All-In PodcastE98: Big tech starts making cuts, Fed incompetency, global debt, Russia/Ukraine & more
EVERY SPOKEN WORD
150 min read · 30,260 words- 0:00 – 1:36
Bestie intros!
- JCJason Calacanis
Hey, everybody. Welcome to Episode 98 of the All-In Podcast. With us again, the Sultan of Science, the Queen of Quinoa, looks like he brought a trucker hat. What- what- what- are you getting jealous of the Moncler hat, or are you just not bathing anymore? This is going off to our-
- DFDavid Friedberg
No, I need a haircut. I haven't had a haircut in, like, six weeks. I'm getting my hair cut this afternoon.
- JCJason Calacanis
It's not going to make a difference.
- CPChamath Palihapitiya
I think what Freeberg is trying to tell us is that he is the Zodiac Killer.
- DSDavid Sacks
(laughs)
- JCJason Calacanis
It's long been known. All right, there it is, the uni-bar. Uh, all right, uh, and Moncler Saxe is here with his $400 Moncler hat and, of course, the dictator himself.
- CPChamath Palihapitiya
I asked Ron, I asked Ron to cut my hair so that the white patch is more prominent. I think he did a good job.
- DFDavid Friedberg
Do you add the white patch with coloring or is it, uh...
- DSDavid Sacks
(laughs)
- CPChamath Palihapitiya
No, it's natural. It's just there. It's just there nowhere else.
- JCJason Calacanis
Why would you make it look so odd if you were doing it on purpose?
- DSDavid Sacks
(laughs)
- JCJason Calacanis
It's super random what Chamath gets to be talking about.
- CPChamath Palihapitiya
I like the way it looks. I like the way it looks.
- DSDavid Sacks
Jay Leno had a look like that.
- CPChamath Palihapitiya
I'm about to go... By the way, you know this, in the fall, in truffle season, I like to grow it so that it's more wavy.
- JCJason Calacanis
White for white truffle season. Got it.
- CPChamath Palihapitiya
I needed to have a reset cut so that then we could grow it wavy for the fall for truffle season.
- DSDavid Sacks
Listen, Chamath, the only thing less relevant to us than your cashmere sweaters is your (beep) haircut. (laughing)
- NANarrator
Going all in. Let your winners ride. Rain man, David Sacks. Going all in. And I said, we open sourced it to the fans and they've just gone crazy with it. Love you guys. Queen of Quinoa. Going all in.
- 1:36 – 31:09
Big tech starts making cuts and what this means for the broader economy and startups
- NANarrator
- JCJason Calacanis
All right. Zuck announced a hiring freeze and reorg at Meta. He also said Meta will reduce headcount for the first time in its history. Meta's headcount in 2023 will be smaller than it was this year. He called it the end of an era of rapid growth. This on top of, uh, Apple reporting, and Apple got walloped in the market for the first time (laughs) in forever. Uh, Apple pulled back iPhone production, uh, for the 14 after slower than anticipated demand. As I mentioned on previous episodes, they've kind of done a gentleman's layoff, similar to, I think, Meta, in that Apple said, "You have to be back in the office three days a week." A bunch of people quit. So, uh, you don't have to pay them, I guess, huge packages when they quit that way. Google CEO Sundar Pichai also called out employees in July, as you guys all read, and he wrote, "There are real concerns that our productivity as a whole is not where it needs to be for the headcount we have." Google, of course, 174,000 employees. So, I guess, the question I have for you is, are these the last towers to fall, Chamath, in this, uh, pullback that we've seen? These are companies that don't need to do the layoffs. They have tons of cash, so they're obviously doing that to maintain earnings, uh, one would, and to maybe, uh, send a signal to employees that they need to work harder. Wh- what's your read on these, this past week's shoes to drop?
- CPChamath Palihapitiya
Well, it definitely is the end of an era. I think it is sort of like the- the end of this phase of big tech, where you had this, you know, unfettered growth, where these business models were largely unassailable and they, you know, were really just fighting to grow into their valuation and just generate more revenue to justify where they, um, where they traded at. And now, it's this next phase where they have to operate more like a cash cow business. And so, you know, it's an acknowledgement that the growth is tapering. It's an acknowledgement that they're going to trade on a pretty tight band in terms of multiple, which means that they have to manage expenses much more tightly, which means that they can't have a really broad-based surface area in which to operate and experiment. You have to keep the experiments small. You have to manage your expenses. You can't have employees, basically, you know, run over the place. Management has to have a firm hand in- in dictating strategy and what people work on. So I think all of that signals that I actually... Jason, I don't think this is the end. I actually think it's the beginning, because these companies, Apple, Facebook, Google, maybe a little bit Microsoft, are the most sensitive to valuation because they are the most widely held, right? These are the- these are the, you know, the equivalent of US treasuries in the equity markets, the safest, most predictable safe haven in times of stress. If you want to own big, chunky cashflow-generating businesses that, you know, are relatively unassailable, you couldn't pick four better businesses than those. And so the fact that they see enough in the horizon to say that we need to batten down the hatches should be a warning to everybody else.
- JCJason Calacanis
Uh, Freeberg, is it as simple as this, that the- they're moving from top line growth to bottom line and they're going to need to look at the expenses? What's your read on this for Silicon Valley and big tech?
- DFDavid Friedberg
Well, I just want to zoom out for a second because I remem- I started working in Silicon Valley in 2001. You guys are a little older than me, I think, but, like, we were right at the kind of year one of the dot-com implosion and all the fallout that happened from all the funding that happened from '97 to '99 and 2000. And so from '01 to '03, it was super, like, deflationary. Everyone was cutting costs and all the money that had been raised was kind of being pissed away or companies were liquidating and, you know, so on. And then starting in 2004, which is actually when I joined Google, but there was also this big movement starting '03, '04 of, like, what people called Web2. Then kind of new business models and new businesses started to emerge that seemed to have real traction and real legs and it was a different story and a much more rational story than what you saw leading up to kind of 2000, 2001. And it was around that time when Google started offering these crazy benefits, right? It was like, there's a gym and free food and all these amazing workplace. And suddenly everyone had to do that to keep up, right? Facebook obviously mimicked it. All the other big companies mimicked it. And then it became mainstay and they also raised compensation in the Valley significantly because Google had really cracked the nut on how to extract value from the internet.And it really changed everything in Silicon Valley and changed everything in tech because suddenly every tech company, whether you were enterprise software or hardware or an internet e-commerce site, to be competitive and hire great talent you have to have the same sort of environment. High wages, great salaries, really share the value with your employees, you know, gyms and free food and all this sort of stuff. So it's the first time, I think, in a generation since like 2003, 2004 that we're seeing things start to turn the other way where instead of adding more benefits, uh, you know, making things more attractive, giving more value to employees, we're really seeing the recession hit these kind of leading indicators of how things are going to be in the Valley. And as a result, I think we should expect to see a similar impact on compensation, on benefits, on value share, and on kind of proclivity to hire, an opportunity to kind of jump jobs, and, you know, opportunities that we've all kind of taken for granted over the past 18 years. And this is going to be a real shock to a lot of people that work in tech and a lot of people that have gotten used to the idea that every company offers great benefits, m- there's always another job to jump to that'll pay you more. And that, that, as that engine of growth that was really driven by these big companies, by Google, Facebook, Apple starts to s- slow, no one needs to compete with them anymore as much. And the compensation bands get tighter, and the option value gets tighter, and the free stuff gets tighter. So it's the end of an era, and I think it's a new world, uh, for tech and, and Silicon Valley.
- JCJason Calacanis
Sax, what are your thoughts here in terms of startups in relation to big tech maybe having these austerity measures kick in and a, and a refocusing on profitability?
- DSDavid Sacks
The big takeaway here is just that nobody is safe. And it's not just startups that have to, you know, tighten their belts, it's these big companies too. And I think we're headed for a broad-based recession. That's what it seems like. You saw Druckenmiller's comments this week predicting a hard landing in 2023. No one's talking about soft landing anymore. In fact, I think we're all wondering who's flying the plane. So I think we're headed for a pretty big recession. And, uh, just to take it in a slightly different direction, I'm down here in LA, had dinner the other night with a friend who's a showrunner in Hollywood. And so a showrunner basically is like the head writer and they basically put together the writing team and the, you know, the content for a show and then they sell 'em to, to networks. He said that, like, no one is buying anything anymore here. That last year you had, there was tremendous, you know, activity and you saw like the, the Game of Thrones guys, you know, uh, D&D, they got like a $300 million deal from Netflix and Shonda Rhimes got a $300 million-
- JCJason Calacanis
These are like the platform deals they did, yeah.
- DSDavid Sacks
Yeah, they got like... Thi- there were massive multi-hundred million dollar deals being made last year. And that was just for, like, future writing deals. Like, Netflix wasn't even buying libraries when they did those deals.
- JCJason Calacanis
They were locking down talent for the next decade.
- DSDavid Sacks
Yeah, exactly. So all of that has stopped and the reason is that Netflix's stock has been hammered, right? And only so they not have the capital to do those kinds of crazy deals anymore, but they know that Wall Street is watching them and so fundamentally, they're questioning whether their business model even works if they have to spend that much money on content. So then all of Netflix's competitors basically have stopped. So this whole, like, frothy environment that you had for, in Hollywood last year, that's just over. The faucet's been turned off and it's not even turned off to a trickle, it's just stopped. So you think that this, like, massive asset bubble that we had last year was just in crypto and growth stocks. It's not. I think it actually trickled down into the real economy because Netflix was one of those growth stocks. The money then flowed into writers in Hollywood and then lots of other places. This is one small example, right? That, that this asset bubble wasn't purely just something that's going to be localized to crypto. It affects real people in the real economy and we are just beginning to see the unwind of that.
- JCJason Calacanis
Yeah. What's abs- absolutely correct, I think, is people were more risk-taking. They had free capital, they wanted to place more bets. And sure, why wouldn't you bet on the Game of Thrones writers for the next decade? But looking at this, this is going to be fantastic for startups. I mean, the startups I've worked with over the last five years have been... They always come to me, "Oh, I got a developer, but s- sc- this person's got three offers from, you know, Facebook, Google." And they're like, "How do I land this person? They got $300 mi- thousand dollar a year offering, a million dollars in RSUs." And basically founders had to say, "No, I can't get that person." And so they had to get creative and they would hire people, Ukraine, Uruguay, everywhere in between to try to find developer talent and they had to get creative. Now all of those people are not going to have four job offers. They're going to have no job offers, so they may have gotten laid off. Uh, and those crazy unrealistic out of school deals are going to be gone, and this means massive consolidation of talent. You look at the startups, uh, community right now, tons of companies are just going out of business. They're packing it in. Those people are going to go work at the other startups that are stronger. So whoever makes it out of this as a startup, this is how the cycle restarts is talent then consolidates on the winners. It would be like taking the NBA and getting rid of the bottom, you know, 10 teams and just telling the best players there, "Move up to the other teams and, uh, everybody else, you're out of the league." So I, I think this is incredible setup for 2023 for startups to consolidate talent. So I'm, I'm actually excited to see as-
- CPChamath Palihapitiya
It's another, it's another data point that, again, I said it last week, I'll go out on a limb and predict my equivalent November fall predictions. Last fall it was that the markets were gonna poop the bed. My prediction now is that I think the markets are bottoming and consolidating.
- JCJason Calacanis
Yup, 100%.
- CPChamath Palihapitiya
And this is the time I think to start nibbling and start getting ready to really rip the money in. And I think there's enough signals every day that kind of, like, tell me at least that on the margin it's time because I think the markets do a reasonably good job of digesting news and then pricing the forward reality, right? Like, today's price is really everything we already know and so the real guess is what's about to happen in the future. And from my perspective...I'm actually pretty, starting to get a little constructive here. I think that, um, when, when companies like Facebook really do this and y- y- you know, like, if you think about it one way, the financial markets have always had this thing that we have called a Fed put. What does that mean? A put is essentially the right to sell something. And what market participants have always known for the last decade is that if things got very hairy, if there was uncertainty in the market, the Federal Reserve would, and they have, consistently stepped in to create a buyer of last resort. And so it always eliminated that last part of true, you know, supply-demand balance, because they would just come and say, "Don't worry." In many ways in tech, what the big tech companies were were that, you know, you could never really find what the true market clearing price for an engineer was or what the true amount of expenses you should spend on office space or, you know, free services, because you always, always had these companies, which was escalating arms race. You know, if one company had a m- massage, the next company had gyms and massage and physical therapists, and the other company would have buses to take you to the gyms and massage and therapist, and the next company would have protein shakes that were freshly made, you know, and it just kept escalating and escalating because the costs didn't matter, and they wanted, if nothing else, to get that marginal engineer or product manager or businessperson to work at their company, which eliminated the risk that they would actually start something to disrupt them.
- JCJason Calacanis
Blocker strategy is very real. You should unpack that. Yeah.
- CPChamath Palihapitiya
No, the blocker strategies are, is very real. So when you take this big tech put out of the market, you will get true price discovery, and you will find out what the real price should be for this kind of an engineer, that kind of a product manager, and you'll find out what are the real expenses you need to bear in order to build a real lasting business, and you'll be able to sort through all of that stuff out. So I think it's a really good moment. And again, it's yet another indication to me that I think broadly speaking, the markets are now starting to stabilize. All the irrational behavior is starting to exit the system. The party is in the last few hours. Volume's going down. The alcohol is being taken away. People are hanging around-
- JCJason Calacanis
What's going on?
- CPChamath Palihapitiya
... with a little bit... Lights are coming on. They're like, "Uh, I've been here a little too long." And I think that that's a very healthy process for an economy, and I think that that's what's happening right now. So I'm constructive. I'm a little bullish. I'll go, I'll go out on a limb. I think, you know, we could be 3% to 5% from the lows, but we're more near the lows than the highs.
- JCJason Calacanis
It certainly feels like the double bottoming out process was th- the bouncing along the bottom. And yeah, who knows how hard the landing, uh, is. But I think this is a great setup for startups and people who want to start companies. I don't know if you saw, Girley did a great interview that trended on the Twitter, and he was just saying, "This is the best time to start a company," and I, I have to agree with him. Like, you're gonna have talent available. And, like, who are you competing against for buying ads? Like, there's so many marketing opportunities available. The first thing to go i- in a down market like this is advertising and marketing, so.
- CPChamath Palihapitiya
And by the way, we will, we will also relive what we have empirically known to be true, and it's been, it's been pretty well proven. The investments that one makes in this period will probably be the best for many, many years to come, because they'll have the most asymmetric upside. And that was true in 2008 and 2009 and 2010. It was true in, you know, 2002, 2003, and 2004. I mean, you're talking incredible companies, just in those two periods, think about this-
- JCJason Calacanis
Yep.
- CPChamath Palihapitiya
... Atlassian, Tesla-
- JCJason Calacanis
Uber, Google.
- CPChamath Palihapitiya
... Airbnb, Uber, Instagram, WhatsApp, incredible businesses that have created tremendous value. And so there are businesses that have been invested in for the first time in 2022 and will be invested in for the first time in 2023 and 2024, which will be the leading winners of this next phase and this next leg up. And so the real opportunity is to find out who those companies are and get behind them, I think.
- JCJason Calacanis
100%. As I always tell people, fortunes are made in the down market, they're collected in the upmarket. Freyberg, what, what are your thoughts here in terms of the startup community or company builder, uh, and talent? Because th- that seems to be the piece that, uh, could be a silver lining on all of this, uh, maelstrom that we're going through.
- DFDavid Friedberg
I mean, technology always marches forward. So (laughs) there's always, you know, there's always progress to be, to be had and to be made. That's one universal truth about... It's weird that we call it an industry, (laughs) 'cause a lot of technology companies in Silicon Valley today don't sell technology to other companies, which is how Silicon Valley started. Nowadays, Silicon Valley is reinventing other industries by being technology led, and that is certainly still true because there are so many, I hate using the term, but undisrupted industries to pursue efficiency gains across, and technology built in Silicon Valley can, can, can drive that. Now, when I say Silicon Valley, I don't mean the physical location anymore, and that's the confounding factor here, which is that there does seem to be this distribution opportunity that's also emerged at the same time where people are doing remote work and work from home and distributed workforce models that seem to be highly effective. You guys talked about Atlassian. I don't think they ever had an office, right? I mean, don't, don't most of the people work from home there? And I think that the success that's been seen in software companies that have operated that model also changes th- the calculus because not only are, are wages, uh, lower, and therefore the cost of operating is lower, not needing a fancy expensive office in San Francisco is needed, but you can also access far more talent than you ever could before. You don't just need people to live in the Bay Area or New York or LA or wherever you're operating from. So from a software perspective, this is an amazing time. I'll tell you, there's a flip side to this, like in life sciences.Real estate is more expensive than it's ever been right now in the Bay Area, uh, to get lab space. There's a total dearth of space. So there's certain segments that, I think, are physical in nature-
- JCJason Calacanis
Why is that? Is large lab space like a specifical- a specific designation you can only build in certain places?
- DFDavid Friedberg
You know what I mean? There's a revolution in genomics that's totally transforming all of biology and human health and life sciences as a whole.
- JCJason Calacanis
What I'm saying is, like, do you need a certain type of location that's sanctioned for that? Yeah.
- 31:09 – 54:06
Global debt numbers, Fed incompetency
- DFDavid Friedberg
I was running some back of the envelope math. You know how much debt there is in the world? Take a guess.
- JCJason Calacanis
200 couple hundred trillion. 200 trillion.
- DFDavid Friedberg
About 300 trillion.
- JCJason Calacanis
Yeah.
- DFDavid Friedberg
That's, um, debt owed by governments, businesses and households. And if in response to the inflation, which is response to fiscal stimulus, which is a response to the entire economy of the world shutting down for a couple of months, we end up raising rates from 0 to 5%. That's, uh, 15 trillion dollars of annual debt service, which is like 18% of global GDP. (laughs) Like that, the debt service alone-
- CPChamath Palihapitiya
But what does that mean?
- DFDavid Friedberg
... is 18%.
- CPChamath Palihapitiya
What does that mean?
- DFDavid Friedberg
That means that for every dollar transacted, you-
- JCJason Calacanis
No, it means nothing.
- DFDavid Friedberg
... have to tax it. No, it means you have to-
- JCJason Calacanis
But if you... What does it mean? Like, so, so what?
- DFDavid Friedberg
So I'm saying that there's a massive squeeze hap- that's gonna happen, right? And so what ends up happening ultimately is... Because you could run this across, uh, local governments.
- JCJason Calacanis
I think it means demand destruction. I mean, if you-
- DFDavid Friedberg
Sovereign debt, households.
- JCJason Calacanis
Yeah, I don't think it means-
- DFDavid Friedberg
And, and it-
- JCJason Calacanis
I think... No, no. I'll tell you, I'll tell you, Chamath, what it means. The person who has-
- CPChamath Palihapitiya
I'm sorry to pop your bubble, but it means nothing and I'll tell you why. These people keep like-
- DFDavid Friedberg
Because you can print more money?
- CPChamath Palihapitiya
You print more money. I'm sorry-
- DFDavid Friedberg
Yes.
- CPChamath Palihapitiya
... to be the bearer of bad news but like it is not as if we have a law, a constitutional law. Or it's not as if governments have collectively decided that you cannot have debt-to-GDP, uh, above a certain number. That doesn't happen, guys. We passed 100 under Obama and we've just kept printing money. So whether we like it or not, and I'm not saying I'm a fan of this or it's right, we are kicking the can down the road, and what we're doing is we're extending the maturities. You know, you'll eventually have 100-year government bonds, okay? Y- just like you have, like, now, you know, multi-decade long corporate bonds.
- DSDavid Sacks
We missed the chance for that. We missed it because brilliant Yellen actually said no to that when, when rates were like near zero and we had the opportunity to refinance the US government debt w- using long-term rates, basically long-term bonds, and actually it was Trump who, you know, crazy Trump who suggested let's basically shift the debt to 100-year bonds and she said no. She does so we-
- DFDavid Friedberg
So she doesn't devalue the dollar, right?
- DSDavid Sacks
So the, the problem is that we have all this short-term debt and look at what, what just happened in the UK when Liz Truss tried to prop up the, uh, bond rates by basically intervening, which is basically an inflationary policy to fight inflation. The markets puked all over that and that's when their, the pound hit, you know-
- JCJason Calacanis
Exactly.
- DSDavid Sacks
... new lows.
- JCJason Calacanis
There's, there's only so... You have to have a buyer of the debt, right?
- CPChamath Palihapitiya
I think the Liz Truss thing is really actually a microcosm of how, unfortunately, Western governments are working, but I think there's a silver lining. Like, she basically came in a day after she got elected and said, "Okay, guess what, guys? At the same time, I'm going to massively cut taxes and I'm gonna give you fiscal stimulus. I'm gonna cap your energy bills and I'm gonna have these huge transfer payments from the government into the hands of, uh, uh, of, um, British citizens." I'm not gonna comment on whether that's right or right, right or wrong, but the financial markets, to your point, David, absolutely hated it, and within a few days, you basically saw the pound get crushed. But then what did you see? You saw the Bank of England decide that financial stability was more important than financial viability, meaning the things that she wanted to do were not viable. So you could have let the financial markets sort this out, which would have forced the Prime Minister to basically abandon the policy, but instead the BoE said, "No. We're an unlimited buyer of UK gilts," which is the name of the UK bond, and everything snapped back. We're back to where we were before her speech and before the Chancellor of the Exchequer's speech, and so it's as if nothing happened. And that's what's so insane to me, which is that even though the Bank of England, by the way, in the next week or two are gonna raise rates 140 basis points, 140 basis points, almost double what the Fed has done the last three times. They're doing both at the same time. They're both raising rates and they're acting as a backstop for bad policy. And this is what's wrong right now in the world. We do not have a real check and balance. And so my point to Friedberg is just that I'm, like, emotionally i- on your side, but the problem is with these folks keep getting bailed out, David, they're just gonna keep doing this stuff and there's no end in sight.
- 54:06 – 1:00:30
RIP Coolio
- CPChamath Palihapitiya
- JCJason Calacanis
Can we do a quick shout-out for, um, Coolio? Sad to hear that he passed.
- CPChamath Palihapitiya
We're here for you.
- JCJason Calacanis
Yeah, I mean it was really sad. The guy was, uh... how old was he? 57?
- CPChamath Palihapitiya
Were, were you a big fan of Coolio's?
- JCJason Calacanis
I love Coolio.
- CPChamath Palihapitiya
You don't remember-
- JCJason Calacanis
I was... I grew up in the '90s.
- CPChamath Palihapitiya
This Coolio story from the pod when he said-
- JCJason Calacanis
Gangster's paradise.
- CPChamath Palihapitiya
I feel you.
- JCJason Calacanis
Yeah, and then when I saw him at Sax's birthday last year, I was like, "Dude, I, I love Coolio. I mean, I cannot tell you what a big fan I am."
- CPChamath Palihapitiya
What was the line you said to him? You said, "I feel you."
- JCJason Calacanis
I said, "I appreciate you" in his ear.
- CPChamath Palihapitiya
I appreciate you. I appreciate you. (laughs)
- JCJason Calacanis
I appreciate you. We fly down for the birthday. They, you know, they shuttle you on the cars from the plane to the, to the house. We get to the house, and you know, we're all waiting. Of course Sax is late, two and a half hours to his own party. We're all hanging out and starving, but then we go into the party and then they have like, uh... Coolio shows up. So we're like sitting down to dinner for course two-
- DFDavid Friedberg
... all of a sudden, pop comes out of the- the- the woodwork, Coolio. I lose my shit. I run up on the, uh, you know the little-
- JCJason Calacanis
Big Coolio fan?
- DFDavid Friedberg
... the dance floor. I grew up, Coolio like is like high school jams, man. I mean, that's like in the car cruising. And, uh, at this point I'm like seven tequila, watermelon tequilas in, so I'm like-
- JCJason Calacanis
Oh my God. You got smashed. Oh, no. (laughs)
- DFDavid Friedberg
Letting loose up in here.
- JCJason Calacanis
Not drunk Freeberg, oh. (laughs)
- DSDavid Sacks
Oh, no. (laughs)
- DFDavid Friedberg
Now here, I'm- I'm on the- I'm on the dance floor, you know, jamming out to Coolio.
- JCJason Calacanis
(laughs) Wow.
- DFDavid Friedberg
I think Coolio thought I was Sax, you know, 'cause he's like, yeah, he's like, "Oh, two South African Jews, you guys all look the same." Coolio comes up, starts high-fiving me and hugging me and I'm like, "What's up Coolio?"
- JCJason Calacanis
Wow.
- DSDavid Sacks
(laughs)
- DFDavid Friedberg
My God, this is like a dream come true. He- he's like hugging me. His face is right next to my face. I didn't know what to say. And I like, I'm- I'm all... I've had a little bit of tequila and I- and I whisper in Coolio's ear, I'm like-
- JCJason Calacanis
Oh, no.
- 1:00:30 – 1:14:19
Russia / Ukraine update
- DSDavid Sacks
- JCJason Calacanis
GPalt. All right. Sax, you want some red meat? You... I- I saw you wrote a piece.
- CPChamath Palihapitiya
Yeah.
- JCJason Calacanis
You want your red meat? Should we throw it to you?
- DSDavid Sacks
Yeah. Yeah.
- JCJason Calacanis
All right, you're the tiger.
- DSDavid Sacks
Well, I mean, I think we- we need a Ukraine update because, I mean, we're talking about all the reasons that there could be a silver lining or the market's bottomed out. I don't think you can know for sure the markets are going to bottom out unless you know that there's going to be successful resolution of this Ukraine war, at least a non-escalation of it. And all the things that have happened in the last couple weeks have been on the road towards escalation.
- JCJason Calacanis
Last 48 hours.
- DSDavid Sacks
Exactly. So in the last like just few days, you've had Zelenskyy saying that they want to be admitted to NATO.... you've got Putin basically annexing, or saying he's going to annex, the Donbass. And somebody, we don't know who, but according to Radek Sikorski, who's the Polish Foreign Minister, he thanked the US, uh, somebody blew up the Nord Pipeline. So what is the common denominator of all these things?
- JCJason Calacanis
Which Nord did they say was blown up? Was it one or two? Was this, the new one?
- DSDavid Sacks
I think it was Nord One.
- JCJason Calacanis
Ah.
- DSDavid Sacks
So it was the one that was actually, like, working. What is the common do- denominator of all these things? They're all eliminating key elements of what a peace deal would look like. So everyone understands that a peace deal would require, uh, Zelensky to give up on NATO, it would require Putin to make some compromises, likely in the Donbass, and it would require the sanctions to be lifted and the energy flows to be turned back on. Well, so now those things basically have been removed from the table, or at least potentially that's what's happening. So I don't see how you're gonna get a peace deal now. And so if you remove all the off-ramps, what's left? Escalation.
- JCJason Calacanis
Well, you know-
- DSDavid Sacks
So it seems to me this thing is just gonna keep escalating.
- JCJason Calacanis
I thought you wrote a good piece in The American Conservative, Should America Go All In On Ukraine? If you haven't read it, it, it is 80% a rehash of what we've talked about here for the, for the last year, but there's 20% new in it, I think. And I thought what was interesting, uh, in terms of new stuff you put in the piece, and it's, it's a good summary of, you know, poker strategy versus what's going on here, is that we've already proven, you know, if, if you did want to prove that Russia is not a threat, with the exception of their nuclear, we now have proven (laughs) that they're really not going to be able to do a domino and go into all these different countries, with the exception of, obviously, the threat of nuclear power. So I, I thought that was a, a point, yeah.
- DSDavid Sacks
Well, what I was really res- yeah, what I was really responding to in that piece is the assertion by the media that Putin is bluffing. How do they know that? You know, how do they know that? Like, you know, I think all of us understand poker pretty well, and none of us ever would have the confidence to assert that we know exactly what cards our opponent holds in any given hand and how exactly they'll play them. What do we do? What do smart pla- players do? We put our opponent on a range, a range of possible hands, of possibilities, and then we evaluate what did their previous actions tell us? What story are they telling through their previous actions? Well, what story has Putin been telling? This is not a guy who bluffs, in my opinion, or at least that is not the story told to this day.
- JCJason Calacanis
So you think there's a sh- there's a chance he, he would pop off a tactical nuke? It's a non-zero chance, obviously.
- DSDavid Sacks
I think if that, if his life is on the line, he is incentivized to use every weapon at his disposal to try and prevent his violent overthrow.
- JCJason Calacanis
Well, his life isn't on the line here. He can, he can back out.
- DSDavid Sacks
Yeah, but where's this thing headed if there's no compromise?
- JCJason Calacanis
I, I think they, you know, I, I, I'm gonna stick with my original prediction that we wanted to ankle Putin. We wanted to prove he didn't have, you know, as much strength as he did, and we wanted to exhaust his resources so we could finally basically get him out of office at some point. So I do think regime change via exhausting him. And I think it seems to have worked. We have exhausted him. Now, is it dangerous?
- DSDavid Sacks
Well, then you're agreeing with me. You're agreeing with me.
- JCJason Calacanis
I agree that we have exhausted his... I mean, he's, he's proven he can't fight a ground war, right? I mean, that, that's a pretty-
- DSDavid Sacks
Well, no, he's escalating now. He's escalating. You think he's just gonna roll over? He's not gonna roll over.
- JCJason Calacanis
No, I didn't say that.
- DSDavid Sacks
He's gonna escalate.
- JCJason Calacanis
I think he... But I think what we've proven, haven't we, is that he can't fight a ground war effectively. He, he doesn't have the army, he doesn't have the weapons, uh, compared to the West, and he's been exhausted. You know, and I think his, he's spent now. The only thing he has left is what you're talking about, is the nuclear option.
- DSDavid Sacks
Well-
- JCJason Calacanis
Literally.
Episode duration: 1:19:37
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