All-In PodcastE97: SPAC updates, public/private market overview, Putin's end game & more
EVERY SPOKEN WORD
150 min read · 30,092 words- 0:00 – 1:03
Bestie intros!
- JCJason Calacanis
I'm in a very Daniel Plainview mood this week. The There Will Be Blood scene behind me.
- CPChamath Palihapitiya
I have a competition in me. I don't want to see other people succeed.
- JCJason Calacanis
That's right. Best scene ever.
- CPChamath Palihapitiya
You are the furthest from that character. Like, that is not your spirit animal. Okay?
- JCJason Calacanis
Oh, There Will Be Blood? That guy?
- CPChamath Palihapitiya
Yeah.
- JCJason Calacanis
Daniel Day-Lewis?
- CPChamath Palihapitiya
Has nothing to do with you.
- JCJason Calacanis
Daniel Plainview.
- CPChamath Palihapitiya
Nothing.
- JCJason Calacanis
I've watched it about 100 times. Incredible.
- CPChamath Palihapitiya
(laughs)
- JCJason Calacanis
You must be so stormy and roiled on the inside.
- CPChamath Palihapitiya
(laughs)
- JCJason Calacanis
Oh my gosh. I mean, like-
- CPChamath Palihapitiya
There is a lot of pent-up...
- JCJason Calacanis
D- Did you not see my roast at Sacks' birthday?
- CPChamath Palihapitiya
It's just a roast.
- JCJason Calacanis
Did I not see it? I lived it.
- CPChamath Palihapitiya
(laughs)
- JCJason Calacanis
It was the most off-color, disgusting, egregious, mean diatribe I've ever heard.
- CPChamath Palihapitiya
My lord.
- JCJason Calacanis
"I have a competition in me."
- CPChamath Palihapitiya
"I don't like to see others succeed." I can't stand that Jake Kaul is a good moderate.
- JCJason Calacanis
(laughs)
- NANarrator
I'm going all in. Don't let your winners ride. Rainman, David Sacks. I'm going all in. And I said- We open source it to the fans and they've just gone crazy with it.
- CPChamath Palihapitiya
WUSI.
- NANarrator
Queen of quinoa. I'm going all in.
- 1:03 – 20:26
SPAC updates, state of the public/private markets
- CPChamath Palihapitiya
I guess everybody wants to know, Chamath, you've wound down two SPACs. Thank you for doing this for, uh, IPOF specifically because people are replying to me every day asking, "What are you going to SPAC?" But IPO D and F, the money has been returned to investors.
- JCJason Calacanis
No, it's, it's goi- going to be returned.
- CPChamath Palihapitiya
Going to be returned to investors. Thank you. And Bill Ackman, uh, of course, he wound down his SPAC returning four billion. There's over 500 SPACs out there looking for deals. Uh, tell us, why this decision?
- JCJason Calacanis
Look, I, I've raised 10 SPACs, six, six in technology and four in biotechnology. And I've done, uh, six deals, two in tech and two in biotech. Um, and- Four in foreign tech. Sorry, foreign tech. Foreign tech, thank you, and two in biotech. So, the, the, the reason to shut it down is pretty straightforward. It's like, you know, when we launched these things, the stock market was in a much different place than it is today. And so over the last two years at looking at deals, um, it's gotten harder and harder to find a good risk-reward. Now, why is that? Well, the, the thing with the SPAC is you do a deal today, but it doesn't usually close for six or seven months in the future. And so you have to do a deal where you have a really good sense that in six or seven months when the deal is, comes to close, that the price will be the same or even higher than what it is today. And if it isn't, all of the investors that you've brought along in the SPAC have a right to redeem, which is to say they file a notice that says, "You can complete the deal, but I want my money back." And what they get back is the initial $10 that they used to buy the stock in the first place. 'Cause when we sold, when we started the SPAC, we wo- we sold stock at $10. And so from my perspective, I was looking at this and I'm like, you know, this is a super volatile, ugly point in the market. This last year has been really problematic. I, I, and I, and I kind of said this last November, and Nick, we can, we can play the clip after and we can come back to it. But basically, my decision was that at this point to do a deal would probably, you know, put a lot of capital at risk. And in all of these deals, I'm typically investing $100 million at least in each of them. And so I couldn't justify that. I couldn't see a good risk-reward, and I thought the right thing to do, the responsible thing to do was just to wind these things down. You know, I'll, I'll lose, I don't know, 10, 15, 20 million bucks for having set these things up. But we give everybody their money back, that $10, and I think that's actually better over the next five or six months than what it'll otherwise do if you were invested in the market. Now, that's a belief that I have. But hopefully when people get the $10 back in the next few weeks, if they want, they can go and put that money back in the market, and hopefully they'll do well, but, uh, you know, from my perspective, the risk-reward was not good.
- CPChamath Palihapitiya
Is part of the issue the inventory that's available of great companies as well? That's one of the things I heard speculated on CNBC. It's hard to convince a private company to go public.
- JCJason Calacanis
Here's my experience. You know, when I, when I was talking to all of these CEOs of these Silicon Valley companies, initially there was a lot of misunderstanding about what SPACs were. And I think we were able to dispel that because we had some really successful transactions. Then there was a lot of interest in being a part of it. In this phase, we were suffering from two very important things. One was that valuations were just completely up in the air. People had a huge question mark on late-stage valuations because we would come in, we would do the work, and we would say the company is worth X. And that number typically was 50 or 60% lower than their last private valuation. And so when it came time for us to negotiate, you know, doing the deal, even if the founder was roughly on board, the rest of the board was not, because a lot of them would have seen some pretty meaningful markdowns in their private assets. And when the company had enough money to kind of like, you know, at least stay private for another year or so without having to raise money, on balance those investors felt it was more prudent for them to not take the mark and to not take the deal at such a lower discount.
- CPChamath Palihapitiya
Mm-hmm.
- JCJason Calacanis
So that was a big issue that we ran into because every time we would price a deal, again, we're trying to create a margin of safety for us and our investors, again, because it's gonna take six to nine months to close a deal, and so ideally you want this thing to-
- CPChamath Palihapitiya
Yeah, so a lot of valuation indigestion.
- JCJason Calacanis
And then, sorry, the second thing was just volatility. So when you see volatility in the public markets, you know, for a CEO, and I can, and I can understand this, it's much easier to go public in a point where the markets are generally going in one direction because it gives them the confidence to be able to learn the ropes, because it is a complicated process being public. Um, and when you introduce tremendous market-based volatility independent of your company, I think a lot of CEOs and CFOs and IR people were a little nervous and-
- CPChamath Palihapitiya
They didn't want to take the risk.
- JCJason Calacanis
And that was this, that was the second piece. But by, in a way, the first one was valuation. We could not find market-clearing prices.
- DFDavid Friedberg
Makes sense.
- JCJason Calacanis
... for assets. And by the way, and, and I'll talk about one company in specific which just this week had a pretty public blowup around this whole issue. And, look, I've been pretty clear about this since November, the marginal trade should have been to be trimming risk. And Nick, maybe you can play the clip because I really wanna make sure that it's, it's very clear and on the record what I said almost an entire year ago. Let me put crypto in the context of the markets and where we are today at the end of the week after, you know, Q3 earnings in November of, of 2021. We have the stock market at absolute all-time highs.
- DFDavid Friedberg
Ripping.
- JCJason Calacanis
We have crypto at absolute all-time highs.
- DFDavid Friedberg
Ripping.
- JCJason Calacanis
We have the art markets, I don't know if you guys saw Phillips and Christie's and Sotheby's this past week, at absolute all-time highs.
- DFDavid Friedberg
Sold another Beeple for 25 million.
- JCJason Calacanis
We have inflation at a 30-year high. We have 10-year breakevens at a 25-year high. We have, you know, one point some odd trillion dollars that we just approved last week and we're still horse trading on another three, you know, $1.8 trillion of stimulus that we're going to put in. And I think the, the most important thing, which is the two most important founders of our generation, the two smartest people who have really consistently won, Elon Musk and Jeff Bezos, have collectively sold more than $11 billion of their holdings this year alone. And if you can't take all of that and decide for yourself what's right for you and your family, you're doing yourself a disservice. I think it's important for me to never sort of, like, you know, be forced to tell folks whether I'm buying or selling, although I'm willing to do it in moments where I think it's important. But I think it's really important to understand the context, and so I think like these folks that, like, think derisively about individuals who are managing risk, I think it's really naive, and I think it's, it creates a lot of missed opportunity for them as well. If the smartest people in the world are now selling their core holdings that they told you they would never sell and you are not reconsidering your position on things, you're either much smarter than them or you're being really, really reckless. The reason I, I said all of those things was because I was getting really worried about where we were, um, and then, and then I think on the heels of that, I published, um, a tweet and I, and I said, "I'm starting to sell." You know, and I sold like $100 million of SoFi, but then I was a systematic seller, um, through the end of last year and, and through this year to try to manage my own liquidity, because it changed profoundly as I saw what was happening in the markets. So, you know, I think that it's just an important thing to call out that, um, things don't always go up and, uh, you have to pay attention to a mosaic of information, and you have to do the work yourself because, you know, your situation is unique to you. Nobody else understands it, and so you can't outsource that decision to somebody else. Obviously, you can use it as a guide. Y- you know, it's fair to say, you know, when the 13 Fs of important hedge funds come out, do I read them? Of course, because I'm trying to figure out, you know, what don't I know? What may I be missing? Maybe there's a great company in there that I, that I should be taking a look at. So, you know, I'm not dissimilar to everybody else in that I use other people that I look up to or respect as a leading indicator of what to buy. But I still take responsibility for my own decisions and I manage my liquidity as best as I can based on my conditions, and those are always changing. And so I think this is just a good reminder that everybody else has to do the same.
- DFDavid Friedberg
So Chamath, what do you think happens to the remaining 500? Every SPAC sponsor friend of mine that I know is not seeking targets anymore, they're all expecting to wind up and return capital, how many of the 500 do you think will actually find a target and how many do you think will... of, of remaining SPACs, how many of them will, um, wind up and return capital?
- JCJason Calacanis
I mean, I, I think that there's still some really good deals to do. They're not necessarily in tech per se. So, you know, I think you did a really great deal in agtech. I think that that's, that's really interesting, so time will tell how that does. I think there's some really interesting deals in energy. In fact, we spent a lot of time actually pivoting and spending time in energy looking at, you know, everything from m-... you know, uh, producers of nat gas and oil to, you know, folks that were building terminals to LNG facilities and the... But it's just a very different return profile than what we were used to. So, I think if you can understand some of these other markets and you can underwrite to a different rate of return, some decent deals will get done. The overwhelming majority of the tech SPACs I think probably will just wind up. Some folks will be really focused on trying to, uh, you know, monetize their founder promote, so they'll do any kind of deal. The problem, as you see, is even whether you do a good deal or bad deal, with the kind of volatility we're seeing in the market, the likelihood is that it's gonna trade down pretty significantly. So, I think most will not find a home, I think some will find some really interesting targets in l- areas like energy I think, uh, are really interesting. Agriculture, like what you did, Freberg, I think is really interesting deal. And then, you know what? It'll be an opportunity for us to retool the SPAC. I don't think it's gonna go away. I think that it is a useful tool in a toolbox of many tools. So, there's IPOs, there's direct listings, there's SPACs, there's obviously private fundraising, there's convertible, there's structured deals. So, it is a tool, and I think when used properly, it can be really helpful. You know, for the companies that we worked with, uh, it would have been impossible for them to raise the quantums of capital that they did. Primary capital from sophisticated hedge funds and mutual funds, you know, we raised billions and billions of dollars for companies like SoFi and Opendoor, and I think that that's gonna go a long way for them to achieve their goals. So, I think it's gonna be a good tool, but we're gonna go through a, a washout of most of these folks who are not gonna be able to successfully find targets.
- CPChamath Palihapitiya
Sax, when we look at private companies, especially the late stage ones, you and I are involved in a number of them, they're doing rifts, they've got headwinds, and their valuations are underwater in many cases. How are they thinking about the public market windows, SPACs, direct listings, or just a traditional IPO?
- DSDavid Sacks
I don't know if they are thinking about it.
- CPChamath Palihapitiya
Yeah.
- DSDavid Sacks
I just think, I think like going public seems like a fantasy at this point. I think the whole public markets exit idea is frozen for two years.
- CPChamath Palihapitiya
Two years?
- DSDavid Sacks
I think that's... Yeah, I think that's probably what people are thinking.
- CPChamath Palihapitiya
What are these late stage companies that raised mega rounds doing to work out valuation issues? 'Cause as Chamath just pointed out, with SPACs, one of the problems was clearing market, the late stage investors who came in, maybe they, you know, don't want to accept the haircut in valuation even if they have-
- DSDavid Sacks
Probably not enough.
- 20:26 – 31:14
US VCs have $290B in dry powder and raised a record amount in H1 2022, is the market nearing a bottom?
- DSDavid Sacks
- CPChamath Palihapitiya
All right. Well, this is a good segue because right now, US venture capitalists are sitting on $290 billion in dry powder. We had talked about this last year, how much dry powder was there. The market has obviously collapsed, um, but here's a chart, uh, from our friends over at PitchBook. It's just extraordinary how much has built up and how much has been raised. US VC funds raised $121 billion during the first half of this year, 2022. So LPs, uh, still have an appetite, which kind of makes sense that investing into the down market for private companies means you're gonna get better deals, uh, and you have a 10-year horizon. US VCs raised 139 billion in all of 2021. So, if you put those two numbers together, yeah, you're looking at $260 billion in the last 18 months, and this is all record numbers being put up on the board. What does this say for private companies, Sax?
- DSDavid Sacks
I, um, dispute this analysis a little bit. Um, I think-
- CPChamath Palihapitiya
Okay.
- DSDavid Sacks
... there's a couple things going on that need to be taken into consideration. First of all, new funds don't get announced till after the process completes, and then, you know, it may even be some time after that when the VC firm feels like they want to make the announcement. You can't announce a fund until the process is completely over or you get subject to all sorts of additional SEC rules. So, you know, these funds might be a- announced in 2022, but they may have actually been raised in 2021. So, that, I think, is a really important point. Moreover, a lot of the funds may have already deployed capital before the crash. So, there was that, I think, remarkable story that we talked about months ago in TechCrunch on how the latest Tiger Fund, which wasn't even announced till March or April of 2022 but had already been two-thirds deployed by the time they even announced it, and so that was pretty stunning. So, I, I think that we don't really have a great sense of, um, how much of this so-called dry powder has already been deployed, how much of it was really raised before the crash. It is true that LP relationships with VC firms that have done well are sticky and good LPs stick with their partners during a downturn. So, look, I mean, the VC world's not going out of business or anything like that, but I would tend to think that this is an overly optimistic, overly rosy scenario. Do VCs have new funds that they're gonna be ready to deploy in great companies? Yes. But does this mean it's gonna be easy? No. I think that the bar has gone up, valuations have gone down. Founders looking at th- this tweet storm, I would not get lulled into a false sense of security.
- JCJason Calacanis
Yeah, I, I agree with that.
- CPChamath Palihapitiya
Just to explain that, there's probably a six-month lag on when these funds are announced. The reason is there's 506B and C designations. Most people raise under 506B, which means you cannot even say that you're fundraising, therefore PitchBook can never have that data, so there's a lag, and people were deploying at a very high velocity, therefore this number could be off 35%.
- DSDavid Sacks
Well, if people were deploying at a pace where they thought they were gonna go back for a new fund every year, which is what it was looking like in 2020 and 2021-
- CPChamath Palihapitiya
Yeah.
- DSDavid Sacks
... you know, if... that six-month period might mean you've deployed half the fund.
- CPChamath Palihapitiya
Right.
- DSDavid Sacks
So, um-
- CPChamath Palihapitiya
Mm-hmm.
- DSDavid Sacks
But, look, if, if you just go back to a two and a half or three-year pace of deployment and before... in 2021, we're at a one-year pace of deployment, divide the availability of capital by two-thirds. I mean, you know, only one-third as much will be deployed in any given year. That's a s- you know, significant reduction. So, um, yeah, I think founders should just be aware that the market's gonna be a lot tighter. And I think given what we're seeing in the public markets this week, it doesn't look to me like it's gonna get any better. I... it looks to me like we're headed for... I mean, I called it a double-dip recession, I think, a couple of months ago. That's exactly what it's looking like. In fact, the Fed basically said as much. The Fed said they would be just marginally positive next quarter, so it would bounce back-... to slightly positive growth on a real basis but then, you know, expect it to go negative again and, you know, recession once all these interest rates kick in. And by the way, I mean, kudos to Chamath for basically calling that, you know, when the Fed just a couple of months ago was saying that n- so-called neutral would be 3 to 3.5%, Chamath was saying, "No, it's going to be 4.5, 5% plus." Now, the Fed, just in two months has revised to saying that neutral is 4.6% or something like that and, um, and they don't think there's gonna be any rate reductions in 2023. So this is not looking good.
- CPChamath Palihapitiya
H- how much, Chamath, of the issue here is we don't... The, the data that we're seeing, the ground truth we're seeing as you would often say, uh, might be very different than, like, the reports that are coming out? People are talking about inflation from, you know, 60 days ago, job reports that are 30 days old, 60 days old. We don't really have live data. I- it seems like our government doesn't use (laughs) live data when they make these decisions. Is that accurately-
- JCJason Calacanis
They unfortunately... Well, they unfortunately don't have access to it, really. You know, they are... They have empirical sampling, um, but to say that, you know, the, the US economy is automated in a way where, you know, they can sit in front of some dashboard and, you know, see in real time what the true on-the-ground data is, is, is not really accurate, unfortunately. Maybe there's a Manhattan Project-type, you know, effort to do that at some point for the United States, but it's not now. Um, I'll give you, uh, a bit of bad news and a bit of good news. Uh, and this is just me kind of, you know, again, looking at the mosaic and, and kind of judging where we are today. The bad news is I think that it's gonna be a really tough, sticky time for the US consumer probably over the next 18 months. And so I tend to think that, you know, through the course of this year and through 2023 and possibly even a little bit of '24, it's gonna be a grind. Unemployment will go back up. Inflation will be sticky. Real earnings will shrink. Consumption will, uh, ebb, and earnings will not be that great. But the silver lining is I think that we are starting a bottoming process for the equity markets, and I think that by the end of this year or the early part of next year, most of that will be done. And the reason is that, you know, the equity markets, I think, do a reasonable job of, one, looking at the bond market and then, two, looking six to nine months into the future and pricing in that future today. And so by the end of this year, beginning of next year, I think that we will have kind of bottomed, and we'll start to build a base. The thing to remind us though is that, you know, let's just say a stock goes down 20, 50%. Even if it rallies 50% from there, it's still 25% off from where it was.
- CPChamath Palihapitiya
Yeah, people don't understand that-
- JCJason Calacanis
And people don't understand that.
- CPChamath Palihapitiya
... how hard it is to climb back up the mountain. (laughs)
- JCJason Calacanis
So, so I, I would just, I would just think, you know, um... Tell people that, you know, I think that David is right. I think that it's gonna... Uh, we're gonna feel this for a while. Um, it's... This inflation, as I've said for a long time, is going to be sticky and persistent. I think you're gonna see Fed funds at or breaching 5%. And, uh, but I think that in terms of, you know, risk assets, we'll bottom out by the end of this year, beginning of next year.
- CPChamath Palihapitiya
Friburg, what are your thoughts? Do you think we're in the process of bottoming out, and it's gonna be a year of this kinda schlog through the muck? And what signs are you looking for that maybe we're getting out of it or turning a corner?
- DFDavid Friedberg
I mean, Larry Summers had some good tweets this week. (laughs) The weird... You know, the weird thing is Larry Summers seems to be, like, almost trying to make the case and make certain points because he's not being listened to. (laughs)
- JCJason Calacanis
Mm-hmm.
- DFDavid Friedberg
Uh, it's, it's, it's so ironic and sad to watch, uh, because he's such a thoughtful economist and has such a, a, a great point of view and experience that, uh, to leverage here. And clearly, you know, he was banging the drums last year, and no one was listening, and then he got public about it, and now he's more repeatedly public about things. The point that he's made, which I think plays into the, the political cycle question, which is where the tension arises is, in order to resolve ultimately, uh, the inflation problem, you're gonna have to see a significant increment in unemployment. And, and so when you raise interest rates, uh, you know, generally purchasing goes down, demand goes down, revenue goes down, layoffs happen, uh, some businesses go bankrupt, et cetera. So then there's this trickle in the economy of, of less people being employed. And when that happens, it ultimately drives a political response which is, "Hey, we're losing our jobs." People start asking their representatives, "Do something about this," in Congress, and then these programs and these things get passed which themselves are inflationary. And that's why it's very hard to predict ultimately when and how this all gets resolved because we seem to have an administration that is enacting and, um, embracing, uh, inflationary policies to support what they consider to be economic growth and, um, improved employment conditions in this country, and the unfortunate effect of many of those policies is inflation. And then it forces this difficult central bank decision-making cycle. And so there's a tension right now that doesn't seem to have a clear path to resolution that, um, is why it's very hard to, to have a clear prediction here. We also have a very significant question overhanging, uh, all of these markets related to the price of energy which is a key input to so many industries and, and, and drives cost.... uh, as well as food and also the military conflict in Eastern Europe. And, you know, we've ... And, and, and, and then, there's ... And the financial markets, this big overhang question on what's going to happen with various countries that may default on their debt, as well as China's real estate bubble bursting. So I made this point, I think a few episodes ago, but there's no easy answer that I can just say deterministically, "Here's my prediction of what's going to happen." Uh, as Chamath uses the term, I think it's a great term, there's this mosaic of things that are under, under consideration right now, and there's a tension between them all. Uh, and, um, and that's what makes it difficult. I'm sorry I didn't really answer the question, but that, that's, that's kind of how I think about it there's a lot of ... There's a lot of geopolitical risk. Yeah.
- 31:14 – 50:45
Risks of backing Putin into a corner, Russia's end game, conditions for conflict
- DFDavid Friedberg
- DSDavid Sacks
I mean, we're kind of, you know, ignoring what happened this week where Putin basically is putting nukes back on the table. Now, I'm not saying that's likely to happen, but I don't know how ... Again, I don't know how you ... this market gets a lot better with the risk of war three hanging over our heads. I mean, who wants to enter the market with that on the table?
- DFDavid Friedberg
And, and by the way, the, the nukes, just, just to be clear, you know, um, y- you can hear certain military commanders speaking publicly about this, uh, but in the Russian military playbooks, uh, there is specifically defined actions that can lead to tactical nuclear weapon use in the field. There's no direct indication that these things are going to be used right away. But the ... As, as Sax says, there's like this weird, like, turning up the volume happening on, "Hey, maybe we're getting closer to a point where if Putin is having tactical failure in this conflict, there's more weaponry he can use that has greater impact." And unfortunately, there are these tactical nukes in his arsenal. And, you know, a g- a guy that maybe has a certain psychology that has, as our friends have said, his back against the wall, he's not a person who in his career, uh, or in his history, has ever acquiesced to defeat.
- JCJason Calacanis
Alex Karp was on CNBC. He was really, really s- sharp and concise about this, which is that, you know, in the West, when leaders fail in their objectives, they just get elected out and somebody else takes their place.
- DFDavid Friedberg
Yeah.
- JCJason Calacanis
But for somebody like Putin, there is nobody to take his place because it's a very zero sum situation. And so his actions will, as a result, also be zero sum. And I think, folks-
- DFDavid Friedberg
He's never acquiesced in his life and ... Yeah.
- JCJason Calacanis
Yeah. We've never, we've never really kind of like ... We don't understand well what zero sum decision-making looks like when it comes to stuff like this.
- CPChamath Palihapitiya
He needs the golden bridge, right? We need the ... Give him the golden bridge out.
- JCJason Calacanis
He does. What ... But what ... I'll, I'll just say two things. One is that I think it's been made pretty clear that both India and China will not stand beside Russia if they do something like this. Um, and I think that that is important because they still are the two biggest purchasers of, of Russian oil. And so I think that matters a lot because you're talking about a lot of revenue that would, that would go away. And then the second is, I mentioned this last week, and, and this may sound dumb to some of you, but, um, don't sleep on the Russian mothers. And what happened this week is really i-
- CPChamath Palihapitiya
Oh, you're a 100% right on that. They need-
- JCJason Calacanis
But what happened this week was really interesting, which is that he calls up all these reservists. These reservists are now coming from the major cities of Russia. You're starting to see protests. You're starting to see young people saying, "I don't want to do this."
- CPChamath Palihapitiya
Yeah.
- JCJason Calacanis
And who's that really activating? It's activating the moms.
- CPChamath Palihapitiya
Yep. They want to lose their sons.
- JCJason Calacanis
And so don't sleep on the Russian moms. Don't sleep on the Russian moms.
- CPChamath Palihapitiya
300 people are being drafted, you know, to basically go fight. And I actually think Sax-
- JCJason Calacanis
But David's right. Oh, sorry. Sorry. Go ahead.
- CPChamath Palihapitiya
The question I have for you is, do you think ... And I know you don't agree with this, but do you think the strategy is to back him into a corner, um, and then have this, like, rhetoric spike to then force a resolution? I know it's a dangerous strategy. It's a crazy chess move. But do you think that's actually what the West is thinking?
- DSDavid Sacks
I see no evidence that we have any, uh, intentions of seeking, uh, a diplomatic off-ramp. I see no evidence that they're looking for a ... to give him a golden bridge, like you said.
- CPChamath Palihapitiya
Then do you think they're trying to break him and have regime change?
- DSDavid Sacks
I think Biden stated the policy, which is this man cannot remain in power. I think he-
- JCJason Calacanis
Yeah.
- DSDavid Sacks
... blurted out the truth of his policy. This is a regime change policy. That's what they're going for. They're, they are backing him into a corner.
- JCJason Calacanis
Jacob, I thought that you were right this whole time, which is, we're going to build a golden bridge. We're going to find a way to egress this guy o- And I'm now sort of in the David camp, which is, I think that the, the stated strategy of the Western alliance is essentially to cause him to make such a categorically catastrophic mistake so as to become a pariah, so as to either get overthrown or s- or, you know, something. So I, I do think that on balance, the risk is now for things to escalate, maybe not in quantity, and I, and I'll use this word in the wrong way, but you know, quote-unquote, like, "the intensity" of, of, of it. So, um, I- I think David's right. It's a lot of pressure to the economy and to, to, to risk assets.
- CPChamath Palihapitiya
It's a high-risk strategy. High-risk strategy.
- DSDavid Sacks
Right. There's a high-risk strategy. We got a good thing going over here. I don't see the re- need for all this risk. So, look, and, and the problem I, problem I have-
- JCJason Calacanis
But the risk would be the reward. What would you see the reward if Putin was removed? Oh, my Lord.
- DSDavid Sacks
Well, it depends who replaces him. What if we get a hard liner?
- JCJason Calacanis
Yeah.
- 50:45 – 1:01:20
Government-heavy climate plans, Dilbert/ESG backlash
- JCJason Calacanis
- CPChamath Palihapitiya
All right, so the Wall Street Journal editorial board, uh, which obviously has a side, wrote an op-ed on California's grid issues. Some of the quotes from the op-ed, "California can barely keep the lights on as its climate policies, uh, bite the electric gi- grid, but Gavin Newsom is undaunted. On Friday, he signed no fewer than 40 new climate bills to amp up California's green energy stock, shock experiment. Even as gasoline prices nationwide have fallen to an average of 3.68 a gallon, Californians are still paying 5.45 a gallon. California's electric rates are already more than double those in neighboring states. This is what happens when politicians try to eliminate fossil fuels with a Molotov cocktail of regulation, taxes, and renewable mandates and subsidies."
- JCJason Calacanis
The coda to this is, um... I'll send it to you, Nick, but can you please play the clip as well of Rashida Tlaib trying to skewer Jamie Dimon where he just destroys her?
- CPChamath Palihapitiya
Oh my God, that's embarrassing.
- JCJason Calacanis
That was embarrassing.
- CPChamath Palihapitiya
I mean, we should play it. I mean, it's, sh- she made no sense.
- JCJason Calacanis
Nick, can you play that clip, please?
- NANarrator
You have all committed, as you all know, uh, to transition the emissions from lending and investment activities to line with pathways to net zero in 2050. You know, uh, what the International Energy, Energy, um, Agency has said is required to meet our goal, global 2015 ne- zero targets of limiting global temperature rise to 2.7 degrees Fahrenheit or one point, uh, five degrees Celcius? So, no new fossil fuel production starting today. That's, so that's like zero. So, I would like to ask all of you and go down the list, 'cause again, you all have agreed to doing this. Please answer with a simple yes or no. Does your bank have a policy against funding new oil and gas products, Mr. Dimon?
- DFDavid Friedberg
Absolutely not, and that would be the road to hell for America.
- NANarrator
Yeah, that's fine. That's fi- Sir, you know what? Everybody that got relief from student loans has a bank account with your bank should probably re- re- take out their account and close their account. The fact that you're not even there to help relieve many of the folks that are in debt, extreme debt because of student loan debt, and you're out there criticizing it.
- JCJason Calacanis
My favorite was when she said Celcius.
- CPChamath Palihapitiya
That was, yeah, I was like, "Okay." It's just so much theatrics.
- JCJason Calacanis
Rashida Tlaib represents the 13th District, Congressional district in Michigan. The, the median age in that district is 35.9 years old. The 2020 poverty rate is 28.2%, so more than almost one in three people. And, uh, the 2020 median household income is $37,601. So, you know, she represents a c- uh, a group of people that, you know, I, I think at best sh- is lower middle class. And the idea that she doesn't even basically understand what would happen in her district if you actually did not have cheap LNG, again, just kind of speaks to the institutional kind of decay in Washington. She is not the person that should be advocating for this. Like, you know, it's districts like this more than any other that don't have the money to spend on, you know, very expensive solar installations that cost $30,000 and $40,000. These are the districts that need coal, coal-fired plants, LNG, oil to keep going, to sort of minimize the impacts of inflation. And so, you know, that was just like a grandstanding moment. Moving to California-
- CPChamath Palihapitiya
I just hate these hearings because, Chamath, these are important discussions and they've become theatrics, and this is a chance to educate the public with some charts and data.
- JCJason Calacanis
She's either so hungry for power that she actually doesn't care about her constituents...... or she's scientifically and numerically illiterate.
- CPChamath Palihapitiya
That's, I think the latter is probably the issue here.
- JCJason Calacanis
And so this is, this is what's such a shame. On the- on the- on the other side, you know, at the end- at the- at the other end of the coast in California, the cost of power generation, just so you guys know, has fallen by 90% when you look at renewables. And that is because of- of good job that the federal government did in introducing subsidies that essentially gave the- the right sets of incentives for people to build this infrastructure. But while the cost of generating renewable power has fallen by 90% to, you know, virtually it's on par and it's cheaper than any other form of generation, your electricity costs have doubled and are probably going to double again in a state like California. So, you know, we're catering our- our- our utility rates by, you know, 7 to 11%, um, every year. That is unsustainable in California. And what do you have? You have, again, a different version of the same flu that Rashida Tlaib has, which is, you run forward to kind of virtue signal and to try to do all of these things, you don't spend enough time to really understand what's happening on the ground, and you make it impossible for people to make the decisions to actually, uh, be resilient for themselves. At the end of the day, there are tens of utilities in America, but there are 100 million households. And the only path to energy independence is to get every single 100 million household to be resilient, which means they need their own solar panels, they need battery storage, they need their own potable water, and all of these systems are now affordable and available. And now the federal government with the IRA has created the financial incentives to pull it forward. So, I don't know, I- I just think, like, this is a hugely stark reminder about how poorly our energy policy has been managed, and if you leave it to the hands of the progressive left, they will do things that don't map to what people on the ground actually need. People in California, most people in California, cannot pay utility rates that are going to double every six and seven years. Just like people in the Congressional 13th District of Michigan cannot afford to pay for solar if Rashida Tlaib is able to get, you know, all these banks to not finance LNG coal and- and- and other forms of hydrocarbons as a bridge fuel, um, for the next 15 years.
- CPChamath Palihapitiya
You have to- you have to look at all 40 of these bills independently, and you have to think about-
- JCJason Calacanis
40 bills? I mean, who's reading these things? What is in these things?
- CPChamath Palihapitiya
I- I mean, each one has to be addressed individually, like, one of them could be to help people put solar panels on top of schools and batteries in there. That could be a good bill. Um, but there definitely needs to be-
- JCJason Calacanis
We have that mechanism at the federal level. The IRA passed an incredible set of incentives built for the producers of these things and for the- for the end companies that actually deploy them.
- CPChamath Palihapitiya
Yep.
- JCJason Calacanis
And so we've solved that problem. You know? So I- I just think, like, it just goes to show you, a ton of regulation does not actually add and get to the solution that we want. The government will not solve your problems. I hate to be the bearer of bad news, but they are going to make things more complicated and more expensive, and the resilience that you expect out of your utility infrastructure... By the way, we saw just what happened last week, there was a massive fire in a massive battery installation that California installed, 182 gigawatt system- megawatt system. Could you imagine if that had actually lit on fire two weeks earlier in the middle of this crazy heat wave that we had? So even- even utility scale renewables are very complicated, um, projects to undertake. So...
- CPChamath Palihapitiya
Look at Texas state. I mean, people are dying there because the grid keeps going down. It's-
- JCJason Calacanis
It is much safer and more reliable if- is- if every homeowner in the United States took responsibility and f- and used...
- CPChamath Palihapitiya
I agree.
- JCJason Calacanis
... these incentives to basically become your own little virtual power plant. And you will...
- CPChamath Palihapitiya
The technology is there. I mean-
- JCJason Calacanis
The technology is there.
- CPChamath Palihapitiya
... people are getting generators for natural gas as backups, uh, we- we're going to have to figure out how to take the load off the grid and build resiliency into it. I don't know if you guys saw in a related story that all this ESG stuff is kind of coming to a head, but Dilbert got canceled this week in like 200 newspapers. Did you see this?
- 1:01:20 – 1:14:30
Poker plans, chess cheating scandal
- CPChamath Palihapitiya
the environment, right?
- JCJason Calacanis
Sax, Sax, we're having olive fed beef tonight.
- CPChamath Palihapitiya
Oh, this is the greatest.
- JCJason Calacanis
Please come. You need to try it.
- NANarrator
I'll see what I can do.
- JCJason Calacanis
No, you have to do it. You have to do it, Sax.
- NANarrator
Okay.
- JCJason Calacanis
Once you have to say-
- CPChamath Palihapitiya
Come on, Sax. Commit. No bullshit anymore.
- JCJason Calacanis
But Sax, Sax-
- CPChamath Palihapitiya
Commit.
- JCJason Calacanis
You cannot imagine, what does a beef look like that has been only fed green olives? Pitted green olives now.
- CPChamath Palihapitiya
I can tell you, I can tell you how it looks. Delicious.
- NANarrator
Is it green?
- CPChamath Palihapitiya
It's the most delicious steak you've had in your life, except maybe when you do-
- JCJason Calacanis
It's the most delicious...
- NANarrator
All right, I'll come for that.
- CPChamath Palihapitiya
Okay, great.
- JCJason Calacanis
It's incredible. Awesome, fun.
- DFDavid Friedberg
Sax, you gonna drive me? Eh, with your driver?
- NANarrator
Text me your address so I know where to get you.
- DFDavid Friedberg
Oh, I love it.
- CPChamath Palihapitiya
Oh, this is gonna be great. Game on.
- JCJason Calacanis
Listen to this lineup. Me, J-Cal, (beep) , Friedberg, Sax, uh, (beep) -
- DFDavid Friedberg
Oh!
- JCJason Calacanis
... is flying it.
- DFDavid Friedberg
Oh!
- JCJason Calacanis
This thing-
- DFDavid Friedberg
This is gonna pop.
- JCJason Calacanis
This, this game is gonna chop up. This game is gonna pop.
Episode duration: 1:24:53
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