E93: Twitter whistleblower, cloud security vulnerabilities, student debt forgiveness & more

Jason Calacanis 0:00 I want to play the theme music for this episode. Okay, hold on one second. Here we go.

Narrator 0:03 When you get in trouble. And you don't know right from wrong. Give a little whistle. (whistle) Give a little whistle. (whistle)

Chamath Palihapitiya 0:12 If you let the Indian government plant spies in your office, give a little whistle. (whistle)

Narrator 0:19 (laughs)

Chamath Palihapitiya 0:21 (Whistle) If you have too many bots, you can come up with your own metric, MDA use. (whistle) MDA use. (whistle)

Narrator 0:30 (laughs) .

Chamath Palihapitiya 0:31 When you want to incent your staff to not look at the bots, give them bonuses based on DAUs. Based on DAUs. (whistle)

Narrator 0:41 (laughs)

Chamath Palihapitiya 0:41 Always let your bonus be your guide. (whistle) When you're on the board, and you see metrics that you don't like. Turn a blind eye.

Narrator 0:52 (laughs)

Chamath Palihapitiya 0:52 Turn a blind eye. (whistle)

Narrator 0:56 (laughs)

Jason Calacanis 0:57 (laughs)

Chamath Palihapitiya 0:57 Sorry, sorry. (laughs) I just got subpoenaed (beep) .

Narrator 1:00 (laughs)

Chamath Palihapitiya 1:01 Shit, everybody's getting subpoenaed again. (beep)

David Friedberg 1:03 This is J-Cal at his best.

Narrator 1:06 (laughs)

David Friedberg 1:07 We got to stop. This is... We're getting ourselves into too much trouble.

Narrator 1:10 Don't let your winners ride. Rain Man, David Sack. I'm going all in. And I said, we open sourced it to the fans and they've just gone crazy with it. Love you 69th. Queen of Quinoa. I'm going all

Narrator 1:25 in.

David Friedberg 1:26 This is gonna be the story of 2022, for sure. (laughs) Right before, I guess, the big case between Elon and Twitter is about to happen, I guess in October at some point, a Twitter whistleblower has come forward and dropped a nuke into the middle of what was basically the story of the year in business, I think. The former head of security hired by Jack himself, an incredibly well-respected, uh, Peter Mudge, Zatko, uh, he's referred to as Mudge, one of the most respected people in, uh, the security industry. Uh, again, recruited by Jack in 2020 after a team of hackers, you may remember, took over all these verified accounts, Obama, Biden and- and- and Elon's account as well. And he was, um, head of security until January of this year, eight months ago, and he claims, through explosive documents, a huge document dump, that, uh, Twitter execs ignored, these Twitter executives ignored multiple security vulnerabilities. Now, why is this important? Well, obviously if Obama, Biden and other heads of state have their Twitter handles, they could say something that could cause an international incident, and that's actually happened, uh, with hacks before. He also says they were not following even the most basic security protocols, like safeguarding staff access to core software. Of course, all this comes after there were Saudi infiltrators, spies essentially, inside of Twitter. I mean, the- the list of things here that he is alleging is truly colossal. He- he dumped these documents to the Department of Justice, the SEC, Congress and, uh, The Washington Post. He alleges that the vulnerabilities make Twitter extremely vulnerable to foreign spies, hacking and disinformation campaigns. And perhaps most importantly to the acquisition, the complaint also adds that Twitter's policy towards fake accounts incentivize "Deliberate ignorance by undercounting spam accounts and giving bonuses to execs for increasing users, but not finding bots." Sacks, your thoughts, I mean, on this? We- we talked about your subpoena or whatever that was. Uh, I don't think that's-

Jason Calacanis 3:39 No, it's not a subpoena.

David Friedberg 3:39 It's a subpoena.

Jason Calacanis 3:39 I'm being depositioned. It's, uh-

David Friedberg 3:42 Oh, you're having a deposition?

Jason Calacanis 3:44 Yeah, they want to- they want to depo- depo me too, which is kind of amazing. But let's- let's save that 'cause-

David Friedberg 3:49 Yeah, sure.

Jason Calacanis 3:49 ... I think this is more- more newsworthy.

David Friedberg 3:52 (laughs)

Jason Calacanis 3:52 So you recall on a previous show, we talked about this idea that if Twitter sues Elon to go after the kill fee or to go after damages, the question will very rapidly become about whether Twitter has a bot problem. And will discovery reveal documents that show that Twitter executives knew or should have known there was a problem? And so I said, you know, the question will very rapidly become, what did Twitter executives know and when did they know it? Now, I couldn't have predicted that this whistleblower would come forward, but what he's basically saying is, not only is there a bot problem, there is a cover up of the bot problem, and he's accusing the company of positively Nixonian tactics here. So just to build on what you said, J-Cal, he said that, "Twitter executives don't have the resources to fully understand the true number of bots in the platform, and their executives are disincentivized to count them properly, because doing so would negatively affect their bonuses." So I didn't know that their bonuses were in any way tied to, uh, to this bot issue. So he's basically, he's making the Upton Sinclair argument that it's hard to get a man to understand a problem when his salary depends on not understanding it. So that's part of what he's saying. He's also saying that he's- he's accusing Twitter CEO Parag Agrawal directly. Let's just say these are allegations, right? These are not proven yet. Uh, but here's what he's saying. Basically, he's saying that Parag and his lieutenants repeatedly discourage him from providing a full accounting of Twitter security problems to the company's board of directors. They basically prevented him from producing a written report. He also says that the company's executives ordered him to knowingly present cherry-picked and misrepresented data to create the false perception of progress on urgent cybersecurity issues.

David Friedberg 5:40 Wow.

Jason Calacanis 5:41 He also alleges that they went behind his back to have a third-party consulting firm, uh, their report scrubbed to hide the true extent of the company's problems. And as a result of this, he's basically saying that Twitter executives committed securities law violations by making material misrepresentations and omissions in SEC filings.And this is what got Elon to, to sort of c- commemorate Zatko's revelations with one of his trademark memes, which was the meme of Jiminy Cricket singing Give a Little Whistle from the film Pinocchio-

David Friedberg 6:12 (laughs) Which I think becomes a cold open here. (laughs)

Jason Calacanis 6:15 ... uh, which, (laughs) exactly. (whistles) Which just became our cold open.

David Friedberg 6:17 (laughs)

Jason Calacanis 6:17 So yeah, look, these are very serious allegations. They're not proven yet. He's working with the same group who worked with Frances Haugen. And I certainly question some of the things she was saying, so I'm not gonna automatically accept on faith everything he's saying. But I think by the same token, because he's working with groups that back Frances Haugen, who was very much not on the free speech side of this debate, I also think you can't just accuse this guy of being an Elon stooge. This guy, uh, is a respected cybersecurity authority. He's one of these, like, white hat hackers. He's somebody who was an early hacker-

David Friedberg 6:58 He's literally m- ... If you were to ask before all of this, before he worked at Twitter, like, "Who would you want as your chief security officer? You know, give me a short list," he'd be on it for any company.

Jason Calacanis 7:08 Right.

David Friedberg 7:09 One of the most respected people who points out vulnerabilities. And Chamath, uh, or Friberg, I have a question about corporate governance and what seems to be a dysfunctional relationship here. You have Jack hires somebody to solve the security problems. Then when presenting to the board, he's not allowed to tell the truth, and they, the board has given incentives to the management team. He's a top five, top seven member of the management team. So what's going on here with this dysfunction where he's hired to tell the truth, to fix the problems, the board is, is turning a blind eye to it, and maybe the management team is not giving the board the data they need to make better decisions? Who, who, w- how do you game theory this? Yeah.

David Sacks 7:52 I'm not sure that it's, you can come to all those conclusions.

David Friedberg 7:56 Yeah, I'm not coming to the conclusion. I'm just, my mind is wandering of how this-

David Sacks 7:59 I read the, I read-

David Friedberg 7:59 ... dysfunction comes up. Yeah.

David Sacks 8:00 I read parts of, of his whistleblower. I can't claim to have read it all. It actually isn't super supportive of Elon's case. Uh, the most problematic thing that he points out is the following, and this is a quote from his complaint. He said Twitter, quote, "Already doing a decent job excluding spam bots and other worthless accounts from its calculation of mdao." At best, he's alleging that Twitter omitted details, not that it lied directly. So if you kind of take that, I think what he's really pointing his sights on are, as you said, disclosures that have nothing to do with the spam issue, but have a lot to do with security. And that is something that typically in a, in a public company board filters up through the audit committee typically, that gets a readout, right, once a quarter from the rep- from the right people who talk about, "Here's our cybersecurity threats and vulnerabilities." And then there is a readout from that committee chair to the board, and then those are noted, um, in your quarterly, uh, i- in your quarterly reports that the secretary writes down. So I think part of why this guy may not have had the audience is, it was also written that he was a pretty terrible manager, and there were hundreds of people in his organization who were just kind of running here and there. And so, you know, you guys have all been in the situation where we hire somebody who is an exceptional performer, and then we miscast that person by putting them in a point of leadership and, and being a team manager versus, um, you know, a, a single kind of, like, um, product or engineering expert. And it seems like there was a part of that at play as well, which decayed the ability for management to actually have enough faith and trust in this guy to put him in front of the board. So, and that's all that's just come out in the last few days. So I don't know. My, my reading of the whistleblower claim is really that this is the kind of thing that companies like Facebook and Google and others have had issues with the FTC in the past. They typically settle those claims. They pay a fine, snap. But those things take three to five years to play out. So I suspect that this body of content more leads to that outcome than is a smoking gun that really helps Elon. In fact, this, the f- the fact that he's actually affirmatively stating that their calculation of mdao is actually pretty decent actually hurts the claim that Elon is making.

Jason Calacanis 10:43 I don't, I don't know if I agree with that actually.

David Friedberg 10:46 Okay, go ahead, Zach.

Jason Calacanis 10:46 Uh, so I, I agree with, with Chamath that the claims he's making are far broader than the bot issue, um, and far broader than the issues that Elon's raised. So I agree with you about that, Chamath. However, I don't agree that what he's saying isn't specifically helpful to Elon's case. So what he said is, so this is from a CNN Business article. He said, um, "Zatko's disclosure argues that by reporting bots only as a percentage of mdao, rather than as a percentage of total number of accounts on the platform, Twitter obscures-"

David Friedberg 11:17 Ah.

Jason Calacanis 11:17 "... the true scale of fake and spam accounts on the service."

David Friedberg 11:21 Ah.

Jason Calacanis 11:21 "A move Zatko alleges is deliberately misleading." And then, uh, CNN continues-

David Friedberg 11:25 So what, what you're saying here, Sacks, just to do the math, the denominator matters here. If the denominator was all accounts, the percentage of bots would be much higher. If the denominator is monthly mdaos, whatever they created, it would be a much lower denominator and the percentage would change I think is what you're saying.

Jason Calacanis 11:42 I'm just, I'm just re- reporting-

David Friedberg 11:43 That's my read on it. Yeah.

Jason Calacanis 11:43 ... what, what CNN is reporting in terms of, uh, what Zatko's al- alleging. I just wanna get it out on the table. CNN broke the story along with, um, what other news source? Uh-

David Friedberg 11:51 Washington Post.

Jason Calacanis 11:51 Washington Post, yeah. Basically what happened is this guy got fired in January and started working with these whistleblower lawyers. They put together a big report, and then that report got leaked to The Washington Post and CNN, as well as people on Capitol Hill. So that's kinda what happened here. So CNN goes on to say...Zatko says he began asking about the prevalence of bot accounts on Twitter in early 2021, and was told by Twitter's head of site integrity that the company didn't know how many total bots were on its platform. He alleges that he came away from conversations with the integrity team with the understanding that the company had, quote, "No appetite to properly measure the prevalence of bots," end quote, in part because if the true number became public, it could harm the company's value and image. So this is, again, the Upton Sinclair problem that they're-

David Sacks 12:39 I mean, then-

Jason Calacanis 12:39 ... you know, it's hard to get a minimum-

David Sacks 12:40 ... at a minimum, David, you have to agree, this guy is basically speaking on both sides of his mouth. I mean, these are both direct quotes from his complaint, so his complaint, at best, is very confusing and a little schizophrenic.

David Friedberg 12:50 Well, it's also just coming out, so w- there'll be more data that, that comes from-

David Sacks 12:54 Yeah. By the way, I don't... I'm, I'm not saying-

David Friedberg 12:55 Yeah.

David Sacks 12:55 ... that I believe him or disbelieve him, but I'm saying-

Jason Calacanis 12:57 Right.

David Sacks 12:58 ... if you, if you look at the quotes, the quotes aren't the smoking gun one would want if one was trying to... Look, uh, I think we have to remember, the, the lawsuit has really nothing to do with this problem. The p- the lawsuit really boils down to one very specific clause, which is the pinnacle question at hand, which is, there is a specific performance clause that Elon signed up to, right? Which, you know, his lawyers could have struck out and either chose not to or, you know, couldn't get the deal done without, and that specific performance clause says that Twitter can't force him to close at 54.20 a share. And I think the, the issue at hand at the Delaware Business Court is going to be that, because Twitter's gonna point to all of these, you know, gotchas and disclaimers that they have around this bot issue as their cover story. And I think that really, you know, this kind of, again, builds more and more momentum in my mind that the most likely outcome here is a settlement where you have to pay the economic difference between where the stock is now and 54.20, which is more than a billion dollars, or you close at some number below $54.20 a share. And I think that that is like, you know, if you had to be a betting person, that's probably... And if you look at the, the way the stock has traded and if you also look at the way the options market trades, that's what people are assuming, that there's a seven to $10 billion swing. And if you impute that into the stock price, you kind of get into the $51 a share kind of a, an acquisition price. Again, I'm not saying that that is right or should be right. I- that's just sort of what the market says.

David Friedberg 14:47 Friedberg, what's your take on this? Do you find this person credible, highly credible? And how damaging do you think this is to Twitter, independent of the, uh, deal to sell the company?

Jason Calacanis 14:58 I think there's two tests. One is the materiality of what they've reported. So... And really, that comes down to just the, um, the endow reported numbers. So if there really is some misstatement, knowing this statement based on what he's saying, that's an issue. The other one is the, the duty of care responsibility of the board, meaning, um, did the information that he's providing actually find its way to the board? If it was blocked by management, you know, it's- it's- it's a judgment call on, you know, whether or not management was trying to deceive or whether they were trying to investigate and identify more. If the information was brought to the board and the board did not act, then there's an issue with the board's meeting their duty of care responsibility as fiduciaries of the company. And that's really what-

David Friedberg 15:47 He did pitch the board at some point, or explain this-

Jason Calacanis 15:49 What, well, well, but if, if-

David Friedberg 15:50 ... to the board, but not in writing.

Jason Calacanis 15:51 Yeah, if what he's-

David Friedberg 15:52 Yeah.

Jason Calacanis 15:52 ... claiming did not make its way to the board, then it's hard to say that the board was in breach of their duty of care. If the CEO-

16:02 I agree with that.

16:03 And if the, if the CEO blocked it, then there's-

16:06 Uh-huh.

16:06 ... a question on what... Then the CEO can be fired, right? Then, then there's a good case for the CEO to be fired. I see... So I-I see, you know, probably one of three scenarios here. One is, you know, nothing happens. Two is that the board is actually violating their... Which I doubt, knowing this board. I mean, knowing who's on this board, it's probably more likely that the CEO or some executives that block this information from getting to the board, the board then has to act now that they have the information and they say, "Hey, you blocked this information from getting to us. We need to act." And maybe they remove the, the, the leadership that was responsible for that.

David Friedberg 16:38 Sacks, in terms of board governments, how much of this has to do with the fact that nobody really owned, on the board, any significant equity (laughs) in Twitter?

Jason Calacanis 16:45 Is that true?

David Friedberg 16:47 Yeah. I mean, I think Jack-

Jason Calacanis 16:48 I mean, um...

David Friedberg 16:48 ... on the board was the highest, right? He owned 2 or 3%.

Jason Calacanis 16:51 How much did Silverlake own? Jack owns Silverlake. Egon's on the board. I mean, they're, there, there are owners on the board, right?

16:57 Zatko doesn't-

16:58 The majority of the board-

David Friedberg 16:59 Yeah. Were low.

Jason Calacanis 17:01 T- to be clear, Zatko doesn't seem to be pointing his finger at the board. Um, in fact, quite the contrary. He's saying he wasn't allowed to present to the board in the amount of detail that he wanted, in written form like he wanted. So in a way, he seems to be exonerating the board. He is pointing the finger at Twitter executives, and the timeline here is instructive. Basically, what happened is he was hired by Jack Dorsey back when Jack was CEO. This is in, I think, um, November of 2020. And at that time, Jack had Zatko report directly to him. He actually took responsibility away from these issues, away from Parag, who was running engineering, gave it to Zatko. Zatko reported directly to him. Now, fast forward about a year later, and Jack steps down. Parag becomes CEO, and then two months later, Parag fires th- uh, Zatko. And it's in that time period, that couple of months, where Zatko alleges that he's prevented from providing a written report to the board, that Twitter executives instruct him to cherry-pick, that they basically, um, tried to amend this third-party consulting firm's report in order to make the situation look better, in order to hide, hide the extent-... of the company's problems. So, I think this is, I think the allegations, as far as they go, are mainly a problem for Twitter executives-

David Friedberg 18:21 Management. Yeah.

Jason Calacanis 18:21 And, and look, I, you know, I don't know the truth of these things. They're just allegations. Uh, I think this guy is a respected-

David Friedberg 18:27 Super friend.

Jason Calacanis 18:28 ... sort of white hat hacker in the cyber community. At the same time, I don't know, maybe he is a bad manager or maybe there are other reasons for removing him.

David Friedberg 18:35 Could be both. Could be a bad manager-

Jason Calacanis 18:36 Um, you also, you also-

David Friedberg 18:36 ... and could be telling the truth, right?

Jason Calacanis 18:38 Yeah, and you can't ignore the fact that under whistleblower laws, if Twitter gets fined as a result of these allegations, he could get 30%. So listen, we, we don't know the truth of it. However, I do think that this whole thing is a windfall for Elon's case, because it does seem to provide substantiation for Elon's assertion that there's a bot problem at Twitter. Now-

David Friedberg 19:02 And a cover-up about it.

Jason Calacanis 19:04 And a cover-up about it, exactly.

David Friedberg 19:05 Yes.

Jason Calacanis 19:05 And a cover-up that would basically potentially invalidate the company's, uh, SEC disclosures on the subject.

David Friedberg 19:13 Yeah, it's explosive.

Jason Calacanis 19:13 Now, there's a ques- there's a question of law and a question of fact with regard to Elon's case. So, in other words, at the end of the day, what they're gonna be litigating in Delaware is a contract dispute. Is Elon contractually required to close? And Elon's assertion is, "I'm not because of this bot issue." So there's a question of law where if e- if everything Elon says about the bots is true, is he required to close? And I don't know what the legal ramifications of that are. But I think with respect to the question of fact, which is, is Elon right about the bot issue, there's no question that this is a bombshell that can only help his case.

David Sacks 19:50 By the way, to your point, the, the, the, the stock was kind of pricing in a 70% likelihood of this thing closing, if you looked at just how all this stuff was trading. And it went down to 60% once that whistleblower report came out and, and people had a chance to digest it. So, to your point, it definitely moved the goal post a little bit towards, tow- in Elon's favor.

David Friedberg 20:11 There is a, a, you know, an important thing to point out here, which Sacks just, uh, touched on. There is a whistleblower program that was created in 2012 and, uh, by the SEC, uh, as part of Dodd-Frank, I believe, or, uh, in part of the evolution of Dodd-Frank. Uh, and they've given out now over $1 billion in whistleblower awards. These awards come out of the SEC fine. So you often wonder, like, hey, they give this huge SE fi- SEC fine, who got it? Well, turns out whistleblowers now are massively incented, because if you're a whistleblower, it's cr- a career-ending, potentially-

David Sacks 20:42 But, but Jason, Jason, you're not, you're not seeing the other part, which is when you go to these organizations to now help develop a whistleblower lawsuit, what is actually happened is you're not whistleblowing moral or ethical breaches. You're whistleblowing things that can come back to an issue that the SEC and the FTC can make an issue of, because that's where the financial fines come and that's where the-

David Friedberg 21:01 Exactly. Sure.

David Sacks 21:01 ... remuneration and motivation. So, for example, like, you could have a company that's illegally, um, I don't know, killing dogs. Horrible. But, you know, the whistleblower claim will be about, you know, their disclosures in a 10-K.

David Friedberg 21:15 Of how many dogs they killed, uh, to the SEC, right. In this case (laughs) you know, how many ... what did they tell the ... yeah. Uh, and that's why he gave this to the SEC, DOJ. The other interesting wrinkle here, and by the way, there's been two... The whistleblower program, I did a bunch of reading on it this week, they also don't disclose who the whistleblowers are. So this isn't a case where you have to come out like Francis did, uh, or, or Mudge did. You, a lot of these awards are being given quietly, so there, and there's been two rewards over $100 million, and they don't say what the award was based on, you know, who did, who, who the whistleblower is or who the company is. They've been doing this in a very stealthy way, and it seems to be highly, uh, effective. The big difference, I think, with Francis compared to this one is Francis is just a PM, you know, who was not a top five or 10 employee, not even close to that. This is a top five, top seven employee who had access to the board and w- was giving reports to the board, at least orally.

David Friedberg 22:08 The final point on this I would like to get everybody's, um, uh, commentary on, if it is true that they essentially, um, were forced, Twitter was forced by the Indian Government to put a government agent on the payroll (laughs) . I think agent means spy. How explosive is that, and then how many other countries-

David Sacks 22:25 That, that to me-

David Friedberg 22:26 Yeah.

David Sacks 22:26 That, to me, is the most important thing that is not getting nearly enough coverage. It's like you had a government come to a company that's based in America, and it's no- it's not the United States Government that did it, and basically said, "We need you to place an agent of our intelligence services inside of your company," and it seems like they were like, "Okay, where do you want them to sit?"

David Friedberg 22:47 Now, Sacks, if that's true, would ... I wonder if they would be required to tell the CIA and our government that their arm's being twisted. Like, this seems unprecedented to me.

Jason Calacanis 22:58 I don't know. That's-

David Friedberg 22:58 And if they didn't-

David Sacks 23:00 Well, I mean, I think the bigger-

David Friedberg 23:01 I mean, if true, again, this is all alleged, so, but if true, Sacks, what-

David Sacks 23:04 I, I think the bigger ... but no, Jason, you should also ask the next one, which is if they did it to Twitter, which is kind of small, what about the big honeypots of users?

David Friedberg 23:12 Apple, Google.

David Sacks 23:14 Apple, Google, Facebook.

David Friedberg 23:17 Wow.

David Sacks 23:17 TikTok, Snap. And what about coun- countries outside of just India? What about-

David Friedberg 23:22 Yeah. Saudi Arabia.

David Sacks 23:23 ... uh, the United States? No, I mean, what about the (laughs) United States?

David Friedberg 23:27 Uh, well, yeah, we have access to this stuff, you know, through the courts.

Jason Calacanis 23:30 There's supposed to be a process. There's supposed to be-

David Friedberg 23:32 Warrants. Yeah, we have warrants.

Jason Calacanis 23:32 The process is you go to court and you get a warrant. Not that it's a high bar, but, uh, a prosecutor has to go show probable cause and get a search warrant, present it to the company, and then they turn over the data. This, you're, you're right, it's explosive in the sense that what they're saying is that these government agents, this is what Zatko says according to Time Magazine, "The purported agents had direct, unsupervised access to internal information." So-

David Friedberg 23:58 Which I think means DMs, when the accounts are created, who owned which account, the IP addresses. That's what I'm guessing they had access to, which is ... you, you do not wanna trust anything-

David Sacks 24:07 I'm guessing, and I'm guessing what it-

David Friedberg 24:08 Don't put anything in your DMs, folks.

David Sacks 24:10 I'm guessing what it doesn't mean is the Twitter menu in the cafeteria.

David Friedberg 24:14 Yeah, no.

Jason Calacanis 24:14 (laughs)

David Friedberg 24:15 Yeah, not that, I mean, not that anybody's been to that cafeteria in three years anyway. (laughs) I mean, there's literally $47 olive steaks-

Jason Calacanis 24:24 I think they had, they had direct unsupervised access to the salad bar.

David Friedberg 24:27 (laughs)

David Sacks 24:28 (laughs)

Jason Calacanis 24:29 (laughs)

David Sacks 24:29 I think, I think you can basically-

David Friedberg 24:31 The yogurt bar.

David Sacks 24:31 I think you c- you have to make an assumption that if, if-

David Friedberg 24:34 What a shit show.

David Sacks 24:35 ... governments are doing this to one company, they're doing it to all companies.

David Friedberg 24:38 Yeah, but you would think-

David Sacks 24:40 Right? I mean, no, but honestly-

David Friedberg 24:40 ... that Google would put up a fight or Apple would put up a fight. But who knows?

Jason Calacanis 24:45 Really? You think they put up a fight-

David Sacks 24:46 Really?

David Friedberg 24:46 Uh-

Jason Calacanis 24:46 ... when they went into China?

David Sacks 24:47 The opposite. Don't you think they'd do the opposite?

David Friedberg 24:51 Well, actually what they did wa- There's actually an even sneakier way to do it. What Apple did when they went there is they said, "We're not providing cloud services in China. Uh, but all the cloud services are provided by this third-party company," so then they could have plausible deniability.

David Sacks 25:04 That's not what this is about. This is about-

David Friedberg 25:06 No, I'm just giving an example of how you-

David Sacks 25:07 I, this is the trick.

David Friedberg 25:08 This is the trick.

David Sacks 25:08 I understand, but I, I'm asking you a question.

David Friedberg 25:09 Okay.

David Sacks 25:09 Do you think that-

David Friedberg 25:11 Yeah. Go.

David Sacks 25:11 ... uh, foreign governments have put pressure on the largest American tech companies to place agents, and do you think they exist in there?

David Friedberg 25:18 They've definitely put... So the first part, they've definitely put pressure. We see that, obviously. Then the question is, would our, would the, would Apple or Google do this and not inform the government or not put up a fight? I don't know.

David Sacks 25:30 Well, I think it's fair to say that the, the Senate Intelligence Committee is gonna haul-

David Friedberg 25:34 (laughs)

David Sacks 25:34 ... Twitter and have, like, a closed-door meeting, and then the question is, you know, will they haul everybody else in? And it's just, it's, I, I, I think what, what is-

David Friedberg 25:42 What a shit show.

David Sacks 25:42 ... what is an important question is, is this a de rigueur kind of business tactic at the highest levels of every company and we just don't know it and are typically not read into it and we would never know in the absence of this whistleblower thing?

David Friedberg 25:54 And my question is do, does our government know that our companies are acquiescing to these governments?

Jason Calacanis 26:00 Well, that's been a problem for a long time, actually. So, there was a op-ed by a Microsoft executive talking about this a number of months back where the argument was, well, the government has to go get a search warrant to get your data from these companies, but these companies don't put up a fight. Like, they don't, it's like they don't challenge the warrant at all. And why? Because they don't have an interest. They have an interest in, in being cooperative, right? The article was basically saying that if you're the subject of a search warrant, meaning they're going to Google to get information about Jason, the government should have a duty to inform Jason so that your lawyers can go challenge it. And that was the legal change that needed to be made. We had this conversation, I think, last year. That is a change that should be made because in the old days when the government would present you with a search warrant, they'd have to go to you because all of your documents were in your possession. They would be at your office. They would be at your house. So they would come knocking at your door, give you the search warrant. You could give it to your lawyer. They could challenge it. That doesn't happen anymore. Now the government just goes and gives a search warrant to a big tech company 'cause your data is in the cloud, but their argument is you don't own that data, the big tech company does. The big tech company has no incentive to fight the government, and they just get access to all of your data. And you don't even know-

David Sacks 27:09 Well, it's n- it's not an-

Jason Calacanis 27:10 ... that you're being investigated.

David Sacks 27:10 ... it's not an argument. You agree to that when you sign their terms of service.

Jason Calacanis 27:14 Yeah. The current situation is bad enough that essentially you have very little protection and rights over your data, but what's happening here, the, the allegation is even worse, which is that government operatives are working with the company in a way that provides them access without them-

David Friedberg 27:30 And they have firehose.

Jason Calacanis 27:30 ... even getting a search warrant.

David Friedberg 27:31 Yeah, they could just-

David Sacks 27:31 I'd always-

David Friedberg 27:31 ... spy on their ex-girlfriend, their, you know, brother-in-law, whoever. They can just spy on a celebrity, do whatever they want, run amok.

David Sacks 27:38 I'd always as- I'd always assumed that this was happening covertly, meaning, like, look, if you're a tech company and, you know, you have a very bright, I don't know, PhD on a visa, and you hire that person to work in computer vision, I'm just making this up, how do you really know that that person is not an agent, uh, of another foreign country? And obviously, the overwhelming majority are not. But once you have hundreds or thousands of people, you know, that, that you brought into your company, all it takes is one person. You know, for example, we just saw, I think in Apple, there were two people that were just recently arrested for stealing all of Apple's autonomous, um, auto data and documents and design schematics and all of that stuff. And one of the guys was, um, arrested right before he was trying to fly back to China. And so somehow they figured it out. They were able to get him. He was not a US citizen, but then another guy they did, it was a US citizen, but both were of Chinese origin. It just goes to show you that the covert nature of industrial espionage is probably at an all-time high, right? And I think that's a, that's a risk that every company has to manage and do the best that they can, but this is different. This is an overt risk. This is just an overture-

David Friedberg 28:57 W- they, they let him in. Yeah.

David Sacks 28:58 ... in saying, "Open the door, give us a badge. We're coming in." And this is why I think you have to deal with this case very delicately and in a different way.

David Friedberg 29:05 Yeah. Uh, and for people who don't know, Google does what's called the Transparency Report. Twitter also has one. So they, they do try to put out, by category, search warrants, subpoenas, et cetera, exactly how many warrants they're getting, uh, and the, the tech companies are at least trying to be transparent about it to the extent they can. But this is going to lead to a lot of people moving off of the cloud, I predict. We're seeing... Uh, and, and in fact, Apple is now storing your data, uh, and a lot of your privacy information locally on your phone, and if it's encrypted, they can't hand it over, as we saw with the, um, the terrorist shooting in, was it San Bernardino, uh, where they couldn't unlock the phone and they went to the Israeli spy company to do it? So, you know, I think, I think, uh, the companies here, at least in the United States, wanna defend their users, but this is, could be, uh, make people rethink the cloud, and I've seen a couple of pitches from startups-

David Sacks 29:57 I think you're confusing issues. Of course they're gonna try to defend their users in the United States, but what if you ha- if you let somebody in to a different country and that-

David Friedberg 30:04 Oh, yeah, no, I, uh-

David Sacks 30:04 It's not as if-

David Friedberg 30:05 Yeah.

David Sacks 30:05 It's not as if those servers-

David Friedberg 30:06 No, I'm not, I'm not confusing the issue.

David Sacks 30:06 ... are not accessible.

David Friedberg 30:07 Yeah, yeah. No, I'm not confusing the issue. I'm, I'm, I'm just talking about the United States here for a minute. I do think you're gonna see people buy mini servers to put, uh, or rent their own cloud services that are encrypted and impossible to unlock. And so, look for that trend to come, or more companies to encrypt it and say, "We don't have the keys to them all." So...

David Sacks 30:25 Isn't it crazy that, like, you know, we spent the last 20 years-... pushing the cloud.

David Friedberg 30:30 Yep.

David Sacks 30:30 And the thing that may actually unwind the cloud is just the utter lack of privacy that we all have now. Of just how, like, we've just created-

David Friedberg 30:38 Absolutely.

David Sacks 30:38 ... these massive honeypots where, you know, any state or non-state actor can essentially just have an incredibly detailed understanding of who you are.

David Friedberg 30:48 Yep.

David Sacks 30:48 And w- why? Because we weren't willing to pay five bucks a month for storage. (laughs) E- Everything needed to be free. I mean...

Jason Calacanis 30:55 Isn't, isn't this part of... Isn't this part of the, uh, philosophy behind decentralized services that, you know, a key part is-

David Friedberg 31:03 Yeah, crypto. Sure.

Jason Calacanis 31:04 ... is distri- Yeah, I mean, uh, I, I don't like using that term, but just decentralized services where the data doesn't sit on some centralized enterprise-controlled servers, but the data is distributed either on a chain, or in your phone, or in some way, um, you know, your identity, your information, your content, uh, isn't, uh, isn't centrally controlled. And that that fundamental principle may actually come to, kind of, bear over the next couple of years and decades, that, "Hey, you know, that model-"

David Friedberg 31:35 It consumers...

Jason Calacanis 31:35 "... yeah, that, that model is more appropriate for us, for me." And therefore, the services that are built that way are gonna win in the market. The challenge-

David Friedberg 31:42 It's definitely-

Jason Calacanis 31:42 ... is ultimately how do you finance those, because those services, right? I mean, they, they, they don't have as much of an economic incentive.

David Sacks 31:47 I think you have to pay th- You have to pay for them.

Jason Calacanis 31:49 If you're accepting-

David Sacks 31:49 You know? If you're willing to pay five or $10 a month for your privacy.

David Friedberg 31:53 Consumers are doing it free but I, I use the Brave browser and VPNs and these are becoming a major category. Uh, you hear it on podcast advertising all the time, uh, DuckDuckGo, Brave, and VPNs.

Jason Calacanis 32:05 V, VPNs are like... VPNs aren't just for hackers anymore. They're like real-

David Friedberg 32:09 No.

Jason Calacanis 32:09 ... like, um, privacy tools.

David Sacks 32:10 You're bringing up something that I think that's really important, which is that, you know, in over the last 20 years, for all of us, we've been building these products on the internet. We've actually done a little bit of a disservice because we've basically created these expectations of consumer surplus, and we've never given people true sets of trade-offs. We've always said, "Oh, you'll get more, and it's essentially free."

David Friedberg 32:31 Yep.

David Sacks 32:31 "Because we're back into an advertising model that, that supports us being able to give you more and more for free." But it turns out that it has some real consequences, and I do think that not enough of us actually understand why privacy is important. But when you start to hear these examples, and it'll be important to see what, what the true details of this Twitter situation are, I think that the pendulum starts to swing in the other direction where we say, "Okay, you know what? I'll eat out at Chipotle one night a week less, and instead, I'm gonna reallocate that money to making sure that I have, you know, some amount of privacy for, for my life."

David Friedberg 33:05 You can do it for 25 bucks a month, you know, two or 300 bucks a year, which is a big number for, you know, maybe the average Joe, but it's, it's, it's, it's being packaged and bundled right now. So the- you're seeing the VPNs, the anonymous search engines, the browsers all starting to bundle. They're bundling a set, a suite of services. And so I, I think this is upon us now, and consumers get it, and they wanna protect their privacy, so. And Apple has said, "This is gonna be our reason for you to choose our cloud, is that we're gonna put the local settings... We're gonna put your data on your phone, encrypt it. We don't have access to it. Use, use Apple for this reason." Of course, they're also building a multi-billion dollar ad business at the same time in Apple News and their app store, so there's that. I guess we should move on here. Well- we'll see what happens with this.

David Friedberg 33:54 The other big news story that people are talking about this week, and we talked about, I guess, last year, was student loan debt relief. Interestingly, uh, about 85 days before the midterms, Joe Biden has decided to unilaterally r- give 10 to 20K of debt relief to people who have, uh, student loans. You have to have under a 125K in yearly income as an individual, 250 as a household. And the student loan pause program, which happened during COVID, has been extended to the end of this year, I'm not sure why. Turns out there's about-

David Sacks 34:33 No, that... They, they explained why.

David Friedberg 34:35 Yeah.

David Sacks 34:35 Apparently, it takes four months for them to turn on their COBOL-written software that runs these loan servicing apps.

David Friedberg 34:42 Fucking Christ almighty.

David Sacks 34:43 No, I'm serious, it, it-

David Friedberg 34:43 So push the change, takes four months. (laughs)

David Sacks 34:44 It's gonna take, it's gonna take four months to restart the software that, that calculates your loan balance and is able to print a bill.

David Friedberg 34:51 We're so incompetent. Okay, anyway, you have to apply for this, um, and as we know, student loan is, student loan debt is 1.75 trillion. Uh, this is gonna cost us another 300 billion. Can't imagine what's gonna happen with this 10, 20K, uh, people buying NFTs and stocks and housing, and we're gonna hit the, uh, I guess we're gonna heat-

David Sacks 35:12 Bloomberg, Bloomberg had a report that said-

David Friedberg 35:14 ... market over.

David Sacks 35:14 ... that, look, we, we, we passed the Inflation Reduction Act, we talked about it last week, but one of the key pillars of that is that there's a 300 billion of expected revenues coming in, and we essentially turned around and just gave that back, um, to a very, very small segment of the American population. Um, Bloomberg's analysis was that it's gonna create somewhere between 0.1 and 0.3% extra inflation on top of all of that. Um, and so, you know, you really have to ask yourself, like, what, what was the White House trying to accomplish? I think, number one, they made a campaign promise. And so, you know, I think Biden needed to make sure that he fulfilled that. But nobody was really happy, right? The progressives wanted something extreme. Everybody else said, you know, "This is not really the right thing to do because it doesn't really solve the sym- the, the, the root cause of what we're dealing with." You know, if... It would have been much better if you had said, "Hey, listen, um, you know, we're gonna make this stuff expungable on bankruptcy." That would have been really useful. Um, what happens if you actually try to... I don't know, you were from the inner city and you worked your ass off, you became a doctor, you have 300,000 in debt, but now you're a, you know, a resident and you make 126,000?

David Friedberg 36:29 Yeah.

David Sacks 36:29 Well, now you're, you know, you're kind of SOL here. So there's a lot of folks...... that they probably-

David Friedberg 36:34 Poorly executed.

David Sacks 36:35 ... wanted, wanted to help that they didn't help. Then there's all the blue-collar folks who are like, "W- why, why this giveaway only to these folks?" Then there are the people that paid off their loans thinking, "Why did I pay my loans off?" Then there's the incentives that it creates for colleges which is, "Well, I'm just gonna keep jacking up tuition because if they did it once, they may do it again." So all of these things, I think, are sort of a little bit of, you know, uh, it, it's a little bit of a head-scratcher. And then the last thing, which we can talk about at the end is, I don't think this is what gets people out to vote and I don't think it's what people care about ultimately at the polls, which, if there was a political calculation to make, that's important. And specifically, when you look at what happened last night in a bunch of these districts, every progressive candidate got absolutely shellacked. They lost across the board. And so the progressive talking points around this stuff, fundamentally when push comes to shove, doesn't work for Democratic voters. And then second is, there was a really hotly contested seat which was a Democrat versus a, a Republican. Uh, I think it's Pat Ryan versus this guy Mark Molinaro, the Republican. He was leading the entire way and then this guy won 51-49, and this is a very centrist, down-the-middle Dem. So all the signs are like, this may not have been the smartest thing to do, but I don't think Joe Biden had a choice because he made the promise and he had to live up to it.

David Friedberg 38:04 Freeburg, is this a fair thing to do, a smart thing to do, a cynical thing to do to buy votes? Where, where do you fall down on this issue?

Jason Calacanis 38:10 This is absolutely moronic. I think that the fact that eight million households are eligible for this relief and $10,000 to $20,000 is relief, uh, is provided to a, a minority of Americans is, uh, exactly what Chamath said, which is kind of distorted politics at its worst. There, uh, this is a $300 billion bill to the US taxpayer, and the ultimate beneficiary of that bill, while we all might want to say it's the people that are getting debt relief that have taken out these student loans, that money was transferred to somewhere. And you know where it was transferred to? University endowments and the profit, uh, and the, and the pr- pockets of for-profit, uh, educational institutions. If there were a free market for education in the United States and the government was not involved in the process of funding and supporting the educational infrastructure in this country, individual citizens would have the right and the obligation to make decisions about whether or not the money that they're spending on tuition actually has a positive ROI for them. By spending $10,000 or $100,000, am I gonna make more than that much money back when I graduate? And unfortunately, we've lulled our citizenry, we've lulled our country into complacency where that decision and that calculus is no longer required because Uncle Sam is there to give you all the money you want to go to college. And the hungry, money-hungry institutions that are there to educate you are taking that money, putting it in their endowments or in the pockets of their shareholders. And at the end of the day, it turns out that that decision may not have been the best decision. And we're no longer holding ourselves individually to take responsibility for the decisions that we've made, and we're creating misincentives because of the government programs that have been created by telling people, "You need to get a higher education. The government is gonna pay for it for you, and it doesn't matter if it does or doesn't work. Because at the end of the day, if it doesn't work, we're just gonna pay it back for you anyway."

David Friedberg 40:09 We'll bail you out. Sachs?

Jason Calacanis 40:10 And there, and there, and there's a middle class in the United States of America that is gonna end up paying the tax bill primarily because that's where most tax dollars come from for the minority of people that made a bad decision. And it's not necessarily their fault. They made that decision because the infrastructure and the system was set up to tell them-

David Friedberg 40:28 They were duped, yeah.

Jason Calacanis 40:29 ... "Go to college, get a good degree, you'll end up-

David Friedberg 40:32 It always works out.

Jason Calacanis 40:32 ... ... having a good life. You'll make more money." And the, and the reality is that they aren't and that they don't. The ROI for many of these degrees has been negative. You make less money than you would have if you were actually in the workforce earning an on-the-ground experience and progressing your career. You do not need a degree in philosophy or history or German studies to be able to go and be effective in the technology workforce or in the services workforce. And I think that we're seeing that play out. The biggest challenge now is if we're gonna provide this loan relief and not reform the educational infrastructure and the, and the requirements for whether or not an educational system is eligible for support from the federal loan program, we are not actually solving the fundamental problem. We are keeping this gravy train running, and we're not actually getting to the root cause of where this money is flowing. And this is exactly what happens, I will rehash my point that I've made 100 times, at the end of empires. Everyone sees that the money train is leaving the station, and everyone jumps and grabs what they can. And that's exactly what's going on. We think that we're a rich nation, but we're becoming complacent, and this is unfortunate and it's a really sad sign. I think we need to fix this educational infrastructure. We need to make eligibility requirements for whether or not loans are actually gonna have a positive ROI for students. And then individuals ultimately need to be educated on that and made held accountable to whether or not they're making the right decisions for themselves.

David Friedberg 41:51 Sachs, should each American pay a thousand dollars to let these eight million people off the hook? 'Cause that's what this is gonna cost.

Jason Calacanis 41:58 No, of course not. I mean, I agree with everything-

David Friedberg 42:00 All right, there you go. If people say, "I don't like you," I just gave you the softball of all softballs. Go. (laughs)

Jason Calacanis 42:03 No, I mean, look, I think this is an issue where all four of us are on the same page. I agree with everything that Chamath said and what Freeburg said. I mean, this bill is unfair, or it rewards relatively well-off college grads over working-class people. It's gonna add 300 billion to the deficit. I mean, Joe Manchin should feel like a sucker right now because they just spent the 300 billion of supposed savings that he just agreed to. I, just to add, it's, it's unconstitutional. I mean, the, the Constitution expressly says, "No money shall be drawn from the Treasury but in consequence of appropriations made by law." So I don't understand how Biden can even do this.... by an executive order. I expect this will be challenged and taken to the Supreme Court, and I think there's a very good chance it'll end up like Biden's other executive orders that were ruled unconstitutional. Remember, there was the vaccine mandate that he tried to do, and there was the eviction moratorium that he tried to do, and they were both ruled unconstitutional. I think there's a good chance that this will also be ruled unconstitutional. E- and like, like you guys mentioned, it's inflationary. I mean, these are basically stimmy checks, which we don't need right now, and it's gonna make tuition go up because the more government subsidizes something, the more th- those providers have an incentive to raise the cost. So, this is just a jump-the-shark moment, I think, for policy-making. The question is, why are they doing it? And I think it really speaks to the nature of the Democratic Party today, which is the Democratic Party has shifted from being a blue-collar, sort of more economically populist party, economically left party, to being a professional class, that is college-educated, culturally left, more woke party. And this is the ultimate example of that, where the Democratic Party is basically passing this payoff and giveaway to their sort of woke college graduates at the expense of their blue-collar, uh, the blue-collar part of their coalition. And, you know, a Democratic political scientist that I like to read, uh, Roy Tuxera, just today, he had a blog post called The Democrats' Shifting Coalition, where he pointed out that if you look at polling, if you look at the generic ballot among White college graduates, they favor Democrats by 12 points, whereas the White working class, which is to say non-college voters, they favor Republicans by 25 points. So, one of the biggest gaps in the electorate is college versus non-college. That is the fundamental gap. It's bigger than even, you know, than any other gap, than racial gaps or anything like that. This is really the key gap in the electorate, and this is a payoff to the... basically to the foot- the new foot soldiers of the Democratic Party. If you think about it, the old stereotype of a foot soldier of the Democratic Party would be a union representative. They were the ones getting out the vote. That person's been replaced with sort of a woke college graduate who joins the Democratic Socialists of America, and they go out, and they're the ones pounding the pavement and, and doing the ballot harvesting. So, there's been a real change in what this party is about, and I think that's the explanation for why they're passing this-

Chamath Palihapitiya 45:04 The MFAs-

Jason Calacanis 45:05 ... really horrible piece of legislation.

Chamath Palihapitiya 45:06 ... Chamath, and then we'll go to you, Freeberg. The MFAs from Sarah Lawrence College have taken over the Democratic Party.

Jason Calacanis 45:11 (laughs)

45:12 Yeah. (laughs) Right. Well, let me ask you gu- let me ask you guys a question.

Chamath Palihapitiya 45:14 Yeah.

Jason Calacanis 45:15 When you guys graduated, uh, everyone went to undergrad. Ch- Ch- Chamath, you went to undergrad in Canada, right?

Chamath Palihapitiya 45:21 I have no grad degree.

Jason Calacanis 45:23 Right. And I th- um, but when you guys graduated college, what do you think the ratio, 80/20, 90/10, 50/50, zero/100, was the first two years of experience you guys had in the workforce versus, um, the education and knowledge you, you garnered in college? How important was work-

Chamath Palihapitiya 45:40 90, 90% workforce. 90% workforce.

Jason Calacanis 45:43 Chamath? First, how would you guess-

Chamath Palihapitiya 45:43 I went to school at night so I was working while I was at school.

Jason Calacanis 45:46 And, and by the way, right. You did night school.

Chamath Palihapitiya 45:47 I will say 100 and zero. I went to school, University of Waterloo, that has a program called Co-op where you have to alternate school and work. It takes an extra year to graduate, but you end up getting 24 months of, um, full-time work experience.

Jason Calacanis 46:01 So, it was the same?

Chamath Palihapitiya 46:02 And you graduate with a lot less debt. I graduated with half the debt I would have otherwise.

Jason Calacanis 46:06 Sax, I mean, do you feel the same? I mean, you went and got a law degree. That's different.

46:12 Yeah. I mean, look, I think that it used to be the case that people would go get these degrees and they would take out these loans because there was a perceived ROI of getting this education. And I think one of the deeper issues we have today is it's very unclear what the ROI is. I mean, what is the return on getting a degree in, you know, social studies or art history or frankly, some woke studies at one of these prestigious universities? Their graduates go out and they're not especially qualified for a higher-paying job. And actually, I think one of the really revealing parts of, of this executive order is not just the debt forgiveness part. We haven't really touched on, there's another provision that caps repayment levels. So basically, it says that the monthly payments on undergraduate loans will be limited to 5% of monthly income.

46:59 Right.

46:59 Now, who is that the payoff to? That is the payoff to the art history major from Amherst who ends up being a barista at Starbucks, you know, or the Democratic political operative who works for the DSA-

47:11 (laughs)

47:11 ... gathering votes. I mean, that is who this is a payoff to.

47:14 Or, or the ROTC. Or the ROTC, but yeah.

Chamath Palihapitiya 47:14 Well, let me give the, let me give the counterargument to you, Sax, and I wanna hear your response to this. So, the, the counterargument is, "Hey, listen. The airlines got bailed out $4 trillion, you know, cumulatively. Um, 2008 financial crisis, 700 billion or something to that number."

Jason Calacanis 47:29 I'm gonna respond to this.

Chamath Palihapitiya 47:30 U- there is a, there is a caveat to that, which is-

Jason Calacanis 47:32 Me too.

Chamath Palihapitiya 47:32 ... we actually made money on that bailout. (laughs)

Jason Calacanis 47:34 I'm gonna respond to this, yeah.

Chamath Palihapitiya 47:35 No, and, okay, great. And then number three, hold on. And number three, um-

Jason Calacanis 47:39 Me too.

Chamath Palihapitiya 47:39 ... airlines, banks, and then the Trump tax break, 1.5 billion. So, why can't a bunch of students get but 300 billion? That is the-

Jason Calacanis 47:49 Yeah.

Chamath Palihapitiya 47:49 ... counterargument. Everybody, we, we don't complain when, you know, the rich people get bailouts and the rich corporations and airlines do, but now we're suddenly complaining about this little pittance here. What's your best response to that, Freeberg?

Jason Calacanis 48:00 Well, Larry Sum-

Chamath Palihapitiya 48:00 I'm not saying that's my position, by the way.

Jason Calacanis 48:01 Larry Summers, former, uh, Treasury Secretary of the United States, had a, um, a tweet storm about this and he said, you know, "The student loan issue arises- arouses passion. Um, here are some observations and some responses. There is no analogy with bank bailouts. Student loans are grants that cost the government money. The bank bailouts were loans at premium interest in which the government actually turned a profit." And it's important to think about all government services being infrastructure funding, where you are funding some underlying tubing or mechanism that allows society and the economy to progress versus making up for the dollar mistakes or decisions that were made in the past. I also have issues not just with this, but with the issues of people buying homes in coastal cities, that they get bailed out at the price of that home at the fair market price when a hurricane hits.... because they paid a premium taking on the risk of a hurricane or a flooding event hitting their home. Why should the US government and the US taxpayer come in and say, "You know what? I'm gonna reimburse you for the full value of your home." Which frankly, should have been 50% of what you paid for it because it's sitting on a coastline. And that's a big problem that we generally have, is we try and use the government as a system for providing bailouts to make up for past investment mistakes made by individuals and businesses. And I think that there's a very clear distinction that you can make when you decide whether or not a... and we use the term bailout anytime we're spending money. But the reality is, if you're making an investment that has some payoff for economic growth and for people and for this country to progress in some measurable way, that is a good way to assess whether or not that is a reasonable investment. Versus saying, "You know what? I'm covering someone else's liability." And when you do that, we're actually burning money and we're putting ourselves deeper in a hole as a nation and making it harder to do the former, to make the infrastructure investments and make the investments that allow us to move forward. And I think that that's a really good way to clarify these things. And frankly, the list of things that people say, "This is fair. This is not fair," yada yada, go down that list and ask yourself that question. Is it a positive ROI to progress our country forward? Or is it a bailout for people that had some liability they took on that they can't cover? And I think for all those things that are unfair, a really important point, we cannot get caught up in the endless cycle of making up for other people's unfair, uh, um, benefits that they got from this, from this government. Because at the end of the day, that's a road to nowhere. We will burn through everything we have and everyone will scramble for money. And that's the state that we're in right now, where everyone's raising their hand and they're seeing $800 billion bu- bills, $600 billion bills, COVID relief, pandemic relief, PPP loan relief. And everyone says, "Well, what about me?" And at the end of the day, everyone's what about me is gonna drive us into an infinite black hole that we will never get out of. And we have to change our mindset and take individual responsibility and recognize that the dollars that we're spending have to have an ROI for progression of us as a whole. And this is a really dangerous place that we're in right now.

Chamath Palihapitiya 51:03 Two things.

Jason Calacanis 51:03 Sacks, if the, if the education-

Chamath Palihapitiya 51:05 I have two comments.

Jason Calacanis 51:06 Okay.

Chamath Palihapitiya 51:06 Can I make, can I make my two comments?

Jason Calacanis 51:07 Go ahead. Sure, you can make two comments, and then I'll ask a question to Sacks.

David Sacks 51:09 Comment.

Jason Calacanis 51:09 Am I too monologuey today? I feel like I'm very passionate about a lot of it, sorry. Yeah.

51:11 No, no, you're doing great. I mean, abs- the fact that you feel passionate about something other than a straight damn video game.

David Sacks 51:16 He'll ... Maybe it was the almond milk.

Jason Calacanis 51:16 Yeah.

David Sacks 51:16 That almond milk gave you a little get up and go.

Jason Calacanis 51:18 (laughs) I think those cashews set you off, man. Maybe four cashews going forward. Maybe not eight.

51:21 I mean, this totally bugs... Guys, this stuff really bugs me. I'll be honest. I look at it and I'm like-

51:23 Just take it easy on the dates.

51:25 Yeah, I'm like, dude, like, this stuff just makes me feel-

51:27 Sweet dates.

51:27 ... like, what are we doing? It just... Uh, sorry, go ahead.

David Sacks 51:29 Did you have... Did you put chia seeds in your cereal this morning? (laughs)

Jason Calacanis 51:31 Yeah, that's it. It... Was it the goji? Was it the goji berries?

51:34 (laughs) The goji berries.

51:35 Go easy on the goji berries, dude. That's a superfood right there.

David Sacks 51:37 If you, if you have, if you have chia seeds in the morning, there's a huge BM that's about to hit.

Jason Calacanis 51:41 (laughs)

David Sacks 51:41 You're just waiting for the wave to hit.

Jason Calacanis 51:43 Yeah. Yes. I mean, for sure you're gonna be in power.

David Sacks 51:45 Uh, I have two comments. Comment number one is, I think the thing that shows that this could have been better is that it was completely silent on the ability to expunge your student loans in bankruptcy. The ability to discharge that is the single biggest change you could make to the system to be fair to everybody and introduce a better ROI risk scoring calculation mechanism.

Jason Calacanis 52:10 Why, Chamath? Why? Unpack it. Why?

David Sacks 52:11 Why? Okay. It's a great... Hold on.

Jason Calacanis 52:12 So this is... We're in agreement. Go ahead, Chamath. Explain it.

David Sacks 52:15 Okay. In all debt markets, right, whenever you lend money, there is an assumption of risk that you're taking and that fits on a curve of highly likely to default, zero likelihood of default. And that manifests in a risk scoring, so FICO score, but in the debt markets, right? And there's these companies that provide that, Moody's and S&P. They say, "You're an investment grade debt." You know, "You're a triple-A plus. You're a junk debt, so you're, you know, you're a triple-B minus," or whatever. And depending on where you are, you pay different rates. This is the same in car insurance. It's the same in home insurance. It's the same in health insurance. But in all of those cases, if you go upside down, you can declare bankruptcy and you can discharge those debts. Here, we don't have that idea. So if you go bankrupt, for whatever reason, this debt will stay with you forever, which is deeply unfair. Second is, if you actually flipped it and you could allow it to be discharged, then the companies that provided these loans would be forced to risk score you. And the reason why that would be so powerful is that that would then create the forcing function for universities to actually deliver what they promise. And so who do you think is really against the ability to discharge in bankruptcy? It's the universities and the university endowments. So you know, if I were progressives, the thing that I would have pushed more than a handout to a few people, which, by the way, didn't even really scratch the surface of the debt that they had anyways, and it also served to piss off everybody else, I would have focused on this bankruptcy issue because that is a meaningful lasting change. And the second is, why don't you go and actually get a large portion of this money from all these university endowments? Because the longer that these folks run what is effectively a multi-trillion dollar asset management business, they're always going to treat education and the ROI that comes from it as a second-class citizen. Okay? And that is what I think is wrong. And if you were to just fix this one thing and then even the threat of actually confiscating some of the $50 billion that Harvard has or the $49 billion that UTIMCO has, you would start... or the UT system has, you would start to see the seeds of change where administrators would think to themselves, "I have to deliver something of value."... because these kids are getting loans, they're going to be risk scored, and I don't wanna be the person that's, like, a low-end borrower, right? I'm not serving junk paper to the market. I wanna serve people that are gonna go and really drive a huge ROI.

David Friedberg 54:57 So then, Sacks, you'd have an alignment between the people giving the loan and perhaps the value of the degree. And so you could say, "Hey, we'll give loans to STEM degrees at a different rate, uh, or a different number of them, or a different amount of cash, or a, a, a different interest rate than we would for, I don't know, uh, you getting a degree in philosophy or, like I did, psychology." Right? Just give a different-

David Sacks 55:22 Right.

David Friedberg 55:22 ... one based on the outcome. That makes total sense to you, yes?

Jason Calacanis 55:25 Yeah. I, I've said re- for a long time that we should be allowing student debt to be discharged in bankruptcy, just like any other type of debt, just like credit card debt, just like other types of debt. Chamath's right. That would create some risk to the underwriter so that they would have to actually assess whether this person getting that degree would be able to repay the debt. But you have to ask the question, is it a bug or a feature that they're trying to remove market forces? And I would argue that this is deliberate, that progressives in the Democratic Party don't want there to be accountability for what you learn in college. Why? Because as I mentioned, it's these colleges that are putting out the foot soldiers of the Democratic Party. I mean, listen, there's a 37-point gap in party preference just based on one variable, which is whether you are professional class or working class, meaning college degree or no college degree. And that spans across different racial groups and other party lines. So, the fact of the matter is that if you go to college and get a degree, you are much, much more likely to become progressive. Now, why is that? I think it's because a lot of these colleges have basically become reeducation camps. I mean, these are the woke madrasas of, uh, of cultural-

David Friedberg 56:42 (laughs)

David Sacks 56:42 Dang it.

Jason Calacanis 56:42 ... of cultural leftism.

56:43 That is a great quote. (laughs)

David Sacks 56:45 Wow, a woke madrasa.

David Friedberg 56:47 It's kind of like Harvard has become-

David Sacks 56:49 That's awesome.

David Friedberg 56:49 ... like Al-Qaeda.

Jason Calacanis 56:50 Sacks, who wrote, who wrote that one for you? Oh, I see that.

David Friedberg 56:52 Yeah.

Jason Calacanis 56:52 Yeah.

56:53 In fairness, (censored) came up with that line.

56:55 (laughs)

David Sacks 56:55 Yes. (laughs)

Jason Calacanis 56:55 But look, these places are woke madrasas, and what do they do? They graduate these people-

56:59 I love it.

David Sacks 57:00 I love it. I love it.

Jason Calacanis 57:00 They graduate the new clerics of our woke theocracy. These people go on-

David Friedberg 57:04 Yes. And then they go blow up buildings.

Jason Calacanis 57:05 ... to become the enforcers. Hold on. Wait-

David Friedberg 57:06 They become suicide bombers.

David Sacks 57:07 Yes, Sacks, exactly correct. (laughs)

Jason Calacanis 57:09 No, no, no. Uh, they, they, it's not, it's not, like, violent like that. But listen, we, we look down on some of these theocratic societies and we don't realize how like them we are. I mean, look, these kids who graduate from these woke madrasas, they go off to become the speech police. I mean, they go enforce community moderation at social networks.

57:26 (laughs)

57:26 They become the foot soldiers.

David Friedberg 57:27 All right. Let me-

Jason Calacanis 57:28 Hold on. Hold on.

David Friedberg 57:28 Let me just make a ... Hold on. Hold on. May- Can I make a final point?

Jason Calacanis 57:31 This is the best. This is the best.

David Friedberg 57:32 No, no. J-Cal, let, J-Cal, let me say one thing.

Jason Calacanis 57:33 (laughs) It's true, right? How else do you explain it? 37-point gap.

57:37 Okay, J-

David Friedberg 57:37 So, so wait-

Jason Calacanis 57:38 J-Cal, look-

David Friedberg 57:38 So if you're in the Democratic Party... Let's wh, listen. If you're in the Democratic Party, which is run by woke progressive political operatives, why would you want to defund the factories that are brainwashing more young students to basically join your ranks? I mean, brain-

Jason Calacanis 57:51 Okay, I wanna say two things. I wanna say two things. One is, um, I think that the, the university and the college degree has been used as, um, a heuristic, uh, for progression out of, um, blue collar to white collar. It says if you get a coll- And J-Cal, you, I know you can speak to this because, you know, you come from a family that, uh-

David Friedberg 58:12 That's blue collar.

Jason Calacanis 58:13 ... that works blue collar and, you know, you got a college degree, but I think there is this, um, uh, you know, kind of assertion in the United States and, and, and it has now become, one could argue, a meme that if you get a college degree, you're no longer blue collar, you're now white collar. And the reality is that the quality of that degree varies greatly based on where you go, the major, and the experience you get to accompany that degree. And as a result, you may not necessarily transfer from blue collar to white collar, but you have the degree, you say you're now white collar, and then you're working a blue-collar job with $120,000-

David Friedberg 58:45 Right.

Jason Calacanis 58:45 ... of debt. Um, and so-

David Friedberg 58:47 That's the tragedy.

Jason Calacanis 58:47 ... that, that, that heuristic isn't true. And what we-

David Friedberg 58:51 Right.

Jason Calacanis 58:51 ... need to examine is why that heuristic is no longer true and what we can do about it.

David Friedberg 58:56 Yeah, I mean, it's, it's pretty-

Jason Calacanis 58:57 Secondly, secon- secondly, secondly, I do wanna make a defense for college. I think that there, there is a incredible benefit to broadening individuals' exposure to topics, research, um, and areas that they may not have naturally been interested in or that they will not necessarily get trained in. And there is an important role that that educational infrastructure has in allowing us to be a more enlightened populous, meaning we can understand history, we can understand philosophy, we can understand the things that shaped our, our world and our livelihoods and what makes us who we are today. And we can understand the sciences and the maths that affect us, so we can better understand the world and the people around us. So there is a role, but the real question is how do you integrate that educational role into a technical training program or into a real world development program?

David Friedberg 59:42 Skills.

Jason Calacanis 59:42 Skills that, that, that basically make an educational system more than just a checkbox that doesn't actually do anything for you, but gives you that exposure accompanied by... And maybe that's the requirement with, you know, with federal loans is that there should be some skill or some workforce-based, uh, uh...

David Sacks 59:57 I think, I think the minute, I think the minute-

Jason Calacanis 59:58 I don't wanna lose the important breadth of exposure that college is meant to bring to people. College is meant to-

David Friedberg 1:00:04 We got it. We got it.

Jason Calacanis 1:00:04 Yeah.

David Friedberg 1:00:04 Yes. And that, that's valid. Go ahead, Chamath, and then I'll, I'll wrap up with my final thought.

David Sacks 1:00:08 No, I, I was just gonna say I, I really think people do not understand how, how meaningful of a change it would be if, if you were able to discharge your student debt in bankruptcy. It is the most powerful market function we could create to make these universities more accountable. And I think if you guys look at my annual letter, I put a chart in there, but, you know, part of the problem that we have in these universities, these leading universities, is that these have become graveyards. Okay? There is a gerontocracy that runs these things with an iron fist. And as these folks have stayed in these jobs for enormous amounts of time now, 40, 50 plus years, the average person is in their mid to late 70s now, who are lea- who are the administrators of our leading institutions.They are focused on running up endowments, and they are focused on the power and the influence that comes with their position. So I, I implore anybody who has any ability to, to actually achieve this change, there should not be a single logical person that should not support the ability to discharge student debt in bankruptcy. And you will identify the insider establishment by those that try to stop you. You, you will expose them.

David Friedberg 1:01:26 100%. And I, I just wanna put a closing thing here for the people listening who have young people making these decisions. When we all went to college as Gen Xers, college was $9,000, $10,000, $11,000 a year in tuition. And if you came out with $10,000 or $20K, and you had an average job or a salary of double or triple that when you graduated, it seemed like a good deal. The ROI broke. Now, market forces are at work here. I just wanna point out two of them. Number one, there is a website, Grow with Google, you can just look up right now. They're allowing people to get professional certificates, and this is free. Uh, and if you could pull up, uh, Grow with Google, they've identified five different paths to jobs. Uh, one of them is digital marketing and e-commerce, one's IT support, data analytics, project management, and UX design. They have e- essentially looked at what's needed in the world and aligned a three-to-six-month online course for fucking free that'll get you a job. And you, if you have executive function, the ability to sit down, shut up, and learn, can do this first before you make the decision to go $100,000 in debt and then get a $50,000-a-year job. Here, these jobs average, you know, 60, 70, 80K a year. And you can do it for free. The next piece that the private market is doing, you and I looked into this, Chamath, actually together, ISAs, income sharing agreements. Uh, we were lucky enough to invest in a company called Meritas. They are providing ISAs for a college, Colorado Mountain College, for nursing. What this means is they will give you your tuition for free. It's educate now, pay later. You, if you go to one of these colleges for nursing, you get educated and then you pay it back and you're capped at paying back, like, two times whatever the loan is, one and a half, whatever the college decides. But they take the risk as opposed to Harvard with 40 billion that takes no fucking risk. And so the free market, I think, can also solve this. But you have to sit down with your kids and say, "Let's have an ROI calculation." At 20K in debt, you know, okay, fine, you got a philosophy degree, you can pay it off.

David Sacks 1:03:24 By the way, Sax-

David Sacks 1:03:25 Sax, fi- final question for you. Uh, I posted this thing in the group chat, but what do you guys think about this r- you know, uh, Republican tidal wave becoming a Republican ripple? That's what, um, uh-

Jason Calacanis 1:03:38 Yeah.

David Sacks 1:03:38 ... that's, that's, that's... it was a- it was an odd set of outcomes, don't you think, for-

Jason Calacanis 1:03:42 Yeah. No question. I mean, Biden... Look, Biden has h- had a good run over the last few weeks. Um, there's no question about-

David Friedberg 1:03:48 I'm sorry, my, my audio cut out. One more time, Sax. Can you say-

David Sacks 1:03:51 Oh, I'll say it again.

David Friedberg 1:03:51 ... it's like I didn't hear that.

David Sacks 1:03:51 I'll say it, I'll say it again.

David Friedberg 1:03:52 Sax, what did you say?

David Sacks 1:03:52 The Cook Political Report says that the red wave looks-

David Friedberg 1:03:55 Got it.

David Sacks 1:03:55 ... more like a red ripple.

David Friedberg 1:03:57 Got it. Okay.

Jason Calacanis 1:03:57 No, I think it's, I think it's right. Well, look, I, I think a couple of things happened. So first, Biden has got some wins legislatively. I don't think it's good policy. I don't think this executive order is good policy. I don't think the 750 billion of, uh, climate that pretends to be an Inflation Reduction Act, I don't think that's good policy. But nonetheless, he has delivered some goodies for his, his base, for his donors, and that has basically ameliorated the story in the press that Democrats are in disarray, so you're not hearing that. In addition, I think Biden's got two things going for him, Dobbs and jobs. I mean, Dobbs, there's no question, Dobbs has helped the Democrats quite a bit. It certainly has motivated their base. And then the jobs report has been strong. Look, I think overall, the economic data is mixed. Real wages are not keeping up with inflation, but jobs have so far been strong. So yeah, there's no question that Democrats are in a materially better position than they were in June when it looked like a tsunami. That being said, the election is still 10 weeks away, and I think we'll have to see what happens. And I think the economy is still in a pretty fragile state, so 10 weeks is still a long time. But yes, you're right, that-

David Sacks 1:05:01 Well, where are most of... yeah.

Jason Calacanis 1:05:01 ... from where, from where things are looking right now-

David Sacks 1:05:03 Sax, where are most of his?

Jason Calacanis 1:05:03 ... things are a lot better for Biden. And by the way, I do think the Republicans have some issues with candidate quality. And so there's a couple of races that, you know, should have been more slam dunks than, that are not. But, so yeah, there's no question-

David Friedberg 1:05:18 What was the first word you used there? You said Dobbs and jobs. What was the first word?

Jason Calacanis 1:05:21 Dobbs and jobs.

David Sacks 1:05:21 Dobbs, jobs, abortion. Ah, got it.

Jason Calacanis 1:05:23 The Dobbs case, yeah.

David Friedberg 1:05:24 Got it. Got it. Okay, okay. That... I, I just didn't hear it perfectly. Weren't a, a lot of these wins for Biden, uh, bipartisan?

Jason Calacanis 1:05:32 Well, no, the Inflation Reduction Act was passed on straight party lines. This, this, uh, college loan forgiveness is something they can't even get through the Senate, it's being done as a l- as a executive order. The, the things that were-

David Friedberg 1:05:43 The gun stuff, you know.

Jason Calacanis 1:05:43 ... bipartisan... Hold on. The things that were bipartisan, there was that CHIPS Act where they got some votes.

David Friedberg 1:05:47 Yeah.

David Sacks 1:05:47 That's great.

Jason Calacanis 1:05:48 And, um...

David Friedberg 1:05:49 Guns, guns

Narrator 1:05:49 Gun stuff.

Jason Calacanis 1:05:49 And then there was the guns bill.

David Friedberg 1:05:50 Yeah.

Jason Calacanis 1:05:50 So, um, yeah, look, he did get some bipartisan wins. There's no question about it. I think the Republicans, I think the Republicans got hoodwinked. Basically, the Republicans foolishly went along with infrastructure and with the CHIPS Act. They should have forced Biden to use up reconciliation on one of those bills, and then they wouldn't have been able to get through the 750 billion Inflation Reduction Act. So Republicans, you know, as much as, of a, um, sort of, um, master strategist as McConnell is reputed to be, they really got snowed on this one.

David Sacks 1:06:28 If it's possible for somebody to, um, masturbate themselves from the inside out, Jason's doing it right now.

Jason Calacanis 1:06:35 (laughs)

David Friedberg 1:06:35 No, no, no, no, I'm, I'm, I'm-

David Sacks 1:06:36 Masturbate themselves from the inside out. (laughs)

David Friedberg 1:06:37 There's a, there's a reason why we do this from the chest up. Okay.

Jason Calacanis 1:06:39 I think what's likely to happen in November is still that the Republicans win one of the chambers, probably the House. I think the Senate is still up for grabs. I don't think it's over. I think that'll be important because Biden won't be able to pass some of this legislation that's, I think, destructive from a deficit standpoint, from a economic standpoint. And we've talked about it on this pod, it... I don't think you guys are too excited about most of the legislation he's passing. So quite frankly, I'm just hoping for gridlock. I'd like to get back to-

David Friedberg 1:07:06 Yeah.

Jason Calacanis 1:07:06 ... a situation of gridlock.

David Friedberg 1:07:08 Less spending would be certainly great at this point. I mean, uh, we're trying to-

Jason Calacanis 1:07:12 Well, the federal government own-

David Friedberg 1:07:12 ... fight inflation here while we keep spending money over here. It's, it's challenging. Yeah.

Jason Calacanis 1:07:16 If you want to get back to, uh, fiscal responsibility, you, you gotta vote for gridlock.

David Friedberg 1:07:22 Or hopefully moderates come, uh ... All right. We'll, uh, we'll let Sax go. Anyway, we're gonna go-

Jason Calacanis 1:07:27 Okay.

David Friedberg 1:07:27 ... to science anyway, and, and Sax checks his email during that segment, so ...

David Sacks 1:07:30 By the way, there's, there's an article now. You know when we talked about quiet quitting? It's now become this huge thing that everybody's talking about.

David Friedberg 1:07:37 Yes.

David Sacks 1:07:37 And, and what's so funny about quiet quitting is just yet another example of Gen Z, again, co-opting something we've already done. When we used to do it, it was called coasting. (laughs) You could just be like, "I'm coasting."

David Friedberg 1:07:47 Yeah. Rest and vest.

David Sacks 1:07:48 (laughs) Rest and vest.

David Friedberg 1:07:48 Yeah.

David Sacks 1:07:48 But now ... But now it's called quiet quitting.

David Friedberg 1:07:51 Yeah, they're all up in their feelings. Do we wanna talk about, um-

David Sacks 1:07:55 The gut biome. I wanna hear about the gut biome.

Jason Calacanis 1:07:57 So there was, there was a paper published in, um-

David Sacks 1:08:02 Cell.

Jason Calacanis 1:08:02 ... uh, the journal Cell. The paper was done by a research team out of Herzliya. So I'll, I'll take a step back. Y- ... The human body is made up of roughly 10 trillion cells, um, and there are also somewhere between 10 and 40 trillion bacterial cells that live in your body, primarily in your small intestine, in your, in what people call the gut biome. And so this is a population of microbes, bacteria, that are basically chemical factories. (metal clanks) They eat stuff up and they spit out chemicals, and those chemicals end up in our body. And it turns out that the gut biome, the bacteria in our gut, can actually regulate our health in a very significant way, and this was the basis of our company Munique. You guys can bleep that out if you want, which is now called SupraGut. And J-Cal, I know you've tried the product, which was-

David Friedberg 1:08:49 SupraGut is awesome. Thank you. You sent me ... I bought Munique. That helped me with my weight loss, and then I just got SupraGut bars-

Jason Calacanis 1:08:54 Yeah.

David Friedberg 1:08:54 ... which were delicious.

Jason Calacanis 1:08:54 And so the, the, the principle of that business is that there is a known product, uh, uh, a molecule, amylose, that you can feed the gut biome. It doesn't get absorbed by the human body. It sits in the gut biome and the bacteria in your gut, certain types of bacteria, will eat it. Their population will grow. Another population of bad bacteria will shrink, and the good bacteria release chemicals called short-chain fatty acids that go into your blood and reduce your blood sugar and have a profound effect on, uh, on your metabolism. And there are also known gut bacteria that can regulate your sleep, your mood, your anxiety, your energy levels, and, um, uh, your glycemic control, the control of blood sugar. So it's, it's an incredibly important-

David Sacks 1:09:36 Are you telling me ... Are you telling me that Cialis is, uh, a natural compound, is a bacteria?

Jason Calacanis 1:09:42 (laughs)

Chamath Palihapitiya 1:09:43 (laughs)

David Sacks 1:09:43 Are you tell-

David Friedberg 1:09:44 Wait a minute. Are you saying we have to cancel our Cialis prescriptions? (laughs)

Jason Calacanis 1:09:47 (laughs)

Chamath Palihapitiya 1:09:47 Oh, no. Good god.

Jason Calacanis 1:09:48 Yeah. So guys, there's, there's, there's a known, um ... There's a known principle that's really deeply studied now in urology, uh, I- in neuroscience, um, uh, called the gut-brain axis, that you can actually profoundly affect, um, disease and the condition of the brain, um, and, uh, and neural conditions by changing the gut biome. And so this is a ... This is something that's just being studied. The reason it's a- it's all coming to light in the last few years is 'cause of the cost of DNA sequencing. We ... It used to be very, very expensive to sequence the DNA from your gut biome, which you do by looking at your poop and then, you know, looking at all the DNA that's in the poop, and that tells you what your gut bio- what bacteria are in your gut. That used to cost a thousand bucks. Now it costs five bucks. And so in the last couple of years, there is this absolute explosion in research into the gut microbiome, and more importantly, how the gut microbiome affects human health. So this particular paper looked at the effect that eating, um, artificial sweeteners had on the gut biome and on human health. And so what these researchers did is they, um, they took 120 people. They gave them nothing or gave them sugar or gave them saccharin or sucralose or aspartame or stevia, the four most popular artificial sweeteners, and then they looked at how their gut biome changed, and importantly, they looked at how their glycemic control or ability to control blood gl- glucose changed. Blood glucose, as you guys may recall, you know, you always have glucose in your blood. The more ... If you have over, you know, a level of 100, uh, you know, you c- and, and it persists, you can actually have really bad health effects, and it causes high A1C over time, which is diabetes. Um, and so high, um-

David Friedberg 1:11:25 And it stores more fat when you're spiking, and so you get fatter.

Jason Calacanis 1:11:28 Yeah. When, when, when you have high blood glucose, it's actually damaging to organs, it's damaging to cells, and over time, it can cause very significant deleterious effects to the human body. That's what the, the disease of diabetes is and does, is it's about high blood glu- bl- high blood sugar, blood glucose. So what these guys did is they gave people s- uh, saccharin, sucralose, aspartame, and stevia, and then measured their blood glucose and their ability to convert, um, uh, sugar in the blood and absorb it and use it, and that's called glycemic control. The way you guys ... You guys have probably done this at the doctor. You take a g- glycemic control test. You drink a bunch of sugar water, and they measure your blood sugar every couple minutes, and then they show the curve on how effectively your body can metabolize that glucose. And if it cannot metabolize that glucose well, you have bad glycemic control, and ultimately that is diabetes. And what they found was that if you eat saccharin and sucralose, which we always assumed were better than sugar, they actually adversely affect your ability to control, um, uh, blood glucose. Saccharin and sucralose in particular drive up your blood glucose and makes it harder for your body to metabolize glucose out of your blood. Aspartame and stevia were relatively benign.

David Friedberg 1:12:42 Oh, really? 'Cause that's what's in Coke Zero. That's what I drink.

Jason Calacanis 1:12:44 There you go.

David Friedberg 1:12:45 Aspartame.

Jason Calacanis 1:12:45 And so, so, so that was kind of the realization, and then they went deep and they actually analyzed the microbiome, and they showed that there were profound differences in how these, um, compounds affected the microbiome. It turns out that sucralose, for example, is more likely not being absorbed by your intestines, so it's sitting in the intestinal walls and the bad bacteria are eating it, and the, the, the good bacteria that are supposed to be making short-chain fatty acids and all these chemicals that regulate blood sugar, um, have a lower population. And so we actually see a, a profoundly negative effect.... from eating certain compounds. And so-

David Friedberg 1:13:18 Have you shipped your poop to test these? Like, you have to-

Jason Calacanis 1:13:22 Me personally?

David Friedberg 1:13:22 Yeah, I'm just saying-

Jason Calacanis 1:13:23 We just did a clinical trial at Supergut, by the way, and we found, uh, and, and we published it, so it's, it's public.

David Friedberg 1:13:28 But wait, h- h- this, the audience doesn't even know this stuff exists, in, in all likelihood. The, you basically take a poop, and you put it in a vial and you send it, and they analyze your poop. I don't mean to be graphic here-

Jason Calacanis 1:13:39 Yeah.

David Friedberg 1:13:39 ... but have you done this before?

Jason Calacanis 1:13:40 No, so-

David Friedberg 1:13:40 How does this work?

David Sacks 1:13:41 I, I, I do it every day.

Jason Calacanis 1:13:42 I've done it. Yeah, and, and I think it's, um... Look, here's, here's the issue, Jason. Think, and I wanna, I wanna say two things that I think are really important to say. Number one is, um, we know very little about what bacteria do what in your gut, how, which... We're starting to understand which ones are beneficial, which ones make good chemicals that your body use and regulate your cells and regulate your health. And, and remember, we have a symbiotic relationship with the bacteria in our gut. They're making chemicals and they're eating chemicals. The chemicals they make affect