How a 23-year-old blew open Minnesota welfare fraud

1. 0:00 – 3:32

   Bestie intros! Nick Shirley joins the show to discuss his recent investigation on potential daycare fraud in Minnesota

   1. JCJason Calacanis0:00

      All right, we have a massive show for you today, besties, but it's not gonna be our prediction show. We thought we were doing predictions end of the year, but we had so many amazing stories to cover in the news that we're gonna do predictions next week. The first story is we have investigative journalist Nick Shirley on. He has uncovered, uh, in a breaking 42-minute video that went viral, $110 million in potential fraud in Minnesota. It's part of $9 billion in overall fraud, and we've got him on the show here exclusively. This video apparently perhaps prompted responses from Kash Patel and DHS Secretary Kristi Noem, who have sent agents in to inspect these facilities. Here's some, uh, sort of important context. These, these entitlement frauds in Minnesota have been going on for over 10 years. It's a 13, 14-year-old story. It started by an investigative reporter named Jeff Baylon, launched his first investigation into this in February of 2013 at Fox 9 News, local investigative journalist. Uh, and after that expose, charges were brought in 2014 against a Somali woman and her husband. They skipped out, they never faced trial. Here's a 45-second clip from 2016 from Baylon.

   2. SPSpeaker1:14

      Ali is facing numerous counts of theft by swindle and racketeering. She ran a daycare business and home healthcare company that catered to low-income families, but former employees told the Fox 9 investigators back in 2013 that it was really part of a scam to collect millions in public subsidies.

   3. JCJason Calacanis1:34

      When I saw the bank account for the business, there were large cash withdrawals on a continuous basis.

   4. CPChamath Palihapitiya1:41

      Could I ask you a few questions?

   5. SPSpeaker1:42

      A year after our investigation, Ali was arrested and charged with bilking the state out of about $4 million.

   6. JCJason Calacanis1:50

      Okay, since 2018, Minnesota has seen 9 billion, around 9 billion in entitlement frauds according to federal prosecutors. Just to give you guys a, a concept of, uh, what that means, that's half of the total amount spent on 14 entitlement programs in the state. So, here's the direct quote from the federal prosecutor on the Minnesota fraud. "The magnitude cannot be overstated. It's staggering, industrial-scale fraud." There have been over 90 convictions for more than $800 million in fraud since 2022. In 2022, 47 defendants were charged in a $250 million fraud scheme called Feeding Our Future that was supposed to feed hungry kids. Then up to 220 million was stolen in funds for kids with autism. Then 300 million was stolen in Medicaid funds meant to help people with disabilities avoid homelessness. So, starting with that Feeding Our Futures fraud in 2022, 82 of 92 people charged have been Somalian. Joining us right now, 23-year-old investigative journalist Nick Shirley. Welcome to the program.

   7. NSNick Shirley3:00

      Thank you. It's been a crazy past few days out here in, uh, Minnesota.

   8. JCJason Calacanis3:04

      So, I guess a good place to start is, uh, you could tell the audience a little bit about your background, uh, when you got into investigative journalism. Obviously, you've got a YouTube channel. I watched some of your early videos when you were 16, 17 years old. I would say along the MrBeast vibes, and then suddenly making a turn into politics, specifically around immigration and some Vox pop, uh, kind of man-on-the-street stuff.

2. 3:32 – 16:36

   Nick's background, how he got into investigative reporting and YouTube, independence, finding this story

   1. JCJason Calacanis3:32

      But maybe you could tell us a little bit of how you got into all this and how you got into this specific story.

   2. NSNick Shirley3:39

      Yeah, so I've been doing YouTube as far as I can pretty much remember, since I was a sophomore in high school. It was just, uh, something I thought I could, would be good at, so I'd do YouTube videos and... all I could do in high school was to do prank videos sneaking into places, just kind of, uh, fun stuff you can do on the weekend. And then as I've grown older and I've had other experiences, um, I've matured and I've wanted to get more into more serious topics. And so, uh, as I've been able to go places and kind of see the world for what it is in different countries and whatnot and had different experiences, um, they, kind of led me to get into this more investigative journalism content. And also back in, around 2020, you couldn't even make political content on YouTube without wor- with- without being demonetized. For instance, if you were to put Trump in a YouTube title or thumbnail on my channel, you'd get demonetized because I was a smaller channel, so it was impossible to make that sort of content. And I was younger, I was about 17, 18 years old at that time.

   3. JCJason Calacanis4:37

      And now YouTube allows you to monetize. I noticed you had ads baked into the program, like many podcasters, and you're not affiliated with any news source, and I- to the best of my knowledge, you're not backed by any special interest groups, you're not backed by some rich billionaire. Where's the money coming to do this reporting from? A- and just to confirm that with the audience.

   4. NSNick Shirley4:58

      Yeah, everything I do, I'm 100% independent, and so I make my money off of YouTube, off of brand deals inside YouTube videos, and if people want to donate money, they can do that. Uh, however, everything I do is straight from my own hands and I don't have any other people really working for me other than me and myself, my mom, and a few other editors.

   5. JCJason Calacanis5:18

      So, tell us about the origin of this story, and then I'll hand it off to the rest of the besties to do some follow-up questions.

   6. NSNick Shirley5:23

      Yeah, so I've been looking into this fraud for a long time. Since last June, I came to Minnesota to kind of do a video on what was happening with the Somali population as far as, like, how much it was increasing and, and how certain towns have been, uh, the demographics have changed, um, and how churches are turning into mosque and how mosque are growing inside of Minnesota. I thought it'd be an interesting topic for people to see. And when I was there, a lot of people were starting to tell me about the fraud that was taking place, and I was like, "Well, how do I..." I just can't come and label everyone saying there's fraud happening. I need evidence. I need actual proof. And so I, I've been doing my own investigation, and then a man by the name of David, who's inside of my YouTube video, he's been doing his own investigation for years.... as he's li- as he works next to some of these childcare centers and he's driven by and he's never seen a single child at any of these daycares. And so he started looking into the funding and he was able to get the numbers of h- how much money these people were receiving from CCAP funding, which is tax exempt, and it was in the millions of dollars. And so I was... I told him, "All right, I'm coming to Minnesota. Let's go see what's happening in these daycares." And when I got there, I was shocked to see, on the first daycare we went to, all the windows were blacked out and you c- didn't have the option to open the door. Everything was locked.

   7. CPChamath Palihapitiya6:37

      So explain the, the mechanics of the fraud, just so the audience, if they haven't seen this, understand how these frauds are being played out.

   8. NSNick Shirley6:47

      Yeah. So massive welfa- welfare fraud is being committed. People are opening up these daycares, home healthcare clinics, you name it, anything that has anything to do with, like, health- uh, welfare, or even just, like, helping people in general, like with daycare or with, uh, healthcare. They're opening up these companies and then they're able to receive millions of dollars. And the state, for instance, I don't know if they're doing any checkups on these places, because these places literally had signs that said, "Leering instead of learning" on their, on their doors, uh, on the outside. And what business is operating in a way where you can't even go inside or the windows are all blocked out? Very strange.

   9. CPChamath Palihapitiya7:28

      Nick, let me ask you a question that I think a lot of people have, which is, when your video... First of all, let me just say, took a lot of courage and it was well-produced, and you communicated some very complicated information in a very simple way, which I think is a tremendous skill. But the question that everybody asks is, how do we know that you are right? And in traditional investigative journalism, there's a process that people follow and there's insurance that you have to get, and then there's errors and omissions, and you typically have to deal with lawyers. Did you go through that process when you made this? And do you think that it's an important part of what needs to be done for your credibility and for this piece to stand on its own?

   10. NSNick Shirley8:17

       Yeah, I think everyone knows that fraud's been going on for years now, like Jason was just saying. Everyone knows that the fraud's being committed, but nobody's actually went to go see it firsthand. They're- they know this fraud's been happening, right? That's why it's been so hard for people to say, "Well, this is happening," or this is why mainstream media has had such a hard time to actually get exposure on the fraud, because they've actually never gone and seen it firsthand or they've had the opportunity to have a platform where they can share on their own, right?

   11. CPChamath Palihapitiya8:43

       But did you check all the traditional boxes that The New York Times or other people... Because what I'm trying to get to is, how do we make sure that then you're not attacked and that you're not discredited and that... People say this process is faulty and he's mudslinging. And how do we make sure that you're not sued into oblivion?

   12. NSNick Shirley9:01

       Yeah.

   13. CPChamath Palihapitiya9:01

       And t- it's specific, to build on that, Chamath, the allegation has come out, oh, you went on a Saturday, oh, you went during Christmas, and I guess you could address that, 'cause now people are obviously vetting your journalism.

   14. NSNick Shirley9:12

       Yeah, well it's o- I went on December 16th, it's a weekday, right before Christmas break, so there's that. And then, um, sorry, the question as far as like, did I do the vetting and whatnot? The man who helped me, like, lead the investigation himself, David, he had all the paperwork from the Capitol. He had somebody from inside the Capitol leaking him the information. So there was my, like, fact check, per se, was he had a source from inside the Capitol. That's how we were able to get the numbers specifically.

   15. CPChamath Palihapitiya9:40

       Do you think that it's gonna be important for you to have lawyers that help you navigate? Because, like, if you build on this-

   16. NSNick Shirley9:48

       Yeah.

   17. CPChamath Palihapitiya9:48

       ... there's obviously more fraud in Minnesota, there's a bunch of stuff in our home state, a lot of people would love you and people like you to start looking in all of these crevices, but how important will it be that you have all of the legal I's dotted, T's crossed here?

   18. NSNick Shirley10:07

       Yeah, that's a good question. I haven't really thought too much about that because every- I've never been in this position where you have hundreds of millions, like, I think-

   19. CPChamath Palihapitiya10:15

       Yeah.

   20. NSNick Shirley10:15

       ... over 500 million people saw that video just alone-

   21. CPChamath Palihapitiya10:17

       Jesus.

   22. NSNick Shirley10:18

       ... just from all the impressions, aside from the main video getting 100 million, 125 million views, right? So, yeah, that's something I definitely need to think about, but I think more than anything, I'm not trying t- to go in and... I'm more so just giving people transparency from the outside where people can't see it when they're sitting from behind a desk talking about it, right? Right? I wasn't trying to barge in any of these businesses, I was simply asking, like, "Okay, like, is it possible to enroll an- a child in here?" And they would say no. Like, what daycare center doesn't have a paper for somebody to enroll a child? So I think, like, yeah, I guess if I wanted... if I was going to do defamation on specific people and stuff, like James O'Keefe style, I know he's always having to lawyer up, which I don't wanna ever have to do. That's like... would suck 'cause I- I hate getting... I don't wanna ever have to deal with that stuff.

   23. CPChamath Palihapitiya11:06

       Are you done with Minnesota? Like have you uncovered everything you need to uncover and now you're gonna look at another state? There was a lot of traffic this weekend about Ohio, Illinois, California. What do you do now?

   24. NSNick Shirley11:19

       Yeah. So I've been making YouTube videos consistently for the past 104 days, and I'll continue to de- show the fraud that's taking place here inside of Minnesota. It's not like I only just do videos on fraud but, um, I think just showing people what's happening inside the country is super important. And yes, there's a lot more fraud taking place here in Minnesota, and I do have a part two episode on a whole different segment of the fraud that is taking place within the, the state of Minnesota. And like you said, a lot of people have reached out to me, whether it be California, Ohio, and, uh, at that point, I will have to kind of... I'll be doing my research as well to then not have to be in a position where somebody can try and sue me.

   25. CPChamath Palihapitiya11:58

       What does it make you feel, Nick, as an American, and also as a young American? You grow up, whatever your belief system is, what do you think? Put aside the investigative journalist part, what do you think as just an American, as a young American?

   26. NSNick Shirley12:10

       About the fraud?

   27. CPChamath Palihapitiya12:12

       Yeah.

   28. NSNick Shirley12:12

       Yeah, I think it's very upsetting. I mean, so many of my friends and so many people are work- were like, we're working so hard just to be able to get by. Like, I don't even have a friend that owns a house at this point in their life, and they're 23 years old and we talk to our grandparents and they're all, like, talking about how they bought their first house or married. And it's like, that's not even a possibility for most of us, right? And so when you see that people are making millions of dollars, and not only is it millions of dollars, it's tax exempt money. They're getting it from CCAP funding, which is, uh, tax exempt, right? And so when we're working hard and we're paying anywhere from 20 to 50% of our money back into the hands of the government while people are just funneling money, it makes us all mad and it's not fair to anybody, quite frankly.

   29. JCJason Calacanis12:56

       It's interesting, Friedberg, I know you're, you're interested in the media as well, like I am. This story has been covered for over 10 years by local news. You came in and did this, it became essentially a national story, but when we did our research, we did find a New York Times story last month, but none of the CNNs of the world have actually covered this, so there seems to be a little pocketing going on here, Friedberg, the local news covering it doggedly, uh, run-and-gun journalists like yourself, Nick, doing an incredible job knocking on doors, but there's this vacuum, Friedberg, on, on the national level. Any thoughts on that?

   30. DFDavid Friedberg13:33

       Well, Nick, I think one of the things that makes your content so compelling is that it is long form. When you watch 60 Minutes or CBS or whatever, they're cut down. They're sort of like segment pieces. It's seven minutes long. What's so great about your footage is you get the raw, true experience. It really is what citizen journalism is meant to be, and you and I have talked for a while, I think, you know, we talked months ago about some of the work you were doing in Portland 'cause I, like I was asking all these questions like, "Well, what is everyone else in Portland up to?" 'Cause all the video from all the news stations was what's going on right outside that gate where the ICE facility was, and there was, like, 20 people going crazy, but, like, what's the rest of Portland like? And you went out and collected that content. That's the sort of stuff that I think makes your work so compelling, is it feels so real. There just isn't a way for a network news station or CNN to do that sort of work where you can sit down and spend 45 minutes looking at, like, the very real footage that you put out, which is awesome. Can I ask you a question? So you grew up Mormon, is that right?
3. 16:36 – 30:08

   Why this fraud story is resonating, why the national press initially avoided it

   1. JCJason Calacanis16:36

      this doesn't seem to made, make the, the national, uh, press, but it has been on the local and obviously it's on X. Maybe you could give your handicapping of the media sphere and Nick's role in it as you see it in 2025.

   2. DSDavid Sacks16:51

      Well, I think it's an indictment of the press that they haven't covered this and they still haven't covered Nick's video which is now, like you said, a viral video with hundreds of millions of views and everyone can see what's happening. You basically have this huge, multi-billion dollar fraud taking place. Yes, there were stories going back a decade, like you said, Jason, but they were isolated stories where they could be portrayed that way, and I think what Nick has done is show that the fraud is massive and in plain sight, and no one bothered, no one cared enough to expose it. And, you know, Nick, you did this by just going around to all these supposed daycare centers, which are receiving vouchers from the government, anywhere from, what, one and a half to $4 million per daycare center per year based on fictional enrollments of children, and these centers aren't even operating and they're collecting millions of dollars from the government. At all totaled, I guess it adds up to 8 to 10 billion. So this is taxpayer money that's being stolen from Minnesota, that's being stolen by this Somali community basically, and I think the story's gone viral because it includes so many aspects of dysfunction. I mean, you've got the issue of illegal immigrants. Some of the people in the Somali community got here illegally, some of them didn't. You then have these progressive judges who foolishly voided convictions of some of the fraudsters who were doing this. I mean, it's just, um...... classic example of suicidal empathy or something like that. So you have that aspect of the story, and then you've got the political corruption. Again, these are not isolated incidents. This is a- a case where I think we have to see this as a system at work, not just an example of, like, a few isolated fraudsters. There's some round-tripping here, where some of the funds that are going into the pockets of the Somali community through this fraud end up back in the hands of politicians. And the really extreme example of this is that Tim Walz even changed the flag of Minnesota to resemble the Somali flag. I mean, he lowered the old flag and raised this new flag to- that resembles the Somali flag, which shows the political clout of this community, which is why I think a lot of politicians turned a blind eye to what was going on. So, I just think you've got all the ingredients here of this story. You've got this suicidal immigration policy that we've had combined with massive government fraud, with dereliction of duty and incompetence, combined with political corruption. And that's why the story is going viral and has gotten hundreds of millions of views. So, kudos to you, Nick. And of course, the way that they are defending themselves... Well, first of all, the press is trying to ignore the story as much as possible. But to the extent that they have to confront it, what they do is just accuse us of being white supremacy, that anyone who notices that this fraud is being perpetrated by this Somalian community, that somehow that must be racial animus. That's the only reason people care about or something like that. And so they've accused Nick, and that actually is the last element here, which is, again, this tired, worn-out trope of accusing anyone who threatens this corrupt government machine of being somehow racist. In any event, let me stop there. Nick, let me get your reaction to all of that.

   3. NSNick Shirley20:04

      Yeah, no, I love everything you said because it's so true, especially, like, for instance, they found a man here with $7 million he had committed in fraud, and- and then the judge overturned it, right? And then Tim Walz is calling people like me a white sup- white supremacy. He says we're acting on white supremacy. No, Tim, it's millions and billions of dollars in fraud of hardworking Minnesota people that's being sent who knows where. And so it's not like... And then today, I'm just looking at the media, and people are... It's the craziest thing. I just get on there, and people are starting to say all these, like, crazy allegations about me. I'm like, "W- whoa, where are you guys..." People have even came out saying- said I'm like a- a pedo. It's like, what? Like, I literally just went and did the job that everyone's been wanting to see done for years, right? And I just brought limelight to everything, tried to make it as, uh, just a simple issue about fraud happening.

   4. DSDavid Sacks20:55

      Let's just be clear. You just went to these day cares and dis-... I- I looked up the CCAP that you mentioned. It's the Minnesota Childcare Assistance Program is what CCAP stands for, and it's a state-administered program, but it's funded largely by federal dollars to subsidize childcare for low-income families. So, it's not just Minnesotans who are paying for this. It's all of us through our federal tax dollars, and I'm seeing a lot of follow-on commentators in other states now saying, "Hey, you know what? In Ohio or in the state of Washington, we're looking at the government rolls and we're seeing that there is over 500 Somali-owned daycare centers." And by the way, that's just, like, one type of fraud or one type of very suspicious behavior. But you can start to see that people are starting to pull the thread here, and they're seeing, like, where this fraud goes and is starting to raise questions about lots of other government programs as well. For example, in California, we have $24 billion going to, quote-unquote, "homeless programs," and yet the number of homeless people keeps rising. And, you know, everyone knows this is called the homeless industrial complex. They can't pass an audit. The state refuses to even permit an audit. So, we know there's massive fraud going on in that program, there's massive fraud going on in entitlements across the country. And I think part of the reason why Nick's video has gone viral here is people can kind of feel that the whole country is really being eaten alive by this fraud and corruption, and it is a huge part of why we have such a huge deficit, why we have so much government debt. And it feels like finally someone's blowing a lid on it. And, Nick, it feels like you're achieving what Doge set out to do, and I think there's no one feeling more vindicated right now than Elon Musk because literally some of the things that he was saying back in February, you have now proven are true, that there's huge amounts of- of entitlement fraud, some of that money that is stolen then goes to politicians who then either support the expansion of that system or turn a blind eye to what's going on. And some of this is even connected, I think, to voter fraud. So, you're talking about here stolen money maybe leading to stolen elections. I mean, it really feels like you've kicked this rock over, and we're starting to see a bunch of nasty things underneath it. And what I think is really cool is that you're inspiring copycats now. Some people have called this decentralized Doge, where now, you know, hopefully we get a thousand or a million Nick Shurleys all over the country who start to show up and try to shine a spotlight on what's going on with all these government programs.

   5. NSNick Shirley23:32

      Yeah, I think it's essential that people realize what's actually happening and realize that y- w- like you said, like, we are getting eaten from the inside. Like, why is our money going to these places? We al- we always talk about Tim Walz was ranting about healthcare the other week. I'm like, "Well, maybe you shouldn't be giving hundreds of millions of dollars to healthcare companies that have nothing to show when you go to their business." And all the other stuff that goes along with what you're saying, like, yes, th- this... Like, I think Elon's... Why it sparked Elon's interest is because it's physically showing people with their eyes, not just a contract. And it's sparked such con- such conversation across the internet because it's something people can physically see and people are actually feeling inside of their communities.

   6. DSDavid Sacks24:16

      Nick, do you think that the fraudsters are gonna get a little bit better at covering their tracks now that you've exposed them? Because I- I feel like one of the things that was really amazing is you would just show up at these day cares that, you know, you can see from the government rolls are receiving millions of dollars. They call themselves a learning center, but they misspell the word "learning," so it's a learing center.And it's these cinder block buildings. Like, there's- there's no reception, there's no one there. I mean, it's almost like they've made it too obvious. Then there were cases where you would have people that got busted a decade ago, the locations didn't even change, they just renamed those fraudulent businesses and they were literally operating from the same location a decade later. I mean, it's almost like there was just no attention paid whatsoever to where this money was going, and I'm just... I- I guess the only thing I'm kind of worried about now is that with you blowing the lid off this thing, is whether the fraudsters are just gonna get better at covering their tracks.

   7. NSNick Shirley25:11

      Yeah. Well, I think that they're gonna have to look into where they're sending all this money, right? Because if they wanted to really confront this fraud, they could have just cut off the- they could have just cut off the money and said, "All right. One sec. Let's take a month and let's figure this out." But no, they just kept giving more and more and more, and they even started expanding it. For instance, how does a place just have an increase in autism? Like, how does that happen? And they-

   8. DSDavid Sacks25:33

      It started, it made me wonder whether a lot of our statistics about issues like that, like autism, like to what extent are they manufactured? Because we're creating this huge incentive for people to create cases of autism at these like, you know, fraudulent healthcare centers, and it does make me wonder, like, well, can we trust any of the numbers?

   9. CPChamath Palihapitiya25:54

      Just to be specific, in the areas that you guys are talking about where they think there was fraud, Medicaid claims for autism in Minnesota spiked 130X in five years.

   10. JCJason Calacanis26:06

       X.

   11. SPSpeaker26:06

       (laughs)

   12. CPChamath Palihapitiya26:07

       What the hell? That's crazy.

   13. JCJason Calacanis26:07

       Not percent, X. X. So from 1 to 130.

   14. SPSpeaker26:11

       Okay. 130X, yeah.

   15. JCJason Calacanis26:11

       (laughs) Not to 1.3 (laughs) . Oh, my god.

   16. CPChamath Palihapitiya26:13

       From 2018 to 2023, it went from $3 million to $400 million.

   17. JCJason Calacanis26:18

       It's probably the water. It's probably the water or vaccines. It could be anything. Who knows what it could be? (laughs) Could be fraud. (laughs)

   18. CPChamath Palihapitiya26:24

       Jason, I have a question for you which is twofold. One, what do you think of what Nick did if you watched the video? And two, why are your former brethren trying to bury this story?

   19. JCJason Calacanis26:34

       So, I think Nick is doing the most fundamental act of journalism for which he should be lauded, and is correctly being lauded, which is just go knock on a door, right, and ask the most simple question in the most unbiased way. You know-

   20. CPChamath Palihapitiya26:45

       (laughs) Aren't there kids here, and can I send my kid here?

   21. JCJason Calacanis26:48

       You know-

   22. CPChamath Palihapitiya26:49

       (laughs)

   23. JCJason Calacanis26:49

       ... I- I looked into Nick... I looked into your videos-

   24. CPChamath Palihapitiya26:52

       What, what more basic could you get?

   25. JCJason Calacanis26:53

       Yeah, and-

   26. CPChamath Palihapitiya26:53

       That's incredible.

   27. JCJason Calacanis26:54

       ... and just-

   28. CPChamath Palihapitiya26:54

       And they failed that test?

   29. JCJason Calacanis26:56

       Incredible, right? Yeah.

   30. CPChamath Palihapitiya26:56

       They failed the most basic test.
4. 30:08 – 49:15

   Future plans, California, possible Al-Shabaab connection, how high up does Minnesota's fraud go?

   1. JCJason Calacanis30:08

      And so I- I think you did a great job, Nick. And I think this is where we could see massive opportunity for investment in new publications and new news sources that take folks like Nick, pair them with two or three other folks, and now you got a team-

   2. CPChamath Palihapitiya30:24

      Well, Nick-

   3. JCJason Calacanis30:24

      ... which it seems like you're building, and then you could have a permanent funding source. So, if you could get... You only have GoFundMe, Nick, right now?

   4. NSNick Shirley30:31

      No, I don't have GoFundMe. I just accept donations via Venmo (laughs) or Q1&As, yeah.

   5. JCJason Calacanis30:36

      Yeah, so you should start a subscription-

   6. NSNick Shirley30:37

      Crypto.

   7. JCJason Calacanis30:38

      ... service, you know, like Substack or any of the other ones, Beehive, and you should...... literally use this momentum to get to 10, to a hundred-

   8. CPChamath Palihapitiya30:45

      Nick, you have, you have young people-

   9. JCJason Calacanis30:45

      ... to a million dollars a month in donations that reoccur. That's the key, is the reoccurring, go ahead, Chamath.

   10. CPChamath Palihapitiya30:49

       You have young people reaching out to you that want to do this work with you now?

   11. NSNick Shirley30:53

       Yes, I think if people are interested, like people are like, "How do we start?" Or "How do we do it?" And, uh, it's a good question. I think most people, like I didn't, I didn't go ask somebody how to do it, I just went and did it.

   12. CPChamath Palihapitiya31:03

       Mm-hmm.

   13. NSNick Shirley31:04

       And so a lot of people are so scared to take those steps, when in reality, you just have to go do things if you wanna make stuff happen.

   14. CPChamath Palihapitiya31:10

       There was an image that I saw on X, and it had a ship running into the iceberg. Nick, maybe you can find it. And the ship's name was the USS Taxpayer. And the top of the iceberg that was visible was Minnesota, but the bottom of the iceberg was California. (laughs)

   15. JCJason Calacanis31:30

       (laughs) That's great.

   16. CPChamath Palihapitiya31:32

       Which is the fourth-largest economy in the world, is just the state of California. I don't know if you can just show the tweet from Kevin Kiley, which I retweeted with a couple of things on. Here it is. What he says is, "A third of college applicants were fake. 17 billion was spent on high-speed rail with no track. 24 billion in homelessness funds disappeared. 32 billion was lost to unemployment fraud. Medi-Cal and SNAP are rife with improper payments." It's probably $100 billion a year that's being just completely pilfered out of California. So I don't know if, Nick Shirley, you have the time to come out west, but if you do, you're just gonna find an entire treasure trove of opportunities to look at.

   17. NSNick Shirley32:16

       Oh, there's massive fraud in California. I mean, the homelessness has just increased as they receive more money, and that's just one part of it. And like you talked about, the light rail and everything like that, uh, the fraud is like crazy in California, and they have the highest taxes.

   18. DSDavid Sacks32:31

       Yeah, they want more. (laughs)

   19. NSNick Shirley32:34

       Yeah.

   20. CPChamath Palihapitiya32:34

       Nick, has anybody approached you about this thing, I tweeted about it, I had never heard about it, but these guys educated me on it, called Qui Tam, which is this framework where you can actually sue on behalf of the state and on behalf of taxpayers. Has anybody approached you about thinking about using all of the information that you've garnered to try to launch some of these lawsuits, or no?

   21. NSNick Shirley32:56

       Yeah, I actually had somebody reach out to me the other day about it, so I'm gonna actually hop on a phone call with that guy.

   22. DSDavid Sacks33:01

       Yeah, also, as I understand it, some of these whistleblower laws reward the whistleblower with something like 20 to 30% of amounts that are-

   23. CPChamath Palihapitiya33:08

       Up to 50% in some cases.

   24. DSDavid Sacks33:10

       Yeah, that are, I don't know if it's like fines or it's amounts that are recaptured-

   25. CPChamath Palihapitiya33:14

       Recaptured, yeah.

   26. DSDavid Sacks33:15

       But I don't know, Nick, you could become a billionaire here, just with all the billions you've exposed.

   27. NSNick Shirley33:20

       I know, right?

   28. DSDavid Sacks33:21

       I mean... (laughs)

   29. NSNick Shirley33:21

       I got, I gotta sit down and figure it out.

   30. DSDavid Sacks33:23

       I know that's not why you're in it, but I mean-
5. 49:15 – 1:09:06

   What the scale of fraud means for America, Minnesota's future, potential patronage scheme

   1. JCJason Calacanis49:15

      Okay. Let me just go around the horn here. Lighting round. Sachs, a year from now, what will happen in relation to what we've seen in Minnesota?

   2. DSDavid Sacks49:23

      Well, I hope that there will be a serious investigation. I hope that there will be indictments. I hope there will be deportations, hopefully massive amounts of deportations. And I hope there'll be impeachments of some of these officials who let the fraud happen.

   3. JCJason Calacanis49:37

      Ooh, love it. Yeah.

   4. DSDavid Sacks49:38

      So, the country is being eaten alive, it feels like, by fraud. Government funds are being stolen. Votes are being stolen. I believe elections are being stolen. And it all comes from the fact that the party of government doesn't really care where the money goes. It's all just patronage to them, whether it's to Somali daycares or whether it's to this high-speed rail line that doesn't have one piece of track laid. I mean, how much has California wasted on that?

   5. JCJason Calacanis50:03

      Yeah.

   6. DSDavid Sacks50:04

      Or $24 billion to the homelessness only to see the homeless population increase. Look, these politicians don't care how the money is spent at all. All they care about is rewarding their supporters. That's the whole game. And then those supporters round trip a portion of the ill-gotten gains they've gotten from the government back to those politicians. That's the whole game.

   7. JCJason Calacanis50:24

      Hmm.

   8. DSDavid Sacks50:24

      And then when the whole thing blows up because it's just so corrupt and inefficient and so absurd, what do they do? They try to find productive people to scapegoat, and they say that billionaires are your problem. They'll blame billionaires for that, or they'll blame the tech community. Look, the startup community or the tech community is one of the, I'd say, last extremely well-functioning parts-

   9. JCJason Calacanis50:44

      (laughs)

   10. DSDavid Sacks50:44

       ... of American society, but they don't control it yet. And so that's what the politicians will do, is they will try to find scapegoats to expand their control and expand the size and scope of the corrupt system that they're running.

   11. JCJason Calacanis50:56

       Freeburg, what do you think? A year from now, where will we be, and what do you think this, um, says about America at the end of the empire and you, which you've been focused on? Yeah, go ahead.

   12. DFDavid Friedberg51:10

       Probably two things. So this is like everyone pocketing the silverware as the Titanic is sinking-

   13. JCJason Calacanis51:14

       (laughs)

   14. DFDavid Friedberg51:14

       ... because the spiraling spending, the lack of audits, the lack of accountability effectively enables an environment like this, because we've basically increased government spending so much to basically try and grow the economy, prop up the debt, keep the debt service payments flowing, et cetera. So, as a result, anytime you have a bubble, and in this case we have a bubble in government spending, you have frothy, fraudy behavior. There's, my guess, tip of the iceberg, Elon's estimate was 20% of federal spending falls under this kind of fraud camp. Could be more. And then when you add in state and local spending, and you start to do the accounting on all of this, we're probably talking about a sizable percentage of overall GDP that is effectively theft through government agencies or government checks being written. And I think that's gonna be the great uncovering of 2026, is we're gonna see on the order of trillions of dollars, of-

   15. JCJason Calacanis52:14

       Trillions?

   16. DFDavid Friedberg52:15

       ... trillions of dollars of this sort of behavior happening across the economy. And I also think the other side, nothing will happen.

   17. JCJason Calacanis52:21

       Oh?

   18. DFDavid Friedberg52:21

       And, and I think nothing will happen because the cost is gonna be so significant, it's almost like staring into the abyss. It's gonna make people feel sick to try and address it.

   19. JCJason Calacanis52:31

       Chamath-

   20. DSDavid Sacks52:31

       Actually, let me ask Freeburg a question. How do you differentiate between legal theft and illegal theft? Meaning, I think what these Somali daycares were doing was outright fraud and is illegal. But when Stacey Abrams creates a NGO in the final days of the Biden administration, and that gets stuffed with $2 billion, I mean, technically, I guess, that's legal, but it's clearly-

   21. DFDavid Friedberg52:52

       Yeah.

   22. DSDavid Sacks52:52

       ... a different kind of theft and fraud.

   23. DFDavid Friedberg52:54

       Would you throw up in your mouth when you heard the news? That's the, that's the test.

   24. JCJason Calacanis52:57

       (laughs) That's the little test.

   25. DFDavid Friedberg52:59

       And, and I honestly-

   26. DSDavid Sacks53:00

       When Elon, when Elon exposed that-

   27. DFDavid Friedberg53:02

       And I call, I call that... Yeah, and I call that the common sense vomit-in-the-mouth test. If you don't pass the common sense vomit-in-the-mouth test, it doesn't matter whether it's legal or illegal, it's (beep) up, and you'll realize that pretty quickly.

   28. JCJason Calacanis53:15

       Chamath, your thoughts on what we just discussed and maybe a year from now, will any of this change?

   29. CPChamath Palihapitiya53:23

       It is a crucible moment for American society. If nothing happens and we deem this kind of theft acceptable, it is the beginning of the end of the American empire. It's just a level of disrespect and lack of care for this country, I think. So, I will be waiting and observing how important it is to root this out. That's number one.

   30. JCJason Calacanis54:00

       Hmm.
6. 1:09:06 – 1:33:56

   CA's wealth tax: normalizing the seizure of private property

   1. JCJason Calacanis1:09:07

      California wants to do an act called BTA. This act stands for Besties To Austin. This is the Besties To Austin (laughs)

   2. DSDavid Sacks1:09:16

      (laughs)

   3. DFDavid Friedberg1:09:16

      (laughs)

   4. JCJason Calacanis1:09:17

      (laughs) And it's where two of four besties, I believe...

   5. DFDavid Friedberg1:09:22

      Oh, no, no. Four of four. The other two are actively looking for houses, they just haven't-

   6. JCJason Calacanis1:09:26

      They're circling. They're, they're in the air right now circling.

   7. DFDavid Friedberg1:09:28

      We haven't found something we liked yet.

   8. DSDavid Sacks1:09:30

      I don't wanna say where I'm living, but...

   9. JCJason Calacanis1:09:32

      Okay. Besties To Austin, I'm just predicting-

   10. DSDavid Sacks1:09:34

       I'm a Texan now, boys.

   11. JCJason Calacanis1:09:35

       Yeehaw, baby.

   12. DSDavid Sacks1:09:36

       Yeehaw.

   13. JCJason Calacanis1:09:37

       Let's go. Ride 'em, boss. There are four of us on horses. Yeehaw. Let's go. Let's get some Terry Blacks.

   14. DSDavid Sacks1:09:47

       Oh, man.

   15. JCJason Calacanis1:09:47

       Oh, man. Saxon, I had Terry Blacks eating beef ribs with our-

   16. DSDavid Sacks1:09:50

       Oh, man.

   17. JCJason Calacanis1:09:50

       ... shotguns and our pistols. It's gonna be a good time. Let's go. Uh, anyway, we brought this up back in October. A lot of people taking victory laps, uh, but we got on this first. This tax for billionaires is gonna target residents with over a billion in net worth. The history of this is really interesting. Friedberg, why don't you walk the all-in audience through how this came to be?

   18. DFDavid Friedberg1:10:13

       So California has a direct Democratic ballot process, so anyone can file for something to go on the ballot. And it allows them to get around the state senate and the assembly, and basically allow the citizens to vote directly on an issue. When they make a filing, it costs $2,000. Anyone can file for a ballot measure, and then you have to go collect signatures. And you have to collect roughly 900,000 signatures. Once you've collected those signatures, it makes it on the next ballot. The state attorney general looks at it to make sure that it's legally compliant and so on. They write their summary of it, and then it makes it on the ballot. People vote for it. And if it votes, it passes. So in this particular case, the Billionaire Tax Act, as it's titled, which is likely gonna get retitled when it's finally filed for people to review, is a 5% tax on the assets of anyone that's got a net worth over a billion dollars. It was proposed by a guy named Dave Regan, who runs SEIU, which is one of the unions, in order to make up for the healthcare shortfall that his members are going to be experiencing. So this was not a broad coalition that filed this. This is not filed by the state. This is not filed by anyone in the assembly or the senate. This is one individual at one union that's put it forward, and it's now trying to collect signatures to get it put on the ballot.

   19. JCJason Calacanis1:11:26

       So it's... To be clear, I just wanna read it back to you. It's a union leader who has a shortfall in healthcare for some number of members, I don't know how many members are in that union, and they just came up with the idea, people who hate billionaires will seize their money, 5% of it, to get healthcare for our members of this very specific union. I mean, to make-

   20. DFDavid Friedberg1:11:45

       Yeah, and the truth, the truth is, it's actually been set up as a negotiating technique. So it's primarily-

   21. DSDavid Sacks1:11:50

       Maybe.

   22. DFDavid Friedberg1:11:50

       ... it's... It, it may be. Yeah. I mean, look, there's a momentum behind it at this point, but it's fundamentally a point that creates leverage that allows this individual to go out and negotiate with other parties to try and find a way for this money to show up so that he can reduce the healthcare costs for his members, which is what his objective is. And this is the way the direct democratic process works in California. Now, it's not the first time a wealth tax has been proposed in California. And I wanna be really clear on this. I, I think this is very important for everyone to understand. Forget the term billionaire. Forget the term wealth. What we are talking about, and this is now being proposed in multiple places in the United States and there's also a federal bill being proposed, several federal bills have been considered. We are talking about, for the first time, a tax on individual people's private property, not on your income. So the way taxes work today is when you earn income, either via labor, so you collect a paycheck, or via the sale of an asset, so you sell a house and make a profit or you sell a stock or bond and make a profit, you are earning income and you pay a tax on that income. And you only pay taxes when you realize income, when you sell something or do work and get a paycheck. So only when you get paid cash. So for the first time ever, we are talking about placing a tax on people's private property that hasn't turned into cash. For example, you own some real estate, you own an apartment building-

   23. DSDavid Sacks1:13:11

       Well, I think it's worse than that.

   24. DFDavid Friedberg1:13:13

       The value-

   25. DSDavid Sacks1:13:13

       I think it's worse than that, because a lot of people were calling this an unrealized gains tax, but it's not an unrealized gains tax. You could have realized-

   26. DFDavid Friedberg1:13:21

       That's my point. Yeah.

   27. DSDavid Sacks1:13:21

       ... you, let's say, let's say that you had just had a big outcome and you sold your stock and you made a billion dollars. You f- were fully paid up on all of your taxes.

   28. DFDavid Friedberg1:13:29

       Tax. Let me... Yeah, let me just say not even a billion dollars.

   29. DSDavid Sacks1:13:31

       Right.

   30. DFDavid Friedberg1:13:32

       Forget about a billion. Let's say that this asset tax, 'cause in some cases it's being proposed on anyone over 50 million, or anyone over a million dollars.
7. 1:33:56 – 1:43:21

   Chamath breaks down the $20B Groq-Nvidia deal

   1. JCJason Calacanis1:33:56

      we have one thing we need to get to here on the docket, which is a victory lap for our bestie, Chamath Palihapitiya. This week, NVIDIA entered into a licensing agreement to, uh, license Groq's technology for inference chips. Chamath was the backer of this company for close to a decade, and, um, had to come rescue it a couple of times. It was a brutal non-consensus bet. Uh, you invested in Groq, essentially formed the company with your partners, five years, six years before ChatGPT even debuted. So, this was a visionary thing to do, and it was a hard bet. And so congratulations from one bestie to another on, uh, this c- incredible non-consensus bet you made, Chamath. But maybe take us through a little bit of the backstory.

   2. CPChamath Palihapitiya1:34:46

      We started the business 10 years ago, and the whole idea was just observing that there was these patterns that was happening inside of AI that we wanted to be ready for. And I think that this is gonna be really important over the next five to 10 years. So, to the extent that you're either a technologist or an investor, let's just take 30 seconds. So, in a world of kind of these LLMs, there's two terms that I think you're gonna hear a ton about over these next few years. The first term is prefill and the next is decode. Gavin Baker had an excellent tweet that broke this down. Nick, you can include that in the show notes. What prefill and decode are, is two very distinct ways of how models think and how a model goes through the process of answering a question that you ask it. And so when you send a prompt to AI, what happens is that the model processes it. This is called the reading phase or prefill. It reads your entire prompt all at once, and then it does a bunch of math, okay? Calculates all these relationships between all the words and it stores them in temporary memory. The problem is that this is really compute bound. So, it requires massive brute force. And NVIDIA GPUs crush you. And their architecture is designed for massive parallel processing, which makes them really amazing at digesting these long prompts, right? And Zach and a bunch of other people have talked about context windows growing and growing. So, the problem just gets bigger and bigger, NVIDIA just completely dominates. But the next phase though, this critical phase, the decode phase, is the writing phase, right? So, the model starts to generate a response. You ask it a question and its response, one token at a time. And then to pick the next token, to pick the next word, it has to look back at everything it has said already so that it doesn't hallucinate. The problem is that this is incredibly memory bandwidth constrained. The math of all of this is easy, but then you gotta do all of this nonsense. Imagine like a building and from getting from point A to point B, you gotta take an elevator, go up to the 10th floor, take a next elevator, go back down to the ground floor, then walk across. That would never make any sense. You'd wanna just walk across the hallway, right? And in our architecture, a long time ago, we made these design decisions from day one. We said, "You know what? There's an entire technology stack that NVIDIA and Google have pioneered. If we try to go and build a building that looks like that, we will fail." They're too smart, they're too capitalized, they're too good, they're too big. They'll get the best deals and we'll just be shut out. And so what we did was we took a very different architectural approach. We took a very conservative process technology. We weren't pushing the boundaries of physics, and we used a lot of what's called SRAM, so memory, on the chip so that we could do this decode thing as well or better than everybody else. And so now when you put these two things together, I just think it's gonna create...... a huge acceleration in the ability for this entire infrastructure layer to get much cheaper and much more valuable, which I suspect then it'll have a lot more developer pull. You'll get a lot more applications being built, billions and billions of more people using it. So think about it as pre-filled decode. We were really great at decode, and I think partnering up was a strategic rationale. And so essentially what happened was last May, NVIDIA announced this thing which allowed their chip to talk to other things. And our team reached out and said, "Hey, can we experiment to see if our chip could talk to your chip and we could do this thing better?" And over the summer, there was some kind of, like, spreadsheet work that happened. Then they were interested enough where they were like, "I'll give you a couple engineers," and Jensen was kind of curious about it. And then about a month ago, he and I had a call on a Saturday and he's like, "I think this thing is really real." And I called Jonathan and Sunny right away and I said, "You should be prepared that if this thing works, there's gonna be something interesting to be done here." And one thing led to another and they acted decisively. Here's what I'll tell you about Jensen, just seeing a little bit up close, he is operating at a level of insight about what's happening in this industry that I've really never seen with other folks in other industries, other than Elon in his industries. It's a level of mastery and a level of skill that is really impressive. Obviously it was a really big deal and I'm really thankful to have been a part of it. Yeah, it was great.

   3. JCJason Calacanis1:39:16

      Yeah. Slack, 25 billion, Grok, 20 billion, two incredible bits-

   4. CPChamath Palihapitiya1:39:20

      But Slack, we sold to Salesforce. The thing with Grok is I just think that it wasn't a point product. I think what will happen here is, if successful, we will be a foundational layer that NVIDIA can use to again make AI much more accessible, much cheaper, much more beneficial to everybody.

   5. JCJason Calacanis1:39:36

      Was there a point just... As a capital allocator, as an entrepreneur, which I consider you very entrepreneurial in the case of Grok, that this looked like it was gonna get, not make it? Because we went through-

   6. CPChamath Palihapitiya1:39:46

      Yeah.

   7. JCJason Calacanis1:39:46

      ... COVID, we went through things and, and how did you manage-

   8. CPChamath Palihapitiya1:39:48

      First seven years, first eight years. I mean, look, Jonathan is a genius, I said this on X, of biblical proportions. His vision for the V2 chip, V3, V4 chips, he is a volcano of technical creativity-

   9. JCJason Calacanis1:40:01

      Savant.

   10. CPChamath Palihapitiya1:40:01

       ... of, uh, a true volcano. He was the inventor of TPU at Google. There's very few people like this in Silicon Valley or the world.

   11. JCJason Calacanis1:40:09

       Savant, yeah.

   12. CPChamath Palihapitiya1:40:10

       But he's not a savant, I just think he's incredibly brilliant, okay? So if that roadmap can be married with Jensen's brilliance, I think that, like I said, it'll be hugely beneficial for AI in general. And then separately though, two years ago, they acquired Definitive and we were able to bring one of our other besties, Sunny Madhra, in as president. And I think the combo of those two, Sunny's team, which are very practical, kind of like put your head down, go to market technologists, plus Jonathan's vision and technical brilliance, frankly allowed a lot of this to happen. It wouldn't have happened without those two working together.

   13. JCJason Calacanis1:40:45

       Well, congratulations.

   14. CPChamath Palihapitiya1:40:45

       It's incredible.

   15. JCJason Calacanis1:40:46

       It's awesome to see you get a win. It was, uh-

   16. CPChamath Palihapitiya1:40:47

       Yeah, I'd like to, I'd like to say a couple things to a couple of people, though, if I could.

   17. JCJason Calacanis1:40:51

       Yeah, sure. Yeah, you, you... Absolutely. It's like the Oscars here.

   18. CPChamath Palihapitiya1:40:52

       So you know, like, my- my ostensible, you know (beep) (beep)

   19. JCJason Calacanis1:40:59

       (laughs)

   20. CPChamath Palihapitiya1:41:01

       (beep) You got (beep) .

   21. JCJason Calacanis1:41:05

       (clears throat) Okay.

   22. CPChamath Palihapitiya1:41:08

       Two... Number two to the VC community, you can also (beep) .

   23. JCJason Calacanis1:41:13

       (laughs)

   24. CPChamath Palihapitiya1:41:14

       (beep)

   25. JCJason Calacanis1:41:16

       (laughs)

   26. CPChamath Palihapitiya1:41:16

       (beep)

   27. JCJason Calacanis1:41:18

       (laughs)

   28. CPChamath Palihapitiya1:41:30

       (beep)

   29. DSDavid Sacks1:41:30

       (beep)

   30. CPChamath Palihapitiya1:41:30

       Number three, I have a message to all the people on social media, Reddit, you can also (beep) .

Episode duration: 1:43:21