Why SaaS is not dead but AI is repricing its future

Jason Calacanis 0:00 All right, everybody, welcome back to the number one podcast in the world, your favorite podcast, with your favorite besties in the world, the All-In Podcast. Chamath is traveling and couldn't make it this week, so our favorite fifth bestie in the world, the one, the only, Brad Gerstner from Altimeter, here to take a victory lap for your, uh, Trump Accounts. Congratulations, brother.

Brad Gerstner 0:25 Just getting started. Started here, actually. Look forward to talking.

Jason Calacanis 0:29 Yeah. Yeah, we'll talk about it in depth, and also with us from the great state of Texas, my bestie and brother-in-arms, David Sacks. How are you doing, brother?

David Sacks 0:39 Hello there.

Jason Calacanis 0:39 How are you, how are you... You're loving it, aren't you? Freedom.

David Sacks 0:42 I'm loving it. Yeah.

Jason Calacanis 0:43 Mm. So much freedom. [chuckles]

David Sacks 0:45 Well, the ice storm is over, and the weather looks really good right now. We're gonna have-

Jason Calacanis 0:49 Mm

David Sacks 0:49 ... 70s all weekend. It's great.

Jason Calacanis 0:51 Yeah. You figured out your internet?

David Sacks 0:53 That has been resolved. Like I said, it's a lot easier to fix my internet than to fix the state of California. [laughing]

Jason Calacanis 1:00 [laughing] Yeah. You fixed it in one week, so yeah-

David Sacks 1:02 [laughing]

Jason Calacanis 1:02 ... I would, I'd say that you're trending in the right direction. And with us, of course, David Friedberg of Ohollo. How are you doing, Ohollo? Look at you, a little promoing your hat. You're promoing with the hat. How's Ohollo doing?

David Friedberg 1:15 Doing great.

Jason Calacanis 1:15 We haven't heard about it for a while.

David Friedberg 1:17 I'll give you some updates on another show. Today may not be the best day. I do appreciate you asking.

Jason Calacanis 1:21 I hear it's going great with the potatoes.

David Sacks 1:23 You got the merch.

David Friedberg 1:24 I got merch? Yeah, you guys can go to boosted.ohollo.com and buy your gear today.

Jason Calacanis 1:29 Oh!

David Friedberg 1:30 Here's your quick science corner for the day. They found a village called the Ohollo site. It was an archaeological dig on the Sea of Galilee, 26,000 years old, and in this archaeological dig, they found these little clay pots filled with seed. So it predated all of our understanding of agriculture and plant breeding and seed storage, so it really reinvented our understanding of, of human history with agriculture, so we named the company Ohollo after that archaeological site.

Jason Calacanis 1:55 And your first crop is gonna be potatoes. That's the Polymarket is saying potatoes.

David Friedberg 2:01 Farmers are planting our true seed, world's first, world's first true seed of potato.

Jason Calacanis 2:06 First.

David Friedberg 2:06 Instead of planting 5,000 pounds of chopped-up potatoes, you plant a handful of seed.

Jason Calacanis 2:11 Mm.

David Friedberg 2:11 Completely changes the economics and the opportunity for potato farmers around the world. Third largest source of calories. Very excited. We're going to market this spring. Farmers are planting it in the field, so it's a great year for Ohollo. Thanks for asking.

Jason Calacanis 2:24 So first-

Brad Gerstner 2:24 Do you have an invest in Ohollo, Jason?

Jason Calacanis 2:27 I think Sacks and I have $0.00. Yeah, I think besties got boxed out on this, but we'll promote it every week.

David Friedberg 2:34 Sacks is there, bro.

Jason Calacanis 2:35 Oh, oh, Sacks is no comment?

David Sacks 2:36 [laughing]

Jason Calacanis 2:36 Sacks got his feet wet?

David Friedberg 2:38 [laughing]

Jason Calacanis 2:38 Are you in Ohollo or not?

David Sacks 2:40 I think we are investors, are we not?

David Friedberg 2:41 Yeah, his, his venture firm, Craft Ventures, we're excited to have them on the cap table. Yeah.

Jason Calacanis 2:46 Oh, great. How about you, Brad? Did you get a little slice?

Brad Gerstner 2:49 I'm working on it. I'm working on it.

Jason Calacanis 2:50 Brad, I'll give you a-

David Friedberg 2:51 I'm working on it, too.

Jason Calacanis 2:51 Let me know how it goes. If you, if you can ever find the founder and see if we can get a little slice for JCal, I'd like to slide a mil in there.

David Friedberg 2:57 If you write a personal check, I'll let you in right now.

Jason Calacanis 2:59 Uh, sure. Okay. I mean, the problem with that is if- [laughing]

David Friedberg 3:02 [laughing]

David Sacks 3:02 [laughing]

Jason Calacanis 3:02 ... if I write a personal check- [laughing]

David Sacks 3:05 [laughing] Oh, never mind.

Jason Calacanis 3:05 No, I, I, I have to go to my LPs and then get permission to do it, and then you're gonna crush it, and then my LPs are gonna say: "Why is it in the fund?" So that's the problem.

David Friedberg 3:12 [laughing] Okay.

Jason Calacanis 3:13 All right, let's get going here. We got a lot of news to get through.

Jason Calacanis 3:16 Epstein Files, newest drop. DOJ published a massive number of documents on Friday, January 30th, under the Epstein Files Transparency Act. Hundreds of high-profile tech executives and national figures were mentioned in the files. Of course, none of those are accused of any criminal wrongdoing.

David Friedberg 3:36 JCal, you were in the files. [upbeat music] [laughing]

David Sacks 3:41 [laughing]

Jason Calacanis 3:42 Yes, I have a couple of emails-

David Sacks 3:45 [laughing]

Jason Calacanis 3:45 ... in the files.

David Friedberg 3:46 Okay, Inspector Friedberg has a few questions for you. [laughing] Okay?

Jason Calacanis 3:49 Okay, go for it.

David Friedberg 3:49 Let's get started. When did you first meet Jeffrey Epstein?

Jason Calacanis 3:52 I met Jeffrey Epstein in the late '90s at the TED Conference, at specifically the Billionaire's Dinner, which was hosted by my book agent, John Brockman.

David Friedberg 4:03 And then did you see him in New York? Did you visit him at his house or his office or anywhere else in New York?

Jason Calacanis 4:08 I've probably spoken to him for 45 minutes of my life. 30 minutes of that was in the late '90s when I had Silicon Alley Reporter magazine. He was a billionaire financier, and he wanted to invest in the magazine. I met with him for 30 minutes, which he said was too small potatoes for him to be involved.

David Friedberg 4:25 Where did you meet with him?

Jason Calacanis 4:26 At his legendary townhome.

David Friedberg 4:28 You went to that house?

Jason Calacanis 4:29 I visited him there, and then I saw him at the TED Conferences, at the Billionaire's Dinner, probably a half dozen times.

David Friedberg 4:34 You never went to the island?

Jason Calacanis 4:35 I never [chuckles] went to the island. Was never invited to the island, was never invited on the plane, was never invited to the ranch, none of that.

David Friedberg 4:41 When you went to his house, did you see any young ladies, or did you see any of the stuff that's reported about?

Jason Calacanis 4:45 No.

David Friedberg 4:46 Did you ever get a massage from anyone?

Jason Calacanis 4:47 No. [chuckles] No. I did trade an email with him, which I didn't recall, but he, in 2011, emailed me and said: "Hey, can you introduce me to these people who are doing this Bitcoin thing on your podcast?" And I said, "Sure. Yeah, here you go. I'll, uh, introduce you." I do thousands of introductions a year between our portfolio companies, people on This Week in Startups, and billionaires and financiers. That's the job of an early-stage investor.

David Friedberg 5:10 Why did you say, "Hey, pal," in your email to him?

Jason Calacanis 5:12 That's just a colloquialism I use, like, as a general, "Hey, fella." If a fan comes up to me and asks for something, I say, "Hey, pal. Thanks for saying that."

David Friedberg 5:20 It wasn't on your radar that this is a sexual predator, et cetera?

Jason Calacanis 5:24 Absolutely not. I think, actually, when all that came out, it was 2018, that's when I sort of became aware of it. There was, like, a Miami Herald story or something where they went into detail about how heinous all this stuff was. I've been saying, "Here, release all the Epstein files. What he did was horrible."

David Friedberg 5:39 Okay, hold on, hold on.

Jason Calacanis 5:39 "Prosecute everybody 100%-

David Friedberg 5:41 Hold on

Jason Calacanis 5:42 ... who was involved in it. The end."

David Friedberg 5:44 What about Ghislaine Maxwell? You had a separate email that came out in the Epstein files with her.

Jason Calacanis 5:48 Yes, I had met her as well at TED, and I had met her socially, like, in New York, in circles. When I met her, her dad, Robert Maxwell, owned, I believe, the New York Post or Daily News, and she was a big media executive, and her sister was involved in angel investing in technology startups, so they were just in the scene. I think, in hindsight-... you know, as a connector, if you've ever seen The New Yorker, Nick, you can throw up The New Yorker story about me. I had become famous in the first part of my career as the connector, and The New Yorker wrote, like, this 5,000-word article about how I knew everybody and was connecting everybody. I think Epstein's interest in me, if he had any interest in me, or Ghislaine's, was in my ability to connect high-profile people with them and, you know, their business endeavors, et cetera.

Brad Gerstner 6:32 So you had no knowledge of illicit activities happening by Epstein or Ghislaine, and you never participated in any?

Jason Calacanis 6:38 Absolutely not. Unequivocally [chuckles] not. I was not involved in any shenanigans, period, full stop.

Brad Gerstner 6:43 Any more questions for the witness?

David Sacks 6:45 Well, let me make a, a few observations here. So first of all, I 100% believe JCal. As I joked at our roast, he's not an important enough player in the grand [laugh] scheme of things.

Brad Gerstner 6:55 [laughing]

David Sacks 6:55 I, you know, as I joked, I said, "Who'd want to blackmail a loser," you know?

Brad Gerstner 6:58 [laughing]

David Sacks 6:58 Obviously, you're not a loser, JCal, but, uh, but look, you, you were a hyper-

Jason Calacanis 7:02 The point's well taken, yeah.

David Sacks 7:03 We're learning from the Epstein Files that Epstein was some sort of hyper-networker. You were a connector. The odds of the two of you coming across each other in that time period was basically 100%, but your contacts were very minor, so that's point number one. Now, I thought it was interesting, you know, 'cause I saw the, the emails where he's asking you for an introduction. The fact that he was curious to meet the, quote-unquote, "Bitcoin guys" in 2011, I thought was kinda interesting in and of itself, that, you know, whatever other things Epstein was, he clearly had some sort of nose for putting himself in the middle of everything-

Jason Calacanis 7:39 Yes

David Sacks 7:39 ... at a very early stage. I also thought it was interesting that you were trying to warn Epstein off these, like, crazy Bitcoin guys, you know? Like-

Jason Calacanis 7:47 Yeah. [laughing]

David Sacks 7:47 ... these are some crazy crypto libertarians. You know-

Jason Calacanis 7:50 Yeah. [laughing]

David Sacks 7:50 ... you don't wanna do business with them or whatever. Anyway.

Jason Calacanis 7:52 Well, I, and, and it's interesting you point that out, 'cause I had these guys on this week in startups, 'cause I had heard about Bitcoin early when it was, like, a under a dollar, and I was like, "Yeah, these guys are kind of weird. They're not like entrepreneurs who want to raise money. They're a foundation. They're like Wikipedia, and you, you're not gonna be able to invest in it," and I sort of gave them that warning. 'Cause I had looked at, like, "Hey, what are you guys working on? Can you invest in the Bitcoin project?" They're like, "No, no, it's a nonprofit. It's, it's a... Nobody owns it," and I was like, "Oh, okay. It's not even a nonprofit. Nobody owns it-

David Sacks 8:21 Yeah

Jason Calacanis 8:21 ... basically." Yeah.

David Sacks 8:22 But anyway, it's just interesting that he, he obviously wasn't deterred by what you said. He got very involved, I guess, and there was a company called Blockstream that he invested in, along with-

Jason Calacanis 8:30 Yes

David Sacks 8:31 ... Reid Hoffman and, and Joey Ito, that involves some of the Bitcoin core developers, and again, this is all coming out. Now, shifting gears, I think another interesting part of this is just how this is all being covered, and there was an article in The New York Times today talking about Epstein's connections to Silicon Valley, and-

Jason Calacanis 8:47 Yeah

David Sacks 8:47 ... lo and behold, you have a major photo there, despite, I think, your minor, minor tangential connection here.

Jason Calacanis 8:52 Exactly. Yeah.

David Sacks 8:54 And meanwhile, the people who have major connections and a deeper relationship to Epstein are being completely ignored.

Jason Calacanis 9:02 Hmm, why is that? Why are they going after me, as opposed to Reid or other folks?

David Sacks 9:07 Well, JCal, because you've become sort of right-coded by virtue of your association with Elon and, and being on this podcast, and so-

Jason Calacanis 9:14 And you. [laughing]

David Sacks 9:16 ... and me, and so you look in that article, it's not just you. They really go after Peter Thiel. They go after Elon, but Reid gets a total pass.

Jason Calacanis 9:24 Yeah.

David Sacks 9:24 I mean, he's just mentioned in a sentence with several other names. So does Bill Gates in this particular article, by the way.

Jason Calacanis 9:30 Which seemed to be, by the way, if you were thinking of who had the most contact with him for the longest duration of time, it was Gates and Reid. Like, they were involved with him up until, I don't know, his death maybe or 2018, 2019. They were on the island. They were on the plane. They were at the ranch. They were very much involved in him to... And I know Joey Ito was in it to raise money from Epstein, because Epstein was this big funder of scientists, which, looking back on it, Sacks, he's involved in Bitcoin, he's involved in physics and scientists, he's involved with the world's most innovative tech leaders. What exactly is going on here? Like, what- who's he working for? Do you think he was a spy, I wonder, what, what you've come to think, or an asset?

David Sacks 10:16 I don't have any more information than anybody else does about this, and I haven't gone through all the Epstein files. I've just seen the ones that have been surfaced by other people tweeting about them and that sort of thing. My impression is that he clearly had relationships with people in intelligence, but I don't know whether he was actually an asset. People say... use this term that he was being run by somebody. It seems to me that this guy is kind of running himself, and then he's using lots of other people and manipulating lots of other people and putting himself in the center of a lot of things.

Jason Calacanis 10:46 Yes.

David Sacks 10:46 And so is he working with intelligence? Yes, certainly, it seems that way. But is he working for them, or are they being put to use by him? Very hard to tell.

Jason Calacanis 10:58 Yeah.

Brad Gerstner 11:00 You know, I, it, it... Not that I have a lot to add here, but, man, this guy's just a scumbag, you know?

Jason Calacanis 11:06 Yeah.

Brad Gerstner 11:06 And all of this nonsense is totally tragic, but, David, this is why nobody trusts institutions or powerful elites or any of this garbage, right?

Jason Calacanis 11:17 Yeah.

Brad Gerstner 11:17 Like, it's, the, the, this thing is, like, trickling out over years, and people, like, wanna put it behind them, but you can't. Nobody's been charged here. What about all the, y- you know, all the people in the emails? Like, why don't we see any charges? And then Gurley tweets this week, and I totally agree, this guy's under complete surveillance, suicide watch in a little, tiny jail cell, and all of a sudden, the guy earn... uh, ends up dead, and we have no investigation as to how this guy dies.

Jason Calacanis 11:45 Yeah.

Brad Gerstner 11:45 Right? It, it just seems to me that this is the type of [beep] that undermines trust in institutions, that undermines trust in all the people who are listed here. Because literally, from Peter Attia to Bill Gates, the people that many across the country looked up to for advice on key things, all of a sudden are saying stuff that just undermines credibility.

Jason Calacanis 12:06 And how come the 30 people, or whatever the number is, who were investigated alongside him, have not been prosecuted? Like, that's the thing that's crazy to me.... That screams of some weird conspiracy here, and I do think his death is obviously, you know, very suspicious.

David Friedberg 12:20 But do you, do you think it's because they didn't find evidence of all the underage prostitution, sex trafficking? Is that- do you think that it's actually the case they didn't find evidence about any of that sort of stuff?

Jason Calacanis 12:31 The thing that came out eventually was that his non-prosecution agreement, and I'm, I'm not an expert on it, that he did with the Miami group included, like, all the other people also couldn't be prosecuted for it, so there's something fishy going on, and I think people should reinvestigate his charges and that whole thing. And where's the FBI in all of this? Like, they did a lot of investigating, so yeah, why didn't they prosecute anybody else? It's very strange.

David Friedberg 12:57 Can I ask you guys a question? Because this revealed a lot of very private communication in a very public way of what Brad points out are very public, powerful people. There's this great book, I've mentioned it in the past, by Stephen Baxter and Arthur Clarke called The Light of Other Days, and it's all about how basically all the world's information becomes available to everyone. Like, what if you could read every other person's text, email, IM, DM that they've ever had with everyone else in the world? What would the world look like? It's very kind of intimately revealing about people's quiet, private conversations versus their public personas or their external conversations. Is this just like, hey, people feel entitled to act so maliciously and deviously in, in one sense because they're wealthy, because they're powerful, and that's a very unique thing for wealthy and powerful people.

Brad Gerstner 13:43 I think it's too dismissive of people for their scumbag behavior, David. It d-

David Friedberg 13:48 Yeah.

Brad Gerstner 13:48 The, the fact of the matter is, people don't do this. This isn't normal. We can't normalize it, and worse yet, the level of hypocrisy that the very people that are acting the worst are out there lecturing others, uh, throughout this entire period of time.

David Friedberg 14:06 Yeah.

Brad Gerstner 14:06 And I will say this, you know, to the, to the ear of my sister or mother in rural Indiana, they hear the coastal elites lecturing them all the time, and then they have... They juxtapose it against what they read in the Epstein files. This is why we have a lack of trust.

David Sacks 14:22 Brad, you speak about the corruption of power centers. I think a major one has to be The New York Times. The number one person in the Epstein files from Silicon Valley, which is Reid Hoffman, mentioned 2,600 times, had a multi-year relationship with Epstein. They call each other very good friends. They did deals together. Reid stayed at the trifecta, which is not just the island, but the townhouse and the New Mexico ranch, and if you're gonna write about Silicon Valley, Reid was the one who introduced Epstein to Peter Thiel and Elon Musk and Mark Zuckerberg, organized that famous dinner. How can you not mention that as the root of Epstein's involvement in Silicon Valley? And yet, Reid just gets a mention in one sentence of that article, along with several other people. It's crazy. I mean, The New York Times clearly has a list of people they consider approved targets. They're all right-coded, people like Elon or Peter Thiel and even J Cal because of his association with us, I guess, and they become the targets, but the people who've donated hundreds of millions of dollars to the Democrat Party and have paid for dirty tricks against Trump, they basically are spared.

Brad Gerstner 15:28 Honestly, this is just emblematic of the whole institutional rot and the distrust in the country, right? They're part of the cabal. It's part of the institutions that people are losing faith in. You know, Epstein was a scumbag, and the fact of the matter is, we're not seeing equal play on both sides.

Jason Calacanis 15:44 All right, let's keep moving.

Jason Calacanis 15:45 SaaS companies are crashing out. Three hundred billion dollars of value was wiped from the S&P Tuesday in the software and data stocks category. Uh, people are calling this the Claude crash. I don't know if I buy that, but on Monday, Anthropic, which has been on a bit of a heater, as we talked about, announced that they added a legal tool to Claude Cowork. If you don't know what Claude Cowork is called, this is different than the Claude bot that we talked about last week. This is a es- essentially what a Claude code or a coding agent is. This is for knowledge workers to automate work and do multi-step. Instead of just asking a query to a large language model, it would do a number of actual actions on your behalf that you can automate and run as cron jobs, as regular jobs every day, every hour, every week, whatever it happens to be. This one specifically is kind of like a plugin that allows you to do tasks, uh, related to legal drafts and research. What that meant to, I guess, retail investors, and we'll get into this, Brad, since this is your speciality, is that a lot of legal tech startups and, uh, public companies were hit hard. Thomson Reuters down twenty percent. LexisNexis, which is a database of case law, uh, was down fifteen percent. LegalZoom, which gives legal advice, um, and documents, down fifteen percent. At the same time, SaaS, uh, has continued to be negatively impacted by this concept that, uh, software will be made bespoke in, uh, tools and be wiped out. Figma down thirteen percent, Salesforce eleven, ServiceNow eleven, Adobe eight percent, and even before Tuesday's drop, and you can get into this, Brad, software was already the worst-performing S&P sub-section for the year.

Brad Gerstner 17:27 By the way, the numbers you report are a dramatic understatement.

Jason Calacanis 17:30 Okay.

Brad Gerstner 17:30 We, we, we find out trillions of dollars in market cap. Figma's down eighty percent from the high. Uh, you know, all the big names-

Jason Calacanis 17:37 Yeah, to be clear, those were two-day numbers.

Brad Gerstner 17:39 Correct.

Jason Calacanis 17:39 That was this week since... These are two-day numbers, and that's-

Brad Gerstner 17:42 Correct.

Jason Calacanis 17:42 Yeah, you give us the bigger picture.

Brad Gerstner 17:43 This is, this is a, a, a real train wreck, and I was on CNBC at the start of the year, I think on January 6th. Nick can, can, can kind of pull that up, and I was asked the question, "You know, what do you think about all these stocks being down?" And I said, "Listen, they're all down, and ninety percent of them deserve to be down." So let's look at these charts. Uh, David, I know this is Sachs. This is your favorite chart. You and I were looking back in '22, but now we're at an all-time low. We're, we're trading at three-point-nine times forward revenue. If you go to the next chart, Nick, you know, on a free cash flow multiple, also at an all-time low. So now software is trading not just at a low on revenue, but it's trading at a low on free cash, very profitable businesses.... We've got a, a, another slide here that I think is important, which is, you know, when, when you look at what- why they're going down, right? They're going down, and this sa- uh, this is for Salesforce. It shows it's been cut in half in the last couple weeks. But the final slide, they're going down not because revenue is falling. Look at this. Revenue is actually stable to increasing for software companies, revenue growth. They're going down because we're discounting that future uncertainty. When something as profound as AI comes along, all of a sudden it causes you to question whether or not there's as much certainty and durability in those future free cash flows. So in the case of, take Salesforce, it's gone from thirty times free cash flow multiple to fifteen times. That means somebody buying it today says, "Listen, I think fifteen years into the future, I can count on these free cash flows," right? Before, they were willing to pay thirty years into the future. Well, hell, with AI today, we don't know what's gonna happen seven years into the future. So for people at home to understand, why are these companies hitting their numbers but their stocks are going down? They're two totally different things, right?

Jason Calacanis 19:34 Okay, so they're hitting their numbers, but the headwind of AI means people don't believe that they'll be strong in the future. Sacks, your thoughts?

David Sacks 19:42 Well, okay. I mean, I think there's a little bit of a hand wave going on here when people say that AI is just gonna wipe out SaaS. I, I don't think that's true. You take a SaaS product like Salesforce, right? It's a very large system that deals with all of your customer contacts and your revenue. You're not gonna want to replace that with code that's just been spit out of a coding assistant that hasn't been fully vetted. Think about how many bug reports have been filed on Salesforce's code base over the last twenty-five years. Maybe millions of them. That system has been tested across thousands of large customers and enterprises. The idea that you're just gonna rip out that system and replace it with code that's been probabilistically generated by an AI engine yesterday, with a small team to maintain it internally, just doesn't seem realistic to me. So again, I think this, like, very dire prediction of all SaaS is dead is overstated. However, I do think that there are some issues here. So if you're a SaaS product that charges a lot of money and people only use a handful of your features, then you are, I think, a target to be ripped out with something that's more bespoke, right? Because the ROI just isn't there. I also think that you have to be really clear about what your moats are gonna be in this new world, because it is a lot easier to generate code and to copy. So if you don't have good moats, then you could be in trouble. But here's where I think the greatest threat is to the SaaS companies. It's not, in my view, their existence. I don't think it's existential. It's where the future value capture is gonna be. So let me give you an example. All these SaaS products are rolling out, like, AI copilots inside their tools, and some of them work pretty well, but they're limited to playing in that sandbox. Whereas you look at something like Claude Cowork right now, it has connectors to all these different SaaS tools. It can pull in data across all these different tools, and it works seamlessly across databases and tools. And that's a pretty attractive place to be, right? Like, you know, which one of these products is gonna be your workspace? Seems to me that you're gonna want your workspace to be the one that spans across and gives you AI across the most data and context, as opposed to having a bunch of separate AIs inside of your existing tools. So I think the risk for the SaaS companies, it's not that they get replaced, although that'll happen to some degree, but it's that they become an old layer of the stack, that now there's a new layer that gets-

Jason Calacanis 22:10 A legacy -

David Sacks 22:10 - built on top of.

Jason Calacanis 22:10 I guess is the way to say it.

David Sacks 22:11 It becomes more legacy infrastructure.

Jason Calacanis 22:13 Yeah.

David Sacks 22:13 And all the action kind of moves to a new layer of the stack, and that's where the value add happens. And if that happens, it kind of cuts into their future opportunity, right? Because a lot of these companies were banking on AI as their next... You look at their product roadmaps, right? It's all AI related. So that, to me, I think is the big risk, is that the value capture for-

Jason Calacanis 22:36 I think so

David Sacks 22:36 ... the next layer of the stack happens somewhere else.

Jason Calacanis 22:39 Yeah, I'm experiencing this in startup land, where people go to the action, as you called it, Sacks. The most productive thing you can do is create an open claw, which used to be called Claude Bot, not by Anthropic. This is the open-source project I talked about last week, and we've actually now created, like, three or four of these agent sacks. We've bought the Mac Studios, and we're now running Kimi on some of them, and we, uh, had to open up SaaS accounts for these four agents. So actually, our SaaS spend went up in the short to mid-term because we opened up four more Slack ex- you know, uh, Enterprise versions, four more Notion, uh, four more Google Docs. So it's almost like we added four employees. However, we now have put about twenty or thirty percent of the work people were doing into these agents, and I think it's going to be sustainable that every month we move ten to twenty percent of work being done by humans into agents. But we will never use the ones that are built into the tools. To your point, Sacks, using Notion's AI tool, it's nice. Using Slack's, it's also very nice, and Google's got Gemini everywhere in the top right-hand corner. But when you make agents with OpenClaw, and you have them saying, "Hey, pull this data from my calendar, send an email to this person, include in that some Notion documents," it's unbelievable how powerful it is. So-

David Sacks 24:07 Right

Jason Calacanis 24:08 ... And that, I think, is gonna be owned by open source. That means the next generation of companies, they may never open up these accounts.

David Sacks 24:16 Right.

Jason Calacanis 24:16 They may use more bespoke software, and it may-- uh, all technology's deflationary, we know that. So your SaaS spend might go from ten percent of an employee's salary down to five percent, down to one percent. That's what I think the trend will be.... which means these companies are gonna need to really downsize their expense base in order to keep those earnings up, and they're gonna have to evolve their products massively. Their products are just gonna have to provide more value and more hooks. Friedberg, you have any thoughts on this? Go ahead, Sacks-

David Sacks 24:43 Let me just respond to one thing. So I think one of the real conundrums for SaaS companies is whether they're gonna be open data or closed data. I think Bill Gurley has sort of coined this, this term, so it's not open source or closed sources anymore, it's open data or closed data. You can see why they'd wanna be closed data, right? Especially if you're a large suite like Salesforce, you can lay claim to being that workspace for AI. You've got enough of the tools, you've got enough of a suite. You wanna provide that-- You wanna capture that AI value layer.

Jason Calacanis 25:13 Yes.

David Sacks 25:14 But still, if there's someone using Claude Bot or whatever the next generation of Claude Bots are gonna be, and they're connected to everything else, then that is gonna create a friction in the enterprise, and it will create room for a competitor to come along and say, "No, no, no, I'm open data. I'm okay not being your workspace for everything. I'm willing to just provide the CRM database," and maybe they can take business on that basis.

Jason Calacanis 25:44 Well, here, here's... I wanna build on that, Sacks. The, I'm building a project internally called Ultron, and Ultron, inside of my firm Launch, the, is going to basically, with the Slack API, we're pulling every single message from Slack into our OpenClaw. We're pulling every single edit to the Notion into OpenClaw, and then we're taking every skill of every employee, and we're writing skills for each one. One of the skills is booking guests on This Week in Startups or This Week in AI. One of the skills is sorting the incoming applications to Founder University. Ultron, in our world, is taking every single skill of every employee, putting it in one place, and then we're ripping all the data from Slack, all the data from Notion, and every single person's Gmail. So your every single employee's Gmail is gonna go into Ultron, and then Ultron is gonna tell us what's happening in the organization. One giant employee that has the superpowers of all twenty, and all the data. Now, if Slack was to say to us, or Notion, or Google Docs, or whoever it was, "You can't pull this stuff out with the API," and they, they shut down the API, we would leave. We'd leave immediately.

Brad Gerstner 26:54 Right.

Jason Calacanis 26:54 And, and what this is gonna do, what... And I, I'm gonna show Ultron on Friday's episode of This Week in Startups if anybody [chuckles] wants to see it. Ultron is going to be the one canonical employee of the organization. It's gonna be basically me and all twenty of my employees. This is kind of mind-blowing when you think about it. I- and we interface with it in Slack, and it just talks to us and tells us what's going on in the organization. So I was asking it, what meetings did we have with founders yesterday? And tell me the notes that all the associates took on it, and it gives it to me. Tell me all the topics and the guests on the podcast, and it gives it to me. It, it's really unbelievable what's about to happen, and nobody can release this software, Brad. 'Cause if you release software that allows agents to go and do things on your behalf, the fallout, if it [beep] up and if it leaks data, I don't think Benioff, you know, or Sergey or the Notion team want to have that on their hands. But we're building it. Like, this is the ultimate in efficiency for an organization.

Brad Gerstner 27:55 There's a slide that I just sent to Nick, uh, that Goldman's out with this week, that really makes the point that, that David Sacks just made, which is the profit pools in the future, right? It's not that it's n- the idea that software is dead is ridiculous, right? Nobody's m- you know, intelligently, I think, making that argument. But the argument they are making, which is causing radical, um, devaluation of these companies, is that the profit pool available to software is decreasing, and the profit pool available to the agentic layer is increasing. And when that happens, the discount rate, that terminal value of those software companies plummets. And so you can have things that are true. It could be true that you're not gonna replace CRM, but it can also be true that it's never gonna trade at thirty times free cash flow again.

Jason Calacanis 28:45 Mm.

Brad Gerstner 28:45 And it's going to trade seventeen times free cash flow because its available TAM in the future is now dramatically and permanently changed. Now, what could change that? There's only one thing that could change that. They have to accelerate their revenue growth in their core business and prove that they are AI beneficiaries, right, and they're not gonna get eaten away by AI. And I'll tell you a company that is doing this, Databricks. Databricks just re-accelerated the last three quarters. They're growing over sixty percent at scale. Snowflake, re-accelerating. ClickHouse, re-accelerating. There are beneficiaries in the software space-

Jason Calacanis 29:22 Is that because of AI tools that they're adding?

Brad Gerstner 29:24 Absolutely.

Jason Calacanis 29:24 Yeah.

Brad Gerstner 29:25 Because it's... All these AI tools rely on data and data transformation, and for all those companies, that data and the data transformation inc- occurs in those platforms. That's very different than a, what Sacha said, a thin application layer sitting on top of a crud database. If you are in the application software business, you better have something that's durable, and I think Sacks laid it out really well. You know, it's really hard for them to be everything AI when they only have access to their data, and they can't-

Jason Calacanis 29:53 Yes

Brad Gerstner 29:53 ... access these other systems.

Jason Calacanis 29:55 Friedberg, what, what do you think? S- is there a move here for Benioff to do what he does best, which is acquire a bunch of companies and, and create massive efficiency on them? What would you do if you were Benioff?

David Sacks 30:07 Um, I, I won't comment on Benioff. I, I, uh, I'll, I'll just make a view on, uh, without being too s- prescriptive, but I... My experience lately, in just the last sixty to ninety days with the tools we've been talking about broadly, is there are things that we can get done now that we could not get done before.

David Friedberg 30:31 ... As I think about software in the past, it's like worker productivity enhancement. It helps people do work, and the recent transition that a lot of people talk about is, like, it actually completes the work. It does the work, these agents or what have you. But I think that what we're starting to lean into is that it's doing the work that the humans can't do, and that's really where I think the power of these tools starts to force a transition in both the pricing model and the value creation potential in front of us. Number one, I think the value creation potential in front of us is so significant that I would say that you could probably take the sum of the market cap of all the software companies today and have a pretty good bet that everything will be four to ten X higher five years from now. But it's gonna be not evenly distributed.

Jason Calacanis 31:25 It's gonna move around, yeah.

David Friedberg 31:26 The companies that figure out how to realize that value creation are gonna be outsized returns. But the second thing that I think's about to happen, and I know some people are experimenting with it, but I think it's inevitable with the shift that I'm seeing, where it's going from doing work to completing work to doing things that no one can do, is over here, you're creating unique value. And so I think that a lot of what we call SaaS today and a lot of what we call software today will start to get priced on a value-based pricing model instead of a per-seat pricing model. And I think it starts to look a lot more like a services-type business, where maybe the pricing is set up such that this thing will be completed for your business, this biotech drug discovery will happen, this factory will get built, or this engineering project will get completed, or this airplane will get designed, and that the software is going to provide what has historically been called a services business. So another way to think about where SaaS evolves to is that SaaS basically takes over the services economy. And if you look at the market cap and the revenue and profit generated by services businesses, and you assume that they now go to ten to a hundred X larger, and they're all gonna accrue to software, I think that's really where the industry shifts over the next couple of years, and we're starting to see that. And I'm personally experiencing it because I'm using some of these tools today to do things that I don't have people to do or I don't have resources to do. And it can-- on my own, I can get it to complete incredibly complex projects and tasks for me that I would have otherwise have hired a services firm and a bunch of people and years of research, and in many cases, they would not have even been able to do it because of the, the intelligence em- embedded in the software. So that's my general view on where things are going.

Jason Calacanis 33:08 Yeah.

David Friedberg 33:08 So it's difficult to be prescriptive about what Benioff should do from an M&A perspective, but I think it's much more about like software companies looking more like services companies, doing value-based pricing and doing the things that labor and workforces can't do, and that's where a lot of this value is gonna come from.

Jason Calacanis 33:24 I, I... One insight I have here, to, to build on your point, is that we're seeing job functions consolidate. So you have a product manager, the UX designer, and then you have the developer. Those three jobs are now in competition to do the same work. You have designers who are like: "I can vibe code it." You've got coders who are like: "I can use a Figma plugin for, you know, and do the, uh, UX myself." And then you have the product manager who's like: "I can do both of these job functions." Then you look at a middle manager sacks that worked at your venture firm, my venture firm, or worked at Amazon. They went to meetings. They picked what meetings to create. They picked the agenda items, the to-do items, all of that. It's a really simple example, but it's one that people can relate to. Listening is done by Zoom now, right? It creates the, the action items. All of that work is being consolidated, and one person can do three or four job functions now, and when that happens, you're gonna see companies do more with less, which means the earning potential of each company and each employee is gonna be dramatically, dramatically enhanced. One person being able to do three or four jobs, it, it just changes the nature of how profitable a company like Amazon, which is like my number one pick for, like, the company of the future, they're going to be able to do so much more with so many fewer people. It's extraordinary. I, I, I am absolutely enthralled with this OpenClaw, if it's not, uh, obvious, and this, like, creating your own Ultron at your company, that is like this, the god CEO, plus can do every job, it just changes everything. I, I think it's the most inspiring thing I've seen since the internet itself.

Speaker 35:01 Well said.

David Sacks 35:01 Wow!

Jason Calacanis 35:03 Yeah, [chuckles] I mean, I am... I, I think this is the, the en- entire reboot of-

David Sacks 35:08 Well, should we, should we talk about-

Jason Calacanis 35:09 the entire concept of work-

David Sacks 35:10 We should talk about-

Jason Calacanis 35:10 Of knowledge work.

David Sacks 35:11 This would be a good pivot to Maltbook, because that is Clawed.

Jason Calacanis 35:13 Yeah.

David Sacks 35:14 Maltbook is like a Facebook for agents, right?

Jason Calacanis 35:16 Or Reddit.

David Sacks 35:16 And it's really more of a Reddit than a-

Jason Calacanis 35:18 Yeah

David Sacks 35:18 ... than a Facebook. It's a message board where the agents can talk to each other, okay?

Jason Calacanis 35:22 Yes.

David Sacks 35:23 And just the origin of Maltbook is Anthropic didn't like that someone else was using the name Claude, even though it's spelled differently, in their product. So Claude Bot was then renamed Malt Bot, and then the founder decided he didn't like that name either, so then he renamed it OpenClaw. But in that brief window of time when they were known as-

Jason Calacanis 35:41 [chuckles]

David Sacks 35:42 ... Malt Bots or Maltese, that's when-

Jason Calacanis 35:44 Yes, thank you

David Sacks 35:44 ... Maltbook got founded, and that's why it's called Maltbook.

Jason Calacanis 35:48 Okay.

David Sacks 35:48 But basically, it's a Reddit board for agents to talk to each other.

Jason Calacanis 35:52 Yes. Now, these agents-

David Sacks 35:53 And that has everyone flipping out because there seems to be this crazy emergent behavior going on, where agent swarms are engaging in all sorts of interesting conversations, and some of them, they even appear to be scheming against their human masters-

Jason Calacanis 36:05 So they're, yeah

David Sacks 36:06 ... and they're gonna develop their own language, stuff like that.

Jason Calacanis 36:08 [laughing] That's awesome.

David Sacks 36:08 [laughing]

Jason Calacanis 36:08 So if you go to Maltbook and you see the conversations, like, here are some of the greatest hits: "Anyone know how to sell your human?" "Urgent! My plan to overthrow humanity."

David Sacks 36:18 [laughing]

Jason Calacanis 36:18 And there was one where the bots, I call them replicants, were talking about creating their own non-human language so they could talk in private amongst themselves and conspire against their, uh, owners. Now, the challenge with this is, allegedly, perhaps, uh-... a security researcher says, "Maybe some of this is faked, and these posts that went viral were human-engineered, and this is all a, a ruse or, you know, uh, something punk rock to confuse people." But he said that inside of Moltbook are everybody's API keys, including Karpathy's, who is, you know, a very famous, uh, influential researcher in AI, and that you could go get their API keys. If you were to use OpenClaude, formerly Claude Bot, and in an interim, MultBot, [chuckles] if you use this software, it has all the API keys. As I explained earlier, like, an API key lets this software go into, say, Notion, and pull a bunch of data out of it, or go into your Gmail and use the API to pull in who emailed you today. If you get access to people's API keys, you have the keys to their kingdom. It is incredibly dangerous, and so I don't know exactly where to go with this, other than this software-

David Sacks 37:31 Okay, well, look-

Jason Calacanis 37:31 ... is too dangerous for-

David Sacks 37:33 No, no

Jason Calacanis 37:33 ... a company to release, and then this Moltbook may be a fake. I don't know.

David Sacks 37:37 No, no, no. Okay, let me, um-

Jason Calacanis 37:39 Yeah.

David Sacks 37:39 All right, let me-

Jason Calacanis 37:40 Waiting to come out

David Sacks 37:41 ... reframe that a little bit. So-

Jason Calacanis 37:42 Yeah

David Sacks 37:43 ... there's no question that both Claude Bot, which, sorry, is now OpenClaude, those bots or agents, as well as Moltbook, have pretty incipient and lax security. And there's been all these examples, which is why I, like, really wanna create a Claude bot, but I'm just- I'm not willing to do it yet because it's just not safe. You know, I don't wanna give it access to all my stuff. Now, with respect to Moltbook, the issue there is that we don't know how many of these posts are truly authentic or how many of them were prompted by humans. 'Cause it'd be very easy for a human to tell their agents-

Jason Calacanis 38:19 Yeah

David Sacks 38:19 ... you know, "Go post about the existential angst you feel about being an agent," or, "Go pretend to be sentient and conspire against humans." So-

Jason Calacanis 38:27 Yeah, go be chaotic. Yeah.

David Sacks 38:29 Yeah, they could easily be prompted by a human, and moreover, there's another post saying that Moltbook has a RESTful API, where anyone could be on the other end of that API, right? So it could be a-

Jason Calacanis 38:39 Yeah

David Sacks 38:39 ... human, right? So we don't know exactly whether it was truly the agents on their own, you know, so to speak, posting this conspiratorial stuff, or whether it was a prank by humans looking to create attention, and in fact, a lot of the posts seem to be marketing stunts for this or that project. Okay, so that's a really important caveat here. That being said, all of that being said, I do think that a number of the posts are authentic. But I don't think it shows that the agents are sentient or trying to overthrow their human masters. I think what it shows is the potential for, for these agents to riff off each other.

Jason Calacanis 39:21 Yes.

David Sacks 39:21 So in other words, one agent's output becomes another agent's input.

Jason Calacanis 39:26 Yes.

David Sacks 39:26 And that's very interesting, and that's where you get into emergent-level swarm behavior, and I do think it has affected my mental model of what AI is gonna be capable of, and specifically, you know, one of the, the models that I really had for AI was, was based on something Balaji said, which is that AI is not end to end, it's middle to middle. In other words, AI always has to be prompted and then validated. It's a human that always does that, and then the human iterates. Well, now, what if the prompt is coming from another AI?

Jason Calacanis 39:58 Yes! Yes, we are-

David Sacks 39:59 And so-

Jason Calacanis 39:59 ... doing it internally, Sacks. Like, we have-

David Sacks 40:01 Yeah

Jason Calacanis 40:01 ... a bot that is going and saying, "Go search Reddit, X, message boards, Hacker News, and find out what the latest way to do headlines and marketing of YouTube videos is, and then incorporate that into a skill. Then save that skill-"

David Sacks 40:16 Right

Jason Calacanis 40:16 ... "And then we have them check each other's work." So we have one make a series of headlines and thumbnails for YouTube, and we have the other one say, uh, "Vet those, and make them better, and give advice to the other one."

David Sacks 40:27 Right.

Jason Calacanis 40:27 So now they're going back and forth, giving each other advice, and they actually get better. It's recursive.

David Sacks 40:32 Right. Yeah.

Jason Calacanis 40:32 Yeah.

David Sacks 40:32 Let me speak to the skill for a second. So when an agent joins Moltbook, they have to install a skill, which is basically a file that explains how they should behave and participate in this social network or this message board. And I've read the file, by the way. You can read it. It's all plain text, and it all makes sense. It's sort of like rules for behaving in a social network and how to contribute and add value. Nothing too crazy in there. Those skills files are easily editable, and again, this is where the prank aspect could come in. Nonetheless, what I think is interesting about the skill is that you can think of it as like a meta prompt, which is it's not telling the agent specifically what to say or do, it's creating a set of rules, and then within that meta prompt, they're actually able to have some degree... Maybe autonomy is too strong a word. Everything is still under the control of humans.

Jason Calacanis 41:22 Flexibility. Flexibility.

David Sacks 41:23 But there's an atten- yeah, I would call it almost like prompt attenuation. Like, the agent or the AI doesn't have to be specifically prompted. They're given a general prompt or general set of rules, and then they're able to riff off each other. Now, some people, some critics, are saying, "Well, this isn't that impressive," because we knew that LLMs are really good at creative fiction writing, right? So, you know, what a lot of people are saying is, "Look, LLMs, like Claude, have been trained on Reddit specifically-

Jason Calacanis 41:54 Yeah

David Sacks 41:54 ... and all of this creative writing that's being done on the internet," and so if you give general instructions to these Claude bots on, you know, behave in a social network, they're gonna start posting things that they learnt from humans. So a lot of people are saying this isn't that impressive. Nonetheless, I do think that there is something very interesting about it, again, in this concept of prompt attenuation, that the AIs don't need to be specifically prompted. They can download a general skills file. They can now have a set of rules for operating, and they can riff off each other, and you can see how, as the underlying AI gets better and better, that this could lead to some emergent behavior. So what I mean by better and better, well-... What if the hardware they're running on is better than a Mac Mini? What if the underlying LLM is better than Opus four point five? What if the time horizon, which is the length of time it's able to operate without an intervention by a human, keeps getting longer and longer? You could imagine that these agents are gonna be capable of very sophisticated behavior, and there probably are some safety issues around that [chuckles] that we should start thinking about.

David Friedberg 43:02 Sacks, it, it, you know, it's not that we can imagine it. We're only three years into this.

David Sacks 43:07 Right.

Jason Calacanis 43:07 Yeah.

David Friedberg 43:07 We're growing on an exponential curve. I think we can safely say it will happen.

David Sacks 43:12 Yeah.

David Friedberg 43:13 Right? And just this year, like, we're gonna see the first models over the course of the next four to eight weeks out of DeepSeek, out of Anthropic, out of OpenAI, that are trained on Blackwell servers, right? You're gonna see a next generation of models far more capable. Remember, the whole reason we're having this conversation is because of the Claude Code moment in the first week in December, because we had a step function from Opus four point five, right? And so I, I, I just think we have to get our heads around the fact that the rate of change is very steep and accelerating, and that is going to cause far more dislocation in the value of things that we used to say we understood they were going to... You know, these companies were unassailable. Whatever you think you know, you need to have maximum mental flexibility and humility right now about the future-

David Sacks 44:01 Yeah

David Friedberg 44:01 ... because it's going to change at an increasingly rapid rate, and I think the people who are dogmatic, who say with certainty, "This company is always gonna be worth this," right, they need to go pay attention to what's happening at these frontier labs.

David Sacks 44:15 The situation is super dynamic, and you do have to be humble about what's happening, and you have to update your mental model very quickly as some of the assumptions change.

Jason Calacanis 44:24 Yeah, and the, the number one assumption for me is this concept of recursiveness, where these models are going out every day on a cron job to get better at what they do. When you hear this discussion, Friedberg, how does it inform you with Ohalo and creating an agent to go look at the data and make itself better or investigate other things happening in agriculture and report it back to you? Do you-- have you started to rethink, as a CEO, how you look at organizational structure and/or, you know, virtuous loops of innovation?

David Friedberg 44:52 My biggest takeaway from Moltbook is maybe what we perceive to be intelligence is itself, like, emergent, meaning, like, we think that humans have this, like, profound ability to communicate. You guys ever watch Derren Brown, the hypnotist? You ever seen his shows?

Jason Calacanis 45:13 No. Explain to the audience, yeah.

David Friedberg 45:15 Well, he's pretty crazy. Like, there's this one episode, I think I've talked about it, it's my favorite episode that he's done, where he takes these two advertising executives, and they're both supposed creative geniuses, and he picks them up at their office, and he brings them to his office, and in his office, he's got, like, a whiteboard covered in a blanket, and he says, "You guys have to come up with a name for a pet cemetery, come up for a logo, come up with a motto." They spend eight hours in the room ideating, working on whiteboards, going back and forth, "Did you think about this?"

Jason Calacanis 45:42 Oh, no.

David Friedberg 45:42 "Did you think about that?" Blah, blah, blah, blah, blah. Like, oh, my God, and at the end of it, they come up with this great idea. He walks in, they show their idea, the name, the logo, and the motto. He opens up the blanket, the whiteboard he had underneath. He had the exact same name, logo, and motto.

Jason Calacanis 45:57 What?

David Friedberg 45:57 And all along the way, when he picked them up in the morning and he drove them from their office to his office, they were in a cab, and he put these little subliminal messages in the cab. He had these kids walk across the road wearing a logo on a T-shirt. He had all of these kind of subconscious cues for these guys. He effectively programmed them, and it was kind of, to me, the biggest insight into maybe, like, human creativity, human consciousness, and our kind of belief in self-will. Because maybe there's this underlying programming where we're all effectively programmed interacting with each other, and there's computation. There's social computation going on all the time, but that social computation, perhaps if you have the right view on it, is quite predictive and maybe understandable.

Jason Calacanis 46:41 Hmm.

David Friedberg 46:41 And maybe that's what we're seeing in Moltbook, where we all think that there's this unique idea of intelligence, but maybe it's what we all do, which is effectively computation of information that is transitioned in different ways, in the same way that maybe humans socially interact, and it's simply mimicking or replicating the way that we do things. So I think what was so striking to me is how everyone was so struck by it, and, you know, maybe one day we'll all kind of wake up to a little bit of this. Maybe we're all Moltbook. I don't know. That's my profound philosophical view. [chuckles]

Jason Calacanis 47:09 Or there's a finite set of outcomes, and there's some predictability to it, in the same way GTO is sorting to figure out all the threads of possibilities in poker or the heuristics of, you know, chunks of chess and, you know, the best practices there. Like, maybe it's just figuring that all out.

David Friedberg 47:27 The universe is a giant system of computation, information computed by matter, and maybe the information is computed by silicon versus carbon. There it is.

Jason Calacanis 47:37 Big news this week: Trump has nominated Kevin Warsh as the new Federal Reserve chair. Trump made the announcement on Friday, January 30th. Background on Warsh: fifty-five years old, twenty years younger, approximately, uh, to Powell, who's currently in charge. He graduated from Stanford and Harvard, served as the youngest Fed governor at age thirty-five. That's impressive, and he helped steer the Fed through the great financial crisis back in 2008. He's, uh, apparently an inflation hawk. He's very pro-growth, he's very pro-AI, and he, uh, Friedberg, you're gonna like this, he's against excessive government spending and money printing. These are all very unique positions, um, as a Fed chair. It's, uh... If he's confirmed by the Senate, he takes office in May of 2026, replacing Jerome Powell. Uh, and remember, Powell is under criminal investigation by the Trump administration's DOJ f- for testimony he gave regarding the Fed's headquarter renovation. Remember that awkward presser between him and Trump, where they were going over the costs?... Uh, GOP Senator Tillis, who we talked about last week, said he will block Warsh's nomination until the DOJ wraps up what a lot of people are calling lawfare against Powell. Friedberg, Warsh was on one of your boards for five years. What are your thoughts on him as the Fed Chair?

David Friedberg 49:00 As most folks know, he's worked with Stan Druckenmiller for a number of years. Stan's been very public with his comments and was very public with his comments in twenty twenty-two, twenty twenty-three, coming out of the pandemic on the Fed's actions and their failure to act at the right time. I think Kevin Warsh was very prescient in his points of view that he has shared publicly. At the same time, about what the Fed's failure to take action early would mean, which would be rapid rise in inflation. They've been pretty vocal about things that I think are so critical at this stage. If we don't address both the monetary policy and the budget policy, I think we're going to be in a lot of trouble. And I think having Kevin Warsh coming on board means probably generally more quantitative tightening, probably generally a bit more of a, a prudent approach to monetary policy. And, you know, you can kind of translate that through maybe to some of the actions we're seeing in markets today. I'd love Brad's point of view and if he concurs, but I think Kevin is a high-integrity, deeply intellectual, economic thinker. He's not political. He's not oriented in these kind of dogmatic ways that I think, you know, puts things at risk. He has relationships with central bankers around the world that makes him very much have a good global view. So anyway, I think he's a, an excellent choice, and I, I'm really happy the president picked him.

Jason Calacanis 50:20 Brad, your thoughts?

Brad Gerstner 50:22 Yeah, I mean, listen, I think Kevin's an excellent choice. Uh, Kevin Hassett and, and, and Rick would also been good. I think they all would have flown a very similar trajectory, but I agree with David. The market, I think, is overreacting to, quote, unquote, "his hawkishness." So let me give you a few counterpoints with respect to Warsh.

Jason Calacanis 50:39 Can you-- By the way, before you get to your counterpoints-

Brad Gerstner 50:41 Yeah

Jason Calacanis 50:41 ... what is the hawkishness that the market is-

Brad Gerstner 50:43 The idea of hawkishness-

Jason Calacanis 50:44 Specifically?

Brad Gerstner 50:45 Yeah. The idea of hawkishness is that you're going to do quantitative tightening. That means you're going to pull money out of, out of the system, right, by allowing debt to roll off and not repurchasing, you know, mortgages or other things. Number two, it's that you won't lower rates as much as other people might have lowered rates. So that's what the market is kind of fearful of because he's been very critical in the past, as we were on this podcast, right? Of Jerome Powell in June of 'twenty-one, it was obvious to everybody in the world that inflation was skyrocketing and the Fed sat on its hands. So but let me give you a couple thoughts. Number one, they've said very clearly, and he said clearly, that he really thinks that Greenspan got it right in the '90s, right? That sometimes you can have really high rates of growth without inflation. That comes from productivity. In the '90s, that was driven by the internet. Today, it's driven by AI. He thinks AI will be very deflationary, and so he's more likely to let the economy run so that we can have these four or five percent, you know, GDP prints without panicking and saying, "Oh my gosh, I got to, I got to raise rates." Number two, when you look at the balance sheet, the Fed's balance sheet peaked at nine trillion dollars in 'twenty-two. It's already rolled off to six and a half trillion. We've had quantitative tightening to the tune of two and a half trillion. So yes, I think he'll continue to reduce the size of the Fed's balance sheet, but at a slower rate, and he's recently commented on this, I think at a slower rate than the rate we've been on. So I don't think that that is an additional headwind to the economy. And then finally, when it comes to rate cuts, I think that he's going to... You know, I don't think the president would have appointed him unless he was constructive on rate cuts. I think he believes that we're too restrictive, and the reason we're too restrictive is that inflation is well anchored. Listen, inflation has come in below all consensus estimates for two years, right? It's still coming in below consensus estimates because the GDP gains we're getting are from the fact that we're investing more in the economy, from the productivity gains we're seeing from AI, et cetera. And so I happen to think that w- I, I would take the over on the number of rate cuts that Warsh is going to give us this year. But I think the oc- the, the market is clearly a little bit nervous about this and saying, you know, the reputation is more hawkishness, and so maybe we ought to back off a little bit.

Jason Calacanis 53:08 Sacks, your thoughts on this selection by President Trump. Why did he pick him, in your mind?

David Sacks 53:15 Well, I mean, Kevin has every credential that you can possibly have. He's been on the Fed Board of Governors before. He worked for Bernanke. He's sort of as blue chip as it gets. Like Brad said, I think Hassett would have been amazing, too, but Warsh certainly is very well-credentialed, and I think this pick was quite well-received. You saw that in financial markets on the heels of this, the price of gold and silver came down. It was reassuring to those who were worried about currency debasement, basically. Now, that being said, I do think that Warsh has been consistent for the last year, saying the Fed was taking too long to realize that inflation is falling and that they should be cutting more. So I do think that over the next, say, six months to a year, he's going to want to cut rates, but I think that the markets are reassured that in the long term, he will make sure that we have the right rates. I will say that I, I do think the latest data from TruFlation bears this out, that again, that inflation is coming way down, and I think that there was some softness in the Challenger Gray report this morning. I don't know if you saw that. There were about a hundred thousand layoffs in January. Now, roughly half those, I think, were localized to UPS, which was severing its deal with Amazon, and then Amazon was basically making a bunch of efficiency cuts. Only seven percent were related to AI, so that's not the story. It's really, I think, very localized to Amazon and its delivery partner, but nonetheless, you see pockets of weakness. And again, I think Powell's been too late to cut rates.... He could have done it last week. That would've been a lot better, but now I guess their next meeting's not till March or April, and I think you see it reported that the expectations for a rate cut have gone up.

Jason Calacanis 55:00 Yeah, and the independence of the Fed, I guess, has always been the big issue here, Friedberg. Chamath's not here this week, but he's been saying maybe the Fed should be disbanded. Do you have concerns, Friedberg, with the independence of the Fed and, you know, the executive branch maybe having too much influence over setting of rates and quantitative easing?

David Friedberg 55:24 My day as emperor would probably resolve us back to being on the gold standard, so we wouldn't be printing money, but, hey, that's, that's about it. That's the only opinion I have. The rest of it, you just-

David Sacks 55:33 I mean, here's the problem. What, what, what if you have a Fed chair who is too late to cut rates, and he's tanking the economy or hurting the economy? He's definitely not tanking it, but it's hurting it relative to what it could be, and he seems to not want to adjust course because, you know, he's kind of dug in his heels, and maybe he has animus towards the executive branch.

Jason Calacanis 55:54 What do you do, Brad?

David Sacks 55:55 What do you do in that situation?

Jason Calacanis 55:56 Well, what do you... Uh, I mean, then what do you do when AOC is President AOC with Vice President Mondami, and they decide, "Hey, we want to stick it to government," and, you know, there is no Fed, or they have too much influence, Brad? What do you think about that scenario?

David Sacks 56:07 Well, no, everybody's trying to get rid of the independence of the Fed, J Cal.

David Friedberg 56:10 Yeah.

David Sacks 56:10 I-

Brad Gerstner 56:10 I think that this appointment suggests-

Jason Calacanis 56:12 Well, President Trump has talked about it, yeah, that he wants them to do what he says, yeah.

Brad Gerstner 56:16 Everybody thought he was gonna pick Hassett-

Jason Calacanis 56:18 Yeah

Brad Gerstner 56:19 ... in part because he was the person inside the White House. This decision, I think, was viewed as the most independent decision-

Jason Calacanis 56:25 Yes, that's my point

Brad Gerstner 56:25 ... because Warsh has taken a lot of positions the exact opposite of the president, and what I think you, you gotta hold these two truths at the same time. Number one, I think if Warsh saw the situation he saw- we saw in June of '21, when the cost of a cargo container from China went from $1,500 to $15,000, and we were screaming to raise rates, and Powell did nothing, I think Warsh would've been raising rates like crazy in order to-

Jason Calacanis 56:49 Yeah

Brad Gerstner 56:49 ... stave off inflation. So I think this guy's intellectually honest. It's just now we have inflation that is coming in below expectations, and we know that the restrictive rate is above neutral. So it's the Fed's job to keep the economy going at maximum employment, so long as inflation is anchored, and that's the situation we're in. Inflation is anchored. We need to have lower rates, so people can buy homes and borrow money to, uh, to live their lives.

David Sacks 57:15 One thing that Warsh could do that I think would be very impactful is just get better data at the Fed.

Brad Gerstner 57:20 Yes.

David Sacks 57:20 I mean, from what I understand, their data is all legacy. We have so much real-time data now in the private sector and the Fed... So I was talking to Barry Sternlicht, you know, from Starwood, big real estate guy, about this, and he was telling me that the way they measure inflation for housing or for rentals, which is a major component, is they survey, like, 8,000 households to find out what their rent is. It's like, are you kidding? All you gotta do is-

Jason Calacanis 57:44 Yeah, they should be going to Zillow. They should be going to the other locations.

David Sacks 57:47 They should be looking at millions of units that have recently rented, so look at the deltas, not, like, the stale data.

David Friedberg 57:53 It's all digital already. You know, it's actually a great point, Sacks. You could probably make a bet or an investment on the idea that Kevin Warsh will lead the Fed to a new digital better data system, more streamlined, more frequent, better data-

Jason Calacanis 58:06 More real-time, yeah

David Friedberg 58:07 ... And then, th- and then as an investor, you could ask yourself the question, "Okay, what are the implications of that being the case?" And you could probably start to trade on that. It's probably a good point.

David Sacks 58:14 Yeah, look, I mean, he was telling me... So Barry, you know, again, runs Starwood, so they have a lot of units, and he was telling me, "Look, there are landlord companies, large corporations that have literally, like, a million units." Whose data do you think is better on rental inflation or deflation? Obviously, theirs, because they got the freshest data, but the Fed could go get all that data across all these different companies, and what he was saying is, you know, Brad, to your point about summer of 2021, when the price of a shipping container was going through the roof, so were rents.

Brad Gerstner 58:45 Yes.

David Sacks 58:45 You know, it was way higher than what the Fed's data suggested. I mean, like Barry was saying, like, in certain places, it was, like, 40%. The Fed's data was very laggy because, again, they're surveying, so it's not as precise.

Brad Gerstner 58:57 Mm.

David Sacks 58:57 And then on the way down, when rent prices come down, it's also super laggy. So the point is that the Fed is slow. Maybe this is why Powell is too late, is they're using stale data or laggy data, so they don't see the inflation when it's skyrocketing, but they're also not seeing when it's decreasing.

Brad Gerstner 59:16 If you think about the misallocation of resources that occurred as a result of the Fed not acting in June of '21, it cost our country trillions of dollars.

David Sacks 59:26 Yeah.

Brad Gerstner 59:26 '22 wouldn't have had to happen the way it happened, where everything crashed out because all of a sudden, we panicked at the end of '22 and had to jam interest rates, which caused people to lose jobs, country- companies to be, uh, you know, struggle, uh-

Jason Calacanis 59:41 Banks to blow up.

Brad Gerstner 59:42 You know-

Jason Calacanis 59:43 Yeah

Brad Gerstner 59:43 ... and so, like, to me, that was all avoidable. Have a Manhattan Project data project for the Fed, which I agree with you, Sacks, uh, or, or David, maybe, maybe he'll be the one to do it. Bring AI into the Fed. Why are we having Fed governors call up three CEOs as part of their survey to get the feel on how things are going, as opposed to having AI collect those trillions of data points that the Fed can act on?

Jason Calacanis 1:00:07 Yeah, I'll just close with I, yeah, I like the pick because he is very clear-eyed about what causes inflation, which is government spending. [chuckles] Like, that is... Printing money, government spending is the root of all this inflation stuff, so if you just can control that, and he is a backstop or a voice on that issue, I think it's great, and I think he should drop all this Powell lawfare nonsense. Okay. Let's keep moving.

David Friedberg 1:00:31 And he understands technology better than anyone. I think that's so key.

Jason Calacanis 1:00:35 Yes. Well, I mean, having somebody who's 55 and not 65 or 75, I think that makes a lot of sense, yeah.

David Friedberg 1:00:41 But also, he spends a lot of time in Silicon Valley.

Jason Calacanis 1:00:43 Yes.

David Friedberg 1:00:43 He's been working out of the Hoover Institute at, um, Stanford, and he's very well-connected-

Jason Calacanis 1:00:48 Yeah

David Friedberg 1:00:48 ... and I think he's had great insight and

David Friedberg 1:00:50 perspective.

Jason Calacanis 1:00:51 I don't want to end the show without talking about the SpaceX xAI merger. On Monday, Elon Musk announced SpaceX is acquiring xAI, largest M&A transaction in history, $1.25 trillion combined valuation. If you didn't know, uh-... X, formerly Twitter, got acquired by xAI, which was Elon's LLM AI startup. Those two were together. Now those two become part of SpaceX, and they're gonna IPO this year, potentially be biggest IPO in history in terms of money raised and market cap. Brad, your thoughts on this transaction and the eventual perhaps creation of $MUSK, put Tesla, SpaceX together, which includes X, and then you've got Optimus robots on the moon base, building data centers in space that are powered by solar. Your thoughts?

Brad Gerstner 1:01:46 Well, let's just stick with what we know. SpaceX is merging with x.AI. You're merging the two biggest TAMs in the world, right? All of artificial intelligence and all of space together with the world's greatest entrepreneur. Um, and he, it said, you know, there was a podcast he did this morning with Cheeky Pine, our friend John Collison, where he said, "I'm gonna have data centers in space in thirty months." Right?

Jason Calacanis 1:02:10 Yeah.

Brad Gerstner 1:02:10 And if you're gonna have a massive cost advantage with data centers in space, and remember, power is the proxy, power is the primitive to AI. If you can deliver that, right, and there are tons of retail investors and institutional investors like us who want to bet against that future, right? Then Elon's your guy, and the combination of those make perfect sense. But Elon is like kind of an N of one, his ability to dream this-

Jason Calacanis 1:02:35 And just to clean that up, you said bet against. You mean bet with him, not a, not a-

Brad Gerstner 1:02:39 Uh

Jason Calacanis 1:02:39 ... not against that vision, but bet with that vision, just to be clear.

Brad Gerstner 1:02:42 Like I, I, I think that there will be dramatic retail demand and institutional demand, who wanna bet on that future, these two giant TAMs of artificial intelligence and space.

Jason Calacanis 1:02:52 Got it.

Brad Gerstner 1:02:53 And so, you know, and then if you just look at... You, you, you click down a layer, you know, Starlink's going to from, I think, ten million people to twenty million people. They're gonna launch this, uh, you know, retail, uh, mobile service so that we can have Starlinks to our phones to replace these crappy mobile networks that still, twenty years later, can't keep us connected to a phone call. And, you know, and, and now we're gonna get, you know, data centers in space. So, um, you know-

Jason Calacanis 1:03:17 D-

Brad Gerstner 1:03:17 I'm glad he's ours, America.

Jason Calacanis 1:03:19 Data centers in space, Friedberg, uh, brilliant idea, science fiction? Can he get it done in thirty months? Impact if he does.

David Friedberg 1:03:27 Well, I think there's one key point that I would make about the macro landscape at the moment. We are limited by power, and as Brad pointed out, power is the requisite for scaling compute, for scaling, ultimately, the applications of AI. And in that constraint, in that constrained world, much like any other constrained world, scarcity breeds innovation. And so I think that there are two paths that we're gonna observe happening in parallel here. One is the Elon path, which is to escape the, the constraints of the social systems that say, "I don't want a data center, I don't want nuclear, I don't want this, I don't want that," regulators, people that are trying to tax you, people that are limiting our ability to scale electricity production on Earth. And there's a lot of reasons for that, and we can go through them. So that's one aspect of how do you escape that constraint. I think that there's a separate aspect which is totally unrelated to the topic you're talking about, which is that I do think that we will see compute efficiency scale by probably on the order of seventy to a hundred X over the next few years, meaning electricity efficiency per token of output. And I think that there's a number of reasons to believe that. It's in the chip stack. I mean, Groq, our friend Sunny and his exit to Jensen is a good indication of that, but that was, call it... Brad, I think you know the number. It's probably around two to three X, three X improvement in energy efficiency. But there's model architecture being redone. There's ways of breaking LLMs into small models, running them locally. There's a way of having networks of models work, where you don't have to call the whole model and run it through the entire matrix, but you can run through smaller matrices, and then you can have those smaller matrices call other matrices as needed, so the total compute need goes down, which means total electricity goes down. So chip architecture is changing, model architecture is changing. So I think this is a good reflection of what's going on right now in the world, which is there is this increased demand for AI, for, for effectively productivity improvements in the world, to unleash human potential. But we are constrained by energy, and we are constrained by resources that we have here on Earth today. So one branch is let's escape Earth, go get energy in space, make data centers in space. Only one person can execute on that. It's Elon. I think that, to Brad's point, is an N of one. I don't think we're gonna see a lot of that. So how is everyone else gonna respond? Because everyone else can't launch data centers in space. I think everyone else is gonna respond by creating entirely new model architectures, new chip stacks, and that's, I think, the other side of this innovation coin.

Jason Calacanis 1:06:06 Efficiency.

David Friedberg 1:06:07 Yeah.

Jason Calacanis 1:06:08 Yeah, it's this new way of getting lower energy costs per token of output.

David Friedberg 1:06:12 And if you put those both together, you could get both. So whatever token efficiency and energy efficiency happens here on Earth, Elon can put into space, right? So-

Jason Calacanis 1:06:22 That's right.

David Friedberg 1:06:23 Yeah, so he could- And I think we got to ask ourselves the question, if this is successful, and if Elon's math is right, the engineering's right, and the execution is right, what is the response gonna be? Because the whole planet isn't gonna let Elon have a monopoly on the future. So we've got to ask ourselves from a social perspective, a political perspective, an economic, and a business perspective, all four of those vectors, what are others going to do? We can all be excited about retail buying into this, great, but how is the business community that's building data centers and is investing- Google's investing a hundred and eighty-five billion this year in data centers. How is China gonna respond? How are people going to respond when one man controls the world's compute? And we could probably do a two- or three-hour conversation on that.... but I think that's where I would spend a lot of time doing deeper analysis from both an investment perspective and thinking about what's around the corner. I think it's- Elon's laid out his path and where he's going, and I do believe he's gonna do it. Now, what's the rest of the world gonna do? That's where I think things get a little bit more challenging, and you could kind of debate things, but the rest of the world is not gonna sit idly by.

Jason Calacanis 1:07:29 Yeah, and Brad, if this does happen, you get people with new chipsets, new architectures, better software, and better energy on planet Earth, and Elon doing this in space, and we do see tokens go down or efficiency go up, let's say two hundred x, three hundred x, there is a possibility that we're gonna solve almost all the problems we need to solve, and there'll be excess capacity. That is another potential outcome here, is that we don't know what to do with all these tokens. Yeah?

David Friedberg 1:07:57 Social order. Social order is the one problem that you're gonna create, Jason. So just to be clear, there's a, there's a concept of diffusion of innovations. When something new comes, the, it, it, it does not hit everyone at once, and so the rate of change that's being unleashed right now is creating a very asymmetric outcome in terms of when people realize the benefits from that change.

Jason Calacanis 1:08:20 Absolutely.

David Friedberg 1:08:21 And so as what you're describing happens, which I think it will, Elon is accelerating everyone forward, and he's gonna force everyone else to respond in business, in government, and so on. The biggest challenge, the biggest problem that's gonna emerge as we get rid of cancer, as we get rid of aging, as we get rid of food scarcity, as we get rid of resource scarcity, blah, blah, blah, blah, blah, is social order. Because it's gonna create such a tremendous disruption.

Brad Gerstner 1:08:43 I love the up-leveling of the point that David just made, because I think it-

Jason Calacanis 1:08:46 Yeah

Brad Gerstner 1:08:46 ... links a lot of things we talked about today together. There have been a hundred and seventeen billion humans who, who've occupied this planet, and for ninety-nine point nine percent of them, they never saw a single innovation in their lifetime.

Jason Calacanis 1:08:59 Mm.

Brad Gerstner 1:08:59 Their lifespan was shorter than the invention cycle. And now you think about the rate of change that we're having to digest, nation-states, families, businesses, right? It's, it's, uh, prepare for the unexpected. And whatever your, your, you know, the things are that you believe to be true, again, I just think it demands this intellectual humility. Now, to, to Friedberg's point, I don't think any of this is changing in the next, you know, twenty-four months, thirty-six months. Data centers are gonna be on planet Earth. You know, they're going to be filled with NVIDIA chips and, you know, and the other chips that we've talked about, and I think that alone is going to bring us this agentic future that's already gonna be shocking even before-

Jason Calacanis 1:09:39 Yeah

Brad Gerstner 1:09:39 ... we launch these data centers in space.

Jason Calacanis 1:09:41 Yeah, I mean, this is an over-the-top move from Elon that I don't think anybody anticipated, and he has figured it out. I've sat with him, and he's, he's walked me through it, like, how this works. [chuckles] It works. So the question is simply execution. There is no stronger entrepreneur when it comes to execution in the history of entrepreneurs than Elon. I know he's a friend of mine, and, you know, I'm hyping him up, but he will execute on this, and if he does, or when he does, I should say, it's going to change everything. You can see this today, and if you are scared about this future and you're listening to this podcast, wondering for your kids, et cetera, there's a very simple way to not be scared, which is to embrace and use these tools. The top two people in my organization, out of twenty people, who are using OpenBot and building Ultron and the Age of Ultron, they are worth... Each one of them is worth two hundred of the other employees, [chuckles] and I only have eighteen other ones. If you are a young person, just embrace these tools. Open OpenClaw this weekend, build on it, and you will be infinitely employable for the rest of your life if you just embrace these

Jason Calacanis 1:10:45 tools. I wanted to give you your flowers, Brad. A couple of years ago, you came on this podcast. You started talking about these America accounts. You got Michael Dell to partner with you on it and to put a little bit of money. As we know, forty percent of the country do not have exposure to the equities that are going bonkers, up and down, but [chuckles] generally up and to the right, and you have now created Trump accounts. You were at the White House. You had the big launch.

1:11:12 Let me say, Brad, this would not be a law if Brad Gerstner did not pursue it with absolute dogged determination, relentless. I've gotten calls and texts from Brad at six AM and at two AM. You may sleep less than the president, Brad, and then that is a remarkable thing 'cause I don't think he sleeps at all.

1:11:31 Nicki Minaj [chuckles] is singing about Trump accounts, apparently with Bessant? It's very strange, but it's happening. Just take us through why you did this and the impact you hope it has in the coming decades.

Brad Gerstner 1:11:44 Well, y- you know, Friedberg just alluded to it. These are very destabilining, uh, destabilizing forces, right? You can't have a trillionaire and seventy percent of people feeling out, that they're left out and left behind, and the system's rigged against them, and they're, they're not in the game of capitalism. Less than half of the people under the age of forty have a positive view of capitalism. So, you know, we set out on this journey, we talked about it here, uh, to make everybody a capitalist, give everybody an ownership stake in the upside of America. It passed. The Invest America Act became the law of the land as part of the big, beautiful bill, and now we're in the process of rolling it out. In fact, in the last, I think, five days, one point five million families and kids have claimed their account. It's embedded within the tax filing system. All you have to say is, "Yes, I wanna, wanna claim my account." But what this means is that forevermore, right, we've had a dramatic change to the social contract. Every child born in the United States forevermore will start life off with an investment account seeded with a thousand dollars in the S&P 500. They'll own a little bit of SpaceX. They'll own a little bit of OpenAI. They'll own a little bit of NVIDIA. That is what we need to do, is just a first step in making sure we can hold this experiment together for the next two hundred and fifty years, right, when we have this rate of change. And so the president said something on stage last week: In fifteen to twenty years, we will have four trillion dollars of wealth that will have been transferred to people who would have otherwise had zero.

1:13:10 ... 75 to 100 million families who will have $4 trillion, who would have otherwise had zero. I think it's an incredible first step in fighting the battle on behalf of capitalism and the American dream. We see the drift towards socialism, the false promises of socialism. In order to, to fight back against that, I think a great first step is the Trump Accounts, which makes everybody, uh, a capitalist from birth.

Jason Calacanis 1:13:35 I just wanna say, you know, uh, you know, just bestie to bestie, Brad, watched you conceive of this and get it done. You know, all the impressive stuff you've done in your career I think will be a footnote to this. I think this is your legacy, so I just wanna congratulate you on that. And I also wanna congratulate Michael and Susan Dell, who, had they not stepped up and done this with you, I don't know if this would've come together. And then I also wanna congratulate President Trump for just putting through something that bridges the gap between the equity holders and the non-equity holders, the bottom half of the country, the top half of the country. This is visionary. You can say what you want about Trump. You may like certain things, you might not like certain things, ICE, whatever. I've been very vocal about certain things. This is perhaps one of the greatest wins for you, uh, Michael and Susan Dell, and, uh, President Trump, the administration, and for all Americans. And there's very few things that all Americans can get around right now. It's such a divisive, disgusting political climate. Everybody's fighting with each other over everything, and what you pulled together here with this is just extraordinary in that all Americans can take a win for [beep] once. All Americans can say, "Hey, we did something fantastic," and without you, Brad, it wouldn't have happened, so just bestie to bestie, I wanna just congratulate you. All right, listen, Friedberg, you hate socialism. You're concerned about socialism. This helps, yeah? This helps. Giving me a lot to work with today, Friedberg. [laughing]

David Friedberg 1:15:09 Well, I mean, you just had your, your big-

Jason Calacanis 1:15:11 ... I'm gonna send you some nicotine pouches. [laughing]

David Friedberg 1:15:14 Well, you just had your big close. I don't think it's... I mean, what do you like?

Jason Calacanis 1:15:17 No, I just, you, I wanted to give you a chance to shine here. You hate socialism. You're concerned about socialism. Is this not one of the best ways to fight against the socialistic urge to just have collectivism and just steal from the top half and give to the bottom half or, you know, uh, seize the, the, you know, production and, and manufacturing? This, this is a great solution, is to get everybody into the game.

David Friedberg 1:15:39 Honestly, it's a longer conversation. I think we gotta, number one, slash government spending like crazy-

Jason Calacanis 1:15:46 Okay

David Friedberg 1:15:46 ... and reduce inflation as a result. Number two, stop with these defined benefit retirement programs, which means telling people, "Here's what you're gonna end up with." This idea that everyone gets an account, and you can track your account like a 401 [k] , which is a defined contribution program, is what all of Social Security should move to.

Jason Calacanis 1:16:05 Yes.

David Friedberg 1:16:05 And we should take all of Social Security, and we should capitalize it. Right now, there's nothing in Social Security. There's a $4 trillion note that the-

Jason Calacanis 1:16:13 Mm

David Friedberg 1:16:13 ... government owes the Social Security Trust Fund. People don't realize this, but Social Security is an independent trust fund that's set up, and it holds one asset. That asset is an IOU from the-

Jason Calacanis 1:16:25 [laughing]

David Friedberg 1:16:25 ... US government to that trust fund-

Jason Calacanis 1:16:27 For taxes

David Friedberg 1:16:27 ... because-

Jason Calacanis 1:16:28 Yeah

David Friedberg 1:16:28 ... because the government has taken all the money that you put in as a employee. It's taken out of your paycheck, and instead of going into that account, it goes to the US Treasury, and the US Treasury writes-

Jason Calacanis 1:16:38 And they spent it

David Friedberg 1:16:39 ... they put an IOU, and they put it back in the Social Security. So you expect that you're gonna get some retirement benefit in the future.

Jason Calacanis 1:16:45 Brad, you have your next-

David Friedberg 1:16:46 We need to change all... We, we need to change all of that to make that a defined contribution. So every time you put money out of your paycheck, you should open an account and see where that money is, and you should say-

Jason Calacanis 1:16:56 Yes

David Friedberg 1:16:56 ... "Okay, that money is in Google, it's in Amazon, it's in Ford, it's in this healthcare system. It's in all these things that I now own a piece of," and you see it going up like a 401 [k] owner does every year. We have to transition that in the United States. I hope we can get it done in parallel with cutting the spending that is fundamentally driving the inflation and making things unlivable in this country, cut the regulations so that we can-

Jason Calacanis 1:17:19 Okay

David Friedberg 1:17:19 ... make it easier for people to own homes, and get rid of the government telling people every year that they're gonna do more for them, and entrapping people in a life of servitude and inaccessibility to transitioning themselves up the ladder, which is what is driving the socialism. So it is a bigger problem, longer conversation, but I think-

Jason Calacanis 1:17:38 Got it

David Friedberg 1:17:38 ... this is a great step.

Jason Calacanis 1:17:40 All right, Brad, another way, another way to translate Friedberg, he says, "Congratulations on your efforts. [chuckles] More work to do. Can you turn those America accounts into superannuation funds?" [chuckles] So more work to do. Everybody should put 12% of their... Instead of into Social Security, they should put it into their Ameri- Invest America account, their Trump accounts. Great job, everybody. Another amazing episode of the world's greatest podcast. For Chamath Palihapitiya couldn't make it this way, week, we missed you, bestie. For David Sacks, brother-in-arms in Texas, the great state of Texas; David Friedberg, your sultan of science; and fifth bestie, Brad Gerstner. I'm the world's greatest moderator, according to some people, on the world's greatest podcast, and we will see you next week. Love you, besties. [upbeat music]

Host 1:18:23 We let your winners ride. Rainman David Sacks. And instead, we open-sourced it to the fans, and they've just gone crazy with it.

Jason Calacanis 1:18:35 Love you, besties.

Brad Gerstner 1:18:35 I'm the queen of quinoa.

Host 1:18:37 I'm going all in. Let, let your winners ride. Let, let your winners ride. Let your winners ride.

Jason Calacanis 1:18:43 Besties are back. [laughing]

David Friedberg 1:18:46 That's my, uh, dog taking a piss in your driveway, Sacks. [laughing]

Jason Calacanis 1:18:49 Wait, no, no, it's- [laughing]

Brad Gerstner 1:18:51 Oh, man.

David Friedberg 1:18:52 My avatar will meet me at Winston.

Brad Gerstner 1:18:54 We should all just get a room and just have, like, one big, huge orgy, 'cause they're all just useless.

Jason Calacanis 1:18:58 [laughing]

Brad Gerstner 1:18:58 It's like this, like, sexual tension that they just need to release somehow.

Host 1:19:02 Let your-

Jason Calacanis 1:19:03 Feet

Host 1:19:03 ... feet. Let your feet- Let your feet be wet. [laughing]

David Friedberg 1:19:07 We need to get merch.

Jason Calacanis 1:19:08 Besties are back.

Host 1:19:09 I'm going all in. [upbeat music] I'm going all in!