Mag 7 sell-off, Wiz rejects Google, UBI, Kamala in, China's nuclear buildout, Sacks responds to PG

Jason Calacanis 0:00 Oh, no. Gosh, I'm having some technical difficulties, Friedberg. There's something happening.

Chamath Palihapitiya 0:05 Oh, you got a bit? Oh, there's a bit coming-

Jason Calacanis 0:06 Something's breaking in.

Chamath Palihapitiya 0:07 Oh, what's happening?

Jason Calacanis 0:08 Oh, no. My camera is not working, but I sense something is happening, guys. (object thuds) It's like a transformation I'm going through. You're not gonna believe it. Yes, this is I, Nushra Kanis, I am here.

Chamath Palihapitiya 0:20 (laughs)

David Sacks 0:20 (laughs)

Jason Calacanis 0:20 I'm here, Nushra Kanis has arrived.

David Sacks 0:23 (laughs)

Jason Calacanis 0:24 I have predicted the hot swap, Sax. Can I get my flowers now from you, Sax? You s- you need to bring me-

David Sacks 0:30 Yeah, I give you... I absolutely give you credit for that. You also predicted a speed run primary, which is the opposite-

Jason Calacanis 0:35 (laughs)

David Sacks 0:35 ... of what happened.

Chamath Palihapitiya 0:36 (laughs)

Jason Calacanis 0:36 Okay, well-

David Sacks 0:37 So one out of two is not bad though.

Jason Calacanis 0:39 Nushra Kanis did not account for the Democratic Party being run by the Deep State, huh?

Chamath Palihapitiya 0:46 (laughs)

David Sacks 0:46 (laughs)

Jason Calacanis 0:47 But, uh, I'm having a vision. Producer Nick, there is a vision for you, coming in to view. Yes. Your uncle has been bought out of the All-In podcast that's going full MAGA.

Chamath Palihapitiya 1:02 (laughs)

David Sacks 1:02 (laughs)

Jason Calacanis 1:02 And he, he got the $25 million buyout deal and he gave you 20%. We're leaving, we're going to start a new podcast and Jared Kushner is the new moderator here.

Chamath Palihapitiya 1:14 (laughs)

Jason Calacanis 1:14 Oh no, wait, it's J.D. Va... No, it's Alex Jones.

Chamath Palihapitiya 1:17 (laughs)

Jason Calacanis 1:17 Starting next week, Alex Jones, the new host.

Narrator 1:20 I'm going all in.

Jason Calacanis 1:20 Oh wait, I'm going away. Nusra Kanis is being pulled away.

Narrator 1:26 I'm going all in. Don't let your winners ride.

Jason Calacanis 1:31 Rain Man, David Sacks.

Narrator 1:32 I'm going all in. And I said- We open source it to the fans and they've just gone crazy with it.

Jason Calacanis 1:39 Love you, bestie.

Chamath Palihapitiya 1:39 Nice meeting you.

Narrator 1:40 Queen of Quinoa. I'm going all in.

Jason Calacanis 1:43 All right, let's get started here. We've got a full docket. We've got civil wars. Everything is going down in All-In land. It is episode 189. You're not done with us yet, folks. The world's number one podcast is still publishing. The world is still spinning.

Chamath Palihapitiya 2:01 Hey, did you announce that you're, you've moved to Texas?

Jason Calacanis 2:03 I did, I did. I, I did a little tweet. I, uh, we moved to Austin a little earlier this year. We have a horse ranch and, um, you know, we've always wanted to move to Austin. We looked during the pandemic, thanks for asking, Chamath, and we wanted to have a ranch and horses and live a, a more homesteading lifestyle. And obviously a lot of our friends are in Austin, so I'll still be spending a lot of time in the valley in New York like I always do, and Miami, but the home base and the girls are going to school in, in Austin.

Chamath Palihapitiya 2:34 How is it going so far? It's super hot, you know, isn't it, in the summertime?

Jason Calacanis 2:36 The summers are hot, but most people decamp, so we'll decamp for Tahoe or Park City or something during the summer months and the winter months, uh, to go skiing and get a little lake time or whatever. And, uh, yeah, we're really, really excited. We, we found an incredible horse farm and we're gonna raise animals and horses and just enjoy these last years with the girls while, um, you know, there's some big announcements coming in terms of my accelerator and, uh, my investing in startups in Austin. So I'll, I'll save those announcements for maybe the fourth quarter. Some big announcements will happen and, um, yeah, I'm just super excited. Obviously I'm gonna miss, you know, the weekly poker game, but I will be back, uh, on the regular and, uh, we'll just do a double session, play Friday, Saturdays we'll do. Just, you gotta get the sh- for two days in a row, we'll just do a full Friday session. Everybody take off Fridays.

Chamath Palihapitiya 3:27 I'm sad to see you go.

Jason Calacanis 3:29 The one thing I'm sad about (laughs) is, like, missing the Thursday game, but I'll be back regular.

Chamath Palihapitiya 3:33 Don't forget science corner today. We got a great science corner lined up.

Jason Calacanis 3:36 Absolutely, absolutely.

Chamath Palihapitiya 3:37 Sax is looking forward to it.

Jason Calacanis 3:38 We're g-

Chamath Palihapitiya 3:39 Sax has been texting me all week about it.

Jason Calacanis 3:40 As Sax said-

Chamath Palihapitiya 3:40 He's like, "I can't wait for science corner. I'm thrilled." He was shaking nervously.

Jason Calacanis 3:44 (laughs)

Chamath Palihapitiya 3:45 He's ready.

Jason Calacanis 3:46 (laughs) Sax does not look amused.

Jason Calacanis 3:50 All right, let's get started. Wiz has declined Google's $23 billion offer and it intends to IPO. Some big news there. Last week we talked about Google offering to acquire this cloud security startup for $23 billion. CNBC reported Wiz declined Google's offer. Wow, that's big time, because Wiz was valued at $12 billion in its most recent funding round. They've got about $500 million in ARR, uh, so this $23 billion (laughs) is a massive, massive 50 times current revenue, 23 or so times forward-looking revenue. They think they'll hit a mil- a billion in ARR. This is a company that was founded in 2020 and just so... If you don't know what they do, they help people secure their data in clouds like AWS, Azure, Google Cloud, all that good stuff. But high growth SaaS businesses are trading at a 10X forward revenue multiple. There's the chart. This is obviously an absurd premium and two potential reasons that I can think of, and I'm curious your positions, gentlemen, of why they would do this. I guess, Chamath, there's two reasons. One, they think they can grow this company at a high percentage, maybe fill in that premium Google was willing to pay, or maybe they're scared that they can't get this deal through, you know, regulators. What's your take here? And then we'll go talk about the wider cloud and Google Cloud and AWS in a moment, but what, what's your initial take here of why they would do this, Chamath?

Chamath Palihapitiya 5:16 I actually wonder whether this deal would have had more probability of happening had the whole AT&T/Snowflake leak not happened. Because I think that when you have moments like this, there's a non-trivial possibility that it supercharges sales even more. I think the reality is that if you're a hyper-scaler, so if you're Amazon or Google or Microsoft, your business is pretty fragile and brittle if... the services you provide or the services that third parties like Snowflake provide through you are not reliable. And so, I've never heard of a business that has generated so much ARR so quickly. I mean, from zero to half a billion dollars in four or five years. I mean, how do you even build a product surface area quick enough to capture that much revenue? I think it just goes to show you how bad security is-

Jason Calacanis 6:17 Mm.

Chamath Palihapitiya 6:17 ... in the cloud and how needed it is. So, it doesn't surprise me that Google wouldn't buy something like this. I think Amazon and, and Microsoft would probably want something like it as well. I suspect that if you had to guess why they said no, is because they thought that they could grow revenue much faster because of recent events as well as their own just natural momentum. And I think that if, if this thing had not happened, I wonder whether they wouldn't have just sold.

Jason Calacanis 6:46 All right. Sax, I want to get your take on this after showing you a couple of charts here. Google's cloud revenue growth has been absolutely stunning. Here is a chart. They're gonna hit, gosh, in the first half they did almost 20 billion, so they're on a run rate of $40 billion this year. Last year they did 33. Back in 2017, they only did four. And if you compare this to Amazon's AWS, again these are cloud services, people can buy, compute in the cloud. AWS, if you look at those first seven years, the all, the crack all-in research team put these side by side. Uh, Google is tracking almost identical (laughs) in revenue to AWS's. Interestingly, META and Apple do not have a competitor here. You said, uh, on this podcast, Chamath, I think last year, that would be a pretty bold move by Apple to have a cloud computing platform since they have all the app developers. Sax, what, what do you think of this just tremendous run by Google Cloud, or also known as GCP in the industry?

David Sacks 7:49 Well, all the cloud service providers are doing extremely well. I mean, cloud is still the future of software and the cloud service providers are still growing really strongly. On Wiz, I think the most likely explanation is that they just wanna keep building this as a standalone company. I think they're probably also worried that they can't get the deal through. The multiples that we have right now are not that insane. I mean, I think the long-term median software multiple is around a seven. So, you know, you see here the mid-growth median is 7.7. We're about tracking at the historical pre-COVID mean. And we had that really frothy, bubbly period in 2020 and 2021, and that's clearly over. Now, in terms of how our friends at Altimeter break this down, I think that high growth means a 30% or greater growth rate, and then I think the mid-tier is more like, what is it, like 10 or 15% to 30%. And then the low growth is like, you know-

Jason Calacanis 8:49 Yeah, single digits.

David Sacks 8:49 ... like under 10. Yeah. So my point is, if Wiz is growing at-

Jason Calacanis 8:54 100%.

David Sacks 8:54 A hundred... We don't... 100%. I mean, I don't know if it's still growing at 100%, but, I mean, I guess they're projecting a bill-

Jason Calacanis 9:01 Even 50%, yeah, would be.

David Sacks 9:02 Yeah, they're, they're projecting a billion in ARR next year, up from, what is it, roughly 500. Like, that offer may not be that crazy. Again, you know, you're getting 10 times at a 30% average growth rate. So, you know, let's say they get to a billion in ARR next year and then they're forecasting, you know, whatever it is the, the year after. You know, the 23 may be reasonable. So, I can see why these guys would just wanna go for it if they think they're building a big standalone company.

Jason Calacanis 9:33 Uh, Freyberg, let's talk a little e- since you were a Googler at some point, um, this GCP product, maybe you could tell us a little bit about, uh, and I know you know some of the people running it, um, how meaningful this is becoming to Google or how much of a priority it is. Uh, YouTube, obviously Android priority is there at the company, then you have like the next tier down, Nest, Waymo, you know, some of those other projects. But, but how important is GCP right now to Google?

David Friedberg 9:59 Well, GCP in the last quarter did 10.3 billion in revenue, which is up from 8 billion in revenue the year before, in the same quarter the year before. And importantly, in this past quarter, they're running at a $1.2 billion operating profit i- out of GCP. So, you know, if you kind of think about what cloud margin should be over time, and, and kind of call it 20 to 30% margin, this cloud business could be generating 20 to $30 billion a year of free cash flow.

Jason Calacanis 10:27 Mm.

David Friedberg 10:28 Now, in the last year, if you kind of look at, or even if you look at the last quarter annualized, Google's generating currently about $60 billion a year in free cash flow as an overall organization, Alphabet is. Um, and they have over 100 billion in cash. So, you know, what can I do to accelerate this cloud outcome given the risks, the challenges, the slowdown with respect to the core consumer business? Cloud and AI based tools really is where it's at. And so Google's asking this important strategic question I would imagine, what can we do to accelerate outcomes in the cloud? And what can we do that is gonna be big enough to matter?

Jason Calacanis 11:10 Mm.

David Friedberg 11:11 And what can we do that is gonna pass antitrust muster? So we can actually get it through antitrust authorities. So cloud security kind of comes top of mind. It's a fast-growing segment as evidenced by the results with, with Wiz. And it's, uh, an opportunity for Google to cross-sell and to secure more enterprise customers and theoretically cross-sell more enterprise revenue by getting folks on a platform, um, that Google could now offer. I would imagine that what Sax is saying is probably right. I have absolutely no sense of what these individuals and board members at Wiz are thinking. But I think what Sax is saying is right. This is an incredibly fast-growing business. Peter Thiel made the comment once, which I think is totally right. Either the buyer pays way too much...... or the seller sells way too early. Um, when you have a fast-growing business like this, it's really an important question to kind of acknowledge that if Wiz continues to grow at this rate, it's conceivable they could be in the range of a Palo Alto Networks' $100 billion market cap in a couple of years, um, you know, given, uh, given this momentum and if you, if you progress it forward. So if I was them, I would ask that question, "Could we r- reach $100 billion if we feel reasonable- reasonably confident?" This may be a, a, a risk worth taking. And what's the downside, right? The downside is they go public next year anyway, and maybe they're only valued at 15 billion or 20 billion. There's not a lot of downside from this offer, and certainly seems to be quite a bit of upside. But I think for cloud, the thing to, to watch is what they're gonna do next. Google wants to accelerate beyond AWS. They want to become the leader, and they're going to look for other sizable transactions that will pass the antitrust muster. And so I think you could see them perhaps looking at some public M&A in the same space, and I wouldn't be surprised to see them start to get active in that sense.

Jason Calacanis 12:53 YouTube and GCP are the, uh, are the two money printing machines inside-

David Friedberg 12:56 Yeah.

Jason Calacanis 12:56 ... the organization that have actually paid off. Android's paid off in terms of dumping more search, you know, from the default search buttons or boxes. But I guess the, to steel me on the other side, if you're on the board and you want your cash, you know, you get 100% of it, you take no risk, and what if Google decides they're going to make this product free and bundle it as we saw Microsoft do in a number of cases, and they just Microsoft Teams this or Internet Explorer it? I guess that would be the risk is if Google feels, uh, some vendetta here and puts this product out for free.

Jason Calacanis 13:30 As you alluded to, Chamath, it was a big week for cybersecurity. CrowdStrike had a really rough week last week when they knocked out eight and a half million Windows machines. Just to briefly explain what happened here, uh, obviously Wiz is cybersecurity and so is CrowdStrike. CrowdStrike, instead of working on datasets in the cloud, they work on securing your laptop, your desktop, your servers, all that kind of stuff for threats. And, uh, they did an update, and when they did their update, a sensor configuration update as they called it, to Windows, uh, machines, they basically bricked them. And this wasn't a cyberattack. They're a cybersecurity company, they weren't attacked. They updated it and it crashed all these machines, and these machines all needed to have a hard reset by IT. It wasn't something that could just be field swapped apparently. People had to go back to their offices in some cases. Delta was hit hardest. They canceled over 6,000 flights, and there's a Department of Transportation, uh, investigation going on now. Shares are down 25% since Friday, so that represents $24 billion in market cap. Uh, CrowdStrike's CEO has been, uh, clowned for his apology and explanation. And, uh, the good news though is they sent everybody an Uber Eats gift card, so I'm super happy about that. Chamath Sax, looking at this and dovetailing it with the last story, this is gonna be an ongoing story and, and one of the big trends in our industry, yeah? Major outages like this?

Chamath Palihapitiya 14:59 I think the reality is that that code is still really brittle and there's gaping holes everywhere. And I suspect that the reason why foreign adversaries don't hack us is because we could hack them back. And so I think it's almost like a mutually assured destruction is the only reason why these things stay up every day.

Jason Calacanis 15:17 Mm-hmm.

Chamath Palihapitiya 15:18 So at some point, we're gonna write better code. Maybe these AI agents will do it and there won't be, like, memory leaks and all this other random stuff. But in the meantime, I think you just have to assume that everybody will get access to all of your information and that eventually everything is hacked and everything is leaked.

Jason Calacanis 15:37 Yeah, and act accordingly. (laughs)

Chamath Palihapitiya 15:38 And act accordingly. (laughs)

Jason Calacanis 15:40 Yeah, assume every... The worst conversation you ever had on social media or on, uh, DMs is gonna come out. All right, I think we've kind of finished this round. Anybody have any thoughts on this CrowdStrike thing? It seems like it's over now.

David Sacks 15:52 I don't have a lot to say about them except actually this, is that that company has some murky connections to the deep state.

Jason Calacanis 15:59 Oh, right.

David Sacks 16:00 And yeah. Well, apparently-

Jason Calacanis 16:01 Ooh, CrowdStrike.

Chamath Palihapitiya 16:02 Really?

David Sacks 16:02 Yeah, their, their fingerprints were all over, you know, Hillary's Bleached server. Then there's been other reports, which I don't n- know exactly what to make of. I can say this, that in the wake of this, Elon announced that he was removing CrowdStrike from any of his company's servers. Similarly, I had my IT department check and make sure that we didn't have it running anywhere, we don't. I'm just gonna be frank, I don't trust this company.

Jason Calacanis 16:25 Mm-hmm. All right, there you have it. Uh, deep state.

Chamath Palihapitiya 16:29 (laughs)

Jason Calacanis 16:29 Tinfoil hat.

Chamath Palihapitiya 16:30 Deep state? (laughs)

David Sacks 16:31 (laughs)

Jason Calacanis 16:31 Deep state accu- accusation, or-

David Friedberg 16:33 I was gonna wear a tinfoil hat today. I forgot.

David Sacks 16:35 You believe what you want. That's what I do.

Jason Calacanis 16:37 I, I don't... This is the first I'm hearing about it. I don't have my tinfoil hat here.

Chamath Palihapitiya 16:40 (laughs)

David Sacks 16:40 (laughs)

Jason Calacanis 16:40 But, uh, who knows? I guess, uh-

David Sacks 16:43 Use your products if you want to. Use the products if you want to.

David Friedberg 16:45 (laughs)

Jason Calacanis 16:45 Okay, there you have it, folks.

Chamath Palihapitiya 16:46 (laughs)

Jason Calacanis 16:47 Uh, and Sax is, is, uh, puts his endorsement behind Palantir, definitely not deep state Palantir. (laughs)

Chamath Palihapitiya 16:53 (laughs)

David Sacks 16:54 No, Palantir, look, there's no question that Palantir's, Palantir sells into the deep state, but-

Jason Calacanis 16:58 Yes.

David Sacks 16:58 ... I don't know that that makes it deep state.

Jason Calacanis 17:00 Well, they're on your team as opposed to the other team, so.

Chamath Palihapitiya 17:03 (laughs)

David Sacks 17:04 No, hold on. I'm not, no, hold on. I'm not on any team in-

Jason Calacanis 17:06 (laughs)

Chamath Palihapitiya 17:07 (laughs)

David Sacks 17:07 ... respect, I don't really understand what you're saying there.

Jason Calacanis 17:10 I'm just goofing.

David Sacks 17:10 I have shares in the company.

Jason Calacanis 17:12 (laughs)

David Sacks 17:12 I think it's a good investment.

Jason Calacanis 17:14 Oh, okay. There you have it.

Chamath Palihapitiya 17:15 (laughs)

Jason Calacanis 17:15 All right, let's go to the stock market. It just had its worst day since... (laughs) I gotta get a tinfoil hat for a bit here.

David Sacks 17:20 One thing I want to say, none of us are at any risk of running Palantir on our servers, okay?

Jason Calacanis 17:25 Absolutely.

David Sacks 17:26 CrowdStrike is running in the background of many, many companies who may not even be fully aware of it.

Jason Calacanis 17:30 Mm-hmm.

David Sacks 17:31 And they were certainly surprised when all those airlines' computers went down, right? So my only point is, maybe you should make sure about whether you're running their products or not, and then make a conscious decision whether you think that's a good idea. That's all.

Jason Calacanis 17:44 That's all. Just a little tip from, uh, the more you know from David Sax. (laughs)

Chamath Palihapitiya 17:47 (laughs)

David Sacks 17:47 Jake Ellington, Jake Ellington.

Jason Calacanis 17:49 Move on. I'm trying.

David Friedberg 17:50 That's good. (laughs)

Jason Calacanis 17:50 I'm trying

Jason Calacanis 17:51 my best. Right. The stock market just had its worst day since 2020 on Wednesday.Clearly, this is because of the January 6th insurrection. The NASDAQ, which is the most tech... I'm joking. The NASDAQ, which is the most tech heavy, fell 3.6%. S&P down 2.3%. Bunch of magnificent seven companies were in the red. But you got to put this in context. NASDAQ and S&P still up around 15% for the first half of the year, record setting territory, obviously, if that holds up or increases. There's a lot of theories about this that people are rotating out of the Mag 7 tech stocks, which were a place that, uh, maybe got a little overheated with the AI bubble. Here's the top gainers that are not in the Mag 7, as you can see. Financials, energy, materials. Over the last six months, S&P financials up 11, S&P energy nine, S&P materials 9% as well, broader index up 11, as we said. Tesla dropped 12% after missing on earnings, but they had a massive runup earlier this year. Google dropped 5%. I guess YouTube was what most people pointed to. Their revenue came in lower than expected. So, maybe some softness in the advertising market, which would then correlate with consumers. NVIDIA down 7%. Meta down 6%. Chamath, any thoughts here on what we're saying? You talked a lot about the consumer weakening on an episode about six weeks ago, I believe. So, is this just the manifestation of that prediction you made?

Chamath Palihapitiya 19:20 Not this specific thing. I think that when you see a broad-based set of revenue misses that, that will kind of mean that the consumer is really under pressure. I think, I still think that that's more in the fall. But we're headed in that direction.

Jason Calacanis 19:36 Mm-hmm.

Chamath Palihapitiya 19:36 I think what happened here is that the market is just priced to perfection, and all of a sudden, we had all kinds of volatility. You had the former president almost assassinated. You have the current sitting president resign. You have a somewhat convoluted process to pick who replaced him that, at a minimum, was opaque. And all of these things create doubt and anxiety in the people that own financial assets. And so if you saw the volatility index, the VIX, that has spiked.

Jason Calacanis 20:09 Mm.

Chamath Palihapitiya 20:09 And so whenever you see that stuff happen, people go risk off, right? And when you go risk off, what do you sell? You sell the things that are deepest in the money, where you think that they probably don't have that much more room to run, and that was the Mag 7. And so what you actually saw was a huge rotation out of those companies into everything but those seven names. And I think that that's a pretty reasonable thing to do. So, I think we're in the part of the cycle where people are getting a little bit more sober and risk managing. We're also in the middle of the summer, where a lot more vacation is taken, which how it manifests is that people tend to be, frankly, more risk off and be more liquid, because a lot of people are in and out of the office. And I think it... The real setup is for what happens in September. Maybe there's a cut, which will help. Maybe there isn't, which won't help. And then the whole consumer cycle, the consumer credit cycle, that doesn't look good, to be honest. And so I think the fall is going to be complicated.

Jason Calacanis 21:09 Yeah, absolutely. What an eventful week on a political front. We'll get towards that in a moment. But, uh, Freyberg, your thoughts here. Is it just people trimming their perfect positions and maybe a dispersion going out, people wanting to own some other assets that maybe have been undervalued in this market cycle?

David Friedberg 21:29 No, I think it's definitely this mini AI bubble deflating a bit.

Jason Calacanis 21:34 Okay.

David Friedberg 21:35 And transactions are, "Let me get out of some of these high multiple tech stocks that are expected to grow rapidly because of AI and shift more into stable market recovery, interest rates are gonna get cut-type trades that will benefit there." So, I think it's just a, a rebalancing. And as a result of the high concentration of the Mag 7 and the S&P and in the Q's, the indices look like they're coming down. But yeah, there's obviously a lot of complexity in what's going on in the economy right now. But I do think that that's been a big trade for PMs, uh, for portfolio managers over the last couple of weeks.

Jason Calacanis 22:09 Makes sense. Yeah. Sachs, if you owned a bunch of NVIDIA and it ran up, Meta, Google, Apple, other companies that ran way up, you might want to trim your position here and, and deploy capital and balance things out. Yeah.

David Sacks 22:22 Sure. I just don't want to overreact or overread into one day in the market. I mean-

Jason Calacanis 22:26 Sure.

David Sacks 22:26 ... today's up, yesterday was down. It's... These are blips in the grand scheme of things. Even a two to 3% move is just not that unusual.

Jason Calacanis 22:33 Yeah, especially given the context. But definitely something worth keeping an eye on is what the earnings reports will say for Q3 and Q4, and those will come out towards the end of the year.

Jason Calacanis 22:47 Okay. Some interesting news. Sam Altman did a UBI experiment a couple of years ago. He put 14 of the $60 million into this experiment that was done by a firm called Open Research. That's a nonprofit group that was founded in 2015 out of an accelerator called Y Combinator. First, I'm hearing of that one. Well, here's the experiment they did. This took place between November of 2020-October of 2023. 3,000 low-income adults in Texas and Illinois making just under $30,000 a year on average were selected. A thousand participants received $1,000 a month for three years. So, on top of the $30,000, they got $12,000 a year tax-free. So, that's nearly a 50% pay increase for doing no more work. 2,000 control participants received $50 per month over the same period, and the research collected and studied a bunch of data. They did blood draws to do, uh, health impact. Uh, they had a custom app that tracked time usage, work, play, et cetera. And they checked everybody's credit reports and bank balances. So probably speaking, the research found almost no lasting impact on everything they tested, from overall health, to work, to education.And here are the quotes directly from the paper, and I'll get the gentleman's take on this. UBI, super fascinating obviously. "The cash transfer resulted in large but short-lived improvements in stress and food security. We find no effect of the transfer across several measures of physical health. We also find that the transfer did not improve mental health after the first year, and by year two we can again reject very small improvements." Final quote, "We also find precise null effects on self-reported access to healthcare, physical s- activity, and sleep."

Chamath Palihapitiya 24:33 I find this so fascinating and reinforces a bunch of intuition that I think we would probably all have. You k- have you guys seen these studies where when somebody has an amputation or they get paralyzed, they study their pre-levels of happiness, their interim level of happiness, and then they just kind of mean revert to their natural state of happiness, independent of what physical calamity they may have gone through? And I h- I'm, I'm... When you were talking about it, J-Cal, I was reacting in the same way, which is, in the absence of, I think, purpose and community, I think children in many cases, it just doesn't meaningfully shift any of these curves that really matter. I think your happiness levels mean revert, I think your health levels mean revert. So it's great to kind of confirm at least my intuition, which is that UBI is a wonderful idea that I think doesn't really understand how humans are both motivated and wired.

Jason Calacanis 25:43 Friedberg, your thoughts?

David Friedberg 25:45 Yeah, so I definitely agree. I think I've talked about this. We talked a little bit about it with Jonathan Haidt. There's some great studies that have shown in the past that the change in income is a better predictor of happiness than absolute income. Eventually, everything normalizes. So I think UBI makes no sense for three reasons. The first is this normalization of spending levels, so once you've kind of had this increase, you have a moment of happiness, and then you actually start spending differently or spending more. And effectively, every human has one innate trait: desire. And desire is what drives humanity, it's what drives progress, it's what pushes us forward, because no matter what our absolute condition, it's our relative condition that matters, relative to others or relative to ourselves in the past, or prospectively in the future. And so we always want to improve our condition. So a UBI-based system basically gives a flat income. So the only way for it to really work is if you increase the income automatically by, say, 10% a year. So in a UBI world, no amount of money will actually make someone satisfied or meet their minimum thresholds, because those minimum thresholds will simply shift. And, you know, the second issue is just the, the net economic effect. If we gave 350 million Americans a thousand bucks a month, that's $350 billion a month. That's $4 trillion a year. Our prospective budget for next year is $7.3 trillion at the federal level. So, you know, that's already more than 50% of the total projected federal budget next year. Finding the mechanism for funding this at scale is not what this study actually looked at, because if you look at it, the net effect would be inflationary, and that's the third major reason is that ultimately, this would have an inflationary effect. Anytime we've stimulated the economy with outside money, with government-driven money, we see many bubbles emerge and we see an inflationary effect. So look at COVID. There were all these little bubbles that popped up in the financial markets. We had NFTs, we had crypto, we had all these sort of new places that money found its way to, and then we had an aggregate inflationary effect. Food prices are still up 30-40% since COVID. And so net-net, I think that the study provides an interesting insight into the micro effects, the psychological effects, the social effects. But the macro effects, or what is so, like, simply arithmetically obvious, which is inflation and an inability to actually fund this at scale. And fundamentally, people wanna work, so they'll take that money and then they'll go find ways to work and generate more money, and you have this inflationary effect. So I think net-net, UBI does not make sense.

Jason Calacanis 28:16 SACS participants were 5% more likely to start a business by the third year. Maybe that was the most encouraging part of this. People worked slightly less, 2% decrease in labor participation, but that seems negligible. People in their 20s had a 2% increase in enrolling in post-secondary education. Again, very tiny impact. There were major benefits to stress and mental health in year one, but by year two, as we talked about, it reverted to the baseline. How do you think about UBI in a world where, let's say, I don't know, we lost a large amount of jobs in a short period of time because of AI? So in that hypothetical situation, and we hit 20 or 25% unemployment from the historic low we're at now, h- how might you think about UBI?

David Sacks 29:01 Well, that's positing a future that I don't think's gonna happen, at least not anytime soon.

Jason Calacanis 29:04 Right. That's why I tried to... Yeah, that's why I'm trying to give you a hypothetical-

David Sacks 29:07 Yeah, no, I just-

Jason Calacanis 29:08 ... kick. Yeah.

David Sacks 29:08 ... I don't, I don't really buy that, and so I think this u- whole idea of UBI i- is premature and very expensive, and it doesn't work. I mean, I think what we saw from the study, just to echo what Friedberg said, is that cash transfers don't work. We saw this in the Great Society. Just handing people money d- doesn't solve poverty. It actually traps people in conditions of dependence. We also saw during COVID that all those stimu checks, they might have had a macro effect on the economy of kind of boosting the economy during what could have been a COVID depression. However, at an individual level, what did we see? We saw people quitting or quiet quitting their jobs, they spent more on leisure, alcohol, and meme stocks. I- in other words, it wasn't tremendously productive. So I think that what we've seen in the past, this just handing people money, doesn't create the types of outcomes that people want. And-

Chamath Palihapitiya 30:03 You know-

Jason Calacanis 30:03 So all this virtue signaling, Sax, is it virtue signaling, you think?

David Sacks 30:06 Kinda, kinda.

Jason Calacanis 30:07 I'm kinda-

David Sacks 30:08 I mean, look-

Jason Calacanis 30:08 ... getting that tone from you, yeah.

David Sacks 30:09 Yeah. I think it's, I think it's a combination of virtue signaling combined with, let's assume that you wanna become the first AI trillionaire and people are concerned about job loss, you're gonna virtue signal in the direction of, "Well, let's just give everyone money." And-

Jason Calacanis 30:27 Okay.

David Sacks 30:27 ... a lot of people in power will love that because it creates a lot of dependence.

Jason Calacanis 30:32 Hmm. Yeah.

David Sacks 30:32 So it serves the interests of tech moguls and people in the government, but I don't think it serves society. And I think-

Jason Calacanis 30:41 Hmm.

David Sacks 30:41 ... one of the most interesting data points in the study, please confirm if I get this right, but what it said is that the people who got the $1,000 a month UBI saw their incomes rise to $45,000 on average, while the control group only got $50 a month, increased their average income to $50,000, actually just shy of $51,000. So the people who didn't get the larger STIMI actually genuinely bettered themselves over the course of the study while the ones who got the $12,000 a year stayed in place. And that's kinda what you'd expect, right, which is if you just hand people money without having to work, it doesn't motivate them to work harder. It actually motivates them to-

Jason Calacanis 31:20 Of course.

David Sacks 31:20 ... do less.

Jason Calacanis 31:21 Yes.

David Sacks 31:22 And let's say that you're in a point in your career where you need to learn, you need to get mentorship, you need to advance yourself, by giving people UBI, you could be kicking out those bottom rungs of the ladder where, you know, the work isn't necessarily that fun, but you're picking up very important skills that are gonna help you rise up in the ladder and you're not doing-

Jason Calacanis 31:39 Yeah, being a cashier, like, sending your kids to be a cashier at a restaurant or a busboy or a waiter, like, that teaches them a work ethic. I was a dishwasher, I did hard work as a child. Like-

David Sacks 31:48 I was a bartender.

Jason Calacanis 31:49 Yeah.

David Sacks 31:49 I mean, look, these are all jobs that have dignity. I mean, I think work-

Jason Calacanis 31:53 Sure.

David Sacks 31:53 ... has dignity and you need people to start somewhere. And if you just give them the STIMI or the UBI, it demotivates them from starting their careers.

Jason Calacanis 32:04 Hmm.

David Sacks 32:04 And you trap people at this lower level. So I just don't think you're doing anyone any favors by doing this.

Jason Calacanis 32:11 And I just wanna say, you know, my production company's in full swing and we are actually working on a, a remake of Cheers with David Sax, yeah, as the bartender, as the lead character.

David Sacks 32:20 (laughs)

Jason Calacanis 32:21 (laughs) It's, it's a really great show. Looking at, um, the back of the envelope math here, I, uh, had the re- CRAC research team take a look at this. Welfare, $1.1 trillion budget in 2023, eight different federal agencies, you know, Medicare, I'm sorry, Medicaid is in there as well. Unemployment, $33 billion paid across 1.8 million participants last year. Food stamp safety, 113 billion. We put all those numbers together and, uh, we've got about 100 million people participating in these programs in some way for $1.2 trillion per year. This is all back of the envelope. It's imperfect, but (laughs) that turns out to be about 12K each, uh, which is exactly what the study did. So not perfect math.

Chamath Palihapitiya 33:02 But that's totally reasonable. I grew up on welfare.

Jason Calacanis 33:05 Yeah.

Chamath Palihapitiya 33:06 And we needed it to make ends meet, and we would have completely fallen through the cracks without it. And so I'm glad that I was able to be raised in a country that has welfare.

Jason Calacanis 33:20 I guess my question to you, Chamath, is do you think all these agencies put together, you know, with all this administration and all this complexity, would it be better if, if we take something from this UBI of maybe consolidating down and-

Chamath Palihapitiya 33:33 No.

Jason Calacanis 33:34 No?

Chamath Palihapitiya 33:34 No.

Jason Calacanis 33:34 Okay.

Chamath Palihapitiya 33:34 No, because I, I think, like, you need to be motivated as Sax said. And so even though we got support from, I grew up in Canada, so the Canadian government, there was still an expectation where certain things were not covered and you still had to work. And so you had to find motivation to pick yourself up and go out and get a job. And it just so happened that in our situation, even welfare and what my mom made as a housekeeper and then as a nurse's aide wasn't enough, and my dad didn't have a job. So I went and I started working at Burger King. And to Sax's point, it's pretty eye-opening when you're 14 years old and, you know, you're working the night shift and people come in after going to the bars, they're drunk, they're puking all over the place, sometimes you see people that go to your own high school and it's a little bit embarrassing 'cause you're working while they're going out, but at the end of the day, it was very motivating. And I think Sax is right, if you take that away from people, I think that you end up with a worse society. I don't think that you have a motivated group of people that wanna go and better themselves. I think they just become really lazy.

Jason Calacanis 34:41 I think it's well, it's well stated and I think the pressure cooker that immigrants are under or, you know, people who have tough situations, like, it, it can create the diamonds. And man, I, I, I do think a lot of the folks here on this podcast went through that pressure cooker and does create a chip on your shoulder. And, and, and when people criticize these entry-level jobs, um, and they're, oh, they're not sustainable, well, they're, we do have a safety net in both countries, Canada and the US.

Chamath Palihapitiya 35:06 I think that that's not... I think the problem is not the entry-level job. I think it's the expectation of people. And Friedberg just mentioned this, but what you have is that there is this desire doom loop that we've fallen ourselves into where what social media does is amplify, in many cases, a fake perception of what your neighbor has that you don't have.

Jason Calacanis 35:30 Mm-hmm. Yeah.

Chamath Palihapitiya 35:30 And so you're in this constant desire doom loop. So if you go to a job and you're expected to work for four years, I'm just gonna make up a number, before you get promoted and the perception is that your neighbor is getting promoted after eight months, you're gonna be mad and you're gonna be angry and you're gonna feel like life isn't working out for you. And we have to figure out a way of resetting that back to normal so that you know that that is a lie that is being told to get clicks and likes.

Jason Calacanis 35:58 Hmm.

Chamath Palihapitiya 35:58 And the real truth is you're gonna have to just put your nose down and grind at something to get what you want.

Jason Calacanis 36:02 Yep.

Chamath Palihapitiya 36:02 And life is not perfect and it's complicated and it's messy.... and we need to do a better job of that.

Jason Calacanis 36:08 Let me ask you a question, Friedberg. If you were gonna do a 2.0 of this study, I was thinking about it, you know, where do you go from here? I just had this idea, like, well, what if you put, like, half of the money into, like, uh, a perfect portfolio, Wealthfront, one of those services, and, um, allow people to take out maybe 5% of it every year, some sustainable amount so they see, you know, a- and get some education around that, or maybe put the money into a business formation fund people can apply to get grants to, you know, maybe form a business and you, you kind of reframe how this UBI is distributed with milestones and maybe some education baked into it. Th- that was my thought on where to go next with it. What, do you have any thoughts of where you would do a 2.0 test of this, or would you just...

David Friedberg 36:53 Well, that's, that's not UBI, right? And what you're describing, I think, exists, and there are incentives and programs and opportunities out there. People can sign up f- with Roth IRAs. They can contribute some percentage of their paycheck to a 401 (k) if they have a job that has a 401 (k) set up for them. There's a lot of systems and mechanisms out there, and you get tax breaks for doing that. So there's mechanisms and incentives out there to do that sort of thing. The, the, the concept with UBI is, can you pay people a flat amount of money so that they don't have to work and then they end up being able to explore and do other things with their life as the robots and AI does everything for them?

Jason Calacanis 37:30 Mm-hmm.

David Friedberg 37:30 And I've just always been of the belief that I don't think that there's this natural border that we hit beyond which humans don't work. I think that AI-based tools and automation tools are the same as they've always been. When we developed a tractor, people didn't stop farming. They could get much more leverage using the tractor and farm more, and new jobs and new industries emerged, and I expect that the same thing will happen with this next evolution of technology and human progress. Humans will find ways to create new things, to push themselves forward, to drive things forward, and for the natural market-based incentives that fundamentally are rooted in this internal system of desire will create new opportunities that we're not really thinking about. So I don't believe in this idea of UBI and some utopian world where everyone's happy not working and letting machines do everything for them. I think that the fundamental sense of a human is to find purpose and to realize that purpose, to drive themselves forward and progress themselves, and I think that that's always gonna be the case.

Chamath Palihapitiya 38:25 The closest thing to leisure and leisurely pursuits that we have today in modern society is the nepo baby. And if you look at the-

David Friedberg 38:33 (laughs)

Chamath Palihapitiya 38:34 No, but, and if you look at the nepo baby, they're the most miserable group of people I've ever met.

Jason Calacanis 38:38 (laughs)

Chamath Palihapitiya 38:39 They're so unhappy with themselves, and so, and part of it is because they've only ever lived a life of leisure.

Jason Calacanis 38:45 Shout out to Alex Soros. (laughs)

Chamath Palihapitiya 38:48 No, I'm, I'm not name-checking anyone. I'm just saying-

Jason Calacanis 38:50 I am.

Chamath Palihapitiya 38:50 ... that when I, when I, when I observe it, I think that you can see it right in front of you, which is that there's just so much inherent unhappiness because you're not motivated to do anything, and then that's amplified typically by guilty parents because they've been working so hard. And I, uh, so I don't think you need to run a second study. A different version of an idea that friend of the pod Brad Gerstner is working on, which I think deserves a shout-out, is this idea of giving every kid when they're born a retirement account.

David Friedberg 39:23 Mm.

Chamath Palihapitiya 39:23 And I think that that's-

Jason Calacanis 39:25 Invest America, mm.

Chamath Palihapitiya 39:25 ... a really interesting idea where you give them some amount of money and it just matures inside of an index fund that gets unlocked for you when that kid is 65 or 70 years old. That's great because it helps you have a soft landing in retirement. I think that that's very humane and a right thing to do, but it doesn't rob you of that motivation to work in your 20s, 30s, 40s, and 50s.

David Friedberg 39:47 Yeah.

Chamath Palihapitiya 39:47 And that's a much better idea than UBI.

David Friedberg 39:49 And I think, by the way, it's really important to state that UBI can be more of a trap than a benefit. It takes away the opportunity for individuals to progress because you no longer have a system that says, "You progress, you get richly rewarded." It ultimately drives to an outcome where you spend all the money and distribute it equally so everyone ends up having some sort of stasis, and I don't think that that's really human nature. I do think that systems and government programs that support people's ability to succeed, to work hard, to work smart, to progress while providing these necessary safety nets is a better solution. There's no right or wrong way. It's just, it's- it's a very complicated system that's needed.

Jason Calacanis 40:31 Yeah. This is-

David Friedberg 40:31 And I don't think that there's, like, this UBI concept, it's fairly naive, and I think that you'll see it play out at- at- at both the micro and the macro scale as being, I think, net-net negative, so...

Jason Calacanis 40:41 Yeah, I, you know, just wrapping up here so we can get on to the rest of the very juicy docket we have today, it- it does seem demotivating to just have money drop in your head. That's why I like my experiment I was referring to, Friedberg, of just forcing people, not, like, having these programs that you have to go find out about and have the social capital and fabric around you, that you know about small business loans, et cetera, but, "Hey, these three things are happening to you right now. This money's been put into your account automatically and you can decide what to do with it," and- and just r- raising the education level and empowering people-

David Friedberg 41:12 Yeah.

Jason Calacanis 41:12 ... is a much better idea.

David Friedberg 41:14 I feel like whatever the education system is, schools or whatever, like, actually teaching the vocational skills or the-

Jason Calacanis 41:20 Yes.

David Friedberg 41:20 ... skills on how to succeed in the workplace, like, "Here's how you go get a job. Here's how you build a business."

Jason Calacanis 41:25 Amazing. Yes.

David Friedberg 41:26 "Here's how you start something," those are the sorts of skills that are not taught in the educational system that I think are generally lacking, and then people kind of learn a bunch of history or some algebra or whatever they learn in school and they- they pop out the other end, and it's like, "Okay, go figure out how to survive. Go figure out how to get a job. Go figure out how to build a business."

Jason Calacanis 41:43 To just build on your idea, we need more healthcare workers. If you paid somebody $1,000 a month and you paid for their school for one year to become a nurse, doctor, nurse practitioner, whatever, that would actually have a dramatic impact and solve a problem for our society while not giving a handout.

David Friedberg 41:58 Yeah.

Jason Calacanis 41:58 I think we, uh, all-

David Friedberg 41:59 Anyway.

Jason Calacanis 41:59 ... agree on this one.

David Friedberg 42:00 Yeah.

Jason Calacanis 42:00 Let's keep moving through this amazingly juicy

Jason Calacanis 42:02 docket. All right, there is a battle right now for Rupert Murdoch's media empire. The Times reported...... on a behind the scenes fight for control of Fox News, Wall Street Journal, New York Post, and just tons of TV networks in Australia, the UK. I think we all know the, uh, News Corp holding set, a bit like the TV show Secession, (laughs) which makes sense because they based it on the Murdoch family. It turns out this article in The Times is based on a sealed court document that was obtained by them. Murdoch, to remind you, is 93 years old now, and his trust would have given control to his four eldest children. However, he changed the, uh, trust to ensure that Lachlan Murdoch, who is more conservative and would take over these assets, as opposed to James, Elizabeth, and Prudence, who are more moderate than Lachlan. And they are engaged in a massive court case now that's gonna start in September. The trust is irrevocable, but it contains a provision allowing for changes so long as they're made, quote, "In good faith, and with the purpose of benefiting all members." So Rupert argued that the change is in the best interest (laughs) of James, Elizabeth, and Prudence, as it keeps them formally separate from Fox News without having to worry about its political point of view. Fox News obviously has massive influence and has been a bit of a disaster over the last couple of years. They did the largest settlement ever in a, uh, defamation case with Dominion, paid $787 million. You remember Tucker Hannity, Laura Ingraham, all of them privately, uh, trashed the people who lied about the Dominion case on Fox News, and that all got shown in text messages, and it was a disaster for them. Sachs, any thoughts on this and, and how this collection of assets and the GOP have, you know, collaborated over the years?

David Sacks 44:02 I wouldn't necessarily call it collaboration. I call it a market position. I mean, Fox News has carved out a powerful and profitable market niche by being the one cable news network that appeals to conservatives. Now, if, you know, let's say the more liberal members of the family, like James, take over and change the content and the programming to serve their own political views, they're gonna lose viewership, they're gonna lose their audience. It would be a foolish idea just from a business standpoint. So I think that Lachlan is the right choice. I've met Lachlan before, by the way. Nice guy. Look, I think a pretty mainstream conservative type of guy. He's clearly the right guy in the family to run this, and the siblings, I think could really screw it up. And I'm talking about not just from a content standpoint, I'm talking about from a, a revenue and profit standpoint if they take it in a different direction. I would already say that Fox News has a, has a market position problem, which is that Rupert is very much a neocon. And neoconservatism is on the way out in the Republican Party in favor of a more populist conservatism that you see with Trump or now his running mate, JD Vance. Rupert and Fox waged a really strong campaign to keep JD Vance off the ticket, obviously lost that battle. Rupert fired Tucker, by far their highest rated and most profitable host ever, and it was over, again, this populism versus neoconservatism direction. So I think that Fox already has a problem where they are becoming misaligned with their audience. And regardless of what you think of the politics, this is bad for business. It'll be really interesting to see if Lachlan will realign things in a more populous direction, but definitely going in a liberal direction that like James or the other siblings want to go in, that would be a disaster.

Jason Calacanis 45:59 Freeburg, Chamath, any thoughts on this media empire and succession planning?

Chamath Palihapitiya 46:06 Man, I think probate and wills and trusts are of the devil's making.

Jason Calacanis 46:12 Mm-hmm.

Chamath Palihapitiya 46:12 Nothing good comes out of these things. And I don't know, I just think some of these assets should just be left to shareholders. And-

Jason Calacanis 46:21 Just sell them.

Chamath Palihapitiya 46:23 Or just sell them and take the money, give it to the kids.

Jason Calacanis 46:25 Distribute it, yeah.

Chamath Palihapitiya 46:26 Hopefully you raise good kids, they can all go and pursue their own path. 'Cause again, I think the point is like the path and the journey is the fun, and these kinds of battles are really brutal. And I'll tell you, to me, the thing that I'm, I'm sad when I hear this whole thing is like you have four siblings that I'm guessing grew up together.

Jason Calacanis 46:49 Yeah.

Chamath Palihapitiya 46:50 And now are they ever going to talk to each other again? Or is it like three versus one or two versus two or... And I just think that that's ugly. Over what? Power and money? I would have just... So if I was the father, I would have sold the asset, given the money to the kids or to charity or whatever, and hopefully they would have found happiness in a different way.

David Friedberg 47:10 But that is what they did with the Disney deal. They took the cash and they distributed it to the kids. So they each got a pretty big windfall. And then, you know, I think the concept was this remaining asset would be managed over the long term. Maybe I'm speaking out of school a bit, but I thought that's what happened there. They, they, they, you know-

Jason Calacanis 47:24 They did sell Fox, the studio, and yeah, that brings-

David Friedberg 47:28 And the library, yeah.

Jason Calacanis 47:29 ... and the library. And that brings X-Men, Fantastic Four, and Wolverine back together with The Avengers, which is most important.

David Friedberg 47:36 20th Century Fox, yeah.

Chamath Palihapitiya 47:36 Clearly, they didn't. (laughs) It's...

Jason Calacanis 47:39 No, it's all coming back together now. Now they just got to get Sony to give up... I mean, we want to talk about interesting IP, Marvel just sold-

Chamath Palihapitiya 47:45 (laughs)

Jason Calacanis 47:45 ... these characters to the highest bidder in perpetuity. Such a crazy weird deal, but...

Chamath Palihapitiya 47:51 (laughs) It's like, it's like me saying, you know, "I, uh, I've collected some really nice belts, and so I'm just gonna have like a death match between my five kids to see who gets the best belt." (laughs)

Jason Calacanis 48:02 I, uh, just... I mean, and it's not, it's- it- not even about money actually because they have enough. It's clearly, this is about power.

Chamath Palihapitiya 48:09 No, it's about, it's about being picked. No, and it's about being picked.

Jason Calacanis 48:10 Yes.

Chamath Palihapitiya 48:10 Imagine if your father-

Jason Calacanis 48:11 Who daddy loves the most.

Chamath Palihapitiya 48:12 ... picks your sibling-

Jason Calacanis 48:13 Mm-hmm.

Chamath Palihapitiya 48:13 ... and not you.

Jason Calacanis 48:14 Yeah.

Chamath Palihapitiya 48:14 Why, why would you, why would you do that?

Jason Calacanis 48:16 Yeah.

Guest 48:17 Like, is there... Is the asset so important?

Jason Calacanis 48:20 Well, I say, I-

Guest 48:20 As Sachs said, there... These are self-managing because business people will make rational business decisions. So put it in the hands of a rational business person, keep the family intact because if you lose the family-

Jason Calacanis 48:30 Right.

Guest 48:30 ... what, what do you have?

Jason Calacanis 48:32 Yeah, shout out to Tom.

Guest 48:32 That's what I don't get. That's what I don't understand.

David Friedberg 48:34 That's very interesting.

Jason Calacanis 48:34 Shout out to Tom Wambsgans.

Jason Calacanis 48:35 We might as well just go to our next topic. Joe Biden has been hot swapped as Nusha Hannis predicted. The speedrun primary, maybe that's been subverted. Uh, as we all know, Joe Biden formally exited the- (laughs) What, what's your version? Maybe it has been subverted? (laughs) Maybe, possibly, could have been subverted, inadvertently knocked over, forgotten. It could be an oversight. Anything's possible. Joe Biden (laughs) formally exited the presidential race on Sunday after donors and party leadership politely asked him to enjoy his retirement. Nope, they shivved him. By most insider accounts, Biden was not happy about the decision and felt betrayed. Nonetheless, the public has backed his VP, Kamala Harris, who appears to have already wrapped up the nomination. A survey conducted by AP on Monday suggested that Harris already had the endorsement of enough delegates to secure the nomination in the first round of convention voting. So, this won't be official until the DNC that starts August 19th in Chi-Town. So far, no one has stepped forward as a rival for Harris and, in fact, many of her would-be competitors have already endorsed her. That includes Shapiro, Pennsylvania's governor, Newsom, California's governor, Pritzker, Illinois' governor, and Whitmer, Michigan's governor. All of those, I guess, potential VP candidates. She is now the 90% favorite to get Democratic nomination. I'll stop there and ask our panelists what they think of this turn of events. Chamath, do you wanna start us off? I mean, I don't think the process was super open and transparent and democratic, but I don't think they had much of a choice, and I think we've talked about that, because too much of the money would have had to essentially been returned. And I don't think you can fight a federal election in 2024 with one hand tied behind your back. So, she was the de facto nominee ev- when the rumors started, and now, I think the whole point is to figure out where does she stand. I think the thing that she will have to overcome is that these last three years, three and a half years, she's been relatively under the radar. MIA, some might say. And I think that now there's this, like, this whole controversy, I don't know if you guys have seen this where, like, she was named the border czar but then she was not the border czar. Yeah. And I think there's a, there's a... Mainstream media is, it's sort of fighting with itself from six months ago about the whole thing. But the point is that we don't know what she believes and we don't yet have a sense of her agenda really, you know? And I think that over these next two months, it'll be up to her to really create a very clear case of what she believes in. And then it'll be really interesting to see who she picks as her VP candidate. And then people, I think, will be in a position to, to judge. And I think that that's what... You know, what... If I've been kind of like reading the tea leaves from the folks that I've talked to is sort of what they say, which is TBD and we need to figure out where she's at. Freeberg, your thoughts on this unbelievable 10 days in the history of our country where the president was nearly murdered by an assassin and Joe Biden resigns and a 39-year-old political neophyte venture capitalist is picked as VP? I mean, this is consequential. What are your thoughts on this 10 days in July?

David Friedberg 52:14 Well, that's a lot of stuff. I think we talked about that last week, but the Kamala Harris de facto nomination that took place over 48 hours, um, I think was a little bit shocking to a lot of people I've spoken with that there wasn't a bit more of a process to identify a nominee besides Kamala that effectively the party lined up. Now, what I think is, is relevant here is that for the first time, it's exposing people to the way the electoral process actually works in the United States-

Jason Calacanis 52:45 Mm-hmm.

David Friedberg 52:45 ...that it's not a direct democracy where every individual in this country votes for their federally elected people. Remember, the United States was set, set up as a federated republic, that there was meant to be these states, the states were in a federation, and then the states would elect electors that would go and figure out who should be the president, who should run the, uh, the federal office. And the states would elect their representatives, their congresspeople, to go represent them in the federal government. And so I, I think a lot of people, you know, whether it's just without thinking about it or based on precedent, assumed, "I get a vote in who gets to be president." What you get to have is a vote in who gets to be the delegate to represent your state in picking the president. And so this process where delegates very quickly fell behind Kamala Harris because of the, the, the significant coalescing of power and influence within the parties, the two major parties in the United States, has, I think, exposed a lot of people to the lack of a democratic process for federal executive role in this country. And I think that's a little bit shocking to people, but it is the way that-

Jason Calacanis 53:54 It's the way it's always worked and-

David Friedberg 53:54 ... the, the nation was set up.

Jason Calacanis 53:56 And, and the same thing with the popular ver- vote versus electoral college, right? People keep getting confused by that.

David Friedberg 54:02 That's right. And in this very unusual condition where a candidate who's earned all of these delegates drops out of the race-

Jason Calacanis 54:09 Yeah.

David Friedberg 54:09 ... it's shocking and surprising to people that they don't get to go and make a vote again-

Jason Calacanis 54:13 Yes.

David Friedberg 54:13 ... individually, and I think it feels unfair. And I think that a lot of people are feeling that way. I do, however, think that pretty quickly there's a lot of people who are anyone but Trump that are gonna rally behind her-... and she seems to be polling well in the polls that have come out in the last couple of days here, so...

Jason Calacanis 54:29 All right. Let me hand it off to, uh, Sax then. You had, uh, a situation where Trump was the runaway favorite and this unbelievable unity at the RNC and immediately after the RNC, the Democratic Party hot swaps Biden for Kamala and they've got a lot of great VP picks that they can choose from. Mark Kelly looking like the possibility, which would obviously give them a lot of support in Arizona and with moderates and law and order folks. So, Sax, we're looking at, uh, essentially a dead heat. Some polls have them tied, some polls, Reuters, Ipsos has Harris with a two percent lead. CNN has Trump with a three percent lead. What's your take on... Forget about how we got here, you know, how does this affect the race itself? This is a dead heat now. What are your thoughts on the race going forward? Who's the VP pick that you're most worried about, uh, going up against the Republicans?

David Sacks 55:32 Well, look, this clearly reshuffles the race to some degree. I don't think it's a dead heat. The polling shows that Trump is still ahead in most of the swing states, but look, Harris has more upside than Biden does because she can actually campaign. I mean, Biden clearly was a surefire loser and that was exposed in the presidential debate and that's why there was a total panic in the Democrat Party. After that debate they were like, "We gotta get someone new," and they drove him out. I do want to just say a word about that process.

Jason Calacanis 56:00 Mm-hmm.

David Sacks 56:01 You know, throughout that process... Remember, it started with Biden doing that Stephanopoulos interview, he said that even God Almighty won't get me out of this race. (laughs) Then he said, "Nobody's pushing me out. I'm not going anywhere. I'm campaigning next week." He expressed that what was happening in the party was a revolt against him. And then boom, all of a sudden he's out.

Jason Calacanis 56:20 Mm-hmm.

David Sacks 56:21 And, you know, all we really know from the public reporting is that Nancy Pelosi said, "You know, Joe, we can do this the easy way or the hard way."

Jason Calacanis 56:28 Mm-hmm.

David Sacks 56:29 And he was out, again, less than 24 hours after he said, "I'm in and I'm campaigning next week." And even his surrogates on the Sunday morning shows were saying that he's definitely in the race. The White House staff didn't know, his campaign staff didn't know. It kind of came out of the blue. It's a very strange process and it happened via him just posting a photograph of a letter that was on personal stationary, not even like an official White House memorandum and we didn't get an update. We didn't hear directly from the President about one of the most consequential decisions of his life and of his presidency until Wednesday.

Jason Calacanis 57:07 Well, he did have COVID, so that, you know, for an 80-year-old is pretty hard. Yeah.

David Sacks 57:11 Fair enough, that was the story, but still, I mean, for us to be left in the dark wondering what was really going on for three days, it was very strange. It certainly was not what you would call a democratic process. There was no speed run primary, as you wanted, Jason. There was no open convention. What happened is the delegates fell in line instantly, as I predicted, because I said that they would not be able to handle the chaos.

Jason Calacanis 57:32 Mm-hmm.

David Sacks 57:32 That they wanted to basically fall in line immediately and end the chaos and they fell in line behind Kamala Harris who has never gotten even one primary vote. Uh, so it's just-

Jason Calacanis 57:41 Who worries you most as a VP candidate? Give us that, because I, we understand that...

David Sacks 57:45 I'll be honest with you, I think that-

Jason Calacanis 57:46 Yeah. Who's the scariest?

David Sacks 57:47 That, uh... The- the guy, the scariest, the one I would pick is Josh Shapiro. He's the governor of Pennsylvania, rising star. Look, if he can deliver Pennsylvania for the Democrats, that's powerful because one way for Harris to eke out a victory is if Shapiro can get her Pennsylvania and then if she sort of tacks back to appealing to the Arab and Muslim vote in Michigan.

Jason Calacanis 58:15 Mm-hmm.

David Sacks 58:16 To eke out Michigan and then ekes out Wisconsin with just one point. In other words, if she can hold onto the blue wall and then she loses... The swing states that Trump is very much ahead in, like Arizona and Nevada, Georgia, North Carolina, she can still win this election by 270 electoral votes to 268. It'd be the closest margin in presidential history. So that's the scenario and it's probably her best path to the, to victory, is to win by one, one electoral vote. That's the scenario I'd be most worried about as a Republican. Now, the other candidate you hear a lot about is Mark Kelly, the senator from Arizona-

Jason Calacanis 58:52 Yeah.

David Sacks 58:52 Who on paper looks fantastic. He's an astronaut, his, his wife-

Jason Calacanis 58:57 He's a vet, yeah.

David Sacks 58:57 ... was the victim of a gunshot.

Jason Calacanis 58:59 Moderate, right? Super moderate.

David Sacks 59:01 I personally don't think he is that moderate, but I think he presents as one.

Jason Calacanis 59:04 Okay.

David Sacks 59:05 And he's, he's made noises-

Jason Calacanis 59:07 Tough.

David Sacks 59:07 He comes across as tough and, and comes across as, as someone who's wanted to be tougher on the border, which is a huge weakness for Harris.

Jason Calacanis 59:16 Mm-hmm. Yeah.

David Sacks 59:16 If he can deliver Arizona, then he, he becomes a strong contender, but I'm not sure that he can, so if it were me, I'd probably go with Shapiro. I mean, I hope they're not listening to me-

Jason Calacanis 59:28 So, Chamath-

David Sacks 59:28 I hope they go with Kelly.

Jason Calacanis 59:29 Chamath, uh, obviously even in this heated thing, the good news is that both sides are going to accept the election results. We have that fairness and, and that honorability in both parties where they'll accept even a close election. There'll be no drama after it. But what's your thought on the strongest ticket? Do you think Shapiro, do you think Kelly? CNN said, "Hey," and this went viral, "Do we think a Jewish vice president, the country's ready for it?" They got kind of dragged for that. What do you, what do you think is the right VP pick here, Chamath? What do you think the right VP pick here is and which one is the scariest to a Trump, JD Vance ticket, which is a very strong ticket in and of itself?

Chamath Palihapitiya 1:00:12 So if you look at Trump's VP pick, it's about aligning a philosophy. Donald Trump created the MAGA movement, this populist, conservative right-wing movement and I think JD Vance has an opportunity now to carry that torch.... post Donald Trump. And that is a ideology that spans states. I think this idea that you pick somebody because they can deliver a state is pretty misguided. I just don't think that that, in reality, is what happens. So I think that Kamala has to decide what she stands for and figure out whether she needs somebody on her flank that represents a slightly different set of ideas that will then maximize her appeal or she wants to double down and then she has to pick somebody that sort of, like, aligns with her philosophically. And again, I would just say that it's not super clear yet what she thinks. I think that Joe Biden was more of a traditional centrist that had to appeal to the progressive left in order to get his work done, so that kind of makes sense. You can understand it. You don't have to agree with it, but it's-

Jason Calacanis 1:01:29 Hm.

Chamath Palihapitiya 1:01:29 ... it's pretty obvious. I don't know what she... where she's at politically. So I think that that's the first thing. She needs to explain herself. Is she a centrist? Is she more of a moderate Democrat? Is she more of a progressive Democrat? And then we can then understand who the best person to align her with should be. But if I was, if I, if I was in the Democratic kind of like-

Jason Calacanis 1:01:55 Star chamber.

Chamath Palihapitiya 1:01:56 ... yeah. I would kind of try to figure that out first because I think the Donald Trump pick makes a lot of sense because it basically moves the Republican Party in a very firm direction. That die is cast for the Republicans for many years to come now.

Jason Calacanis 1:02:08 Okay. Freyberg, your thoughts. Who is the VP candidate? What do you think of this race? And give us a prediction. You know, you're, you're famous for your incredible insights and predictions in politics. Give us your prediction there, Freyberg. Who should she pick? Who will she pick and why?

David Friedberg 1:02:25 I think there's a lot of talk about Roy Cooper in North Carolina.

Jason Calacanis 1:02:29 Hm.

David Friedberg 1:02:30 Sacks didn't mention Cooper, but sounds like could be in the running and could be a leading contender for the slot. I think the Harris-Trump poll is not out or there's a recent one that shows Harris, yeah, 44-48 Trump in the lead in North Carolina. So there's, uh, some, some room there if you can get the governor in that spot, that's a lot of, uh, electoral votes. In terms of who I think should be, I'm not sure.

Jason Calacanis 1:03:04 Hm.

David Friedberg 1:03:05 But I do think that might be a, a top contender from

David Friedberg 1:03:08 folks I've talked to.

Jason Calacanis 1:03:09 Any thoughts on Shapiro and CNN's positioning that the country's not ready for a Jewish vice president?

David Friedberg 1:03:16 So, you know, I was shocked recently to hear about a board, a, a pretty, you know, important board because it represents a large organization and there was a, uh, an individual on the board who was supposed to be elected chairman. They went in for the, for the vote and in that board meeting, this individual who happens to be Jewish, there was a conversation that ensued about, "You can't be the, the chairman at this time because having a Jewish chair would be really difficult in this current climate." And I was shocked to hear this. It... you know, it was, it was not expected by, by folks going into the meeting. Things were supposed to be quite different e- in the vote and ultimately the decision was made that a, a, a Jewish person should not be the chair of the board at this time. J Cal, to your question, I think that behind closed doors these are the sorts of conversations that are going on, that there's a perception given the Gaza conflict that there is a risk of having Jewish leadership being put into powerful positions right now, Jewish leaders being put into powerful positions.

Jason Calacanis 1:04:12 Wow. That is shocking.

David Sacks 1:04:15 That's insane.

Jason Calacanis 1:04:16 It's deranged.

David Sacks 1:04:17 That's just insane.

Chamath Palihapitiya 1:04:17 It's just this is, this is w- what is going, what?

Jason Calacanis 1:04:21 This is just-

David Friedberg 1:04:22 Yeah.

Jason Calacanis 1:04:22 ... it's shocking and deranged and, and the antisemitism right now on social media and what we're seeing online is just absolutely heartbreaking and infuriating in equal parts. Sacks, anything you want to add to this as we, uh, wrap up our...

Chamath Palihapitiya 1:04:37 What the... (sighs)

Jason Calacanis 1:04:40 Well, I mean, just talk about Shapiro, Sacks. I- i- is the country ready for this? You, you saw the CNN clip and, you know, sort of surging hate when you heard that.

David Friedberg 1:04:48 Well, can I just ask a question? Can I just ask, I'm sorry.

Jason Calacanis 1:04:50 Go ahead.

David Friedberg 1:04:50 What, what, what does it solve? What does it accomplish?

Jason Calacanis 1:04:55 Less heat coming into that board.

David Friedberg 1:04:58 Less protests, less-

Jason Calacanis 1:04:59 Less protests. The protestors now have, I guess, what I would read into this, correct me if I'm wrong here, Freyberg, is the protestors have now won in that they've intimidated people to an extent that they don't want to go near Jewish leadership. Am, am I interpreting correctly a possibility here?

David Friedberg 1:05:20 Sorry, say that again. The protestors what?

Jason Calacanis 1:05:22 So these protests, w- the Gaza conflict have reached a point where people do not want to have Jewish leadership because it would be polarizing and create more protests.

David Friedberg 1:05:35 That's right. That's-

Jason Calacanis 1:05:36 Yeah.

David Friedberg 1:05:37 And that's the conversation that I hear going on behind closed doors or I'm hearing about and so-

Jason Calacanis 1:05:42 Wow.

David Friedberg 1:05:43 ... you know, it's almost like a cancel culture against Jews because of the risk of a Jewish person being in a leadership position that could drive-

Jason Calacanis 1:05:51 Or VP which is exactly what CNN was bringing up with the VP choice of Shapiro.

David Friedberg 1:05:55 ... hating conflict. And that's right.

David Sacks 1:05:56 I think it's totally crazy. However, I definitely have seen people online, I mean, articles online, like, saying, like, "Is th- is this an issue with putting Shapiro on the ticket?" Now, I can't believe this is a problem for the voters of the country. However, I think if you're one of the Democratic masterminds and you're trying to engineer enough electoral votes for Harris to win, like I said, you're trying to win that blue wall. You're trying to get not just Pennsylvania but Michigan. And the problem that Biden un... had and now Harris has in Michigan is that the large Arab and Muslim population of Michigan is really against the-

Jason Calacanis 1:06:34 Hm.

David Sacks 1:06:34 ... administration's support.... of Israel. Now, this is why Harris just snubbed Netanyahu when he came to Washington. So they are immediately trying to reposition that issue. And remember, the margin of error in Michigan is like two percent, so if they can win back that vote by, uh, seeming to be more progressive on the whole Israel-Gaza war, then there's a big electoral advantage for them. So I have to wonder if this is where this talk about, you know, is it an issue for Shapiro to be Jewish on the ticket or whatever. Again, it's nuts to me that we could be even having that conversation in this country, but it's possible that- that that is what's going on, is it's- it's like can you win Pennsylvania but not lose Michigan?

Jason Calacanis 1:07:20 Mm.

David Sacks 1:07:20 Well, the inevitable outcome of identity politics by giving everyone a definition on their race or their gender or their background or their religion is that you ultimately end up picking winners and losers, and you don't just get to pick winners. When you- when you make selections or prioritize things based on identity like this, you also de facto pick losers, and that's where-

Jason Calacanis 1:07:43 Yep.

David Sacks 1:07:43 ... this unfortunate snowball- When John F. Kennedy-

Jason Calacanis 1:07:47 ... takes off.

David Sacks 1:07:47 ... ran for president, it was a big issue that he was Catholic. I mean-

Jason Calacanis 1:07:50 Yeah.

David Sacks 1:07:50 ... you guys don't remember this, but-

Jason Calacanis 1:07:51 I do, yeah.

David Sacks 1:07:52 ... this is in-

Jason Calacanis 1:07:52 Irish-

David Sacks 1:07:52 In 1960, right?

Jason Calacanis 1:07:53 It was a major thing in our family.

David Sacks 1:07:55 It was, yeah.

Jason Calacanis 1:07:55 It was a major point of pride that we had an Irish Catholic in the White House, yeah.

David Sacks 1:07:58 Yeah, and specifically what people asked is would he be loyal to the United States or be loyal to the Vatican and the pope, you know, who was his ultimate authority, and he made it really clear, "Look, I'm gonna do what's right for the United States," and he neutralized that issue. I think that what matters about Shapiro or any VP is their views and their accomplishments, their policies, and whether he's Jewish or not really is secondary. Even if- even if your principal concern is Gaza, there are still plenty of Jews who have a wide spectrum of views on that issue. So it is nuts to me that this conversation is seriously happening.

Jason Calacanis 1:08:36 All right.

Jason Calacanis 1:08:37 There has been a kerfuffle, a donnybrook online between Paul Graham-

David Sacks 1:08:43 (laughs)

Jason Calacanis 1:08:43 ... and our bestie, uh, David Sacks here. Here, Paul Graham threatening you at Sacks on X, "Do you really want the full story of what you did to Parker being told publicly? Because it's the worst case of an investor maltreating a founder that I've ever heard, and I've heard practically all of them." This is Paul Graham, the founder of Y Combinator. "I was talking recently to another investor about whether you are the most evil person in Silicon Valley," referring to you, David Sacks.

David Sacks 1:09:09 (laughs)

Jason Calacanis 1:09:10 "He thought about it for a few seconds and agreed-"

David Sacks 1:09:12 (laughs)

Jason Calacanis 1:09:12 "... that he couldn't think of anyone worse. The second tweet about you being the most evil person-"

David Sacks 1:09:18 (laughs)

Jason Calacanis 1:09:18 "... David Sacks, in Silicon Valley has been deleted."

David Sacks 1:09:22 Well, that's nice to know.

Jason Calacanis 1:09:23 But your response. It's nice to know, yes.

David Sacks 1:09:24 That's nice to know. There was also another unhinged tirade that he had against me a few months ago-

Jason Calacanis 1:09:29 Okay.

David Sacks 1:09:30 ... where he was commenting in the Ukraine debate and-

Jason Calacanis 1:09:33 (laughs)

David Sacks 1:09:34 ... uh, was responding to a Ukrainian partisan who, this guy is like a propagandist for Ukraine who was embedded in the Azov Battalion. People may know what that is. In any event, Paul went out of his way. The- the thing is, I've never met Paul Graham. I- I don't know him.

Jason Calacanis 1:09:50 (laughs)

David Sacks 1:09:51 I've never- I've never done business with him. So it's just weird to me that he has this animus and this vitriol towards me. It's hard to know exactly what this is based on. I think that part of it is that he thinks he knows what happened at Zenefits even though he wasn't involved at all, and he's just listening to one guy who's been nursing this vendetta for many years. And then other people are speculating that there could be other things involved. I don't quite know.

Jason Calacanis 1:10:19 You want to set the record straight on Zenefits and just say what happened?

David Sacks 1:10:22 What is it that you guys wanna know?

Jason Calacanis 1:10:24 Parker apparently has done several public interviews where he kind of made claims, I think s- I don't know if I've listened to them, I've just read the summaries but JK you probably know that Parker's claimed that he was-

David Sacks 1:10:33 Uh, just said-

Jason Calacanis 1:10:33 ... that he was-

David Sacks 1:10:33 ... he ran a coup on him. Obviously for folks who don't know, there was an SEC investigation, and Parker was ousted from Zenefits as the founder CEO, he's very bitter about that, did a revenge startup, Rippling, which is doing quite well from what I understand. And, uh, he blames Sacks for all of this even though he was sanctioned for doing essentially insurance fraud by helping people lie on a test for their insurance certifications, and he- he got sanctioned by the SEC for it, and as you pointed out, Sacks, he was the only person who was sanctioned for that. So he broke some rules and he got pretty- pretty serious penalty, yeah? Do I have that basically correct, brushstrokes? Yeah, I mean, look, that- that- that whole experience was like the- was easily the worst year of my entire professional career having to deal with that mess that he created. And look, anybody can now say anything almost 10 years later in a podcast but the situation there was thoroughly investigated by regulators who had subpoena powers, who did extensive discovery, they looked at everyone's emails throughout the whole company. They also interviewed something like a dozen people under oath and took witness testimony from them, and then they sanctioned him, they fined him, and they published an account of what happened. I personally think it's a huge waste of time to be like rehashing events that are almost a decade old but I guess I'm being forced to by this smear campaign-

Jason Calacanis 1:12:07 Attack, yeah.

David Sacks 1:12:07 ... that he and Paul Graham have engineered against me. If you want to know what happened just read what the SEC said, read what the other regulators said. There was only one person who was named as being aware of the misconduct, and there was only one person who was fined-

Jason Calacanis 1:12:27 Hm.

David Sacks 1:12:27 ... and held accountable by regulators, in fact he was fined more than the company. Now if he just said, "Yeah, I, look I learnt from that mistake and I, you know, I- I made some mistakes and moved on," and apparently he does have a successful company, so...I don't really understand why he's so bitter. He seems to have, like, a... You know, he's, like, disturbed about it. Then it would be fine. I mean, there would be no reason to be talking about this. But the guy refuses to admit that he did anything wrong and instead he's created this elaborate story that his departure from Zenefits wasn't related to massive compliance issues, and that somehow i- it was related to him missing a sales target or being the victim of a coup. That's not what happened. This was a regulatory crisis that unfolded over many months and kept getting worse and worse, and we kept discovering new compliance violations. And this created a 50-state insurance investigation that could have shut the company down.

Jason Calacanis 1:13:23 Yeah.

David Sacks 1:13:23 And he controlled the board. He didn't have to leave if he didn't want to. He ultimately perceived that it was in his interest to leave and let us clean it up, and then he went on to go do this other startup, which I think he was planning to do all along. So th- his plan worked out for him, which is he left a big mess for us to clean up and went on to this other-

Jason Calacanis 1:13:42 And he's very successful now with the new company, so...

David Sacks 1:13:44 Right. Right.

Jason Calacanis 1:13:45 Sacks, I remember... I will just say, I remember how hard you worked at that after you were, uh, in the COO seat and then you were promoted to CEO. And I was really impressed watching it and seeing what you did, because you chose to step up and take care of this company at a time where you expressed to all of us privately how hard it was and what a challenge this company had found itself in. And you had investors that were friends of yours that were involved in the company that were on the board. And I think you did what felt like at the time, and from my experience interacting with you during the time, the right thing, which was to step up and address this rather than just throw your hands in the air and say, "This guy screwed things up," or, "This company screwed up," and walk away from it. You had personally put money in, your friends had put money in, and you worked hard to try and help the business recover after this miserable period of time. And it was really impressive to watch you do that work. So, I just wanna, uh, highlight my kind of-

David Sacks 1:14:35 Yeah. Well, thank you.

Jason Calacanis 1:14:36 ... experience watching you and knowing you-

David Sacks 1:14:36 Yeah. I mean, look, it was-

Jason Calacanis 1:14:37 ... during that time.

David Sacks 1:14:37 It was, it was miserable and obviously pretty thankless, and I did it for no compensation. I did it because, like you said, I had a lot of friends who invest in the company. I just thought it was the right thing to do to do this cleanup. The lawyer said it would take two years. We managed to get it done in one year. We got a clean bill of health from regulators. We had to remediate all the compliance failures. And when I then handed the torch to the new CEO, we had $200 million in the bank and 60 million of ARR with a clean bill of health. So, you know, but I didn't know I'd have this, like, crazy founder, like, lobbing bombs at me the whole time. And frankly, if I had known he was gonna do this, I would have just said, "Listen, man, you clean up your mess." And he would have continued playing games and stonewalling the regulators, and-

Jason Calacanis 1:15:20 Well...

David Sacks 1:15:20 It would have been a much worse situation, for sure.

Jason Calacanis 1:15:22 Chamath, you want to add anything here before we wrap up on this? 'Cause I- I'll have, I have two points to make, but I'll let you go first.

Chamath Palihapitiya 1:15:28 Look, I think that part of what happens in Silicon Valley is that there's these cliques, and there's definitely a YC clique, and they protect their own in absolute terms. And so I think there's a level of morality that everybody else has to live by that's not necessarily the, the rules that apply if you're a YC CEO. Now, that was accepted in Silicon Valley because in the early days, they were, frankly, one of a very, very small handful of games in town with respect to high-quality deal flow when you started to do series A, B and C. And as a result of that, I think venture capitalists essentially looked the other way because the returns were so good. The companies that were coming out of the incubator were so good. But as with all things, when you're successful and you try to scale, returns decay. And this is not a, a slight on YC's returns, but it's what happens to everybody. So if you look at Blackstone's returns, they were incredible when they started, and they're okay today. When you look at Sequoia's returns, they were incredible when they started. They're okay today. YC's returns were incredible when they started. They're okay today. And this is nothing against any of these folks. It's that in the business of building an organization and scaling, that's what happens. And when that happens, and a lot more competition emerges on the scene, the old tactics that you used to use to run a protection racket, if you will, just doesn't work anymore. And I think part of what's spilling out in public here is that that kind of immature form of bullying and intimidation is just kind of dumb because it's... it just doesn't hang together anymore. So, I don't know, I thought the whole melee, if you will, ruckus, Jason. Fracas, fracas.

Jason Calacanis 1:17:24 Yeah. Donnybrook, brouhaha.

Chamath Palihapitiya 1:17:27 Brawl, a clash-

Jason Calacanis 1:17:28 Yeah. Yeah.

Chamath Palihapitiya 1:17:30 ... was more about a guy that was engaged in this trying to do what he perceived to be the right thing for a YC founder in his community, but probably just, he just needs to get back to work and do something productive and probably (laughs) this wouldn't happen the next time.

Jason Calacanis 1:17:47 I- I'll just make two points here. Y Combinator has always, like much of our industry, they're not unique in this, been in favor of rule benders, breakers, and naughty is actually something in their interview process that they optimize for. Sam Altman has talked about this very publicly. I had a YC alum who was trying to get funding for me, hacked my voicemail and, uh, changed my outgoing voicemail. And that was like a big brouhaha on Hacker News, et cetera. And, you know, we kind of celebrate a little bit of bending and breaking of rules. And what everybody needs to understand is sometimes if you bend or break a rule, like insurance certification, like Parker did here, you know, that, that can be fatal for a company, which it was, and it, it can be, you know, really, really dangerous. And so then you superimpose on top of this, to your point, Chamath, Y Combinator, very big, powerful organization. Some folks say a mafia, and they described it as a bully stack. You know, Y Combinator does circle the wagons. They do bully people, and they do...... put out a presentation that we are the only people in Silicon Valley who are founder-friendly, you know, even though they're getting 7% for 125K like we do in our accelerator, or Techstars does, while also saying everybody else is the enemy, everybody else is taking advantage of founders. The truth is, we're all working really hard. Every founder, you know, is going to, uh, hack their way to success. Sometimes you take it too far, like Parker did here. He learned a lot of lessons, like some people say Uber did, like some people say Airbnb did. There's always been rule-breaking and bending in the entrepreneurial class. And then you superimpose on it Paul Graham's feelings, you know, uh, in the Middle East, Sax, your strong feelings about Ukraine and politics, and now the footprint of Silicon Valley is just so powerful, so influential on the global stage when it comes to politics. It just reaches a level of toxicity here that it doesn't need to. We're all on