Hurricane fallout, AlphaFold, Google breakup, Trump surge, VC giveback, TikTok survey

Jason Calacanis 0:00 All right, everybody. Welcome back to the number one science, politics, technology, and business podcast in the world for five years running. We're about to hit our fourth anniversary here. Episode 200's coming up. And a bunch of lunatic fans are getting together. You can join them. Allin.com/meetups. Holy cow, we got the domain name All In? Fantastic. Go to allin.com/meetups and, uh, hey, subscribe to our YouTube channel. We're gonna do some sort of crazy event for the million subscriber party. We're like 300,000 away, gentlemen. This is nuts, huh? Can you imagine this thing made it to 200 episodes?

David Sacks 0:39 Wow, we have allin.com. How much did we spend on this? This is great, guys. Best.

Jason Calacanis 0:42 I negotiated it. I got it. It took me two years. And I got a sick deal on it. I don't even want to say because I... You know. I don't want to jinx it but-

David Sacks 0:53 Don't, don't say. Don't say.

Jason Calacanis 0:54 ... I think I got it. Don't say?

David Sacks 0:56 Don't say.

Jason Calacanis 0:56 I'll just say it. You bleep it out. I got it for (beep) or so.

David Sacks 1:00 (laughs)

Jason Calacanis 1:00 And that's a million dollar domain, just so we all know. Five letters in the dictionary? Oof. So good for branding.

David Friedberg 1:06 Good job, JCom.

Jason Calacanis 1:06 Thank you, my friend.

David Friedberg 1:07 Yeah, and now we have allin.com/tequila.

David Sacks 1:10 Ooh, I love it.

Jason Calacanis 1:11 Exactly. Exactly. And you can yum yum.

David Friedberg 1:14 Yeah.

Jason Calacanis 1:14 I got you, Sacks.com, didn't I? You have the domain name Sacks.com.

David Friedberg 1:17 Oh, yeah. Yeah, yeah, yeah.

Jason Calacanis 1:17 I negotiated that for you.

David Sacks 1:18 Wow, we have all the way back to episode 1. This is incredible.

Jason Calacanis 1:22 Oh, the new website?

David Sacks 1:23 Yeah, this is great.

Jason Calacanis 1:25 Oh, can I tell you, if I may-

David Sacks 1:26 There's a website? Allin.com. Allin.com? That's our website?

David Friedberg 1:31 It's like this thing is real.

David Sacks 1:32 Yeah.

Jason Calacanis 1:33 It's like a real thing.

David Sacks 1:34 After four years we got our shit together. This looks great.

Jason Calacanis 1:37 Here we go. And I want to give a shout-out to Podcast AI, one of our, um... Remember those fake All In episodes? That became a startup, Podcast AI, and they built our website for us. So shout-out to the team over there. All right, ladies, let's move on and, uh, I am, of course, your executive producer for life, and the moderator (laughs) of the All-In podcast. And if I may, just a tiny plug. If you're a founder, we are having our ninth cohort of Founder University. It's a 12-week course I teach on starting companies.

David Sacks 2:05 What are you doing?

Jason Calacanis 2:06 And you get to spend-

David Sacks 2:06 Stop this. Stop this. What is this?

Jason Calacanis 2:08 I'm just giving a quick plug for Founder University.

David Sacks 2:09 (laughs)

Jason Calacanis 2:10 I, I, I need to get a plug in because I want to be founded.

David Sacks 2:12 Go to Erewhon, go to Erewhon and buy Supergut bars, 3.99. (laughs) You can pick them up this afternoon.

David Friedberg 2:19 Let your winners ride.

Jason Calacanis 2:22 Rainman, David Sacks. And I said-

David Sacks 2:26 We open sourced it to the fans and they've just gone crazy with it.

Jason Calacanis 2:30 Love you, Wes.

David Sacks 2:30 Queen of Quinoa. Speaking of that, your people used me in an ad, Friedberg, so don't talk about plugs. Oh, no.

David Friedberg 2:40 A few weeks ago when I shouted out that Glue AI was hiring engineers, we had like 100 applications just from that.

David Sacks 2:46 From Glue AI looking for engineers?

David Friedberg 2:47 Isn't that incredible? From one plug on the show, yeah.

David Sacks 2:49 For Glue AI?

David Friedberg 2:50 Yeah.

David Sacks 2:51 Right. That's awesome for Glue AI.

Jason Calacanis 2:53 And if you haven't tried Supergut, Friedberg's team literally made an advertisement with me talking about Supergut and didn't tell me.

David Friedberg 3:01 And we're still hiring, so...

Jason Calacanis 3:03 Okay. Well, there you have it. So go to Founder.University to apply for my 12-week program.

David Friedberg 3:06 And check out Grok.

Jason Calacanis 3:07 I'm running a GoFundMe, a GoFundMe.

David Sacks 3:10 Probably gonna need... Yeah, go to GoFundMe/Friedberg.

Jason Calacanis 3:12 Really? For what? More Xanax to deal with your panic attacks? (laughs) All right, let's get started everybody. Enough of the shenanigans.

Jason Calacanis 3:19 Hurricane season is upon us. As Friedberg had predicted, Hurricane Milton made landfall on Wednesday evening along the West Coast of Florida as many of you know. It's been downgraded. It, it started as a Category 5 potentially, then a Category 3, and then it looks like it's a Category 1 now, so I guess these things are quite random. Leading up to Milton though, six million Floridians across 15 counties were ordered to evacuate. That's a lot of people moving out. And it was a pretty powerful storm. It ripped off the roof of the Tropicana Field in Tampa. So far the death toll is at four, but it's expected to rise, sadly. And, uh, just two weeks ago, Hurricane Helene swept through six southern states, killing over 220 people, tragically. Devastating western North Carolina, and, uh, entire towns were wiped out. Oof. These are, uh, also, beyond the tragic human losses, are economically staggering in terms of the losses. AccuWeather estimating the total economic damage could be between 145 and 160 billion from Helene. And Moody estimates the property damage alone could be as high as 26 billion. Tons to get into here. FEMA, Starlink saving the day, tons of stuff. But Friedberg, back on episode 182 you predicted this would happen. What's causing all this? And let's just start with the science angle, I guess, before we get into the other political and, um, insurance issues.

David Sacks 4:49 Well, I think if you'll remember when we talked about this a couple of months ago, the sea surface temperature was at kind of a record high in the Atlantic. And warm ocean temperatures drive, um, moist air up that evaporates. The warmer the air, the faster the evaporation, and that starts to cause the movement of the air which drives, ultimately, the hurricane, and then the hurricane sucks up more warm, moist air from the ocean and it creates a feedback loop. So the more energy you have in the ocean, the more likely you are to accelerate wind forces in storms, and that's why you get these massive hurricanes that suddenly form seemingly overnight and go... Like in the case of Helene, that hurricane went from a Cat 2 to a Cat 4 or a Cat 5 in like 48 hours because of the energy that sort of... And 90%... Here's an interesting stat. 90% of the energy that we get from the sun is absorbed and stored in our oceans. The other kind of fact that's playing into this, if you pull up that Sci- that Nature article, and this is something that I think you guys may remember we talked about. So this was an article that came out, uh, a paper, a science paper that came out a couple of months ago, and in this paper-... these scientists identified that removing sulfur dioxide from cargo ships that travel across the oceans is actually causing accelerated warming in the oceans. And the reason is that the sulfur dioxide forms cloud formations, and those cl- as they travel across the oceans. And those cloud formations reflect sunlight, and in the absence of those cloud formations, that sunlight makes its way into the ocean and you get more ocean warming. And by their estimation, removing sulfur dioxide, which causes acid rain, and that's the reason it's been pushed to be removed, and they started removing it in 2020, 2021 from cargo vessels. By removing sulfur dioxide, we are now gonna see a doubling of the rate of warming of the oceans in the 2020s and going forward. So the oceans are getting-

Jason Calacanis 6:51 Let me pause there for a second-

David Sacks 6:52 Yeah.

Jason Calacanis 6:52 ... just to make sure people understand what you're saying. Emissions from cargo ships block sunlight, which then, of course, reduces the heat absorbed by the oceans, and so we're now choosing between pollution of the air or overheating of the oceans. Am I correct in summarizing that?

David Sacks 7:10 That's roughly it. And, um, Nick's gonna pull up-

David Friedberg 7:14 Wait, what is the pollution again? Sorry, I just don't understand.

Jason Calacanis 7:16 It's emissions-

David Sacks 7:16 It's sulfur dioxide-

Jason Calacanis 7:17 Sulfur dioxide.

David Sacks 7:17 ... that goes in... Yeah, that goes into the fuel of cargo vessels. And a couple of years ago, they started to implement these mandates that sulfur dioxide no longer be used in the fuel. As a result, when s- sulfur dioxide is emitted from these vessels, it goes into the atmosphere and it actually triggers cloud formation. So now you have these clouds that are forming. And Nick's gonna pull up this image right now. Yeah, here you can see that. So all of these tracks are these cargo vessels moving across the ocean, and as they move across the ocean, they create cloud cover.

Jason Calacanis 7:48 Smoke.

David Sacks 7:48 That cloud cover actually reduces the warming in the ocean because it reflects sunlight, so now that sunlight energy gets absorbed into the ocean. So this is another driving force that some people are now speculating may be accelerating the warming of the oceans that we're seeing, which drives these extreme storm and, and hurricane events. And so this becomes a more frequent event. Now, a lot of people also-

Chamath Palihapitiya 8:09 So sorry, can I ask you a question?

David Sacks 8:11 Yeah.

Chamath Palihapitiya 8:11 Does that mean that we're mean reverting? Meaning if we improve the quality of the fuel source that are used in shipping, doesn't that then mean that we're reverting back to what would have happened in the absence of these dirty fuel sources?

David Sacks 8:27 Yeah, so in addition ...

Chamath Palihapitiya 8:29 No, no, I'm asking...

David Sacks 8:30 Yeah.

Chamath Palihapitiya 8:30 I'm asking you the question. Is that true or not?

David Sacks 8:33 Um, so, yes, we are no longer reflecting as much sunlight, and so for several decades-

Chamath Palihapitiya 8:39 Like we had, we had bad fuel sources-

David Sacks 8:40 We had artificial, we had artificial cooling effectively, yeah.

Chamath Palihapitiya 8:43 ... we had an artificial cooling, and now we take... But that's counter to the narrative of what we all think is happening.

David Sacks 8:50 Oh, well, the argument is that we've actually been warming the atmosphere, which we have been. We can see the data that shows that everywhere, all over the Earth, not just about sunlight coming in on the oceans, and not just ocean warming. But the, the atmosphere is warming, the planet is warming.

Chamath Palihapitiya 9:04 Mm-hmm.

David Sacks 9:04 And so this is c- uh, by, by blocking the sunlight above the oceans, we were artificially dampening that effect, and we were reducing the amount of heat energy that was getting into the oceans. So now, by taking that away, we're seeing the heat energy in the oceans accelerate, and now the oceans are getting much, much warmer, much faster.

David Friedberg 9:21 Wait, wait, so the pollution was good?

David Sacks 9:23 Turns out it was good.

Jason Calacanis 9:23 That's the paradox here-

David Sacks 9:25 Yeah.

Jason Calacanis 9:25 ... is that it was creating a blocker for sunlight. And to your point, Chamath, exactly, like shouldn't we just be going back to what was normal? But at the same time, in the same system, we had heated things up. So this is a multi-factored system, uh, that we're dealing with, Friedberg. And I, I guess the takeaway from all of this is that we gotta be really careful with what we do with the environment, right?

David Sacks 9:47 Well, I mean, let's talk about economics, right? So w- how much real estate do you guys think is on the Florida coastline? What's the real estate value?

Chamath Palihapitiya 9:55 Well, sorry, Friedberg, can you just anchor this? Like was it that it was supposed to be a Category 5 and now it's a Category 3 when it hit land?

David Sacks 10:03 Right, so what happens typically when storms hit land is they no longer have that hot ocean pumping energy back into the storm that keeps the feedback loop going.

Chamath Palihapitiya 10:10 Mm-hmm.

David Sacks 10:11 So the storm cycle starts to break down. All hurricanes, when they hit land, they start to break apart, and so the category which measures the wind speed actually reduces. This is just a natural thing that happens. But this was a Category 5 hurricane. When it made landfall, I believe it was Category 4, so you know, it was a massive hurricane as it approached.

Chamath Palihapitiya 10:32 Right, so we should not, we should not dismiss it, because my understanding was Helene was Cat 4 when it, like, hit North Carolina, but I read yesterday that-

David Sacks 10:42 No, what, what happened... Yeah, what happened with Helene was it was Cat 4-

Chamath Palihapitiya 10:44 ... that Milton is Cat 3 when it hit Tampa or something. Is that not right?

David Sacks 10:48 Yeah, yeah, so that's right, but what happened when Helene hit North Carolina, it was not a Cat 4. Uh, what happened is as that storm moved inland, it hit the f- the mountains, and the first mountains it hit are on Western North Carolina. That area is elevated. There's mountains there. So when a heavy hot storm runs into cold mountains, all the moisture dumps out. It's like it runs into it, and suddenly everything precipitates out of that storm. And that's why some parts of Western North Carolina got like 18, uh, some hi- some people measured as high as 30 inches of rainfall in a couple of hours. So this insane dumping happens when that hot air hits cold, hits a cold region, and suddenly everything, all that warm moisture precipitates out and dumps to the ground. So it ran into a mountain. It's effectively why everything fell out in North Carolina.

David Friedberg 11:33 Wait, wait, wait, so you're saying that it wasn't Democrats who basically, uh ...

David Sacks 11:37 (laughs) Right. What do you think, Sax?

Jason Calacanis 11:38 I blame Putin. (laughs)

David Sacks 11:39 No, Sax, let me ask you this-

Jason Calacanis 11:40 Putin or Kamala. (laughs)

David Sacks 11:40 ... 'cause there is out there, who did it, Sax?

Chamath Palihapitiya 11:42 Sax, in-

David Friedberg 11:43 I thought Nancy Pelosi cast a spell or something and, uh...

Jason Calacanis 11:45 Yeah.

David Sacks 11:46 Well, isn't there a lot of geoengineering conspiracy theories, uh, going on in your cohort? I mean, what's your, uh...

David Friedberg 11:51 I don't think so, but Vinod wants us to be very clear that, uh, we need to-

David Sacks 11:56 (laughs)

David Friedberg 11:56 We need to stop all this disinformation that somehow Democrats are behind that storm.

David Sacks 12:01 Well, there are a lot of-

David Friedberg 12:02 So we can assure everyone that it was just precipitation.

David Sacks 12:03 There's a lot of theory online that there's a ton of, um-

Jason Calacanis 12:06 Lasers.

David Sacks 12:07 ... geoengineering being run by government agencies-

David Friedberg 12:09 Yeah.

David Sacks 12:09 ... to drive these storms.

David Friedberg 12:10 I don't think people are taking that seriously.

Jason Calacanis 12:12 Well, I mean-

David Sacks 12:13 Okay.

Jason Calacanis 12:13 ... the ori- the origin of this though, Freeberg, is people have done experiments for decades on trying to control the weather or, you know, alter the weather. And, and they're doing that in the Middle East by seeding clouds and creating more rain. We saw that with the Dubai floods. They said that that might have been caused by over-seeding of clouds, uh, which they're doing there. And then there have been experiments just to, you know, for the crazy laser people, conspiracy theorists, Theorist on X, there actually have been experiments with lasers, you know, being shot into hurricanes and storms. Correct?

David Sacks 12:47 Are you Alex Jones? Is that what we're doing?

Jason Calacanis 12:49 Well, no. I'm not saying that-

David Sacks 12:50 We're doing the Alex Jones Yeah.

Jason Calacanis 12:51 I'm just saying that's the origin of where people are kind of building on this. There have been-

David Sacks 12:55 The amount-

Jason Calacanis 12:55 ... geo-

David Sacks 12:55 Okay, so, so let's just talk about-

Jason Calacanis 12:57 Yeah.

David Sacks 12:57 The, the hurricane, the amount of-

Jason Calacanis 12:58 I'm teeing it up for you to debunk is what I'm doing here.

David Sacks 13:00 Yeah. Putting particulates in clouds to accelerate precipitation is ... I mean, we've done that for a hundred years. You know, you can do ... You can increase the precipitation rate when there's already clouds that have formed. But that has nothing to do with creating 200-mile-an-hour wind speed. That requires an extraordinary amount of energy, all of this energy that the oceans are like giant batteries. And when a hurricane gets going, that battery is accelerating the hurricane, and the hurricane sucks up more power from the battery, and it creates this incredibly dynamical system. There is no human-created energy system that can fors- form a hurricane. A hurricane is an extraordinarily powerful natural phenomenon that arises from the amount of energy that can come out of very, very, very hot oceans, relatively speaking. So, you know, that's really where these hurricanes are coming from. Now they're going to be more frequent if the t- ocean temperatures remain elevated as they seem to be, and continue to be elevated. And this can be a function of generally the temperatures warming on Earth, generally the removal of sulfur dioxide, generally these El Nino/La Nina cycles. There's a lot of factors, but it seems to be the case that we are having a very significant trend of continuously warmer oceans, and those continuously warmer oceans means that we're going to have what used to be called a 1-in-500-year storm, which is what Asheville is being termed at, 1-in-500 year. These sorts of storm events can happen every couple years, and we're now looking at 1-in-100-year events happening every two to three years in the United States with the, uh, the hurricane activity that we've been seeing.

Jason Calacanis 14:28 I think a lot of the conspiracy theories are built on actual experiments that happened. This one, Project Stormfury, I'm sure you know about, was to try to modify hurricanes by putting in some chemicals that would, uh, freeze them and dull them. So they're, they're kind of building on these-

David Sacks 14:44 Yeah, break it apart.

Jason Calacanis 14:45 Yeah. Break it apart.

David Sacks 14:46 Yeah.

Jason Calacanis 14:46 So, you know, there, there, there have been experiments here with altering weather, altering hurricanes, but that doesn't mean it's Putin-Pelosi or, you know, the Illuminati, because-

David Sacks 14:56 Okay. So let's get, let's get back to brass tacks. So ... Yeah. Well,

David Sacks 14:59 let's talk about the economics. So there's, there's- Yeah. ... $500 billion to a trillion dollars of real estate value on the Florida coastline. And what used to be a 1-in-100-year event, the average Florida homeowner historically has been paying about 1% of their real estate value in insurance. So now if your real estate is likely to be wiped out one out of every 20 years instead of one out of every 500 years, the cost of insurance gets to the point that it is untenable for most people to pay for their insurance. Florida has a state-backed reinsurance provider called the Florida Hurricane Catastrophe Fra- Fund. And this fund issues debt to meet its coverage demands because it reinsures insurance companies in order to ins- incentivize them to come into the state and underwrite homeowners insurance. Well, you, you should, you should explain the loop here, which is you go and get a mortgage. The bank says, "You need to get insurance if I'm going to lend you the money to buy the home." So then a bunch of insurers need to decide that they're willing to underwrite that area, and then when they give you that insurance, they then want to lay that risk off and go to a reinsurer. Is that the cycle? That's right. And what's happening is they would normally underwrite that risk. They would say, "This is gonna cost w- You're gonna lose the value of your home every 100 years or every 200 years." But now the models are showing, because of the frequency of these sorts of hurricane events and the severity of the hurricane events, that maybe you'll lose the value of your home once every 20 years or once every 30 years. And no consumer is going to be willing or able to pay that much for the insurance on their home. So the state, over the last several years, has had to step in and effectively subsidize the insurance. And now the state reinsurance vehicle only has statutory liability maximum of $17 billion in a single hurricane season. Now I think they got lucky with Milton today, but some were estimating that the Milton losses were going to be in excess of 100 billion, bigger than Katrina. It's likely, as of this morning, the reinsurance, um, websites are all saying it's probably a 40 to $50 billion loss event, which still exceeds the state's reinsurance capacity. So you can kind of think about Florida state's reinsurance thing being effectively bankrupt. It doesn't really have the capacity to underwrite the insurance anymore. So the real question for everyone is, is the federal government going to have to step in and start to support the price of homes? Because if they don't- Well, it's a terrible precedent to set, because if you do it for Florida, then you'll have to do it in Texas and Louisiana and Mississippi- And California and Arizona. There's, there ... And Texas. There's going to be no way to create a clear demarcation of who gets a bailout and who doesn't. I mean, which, which will mean that everybody will get a bailout or nobody gets a bailout. That's right. Yeah. And if everybody gets a bailout, and if you think about how systematically unpredictable, at least in the Southern states, the weather is, you're going to be talking hundreds of billions of dollars a year probably. The total value of all mortgages in home- homeowner mortgages in Florida is $454 billion. And those people typically have, you know, a debt-to-equity ratio probably on the 50 to 80% range. Mm-hmm. So if the value of your home dips by 25% because everyone starts selling their homes, leaving Florida, or they can't get insurance, then-... the people that live in Florida, most of them have their net worth tied up in their home, are gonna see their personal net worth wiped out or cut-

Chamath Palihapitiya 18:13 Mm-hmm.

David Sacks 18:13 ... in half. So it's not just an economic problem, it's a social problem that now there are so many people that have put their entire net worth into their home, and the value of their home is written to a point that it no longer makes sense given the frequency at which homes are going to get destroyed-

Chamath Palihapitiya 18:27 Well, that-

David Sacks 18:27 ... and-

Chamath Palihapitiya 18:27 ... that's probably the reason why they'll have to do it because they'll-

David Sacks 18:30 Exactly.

Chamath Palihapitiya 18:31 But then that calculation will have to happen for every single homeowner in every single state a- where this is a, this is an issue.

David Sacks 18:38 Yeah.

David Friedberg 18:38 Wait, Freeburg, are you saying the entire Florida coastline is no longer economically viable?

David Sacks 18:43 No! It's totally viable, it's just the question is, what are you willing to-

Chamath Palihapitiya 18:47 At what price?

David Sacks 18:47 ... price?

Chamath Palihapitiya 18:47 At what price?

David Sacks 18:48 Will you pay 5% of your home value for insurance every year? You know, will you pay 2%, 3%?

David Friedberg 18:54 If the expected life of a house is 20 years, then th- no, that's not, that's not viable.

Chamath Palihapitiya 19:00 It becomes very, very untenable.

David Sacks 19:02 Well, it used to be one in 500 here, now it's probably-

David Friedberg 19:04 But my question is-

David Sacks 19:04 ... one in 50, right?

David Friedberg 19:05 ... does this apply to the entire coastline or just parts of it?

David Sacks 19:08 Well, I mean, you saw that the range at which these events can happen is all over the place and the, and the challenge is the events are getting more significant because of this warm ocean weather that we're seeing, this warm ocean temperature.

Chamath Palihapitiya 19:20 And the only good news-

David Sacks 19:22 So we're going to see more of this stuff.

Chamath Palihapitiya 19:22 ... Freeburg, is that now people are building the first couple of floors in high-rises in Miami and homes on stilts with concrete and with resistant, you know, salt water resistant materials, so there is a counter to this so we might be looking at-

David Sacks 19:36 An investment in climate resilience, that's right.

Chamath Palihapitiya 19:37 Yeah, so it might-

David Sacks 19:39 Yeah.

Chamath Palihapitiya 19:39 ... actually be an opportunity to upgrade all these homes to resistant ones, uh, using another set of technologies, but the bailout is really interesting too, Sax, because Florida's got a lot of electorial, uh, college votes, doesn't it? Like, I hate to bring this back to politics, but y- y- you know, promising people bailouts is how these politicians seem to be getting votes these days.

David Friedberg 20:02 Yeah, but is anyone talking about a federal bailout? I mean, is that... this is something you're predicting?

Chamath Palihapitiya 20:06 I think what Freebrick is saying is that there's a, there's a pretty obvious parade of parables here where the question will have to be answered one way or the other.

David Sacks 20:14 Mm.

Chamath Palihapitiya 20:14 Because if you only have a $17 billion reinsurance fund and there's 50 billion of damage, somebody's going to have to come in and cover the gap, and if it's the insurance companies, expect your insurance premiums to double or triple.

David Sacks 20:27 That's right, and that's what happened in California. And by the way, State Farm left a lot of California, most of the-

Chamath Palihapitiya 20:32 And also th- this is what-

David Sacks 20:32 Yeah.

Chamath Palihapitiya 20:32 ... I was going to say, most-

David Sacks 20:33 Yeah.

Chamath Palihapitiya 20:33 ... of these big insurance companies have already done the calculus to realize that these regions are no longer profitable enough to justify the downside risk.

David Sacks 20:41 100%.

Chamath Palihapitiya 20:41 That's the bigger problem. So then the, the ones that are left are insolvent reinsurers or insurers that are just funding short-term ARBs because they know that the odds are they're going to get wiped out, so they'll price-gouge effectively. So, you know, a different example is that here where I live in Menlo Park, we're not in a floodplain, we're not in a fire region, none-

David Sacks 21:02 Nope.

Chamath Palihapitiya 21:02 ... of that stuff. But in order for us to get home insurance, you have to now go through a risk assessment, and in our specific case, we were like, "Hey, what should we do with our roof?" And they were like, "You got to take the roof off if you want home insurance." We're like, "Well, home insurance is probably a good thing to have." Was it a wood shake roof on your house?

David Sacks 21:20 It was a bea- you saw our house, it's a-

Chamath Palihapitiya 21:22 Yeah.

David Sacks 21:22 ... beautiful wood shake roof and we had to remove it, and the two choices were a $350,000 like iron roof-

Chamath Palihapitiya 21:28 Composite materials, yeah.

David Sacks 21:29 ... or, or like 70K for composite and it's like, this is insane. And-

Chamath Palihapitiya 21:34 Yes.

David Sacks 21:35 ... the cost of insurance was just egregious in the absence of going in one... Anyways, we ended up getting the- For most homeowners when the cost of insurance gets to a certain threshold, you don't have budget for it, you can't afford it, and so that's-

Chamath Palihapitiya 21:47 Right.

David Sacks 21:47 ... a lot of why the insurers leave. They'll underwrite anything at any price but they just know that most consumers can't afford it. Here's some other interesting statistics, uh, related but unrelated. In the early 1900s, the city of Phoenix, Arizona averaged five days a year of temperatures of 110 degrees or warmer. By the 2010s, Phoenix averaged during the 2010s, 27 days a year where the temperature was 110 or higher. Since 2021, Phoenix averaged four-

Chamath Palihapitiya 22:15 100 plus days.

David Sacks 22:15 ... 42 days and in 2024 it's been 70 days so far this year that the temperature is over 110. So this is affecting... And so there's, there's increased risks in California with wildfires, increased risk with hurricane, there are a lot of these factors and I have friends that work in reinsurance and in the insurance markets-

Chamath Palihapitiya 22:32 Well-

David Sacks 22:32 ... and-

Chamath Palihapitiya 22:32 Even, even if you don't get affected by a wildfire or disaster when... That, that article was in the Wall Street Journal it, I think it said that the, the number of average days above 100 was like 100 something.

David Sacks 22:44 Yes, that's right.

Chamath Palihapitiya 22:44 And the profi- they profiled this retired woman who was an insurance adjuster or something and the whole point of the article was not that her f- her house was destroyed or at risk but the cost of electricity has gone just absolutely sky high.

David Sacks 22:57 Yeah.

Chamath Palihapitiya 22:57 Even with solar panels, even with storage, you need to basically lean on the grid and the grid now just charges you an exorbitant amount of money and so these, these folks were paying thousands of dollars a year. So if you imagine the, the trifecta, you have all of this climate risk that could destroy your home, you're paying an enormous premium for home insurance and then you're paying an enormous premium for electricity from the mainline power utilities. It's, it's not sustainable.

David Sacks 23:26 Yeah. Yeah, well this-

Chamath Palihapitiya 23:27 And just for background FEMA manages something called the NFIP, National Flood Insurance Plan, and it's historically about 50% cheaper than private flood insurance. They have 4.7 million active policies providing 1.3 trillion in coverage but they instituted a new risk assessment system and that caused rates to increase and yeah, it's, uh, because of all this the policies have decreased over the last couple of years meaning less people have flood insurance at the same time that these things are getting worse and so yeah, this is a, a really, uh, tough issue. I wonder if this is an opportunity, Chamath.

Jason Calacanis 24:10 ... if you think about historically how insurance worked, it worked in communities where people would help each other out (laughs) and do barn-raising kind of events when somebody had a problem. So, if we just put on our entrepreneurial hats here, if you look at the cost of insurance, if 100 different people bundled the costs (laughs) of their homes together, put money into some sort of platform like an Uber, Airbnb marketplace, and there was some management structure here of self-insurance, 'cause I know some people are doing self-insurance for healthcare at their companies for this kind of thing, do you think there's gonna be a new business opportunity here to, to ...

David Sacks 24:45 Well, that's called, or exists, Jason.

Jason Calacanis 24:46 ... I guess-

David Sacks 24:46 It's called a mutual.

Jason Calacanis 24:48 Yeah.

David Sacks 24:48 And those are, like, a, a good chunk of the industry are mutuals, where it's, uh, the shareholders are the members and they all share the risk and the ownership. But the problem is-

Chamath Palihapitiya 24:57 Those things, those things work because you have broad geographic coverage.

David Sacks 25:00 Yeah.

Chamath Palihapitiya 25:00 If you had to go just into Malibu and self-insure, the rates would literally be gr- the f- greater than the value of the homes.

David Sacks 25:07 Right. No one would pay into it. So if you actually-

Chamath Palihapitiya 25:09 No one would pay into it.

David Sacks 25:09 ... if you do proper underwriting, what's happened in the last couple of years is all the reinsurance companies and all the insurance companies have had to re-underwrite the rates that they charge for insurance because the frequency of a disaster has gone up.

Chamath Palihapitiya 25:20 Hmm.

David Sacks 25:21 And the new price-

Jason Calacanis 25:22 Yep.

David Sacks 25:22 ... that they should be charging is so high, it doesn't matter how the capital structure is set up. It's simply there's a, there's one big event that's gonna cause a big wipeout for a large number.

Chamath Palihapitiya 25:31 My personal belief is I think that the, the real estate markets in some of these places are, um, meaningfully mispriced. And specifically what I mean is that they are massively overpriced.

David Sacks 25:44 That's right.

Chamath Palihapitiya 25:44 Because I think when you actually account for the climate damage and the long-term financial stability of the insurers and the reinsurers, I don't think that many of the markets that have seen these crazy sky-high prices ... I'll name two to be specific: West Palm Beach and Malibu. So, both ends of the coasts. These things just don't make sense. And I think people view these things as investments but on the West Coast, when you deal with things like soil erosion and other things, I think it's a, there's a, it's a calamity waiting to happen. And I think on the East Coast, when you factor in the extreme weather conditions, even Jason, your comment about rebuilding these homes in a more foolproof way doesn't solve it because it, you won't be able to rebuild the entire state. There's a lot of people that just can't afford it. There's a lot of folks that will not have adequate coverage. So, I just think these are disasters waiting to happen, unfortunately.

Jason Calacanis 26:44 Yeah. It, it's, uh ... And Sachs, there's a movement right now, a lot of people, even of means, are renting their homes. And so w- in the real estate market, what are your thoughts on that? Just renting versus buying now becoming like a, something that, you know, people in the, in the top half of homeowners or potential homeowners are now electing to not own their home and rent. Have you been monitoring that?

David Friedberg 27:10 I, I honestly, I hadn't heard that.

Jason Calacanis 27:11 Yeah.

David Friedberg 27:11 I mean, the, the trend that I thought was happening was that you had these big funds, like BlackRock or whatever, buying up huge numbers of homes and then running them to-

Jason Calacanis 27:21 Low-end homes, yeah.

David Friedberg 27:22 ... low end or medium-

Jason Calacanis 27:24 Yeah.

David Friedberg 27:24 ... you know, to families. I thought that's what was going on. I hadn't heard that at the high end of the s- range that people were running.

Jason Calacanis 27:30 Yeah, I mean, well, if you think about it, like, there's, there seems to be a cap when you have a $10 million home of what you can possibly rent it for. And it's, it's the, the, the prices are now making more cent to ke- more sense to keep your money in the market or in other places and then rent. I'm just hearing that over and over again.

Chamath Palihapitiya 27:46 Freeburg, are you, are you long real estate in Florida or Coastal California, if you could? Or do you treat them differently?

David Sacks 27:53 I think they're different but Florida is like ... I, I, I mean, I don't know how you do the math on ... I, I, I just don't know what you do on a trillion dollars of real estate value with half a trillion of mortgages when you have real exposure on loss more frequently than one in a hundred years. There ... To your point, they need to be repriced. And how do you reprice those homes in the significant level that they need to be repriced without causing massive economic and social consequence? That's what's f- that's what's kind of, I think, challenging me in thinking about what's the path here.

David Friedberg 28:26 So, it was a, it was a good thing that I sold my Miami place when I saw this?

Chamath Palihapitiya 28:30 Yes (laughs) .

Jason Calacanis 28:30 Once again, Sachs makes a great trade.

David Friedberg 28:32 (laughs)

David Sacks 28:33 (laughs)

Chamath Palihapitiya 28:33 (laughs)

Jason Calacanis 28:33 Pretty awesome. Well done, Sachs.

David Friedberg 28:35 I top-ticked it.

David Sacks 28:35 Yeah, I know.

Jason Calacanis 28:35 You top-ticked it again.

David Friedberg 28:36 (laughs)

Jason Calacanis 28:36 Well done (laughs) , Sachsiepoo.

David Friedberg 28:39 (laughs)

Jason Calacanis 28:39 Just like (beep) .

David Sacks 28:40 Boop.

David Friedberg 28:40 I really love, I loved that house.

David Sacks 28:42 Oh.

David Friedberg 28:43 It was on the Beach at Isles.

David Sacks 28:44 The Miami Isles? Yeah.

Jason Calacanis 28:44 You loved that house.

David Sacks 28:45 Yeah.

Chamath Palihapitiya 28:45 Yeah.

Jason Calacanis 28:45 Where do you think I stayed when I was in town? (laughs)

David Friedberg 28:47 Yeah.

Jason Calacanis 28:47 You're so selfish. I, who wants the (laughs) -

David Friedberg 28:50 No.

Jason Calacanis 28:50 ... who wants the place to stay? I mean, the yacht access alone, being able to get out on the bay and get on a boat, the, the Ski-Doos, all this great stuff. Ugh. Okay. All right. Let's, uh, let's keep the Freeburg train going here.

Jason Calacanis 29:03 Huge news. AlphaFold creators just won a Nobel Prize in chemistry. Two members of Google's DeepMind AI research team, Demis Hassabis and John Jumper, received this year's Nobel Prize in chemistry. They both work for Google's DeepMind, as you know. And Freeburg, again, all in, getting there first, explained what AlphaFold was back on episode 14 in December of 2020. That was almost four years ago. Freeburg, maybe, um, you could explain-

David Sacks 29:34 Did we, did we predict that they would win the Nobel Prize at the time?

Jason Calacanis 29:37 I believe you did. I will go check the receipts using-

David Sacks 29:40 Well, hold on, hold on, hold on.

Chamath Palihapitiya 29:40 ... the broadcast AI search engine. It was, it became, it became much more likely that they would win the Nobel after they won the Breakthrough Prize. I mean, just to, just to point this out, but-

David Sacks 29:50 Yeah. Yeah.

Jason Calacanis 29:51 Shout-out Yuri Milner.

Chamath Palihapitiya 29:52 Shout-out Yuri and Julia.

Jason Calacanis 29:53 And Julia.

Chamath Palihapitiya 29:55 Because when those guys won that award for 2023 and you, you heard the extent of what they've done, it was almost, like, obvious that they were gonna win a Nobel after the fact. So-

Jason Calacanis 30:08 Hmm.

Chamath Palihapitiya 30:09 ... I think the really interesting thing is actually ...... in this community, I think the Breakthrough Prize is actually meaningfully more relevant and a positive directional indicator to breakthrough science than anything else.

Jason Calacanis 30:18 Well, it's kinda like winning Sundance or Cannes. You win the Palme d'Or, you become a favorite to win at the Oscars, right, and the Academy Awards. So, that's actually interesting, the regional or more industry-centric award could lead to the next one. So Freeberg, just explain to us why this is so important before we go on.

Chamath Palihapitiya 30:35 I just think it's, I just think it's much more rigorous than the Nobel. I think the Nobel can be a little bit gamed, I think.

Jason Calacanis 30:40 Oh, interesting. Okay. What do you think, Freeberg? Explain to the audience why this is important and, and what's transpired since we talked about it four years ago.

David Sacks 30:48 Well, I, I mean, there's just been a lot... there's been a long challenge in biochemistry on understanding or predicting or visualizing the three-dimensional structure of, of proteins 'cause remember, proteins are produced by long chains of amino acids, and those amino acids are kind of, create like a bead, beaded necklace, and then the, the whole necklace collapses on itself in a very specific way, and that three-dimensional molecule, that big, chunky protein, does something structurally, physically. And so trying to understand the shape of a protein is really hard. I mean, we've used kind of X-ray imaging systems to try and identify it and tried to build models to identify how does that, quote, "protein folding" work? How do those amino acids collapse on each other to create that three-dimensional construct? And if, I don't know if you guys remember, in the early 2000s, there was a Stanford Folding@home distributed computing project. Do you guys remember this?

Jason Calacanis 31:43 Yeah. It would use people's machines and extra CPU, like the SETI@home project to-

David Sacks 31:49 Precisely, yeah.

Jason Calacanis 31:49 ... do the same thing.

David Sacks 31:50 Exactly right, yeah. So, it's like, it ran on the background of your computer, it used your CPU cycles when you weren't using your computer, and it tried to model protein folding. And so this has been a, a problem that folks have tried to tackle with compute for decades to figure out the 3D structure. This is so important because if we can identify the 3D structure of proteins, and we can predict them from the amino acid sequence, we can print out a sequence of amino acids to make a protein that does a specific thing for us. And that unlocks this ability for humans to create biomolecules that can do everything from binding cancer, to breaking apart pollutants in plastics, to, um, you know, uh, creating entirely new molecules, to running, in some cases, like what David Baker did at University of Washington, he shared the Nobel Prize, creating micro motors, mini motors-

Jason Calacanis 32:38 Hmm.

David Sacks 32:38 ... from proteins that he designed on a computer. And so this becomes, I think, this great, like, big holy grail in biochemistry and the AlphaFold project at, at DeepMind inside of Google solved this problem. And, and by the way, since, since then, they've come out with AlphaFold3.

Jason Calacanis 32:52 Yep.

David Sacks 32:53 They've launched a drug discovery company called Isomorphic Labs, where they're basically predicting molecules that will do specific things for a target indication, uh, and then they use the AlphaFold models to actually design and develop those molecules. And there have been literally dozens of companies that have been started since DeepMind was published, and probably several billion dollars of capital that's gone into companies that are creating new drugs, creating new industrial biotech applications using this protein modeling capability that was unleashed with DeepMind-

Jason Calacanis 33:24 Yeah.

David Sacks 33:24 ... a number of years ago. So, it really has transformed the industry. It'll be a couple years before we see it transform the world, but, uh, it's, it's, it's an exciting kinda thing. Yeah.

Jason Calacanis 33:32 Not to, um, virtue signal here, but those are plus-sized proteins now, Freeberg. We, they don't like being called chunky. They're calling them plus-sized proteins. Uh-

David Sacks 33:39 Plus-sized proteins. (laughs)

Jason Calacanis 33:40 Yes. One, one really difficult technical question for you, Freeberg. Is there any way for you to take this amazing breakthrough, uh, and make Sachs interested in it? Is there any possible-

David Sacks 33:52 (laughs)

Jason Calacanis 33:52 ... vector here for it to relate to Sachs and get him off his Blackberry right now?

David Sacks 33:58 Blackberry.

Jason Calacanis 33:59 I think he's playing chess with Thiel, and J.D. Vance is watching them play chess. I think that's what's going on right now. It's really hard. I mean, the poor audience here is watching Sachs looking down. (laughs) Uh, all right, let's keep this train moving here. Enough of the shenanigans.

David Sacks 34:13 Anyway, congrats to the teams, the various teams that won-

Chamath Palihapitiya 34:15 Congrats to Demis and Jumper.

David Sacks 34:16 Yeah.

Chamath Palihapitiya 34:17 Yeah.

Jason Calacanis 34:17 Yeah, I mean, it's just great.

David Sacks 34:18 And, and David Baker at the Baker Lab at University of Washington for sure.

Chamath Palihapitiya 34:21 And David Baker, also a Breakthrough Prize winner.

David Sacks 34:23 Yeah.

Jason Calacanis 34:24 Hmm.

Chamath Palihapitiya 34:24 What's interesting to me is, like, these two Nobels, th- these guys, but also Geoffrey Hinton's. You know, you're really seeing now the convergence of the hard sciences and computer science-

David Sacks 34:36 Totally. Yeah.

Chamath Palihapitiya 34:36 ... in a really meaningful way, and I think that that's so interesting and cool.

Jason Calacanis 34:41 I think in the group chat, Chamath, you had an interest in, "Hey, maybe there should be a computer science award for, you know, a Nobel computer science award." And, uh-

Chamath Palihapitiya 34:50 I actually think it's the opposite now, which is that-

Jason Calacanis 34:53 Oh.

Chamath Palihapitiya 34:53 ... it's amazing to see folks using computers to improve our understanding of the natural sciences, and I think that that's a really great place to be. So, what Demis and John and David are doing in the life science is amazing. What Geoffrey Hinton, you know, did, you know, tw- 30 and 40 years ago and 20 years ago in terms of training deep neural nets, also really amazing.

Jason Calacanis 35:16 In related news-

Chamath Palihapitiya 35:16 All

Chamath Palihapitiya 35:17 computer based.

Jason Calacanis 35:17 Yeah, all computer based, and in related news, Benioff just nominated himself for excellence in CRM management.

David Sacks 35:24 (laughs)

Chamath Palihapitiya 35:24 (laughs)

Jason Calacanis 35:24 So, congratulations to Benioff on nominating himself for a Nobel.

Chamath Palihapitiya 35:28 What is that about? (laughs)

David Sacks 35:28 What does that call in? I don't know.

Jason Calacanis 35:29 It's just a stray.

Chamath Palihapitiya 35:29 (laughs)

David Friedberg 35:30 Why are you attacking Benioff?

Jason Calacanis 35:31 It's just a stray.

David Sacks 35:32 What did Benioff do?

Chamath Palihapitiya 35:32 The audience loves-

Jason Calacanis 35:33 I mean, what did he do wrong?

David Sacks 35:35 Uh, yeah, it's just a joke.

Jason Calacanis 35:36 Take out... It's a joke.

David Friedberg 35:36 What did he do?

David Sacks 35:37 They're just jokes.

Chamath Palihapitiya 35:38 Have you not learned anything from the Palmer Luckey incident?

David Sacks 35:41 You're better attached to people that attack you.

Jason Calacanis 35:42 It's not an attack.

David Sacks 35:43 When you...

Jason Calacanis 35:43 It's a joke.

David Friedberg 35:43 The opening salvo.

David Sacks 35:44 Benioff has done so much for philanthropy.

Chamath Palihapitiya 35:46 Yeah, but-

David Sacks 35:46 Just ask him. If you... (laughs)

Chamath Palihapitiya 35:48 I, I don't, I-

David Friedberg 35:49 Oh, my God.

David Sacks 35:50 (laughs)

Jason Calacanis 35:50 Dude, he's doing the best he can.

David Friedberg 35:51 This is how you got in trouble with Palmer.

Jason Calacanis 35:53 He's doing a great job.

David Sacks 35:53 This is how I got in trouble with Palmer Luckey.

Jason Calacanis 35:53 What are you doing?

David Friedberg 35:54 Exactly. Yeah, I don't get it.

David Sacks 35:55 Can you people have a sense of humor about yourselves?

Chamath Palihapitiya 35:57 No, but it's not even, it's not even funny. If you had said something else.

David Sacks 36:01 I mean, okay, give me a, give me a funnier Nobel. Go ahead. Go, go ahead.

Jason Calacanis 36:05 Benioff runs a 300 billion market cap company.

David Sacks 36:07 Go ahead, Chamath.

Jason Calacanis 36:07 How, how could he-

David Friedberg 36:08 Yeah, yeah, he's, he's chomping at the bit-

Jason Calacanis 36:09 How could he... yeah.

David Friedberg 36:09 ... to come back on the pod and explain why AI is not gonna disrupt SAS.

Chamath Palihapitiya 36:13 Really?

Jason Calacanis 36:14 Oh, is she? He wants to be back on the pod again?

David Friedberg 36:15 He's texting me. He wants to come on.

Jason Calacanis 36:17 Okay, cool.

Chamath Palihapitiya 36:17 We'll check in, we'll check in in $100 billion.

David Sacks 36:19 (laughs)

Jason Calacanis 36:20 (laughs) I mean... (laughs)

David Sacks 36:22 He had his chance. That chance is closed.

Jason Calacanis 36:24 He shot his shot and it did not land. (laughs)

David Sacks 36:26 That door was closed when he insulted our guests about not being able to afford the Disney+ app.

Jason Calacanis 36:30 Yeah, when he called you all in, people, whores. (laughs) Oh, my God. Now you're piling on. Anybody coming to Dreamforce 2025?

David Sacks 36:38 (laughs)

Jason Calacanis 36:38 Okay, let's move on. Sorry. Oh, my God.

David Sacks 36:40 Anyways, leave Benioff alone, Gino.

Jason Calacanis 36:42 Leave... (laughs) It's like, uh, (laughs) Leave Britney Alone, that famous meme. Leave Benioff alone. (laughs)

David Friedberg 36:49 So how many new enemies do you wanna create-

Jason Calacanis 36:52 I... I... Just... J- they're-

David Friedberg 36:52 ... every week, there's gotta be-

Jason Calacanis 36:54 ... just jokes, people. They're just jokes.

David Friedberg 36:55 ... somebody new.

Jason Calacanis 36:56 (laughs)

David Friedberg 36:57 Just when you thought he was running out of feuds, you know?

Jason Calacanis 37:00 (laughs)

David Sacks 37:00 Yeah, exactly. (laughs)

Jason Calacanis 37:00 I'm not in a feud with anybody.

David Friedberg 37:01 (laughs)

Jason Calacanis 37:01 I'm making stupid jokes. The reason people tune in is 'cause you laugh and learn.

David Friedberg 37:06 Did you guys see that, that tweet? That, uh, somebody suggested throwing a conference with all of JCal's haters?

Jason Calacanis 37:13 Jason Kahn. (laughs)

David Sacks 37:14 (laughs)

Jason Calacanis 37:16 JCon.

David Sacks 37:16 Oh, no.

Jason Calacanis 37:18 Jaters, Jaters convention.

David Sacks 37:20 What is it called? Jaters?

Jason Calacanis 37:22 Jaters, yeah. Or-

David Friedberg 37:24 J-Haters.

Jason Calacanis 37:24 Yeah, Jason Haters.

David Sacks 37:25 Jaters.

Jason Calacanis 37:25 Jaters, yeah.

David Sacks 37:26 Jaters.

Jason Calacanis 37:26 I'd like to shout out my Jaters. (laughs) They're just jokes, folks.

David Sacks 37:29 (laughs)

Jason Calacanis 37:30 I l- (laughs) I love you more, um, Benioff. Oh, come on the pod, Zach. (laughs)

David Sacks 37:35 (laughs)

David Friedberg 37:35 I think somebody could launch a successful summit just doing that. It's like a-

Jason Calacanis 37:38 Absolutely.

David Friedberg 37:38 It's like a ready-made audience.

Jason Calacanis 37:40 (laughs)

David Friedberg 37:41 And they're clearly passionate.

Jason Calacanis 37:41 How could you shout out to-

David Friedberg 37:42 They're clearly passionate.

David Sacks 37:44 All the YC founders will be there. (laughs)

Jason Calacanis 37:46 Keynote, day one, Palmer Luckey.

David Friedberg 37:49 (laughs)

Jason Calacanis 37:49 Keynote, day two, David Sacks. (laughs)

David Sacks 37:53 (laughs) David Sacks.

David Friedberg 37:54 I think it would rival the all-in summit in terms of the passion of the fans.

David Sacks 37:57 All three of us would show up.

Jason Calacanis 37:58 For keynote... (laughs)

David Friedberg 37:58 JCal would be so devastated.

Jason Calacanis 38:00 (laughs)

David Sacks 38:00 Yeah, keynote one. Are you kidding me? I think it's hilarious.

David Friedberg 38:04 Yeah, I would have to k-

David Sacks 38:05 Friedberg.

David Friedberg 38:05 I'd have to keynote them.

David Sacks 38:05 Paul Graham. (laughs) Oh.

Jason Calacanis 38:07 Benioff.

David Sacks 38:08 (laughs)

Jason Calacanis 38:08 I... I like Benioff. What? I, I'm not trying to make enemies with Benioff.

David Sacks 38:12 (laughs)

Jason Calacanis 38:12 He's just got to have a sense of humor.

David Sacks 38:14 Oh, my gosh.

Jason Calacanis 38:14 Um, Megan Kelly.

David Friedberg 38:15 Yeah, Zuckerberg. Oh, yeah, Megan. Oh, my God.

Jason Calacanis 38:16 A special Fireside Chat, Megan Kelly and Palmer Luckey. (laughs)

David Sacks 38:20 Wait, does Zuck hate you too? Why does Zuck hate you?

David Friedberg 38:22 Oh, my God, JCal was just so-

Jason Calacanis 38:24 (sighs) I was brutal to Zuck in the early days.

David Friedberg 38:25 Brutal, yeah.

David Sacks 38:26 Why?

Jason Calacanis 38:27 Well, he just... Yeah, uh, anyway, we'll get to it later.

David Friedberg 38:29 But you're right. Like, eh, you know, throwing a conference for J-Haters would just be-

Jason Calacanis 38:32 Jaters? (laughs)

David Friedberg 38:32 That's like a ready-made-

David Sacks 38:34 Jaters.

Jason Calacanis 38:34 Jaters.

David Friedberg 38:35 That is an underserved and passionate demographic.

David Sacks 38:38 It would be bigger than TED.

Jason Calacanis 38:38 It's a passionate demographic. (laughs) Just-

David Friedberg 38:40 (laughs)

Jason Calacanis 38:40 Just look at Sacks' replies.

David Sacks 38:43 Community with shared values.

Jason Calacanis 38:44 Hey, man, if I can get 25% of those ticket sales, I'm in. Let's go. (laughs) All right, let's keep the train moving here. We have

Jason Calacanis 38:53 an update on the DOJ's antitrust suit with Google. It looks like they're going for the breakup, as Chamath predicted. You remember the Bloomberg report back in August. We covered it in episode 192. Google was found liable for maintaining a monopoly in search and digital ads. Now the DOJ is working on the remedy, right? Okay. They're guilty, so now comes time for the remedy. And the DOJ is, quote, this is from Bloomberg, "considering asking a federal judge to force Google to sell off parts of its business." And according to this filing, the DOJ is specifically considering structural remedies that would prevent Google from using products such as Chrome, Google Play, that's the app store on Android, and Android itself to advantage Google Search. A 32-page document released by the DOJ lays out several options, and, uh, we'll go through them in talking about them here. The obvious one, terminating Google's exclusive agreements with hardware companies like Apple. They're the default search engine there for 30 or 40 billion a year. Samsung, that's a layup. Uh, separating Chrome and Android. My God, that would be drastic, ripping that out of the Google ecosystem. Prohibiting certain kinds of data tracking, that's a layup as well. Or other behavioral and structural changes for the company. I'm gonna pause there, Friedberg, and get your thoughts on this as a former Googler and you interviewed Sergey at the summit. But I don't think we talked to Sergey about this, because obviously he would not be able to talk about it. So what are your thoughts here on a potential remedy?

David Sacks 40:27 I think we've talked about this. I, I mean, look, I've shared in the past my belief that companies that are big, that have excess capital, that then invest that excess capital in R&D can be a net benefit for all of us. Look at Bell Labs. Bell Labs had a monopoly on... through their association with AT&T, with developing radar microwave, the transistor, integrated circuitry, information theory, everything that is the basis of the internet, computing, even nuclear technology and so on. It's because they had this extraordinary capital flow from the scale of the business and they were able to invest in R&D. Similarly, Google acquired and invested for many, many years in DeepMind. And we just talked about how Demis and team won the, uh, uh, the Nobel Prize for the work that they did. And they, by the way, published the protein structure for 200 million proteins for free out of that service. I just wanna zoom out for a minute and talk about the fact that this isn't about, you know, whether Google has a monopoly in search that prohibits competition or in ads that prohibits competition, but are... Do... Is it really worth penalizing any company that's big? Particularly, do we lose the benefit of those big companies investing in technology that pushes us forward? Google also invested in Waymo for years and years and years, which arguably spurned and drove investment from many other companies in self-driving technology. And if Google hadn't done that, would self-driving have taken off the way it did? I don't know. Same with Kitty Hawk and Larry's investment in eVTOLS, and that, that spawned a lot of eVTOL investing. And similarly, if you think about Amazon and their investment in AWS, where they were burning cash for many years, that turned out to spawn arguably a lot of, uh, interest and investment in cloud. And so I, I don't think that these big companies are bad just because they're big. I think we should take apart-... the monopolistic, antitrust actions and behaviors that they take, and then identify ways to remedy those behaviors versus just saying anyone or anything that's big should be taken apart. Because there is a tremendous benefit to be gained from the R&D dollars that they all put into things that, you know, move the whole industry forward. And I think that leadership's important and needed. Otherwise, if you've got a bunch of startups that are trying to get $10 million checks from VCs, I'm not sure they're going to build a Waymo, and I'm not sure they're going to build an Amazon Cloud, and I'm not sure they're going to build a DeepMind, you know, protein folding company and publish it for free. So I don't know, that's just my point of view on-

Jason Calacanis 43:01 Chamath, what's the, uh, likely outcome here?

David Sacks 43:03 ... like, how we should be- how we should think about this stuff.

Jason Calacanis 43:04 Chamath, you kind of nailed this one. Pretty good with these predictions. Tell us, we'll be sitting here five years from now, what will have occurred?

Chamath Palihapitiya 43:14 Unfortunately, not what Friedberg just said. It'll be the opposite. There'll be some form of forced remedy. I'm sympathetic to Friedberg's argument. I don't think that it's really a good thing in the end, because I do think there are some incredible examples of Google, specifically, reinvesting in a way that's really added value in the world.

Jason Calacanis 43:35 Hm.

Chamath Palihapitiya 43:36 I think the problem though is that the technology innovation cycle has gotten too elongated, so you're not seeing creative destruction be the natural force that keeps all of these companies in their own swim lanes. And so they are allowed to become too amorphous and too profitable, and I think it becomes an obvious target for politicians.

Jason Calacanis 44:04 I think that's a really good observation there about the timeline of this, because if you look at this, I have started now, and I know many people are starting their search journey on Claude and ChatGPT every day. I'm doing 30, 40, 50 queries and follow-ups per day. I force my entire team to do that as well. And so just as there's an actual viable competitor to Google, this action has reached, I don't know, the halfway mark. This is gonna wind up being completely meaningless, Sax, if ChatGPT does build a viable competitor coexister that siphons off search. Uh, am I wrong here?

David Friedberg 44:47 Well, it is ironic that frequently the government takes actions on these monopolies at precisely the moment they're subject to the greatest disruption.

Chamath Palihapitiya 44:56 (laughs) Totally.

David Friedberg 44:57 The same thing happened with Microsoft in a way, but it-

Chamath Palihapitiya 44:59 Totally.

David Friedberg 44:59 ... was still a good thing that the government acted when it did, because there was a risk of Microsoft porting over its desktop monopoly into this new era of the internet. I think it's still a good thing to be looking at breaking up Google. I actually think that would be good. At the end of the day, it might even be good for shareholders. This thing should be probably three separate companies, like we've talked about in a previous show. But it is true that Google is facing the most existential threat to its search monopoly. And it is a monopoly, in the form of OpenAI at this point in time.

Jason Calacanis 45:30 I have one final thought here and piece of advice for Sergey and the team over there. And I- and I told Sergey directly, they have to get good at making apps. To go use ChatGPT, you take out the app and it's a wonderful, beautiful experience. When you go try to figure out how to use Gemini, it's like shoehorned into search results, and then it's like some subdomain. That's why people aren't using it. Go buy the domain name chat.com and make a dedicated app-

Chamath Palihapitiya 45:56 Wait...

Jason Calacanis 45:56 ... just for Gemini and make it kick ass.

Chamath Palihapitiya 46:00 You're 100% right.

Jason Calacanis 46:00 Google-

Chamath Palihapitiya 46:00 You're 100% right. We-

Jason Calacanis 46:01 ... you suck at apps.

Chamath Palihapitiya 46:02 We said this when, when you asked about the bear case of OpenAI. If the DOJ is going to go after Google... And by the way, the interesting thing, Jason, and I mentioned this to you, is that in the same article that floated the trial balloon about this remedy of a Google breakup, the headline in the Wall Street Journal, which I think was very purposeful, said Google and Meta.

Jason Calacanis 46:25 Hm.

Chamath Palihapitiya 46:26 So I think that they, if given their druthers, they being the powers that be at Washington, will probably want to take a run at both of these companies. They'll start with the one that they think they can disassemble the quickest, and then they'll go to Meta afterwards. My strong advice to Meta and Google is, if this is gonna happen, you got to go out kicking and punching and fighting and scratching. And I think the most obvious thing is what you just said, Jason, which is, you are the front door through the internet and there is this completely new emergent technology, and where is the same response to ChatGPT that you had to X or that you had to Snapchat or that you had to TikTok? Because if it's gonna happen, it's gonna happen, and then you might as well just go for it.

Jason Calacanis 47:22 Yeah.

Chamath Palihapitiya 47:23 Build the apps, make them kick ass, make the ChatGPT alternative, and get it to billions of people yesterday.

Jason Calacanis 47:31 Hm.

Chamath Palihapitiya 47:32 That would be the most logical game theory thing to do to build up a pool of users that you will rely on when the DOJ tries to come with some consent decree or whatnot. So, this is the time to build up the assets, now, as aggressively-

Jason Calacanis 47:51 Right.

Chamath Palihapitiya 47:52 ... as possible.

Jason Calacanis 47:52 Yeah. And, uh, selling YouTube would be the ultimate. I know that the ad networks you pointed out, Friedberg, are connected. But if they distributed, if they spun out-

Chamath Palihapitiya 48:01 I'll give you-

Jason Calacanis 48:02 ... YouTube-

Chamath Palihapitiya 48:02 I'll give you something about the ad thing.

Jason Calacanis 48:04 Can you imagine $500 billion going into Google's coffers in YouTube shares?

Chamath Palihapitiya 48:09 Well-

Jason Calacanis 48:09 They would have $500 billion in cash, Chamath.

Chamath Palihapitiya 48:13 I had a... I talked to a company, he, uh, the CEO of a, of a public consumer-facing company. And this was in the context of some 80/90 stuff. And he said that he and, and two other CEOs, the three of them you guys would all know, these are very big companies, the three of them combined are particularly large.... and they said they've had multiyear road maps to try to build a reasonable set of tools in advertising, and it's been impossible. And partly why is that the, the tools that the big folks offer are so good that they just cannibalize and run over the entire market. And so what they hear from CMOs is, "We would love to advertise on your company, your site, but A, your tools are substandard, and B, even though your inventory is cheaper, you just don't give us the same scale and breadth that we get in these other big places."

Jason Calacanis 49:07 Yeah.

Chamath Palihapitiya 49:07 I'm not saying that that's either right or wrong, but through the lens of probably what the DOJ sees is when a lot of these folks write letters to them talking about what they're going through, this is what they're saying. And I suspect that if you could actually have a more fragmented market in some of these key markets, it's going to be a little bit easier for these smaller companies to have a business.

Jason Calacanis 49:31 Yeah.

Chamath Palihapitiya 49:31 Now, you could say, "Well, tough luck. You tried and you couldn't build it." I get that argument and I thi- and I think that, that at some point that is legitimate, but the problem is if you're public and you're trying to make your company profitable, what do your engineers want to work on? They want to work on consumer-facing forward features. And so what-

Jason Calacanis 49:46 Right.

Chamath Palihapitiya 49:46 ... always falls off the list, it's the stuff at the end.

Jason Calacanis 49:48 The ad tech, yeah.

Chamath Palihapitiya 49:50 And so anyways, it's this recursive negative loop that a lot of these other companies are in-

Jason Calacanis 49:54 Hmm.

Chamath Palihapitiya 49:54 ... in the shadow of these big companies that I think is going to cause the DOJ to try to do something.

Jason Calacanis 49:59 You know, this is a great set-up for M&A. It's a great set-up for IPOs, starting to look like. And this is a multi-administration case that's been going, right? I think this started under Trump, went into Biden, and is now going to continue on to Trump or, or Harris. So, what are your thoughts here, Sacks?

David Friedberg 50:19 Well, in terms of the political environment for M&A next year?

Jason Calacanis 50:21 Yeah.

David Friedberg 50:22 Yeah, I mean, so obviously it depends which administration's in power. A lot of Democrats, uh, you know, prominent Democrats in tech, like Mark Cuban or Reid Hoffman, have been making the case that if Kamala is president, she's going to be much more hospitable and friendly towards M&A, and they've been saying explicitly that they want Lina Khan fired. Well, in response to that, AOC just came out and said, "We're going to have a throw-down if you do that."

Jason Calacanis 50:47 (laughs)

David Friedberg 50:47 So, I don't-

Jason Calacanis 50:49 Let's go.

David Friedberg 50:50 I, I would not expect a substantial difference or improvement in the, in the regulatory permissiveness, uh, towards M&A if, uh, if we have a Democratic administration. If the, if you have Trump in office next year, I think that there w- there will be an opening up of, of M&A. I think the Republicans have their own issues with big tech, but those issues tend to revolve around censorship and bias in search results and LLMs, things like that, as opposed to bigness per se. So, I think it will be easier to get M&A done next year if you have a Republican administration.

Jason Calacanis 51:26 Absolutely. I am going to be printing money in a Trump administration. It is going to be obscene how (laughs) many M&A deals and IPOs are gonna occur. There is such a huge backlog. But I do think the Re- I do think the Democrats want to get this moving as well, and I, I was talking to Reid Hoffman, uh, and you and Peter Thiel in the Illuminati meeting, and, uh, they voted 190 to two to replace Lina Khan in the Illuminati meeting. Chamath, why, why didn't you make the Illuminati meeting last week? I'm shocked that you weren't there.

Chamath Palihapitiya 51:55 I'm not a- I'm not invited to that.

David Friedberg 51:57 Pe- people don't know that you're being facetious, Jason.

Jason Calacanis 52:00 Oh, really? They don't understand that I'm joking about the Illuminati? (laughs)

David Friedberg 52:03 They often don't. They often don't.

Jason Calacanis 52:05 (laughs) Well, I'm sorry to the low-IQ (laughs) , listeners who don't know that the Illuminati is not real.

David Sacks 52:11 Oh, now, now you're insulting the audience?

Jason Calacanis 52:13 No, I'm insulting the ones-

David Sacks 52:14 (laughs)

Jason Calacanis 52:14 ... who believe there's an Illuminati. (laughs)

Chamath Palihapitiya 52:16 (laughs) He's trying to sell tickets to the Jaders ball.

Jason Calacanis 52:17 I'm, I'm sorry, sell tickets to the Jaders ball (laughs) with Buck Nasty and Zuck Nasty. "J Cow is the biggest hater in the tech industry." (laughs) You ever see the Haters Ball, Sacks?

David Friedberg 52:31 I have not seen that, no.

Jason Calacanis 52:31 On Chape- Chappelle's Show? (laughs) Oh.

David Friedberg 52:33 No.

Jason Calacanis 52:33 Chamath, it looks like between the time we mentioned it on the pod, it's, it's actually happening. Here it is, the Jaders Ball is happening. There it is. Lina Khan-

Chamath Palihapitiya 52:42 (laughs)

Jason Calacanis 52:42 ... and David Sacks.

David Friedberg 52:43 Wait, why am I there?

Jason Calacanis 52:44 (laughs) Well, 'cause you're a headliner. You're, you organized it. I think you're the host.

David Friedberg 52:47 Oh, I'm, I'm gonna be a keynote?

Jason Calacanis 52:49 You're the emcee.

David Friedberg 52:50 Oh, I'm the n- I'm the ... I'm ... Okay, wow, I'm the emcee.

Jason Calacanis 52:53 There, look, there's, there's Zuck Nasty and there's Palmer Luckey. (laughs) You guys don't know-

David Friedberg 52:57 That's-

Jason Calacanis 52:57 ... this bit from Chappelle?

David Friedberg 52:59 No.

Jason Calacanis 52:59 The Haters Ball from Chappelle?

Chamath Palihapitiya 53:01 No.

Jason Calacanis 53:01 Oh my God, it's the funniest bit on Chappelle's Show. It, it's literally-

David Friedberg 53:06 Oh, wow. I, I mean, I saw a lot of Chappelle's Show. I never, I don't remember that one.

Jason Calacanis 53:09 Oh, God. Just show the real picture, Nick. Um, on the Chappelle's Show, they have all of these pimps who have a, a yearly convention, which is their Player Haters Ball.

Chamath Palihapitiya 53:18 Oh, I've seen this. I've seen it, Player Haters, but yeah-

Jason Calacanis 53:19 And all they do-

Chamath Palihapitiya 53:20 ... I've seen, I've seen -

Jason Calacanis 53:20 ... is sit there with like a toothpick in and they hate on each other-

Chamath Palihapitiya 53:23 Yeah, yeah, yeah.

Jason Calacanis 53:23 ... and make fun of each other.

Chamath Palihapitiya 53:25 I've seen this. I've seen this.

Jason Calacanis 53:25 It is the funniest bit in the history of the Chappelle's Show. All right, let's (laughs) keep the train moving here. CRV

Jason Calacanis 53:32 is giving back or maybe not calling down $275 million from their LPs, Charles River Ventures. Shout-out to my pal Joryd Zachary and Greek Brother from CRV. Historically, they invest in early stage startups. They did DoorDash, Airtable, Twitter back in the day. They had two funds that they raised back in 2022, a billion-dollar early stage fund and a 500 million growth fund. Sometimes people call that an opportunity fund or a select fund. The New York Times reported CRV is going to give back about half of that, $275 million, to investors or technically probably not call it down. The four partners at CRV gave an exclusive to the New York Times, so either getting ahead of this story or, uh, maybe, you know, who knows what the motivation here is. But the reason they gave is that the market conditions for late stage have worsened dramatically and that the valuations are still too high, yes, the rent is too high, and that there aren't any exit options, as we just talked about, with the administration, no IPOs, no M&A. And that VC math doesn't work in the late stage. So, I'll just stop there. There's a bunch of other notes here. Obviously, this isn't the first time this has happened. I think Founders Fund cut the size of its eighth fund in half, from 1.8 billion to 900 million.They didn't actually give the capital back to VCs like they're saying CRV did here. Again, I'm not certain if that's what's happened or not. They put the extra 900 million into its Ninth Fund, if they decide to raise that which I'm assuming Founders Fund will. Chamath, do you have any thoughts on this-

Chamath Palihapitiya 54:59 I-

Jason Calacanis 55:00 ... I guess, trend?

Chamath Palihapitiya 55:01 I think it was-

Jason Calacanis 55:01 Like, we got two stories here, so I don't know if you consider it a trend or not.

Chamath Palihapitiya 55:04 Peter Thiel, Peter Thiel did this, and he gave back-

Jason Calacanis 55:06 Yeah.

Chamath Palihapitiya 55:06 ... quite a large piece of his fund a couple years ago, and then CRV just did it. I, I wanna make sure I get the citation right. I think it was Thomas LaFont at Coatue who said this. It was really powerful, it made a huge impression on me, which is that the NASDAQ creates about $800 billion of enterprise value a year. And he brought that up in the context of private markets have to exceed that in order for it to be a real, viable alternative to just owning public indices. And so, if you factor in illiquidity risk and the duration, you have to probably generate, I don't know, a trillion, $1.2 trillion of enterprise value in private tech every year. That just seems like it's really hard to do. Where is all of that value getting created? So, I think that venture needs to go through a phase where it re-rationalizes. You know, this is sort of what I said at David's LP day, which is, I think that LPs have made a couple of very big mistakes, and I think the biggest mistake that they've made is by smearing too much money across too many general partners. And I think if you had to redo it, A, it's probably a lot less money in total, but B, and the example I gave there, is instead of giving $50 million to Craft and $10 million to somebody else, you're better off giving $60 million to Craft and not even having that other GP, because that GP makes everybody's life complicated. They overpay, they mispay, they're probably not supposed to be a GP in the first place, and so they force returns down. And then when you contrast that again to a public market that is systematically creating $800 billion of enterprise value a year, this is an incredibly tough game and it's getting much, much harder.

Jason Calacanis 56:52 Mm.

Chamath Palihapitiya 56:52 So, I think that if you just take a step back, these are the right things to do because y- you're much better off having a smaller pool of capital that you can concentrate into the things that matter, you're probably better off having smaller teams versus bigger teams, and you're probably better off trying to forge LP relationships where they're not doing 50 fund investments, because it just makes the entire industry lag public liquid alternatives, and I think that that's just not good.

Jason Calacanis 57:24 Peanut butter getting spread a little bit thin there. Any thoughts, uh, Freyberg, on this trend, if we can call it that? Or is this like maybe they're reacting right as the market is changing and valuations are getting more reasonable and the exit opportunities are getting more reasonable? It seems like this was the right reaction two years ago, but maybe it's the wrong reaction now. What do you think, Freyberg?

David Sacks 57:46 For a venture firm to return capital, they need to have at least one or two big winners. And so, if that winner needs to be a 10X or a 20X or a 30X of the fund, because most of the investments in the fund are not going to work, you need to be able to enter at a reasonable price and there needs to be enough opportunity relative to the capital trying to invest in that opportunity out there for it to make sense. So, in a market where there is excess venture capital, where valuations are at a premium, and where you don't see the exit path, the M&A or the IPO events that make sense that you can actually realize that model, you should take less capital and make fewer surer investments, and I think that that's what some folks have realized. They don't want to be chasing, um, you know, highly valued inflated opportunities, and they don't wanna be putting capital into Tier B or Tier C opportunities just for the sake of deploying capital. This is a really interesting moment where you can kind of see who are the, the right folks in terms of thinking long-term in Silicon Valley, long-term in terms of building an investment practice and private venture, and maybe who are folks that are trying to build their AUM stack. And folks who have done reasonably well, like Founders Fund has probably the most exceptional track record in Silicon Valley as a venture firm, they are very cognizant of the market conditions and I think that they're being very smart. By the way, the other thing I've heard from LPs is they're similarly trying to find more concentrated capital themselves. So, they're trying to put more capital to work in fewer managers, and so there's a, a real wheat from the chaff moment happening in Silicon Valley venture right now. What I think a couple years ago was, "Hey, everyone's gonna go do a startup," a few years ago became, "Everyone's gonna go do a venture fund," and now I think the froth that has occurred because of that is being cleared out.

Jason Calacanis 59:42 And to just explain this math before I get Sachs's thoughts on this, if this was a $500 million fund, let's say they were putting $25 million into each, uh, we'll take management fees out of it, $25 million into each opportunity. At a billion dollar valuation, they would own two and a half percent, obviously, of those firms. They need to get probably a $30 billion power-law exit, a 30X, Sachs, in order to just return the fund. There'll be some dilution, obviously, along the way, that's why it's not 20X, and the number of companies that go from a billion to 30 billion per cycle is incredibly low. Uber, Coinbase, Airbnb. I... It's a really short list, huh, Sachs, in recent history? Robinhood?

David Friedberg 1:00:28 Yeah, I mean, look, just, just to go back to the CRV thing, you said at the outset of the conversation that this was either a growth fund or an opportunities fund. That makes a really big difference.

Jason Calacanis 1:00:39 Explain, please, for me.

David Friedberg 1:00:40 Because, well, an opportunities fund typically exists...... to back up your winners. In other words, if the venture fund is producing some big winners, the opportunities fund exists to deploy more capital into those, into those companies. As opposed to a growth fund, which is you'd be underwriting brand new companies from scratch. And typically, an opportunities fund is limited to companies that you're already an investor in through your venture fund. So, that makes a big difference. I mean, if CRV has a billion dollar venture fund and only a $500 million opportunities fund, it may just be the case that they don't need all of that capital to back up the winners.

Jason Calacanis 1:01:15 Hmm.

David Friedberg 1:01:15 They can do their pro ratas out of the main fund.

Jason Calacanis 1:01:18 Hmm.

David Friedberg 1:01:18 So, I, I suspect that that might be what's going on. I actually think this is a pretty good time to have a growth fund. A lot of the, the-

Jason Calacanis 1:01:25 Why? Yeah.

David Friedberg 1:01:26 Well, because a lot of the, uh, crossover capital has left the ecosystem-

Jason Calacanis 1:01:30 Okay.

David Friedberg 1:01:30 ... a few years ago.

Jason Calacanis 1:01:31 The Tigers and that sort of cohort, SoftBank-

David Friedberg 1:01:33 Yeah, and you know, you look at s-

Jason Calacanis 1:01:34 ... Masayoshi Son?

David Friedberg 1:01:35 Yeah. I mean, well, T- Tiger and, and, um, SoftBank are still around, but there are other very large investors, hedge funds and so on, who had come into the ecosystem with billions of dollars a few years ago, and now they've left. And some of those funds that you're talking about, like Tiger used to be $10 billion funds, now they're $2 billion funds.

Jason Calacanis 1:01:52 Right. They've-

David Friedberg 1:01:52 So-

Jason Calacanis 1:01:52 ... been right-sized. They're not violently doing... I mean, the, the Tiger deal, as my understanding was they weren't joining the board in a lot of the cases, and they were outsourcing the diligence, and that was a pretty violent pace. Uh, I don't know all the details.

David Friedberg 1:02:03 Yeah. This is the best time in probably five years to have a growth fund.

Jason Calacanis 1:02:07 Hmm. Interesting.

David Friedberg 1:02:08 But to, to your point about the size of the venture fund, the bigger the venture fund, the bigger the winner that you need to make that pay off, obviously.

Jason Calacanis 1:02:15 Yes.

David Friedberg 1:02:15 And so because of the power law, so to take an example, I don't know, let's say you've got a billion dollar venture fund. Let's say that at IPO you own 10% of whatever that, that winner is. And because of the power law, your, your fund performance is really determined by your best outcome, right?

Jason Calacanis 1:02:33 Yep.

David Friedberg 1:02:34 So, in order to take a $1 billion venture fund and say deliver a 3X-

Jason Calacanis 1:02:39 Hmm.

David Friedberg 1:02:40 ... you know, so 3 billion of returns, and your best company you own 10% of, that implies you have a $30 billion winner in that fund. And there are precious few outcomes where you have a $30 billion IPO, right?

Jason Calacanis 1:02:55 Yeah. I mean-

David Friedberg 1:02:55 This doesn't happen very often.

Jason Calacanis 1:02:56 Count them on two hands the last cycle.

David Friedberg 1:02:58 Right.

Jason Calacanis 1:02:58 Like I just did. You got, you got Uber, you got Robinhood, you got Coinbase, Strike will eventually come out. You got SpaceX. Well, that was two cycles ago. So, I mean...

David Friedberg 1:03:09 Yeah. You're gonna need to have a meaningful ownership position in a massive company in order to make a fund that big pay off. The, the data that I think LPs look at shows that smaller venture funds tend to perform better for this reason. $500, $600 million-

Jason Calacanis 1:03:23 On a multiple basis, yeah.

David Friedberg 1:03:23 ... funds. So yeah, I personally wouldn't want the pressure of a billion dollar venture fund. That would be really hard.

Jason Calacanis 1:03:30 Hmm.

David Friedberg 1:03:30 As a five or $600 billion venture fund, you kinda need to have or, or wanna have like a decacorn outcome to make that a great fund. But to have to have a $30 billion plus outcome, it's- it's even more difficult.

Jason Calacanis 1:03:44 Moving on. Pew just published, uh, some really interesting research on TikTok. Uh, if you don't know the Pew study, they've been doing it for decades. It's very well respected, um, and, uh, bipartisan or nonpartisan. 4 in 10 US adults aged 18 to 29 are now regularly getting their news from TikTok. Here are some charts for you to take a look at. As you can see, the younger generation is really spending a lot of time on TikTok and getting a lot of their news there. I know this because, uh, yeah, I- I- I've talked to a bunch of kids about this. And people that use TikTok, 52% are regularly getting their news from the platform. And that number has skyrocketed compared to other social platforms. Take a look at this chart. Here's X. 59% of people say they get their news at X. It's really a news platform, so that makes total sense. You look at Facebook, it's, you know, 48% right now. Reddit, 33%, YouTube, 37% in 2024. Instagram, 40%, but TikTok 52, up from 22%. So it's no longer just dancing. And this is the reason I think many people in the government were concerned about the attack vector that the CCP would have in the United States since they still control the company. For services like Snapchat, LinkedIn, and WhatsApp and Nextdoor, it's below 20, below 30% get their news from there. There's your Truth Social there, uh, Sax, 57% of people get news there, and Rumble, 48%. So what do you... What's your takeaway from, from this, just Sax, looking at it and this impact that TikTok has? Is this concerning on a national security level since the algorithm's a black box and you could tweak it if you really wanted to do to really change sentiment, and um, young people are obviously very impressionable on this platform and they're big users of it?

David Friedberg 1:05:32 Well, I thought there was other data in this study that should calm people's fears that TikTok would somehow be used as a political weapon.

Jason Calacanis 1:05:40 Hmm.

David Friedberg 1:05:40 So in the same survey you're talking about, 95% of adults that use TikTok say they use it because it's entertaining, so that's the main reason people use it, and only 10% of accounts followed by US adults post content related to political or social issues. So-

Jason Calacanis 1:05:56 Okay, that's posting and the main reason, right? Sure.

David Friedberg 1:05:59 Yeah. But so- so basically you're... 90% of the accounts that get followed aren't even posting political or social issues. They're there for entertainment as people watching dance videos, as people watching-

Jason Calacanis 1:06:11 Yeah, that's definitely...

David Friedberg 1:06:12 I- I mean, I'll... The main thing I use it for is to watch wrestling highlights. So, uh, you know-

Jason Calacanis 1:06:18 You're a wrestling guy?

David Friedberg 1:06:19 Yeah, I'm a wrestling fan.

Jason Calacanis 1:06:21 What?

David Friedberg 1:06:21 Yeah. (laughs)

Jason Calacanis 1:06:23 You're into this kabuki theater of wrestling?

David Friedberg 1:06:25 (laughs)

Jason Calacanis 1:06:25 This is new information I'm telling you for 20-

David Friedberg 1:06:27 Kayfabe. Yeah. I get my WWE on, uh, on TikTok because I don't have to watch the whole sh-

Jason Calacanis 1:06:32 You do?

David Friedberg 1:06:32 Yeah, I don't have to watch the wh-

Jason Calacanis 1:06:33 Who's your favorite? Are you a Hulk Hogan guy? Are you an Undertaker guy? Uh, Vince McMahon? I mean, who, who-

David Friedberg 1:06:37 S- Strowman.

Jason Calacanis 1:06:38 Jimmy, Jimmy Superfly Snuka.

David Friedberg 1:06:39 (laughs)

Jason Calacanis 1:06:40 Who are you, Andre the Giant?

David Friedberg 1:06:41 The crazy thing is I know all those names, but, uh...

Jason Calacanis 1:06:43 I like... I also love the Road Warriors.

David Friedberg 1:06:45 Yeah.

Jason Calacanis 1:06:46 Uh, Ultimate Warrior I loved. I- I was a huge wrestling fan. That was the one thing that my dad and I- You never got...

Chamath Palihapitiya 1:06:51 ... bonded over. We would watch wrestling every Saturday.

Jason Calacanis 1:06:55 Oh, wow.

Chamath Palihapitiya 1:06:55 Sacks, did you ever watch the, the specials on Saturday night, like the-

David Friedberg 1:06:59 Oh, yeah.

Chamath Palihapitiya 1:06:59 Oh, those were so great.

David Friedberg 1:07:00 That was, that was the era of Hulk Hogan, for sure.

Chamath Palihapitiya 1:07:02 Yeah.

David Friedberg 1:07:03 Saturday night's main event.

Chamath Palihapitiya 1:07:05 Randy Machman-

Jason Calacanis 1:07:05 Hulk Hogan was so good.

Chamath Palihapitiya 1:07:05 ... and Savage.

David Friedberg 1:07:06 Oh, Savage, yeah.

Chamath Palihapitiya 1:07:07 He was great, too.

David Friedberg 1:07:07 Savage.

Chamath Palihapitiya 1:07:07 Savage is great. Savage is great.

David Friedberg 1:07:08 Yeah, I mean, look, my all-time favorite was Stone Cold Steve Austin.

Chamath Palihapitiya 1:07:11 Stone Cold is great.

David Friedberg 1:07:12 I, I marked out the hardest for Austin.

Chamath Palihapitiya 1:07:13 He was, he was anti-woke before anti-woke became a thing.

David Friedberg 1:07:17 Totally.

Jason Calacanis 1:07:18 This is crazy. You guys are into wrestling fans.

David Friedberg 1:07:21 And Flair.

Chamath Palihapitiya 1:07:22 I love, I love wrestling.

David Friedberg 1:07:22 I'd say Flair was number two for me.

Chamath Palihapitiya 1:07:24 Yeah, Ric Flair was great.

Jason Calacanis 1:07:24 Wait, wait. Hold on.

David Friedberg 1:07:25 (laughs)

Jason Calacanis 1:07:25 Have you gone to a wrestling event in person, Sacks?

Chamath Palihapitiya 1:07:27 But Sacks, Sacks, did you, did you only, like, the WWF at the time or did you like the NWA as well?

David Friedberg 1:07:31 They had their moments. When, when Hogan turned heel and joined the, the, uh, was it the NWO? That was, like, a big moment.

Jason Calacanis 1:07:40 I'm a big, uh, Andy Kaufman wrestling fan. That was my only interest, is when, when Andy Kaufman (laughs) came in there and, uh, trolled them. But have you been-

David Friedberg 1:07:49 Oh, yeah, Andy Kaufman. Yeah, that w- that was, like, in the 1970s, wasn't it? Or w- for-

Jason Calacanis 1:07:52 Uh, it was the late... It was '80s.

David Friedberg 1:07:54 '80s, yeah, with Jerry Lawler.

Jason Calacanis 1:07:54 Remember, he was on David Letterman with Jerry Lawler.

David Friedberg 1:07:58 Yeah.

Jason Calacanis 1:07:58 And he (laughs) , he comes to a wrestling match, Sacks, in the South.

David Friedberg 1:08:03 Yeah, that was where I grew up, in my hometown of Memphis.

Jason Calacanis 1:08:05 And he gets in there... Right, so he goes there, and he gets in the ring, and he says, "All of you rednecks, I wanna show you-"

David Friedberg 1:08:12 (laughs)

Jason Calacanis 1:08:12 "... some new inventions. This is called soap."

David Friedberg 1:08:15 (laughs)

Jason Calacanis 1:08:16 "And this is called a washcloth, and you use it to clean yourself." And he's, like, just mocking the Southern accent, and Jerry Lawler. Remember Jerry Lawler smacks him and-

David Friedberg 1:08:28 Yeah.

Jason Calacanis 1:08:28 ... on Letterman? Oh, it's the greatest bit ever.

David Friedberg 1:08:29 No, it was a huge deal, I mean-

Jason Calacanis 1:08:31 Yeah.

David Friedberg 1:08:31 ... where I grew up because th- this was, like, on the local news.

Jason Calacanis 1:08:34 Yes.

David Friedberg 1:08:35 When, when I grew up in Memphis, there was no professional sports teams, okay? All we had was the Memphis State basketball and, and, uh, wrestling every Monday night at the Mid-South Coliseum.

Jason Calacanis 1:08:46 Yeah.

David Friedberg 1:08:46 That was it. That was, like, professional sports in Memphis.

Jason Calacanis 1:08:49 But you, you also had probably, like, some state fairs or, you know, like, best goats-

David Friedberg 1:08:53 (laughs)

Jason Calacanis 1:08:53 ... best sheep or something.

David Friedberg 1:08:55 Lawler was so popular that he could've been elected mayor. In fact, I think there was talk at one point of him becoming mayor.

Jason Calacanis 1:09:02 Huh.

Chamath Palihapitiya 1:09:02 Wow.

David Friedberg 1:09:02 Yeah.

Jason Calacanis 1:09:02 I mean, the inter-gender champion, Andy Kaufman of the world of wrestling-

Chamath Palihapitiya 1:09:05 Did you, uh, did you guys like Mouth of the South?

David Friedberg 1:09:08 Jimmy Hart? Oh, yeah, of course.

Jason Calacanis 1:09:09 Jimmy Hart? Yeah, Hart was great, too.

David Friedberg 1:09:09 Yeah, he was amazing. He was, like, the main heel manager for a while.

Chamath Palihapitiya 1:09:14 Yeah.

Jason Calacanis 1:09:14 Okay, uh-

David Friedberg 1:09:15 This is before the WWE took over. I guess it was called WWF back then. But there were all these little fiefdoms and kingdoms- Mm. ... and Mid-South Wrestling was, like, one of those kingdoms, and Lawler was, like, the king of it-

Jason Calacanis 1:09:26 Yes.

David Friedberg 1:09:26 ... and then you had all these guys come in and out and wrestle.

Jason Calacanis 1:09:29 Friedberg, do you ever watch wrestling and what do you think of this TikTok survey?

David Sacks 1:09:34 I don't watch wrestling.

Jason Calacanis 1:09:35 Okay, very good. And TikTok survey, anything worry you? No? Any thoughts?

David Sacks 1:09:40 Looks like they gathered some reasonable data.

Jason Calacanis 1:09:43 Okay, there you go. There's, there's your hard-hitting, high-

David Friedberg 1:09:45 But this, this isn't the point. My point was-

Jason Calacanis 1:09:46 Yeah.

David Friedberg 1:09:46 ... that it's mostly an entertainment app where people go to watch dance-

Jason Calacanis 1:09:49 Yes.

David Friedberg 1:09:50 ... videos, wrestling clips, style influencers, and so on. And I think that this idea that it's somehow a propaganda tool around, you know, programming our youth, I think that's a moral panic that's been exaggerated.

Chamath Palihapitiya 1:10:02 What do you think the odds are that TikTok is hacked to allow you passively listen even when the app is not being used?

David Sacks 1:10:09 Zero.

Chamath Palihapitiya 1:10:11 You think it's definitively zero?

David Sacks 1:10:12 I mean, not zero, but... No, no, like, 5%.

Chamath Palihapitiya 1:10:13 Five percent?

David Sacks 1:10:14 I think that's very unlikely. Yeah. Because s- someone said that that was, that was, uh, there was some code that enabled that in the early version of the app, and then some other people audited it and they said they did not find evidence that there was any technology. And Apple's got a very good audit system for this, on the iPhone.

Chamath Palihapitiya 1:10:31 Did those same people audit WhatsApp and then it turned out that it was- you could hack it?

Jason Calacanis 1:10:35 Telegram?

David Sacks 1:10:36 They passively listen?

Chamath Palihapitiya 1:10:37 Yeah.

David Sacks 1:10:38 Does WhatsApp passively listen?

Chamath Palihapitiya 1:10:39 Yeah, it's one of the, it's one of the most well-known breaches.

David Sacks 1:10:41 Well, maybe they do. Maybe it's, maybe it's 10%.

Jason Calacanis 1:10:43 I'm 100% certain that the CCP is using it 'cause they, this, people have tracked already journalists using it. So, if they've already done it, it's 100%. Now, I don't know about the passive listening, but any thoughts on 50% plus of young people getting their news here? Chamath, any news on that? I mean, obviously, we don't have evidence that it's being used currently to manipulate people, but it's over 50% of young people are now getting their news there, or say they're getting their news there, so-

David Friedberg 1:11:07 I bet, I bet more than 50% of young people are getting their news from podcasts, and those podcasts get chopped up and clipped, and then people watch them on TikTok.

Jason Calacanis 1:11:14 Yeah, for sure. I think that's-

David Friedberg 1:11:15 I bet that's how it's happening.

Jason Calacanis 1:11:17 There are a lot of people who think this show is a TikTok show and they don't know it's a big show, yeah.

Chamath Palihapitiya 1:11:22 We'll have to prepare for a brave new world in the following way. There was an article, I think it was in the Wall Street Journal, that said that Russia and Iran were paying low-level street criminals to create chaos. Okay, and I, and I read that article and I thought, "Okay, well, what does this mean if you actually extrapolate this, which is that the hot wars are very complicated, not worth doing. These disruptive fissures are the better way to sow chaos." And it occurred to me then that, tying this back to something that we saw before, it does make sense for a lot of folks to sponsor a lot of long tail content that say a lot of different things. I think that that just is pretty obvious.

Jason Calacanis 1:12:08 Hmm.

Chamath Palihapitiya 1:12:10 And so I think that if you put these two ideas together, it stands to reason that a lot of people will be paying influencers a lot of money to create all kinds of content that is specific to a perspective that they have. And then on top of that, if you can algorithmically amplify one over the other, you know, you're, you're going to have issues. Is it the biggest issue in the world? Probably not, but it's probably a thing.

Jason Calacanis 1:12:35 It probably wouldn't swing an election, but it would cause chaos, and we just had the, the Southern District of New York target that Russian... Russia Today was giving $10 million to four podcasters, didn't even know they were getting paid by the Russians. They just picked them because they liked their opinions and they gave them 100,000 an episode to, to promote-... pro-Russian positions.

David Friedberg 1:12:56 If the Russians were actually doing it, it's the stupidest use of $10 million ever because-

Jason Calacanis 1:13:02 That's great news, I think.

David Friedberg 1:13:02 ... those podcasters already had their own channels, they're already putting out lots of content, and this other content is a drop in the bucket. I think, Chamath, the, the issue with what you're saying is just there is so much content out there already. People create it for free. People create it, you know, because they're, they have a career in it. There's a whole long tail of influencers. There is so much content out there already through podcasts, through websites, it's all being chopped up, that trying to do it as some sort of disinformation strategy, I think, is very hard to do because it's just when there's billions and billions of, of impressions, any effort that you try to engineer ends up just being a drop in the bucket.

Jason Calacanis 1:13:41 I agree with that.

David Friedberg 1:13:41 So-

Jason Calacanis 1:13:41 Yeah, it's definitely a drop in the bucket, but that's not the goal.

David Friedberg 1:13:44 ... that's the problem with it is it makes sense in theory, but-

Jason Calacanis 1:13:45 Yeah, it's not the-

David Friedberg 1:13:45 ... it makes sense in theory. It's very hard to do in practice.

Jason Calacanis 1:13:47 Yeah, the goal is not to win any specific argument. It's to create mistrust in the entire news ecosystem, in the information system, so that people give up trying to figure out what the truth is. And that's what the Russians and the KGBs-

David Friedberg 1:14:02 I think the mainstream media is doing that on their own.

Jason Calacanis 1:14:04 Yeah. I mean, you, you could argue that, sure. Sure.

David Friedberg 1:14:04 The mainstream media lies so much, that's what's creating the distrust.

Jason Calacanis 1:14:08 As are the Russians paying off podcasters. Okay, let's give-

David Friedberg 1:14:11 How is $10 million gonna accomplish anything if that story's even true? It makes no sense.

Jason Calacanis 1:14:14 Oh, very simple. Great question. Great question. Uh, may I answer it? It's a great question.

David Friedberg 1:14:19 Let's hear your conspiracy theory.

Jason Calacanis 1:14:20 Not a conspiracy theory at all. These were very low level, mid, like, you know, tier B, C, D podcasters. If you give them $100,000 per episode, they can spend more money buying cameras, promoting their shows, hiring people. So, you're just finding people and dropping money on their heads so they can do more of the same. So, it's a very smart strategy, in fact, I think.

David Friedberg 1:14:41 I think it's the stupidest thing I've ever heard. They, they took podcasters who were already successful and paid them to release content through a less-watched channel. That's the quest.

Jason Calacanis 1:14:49 Yes. It was, it was just more about getting them money to produce more content. And then they, in the-

David Friedberg 1:14:54 They're, these guys are already on-

Jason Calacanis 1:14:55 ... allegedly-

David Friedberg 1:14:56 These guys are already live streaming, like, 24/7.

Jason Calacanis 1:14:58 Oh, there's a puppy. Oh, here he goes. Friedberg trying to win more people over with his puppy love. Unbelievable. This guy is absolutely ridiculous. Unbelievable. All right, listen, let me give Sacks some red meat here. He got, he got his little steak tartare with my Russia Today story, he got your little amuse-bouche, and now I give you your tomahawk. You ready, Sacks? You want your tomahawk?

David Friedberg 1:15:23 (laughs)

Jason Calacanis 1:15:23 You want it rare? Here it comes. 2024

Jason Calacanis 1:15:26 election update. The betting markets and polling indicate a really tight race, but maybe Trump is surging this week. Polymarket, which is a betting market, has Trump 55 to 45 versus Kamala Kalshie, another betting market, 52-48 Trump. Bovada and