All-In PodcastHurricane fallout, AlphaFold, Google breakup, Trump surge, VC giveback, TikTok survey
EVERY SPOKEN WORD
150 min read · 30,192 words- 0:00 – 3:18
Bestie intros!
- JCJason Calacanis
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?
- DSDavid Sacks
Wow, we have allin.com. How much did we spend on this? This is great, guys. Best.
- JCJason Calacanis
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-
- DSDavid Sacks
Don't, don't say. Don't say.
- JCJason Calacanis
... I think I got it. Don't say?
- DSDavid Sacks
Don't say.
- JCJason Calacanis
I'll just say it. You bleep it out. I got it for (beep) or so.
- DSDavid Sacks
(laughs)
- JCJason Calacanis
And that's a million dollar domain, just so we all know. Five letters in the dictionary? Oof. So good for branding.
- DFDavid Friedberg
Good job, JCom.
- JCJason Calacanis
Thank you, my friend.
- DFDavid Friedberg
Yeah, and now we have allin.com/tequila.
- DSDavid Sacks
Ooh, I love it.
- JCJason Calacanis
Exactly. Exactly. And you can yum yum.
- DFDavid Friedberg
Yeah.
- JCJason Calacanis
I got you, Sacks.com, didn't I? You have the domain name Sacks.com.
- DFDavid Friedberg
Oh, yeah. Yeah, yeah, yeah.
- JCJason Calacanis
I negotiated that for you.
- DSDavid Sacks
Wow, we have all the way back to episode 1. This is incredible.
- JCJason Calacanis
Oh, the new website?
- DSDavid Sacks
Yeah, this is great.
- JCJason Calacanis
Oh, can I tell you, if I may-
- DSDavid Sacks
There's a website? Allin.com. Allin.com? That's our website?
- DFDavid Friedberg
It's like this thing is real.
- DSDavid Sacks
Yeah.
- JCJason Calacanis
It's like a real thing.
- DSDavid Sacks
After four years we got our shit together. This looks great.
- JCJason Calacanis
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.
- DSDavid Sacks
What are you doing?
- JCJason Calacanis
And you get to spend-
- 3:18 – 14:59
The science behind Hurricanes Helene and Milton
- JCJason Calacanis
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.
- DSDavid Sacks
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-
- JCJason Calacanis
Let me pause there for a second-
- DSDavid Sacks
Yeah.
- JCJason Calacanis
... 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?
- DSDavid Sacks
That's roughly it. And, um, Nick's gonna pull up-
- DFDavid Friedberg
Wait, what is the pollution again? Sorry, I just don't understand.
- JCJason Calacanis
It's emissions-
- DSDavid Sacks
It's sulfur dioxide-
- JCJason Calacanis
Sulfur dioxide.
- DSDavid Sacks
... 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.
- JCJason Calacanis
Smoke.
- DSDavid Sacks
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-
- CPChamath Palihapitiya
So sorry, can I ask you a question?
- DSDavid Sacks
Yeah.
- CPChamath Palihapitiya
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?
- DSDavid Sacks
Yeah, so in addition ...
- CPChamath Palihapitiya
No, no, I'm asking...
- DSDavid Sacks
Yeah.
- CPChamath Palihapitiya
I'm asking you the question. Is that true or not?
- DSDavid Sacks
Um, so, yes, we are no longer reflecting as much sunlight, and so for several decades-
- CPChamath Palihapitiya
Like we had, we had bad fuel sources-
- DSDavid Sacks
We had artificial, we had artificial cooling effectively, yeah.
- CPChamath Palihapitiya
... we had an artificial cooling, and now we take... But that's counter to the narrative of what we all think is happening.
- DSDavid Sacks
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.
- CPChamath Palihapitiya
Mm-hmm.
- DSDavid Sacks
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.
- DFDavid Friedberg
Wait, wait, so the pollution was good?
- DSDavid Sacks
Turns out it was good.
- JCJason Calacanis
That's the paradox here-
- 14:59 – 29:03
The economics of intensifying natural disasters
- DSDavid Sacks
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-
- CPChamath Palihapitiya
Mm-hmm.
- DSDavid Sacks
... 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-
- CPChamath Palihapitiya
Well, that-
- DSDavid Sacks
... and-
- CPChamath Palihapitiya
... that's probably the reason why they'll have to do it because they'll-
- DSDavid Sacks
Exactly.
- CPChamath Palihapitiya
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.
- DSDavid Sacks
Yeah.
- DFDavid Friedberg
Wait, Freeburg, are you saying the entire Florida coastline is no longer economically viable?
- DSDavid Sacks
No! It's totally viable, it's just the question is, what are you willing to-
- CPChamath Palihapitiya
At what price?
- DSDavid Sacks
... price?
- CPChamath Palihapitiya
At what price?
- DSDavid Sacks
Will you pay 5% of your home value for insurance every year? You know, will you pay 2%, 3%?
- DFDavid Friedberg
If the expected life of a house is 20 years, then th- no, that's not, that's not viable.
- CPChamath Palihapitiya
It becomes very, very untenable.
- DSDavid Sacks
Well, it used to be one in 500 here, now it's probably-
- DFDavid Friedberg
But my question is-
- DSDavid Sacks
... one in 50, right?
- DFDavid Friedberg
... does this apply to the entire coastline or just parts of it?
- DSDavid Sacks
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.
- CPChamath Palihapitiya
And the only good news-
- DSDavid Sacks
So we're going to see more of this stuff.
- CPChamath Palihapitiya
... 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-
- DSDavid Sacks
An investment in climate resilience, that's right.
- CPChamath Palihapitiya
Yeah, so it might-
- DSDavid Sacks
Yeah.
- CPChamath Palihapitiya
... 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.
- DFDavid Friedberg
Yeah, but is anyone talking about a federal bailout? I mean, is that... this is something you're predicting?
- 29:03 – 35:17
AlphaFold creators win Nobel Prize in Chemistry
- JCJason Calacanis
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-
- DSDavid Sacks
Did we, did we predict that they would win the Nobel Prize at the time?
- JCJason Calacanis
I believe you did. I will go check the receipts using-
- DSDavid Sacks
Well, hold on, hold on, hold on.
- CPChamath Palihapitiya
... 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-
- DSDavid Sacks
Yeah. Yeah.
- JCJason Calacanis
Shout-out Yuri Milner.
- CPChamath Palihapitiya
Shout-out Yuri and Julia.
- JCJason Calacanis
And Julia.
- CPChamath Palihapitiya
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-
- JCJason Calacanis
Hmm.
- CPChamath Palihapitiya
... 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.
- JCJason Calacanis
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.
- CPChamath Palihapitiya
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.
- JCJason Calacanis
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.
- DSDavid Sacks
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?
- JCJason Calacanis
Yeah. It would use people's machines and extra CPU, like the SETI@home project to-
- DSDavid Sacks
Precisely, yeah.
- JCJason Calacanis
... do the same thing.
- DSDavid Sacks
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-
- JCJason Calacanis
Hmm.
- DSDavid Sacks
... 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.
- JCJason Calacanis
Yep.
- DSDavid Sacks
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-
- JCJason Calacanis
Yeah.
- DSDavid Sacks
... 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.
- JCJason Calacanis
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-
- DSDavid Sacks
Plus-sized proteins. (laughs)
- JCJason Calacanis
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-
- DSDavid Sacks
(laughs)
- 35:17 – 38:53
The Jayter's Ball
- CPChamath Palihapitiya
computer based.
- JCJason Calacanis
Yeah, all computer based, and in related news, Benioff just nominated himself for excellence in CRM management.
- DSDavid Sacks
(laughs)
- CPChamath Palihapitiya
(laughs)
- JCJason Calacanis
So, congratulations to Benioff on nominating himself for a Nobel.
- CPChamath Palihapitiya
What is that about? (laughs)
- DSDavid Sacks
What does that call in? I don't know.
- JCJason Calacanis
It's just a stray.
- CPChamath Palihapitiya
(laughs)
- DFDavid Friedberg
Why are you attacking Benioff?
- JCJason Calacanis
It's just a stray.
- DSDavid Sacks
What did Benioff do?
- CPChamath Palihapitiya
The audience loves-
- JCJason Calacanis
I mean, what did he do wrong?
- DSDavid Sacks
Uh, yeah, it's just a joke.
- JCJason Calacanis
Take out... It's a joke.
- DFDavid Friedberg
What did he do?
- DSDavid Sacks
They're just jokes.
- CPChamath Palihapitiya
Have you not learned anything from the Palmer Luckey incident?
- DSDavid Sacks
You're better attached to people that attack you.
- JCJason Calacanis
It's not an attack.
- DSDavid Sacks
When you...
- JCJason Calacanis
It's a joke.
- DFDavid Friedberg
The opening salvo.
- DSDavid Sacks
Benioff has done so much for philanthropy.
- CPChamath Palihapitiya
Yeah, but-
- DSDavid Sacks
Just ask him. If you... (laughs)
- CPChamath Palihapitiya
I, I don't, I-
- DFDavid Friedberg
Oh, my God.
- DSDavid Sacks
(laughs)
- 38:53 – 53:32
Google antitrust update: DOJ is going for a breakup
- JCJason Calacanis
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?
- DSDavid Sacks
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-
- JCJason Calacanis
Chamath, what's the, uh, likely outcome here?
- DSDavid Sacks
... like, how we should be- how we should think about this stuff.
- JCJason Calacanis
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?
- CPChamath Palihapitiya
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.
- JCJason Calacanis
Hm.
- CPChamath Palihapitiya
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.
- JCJason Calacanis
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?
- DFDavid Friedberg
Well, it is ironic that frequently the government takes actions on these monopolies at precisely the moment they're subject to the greatest disruption.
- CPChamath Palihapitiya
(laughs) Totally.
- DFDavid Friedberg
The same thing happened with Microsoft in a way, but it-
- CPChamath Palihapitiya
Totally.
- DFDavid Friedberg
... 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.
- JCJason Calacanis
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-
- CPChamath Palihapitiya
Wait...
- JCJason Calacanis
... just for Gemini and make it kick ass.
- CPChamath Palihapitiya
You're 100% right.
- JCJason Calacanis
Google-
- CPChamath Palihapitiya
You're 100% right. We-
- JCJason Calacanis
... you suck at apps.
- CPChamath Palihapitiya
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.
- JCJason Calacanis
Hm.
- CPChamath Palihapitiya
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.
- JCJason Calacanis
Yeah.
- CPChamath Palihapitiya
Build the apps, make them kick ass, make the ChatGPT alternative, and get it to billions of people yesterday.
- JCJason Calacanis
Hm.
- CPChamath Palihapitiya
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-
- JCJason Calacanis
Right.
- CPChamath Palihapitiya
... as possible.
- 53:32 – 1:03:44
VC giveback: CRV will return ~$275M of a $500M fund to LPs
- JCJason Calacanis
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-
- CPChamath Palihapitiya
I-
- JCJason Calacanis
... I guess, trend?
- CPChamath Palihapitiya
I think it was-
- JCJason Calacanis
Like, we got two stories here, so I don't know if you consider it a trend or not.
- CPChamath Palihapitiya
Peter Thiel, Peter Thiel did this, and he gave back-
- JCJason Calacanis
Yeah.
- CPChamath Palihapitiya
... 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.
- JCJason Calacanis
Mm.
- CPChamath Palihapitiya
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.
- JCJason Calacanis
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?
- DSDavid Sacks
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.
- JCJason Calacanis
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?
- DFDavid Friedberg
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.
- JCJason Calacanis
Explain, please, for me.
- DFDavid Friedberg
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.
- JCJason Calacanis
Hmm.
- DFDavid Friedberg
They can do their pro ratas out of the main fund.
- JCJason Calacanis
Hmm.
- DFDavid Friedberg
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-
- JCJason Calacanis
Why? Yeah.
- DFDavid Friedberg
Well, because a lot of the, uh, crossover capital has left the ecosystem-
- JCJason Calacanis
Okay.
- DFDavid Friedberg
... a few years ago.
- JCJason Calacanis
The Tigers and that sort of cohort, SoftBank-
- DFDavid Friedberg
Yeah, and you know, you look at s-
- JCJason Calacanis
... Masayoshi Son?
- DFDavid Friedberg
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.
- JCJason Calacanis
Right. They've-
- DFDavid Friedberg
So-
- 1:03:44 – 1:15:26
New TikTok survey shows increased usage as a news source
- DFDavid Friedberg
- JCJason Calacanis
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?
- DFDavid Friedberg
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.
- JCJason Calacanis
Hmm.
- DFDavid Friedberg
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-
- JCJason Calacanis
Okay, that's posting and the main reason, right? Sure.
- DFDavid Friedberg
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-
- JCJason Calacanis
Yeah, that's definitely...
- DFDavid Friedberg
I- I mean, I'll... The main thing I use it for is to watch wrestling highlights. So, uh, you know-
- JCJason Calacanis
You're a wrestling guy?
- DFDavid Friedberg
Yeah, I'm a wrestling fan.
- JCJason Calacanis
What?
- DFDavid Friedberg
Yeah. (laughs)
- JCJason Calacanis
You're into this kabuki theater of wrestling?
- DFDavid Friedberg
(laughs)
- JCJason Calacanis
This is new information I'm telling you for 20-
- DFDavid Friedberg
Kayfabe. Yeah. I get my WWE on, uh, on TikTok because I don't have to watch the whole sh-
- JCJason Calacanis
You do?
- DFDavid Friedberg
Yeah, I don't have to watch the wh-
- JCJason Calacanis
Who's your favorite? Are you a Hulk Hogan guy? Are you an Undertaker guy? Uh, Vince McMahon? I mean, who, who-
- DFDavid Friedberg
S- Strowman.
- JCJason Calacanis
Jimmy, Jimmy Superfly Snuka.
- DFDavid Friedberg
(laughs)
- JCJason Calacanis
Who are you, Andre the Giant?
- DFDavid Friedberg
The crazy thing is I know all those names, but, uh...
- JCJason Calacanis
I like... I also love the Road Warriors.
- DFDavid Friedberg
Yeah.
- JCJason Calacanis
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...
- CPChamath Palihapitiya
... bonded over. We would watch wrestling every Saturday.
- JCJason Calacanis
Oh, wow.
- 1:15:26 – 1:16:28
Election update: Are polling problems causing a strategy shift for Kamala Harris?
- JCJason Calacanis
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 PointsBet, those are offshore booking, and Polymarket is also offshore, 52-48 Trump. Nate Silver, friend of the pod, his algorithm has it 53-47 Kamala. RealClearPolling, that's an algorithm, has Kamala with a two-point lead. New York Times/Siena, Kamala with a three-point lead. Reuters/Ipsos, pretty well trusted, uh, three-point lead for Kamala. NPR/PBS/Marist Poll has Kamala with a two-point lead. So, sportbooks and betting markets are favoring Trump slightly, while the polls are slightly favoring Kamala. Sacks, I sliced it up nice for you. You got nice 10 slices of meat here. Which slice you going for?
Episode duration: 1:24:18
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