easy in hindsight. How do you do it today?

Jason Calacanis 26:19 Well, today-

Chamath Palihapitiya 26:21 Is Unity, is Unity a legendary company or should you have distributed at $165 a share?

Jason Calacanis 26:26 Well, I'm splitting baby, I'm-

Chamath Palihapitiya 26:26 That's an extremely hard question.

Jason Calacanis 26:28 And I'm saying you can mitigate that question by paring your position 10, 20% so you have the best of both worlds. Sax, what do you think?

David Sacks 26:34 Well, I think it's, it's hard to pare down a position while the company's still private because the, the companies don't, don't want you to, by and large. But, uh, but once they do become public, then the question is when do you distribute? And we talked about this. I think it sounds like SoftBank was sitting on quite a few large public positions and could have distributed. I'm not fully familiar with their structure, but given that they had all this debt, seems like you'd want to pay off all the debt, uh, as soon as you could. And missing the chance to do that-

Chamath Palihapitiya 27:05 They had a preferred, they had a preferred coupon they had to pay PIF and ADIA every year. I think it's like three or four billion dollars. It's well, it's documented, but that's the 6% that they, that they were owed on their $50 billion.

David Sacks 27:18 Mm-hmm. But did they pay it off la- the, last year?

Chamath Palihapitiya 27:21 No, they have to pay it every year. They have to pay it every year.

David Sacks 27:22 Okay, so they did it. I mean, look, I would just say these bubble, it's, it's easy, you know, hindsight's 20/20. It's really easy to point out these mistakes after the market's cratered. You know, my experience with these bubbles, whether you go back to 1999 or 2021, is when you're in them, they're very powerful psychologically. You know, everyone's-

Jason Calacanis 27:40 Yes.

David Sacks 27:40 ... talking about how everything's going up. And we, I think, actually had some really good commentary on the show about, back in November, about how it could be the peak, how it could be all liquidity fueled. Uh, we didn't know for sure, but there were some pretty good predictions on this pod. But by and large, it's, it's pretty hard to, to know whether you're, you know,

David Sacks 27:59 whether you're in a bubble.

Jason Calacanis 27:59 Is there a grounding metric that you use, I'll open up to Friedberg and then everybody else, when, to know that the market is overheated? Do you, Friedberg, is there something you look at and go, "Okay, we've disconnected from reality." Price to earnings, price to sales? Uh, some valuation metrics, uh, are there things you look for so you know that this is overheated and maybe it is time to pare positions? Uh, what have you learned over now our third collective, uh, down market?

David Friedberg 28:26 Valuation trophy hunting I would say is a pretty good indicator of things being, things being, um...

Jason Calacanis 28:35 Explain what that is.

David Friedberg 28:36 In a heated market, like if the... The businesses, the CEO, the founder, the venture firms, everyone is all about how much you can mark up your investment as opposed to talking about the quality of the business and the quality of the earnings. Um, and then you revert back, as we just recently did, to now people talking about, okay, how strong are the gross margins of this business? How effectively can they deploy capital? What's the return on invested capital? Key metrics around the fundamentals of the business versus the value that the market is willing to pay for the business. And the more heated the market gets, the more everyone focuses on terms like unicorn, decacorn, you know, and- and that becomes the key metric as opposed to saying, "This business is so good. For every dollar they spend, they make $3 in gross profit in 12 months." That's what fundamentally says that's a high quality grow-, uh, you know, valuable business over time, as opposed to, "Here's what the market is telling me it's worth today." And if the market is telling you it's worth that much today, um, and you're, and that's what you focus on, you inevitably end up in these kind of bubbly moments where you miss out on focusing on core value creation, which will actually pay off much, much more over time.

Jason Calacanis 29:57 Chamath, you pointed out a- another signal. Uh, hey, when smart people (laughs) who have the largest amount of capital in the markets are clearing positions, uh, maybe that's a- a signal of a top. And then I think it's a really good insight by Friedberg, when the conversation, the narrative is about the valuation and the status and vanity metrics as opposed to the quality of the earnings, hey, that's a really good indicator we're in a bubble, maybe should start clearing positions. What are indications for you that we're either in a bubble or the market is undervalued? Because we're really talking about this timing, right? Timing is very important as a

Narrator 30:29 It's not possible. This is why I think that...

Chamath Palihapitiya 30:33 You have to define what game you want to play before you start playing the game.

Jason Calacanis 30:37 Okay.

Chamath Palihapitiya 30:39 This is why I think it's kind of nonsensical... For example, I believe that, at best, I am an equity investor in technology companies or things that have a technology bias, 'cause I can generally understand them maybe, you know, a few seconds faster than everybody else, which allows me to make a decision a little bit quicker. But if all of a sudden I started investing in debt, you should expect that I'll lose my money, because I don't know what I'm doing. And that's not the game th- where I have any advantage. So, I think the most important thing to do is to not try to do all of this crazy stuff, because this is what happens in moments where either things are very, very good or things are very, very bad. People try to create all these stupid rules. And the rule, the only rule is there are no rules. So, I don't know, I just think it's like, stick to your knitting. If you're a product builder, build products. If you're an early stage investor, just do that. It's hard enough to do any one of those things really, really, really well.

Jason Calacanis 31:47 Hmm.

Chamath Palihapitiya 31:48 But this idea that, you know, you're gonna come up with, like, some mosaic and a system, I think it's just highly suspect, and I think the market returns have showed that everybody that tries has failed, except for maybe one or two.

Jason Calacanis 31:59 Sax, any thoughts on this?

David Sacks 31:59 Yeah, I mean, this is-

Chamath Palihapitiya 32:00 It's just not gonna work. What's the point?

David Sacks 32:01 Yep.

Chamath Palihapitiya 32:01 So, I don't know, if you're an early stage investor, make good deals and then give the shares and book the win.

Jason Calacanis 32:06 That's what I do, yeah, that's, uh, my philosophy. (laughs) Um, Sax, what are your thoughts?

David Sacks 32:10 There's a couple of metrics that I'll be looking at from now on that I wasn't paying a huge amount of attention to before. Uh, one is the price to ARR of the median public SaaS company.

Jason Calacanis 32:22 Mm-hmm.

David Sacks 32:23 And so, like, Brad Gerstner has these great charts where you saw that, historically, that number was around six. You know, the median SaaS company was, was trading at about six times their next 12 months revenue. And it went all the way to 15 during this sort of COVID bubble in 2021. And for the high growth SaaS companies, which are the ones growing 40% instead of 20%, it went from, you know, like 8 to 35. So, um, so I'll definitely be looking at that. And, you know, what you're looking for is just how off the historical mean are we, positively or negatively? Because these public valuations are the exit comps for, you know, the private markets, and those valuations do eventually trickle down. And so, if there is a bubble in the public markets, it will trickle down to the private markets. So, that'll be, like, one metric. I mean, again, it's not something that, like, affects me daily, but it's something I'd want to periodically keep tabs on. The other is just interest rate policy. I mean, I've never spent so much time in my entire career, like, looking at inflation and interest rates than I have this year, because who knew how much this, this stuff was affecting us? I thought I was a micro investor.

Chamath Palihapitiya 33:30 Right.

David Sacks 33:30 I thought I was just picking companies on a micro level. As it turns out, we were all massively impacted by macroeconomic policy. And, you know, it got so we didn't even notice it. The zero, the zero interest rate policy, the ZIRP, along with quantitative easing, these were supposed to be exceptional measures that started back in 2008, but we stopped noticing them. They continued for years and years and years. They continued until l- last year, and w- again, we just stopped noticing 'cause we got used to it. We kind of got hooked on, hooked on drugs. So, the market did. Um, so I'm just gonna have to pay a little bit more attention to what the Fed is doing now. And, you know, if you go all the way back to the dot-com bubble, what's interesting is that the fed funds rate back in, uh, 1999 wasn't low, it was like 4%. Um, it wasn't like it was even today, and we still had a bubble. But what popped the bubble was that interest rates went from 4 to 6% in, uh, from 1999 to 2000. That's what popped the bubble. So, y- you know, I, I don't, I don't know if we'll ever have a situation again like we had over the last few years with the, with the ZIRP, but, um, I mean, that, probably looking for that next time is fighting the last battle instead of the next one. But you do probably have to be a little bit more aware of monetary policy and what the Fed is doing.

Jason Calacanis 34:49 Yeah, this chart, um, exhibit six from the Vision Fund benchmarking against peer funds that Chamath just put into the group chat is absolutely spectacular. Um, it puts, uh, Sequoia, Insight, and SoftBank, um, you know, large, large funds, uh, against each other. Fund size, 100 billion for SoftBank, eight billion for Sequoia, 6.3 billion for Insight, and to Chamath's point earlier, the pace is, yeah, really crazy. 130 deals-

Chamath Palihapitiya 35:14 Three and a half deals per month, but then the average check size is 620 million.

Jason Calacanis 35:20 Versus 130 and 70.

Chamath Palihapitiya 35:22 Correct.

Jason Calacanis 35:23 And the deals per month, 3.5 versus .6 versus 4.2. So Insight going pretty fast with small checks, SoftBank going very fast with huge checks.

Chamath Palihapitiya 35:32 I think the Sequoia data here is really... You know, Sequoia has the benefit of being able to back test against 40 years of returns. And so if essentially what they're saying is there's really no more than five or six companies a year that are worth investing in, that's a really big signal that's worth thinking about. And so, you know, five or six companies, maybe they can absorb even $600 million each, you know, it still puts you at three and a half, $4 billion. Doesn't (laughs) put you at 20, which is what you need to put 100 into the ground and try to make it.

Jason Calacanis 36:02 Two billion a month, I mean, my Lord, it's like Brewster's Millions or something. It's, it's like some crazy premise-

Chamath Palihapitiya 36:07 Again, I think, I think, I think in fairness to, in fairness to SoftBank, again, you know, these are the same guys that invested in Yahoo! They invested in all of these, you know, dot-com companies and brought them into Japan, including great businesses like Cisco. You know, these guys have been big-time serial winners. I think the tactical mistake was not having a ten-year investment life.

Jason Calacanis 36:28 I mean, and we could be sitting here next year, Alibaba could double in value, a couple of their other positions could recover 50%.

Chamath Palihapitiya 36:36 Probably, probably not, but ...

Jason Calacanis 36:36 Okay-

Chamath Palihapitiya 36:36 Probably not.

Jason Calacanis 36:36 But we could be sitting there and they could be, they could have closed the gap massively.... anything's possible. I think actually a good jump-off point here, uh, great discussion, gentlemen.

Jason Calacanis 36:46 Do we wanna talk about the markets? And we got the inflation print. Uh, Sax, I guess depending on what political party (laughs) you're in, it's either 8.5% or zero. 0% month over month, uh, if you're a Democrat. If you're a Republican, it's 8.5% (laughs) in our, uh, polarized times. Uh, but what does this tell us, uh, Sax, just at least about maybe inflation is tipped over and we're gonna be flat for a little bit? That obviously caused the market to rip a little bit, and we had this incredible jobs report. Uh, we're now at 3.5% unemployment-

David Sacks 37:22 Yeah, I mean, look, I think, I think-

Jason Calacanis 37:22 ... and we had twice as many jobs as we predicted. I mean, it's pretty extraordinary what happened in the last 30 days to the, to these, uh, prints.

David Sacks 37:29 Yeah. Look, I think that overall, the economic data is mixed, uh, but we got a couple of good data points in the last month. Um, so inflation did decrease from 9.1 to 8.5%. Inflation was, until now, measured on a year-over-year basis, not a month-over-month basis. But since we got the first good month-over-month reading, all of a sudden now it's been redefined to be on a month-over-month basis. Just this is the same thing that happened with the definition of recession, where recession used to mean two quarters of negative GDP growth. Of course, that happened, and so all of a sudden the definition became unknowable. We have to defer to this, um, this economic board that won't render a decision till next year. By the way, if that were true, how could we ever contemporaneously talk about a recession? You know, if, if you had to wait until this economics board declares a recession a year from now, the press could never have ever reported on a recession.

Jason Calacanis 38:26 I, for one, am shocked. Yeah, I, I'm shocked politi- politicians are spinning.

David Sacks 38:28 So look, the politics of this are obvious-

Jason Calacanis 38:29 Yeah.

David Sacks 38:29 ... which is they keep redefining terms rather than admit that there's any bad data at all. Um-

Jason Calacanis 38:34 It's mixed.

David Sacks 38:35 Now, look, I don't, I don't think the data is catastrophic. I don't, I don't think-

Jason Calacanis 38:39 No.

David Sacks 38:39 I don't think it's in anyone's interest to catastrophize the data, but there's a lot of negative data out here. I mean, look, inflation is still very high, eight and a half percent. If you had told any of us that in August that inflation would still be a half- eight and a half percent at the beginning of this year, we would've said that is horrible. Because remember, the investment banks were all saying it's gonna come down to 3% by the end of the year. So inflation is still high. The jobs picture is good. Um, we're technically in a recession. I, if I were to predict, I think, what's gonna happen now, I think, you know, look for a double dip. I wouldn't be surprised at all if in Q3 or Q4 we're back to positive GDP growth, but I don't think we're necessarily out of the woods, because I think there's a pretty good chance that next year these in- these, um, rate hikes really kick in. It takes six to nine months for them to ripple through the economy. So if you look at the construction industry, the construction industry's just been devastated. New housing starts, you talk to the builders, they tell you that the construction industry has just been clobbered by these rate hikes. The, uh, inventories are piling up and the affordability of... There's a chart today about the affordability of home prices is at a 40-year low. And so the construction industry, it's really the bellwether. When a recession starts, they're the ones who are first impacted. But it's probably gonna take six to nine months for that to get-

Jason Calacanis 39:58 Because the loans are so expensive and cost of capital is expensive.

David Sacks 40:02 Right. Exactly. So-

Jason Calacanis 40:02 They can't start new projects in.

David Sacks 40:03 So look, I, if I had to g- w- I think we're in a shallow technical recession right now. I bet that we probably bounce out of it in Q3 or Q4, but I think there's a significant risk that we're back in, we're back in it next year. Just my guess.

Jason Calacanis 40:17 Friedberg, we've, we've been talking about consumer credit a whole bunch. Buy now, pay later. Um, household debt now totals more than 16 trillion. Credit card balances, uh, make up 890 billion of that. Obviously, student loans, mortgages, other things are in there. And the number of credit cards, uh, is now at a massive high. 500, uh, 50 million of them issued here in the United States. Uh, we added a massive amount of debt. Uh, it's still lower. The c- the credit card debt, just to be clear, is still lower than the pre-pandemic level of 930 billion. But consumers seem to be taking out credit, I guess, to deal with inflation or to (laughs) enjoy their lives 'cause they're not stopping their spending. Uh, and w- we see that in some of the stocks in the earnings reports that are coming out as well. So what's your, what's your take on this, you know, conflicting data we have? Or is... Or have you made some sense of it? And, and what is your prediction of Q4?

David Friedberg 41:10 Sorry, are you asking what my take is on the consumer credit?

Jason Calacanis 41:13 Well, basically the overall macro situation here. We've got consumer credit, you know, people taking on a lot of debt while jobs look great, while inflation is still high. What does that look like, you know, as we go into Q4, uh, and next year? What i- what i- what is this telling you? Is there some signaling you can take from this? Sax said shallow recession, thinks we might double dip. I'm kinda getting to your prediction of Q4 maybe going into next year.

David Friedberg 41:37 I mean, this is a little repetitive. I mean, I've said this... I-

Jason Calacanis 41:39 Yeah.

David Friedberg 41:39 ... first said it in May at the All In Summit, and I said it again on the show twice-

Jason Calacanis 41:44 Great.

David Friedberg 41:44 ... which is, I think that the definition of a recession, of negative GDP growth when you're coming off of inflated GDP is, you know, like it's, it's not a binary catchall term. I mean, the fact is we had, uh, inflated assets and, um, as a result of inflated assets, we had inflated earnings and we had inflated valuation and we inflated income and, you know, now the capital's coming out and things are gonna go down inevitably. S- but I don't think that there should be deemed that there's something fundamentally negative about the US economy. The biggest risk I still see is this rising consumer credit balance, particularly in a rising rate environment. People are taking on more debt. If you look at the New York, uh, Fed... Here, I'll just give you the latest, um, uh, this is the household debt and credit report they put out. Household debt rises to $16 trillion dollars amid growth in housing and non-housing balances. And so there are variable rate loans in there in the auto, uh, home, and credit card markets. Those variable rates mean that as interest rates climb, the amount to service existing debt will go up each month.... um, and the amount of debt that's being taken on is also going up each month. And so the key economic question is does the, uh, income gain that's being experienced or the asset value gain that's being experienced outpace the increase in, um, monthly debt service needed for a large number of consumers? Student loans are also in here, by the way. And so when you put that all together, um, it's a, it's a very technical question, which is technically where do you start to see defaults rise? And when you have defaults rise, then the money that's owed and the services that are... the service payments that are owed on that debt trickles through the economy because bonds start to default, um, equities start to decline, and so on. So, um, you know, I... this is why I can speak at a high level, uh, from a macro point of view, that the rate at which debt is going up and consumer credit is going up, and the rate at which rates are climbing that affect the revolving, um, and variable rate, um, uh, debt that consumers hold could outpace the income and the asset value gain, particularly when equities are down, 401 (k) s are down, hous- housing prices are down. And so there's a tipping point. And, uh, when that starts to happen, then you start to really hit, um, an economic crunch. And I, I've mentioned this multiple times now that it's the thing, you know, I would kind of watch most closely. While there are core elements of the current economy that look strong, um, there are, uh, real, uh, concerns around whether consumers can keep up with their debt payments, uh, in the months-

Chamath Palihapitiya 44:20 Chamath, are you-

David Friedberg 44:20 ... and quarters ahead. Yeah.

Chamath Palihapitiya 44:21 Chamath, are you following this consumer credit, uh, surge? And do you think that this could be a black swan type event? This could be, you know, um, uh, a major headline?

David Friedberg 44:30 Well, it's no black swan because it's right here in front of us. So, you know.

Chamath Palihapitiya 44:32 Okay. Well-

David Friedberg 44:32 Like, I think... Yeah, yeah.

David Sacks 44:33 (laughs)

Chamath Palihapitiya 44:33 I, I would say like a massive contagion where there's massive number of defaults creating a black swan contagion-like event. But yes, so it's, it's not... it's maybe hidden in plain sight. What do you think, Chamath? Is this important data, uh, or impacting your view on things? Yeah, I think it's important. It's part of a mosaic. And I, I don't, I don't really know. Look, what are we trying to get from this discussion? I don't understand. Like, like are we trying to predict what's gonna happen? I mean, I think David basically said it best. Like, if you actually just take a step back and stop overlaying what we want to happen... Look, the, the reality is all four of us want things to go up, and we like it when there's money in the system and everything's flush. But if we had said last year that we would open an envelope and, you know, we would show these inflation prints, we would be shocked and we would have been scared. And quite honestly, you know, in the process in November when I started selling, I would have sold even more violently than I sold. And all I can say is I saved my ass in November of last year looking at what's happened in the last six, eight months. So I don't know. I just think that if you look at the CPI print, um, and you look at the components, we were saved because energy basically fell off a cliff. And for whatever reason, a bunch of people decided not to travel and, you know, we didn't import as much oil and we were able to keep costs contained, and that kept CPI from being really out of control. But again, we're in the summer where we don't have the pressure on energy that we're gonna have in October, November this year. So I, I, I really don't know. I mean, I just think that there is... Like, Friedberg has his pet issue. I have my pet issue. Sacks has his pet issue. You ask a hundred economists, they'll have their own pet issue, housing affordability, whatever it is. The point is we have a hundred whack-a-mole problems, and the question is which mousetrap sets off the rest of the mousetraps? I have no idea. Um, and so, you know, I just think that right now things are a little bit too calm, and that makes me feel very unsettled. Another shoe might drop. I mean, the point of the conversation is to try to understand and make better decisions in capital allocation, company formation, and placing bets in the next year. So that, that... I mean, that, that's the point of the discussion.

David Sacks 46:59 We, we now have this spectacle of the President saying he's gonna pass an inflation reduction act to solve a 0% inflation problem to get us out of a recession that he says doesn't exist. You guys know this, but the, the politics and the, and the political commentary on this are absurd. I think what we're describing here is just simply more honest, which is to say that the data is mixed and we don't exactly know what's gonna happen.

Chamath Palihapitiya 47:26 Yeah. I mean, the thing that I think is encouraging is when you look at this jobs data and you look at the, uh, debt that consumers are putting on, my theory is, uh, and I could be wrong, that people want to keep spending. Uh, they want to keep living their lives. They're taking on a little bit of debt to deal with inflation and to keep spending, but they're also going back to work. And I'm seeing that anecdotally, a lot more people going back to work and the numbers show that. That feels to me, and I said this on previous episodes, that that feels like a possible, you know, very helpful path out here. And I think you brought it up, Sacks, as well, which is, hey, if we have increased participation, um, that's great. Increases monetary velocity, increases participation in the economy. That's a possible path out. Do, do you feel like, uh, that's still holding strong, Sacks? We've been in secular decline on that trend for 25 years. So maybe, maybe on the margins a few folks, um, run out of stimulus and decide to go and get a job. But I don't think... A- again, it's, it's kind of like, you know when you're at... you're, when you're at the blackjack table in Vegas and somebody's clapping- Clapping is a strategy. Clapping is a strategy, but- Clapping is not a strategy. I feel like all the... like, what we're talking about right now is clapping as a strategy. Maybe this can happen, maybe that can happen. You know what? Maybe it'll start raining gold fucking coins that we can use and just not have to worry about- (laughs) Yeah, let's do it.

David Sacks 48:41 Yeah. I mean, J-Cal, I, I-

Chamath Palihapitiya 48:42 Okay. Anybody got a bucket?

David Friedberg 48:42 I feel like the last 15 minutes have been, like, not a good conversation. Like-

David Sacks 48:45 I think it's totally repetitive.

Chamath Palihapitiya 48:46 Well, I think it's a great conversation.

David Friedberg 48:47 It is repetitive, but it's-

David Sacks 48:47 No, listen. I think, I think it's totally repetitive.

David Friedberg 48:49 It's repetitive.

David Sacks 48:49 It's totally repetitive, J-Cal, because look, the structure of the problem, I think, is very well-defined.

David Friedberg 48:55 Okay.

David Sacks 48:55 Which is we have an inflation problem.... great. It went down from 9.1 to 8.5%. It's still really high.

David Friedberg 49:01 And a recession probably. And we keep repeating ourselves. Yeah.

David Sacks 49:01 Two to 3% would be, would be normal, okay? So that's half the problem, is how fast is inflation gonna go back down to normal based on interest rate cuts? The other side of the problem is-

David Friedberg 49:11 Increases.

David Sacks 49:12 ... is, sorry, interest rate increases, not cuts. The other side of the problem is, how much will the economy be hurt by these rising rates? And those are the two variables. And-

David Friedberg 49:21 Yep.

David Sacks 49:21 ... w- w- we see that there is a slowdown. There's still a lot of jobs being filled, which is good, but there is unquestionably an economic slowdown, and those are the two sides of this equation. And we just need to see some economic data-

David Friedberg 49:34 Yeah.

David Sacks 49:34 ... and what's gonna play out over the next several months.

Narrator 49:34 You've been asking the same question for three fucking weeks.

Jason Calacanis 49:38 If you guys don't wanna talk about the new data, that's fine. I'll let you guys win.

Narrator 49:41 Hey, who cares? It's like-

Jason Calacanis 49:41 None of us care. None of us care.

Narrator 49:43 ... we just bounced around from re- issue.

Jason Calacanis 49:44 Okay. None of us care.

Narrator 49:44 None of us, like-

Jason Calacanis 49:44 Okay.

Narrator 49:44 ... we don't have an opinion other than we don't know. How many ways can we say we don't know, Jake Gyllenhaal?

David Friedberg 49:48 Okay, I don't wanna talk about inflation or recession or jobs or any of that shit anymore, unless there's something really for us all to say, like, something new's come out.

Jason Calacanis 49:55 Well, I mean, the job note-

David Friedberg 49:55 Like, some fucking economic report.

Jason Calacanis 49:57 ... was really important. I mean, that was a, that was a massive print, but okay.

Narrator 50:00 It's not. It's not the, it's, it's, it's on-

Jason Calacanis 50:01 Oh, yeah, it's twice as, it is twice as many jobs-

Narrator 50:02 But it's on the track of what we've already said.

David Sacks 50:04 It's one data point. It's one data point.

Narrator 50:06 It's, it's, it's on the, it's on the track, and we already-

David Sacks 50:06 And, you know what, there were some bad jobs reports before that print, so-

David Friedberg 50:10 I think we should stop doing the recession/inflation chat every week. It honestly is, like, repetitive, and we keep-

Narrator 50:14 Do a better job moderating. Can you not dial it in?

Jason Calacanis 50:17 (laughs) You guy, no, you guys asked to talk about it. You guys put some of these things on the docket, so-

David Friedberg 50:20 No, I don't wanna talk about it anymore. I think we should cut that shit.

Narrator 50:23 I didn't write it in. Yeah.

Jason Calacanis 50:23 Let's move on. What are you, okay. W- what do you wanna move on to next?

David Friedberg 50:25 No, but I think, I think SoftBank was a great chat. I think, you know, that was a good talk. We should do that kinda shit. We should talk about Trump.

Narrator 50:29 I wanna know what you guys think about the Sequoia Evergreen Fund. Tell me what you guys think about that. Come on, geniuses.

David Friedberg 50:34 The Sequoia, like, when they restructured? Are you joking?

Narrator 50:38 (laughs) No, I'm j- I love, I love when these two go silent. (laughs)

Jason Calacanis 50:42 No, no, I, I always, didn't wanna interrupt anybody.

David Friedberg 50:44 I don't understand what you're

David Friedberg 50:45 saying.

David Sacks 50:45 I don't understand why you guys are trying so hard to avoid the, the obvious news of this week.

Jason Calacanis 50:50 Is there something else in the news this week?

David Friedberg 50:52 Sacks, um, if Trump actually had some material in Mar-a-Lago that was related to the nuclear program, and, um, you know, there was an attempt to try and r- get, recover those documents through normal means, and they were not recoverable, what would your course have been if you were the director of the FBI or the president of the US in that condition? 'Cause I think that seems to be the party line of what's going on here.

David Sacks 51:17 Well, I, you know-

David Friedberg 51:18 Or the, the, the Democratic kind of spin on what's going on here. But, like, you know, honestly, in that circumstance, what do you think would've been appropriate? So there's, there's some sort of confidential material related to our nuclear program or nuclear weapons. Something's, something there in those materials that were attempted to be recovered or were taken without approval, and then they tried to recover it. For, you know, assume there's no nefarious intent, what would be the right kinda course here?

David Sacks 51:43 Well, I, I, so, I, I, I don't know exactly what's going on. I just think that, um, you can't necessarily give the F, sadly, I don't think you could necessarily give the FBI the benefit of the doubt here in light of their history. Um, but let's back up. I mean, first you had this, this raid on Mar-a-Lago where you got 30 FBI agents. They're not wearing suits with holstered sidearms. They're carrying AR-15s, you know, weapons of war, fingers just outside the trigger guard. They're wearing body armor. It looks like a paramilitary raid on Mar-a-Lago. It's utterly unprecedented. And you look at tweets by, um, Andrew Cuomo, for example, or, uh, Andrew Yang. I mean, th- these guys actually turn out to be pretty, I think, intellectually honest Democrats on this point, saying, "This is unprecedented, and it's really gonna..." Here, I wanna read this by-

Jason Calacanis 52:28 Why don't you just answer Freeburg's-

David Sacks 52:29 ... Andrew, Andrew Yang. Hold on, let's just-

Jason Calacanis 52:30 Why don't you answer Freeburg's question?

David Sacks 52:32 I'm getting there. I know you're gonna cut me off, so I'd like to just read these tweets, so maybe you, 'cause, you know, maybe you'll give more credence to Andrew Yang. He said, "I am no Trump fan. I want him as far away from the White House as possible. But a fundamental part of his appeal has been that it's him against a corrupt government establishment. This raid strengthens that case, for millions of Americans will see this as unjust persecution." You have Andrew Cuomo saying, "DOJ must immediately explain the reason for its raid. It must be more than a search for inconsequential archives, or it will be viewed as a political tactic and undermine any future credible investigation and legitimacy of January 6th investigations." And let me read one other tweet, uh, by Elon that's not directly about this, but he tweeted this on July 11th, so a month ago. And he said, "I don't hate the man, but it's time for Trump to hang up his hat and sail into the sunset." That was the part that was widely reported, but he also said, "Dems should also call off the attack. Don't make it so that Trump's only way to survive is to regain the presidency." I think there was a lotta wisdom in that. And, you know, I'm old enough to remember when the case for Biden getting elected is we have to move past this partisan warfare, this extreme rancor and derangement. And we were told that the media, you know, all these people who had TDS, that, that their psychosis was due to Trump, and if we could just move past Trump, this, all this sort of partisan warfare would end. And now, and, and I was certainly hoping that would be true. And now, sadly, it seems like we're right back in this thing, um, where we're right back with the media being obsessed with TDS, portraying this narrative that somehow he's a traitor. And what does this whole thing hang on? Just these two words, nuclear documents. Well, listen, until they actually produce those documents, I'm gonna suspend judgment, because the FBI, the last time they did this, remember, they manufactured a falsified warrant to the FISA court for this type of, uh, investigation. They have that history. So, I'm just gonna suspend judgment on what's going on here until they actually produce the documents they're talking about, because-

David Friedberg 54:37 So, Sacks, can I ask, are you, do you-

David Sacks 54:38 ... right now, this stinks.

David Friedberg 54:39 Do you honestly question the integrity of leadership and agents, uh, of the FBI? Like, honestly?

David Sacks 54:46 Are you serious? Like, you don't think-

David Friedberg 54:47 Yeah.

David Sacks 54:48 All right, let me read you this tweet from Michael Burry from-

David Friedberg 54:50 I don't wanna, I don't wanna hear the tweet. I wanna hear your point of view.

David Sacks 54:51 Well, no, no. Well, I, I, I agree with what Michael Burry's saying, so I think sometimes help, there's a lot of thoughtful commentary about this. And what Burry says is, "J. Edgar Hoover led the FBI for five decades, denied the mafia existed, fought the civil rights movement, shielded the KKK. Multiple presidents acknowledged fear of him." So what he's saying is that the FBI, since its inception-... has political origins, uh, and, and, and basically meddled politically in the affairs of the country. Then he says, "The FBI lied to the FISA court..." This is back in 2016. Totally true. "... Altered emails. Leaked lies to the press to get Trump. Nothing shocking." So Freeberg, listen, I don't know whether the FBI is telling the truth, but are you honestly gonna say that the FBI's leadership has never been political, that it's never harbored or pursued their own agenda, and that it's never had a desire to go after Trump?

David Friedberg 55:41 I'm not, I'm, I'm not making an opinion. Yeah.

David Sacks 55:42 We saw... Hold on a second. We saw, we saw the text messages from Comey, Strzok, Page, McCabe. I mean, these guys basically took it upon themselves when Trump was elected to be the "insurance policy".

David Friedberg 55:55 Yeah.

David Sacks 55:55 And an FBI lawyer pled guilty to falsifying documents to seek a warrant from the FISA court. So I just think anything's possible here. And now-

David Friedberg 56:07 Yeah.

David Sacks 56:07 ... I'm not saying the FBI is lying about this. I don't know. But the idea that the FBI is automatically entitled to the benefit of the doubt in light of their proven history of basically pursuing Trump like Ahab pursued the white whale. I mean-

David Friedberg 56:21 Yeah.

David Sacks 56:21 ... these guys ha- have been after him.

David Friedberg 56:23 I'm just gonna zoom out for a second c- And the reason I'm interrogating Sacks on this is, like, it's just so telling to me that a guy like, like you, Sacks, in your position are, are actually questioning the integrity of, like, the highest justice, authority, and institution in the United States, um, really says a lot about kind of the state of, of the U.S. citizenry, the state of our society today. I, I think it speaks a lot to what-

Narrator 56:49 It's at least a third of Americans.

David Friedberg 56:51 I know. It's incredible. And what Ray Dalio said in his book about how during these periods when the empires begin their decline, and, you know, when you're challenged with kind of the economic conditions that the U.S. is challenged by, printing lots of money, lots of debt, very hard to service all that debt, and we have a ton of obligations over the next decade or two that are gonna be very hard to meet given our economic, uh, growth and inflation conditions right now, that you start to see these sorts of behaviors. Historically, it's happened six times in the last 500 years where large empires like the United States or large, um, you know, economic powerhouses like the United States start to decline, that the civil war begins, that the institutions get challenged by a minority and then a mag- majority of the citizenry. And it really starts to crumble and, and, and challenge the, uh, the integrity of the institution and its ability to hold itself together.

David Sacks 57:41 Well, I, I'm not... Hold on a second.

David Friedberg 57:43 And, and, and by the way, they're, they're-

David Sacks 57:43 I'm not, I'm not challenging... Hold on a second. I'm not challenging the-

David Friedberg 57:45 Well, you're questioning the integrity. You're, you're questioning the integrity of the Department of Justice, right?

David Sacks 57:49 Listen, I, I-

David Friedberg 57:50 And by the way, I'm not, I'm not arguing.

David Sacks 57:51 I'm not-

David Friedberg 57:51 I'm just pointing out, like, it's, it's an incredible condition for us to find ourselves in.

David Sacks 57:55 Yeah. But I... But, but, but my questioning did not create that condition. Their... This lack of trust-

David Friedberg 58:00 I know.

David Sacks 58:01 ... is earned.

David Friedberg 58:02 I know.

David Sacks 58:02 It's earned by the FBI in light of behaviors they took just a few years ago. Now listen, I'm not defending Trump per se. I don't know what he did or didn't do. Okay? But I think that it... You can't just accept at face value without further proof these leaked... what, what are basically leaked comments by the FBI.

David Friedberg 58:25 Yeah. But you guys-

David Sacks 58:25 I mean, look, I'm not... Listen, I'm not a naive child. I mean, the fact of the matter is that power can be corrupt, and power corrupts. Okay? And we have seen that the FBI from its earliest days did engage in corruption, and more recently, against Trump himself, had a vendetta against Trump. So I'm simply-

David Friedberg 58:44 And let's also... Yeah.

David Sacks 58:44 So hold on. So all I'm doing is I'm not gonna automatically accept at face value what they're saying until I see some proof. Now, I'm not saying that they're wrong or they're lying about this. I'm simply saying I'm not gonna accept it at face value.

David Friedberg 58:58 Yeah. I'm... And, and remember, Trump, Trump was elected on, on, uh, on the platform that there is this deep state, that there is institutional corruption, that there is, um, malaise and lethargy in these institutions of the government that are funded on the order of trillions of dollars a year, and that that's what he was intended to, you know, to go and, and blow up and repair. And there, there's, there's a very strong and, and potentially close to majority percentage of voting Americans that, that feel that there is this core deep state corruption, uh, institutional lethargy, that is challenging our ability to give everyone the freedom and liberties that they deserve.

David Sacks 59:34 Freeberg, these agencies are supposed to be nonpartisan. They're not supposed to have a horse in the race. And what we saw is that when Trump was in office and these texts came out, clearly the, the top levels of the FBI, these top agents... I'm not talking about the rank and file. I'm not talking about the field agents. I understand that a lot of them are law-and-order types who vote Republican. I get it. But I'm talking about the leadership, the highly political leadership in Washington. And it was pretty clear that they had a horse in the race. They did not like Trump, and they were out to get Trump. And, you know, again, uh, Trump is not my preferred candidate for 2024, but what the FBI has done with this raid, quite frankly, I think has polarized the outcomes. They are basically gonna send Trump to the big house or the White House. I mean, because now the Republicans have rallied around Trump. I think he's gonna be very, very hard to beat, uh, for, as the nominee in 2024 unless the FBI comes up with ironclad evidence to show that he did something significantly wrong.

David Friedberg 1:00:31 I care less about who did what and what was done wrong. I care more about the fact that this conflict is escalating, and it's creating a real condition of continuing, uh, polarization. And it really is the, the conditioning that... You know, Biden had some historians in, in the White House. There was a report on this last week. And these historians spoke about how the conditions in the United States are just as they were right before the Civil War. And, um, and that there's real concern-

Narrator 1:00:55 They measured how?

David Friedberg 1:00:55 ... that... Yeah. Well, I mean, you know, they... You can go read the, the, the anecdotal reporting that was done on this thing. But that was the general theme of the conversation. And, um, you know, it really, it really kind of, um, concerns me more that this level of discourse is escalating to a point of...... uh, you know, there is corruption. Uh, this person is a criminal. And that sort of discussion happens, um, you know, in, in, in more dire circumstances and more... and, and, and economic circumstances than has ever been seen. You know, the US has the largest economy in history and we're now having these sorts of conversations that typically lead to some degree of conflict, and it's really concerning. It's really concerning.

David Sacks 1:01:35 Well, I, I just think... Listen, I, I think that Trump was out of office. We were told that this partisan rancor would stop once he was out, and it's... You know, they're pulling him back in. And all I can say is that when the... I think we know maybe 1% of the story. Okay? I think this leak around nuclear documents is... It feels like a selective leak. It's not certainly the full story here.

David Friedberg 1:01:57 But all sides are inflammatory.

David Sacks 1:01:58 The, the-

David Friedberg 1:01:58 All sides are cantankerous, Sax, right? It's, yeah.

David Sacks 1:02:01 Well, I'm, I'm, and I'm suspending judgment. What I'm saying is, though, that when all the information comes out, there better be a very significant there there.

Chamath Palihapitiya 1:02:08 No, no, no. We've made that impossible too because he- Trump came out and he basically said, uh, "Hey listen, if you, if these guys find something, it was planted." And now you're gonna have at least a, you know, 10 or 15% of the population that believes, "Okay, this was planted. It wasn't actually there and..." You know, so whatever the outcome is, um, will not be good. Nobody will be satisfied and both, both of the extremes in the United States will be even more angry-

David Friedberg 1:02:35 Further inflamed, yeah.

Chamath Palihapitiya 1:02:36 ... further inflamed.

David Sacks 1:02:37 Well, that, and that's what I'm say-

David Friedberg 1:02:38 Yeah.

David Sacks 1:02:38 That's, I think, I think-

David Friedberg 1:02:38 The inflammatory index has now s- has now skyrocketed, yeah.

Chamath Palihapitiya 1:02:41 By the way, this is why I think at some level maybe the lack of faith in these institutions is well-deserved, because where is the, the, you know, the, the, the prudence of all of this? Like where is the, the circumspect, thoughtful, methodical thinking about all of the different outcomes that could be possible so that you exhaust every option and this is the only option left? And then even then, if Merrick Garland was open to basically saying, "Unseal the warrant," why didn't you do it before and say, "We're going to have to serve this guy unless he actually gives us these in-" There's all kinds of things you could have done-

David Friedberg 1:03:23 Oh, clearly they did that.

Chamath Palihapitiya 1:03:24 ... to keep the, hold on a second, to keep the temperature of this thing way, way down. And that's what's frustrating.

David Sacks 1:03:29 And, and to your point, Chamath, they could have let Trump's lawyers watch them do the search so that nobody could claim anything about anything being planted.

Chamath Palihapitiya 1:03:38 Yeah.

David Sacks 1:03:38 So they didn't let that happen either.

David Friedberg 1:03:39 The inflammatory, the inflammatory index is spiking. I think that's my key takeaway on all of this. I, I care less about what Trump did and what the DOJ did-

Chamath Palihapitiya 1:03:47 No, but you're right. And, and, you know, like when you-

David Friedberg 1:03:48 ... and what the FBI did. But I'm more concerned about where this takes us because the next step, regardless of the outcome-

Chamath Palihapitiya 1:03:52 Well, you know where it takes us.

David Friedberg 1:03:53 Yeah.

Chamath Palihapitiya 1:03:53 You know where it takes us. When you're on tilt at the poker table, what do you do? You cannot think properly. Right? And so when people-

David Friedberg 1:03:58 That's what's... That's, and that's where everyone is at right now. Yeah.

Chamath Palihapitiya 1:04:00 When people are so inflamed with emotion, they start to make very poor decisions. I don't know whether the DOJ and Main Justice made a poor decision or not. I think this is where we have to hold our breath and hope they didn't. I don't know whether the White House knew anything or not. But the whole point of all of this is that we pulled this guy right back in to the, to the, to the main stage.

David Sacks 1:04:24 Absolutely. I mean, you're, like I said, you've polarized the outcomes. You're either gonna basically send this guy to jail or you're gonna send him to the White House, back to the White House.

Chamath Palihapitiya 1:04:32 No. I think there's very likely... No. I think there's very likely a middle path where nothing happens-

David Friedberg 1:04:36 Right.

Chamath Palihapitiya 1:04:36 ... but it will further erode what Freeburg says, which is, it's just a little bit less trust in the DOJ and the FBI.

David Friedberg 1:04:42 Institutional integrity is eroding.

Chamath Palihapitiya 1:04:45 That, ins- institution-

David Sacks 1:04:45 Yeah. Well, I mean that, that-

David Friedberg 1:04:45 And when institutional integrity erodes, the, the fabric of what keeps everything working starts to fall apart. And I'm not saying this is some cataclysmic civil war happening... Just to be clear, I'm not saying there's some cataclysmic civil war happening next year, but it's an unfortunate decline in everyone's faith and, and, and the stability of the institutions that we all rely on to support and service us. Because the inflammatory index is gonna go up and everyone is gonna be criticizing everything. And that's a nasty place to be.

David Sacks 1:05:10 That's, this, this is why I think we really have to ask, was this really necessary? I mean, why did the DOJ and the FBI think this was necessary?

David Friedberg 1:05:17 Yeah. I think the judgment-

David Sacks 1:05:17 I mean, these boxes were just sitting there.

Chamath Palihapitiya 1:05:19 I think that's a reasonable question, is like if these things were actually sitting (laughs) in a box with a lock that they changed, there must have been something more that was so grievous where you had to do something like this. Now, by the way, David, I just want to... I read, so I don't know if it's true or not. I think maybe it was in Bari Weiss' Substack or Matt Taibbi Substack, these folks weren't armed to the teeth. They came in jeans and shorts and T-shirts. In fact, Main Justice told them like, "Do it as low-key as possible."

David Sacks 1:05:45 No, I've seen the photos. They, I, I've seen the photos. They had a- they had AR-15s.

Chamath Palihapitiya 1:05:47 No, no. You saw the photos outside. I'm saying the people inside were there for six or seven hours and only a few people knew about it. That's what was written in the-

David Sacks 1:05:53 They were there for nine hours. They basically told Trump's people they couldn't be there, they had to leave. They told them to turn the cameras off. And they had, like, highly militarized gu- There, there were something like 40 people and something like 30 of them were heavily armed. The optics were terrible.

David Friedberg 1:06:08 If there was some nuclear con- confidential nuclear material in Mar-a-Lago, and through normal means of communication they had asked several times to have it returned and identified this for him and he had refused, which I think is a very reasonable kind of, you know, conditioning for what may have happened here. And then they said, "Okay, we gotta go get it. There's no choice. This is like super confidential nuclear material. We gotta get this stuff. The only way to get it is to serve a warrant and go in there and get it." You know, under those circumstances, you know, do you think that this would have been kind of inappropriate? Like assume all other kind of communication means were exhausted, like, you know, what would you have done if you were president?

David Sacks 1:06:44 Listen, I think there is information that could still come out to convince me that this raid was warranted. Um-

David Friedberg 1:06:50 Yeah.

David Sacks 1:06:51 I just haven't seen that information yet, and I think the optics of it were terrible. I, like-

David Friedberg 1:06:55 Right.

David Sacks 1:06:55 ... the point I was making. I don't know why it wouldn't have been good enough to send in the FBI agents with holstered sidearms, you know. Not AR-15 weapons of war, you know, where the fingers were just outside the trigger guard. It looked like a paramilitary raid. So whoever was thinking about the political ramification of this clearly didn't do a very good job. I also don't know-

David Friedberg 1:07:15 They didn't go for the optics. Yeah. The optics are terrible. Yeah.

David Sacks 1:07:15 Yeah. I also don't know why you wouldn't give the courtesy to a former president of the United States to give them either more of a heads up or to let his lawyers attend so that it... Just for their own protection, so they can't be accused of planting anything. That would have been smart. And I don't know why they would have said to Trump's people that they couldn't record it, and I don't know why there have been reports that the FBI went through Melania's closet. I mean, seriously, they're like going through Mal- Melania's clothes. It's just weird. It's weird. So there's a lot about this that we don't know. I'm not conclusively rendering judgment about it because there are things that absolutely could come out to convince me that it was warranted. But I haven't heard them yet.

Chamath Palihapitiya 1:07:56 Okay, everybody. We'll see you on the next episode of the All-In Podcast. Love you BESTies.

David Sacks 1:08:02 Let your winners ride.

Chamath Palihapitiya 1:08:05 Rain man David Sax.

David Sacks 1:08:09 And I said, we open source it to the fans and they've just gone crazy with it.

Chamath Palihapitiya 1:08:13 Love you BESTies.

David Friedberg 1:08:14 Queen of quinoa. Let your winners ride. BESTies are back. That is my, uh, dog taking a no issue in your driveway, Sax. (laughs)

David Sacks 1:08:28 (laughs) Oh, man.

David Friedberg 1:08:31 Oh, man.

Chamath Palihapitiya 1:08:31 My haberdasher will meet me at Windsor.

David Friedberg 1:08:33 We should all just get a room and just have one big huge orgy 'cause they're all just useless. It's like this, like, sexual tension that we just need to release somehow.

David Sacks 1:08:41 Wet your beak. Wet your beak.

David Friedberg 1:08:43 Wet your beak.

David Sacks 1:08:43 Wet your beak. Wet.

David Friedberg 1:08:46 We need to get merch.

Chamath Palihapitiya 1:08:47 BESTies are back.