E94: NFT volume plummets, California's overreach, FBI meddling, climate change & national security

Jason Calacanis 0:00 All right, everybody. Welcome to Episode 94 of All-In. This is a summer unprepared episode. There's not much news. We're gonna wing it. With me again in his, uh, golfing cap, the Rain Man himself, David Sacks. You doing okay, buddy?

David Sacks 0:17 Yeah, everything's good.

Jason Calacanis 0:18 Yeah? All right, all right.

David Sacks 0:19 I'm kind of annoyed that we're taping on a Wednesday.

Jason Calacanis 0:22 You know, this is a slow news week. It's a slow news week.

Chamath Palihapitiya 0:25 Well, that's not why we're taping on a Wednesday, is because you have to want to go to Burning Man.

Jason Calacanis 0:28 Well, whatever. I mean, listen, everybody has to get their burn on.

Chamath Palihapitiya 0:30 Sacks, have you ever been to Burning Man?

David Sacks 0:32 Yeah, I've been before.

Chamath Palihapitiya 0:33 Did you like it?

Jason Calacanis 0:34 Sacks was at Burning Man? Really?

Chamath Palihapitiya 0:35 He was there on Threesome Thursday.

David Sacks 0:37 (laughs) I've been a couple of times. I think it's, uh, it's a cool experience doing, worth doing, you know, once or twice in your life. It's not something I want to do every year, but, um... And I know a lot of people do like doing it every year. They're like really into it. I'm not really into it that way, but I think it was a worthwhile experience to go at least once.

Chamath Palihapitiya 0:56 Chamath, have you been? Uh, no.

Jason Calacanis 0:59 Freyberg, have you been?

Chamath Palihapitiya 1:01 I've not been, no. I have no desire, no. I don't like driving in the car for a long period of time, and... Well, the... Uh, by the way, I'll tell you, I'll tell you why I don't really have a huge desire to go. I, uh, I don't really have a huge desire at this point in my life to want to do a ton of drugs.

Jason Calacanis 1:17 That's not, that's not just about that.

Chamath Palihapitiya 1:19 Really?

David Sacks 1:21 (laughs)

Jason Calacanis 1:21 No, really, seriously, it's not.

Chamath Palihapitiya 1:22 Are we joking right now?

Jason Calacanis 1:22 What it's really about is art-

Chamath Palihapitiya 1:23 Are we joking right now?

David Sacks 1:24 (laughs)

Jason Calacanis 1:25 It's, if you like art and you like music, it's amazing. It's amazing.

Chamath Palihapitiya 1:30 I really, I really like art. I think I actually collect phenomenal art. In fact, I like to go to like Frieze, the Biennale.

Jason Calacanis 1:37 It would blow your mind.

Chamath Palihapitiya 1:37 That's where you go see our museums.

David Sacks 1:38 (laughs)

Jason Calacanis 1:38 No, no, no. You have no idea. The scale of the art there is tremendous. It is extraordinary. And if you're into music-

Chamath Palihapitiya 1:43 Can we just, can we just call it what it is? It started out as a festival that did celebrate art and creativity.

Jason Calacanis 1:50 Yeah.

Chamath Palihapitiya 1:50 And over time became mass market. And in order to become mass market, there is still-

Jason Calacanis 1:55 Hmm.

Chamath Palihapitiya 1:55 ... an element of that, but it's a huge party, and I think people should just be more honest that it's super fun. You can really rage for a weekend or for an entire week, and people should enjoy themselves. But let's not, like, have to put all these labels about how, like, intellectually superior it is and how you feel like... Bullshit.

Jason Calacanis 2:12 No, I don't think it's intellectually superior. It's really-

Chamath Palihapitiya 2:14 If a bunch of people are doing drugs, it's okay.

Jason Calacanis 2:15 It's, it's not gre-

Chamath Palihapitiya 2:15 It's okay to go and do drugs.

Jason Calacanis 2:16 The thing that's interesting about it is, it's really about community. A large number of people get together. They build camps.

Chamath Palihapitiya 2:21 To do drugs-

Jason Calacanis 2:22 No.

Chamath Palihapitiya 2:22 ... in a community.

Jason Calacanis 2:23 No. You've never been. I- i- you would... Literally, that's not the vibe there. The vibe is really dancing and creativity and art and community. But anyway.

Chamath Palihapitiya 2:31 So it's like a rave-

Jason Calacanis 2:32 It's... Right?

Chamath Palihapitiya 2:33 ... where everybody's on drugs?

David Sacks 2:35 (laughs)

Jason Calacanis 2:35 I mean, sure. I mean...

David Sacks 2:37 With neon, with a lot of neon.

Jason Calacanis 2:38 With a lot of neon.

Chamath Palihapitiya 2:39 Yeah.

Jason Calacanis 2:39 No, it's kind of... It's mu-

Chamath Palihapitiya 2:41 Those experiences are the best when you're sober, best.

David Sacks 2:44 Best.

Jason Calacanis 2:44 You have to understand the great-

Chamath Palihapitiya 2:45 It's the best going to EDC sober. That's-

Jason Calacanis 2:47 I've never been to EDC, but this... There's a great filter here, which is, you've got to drive six, seven hours into the desert, and you have to survive. You have to bring everything with you and bring everything out, you know, whatever it is, the bathroom, water, food. And it is harsh. I mean, it's 100 plus degrees in the day, and it's 40 degrees at night. It's not easy to survive. It's hard.

David Sacks 3:07 It used to be that way. When, when I went... Hold on. When I went, I went with a bunch of guys who had the whole thing like wired in, and they had, like, these yurts, and it was like a whole community, and they had, like, running water and a kitchen.

Jason Calacanis 3:18 Yeah.

David Sacks 3:19 And it was basically glamping. It was glamping.

Jason Calacanis 3:22 There are people-

David Sacks 3:23 And then-

Chamath Palihapitiya 3:23 How's that hard to survive?

Jason Calacanis 3:24 No, no. There... I mean, it's hard to do the... There, there are people who glamp.

David Sacks 3:27 Right.

Jason Calacanis 3:27 It is hard to do that because you have to seriously bring-

Chamath Palihapitiya 3:29 You bring water and food. You bring water and food to your car.

David Sacks 3:30 You have to go with people, you have to go with people who know what they're doing-

Jason Calacanis 3:32 Yes.

David Sacks 3:32 ... and are highly organized. So-

Jason Calacanis 3:34 Yes.

David Sacks 3:34 ... I went on, like, one of those trips.

Jason Calacanis 3:34 They take months to set that up.

David Sacks 3:36 So yes, they spent the whole year, whatever, setting it up, and it was really elaborate. And then there was an article like in the New York Times basically saying that, you know, that they were ruining Burning Man-

Jason Calacanis 3:46 Yeah.

David Sacks 3:46 ... because they were making it too nice. And that was-

Jason Calacanis 3:49 That was part of the problem. It, whether it-

David Sacks 3:50 Do you remember this? That's, that's when I went.

Jason Calacanis 3:51 Yeah.

David Sacks 3:52 I went to the too nice experience

David Friedberg 3:53 Oh, so they wrote that about you?

David Sacks 3:54 ... from the government. Yeah, yeah, basically. (laughs)

Jason Calacanis 3:55 Okay, great. You ruined Burning Man. Great. Thanks, Sacks. Thanks for ruining Burning Man. (music) Let your winners ride. Rain Man, David Sacks. Going all in. And I said, "We open source it to the fans," and they've just gone crazy with it. Love you, guys. Queen of Quinoa. Going all

Jason Calacanis 4:16 in. I don't know if you've been following the NFT story. We'll queue that up as our next story. Uh, OpenSea, the marketplace, the eBay of NFTs, if you will, the volume has dropped 99% since May 1st peak of $406 million in a single day. On August 28th, volume dropped to around $5 million, down 99%, according to decentralized app tracker DappRadar. Now, on a monthly basis, OpenSea's volume has dropped 90%, according to Dune Analytics. The floor price of a Bored Ape has now dropped by 53%. Uh, if you remember, OpenSea raised 300 million at a $13.3 billion valuation December 2021, uh, in a round led by Coatue and Paradigm. To put that in perspective, that was nine whole (laughs) months ago. My, how the world has changed. Freyberg, what's your take on NFTs and this whole boondoggle?

Chamath Palihapitiya 5:16 I, I don't know how to...

Jason Calacanis 5:17 How will we look back on it?

Chamath Palihapitiya 5:18 Yeah, I don't, I don't know. I mean, we've had a lot of bubbles as a species. This is just another one.

David Sacks 5:24 I thought we were gonna stop doing stock market crashing stories. (laughs)

Jason Calacanis 5:27 Well, this is a different, this is a different market. What do you think? Did you invest in any of these NFTs?

David Sacks 5:31 We're in the eighth month of this story, which is fill in the blank asset class crashed.

Jason Calacanis 5:37 Yeah. This one seem... I, the, the question I have here, Sacks, is do you think that this is the end of the category, though? Do you think there's a category ending? And do you think there was ever anything interesting here? 'Cause you took a... You, you heard a lot of pitches like I did for how NFTs were gonna change everything, non-fungible tokens.

Chamath Palihapitiya 5:52 Yeah. You know what? I'll, I'll, I'll, I'll say something 'cause I, I liken this to the point, um... Just to tie it back to what we just talked about. At the end of the day...

David Friedberg 6:02 You know, I think I've said this in the past, but like what differentiates humans from all other species on Earth is our ability to tell, to communicate and tell stories. A story is like a narrative about something that doesn't exist and by telling that narrative you can create collective belief in something and then that collective belief drives behavioral change and action in the world, right? I mean everything from religion to government to money to art is all kind of driven, all markets are driven by this notion of narrative and collective belief that arises from that narrative. So when you go to an art dealer and you have a sit down with an art dealer, you might appreciate the art, but then the narrative begins. And the narrative is this artist did this, and they came from this, and the artist that looks like this traded at 6.8 million and this artist is only trading for 3.2 million and the whole narrative takes you away into, okay, I should pay 3.2 million for this piece of art, and ultimately it'll be worth more. And that's the fundamental premise of markets, is you're buying into something not necessarily always, and this is such a minority now it's scary, used to be that you'd own a piece of a business or productive asset, you'd pull cash out of it, hopefully you get more cash out than you put in when you buy it. Nowadays, markets allow you to trade, therefore the majority of market-based decisions are driven by if I buy something for X, I'm gonna be able to sell it to someone else for Y. And so the narrative is driven around I'm paying this, someone else'll pay Y down the road, I'll make money from that. And this has been repeated a thousand times over. It's been repeated in the ICO tokens, it's been repeated in the tulip bubble, it's been repeated in every art market and subsidiary of every art market since the dawn of time, uh, since the dawn of, of, of markets, and I think the NFTs are really just one more kind of example where this beautiful narrative is formed, the, the digitization of art, but it is no different than any other form of assets that we tell ourselves a story around and we convince ourselves that I'm paying something today and someone else will pay something more for me tomorrow. And I will also say that in the last year with the liquidity that we saw the last two years, it leached into the stock market where there's supposed to be more rational behavior that ultimately the cash flows of an asset you're buying should generate more for you than the money you're spending to buy that, that, that asset. And ultimately you can maybe trade out of it early, but still so much of it became about, well, the stock is going up, therefore if I spend X someone else'll spend Y and I'll make money on the stock, with no underlying assertion of what's the productivity of that business, what's the return on cash gonna be based on the cash flows coming out of that business over time, or any of the fundamentals around it. And so so much of our discussion and distortion has really been driven by this narrative fueling. And I think the NFTs are an example, but there are many others, and we're gonna see many more as long as humans have the ability to communicate with each other.

Jason Calacanis 8:47 Do any, do you have anything on it, Chamath?

Chamath Palihapitiya 8:48 I think Friedberg's mostly right. Like I do think that there is this thing, the, the Burning Man Coachella example is the best way to describe this. A lot of these things are the same, but when a few people approach something early, they're too insecure to admit that it's the same as something else, and so they spend a lot of time trying to tell you a narrative about why it's totally different. The Buffett example, you know, would be the quote, you know, when e- somebody tells you that this time is different, it's probably not that different. Uh, or the other quote that's well-worn in history is like, you know, things don't necessarily repeat in history, but they rhyme. All of this is trying to say that other than like fundamental leaps of science, there's not a lot of stuff that's new in the world. You know, we are repeating things over and over, and one of the things we repeat is the social capital that you get from having certain choices and then getting other people to validate those choices because you want to feel like you're, you know, worthwhile. And this happened in NFTs, and I'm sure in the first phase of different movements in art that also happened. It's probably happened in a bunch of other markets as well. So these things are more similar than they are different. Coachella and Burning Man, the same. NFTs and part of the art market, the same. Everybody that runs to you with why it's so different, I would just have a grain of salt and say you don't need to be different, just enjoy it because you think it's cool.

Jason Calacanis 10:19 All

Jason Calacanis 10:20 right. We can go either to this California fast food wages story or we can go to Goldman Sachs workers are quitting en masse because Goldman Sachs is saying you got to come back to the office five days a week. Where do you want to go, boss?

Chamath Palihapitiya 10:32 I think the California thing is really interesting, just the, the three things that California did in the last week, I don't know if you guys saw, but number one is they basically, uh, said that, you know, you have, they're going to ban ICE combustion engines I think by 2035. So you have to be battery EV, um, and they have this ha-

Jason Calacanis 10:50 New, new sales. You can still have old sales.

Chamath Palihapitiya 10:52 New sales, sorry. Yeah, new sales.

Jason Calacanis 10:53 Yeah.

Chamath Palihapitiya 10:54 Um, which is the first in the country to do it. And just to go back to a second, California is the largest auto market in the United States, and effectively, you know, Trump and California got into a huge spat because California had certain emission standards that were tougher than the rest of the United States, and, you know, the federal government tried to sue California and back and forth, all of this rigamarole. So California's always sort of led on climate. That was one thing. Then the second thing is they said we're going to create, you know, a state sponsored organization to set the minimum wage rates for fast food workers. Pause what we think about that. And then the third thing is that, um, this congresswoman I think or this assembly person, Buffy Wicks, passed a law, um, through the Senate and through the, the House that essentially holds social media companies liable for the mental well-being and the mental health of kids. Um, and depending on where you're lying on all these issues, it's like an interesting kind of lens in which we're like California is really becoming extremely, extremely, um, legislatively active in basically imfi- imposing their will on free markets and the economy.

Jason Calacanis 12:05 ... there.

12:06 Yeah, and f- for people who don't know, the fa- the fast food issue was they wanna move to a more European style where instead of unions debating with individual corporations, McDonald's, Burger King, whoever, what they're gonna pay their employees, uh, or employees, uh, having that discussion one on one, they want the state, some state authority, to pick the amount per hour fast food companies pay and then, I guess, disintermediate the unions? Uh, it, it's kind of confusing, but interestingly, uh, uh, our friend, uh, Lorena González, if you remember, she's the one who told Elon to, you know, F off, um, and was a, a former, uh, Democratic legislator. Um, uh, she introduced the bill when she was in the assembly. And so it's kind of a weird approach. Uh, I'm not sure why the government wants to get involved in it.

David Sacks 12:59 No, it's not, it's not, it's not disinter mediating the unions. She, Lorena González Fletcher, I guess, now, she's the former Democratic legislature who drove Elon out of the state. Remember when she said-

Jason Calacanis 13:09 Sure.

David Sacks 13:10 ... you know, "F Elon."

Jason Calacanis 13:11 And Elon responded-

David Sacks 13:11 Now she works-

Jason Calacanis 13:12 ... "Message received." (laughs)

David Sacks 13:13 Yes, and he left. Uh, great, great move for, for the state. So she is now running one of the biggest unions, and what sh- she said is that this bill will move California closer to the labor model used in Europe where unions negotiate, the unions are still negotiating for wages and work conditions, but in an entire sector with some sort of government board rather than company by company. So in other words, it's too slow to unionize, you know, company by company. They would just wanna unionize entire sectors of the economy. Now, the thing that's really crazy about this minimum wage proposal is that, like you said, Jason, it isn't just that they set a minimum wage. They created a 10-person panel, so there's a new government agency that's gonna regulate fast food, the fast food industry. You know they're not gonna stop at minimum wage. It's gonna be work conditions. So now you're turning fast food restaurants into a highly regulated part of the economy. And the weird thing is it's not even just all fast food. It's basically chains that have more than 100 fast food restaurants nationally. So in other words, if you're a local operator of two McDonald's, you'd be subject to this 10-person board. But if you own 20 restaurants that aren't part of a national chain in California, then you're not. And so the weird thing is that some workers in the fast food industry could get this new minimum wage of $22, where other... whereas other workers who work for, you know, they're not part of a major chain would get the statewide minimum wage of 15. So it's, it's, um, it's kind of unfair in that some parts of the restaurant industry are being regulated and others aren't.

Jason Calacanis 14:56 Well, is there any justification here that you can think of to not let the free market do its thing, Friedberg?

David Friedberg 15:04 Well, if you represent the workers, you're saying, "Hey, pay them $22," and you can. And here's what that points out. It actually points out that there's probably a pretty big business flaw in a business that's so reliant on commodity labor. And that business, in and of itself, is not as valuable as you might have thought it was before. Think about it this way. There's a company called McDonald's, and then there's another company called McDonald's Labor. And what happened before is McDonald's employed people who do work at McDonald's. And maybe what happens in the future is all those people are looking left and looking right and they're like, "You know what? McDonald's has nothing without us. We are the business. We deserve the value." So in terms of how much of the value of the business flows to the shareholders of McDonald's versus the employees that work at McDonald's, the employees that work at McDonald's are saying, "Let's go do a startup. And our startup is called Union. And our business that's called Union is now gonna provide a bunch of services to McDonald's. And those services, we're gonna start to value capture what they're doing." And it indicates that maybe there's something inherently, um, disadvantaged in that model. And it could be that the argument could be made that that business in the early 20th century, um, in the late, um, 19th century, yeah, the 19th century, early 20th century and beyond, that you could build a good advantaged business because there was such an eager, hungry workforce, people looking for work. The people would come and work for a nickel an hour or whatever. And so you, as a business owner, could make a lot of money doing that. You could sell a product for a dollar, pay people five cents to make it for you. But nowadays, those people are looking left, they're looking right, and they're like, "Wait a second, we are the business," or, "We're 90% of the value of this business." And so a couple things will happen. Number one is the inherent business model of a company that's so dependent on commodity service is gonna be flawed and challenged in the 21st century and fast food restaurants aren't gonna be as valuable, businesses that rely on commodity service are not gonna be as valuable. Number two, businesses are gonna automate. So new businesses will emerge that actually do the fast food work or do the car building work or do the dock loading and unloading work that are automated, and they'll have an inherent advantage in the economy and they'll win. And I think number three is that in the near term, consumers will suffer because prices will go up 'cause someone has to pay for the incremental cost of running this unionized business, and that will ultimately be the customer of that business. I'll say the fourth point is I am concerned about this sort of behavior in regulated spaces where the government has actually control over the market itself. So this i- a good example of this is th- you know, we had, um, uh, um, our friend Ryan from Flexport on a few times, but you can't just start up a shipping company and have a dock. The docks are run by the cities and they're run by the state. And so those docks, access to those docks, access to that market is regulated by the government. So then what happens is the union, right, the, the labor company can actually have regulatory capture through the government of a segment of the economy, and that's where things start to get dangerous. So look, I'm all for unions if they want to show that a business...... is reliant on a commodity labor force and commodity service, and they all band together and start a startup. I mean, that's what we do. We all start a company-

Jason Calacanis 18:15 Yeah.

David Friedberg 18:15 ... and go and compete. But the-

Jason Calacanis 18:16 Right.

David Friedberg 18:16 ... issue is then when the government creates regulatory capture over a segment of the economy and make it difficult for the free market to ultimately do its job of either automating or creating a newly advantaged business model, or all those things that allow us to progress.

Jason Calacanis 18:29 Automating is coming. Uh, a couple of us made a bet on a crazy idea of, like, automated, uh, robotic coffee (laughs) called Cafe X. Uh, not to talk our own book here, and the company really struggled during the pandemic, but they have two units at SFO. Chamath, they're doing 70... Uh, $73,000 in two units (laughs) last month. And I'm like, "Wow, the, the, the company figured it out," and there's another company doing french fries.

Chamath Palihapitiya 18:53 This is the, this is the sad thing that California doesn't realize is, like, I think that the folks writing these laws have just an extremely poor understanding of economics and capitalism, um, because the first thing that it does effectively, and everybody can understand this, is it caps the profitability of a company, right? Because it effectively says if you look at an industry that is over-earning, then this council will essentially see money that should be reappropriated to employees. Now, that idea is not necessarily a bad thing. For example, you see that all the time in technology, right? If you look at the EBITDA margins of, like, big tech and how they've changed, they've actually eroded over time as the companies have had to generate more revenue because employees demand more and more of those gains.

Jason Calacanis 19:43 Right.

Chamath Palihapitiya 19:43 That's an implicit part of how the free market economy works in technology. So, you know, if you don't feel like you're getting paid well at, you know, Google, you go to Meta, and you get paid more and vice versa. So there's a natural effect of people being able to do that in certain markets. But when you impose a margin and essentially say, "You can only make 10% because the rest of these profits I'm giving to these folks because I've imputed their new wage to be something that's much greater than what they were paying before," the unfortunate thing is what Friedberg said, which is that you will rebuild that business without those people, because it is the rational thing to do. And so unfortunately, what you'll do is you'll take a bunch of people that should be in the economy, right? Think about, like, new immigrants or young people that are first getting on their feet. They'll take these jobs, you know? I mean, I worked at Burger King-

Jason Calacanis 20:32 First-run jobs. Yeah.

Chamath Palihapitiya 20:33 ... I worked at Burger King when I was 14. That's how I got my first-

Jason Calacanis 20:36 That's how I got my first... Yeah.

Chamath Palihapitiya 20:37 You, you, you... Those jobs won't be there to be had, and that has ripple effects as these folks get older or try to get more ingrained in the economy. And this is what I wish California would understand is that these things aren't free, and even though they seem like you're coming to someone's rescue, there's all kinds of unintended consequences-

Jason Calacanis 20:58 Yeah.

Chamath Palihapitiya 20:58 ... and very obvious consequences that you're ignoring by not really understanding how the economy works.

David Friedberg 21:03 I'll just say, like, look, these people... Uh, can I... Oh, sorry, Sax. But, I mean, you know, the, the people that are elected are elected by the people to represent the people. They're not elected to govern over the long-term plan necessarily for the state. And while you think that those two may be the same, the near-term incentive and the near-term motivation of someone who's voting is, "I want to get a benefit for myself sooner rather than later," not necessarily, "I want to make an investment for 30 or 40 years down the road." And if you're an individual that's struggling in some way, you're gonna prioritize the former over the latter, and you're gonna elect someone who's gonna go put in place public policy that's gonna benefit you. So I don't necessarily raise my hand and say, "I blame the people that have been elected." I raise my hand, and I say, "Look, this is the natural evolution of what happens in a democracy where there is a struggling class, and there were, where there is some sort of view disparity or considered disparity, that this is what's gonna happen in a democracy under this condition, is that you're gonna elect individuals who are gonna go and govern, and they're gonna make decisions that are gonna benefit those individuals that got them elected over the short term, and there may be some real long-term damage that results."

Jason Calacanis 22:15 Sax, is a part of this problem is that, uh, people are now looking to the government to solve their problems in life versus maybe looking internally to solve their problems and, you know, negotiate better salaries and more skills?

Chamath Palihapitiya 22:27 No, but hold on. I think you have to give people a little bit more credit. Nobody was asking for them to step in like this.

David Sacks 22:32 Look, this is as much for the politicians as it is for any of the workers. Um, what's happening right now, the National Restaurant Association and all these restaurant lobbying groups are flooding the state, the legislators, the governor with lobbying money because they want to get this bill modified, tempered, or thrown out. And so this is basically a racket. Like, look, as a public policy matter, it makes zero sense for the same worker if they go work at, say, Jiffy Lube or something outside the restaurant industry, they get the California minimum wage of $15. If they go to a mom-and-pop restaurant, they get the minimum wage of $15. But if they go to McDonald's, they now get a new minimum wage specifically for chain restaurants of $22. That simply makes no sense. There's no public policy rationale. But the real question you have to ask, and Chamath is kind of getting at this, is why shouldn't it be $50? Why shouldn't it be $100? Well, the reason is because if you raise the minimum wage too much, then these, um, employers have a huge incentive to replace that labor with automation. And so the unintended consequence that Chamath is talking about is that these big chain restaurants are gonna rely even more heavily on automation now, and they're gonna basically employ less of this labor where the price has been artificially raised for that sub-sector of the economy from 15 to $22 for reasons that no one can really explain. So again, this is not for the benefit of workers. It's for the benefit of the politicians. Look what's happening right now, is all these articles talking about the lobbyists coming in. They're going to Nav- Gavin Newsom begging him to be their savior right now. And this is the game that the California Democratic Party plays. It's a one-party state where they, where basically business loves Gavin Newsom because he's their protector. He's the protection end of the extortion racket. Lorena Gonzalez gets this bill passed, which is basically incredibly damaging...... to these chain restaurants. And they have to go running to Gavin Newsom and beg him to either veto it or modify it, temper the bill, so it's not as destructive to their business. He uses protection in the extortion racket, but it's the same racket. This is a one-party state. And what they're doing with chain restaurants, they would do with every sector of the economy if they could. It's just a matter of time.

Jason Calacanis 24:42 A- and what is the purpose of the California government? Like, are there things they could be focusing on other than this? Like, maybe the free market settles this issue and they could focus on the schools. Yeah.

David Sacks 24:50 To extract benefits from the private sector, from basically the wealth-producing part of the economy, and to line their pockets and the pockets of their supporters. You know that the typical government worker in California makes 53% more than their private sector counterpart. And if you factor in all the pensions they've been promised, it's 100% more, okay? So basically, there's a huge wealth transfer that's taking place where the, where basically, the legislatures, the party, they are transferring wealth from the private sector to their supporters, their backers. And Friedberg, you talk about democracy. Listen, I mean, California is a one-party state and ballot harvesting is legal here. I'm not saying the votes are fake or anything like that, but there's a giant party machinery and apparatus that literally just goes door-to-door and collects the ballots from their supporters. They literally know who their supporters are on a door-by-door, household-by-household level. It has gotten to the point now where the party machine is so powerful, they can pretty much run anybody for any post and get them elected. It's very hard for an outsider candidate.

David Friedberg 25:58 But how long that lasts-

Jason Calacanis 25:59 Well, statehouse-

David Friedberg 25:59 That's exactly-

Jason Calacanis 25:59 ... it does feel like people are getting tired of it here.

David Sacks 26:00 No, but guys, that's exactly how it works. I mean, like, if you look at Gavin Newsom's run to the governorship. Um, he paid his dues, he did the right jobs, he waited in line, he didn't, you know, rock the boat. Independent of any of the things he did right or wrong, and he had some pretty big moral transgressions, it didn't matter because it is about paying your dues and waiting in line because there aren't any meaningful challenges here. None.

Jason Calacanis 26:26 I'll tell- I'll tell you guys-

David Sacks 26:26 So in LA-

Jason Calacanis 26:27 ... yeah, yeah.

David Sacks 26:28 In L- In LA, in LA right now, there's a mayoral race going on and the two... there's a runoff between Rick Caruso and, and Karen Bass. It... Karen Bass is basically a product of the political machine, she's basically worked her way up in the Democratic Party forever, sort of uninspiring candidate. She's just basically a puppet of the machine. Caruso is actually... he's a real estate developer who's built some of the most landmark, you know, spots in LA, like the Grove, like the Pacific Palisades development. He's made incredible... he's created incredible amenities for the LA area. He's also been on a bunch of civic boards. Um, you know, I had lunch with him at the Grove, and people were coming up to him. He's like a celebrity. They were taking photos with him. He's the best possible candidate that you could have in a place like LA. He actually understands business. I think he would restore law and order. I mean, all this kind of stuff, right? He's spoken out about the homeless problem being out of control. And on election night, he had the most votes. But five days later, when they counted all the, the, basically the collected ballots through ballot harvesting, Karen Bass was up by, like, five points. That is the power of the ballot harvesting. And I still hope that he wins, but the party machine is so powerful, they can basically get almost anyone elected in the state.

Jason Calacanis 27:45 Can't- can't the ballot harvesting work both ways, though? It's got to-

David Sacks 27:46 And I don't know, I don't really know what it's gonna take to change it. ... you say? What's that?

Jason Calacanis 27:49 Uh, just devil's advocate here. The, the ballot harvesting could work both ways. Like, you could go collect Republican votes.

David Sacks 27:54 No, but you have to have the party infrastructure to literally go door-to-door to collect it.

Jason Calacanis 27:58 Got it. Okay, so the Republican hasn't... the Republicans haven't built that in the state?

David Sacks 28:01 No. Okay, look, look, th- th- think about it this way, okay? So, you know, like your phone, there's a platform and there's an app. Think about the party as the platform and the candidate as the app, okay? The platform can drive a ton of traffic to whatever app they want. A guy like Caruso doesn't have the party behind him, so he has to build his own operating system, he has to build his own platform.

Jason Calacanis 28:19 He can use the media, right?

David Sacks 28:21 Exactly. So he has to build his own platform, then he has to build his own candidacy. So when you think about the amount of money that's required to do something like that, about how hard it is to do it, it's, it's very, very hard. So he spent something like $100 million of his own money. Hopefully, he wins. But if he doesn't, all the infrastructure, all the platform that he created just goes away and then the next candidate has to start from scratch. This is why outsiders-

Jason Calacanis 28:45 Why hasn't the GOP invested-

David Sacks 28:47 ... it's almost impossible-

Jason Calacanis 28:47 ... why hasn't the GOP invested in California? They just don't think they have any shot? 'Cause it seems like the, the Democrats are investing heavily in trying to flip, you know, um-

David Sacks 28:54 Uh... Look, there's a two-to-one party affiliation-

Jason Calacanis 28:56 ... trying to flip Texas.

David Sacks 28:56 There's a two-to-one party affiliation in California towards Democrats. So look, I mean, the Republican Party here is a mess and that's part of the problem, is the Republican Party in California needs to move to the center. It's a plus 30 blue state. Unless they're willing to do that, they're not gonna make progress. But that could take, you know, generations to fix.

Jason Calacanis 29:15 Yeah. And with Roe v. Wade and that kind of stuff, it's gonna be really hard to... yeah.

David Sacks 29:18 Look, there are pro-choice Republicans in California, but all Newsom has to do is point to what's happening in Texas and, um, you know, all of a sudden, people kind of revert to their tribal political affiliations.

Jason Calacanis 29:31 I'll make, I'll make one more simple point. The average voter in California probably knows more people that work at McDonald's than are shareholders of McDonald's. And I think in any time that there's policy that gets voted or gets suggested or ultimately gets passed, there's a side that benefits and there's a side that doesn't. And if you know more people that benefit on one side than are hurt, you're probably gonna be supportive of that policy. And I think that's probably a pretty simple rubric for thinking about how these things, over time, evolve and become the piece of the income pie.

David Sacks 30:02 But don't you think that's true nationally? Why, why, why is it only true for California? I mean, like, in Florida-

Jason Calacanis 30:08 No, I think, uh, yeah, I think over time that-

David Sacks 30:09 ... like the average person in Florida-

Jason Calacanis 30:10 Yeah.

David Sacks 30:10 ... knows more people who work at McDonald's than shareholders of McDonald's and they're not engaged in a systematic takeover of the private sector.

Jason Calacanis 30:17 Well, philosophically they're, they believe in independence and businesses not being interfered by the government, right? That's a core tenet of the Republican Party.

David Sacks 30:25 Right.

Jason Calacanis 30:26 Also, the sad reality is that within a few years-

Chamath Palihapitiya 30:29 ... um, unfortunately, you'll know a lot fewer people that work at McDonald's because the number of jobs for humans will be dramatically lower.

Jason Calacanis 30:37 They got rid of the cashiers.

David Friedberg 30:38 And, and-

Jason Calacanis 30:38 That's gone already.

David Friedberg 30:39 ... or what people will be more acutely aware of in a number of years is how expensive McDonald's has gotten. Because if the price doubles-

Chamath Palihapitiya 30:45 Well, no, that, that won't be.

David Friedberg 30:46 ... you know.

Chamath Palihapitiya 30:46 Because, like, again, McDonald's has a very simp-

David Friedberg 30:48 The market won't support it. Yeah.

Chamath Palihapitiya 30:48 No, not, not even the market. McDonald's is not stupid. They understand how to use Excel, and so they'll think, "Well, I can amortize a robot..." Versus actually jacking up, um, prices because what McDonald's understands is the sensitivity of pricing to demand for their product.

David Friedberg 31:04 Yeah, that's right.

Chamath Palihapitiya 31:05 Right? I mean, they are the most intelligent about how they price. Ev- anything at the sort of, the lower end where you're capturing, you know-

David Friedberg 31:12 Yeah.

Chamath Palihapitiya 31:12 ... nickels and dimes-

David Friedberg 31:13 Yeah.

Chamath Palihapitiya 31:13 ... they are the most sophisticated-

Jason Calacanis 31:15 Have to be, yeah.

Chamath Palihapitiya 31:15 ... in understanding supply, demand, and, and, and the curves. And so to think that they're not going to just invest heavily now at the corporate level, the next franchisee of McDonald's will still pay a million dollars for a franchise fee, but will give, will be given a bevy of robots that they rent from McDonald's, and they'll have to hire half or a third less. That's, that's the real shame of this, which is the number of people that should actually be gainfully employed in the economy will then shrink again. But in this case, it was because legislators just completely don't understand e- how incentives work and how the economy works.

Jason Calacanis 31:49 Yeah, and p- and people are not clued into exactly how well narrow AI machine learning is doing right now.

David Friedberg 31:55 By the way, I'll say, like, gen-

Chamath Palihapitiya 31:56 It's really moving quickly.

David Friedberg 31:58 One general way to think about this is-

Chamath Palihapitiya 32:00 Very quickly.

David Friedberg 32:00 ... is, is, technology is introduced and the technology creator captures roughly a third to a half of the value increment because of the delivery of that technology, the productivity increment. So let's say that it costs 12 d- $15 an hour to employ a McDonald's laborer today, and let's say that you can build technology that the amortized robotic cost is $10 an hour. There will be a technology company that will make $2.50 an hour off of that. So net-net, what ends up happening is productivity has to be gained and prices will reduce, and so, you know, there are moments like this where there could be an acceleration of technology, and also an opportunity for new industries to emerge. And when that happens, new jobs emerge too. So it's, you know, it may be... Look, I mean, at the end of the day, it seems Luddite-ish, but, you know, there's gonna be a mar- a market opportunity that will arise.

David Sacks 32:48 I think we need to, like, just step back and, and ask, what is the type of economy that California is creating here with this fast food law, with these other laws we're talking about? This is a state in which you have a disappearing middle class. The middle class has been moving out of the state by the hundreds of thousands. In fact, last year, we had, for the first time, net migration out of the state. This has basically become a state where the only middle class are basically the government workers, who, like we talked about, are making twice as much as their private sector counterparts. It's a state where you have the very rich and very poor, and the only middle class are government workers. That is what we're creating. The rich in the state have done really well over the last few decades. Why? Because of globalization. So you take the two big industries in the state, tech and Hollywood, entertainment, they have benefited enormously through globalization because now you can sell software or you can sell movies-

Jason Calacanis 33:41 Yeah, global export, yeah.

David Sacks 33:41 ... or music. Exactly. So now these, these industries have become, you know, massive global exports. And so, if you're in those industries in California, you've done really well, because now your market is the whole world. So the super rich have done really well. That's funded the state. That's allowed the state, it's almost like a resource curse, to have all of these bad policies that really hurt small business owners. They've been moving out of the state. And so again, you've got the very rich and very poor. This is not an economic model for the entire nation. This is what, you know, Gavin Newsom says he wants to take to all of America. This is not a model for all of America. In order for democracy to function, we need a thriving middle class. And this is not a recipe for delivering a thriving middle class to America.

Jason Calacanis 34:28 A- and th- I just wanna show you guys a quick video. Um, we'll just play it for five seconds here. We had invested in this company and it got sold. I'm, I'm not gonna be able to say the name of it, but, um, if you watch this Quickrobot (laughs) , this is a computer vision company out of, uh, Boston, and, like, they're doing high speed picking (laughs) of tomatoes and berries. Like, this is a two-year-old video when we invested and wound up getting bought by another company and, and they're doing vertical farming, but... A- and there's companies doing this now for french fries. I- it's over. Like, we are within, you know, I think, five, 10 years of a lot of these jobs. We're talking tens of millions of manual labor jobs being gone, and, and we're gonna look at this moment in time where we try to squeeze an extra 10 or 20% out of these, you know, uh, employers, and then you're gonna see these employers say, "You know what? Twenty-four hour day robot? Hmm. Yeah, it's a little bit upfront cost. Ah, put it on a lease," and they're just gonna move to these robots. It, it's, it's really very close to being game over for manual labor. And, and you can see it also with Cybertruck and, you know, what Elon's doing with AI, and, and these things are getting so close, and it's been, I don't know, when did you invest in your first robotics or AI company, Sax or Chamath? Do you remember the first robotic or AI company you invested in and how long ago it was?

Chamath Palihapitiya 35:49 2014. It's a company called Relativity Space, which is 3D printing rockets and engines, and basically they're able to use machines to learn how to actually fix the morphology of all the materials that they use to print better and cheaper and more useful rocketry. That's an example, but then that led me down the garden path. I was just gonna say something more generic, um, instead of talking our book, which is, um, I think people misunderstand that Moore's Law has actually not ended, um, and this is something that-... a friend of mine, Adam D'Angelo, characterized to me, beautiful human being-

Jason Calacanis 36:35 From Quora?

Chamath Palihapitiya 36:36 ... we, and I worked together. He, well, he was the CTO of Facebook when I worked there, so we, this is, you know, we, we've known each other for 15, 16 years, and now he's a CEO and founder of Quora. But, you know, the, the way that he described it to me, which is so true, the minute he said it I was like, "My gosh, it's like Moore's Law never ended, it just shifted to GPUs." You know? Because the inherent lack of parallelization that CPUs have, you saw with GPUs. And so, that's why the, the surface area of compute, uh, of innovation has actually shifted, Jason, to what you were saying, which is, you know, all of these new kinds of machine learned models because you can just now brute force and create such a tonnage of compute capabilities and resources to solve these problems that weren't possible before. So, you know, you see this thing, you know, fun things like WALL-E or, you know, DALLE, sorry, and more sophisticated things like GPT-3, but he's right, which is that, you know, we are at a point now where all kinds of expert systems, which is sort of like V1 simple forms of AI, are going to be completely next level.

Jason Calacanis 37:40 Well, if you think about the datasets adding to that.

Chamath Palihapitiya 37:43 And so when governo- exactly, and so when governments don't understand this and they try to i- you know, step in, they're going to be shocked at how much faster they're pulling forward the actual future they actually are trying to prevent.

Jason Calacanis 37:54 Yeah. I, the, the datasets is the other issue, Friedberg. You look at, you know, the, the datasets that are available to train, so you have the GPUs still, uh, escalating massively the amount of compute power it can do, you have cloud computing at the same time, and then you have these datasets. One of the most interesting things about, you know, DALLE and, and a lot of these is the corpus of data they're able to absorb. And a second factor issue that, uh, is starting to come up is who owns the derivative work in copyright? So if you train your dataset on a bunch of images and those images are owned by Disney or whoever, you know, a photographer, Getty, and then the AI makes you a new photo? Based on that?

Chamath Palihapitiya 38:32 So here's another-

Jason Calacanis 38:33 Who, who owns that?

Chamath Palihapitiya 38:33 ... here's another example of this. Here's another, here's another example of this in a law that just passed. So in the IRA, uh, the Inflation Reduction Act, you know, we granted CMS and Medicare the ability to negotiate drug prices. And we actually also capped, um, the total prescription cost that any American can pay at $2,000. Now, it turns out that m- overwhelmingly most Americans will never spend $2,000 a year on prescription medications, but there will be a few and they bump up against drugs that cost millions of dollars, so there was a, you know, there was a drug for, you know, uh, SMA, um, that's like, you know, 2.4 million. And like, you know, beta thalassemia, like 2.8 million. And you're, and, and we will all bear the cost of that. Now, if CMS and Medicare go and really crunch those costs, what is pharma gonna do? Well, pharma is going to do what is the obvious thing, which is like if you're gonna cap what I can make, I have to completely change my R&D model, and they're just gonna use AlphaFold. You know? And what it's really gonna do is potentially put a bunch of research scientists out of work, and those are folks that should probably in the f- you know, for our general future, be gainfully employed, but the nature of their job is gonna change completely because the economic capitalist incentive of big pharma is gonna move towards technology, which is, you know, an AlphaFold and their protein library is the equivalent of AI and automation for McDonald's. So, this is where, again, governments have to be super careful that they understand what's actually happening, 'cause they're creating incentives, I think, that they don't completely understand.

Jason Calacanis 40:15 All right. We can go to raw meat for Sacks. Zuckerberg's, uh, admission of FBI meddling, Truth Social, uh, being held up in good light.

David Sacks 40:23 Well, after you guys disputed me and like, "How dare you imply that J. Edgar Hoover and Jim Comey's FBI is politicized." Remember you guys were debating and someone got very shocked?

Jason Calacanis 40:33 No, I said you guys. That was about the, uh, investigation.

Chamath Palihapitiya 40:35 I didn't say that.

David Sacks 40:35 I didn't, you didn't, but some of you were saying, "I can't believe, Sacks, that you're part of the 35% of Americans who don't believe fully in the rectitude and integrity of the FBI." And then, you know, a-

Jason Calacanis 40:46 But I mean, I, I don't know if this is FBI meddling-

David Sacks 40:48 And now, and now comes this bombshell.

Jason Calacanis 40:50 Yeah.

David Sacks 40:50 I mean, you gotta admit, this was a bombshell.

Chamath Palihapitiya 40:52 What was the bombshell?

Jason Calacanis 40:53 Okay, so-

Chamath Palihapitiya 40:53 I was not paying attention.

Jason Calacanis 40:53 ... so I'll, I'll cue it off here. Okay, so Joe, uh, Joe Rogan had Zuck on, and they, he asked him about this very specific thing. Remember the New York Post story on Hunter Biden's laptop, in like the week or two before the election, was censored, right? And it was a very controversial thing because the FBI was dealing with known, uh, Russian interference and hacks and all this stuff, uh, part of which Trump was like asking people to hack other candidates.

David Sacks 41:18 Okay, you're not even setting this up correctly.

Jason Calacanis 41:20 Well, okay-

David Sacks 41:20 You're like-

Jason Calacanis 41:20 ... I'm gonna keep going, and then so this is what Zuckerberg said, "Hey, look-"

Chamath Palihapitiya 41:23 Let, let's give, let Sacks moderate this segment. (laughs)

Jason Calacanis 41:26 (laughs) Well, I mean, I'm just gonna read The Federalist which is, you know, a super right wing-

David Sacks 41:29 I mean-

Jason Calacanis 41:29 But he says, I'll just read you what Zuck said, 'cause that's, says it all. He says, "Hey-"

David Sacks 41:33 Fair enough.

Jason Calacanis 41:33 "... Look, if the FBI, which I still view as a legitimate institution in this country..." I'm, I'm quoting from The Federalist, which is quoting him from Joe Rogan, um, "It's a very professional law enforcement. They come to us and tell us we need to be on guard about something, I want to take it seriously. So, uh, when The New York Post broke the Hunter Biden laptop story on October 14th, 2020, Facebook treated the story as potentially misinformation, important misinformation, for five to seven days while the tech giant's team could determine whether it was false or not. During that time," uh, this is The Federalist speaking, "decreased its depo- distribu- Facebook decreased distribution of the story by making the story rank lower in the newsfeed." And this is his quote, Zuckerberg's, "You could still share it, you could still consume it," Zuckerberg explained, but, quote, "fewer people saw it than would have otherwise." And, "While he would not quantify the impact, the Facebook founder said the decreased distribution was," quote unquote, "meaningful." In a followup, Rogan asked, "If the FBI had specifically said...... quote, "to be on guard about that story," meaning the laptop story. After originally responding, "No," Zuckerberg corrected himself. He says, "I don't remember if it was that specifically, but it was basically the pattern." So basically, I guess you would agree, Sachs, Zuck didn't know exactly what to do here with this information, um, and if it was real or not, which, you know, it turned out to be very real. And it probably could have swayed the election. I mean, I do think if people thought there was a connection between Hunter Biden, maybe it could've. Um, I don't know if we want people being hacked to do that. So what's your take on it, Sachs? Y- uh, you know, just hacking in general and, and this specific thing. What should the FBI do if these kinda hacks are getting released of people's families? Should they-

David Sacks 43:14 Okay. So-

Jason Calacanis 43:15 Yeah.

David Sacks 43:15 ... here, here's what actually happens. So-

Jason Calacanis 43:16 It's a complicated issue, right? There's many vectors, yeah.

David Sacks 43:18 What Zuck basically says, the FBI came to, to them and encouraged them to suppress the story, or to suppress a story that they described that would be just like this, okay? So now, look, a lot of conservatives are dragging Zuckerberg and Facebook for doing, for doing the FBI's bidding. But I think a lot of people, I think most people in Zuckerberg's position, would've believed the FBI. When the FBI comes to you and says, "You're about to be targeted by Russian disinformation. You need to do something about it," you would've listened to the FBI. He believed the FBI. My point, and so I don't blame Facebook too much for that. I think it's understandable that he would've believed them. The issue here is the politicization of the FBI. Look, let's back up. What was happening? So the New York Post gets this story about the leaked contents of Hunter Biden's hard drive. In response to that, you had 50 former security state officials, uh, uh, many of whom were Democratic partisans, like Clapper, like Brennan, they signed a letter saying that this story has all the hallmarks of Russian disinformation. Now, the truth is, they had not inspected the hard drive. They simply said this has the hallmarks of it. And as a result of that, we thought that the social networks and so forth censored the story, okay? Now it turns out that the FBI... By the way, the FBI had the hard drive. They had the hard drive for over a year. It was in possession-

Jason Calacanis 44:40 They had an image of the hard drive or the actual hard drive?

David Sacks 44:42 They had the actual hard drive.

Jason Calacanis 44:42 They had the actual hard drive. Yeah.

David Sacks 44:44 The leak of the story was, was likely prompted because the FBI didn't appear to be doing anything with the hard drive. So somebody leaked the story to, you know, to Rudy Giuliani, and then he leaked it and so forth to the New York Post. But the point is that the FBI had the hard drive, so they knew it was authentic, okay? So they knew that these hallmarks of Russian disformation was not the truth, because again, they had the authenticated hard drive in their possession. And yet, they still went to Zuckerberg and basically played into this narrative, this phony narrative that, you know, Democratic partisans like Clapper and like Brennan had created. And it was on that-

Jason Calacanis 45:22 Was there anything meaningful, by the way, about what was on the laptop, in your mind? Like did, do you think it's relevant? Or do you think we want people's laptops being hacked like this, who are in people's political families? Interesting.

David Sacks 45:32 I don't think the laptop was hacked. I mean, there's a weird convoluted story about-

Jason Calacanis 45:37 Yeah, we actually will never know.

David Sacks 45:38 ... how the laptop ended up. But, but look, the, the point is that-

Jason Calacanis 45:40 Should people's personal pictures, you know, and stuff like that be released?

David Sacks 45:43 I never liked the part where they were showing, uh, Hunter Biden's, you know, drug use-

Jason Calacanis 45:49 Debortuarying.

David Sacks 45:49 ... and the other personal stuff. I thought that was scurrilous.

Jason Calacanis 45:52 The sex stuff. Yeah.

David Sacks 45:52 And I didn't, I didn't like it, and I didn't think that was, uh, particularly germane. So I think... And I think it was an invasion of his privacy. However, there were materials on there related to his business dealings in Ukraine, and I don't sa- see how you can say those weren't relevant-

Jason Calacanis 46:07 Oh, I think they're highly relevant.

David Sacks 46:08 ... to, to an election. Yes.

Jason Calacanis 46:08 He's being investigated for them too, now. I mean, uh, yeah, a lot of this has to do with timing too, you know? It's like how, how do you deal with something like this seven days before an election when you know the Russians are hacking it, if it has been or not? It's a really difficult situation for everybody, I think.

David Sacks 46:21 So, so, so look, my point, my point is this, that, um, I, I can agree with you about the personal stuff about Hunter Biden shouldn't have come out, but, but with respect to the Ukraine stuff, that was legitimate. It was fair game. And the... and m- most importantly, I don't know whether it would've swung the election or not. Probably not. Probably by itself, it's not. But the real point here is that the FBI went to Facebook to censor a story that they must've known was true because they had the laptop in their possession. They should not be intervening in elections that way. That is the bombshell here. That's unbelievable.

Jason Calacanis 46:53 Mm. I, I, I think they didn't know the provenance of this, but I guess we'll find out. Uh, wh- where are you landing-

David Sacks 46:57 How do they not know the provenance of a hard drive that's in their possession?

Jason Calacanis 47:00 Uh...

David Friedberg 47:00 They didn't have an NFT. (laughs)

David Sacks 47:01 (laughs)

Jason Calacanis 47:01 Exactly. Um, where do you... How are you, uh, I think the audience-

David Sacks 47:05 You brought it full circle, Chamath.

Jason Calacanis 47:06 Exactly. Yeah.

David Sacks 47:06 Yes, exactly. They didn't have an NFT, but-

Jason Calacanis 47:07 Audience wants to know, Sachs, audience really wants to know, where... You were gonna reserve judgment on the Mar-a-Lago search. Where do you and/or Republicans come out on all this now when you see, fuck, he, he did in fact have a ton of really sensitive stuff? Like, it's, it's not-

David Sacks 47:23 Well, define ton. And, of... Define ton-

Jason Calacanis 47:24 Boxes.

David Sacks 47:25 ... of really sensitive stuff.

Jason Calacanis 47:26 Yeah. I mean, listen.

David Sacks 47:26 Listen, he had 300 pages-

Jason Calacanis 47:27 And he, and he wouldn't give it back. Like what's your, what is your-

David Sacks 47:28 He had 300 pages of documents marked classified. If you were to go to the 30,000 boxes of documents that Obama took, are you telling me you really couldn't find 300 pages that have classified markings on them?

Jason Calacanis 47:40 Well, the fact that he wouldn't give it back when they asked him, I guess, just tells me-

David Sacks 47:41 I never disputed... By the way, I never disputed... Hold on a second. I never disputed that they would find documents with classified markings in Trump's basement. I still think that the approach was heavy-handed. And we don't know enough because we don't know what those documents are.

Jason Calacanis 47:55 Yeah. Well, at least we'll find out.

David Sacks 47:55 Listen, every document they stick in front of the president, or not every, but many of them, are marked classified. Okay?

Jason Calacanis 48:00 But, well, okay, so let me ask you this. A- aside from these like kinda details, what, what is, what is Trump's deal that he just wouldn't give them back to, I think... What do you think his motivation was? I mean, I have my own theory, which he likes memorabilia. He's always liked to show off memorabilia.

David Sacks 48:12 I think that's it. I think you got it. I mean, honestly, if I had to guess what this whole thing was about, it's probably that the archivist at the National Archives wants the original copy of those letters with Little Rocket Man, and he doesn't wanna give 'em up.

Jason Calacanis 48:24 Right. And the assorted stuff, yeah.

David Sacks 48:25 And I literally think that's what this is about. I think it's about something as silly as that.

Jason Calacanis 48:29 Memorable. Memorabilia.

David Sacks 48:30 I think it's about memorabilia. I do not think these documents pose a threat to national security, eh-

Jason Calacanis 48:33 Why wouldn't Trump just give it all back? It's so dumb.

David Sacks 48:36 ... but why would the FBI feel the need to do a raid?

Jason Calacanis 48:38 Well, because there's-

David Sacks 48:38 By the way, remember-

Jason Calacanis 48:39 ... because there's so much classified stuff, I guess. Yeah.

David Sacks 48:39 ... remember when we first discussed this? Hold on a second. When we first discussed this issue, we were told it was nuclear. It was nuclear secrets.

Jason Calacanis 48:46 Could be, yeah.

David Sacks 48:48 No. They've backed off that completely. It was not in the affidavit. It was not about nuclear. That was something they leaked to get them through a tough press cycle. So, but look, my point about all this stuff, just to wrap it up so people are clear, was never to defend Trump per se.

Jason Calacanis 49:00 Yeah.

David Sacks 49:00 My real concern is the politicization of the FBI. Our law enforcement agency should not be weaponized by either party to pursue their political agenda-

Jason Calacanis 49:09 But you believe they are at this point?

David Sacks 49:10 ... uh, and we just saw with the Zuckerberg thing, what business did the FBI have going to Zuckerberg to get them to censor a New York Post story that turned out to be completely true? Hold on a second. That is election interference. They should not be doing that.

Jason Calacanis 49:25 Yeah. That is a-

David Sacks 49:25 That is inexcusable.

Jason Calacanis 49:26 ... it's a tough, it's a tough job if they don't-

David Sacks 49:27 And by the way-

Jason Calacanis 49:27 ... know if it's been stolen or not. Yeah. It's a tough job.

David Sacks 49:29 By the way, the government of the United States has no business censoring a free press. That is a violation of the First Amendment. When the government instructs a private company to censor a press story that the government itself does not have the authority to censor, that is a violation of the First Amendment. We thought... Remember when Jack Dorsey said that he regretted the censorship that Twitter did? And he came out with that apology? We thought it was just Twitter's decision. Now, we find out from Zuck that he was leaned on by the FBI. And I think that these big tech companies, like Twitter, like Facebook, they're gonna have to have a new policy which is, when the government says, "We want you to censor something," their response needs to be, "Show us a court order."

Jason Calacanis 50:14 You know, uh-

David Sacks 50:14 They cannot just censor now based on the say-so of some operative from the government.

Jason Calacanis 50:18 I would, I would agree with you. I agree with you on that. I think it was a bad decision, obviously.

David Friedberg 50:23 The one big tech company that really nailed this, I think, was Apple. You know, very early on, they drew a really hard line in the sand with the San Bernardino shooter because they said, "If we allow the FBI to get into this person's phone, even though, you know, what he did was completely heinous, we are going to create a backdoor that will become an exploit for everybody, and we are drawing the line on privacy and security." Now, different set of issues, but it just goes to show you, there have been a few examples where some of these companies have drawn a hard line. And then in that example, and I think, Jason, you mentioned this, they went to Israel and had that company hack the phone.

Jason Calacanis 51:00 San Bernardino.

David Friedberg 51:01 Okay, whatever. But it didn't come with, um... They, they were able to stand up to the pressure. So, I think there are some examples, Sax, where you, you can say no.

Jason Calacanis 51:10 I mean, the, the idea that Twitter would block a New York Post URL, it's like, ugh, such a jump ball. Like, if it was the sex material, I could understand them saying, like, "You can't hack it. That's against our terms of service for... and we agree on that sex." But in this case, like, I don't know-

David Friedberg 51:25 Let's go to something more interesting. Can we-

Jason Calacanis 51:27 Well, heatwave, I think, and the drowning. I know this is interesting to Sax, but I think it's interesting to everybody else in the audience. Uh, heatwaves and droughts are, uh, just-

David Sacks 51:34 Newsflash, it's hot in summer.

Jason Calacanis 51:36 Yeah, I think this might have-

David Sacks 51:38 (laughs)

Jason Calacanis 51:38 ... to do with global warming and be a little unique.

David Sacks 51:40 Okay, okay. I'm just... I'm kidding. I'm kidding.

Jason Calacanis 51:41 You're kidding.

David Sacks 51:41 I know there's more to it.

Jason Calacanis 51:42 Before all the ESG people get into Sax and say, "You don't... You're global..."

David Sacks 51:47 All right. Well, free Burka Science Corner.

Jason Calacanis 51:47 "You believe in global warming, to be clear, Sax."

David Friedberg 51:49 By the way, I do think, I do think the death-

Jason Calacanis 51:50 They're all burning now.

David Friedberg 51:51 ... of Gorbachev is a big story.

Jason Calacanis 51:52 Okay, we'll get to that after this.

David Friedberg 51:53 Oh, yeah. I think that's a great story.

David Sacks 51:54 Gorbachev dying is a big story, too.

Jason Calacanis 51:55 Let, let's give Free Burka Science Corner, and then we'll come back around and give you your raw meat, uh, ready.

David Friedberg 51:59 Sax, what's your, what's

David Friedberg 52:00 your, uh, what's your point of view on climate change, the impact it will have on the planet, and whether, like, urgent action is needed?

David Sacks 52:12 Listen. I'm not an expert in that area. I'm not gonna pretend to be. I do think that, um, that we can't save the planet by destroying the economy. And it seems to me that too many of the save the planet people, like, wanna take reckless, extreme actions that would wreck our economy. You just saw, actually, Elon just gave a talk that's, uh, it made news this past week, from Norway, where he said that we still need oil and gas. He's the leading innovator in basically moving to solar-

David Friedberg 52:42 I don't disagree with you. I don't disagree with you, but, but-

David Sacks 52:43 ... and renewables. And he said, "Listen. Unfortunately, we gotta rely on oil and gas because it's too important for civilization. If we cut the stuff off too quickly, we end civilization."

David Friedberg 52:53 Yeah, and the, and the, uh-

David Sacks 52:53 So, look, I mean, I think this is a long-term problem, but I... and I think we need to have long-term solutions.

Jason Calacanis 52:58 You believe in global warming? Just full stop? The, the planet is warming? You agree with the science?

David Sacks 53:04 It seems to be. Sure, it seems to me.

David Friedberg 53:04 It's not just about warming. J- just, just, just to use a different term, that there are more frequent extreme events that can severely, uh, hurt people, hurt the economy, hurt the food supply, hurt the energy supply, all the things that... You know, I think we're, we're, like, all the way on the bottom of Maslow's hierarchy. Like, these are the things that are most critical that, that they're starting to get disrupted in a pretty severe way. You know, I think that, that's, that's... I mean, that's the big question. So, Sax, it, it's... I think it's becoming... And, and this is where the transition starts to happen, that a lot of people kind of say, "Hey, over the long run, the temperature's gonna go up by one degree Celsius. Over a century, you know, who cares?" But there are kind of-

David Sacks 53:46 The, the problem, the problem is this, is that, you know-

David Friedberg 53:49 And by the way, I don't disagree with your comment-

David Sacks 53:50 ... whenever, whenever somebody like me points out how insane some of these policies are-

David Friedberg 53:54 I... But Sax-

David Sacks 53:55 ... the topic is shifted to, "Are you a denier of some science or other?"

David Friedberg 53:58 No. No, no.

David Sacks 53:58 Listen. My point is not about the science. My point is, look at the collapse of the Sri Lankan economy because they implemented these ESG rules on fertilizer. Look at what's happening to the Dutch farmers who are being put out of work because of ESG rules.

David Friedberg 54:11 And California, California today, Goven- Governor Newsom today said, "Please don't use your electric power to charge your electric cars," a week after they said, uh, gas cars are now gonna be banned in the state. And so there's a, there's a deep irony-

Jason Calacanis 54:26 The grid is gonna go... Yeah.

David Friedberg 54:27 There's a deep irony underway today in California because... And Fox News has obviously latched onto this story that, uh-

Jason Calacanis 54:33 That has to do with the grid, though.

David Friedberg 54:35 Yes.

Jason Calacanis 54:35 I mean.

David Sacks 54:36 Look, I've, I've become suspicious-

Jason Calacanis 54:38 Grid demand because America doesn't care.

David Sacks 54:38 ... whenever, whenever politicians invoke some crisis as the re- as the reason for some authoritarian-

David Friedberg 54:42 But I'm not talking about the political response.

David Sacks 54:44 ... measure-

David Friedberg 54:44 I'm not talking about the political response. I'm... Yeah.

David Sacks 54:45 ... I've learned to distrust it. That's the point. And so-

David Friedberg 54:48 I guess I'm talking to you-

David Sacks 54:49 Look. You know what's happening in Europe right now is obviously gas is through the roof because of the Ukraine war.

David Friedberg 54:55 ... the, you know, the price has basically gone through the roof. And so because of that, they're not able to produce fertilizer. And one of the byproducts of the production of fertilizer is CO2, which gets added to the production of beer to make it fizzy. Well, guess what? The Germans are not only about to run out of gas.

55:12 (laughs)

55:13 They're about to run out of beer.

55:14 This is trouble.

Jason Calacanis 55:14 Oh, boy.

David Friedberg 55:14 You think, you think they're gonna keep supporting the Ukraine war when they find out that there's no beer for Oktoberfest?

Jason Calacanis 55:20 (laughs)

David Friedberg 55:21 Forget about not being able to eat their, heat their homes. They can't drink beer in October.

55:26 Yeah. This is-

55:27 This, this, the Western alliance is gonna fracture very quickly.

Jason Calacanis 55:28 We need to sit down. We're gonna, everybody needs to sit down. (laughs) We got, we need to sit.

David Friedberg 55:31 Let's say, just, just taking a po-, just taking a beat for a minute. Like, taking, taking off the table the political response, are you as an individual concerned, uh, about the, the impact of a change in climate on people and on the economy? And, and, and are you interested as an investor in the private market solutions to resolve some of those things that are obviously gonna become market-driven problems?

55:56 Well-

55:56 Take, take the government out of the equation.

55:59 I, I think there, there may be a long-term problem here. I'm not sure like how long it takes. I definitely think... I, I'm skeptical of this claim that, you know, the world's gonna end in the next 10 years because frankly, we've been hearing that since the 1990s. I mean-

56:12 Yeah. 1988, there was a great headline article, by the way, in New York Times, where it was like, scientists in 1988 said that all the oceans, all the ice caps will melt, the oceans will flood the land by the year 2000. So there is a credibility challenge associated with predicting, you know, kind of long-term outcomes like this, that, that, that continues to kind of foment, unfortunately, right?

56:32 Yeah, all my beachfront property would be underwater right now if all that came true.

56:36 Right. (laughs)

56:36 Um, no, I'm just kidding. But no, but, but look, it hasn't escaped my attention that many of the political leaders who are claiming that we're facing imminent threat of being underwater in 10 years own beachfront property and fly on private jets. So obviously, you know, I'm not saying this isn't a long-term problem, but I do think they try to create an imminent crisis so they can shove through a bunch of bad policies that are very destructive to the environment.

57:03 Free- Freeburg, there-

57:04 Not to the environment, to the economy.

57:05 Would you define what's happening with temperature and extreme weather as a crisis or not?

57:12 Um, yeah. I mean, there, there's, there's a... I, I, I would say there's a critical impact in, um... and, and will continue to be a critical impact in the food supply chain in, um, the quarters and years ahead because of what we're seeing. So severe drought and heatwave in China right now. Um, and by the way, food is not the only one. There's, there's also the manufacturing supply chain. So in the province of Sichuan in China, they actually lost power because so much of the power is driven by hydroelectric plants. So streams and water flow has slowed down and stopped. As a result, there's less power. As a result, the factories are being shut down. As a result, key components for manufacturing in the computing industry and, um, uh, and, and, and kind of mechanical goods are not being produced at the rate that they were being produced before. That has a ripple effect in the supply chain, similar to what we saw in COVID. And then in the food supply chain, we're seeing a drought and a heatwave right now. We're coming out of it in the Midwest, in the United States, where we grow corn and soybeans, throughout Europe, and also in China. And in China, they had 70 days in a row of record-setting temperatures. 70 days in a row-

Jason Calacanis 58:22 70 days in a row, every day was a record.

David Friedberg 58:25 ... of high temperatures.

58:25 No water, high temperatures. They're, they're just starting to assess the crop damage. It looks pretty severe. There was massive crop damage in the Midwest, uh, uh, in the corn, the Corn Belt this year. Um, and then obviously European farmers are having issues. And combine that with the geopolitical issues of the Ukraine crisis and the natural gas pricing being so high, one-third of fertilizer, of ammonia plants have been shut down in Europe. And they think that ammonia and fertilizer production may drop by as much as one-half in Europe because of the crisis. So energy prices are so high, you can't make fertilizer. So that energy is being also redirected into other industry and support homes. And so-

Jason Calacanis 59:02 So you believe it's a crisis. So I guess the question-

David Friedberg 59:04 Yeah, people are turning on their ACs in California this week. You know, you see that Governor Newsom just said, "Our grid in California cannot support excess electricity consumption." Therefore, one of the biggest variables is electric cars. He's saying don't plug in your electric cars this week. And that's because of record-high temperatures that are about to hit California in two days. So look, everyone says, "Hey, these are kind of, um, anecdotal stories." But specifically-

Jason Calacanis 59:28 No, it's a trend.

David Friedberg 59:29 Statistically, the frequency of extreme things happening is continuing to climb. And then the impact is in the food supply chain, the energy supply chain, and the manufacturing supply chain. And there are follow-on effects. Now, I'm optimistic that private market solutions will resolve these issues.

Jason Calacanis 59:45 Yeah, that was my next question. Can we solve this or not?

David Friedberg 59:48 I certainly, I certainly am not optimistic... Yeah, of course. I mean, look, we've had crises since the dawn of humanity. I mean, we were a starving, you know-

Jason Calacanis 59:54 I don't think we need a crisis to solve some of these problems. These are pretty economically obvious.

David Friedberg 59:59 Yeah, and that's, that's my point. The, the private market will resolve because people want to have electricity. They want to have food. They want to have cars.

Chamath Palihapitiya 1:00:06 Not want, they need.

David Friedberg 1:00:08 They need. And so, so, so the market will pay for those things, and therefore producers and technologists will resolve to solutions to make that happen.

Jason Calacanis 1:00:15 So we just have to have the pain and suffering and see it firsthand come out for the market to kick in?

Chamath Palihapitiya 1:00:20 Our, our friend in the group chat that shall not be named posted this meme. You guys saw it, right? Which said, like, an autistic schoolgirl takes... What was it? I have it here.

David Friedberg 1:00:33 Quit school?

1:00:33 The dominoes.

Jason Calacanis 1:00:35 The dominoes.

David Friedberg 1:00:36 Yeah, the dominoes. You can show the dominoes, but basically it said, "An autistic Swedish girl decides to skip school," is the little domino. And seven dominoes later, this huge domino, it says, "The collapse of Europe's energy grid." Um, and without commenting on the language used in the meme for a second, what is the point? The point is these conversations can so quickly...

Chamath Palihapitiya 1:00:58 ... go off the rails and are not about national security and economics, and quickly become about moral virtue signaling, that you miss the point. The point in the United States, just to be very blunt, is that the cost of electricity has gone up by 46% in the last decade. It will go up by another 40-odd percent through 2030. So between 2010 and 2030, the cost of electricity for every single American will have effectively doubled, even though the ability to generate, particularly from wind and solar, have been reduced by 90%. Now, why is that? Well, it turns out that if you look inside the P&Ls of these utilities, it actually gives you the answer. So over the next 10 years, we have to spend, as a nation, just- just on upgrading power lines, $2 trillion. This is all cap- This is all, like, crazy, crazy opex, right? Capex improvements for sunk-cost investments. Our power line infrastructure in America is 20-plus years old, 30 years old. Our, uh, generation infrastructure is pretty poor. Um, we have all of these failures. We don't have enough peakers. We don't have ability to store energy when we need it. So, if you add this all up, I do think that there's a huge economic incentive to solve it, and there are practical ways to solve it. And that's what we have to stay focused on, because if we allow the moral virtue signaling to get in the way, we're going to make some really stupid decisions.

Jason Calacanis 1:02:33 Okay, well-

Chamath Palihapitiya 1:02:33 We're going to keep trying to turn off nuclear.

Jason Calacanis 1:02:34 Yeah.

Chamath Palihapitiya 1:02:35 Another thing that Elon said. You know? "We're, we're not going to green light, uh, shale and nat gas." We don't have time for this. If you actually believe-

Jason Calacanis 1:02:43 That's okay. (laughs)

Chamath Palihapitiya 1:02:43 ... this is a cataclysmic issue, you need to basically be okay with hydrocarbons, because it is the only credible bridge fuel we have to keep the world working properly. Because otherwise, what David said is right. We are going to economically destroy parts of the world by trying to race towards this net zero goal. By the way, guys, I just want to take the, the, you know, rip the Band-Aid off. Net zero by 2050, '26, it is not possible. There is zero credible plans that the world has to do it. So we have to take small incremental steps, and many of them.

Jason Calacanis 1:03:18 Yeah. Uh, this is multi-variable.

Chamath Palihapitiya 1:03:19 And we should stay focused on that.

Jason Calacanis 1:03:21 Yeah. Uh, the interesting thing, um-

Chamath Palihapitiya 1:03:22 And you cannot let people guilt trip you, because this is when you make these stupid mistakes like the-

Jason Calacanis 1:03:27 Absolutely.

Chamath Palihapitiya 1:03:27 ... entire continent of Europe made-

Jason Calacanis 1:03:30 Yeah, it really does.

Chamath Palihapitiya 1:03:30 ... which is now going to cripple-

Jason Calacanis 1:03:33 Here's the good news.

Chamath Palihapitiya 1:03:33 ... many economies of that, of that entire continent unnecessarily.

Jason Calacanis 1:03:37 Here's the good news. All this virtue signaling and, and people wanting to be green and, and for whatever reason, um, all of that now, economics and geopolitical, is forcing people to rethink nuclear. Uh, the Diablo Canyon, um, nuclear power plant, which is the last one in California that's operational, uh, it's being voted on today as we're taping this, and it's expected that they're going to keep it online. The governor, uh, with the great hair, wants to keep it going. And the fascinating part about this is how quickly-

Chamath Palihapitiya 1:04:04 What choice does he have?

Jason Calacanis 1:04:05 Exactly.

Chamath Palihapitiya 1:04:06 (laughs)

Jason Calacanis 1:04:06 And so now the awareness is so high about power and us losing it and asking people to turn off their air conditioners, turn of-, don't plug in your cars.

Chamath Palihapitiya 1:04:14 But people, people don't understand how nuclear energy even works, and they're like-

Jason Calacanis 1:04:19 But they won't get rid of it. They went to a No Nukes concert in 1978, and they haven't changed their position since. But this is interesting. This guy, Gene Nilson, um, who's been a champion of this stuff, he said, "I thought our chances were zero of keeping this thing open." Um, and he said, "What's..." You know, and he, and he said, he told this conference of attendees, this nuclear conference, that the effort, uh, to maintain it, he said, "What's happened since, you know, the last six months, has been like a snowball." That everybody has changed their position just in the last year on shutting these things down. And we saw, obviously, Germany is re- you know, thinking the f- the three remaining of their six that they were gonna turn off, they're putting back on. And I think we're gonna see new ground broken. And Japan came out just in the last week and said they're going to build more nuclear power, uh, and nuclear power plants. Now think about that.

Chamath Palihapitiya 1:05:07 That's awesome.

Jason Calacanis 1:05:08 That's unbelievable. They had Fukushima. The Germans shut off their nuclear because of Fukushima-

Chamath Palihapitiya 1:05:13 But guys, do you, do you understand-

Jason Calacanis 1:05:14 ... but the Japanese are saying, "We're building more."

Chamath Palihapitiya 1:05:15 ... Fuka- Guys, Fukushima didn't happen by accident. There was a, like, an incredible tsunami which was triggered by a massive-

Jason Calacanis 1:05:23 Once in a hundred years, yeah.

Chamath Palihapitiya 1:05:24 ... earthquake.

Jason Calacanis 1:05:25 Yeah.

Chamath Palihapitiya 1:05:25 You're, you're talking about these extremely long-tail events. Yes, the retaining walls could have been built better, but these are things we find, we iterate, and we solve.

Jason Calacanis 1:05:35 Yes.

Chamath Palihapitiya 1:05:35 It was not the reason to shut down an entire mechanism of energy generation.

Jason Calacanis 1:05:40 Stupid mistakes where they put it just too low, in the wrong place. If they had just put it up the hill a couple of miles, it would have been fine.

Chamath Palihapitiya 1:05:46 But, but also if, if you- But also, if you look inside of what happened, there was enormous pressure inside of these companies to basically, you know, take, take actual direct blame and responsibility. I get all of that, but these organizations were shamed into turning these things off. That is not the way to make good, smart decisions.

Jason Calacanis 1:06:04 Okay. So, uh, Gorbachev, the last ruler of the USSR, uh, passed away this week. Sacks, your thoughts?

David Sacks 1:06:12 Yeah, I mean, I think this was a real milestone. Um, you go back to the 1980s, and, uh, Ronald Reagan, the, who had spent his entire, uh, career being a Cold Warrior, um, saw the opportunity to basically do business with, with Gorbachev. Margaret Thatcher had told him that, "This is a man we can do business with." Gorbachev had come to power in 1985. He had initiated reforms of the Soviet system. He was a communist, to be sure, but he introduced political reforms called glasnost, and economic reforms called perestroika. And Reagan sees the opportunity to go meet with him, and they signed Arms Control Treaty after Arms Control Treaty, and ended the threat of mutually assured destruction that the world had been living with since the beginning of the Cold War. You got to remember that, you know, the Cold War began shortly after World War II, and we had this doctrine of mutually assured des- destruction, or MAD, and the whole world was living under the shadow of nuclear annihilation. This was showed, uh, repeatedly when I was a kid. Um, there was a TV movie called, um...... the day after.

Chamath Palihapitiya 1:07:17 Yeah, uh- The day after. Do you guys- It was scary as hell.

David Sacks 1:07:19 Do you remember The Day After? It was really scary.

Chamath Palihapitiya 1:07:20 The Day After, yeah. Oh, lord. Yeah, The Day After. Yeah. They terrorized us that-

David Sacks 1:07:22 Yeah.

Chamath Palihapitiya 1:07:22 ... America-

David Sacks 1:07:22 Yeah.

Chamath Palihapitiya 1:07:22 ... and we're all gonna die. We had... Did you ever have nuclear, uh, bomb drills where you had to get under your desk?

David Sacks 1:07:27 Yeah.

Chamath Palihapitiya 1:07:28 We- we had them.

David Sacks 1:07:28 I mean, so-

Chamath Palihapitiya 1:07:29 Yeah.

David Sacks 1:07:29 Yeah. So if you're like our age you remember this. That- that movie, by the way, that- that was a TV event movie that was one of the- the most widely watched movies. But there were others. You know, Jim Cameron used this concept in- in the Terminator movies. Um, you know, it was something that people were really afraid of. And Reagan seized the opportunity. He thought fundamentally that, uh, nuclear deterrence was immoral, that yeah, better to have deterrence than a nuclear war, but that he... if he could, he would seize the opportunity to negotiate the end of the Cold War. And, by the way, there were hardliners in his administration who did not want him to negotiate with Gorbachev, but they ended up doing a series of, uh, meetings. Uh, it culminated in 1986 at the Reykjavik Summit, and they signed, uh, deals to remove, uh, th- you know, these- these INF system deals. Now... A- and that ended the Cold War, and then basically what happened is in 1989, the- the Berlin Wall came down, Gorbachev allowed the Western... the Warsaw Pact countries to leave, and then in 1991, the Soviet Union collapsed. So, you know, he gets a lot of credit for being willing to reform that system. Now, the sad thing is, if you were- fast-forward 30 years later, where are we today? We're back in a new cold war with Russia. I mean, the- we've been spending a good part of this year talking about the threat of a nuclear use. And, you know, this was a problem that we thought was solved 30 years ago, um, and now we're back with it today. And you've gotta ask, have the successors of, you know, Reagan and- and- and George Herbert Walker Bush, the people who inherited our foreign policy over the last 30 years, have they done as good a job a- um, as Reagan did? Reagan ended the Cold War. We are back in a new cold war. Why? What is the reason for this? There's been a- a- a series of stupid policies that now have put the risk of nuclear war back on the table.

Chamath Palihapitiya 1:09:29 My interest in Gorbachev is slightly different. Um, he is an incredibly important character, uh, of the second half of the 20th century. Undeniable. You know, won the Nobel Prize, as you said, David, kind of ended the Cold War. But the most important thing, in my opinion was, the precursor to perestroika and why he did it. And as you said, like, you know, this is a fairly ardent communist, although he had really interesting views, like, he ran a very kind of, like, open, um, kind of politburo where folks could debate and he, uh, you know, promoted a lot of young people from within. All of these interesting things. But the most important thing, and he's written about this a lot, is the reason that he embarked on perestroika was because USSR at the time had an incredibly poor work ethic, terrible productivity, and horrible quality goods. And I think that there's something to be learned by that, because at the tail end of communism, essentially where you had central planning, central imposed economic principles, what happened? People did not feel that they had any ownership in the outcome. No agency, yeah. No buy-in. No agency whatsoever. Mm-hmm. And I think that there's a really important lesson to observe there, which is that if governments get too actively involved, this doesn't just happen in Russia, it happens everywhere and- It's happening in California. (laughs) We just talked about it. ... it's happening, it's happening where we live right now. And if you look at then what happened afterwards, it became the aristocracy that basically ruled the USSR before, and then fighting against all these folks that wanted reforms, and that created the schism which then perverted capitalism for, you know, seven or eight years through Yeltsin until Putin got there. And that's what created the oligarch class and, you know, really exacerbated a bunch of wealth capture by a handful of folks that may or may not have deserved it, and I'm not gonna judge that. But I just think it's really important to understand that he was forced to embark on this, because of-

David Sacks 1:11:33 Right.

Chamath Palihapitiya 1:11:33 ... all of these state central planning policies. And so it's just an important lesson for Americans and democracy- Yeah. ... which I don't think- Be careful. If you want more government-

David Sacks 1:11:42 Y- y- you're-

Chamath Palihapitiya 1:11:42 Nanny states don't work, guys. ... you might get more government. Nanny states do not work.

David Sacks 1:11:45 You're- you're exactly right. The Soviet Union, their economy used to run on what they called five-year plans. It was incredibly centralized, it was all run by the government and, you know, this was communism. And the 20th century, the second half especially, was a giant battle of systems, not just of countries, not just the Western bloc, um, you know, led by the US, the Free World versus th- the Soviet Union and the Warsaw Pact. It was also a battle of philosophies and systems. It was the philosophy of state control versus freedom and, uh, and a free economy. And freedom won, you know, the free economy won in that battle. And the crazy thing is, 30 years later, we're talking about socialism being a viable doctrine. You have politicians basically saying that they are socialists, but 30 years ago, you would've been like, "That was unelectable."

Chamath Palihapitiya 1:12:34 But the thing, a- and- and the- and the point is, example after example, empirical evidence well-documented of just how it doesn't work. And I guess the thing is, you know, we all say like, "You just have to learn it for yourself." You know, like, you'll tell your kids to do- Yeah, I know. ... to not do something ad infinitum. They gotta touch the stove, yeah. They gotta touch the stove themselves and get burned.