Meta's scorched earth approach to AI, Tesla's future, TikTok bill, FTC bans noncompetes, wealth tax

Chamath Palihapitiya 0:00 What did you think about that reservation article thing? Oh, that's crazy.

Jason Calacanis 0:04 Well, this is a great topic. There is a guy-

Chamath Palihapitiya 0:07 A pretty industrious kid, it turns out.

Jason Calacanis 0:09 What this kid's been doing is he's been getting Carbone reservations, other top-tier reservations. And by the way, everybody's had this as an app idea. Nobody's really executed it that well. I don't want to give any plugs for any apps right now. But he has been selling $70,000. He's been flipping restaurant reservations for upwards of a thousand bucks. Chamath, you're very, uh, industrious in you're ab- absurd tipper, 100% tipper minimum. I know this because when I paid for dinner one time at Carbone, you took me and Phil Hellman's cards, and you said, "You guys pay and I'm gonna put the tip in." And then I had to sell Uber shares to cover it.

Chamath Palihapitiya 0:45 (laughs)

Jason Calacanis 0:46 Uh, that was gross.

Chamath Palihapitiya 0:47 (laughs)

Jason Calacanis 0:47 That was gross.

Chamath Palihapitiya 0:48 I've never had problem getting a reservation at any restaurant in New York.

Jason Calacanis 0:52 Yeah, they see you coming. You know what they see? 10 dimes worth of wine. I have taught many of my friends how to get reservations. I have a, a series of tips that I could give, but I don't want to give too many of them away. But nobody gives tips to maître d's anymore. Sachs, you tip the maître d' with cash?

Chamath Palihapitiya 1:09 Oh, all the time.

David Sacks 1:10 Yeah, sure.

Jason Calacanis 1:11 Of course, right? See, this is why Sachs and I get along. Sachs is a legit old-school guy.

Chamath Palihapitiya 1:15 Yeah, Sachs is elite. He's got the $100 bill pressed into his palm, shakes the guy's hand.

David Sacks 1:21 I'll tip the bartender to keep the ice cubes cold.

David Friedberg 1:24 The bartender got 100 just for keeping the ice cubes cold.

Chamath Palihapitiya 1:27 (laughs)

Jason Calacanis 1:27 There you go. Oh.

Chamath Palihapitiya 1:29 (laughs)

David Sacks 1:29 This guy has a C-note for you, a C-note for you.

David Friedberg 1:34 I'm going all in. Let your winners ride.

Jason Calacanis 1:37 Rain Man, David Sachs.

David Friedberg 1:39 I'm going all in.

David Sacks 1:41 And I said- We open sourced it to the fans and they've just gone crazy with it.

Chamath Palihapitiya 1:45 Love USC.

Jason Calacanis 1:46 A queen of quinoa.

David Friedberg 1:47 I'm going all in.

Jason Calacanis 1:49 This is my tip. It has worked. I'm gonna give it out here, but... And the reason I'm giving this out is because y'all are cheap (beep) . And n- not you, but just a lot of y'all out there, and you, you don't know the art. In Brooklyn, everybody gets tipped. We tip the phone guy when he comes to fix your phone at your house. Everybody gets tipped. So here's what I would do. And you can do this with a 20, you can do it with a 50, uh, you know, if you're going to some great place, you can do it with a hundy. You fold it twice, as Chamath says, you put it in your palm. You walk up to the maître d' stand. If there's anybody in line, you just cut it, and you go to the side of the table. You put your hand on the maître d' stand. You push the hand over slightly. Here's the maître d' stand, you just slide your hand over and you reveal the 50. And you say, "I am so sorry. I was supposed to make a reservation. I don't know if my assistant did it or not. She probably didn't. However, I'm a huge fan of the restaurant. If there's anything you could do for me, I made a stupid mistake to not make a reservation. If somebody cancels, I'll be at the bar. If there's any way you could accommodate me, I truly appreciate it. Only in town for one night." Uh, when I say 99 times out of 100, it works. The one time it didn't work-

Chamath Palihapitiya 2:58 How much are you tipping, 100?

Jason Calacanis 2:59 It used to be 20 when I lived in New York. Now I regularly do 50, and the reason I do it is I don't like giving money to charity, I feel like these charities are all a giant scam, and I like to give it to service people, like work-

Chamath Palihapitiya 3:10 Is it awkward when you tip $50 in ones like that? Like, doesn't it-

Jason Calacanis 3:14 No.

Chamath Palihapitiya 3:14 ... become really thick as-

David Sacks 3:15 (laughs)

Jason Calacanis 3:15 No, no, it just, it's a little harder to hold in your hand. I used to use a roll of quarters, actually. That was hard.

Chamath Palihapitiya 3:20 (laughs)

Jason Calacanis 3:20 The roll of quarters was a little bit hard. (laughs)

Chamath Palihapitiya 3:22 (laughs)

Jason Calacanis 3:22 The 50 was easy. (laughs) I'm just asking everybody here, if you hear my voice, please go tip your maître d', 20 or 50, and report back if my technique works. 'Cause what you're doing in the framing is you're saying you made a mistake, and then you make it so the person doesn't feel like you're bribing them or paying them off. They're helping you solve a problem. So anyway, it's kind of like when I troll David and I'm like, "Hey, Freeburg, uh, with the s- with the summit," whatever. And he's like, "I'll do all the work." Forget about it. You just gotta reframe it. All right, let's get started here. Sachs? But it is a bribe.

Chamath Palihapitiya 3:54 That is a bribe, yeah.

Jason Calacanis 3:55 It is, in fact, a bribe.

Chamath Palihapitiya 3:56 Yeah.

Jason Calacanis 3:58 I consider it a, uh, it's interesting you bring this up.

Chamath Palihapitiya 4:01 You're creating plausible deniability, but it's still a bribe.

Jason Calacanis 4:04 I consider it a tip in advance of services.

David Sacks 4:06 You're not tipping him. No, you're not tipping him for good service, you're tipping him to basically break the, in line.

Chamath Palihapitiya 4:11 Yeah.

David Sacks 4:11 You didn't make a reservation-

Chamath Palihapitiya 4:13 And break a covenant with another visitor.

David Sacks 4:13 ... and you're taking away somebody else's spot-

Chamath Palihapitiya 4:15 Yeah, totally.

David Sacks 4:15 ... and you're paying him to break the rules.

Chamath Palihapitiya 4:17 It's coudl- what?

Jason Calacanis 4:18 God, you know what? Your shift to man of the people-

Chamath Palihapitiya 4:21 (laughs)

David Sacks 4:22 (laughs) It's a bribe.

Jason Calacanis 4:22 ... is the most brilliant move you ever made.

Chamath Palihapitiya 4:23 No, but it's a bribe. It's a bribe.

Jason Calacanis 4:25 You're populist.

David Sacks 4:25 It's not a bribe. You're not, you're not even really doing him a favor, you're doing yourself a favor.

Jason Calacanis 4:30 All right, let's unpack this.

Chamath Palihapitiya 4:32 (laughs)

Jason Calacanis 4:32 You're such a populist.

Chamath Palihapitiya 4:33 (laughs)

David Sacks 4:33 (laughs)

Jason Calacanis 4:33 That's so (beep) brilliant, I hate you. (laughs)

Chamath Palihapitiya 4:35 (laughs)

Jason Calacanis 4:36 He just figures out a way to get those populous votes. No, here's what it is. 'Cause I had this argument with my, my personal-

David Sacks 4:42 You gave him the 50 just for doing a good job, even if you had the reservation, is what you're saying.

Jason Calacanis 4:47 I am so confident in how good the service is gonna be, I'm giving a pre-tip. I consider it a pre-tip.

Chamath Palihapitiya 4:53 Oh my God.

David Sacks 4:54 A pre-tip if he gives you a reservation when you don't have one.

Jason Calacanis 4:58 I am happy to not get the money back if they can't accommodate me. One time it happened, the woman at Asia de Cuba in New York in the '90s said, "Here's your 20 back." And she said, "I'm really sorry, there's nothing I can do. I would love... It's very lovely of you to give me the tip." And she handed it back to me. And I said, "Keep it." And she said no. "But, uh, I, I, I got a... The bartender's gonna take care of you at the bar, so."

Chamath Palihapitiya 5:18 (laughs)

Jason Calacanis 5:19 All's well that ends well.

Jason Calacanis 5:20 All right, let's get started, everybody. We have a full docket for you today. And story of the week, as voted by Besties... We have a new system here. Instead of me sorting the docket, the Besties give a thumbs up, thumbs down. Uh, this one, I think had two of three people voted for it. One person didn't vote this week. And that is Zuck's scorched-earth AI strategy. As you probably know if you're in tech, Meta was the first big tech company to fully embrace open source AI. LLaMA leaked last year. Folks said that it wasn't leaked, it was released covertly or on the slide, DL, by the folks at Meta. But they just released LLaMA 3, and I talked to Sandeep about this a whole bunch.... last week. It just came out a few days ago and it's already in the top two models on Hugging Faces leaderboard. You can take a look at Hugging Faces leaderboard. It's basically where, uh, it's the most trusted place, I think, where people benchmark these things. Developers are saying it's faster, it's less preachy, was an observation in Chat GPT-4, despite being slightly lower quality. They also have some small models that are performing really well. They also announced, very interestingly, open sourcing the Quest operating system called Meta Horizons OS. The OS powers the mixed reality headsets, VR, all that kind of stuff, AR. But here's the big news. This one is amazing. Instagram, Facebook, and WhatsApp are integrating a search box or their AI assistant chatbot into all their apps. Worth noting, Meta came out with their results just the other day. And we're taping this on Thursday, as you know, it comes out Friday. Their stock is down as much as 16% after reporting its Q1 earnings. They beat estimates, but, uh, Zuck is saying he's gonna spend a bucket load of cash on infrastructure. Chamath, it's your alma mater. You worked side by side with Zuck growing Facebook from what? 10, 20 million to 400 million MAUs. What do you think of his strategy?

Chamath Palihapitiya 7:16 800 million when I left.

Jason Calacanis 7:18 Okay. What are your thoughts on Z- gold chain Zuck and his new strategy, the pivot away from VR to AR, AI, and going full all in, so to speak, on open source?

Chamath Palihapitiya 7:30 They're taking a play that we talked about, which makes a ton of sense, which is, it's not a core market, but it's very important. The core money-making market for them is monetizing their family of apps. And so they're scorching the earth for these new markets so that the economics are not viable, which will, I think, allow a more robust ecosystem where they'll have more of a say. Because I think up until this point, you could have said that they and Google were sort of lagging behind OpenAI, but I don't think that's the case. And by the way, this is the strategy that we talked about 16 months ago that these big companies should take. I just think it's worth listening to what, what we said and then w- basically what Zuck said just right now.

Jason Calacanis 8:18 Mm. Here we go. This is a black and white flashback. Chamath in turtleneck, go.

Chamath Palihapitiya 8:23 I think that Google will open source their models because the m- most important thing that Google can do is reinforce the value of Search. And the best way to do that is to scorch the earth with these models, which is to make them widely available and as free as possible. That will cause Microsoft to have to catch up, and that will cause Facebook to have to really look in the mirror and decide whether they're going to cap the betting that they've made on AR, VR and reallocate very aggressively to AI. That should be what Facebook does. And, and the reason is if Facebook and Google and Microsoft have roughly the same capability and the same model, there's an element of machine learning called reinforcement learning and specifically its reinforcement learning from human feedback. Facebook has an enormous amount of reinforcement learning inside of Facebook. Every click, every comment, every like, every share. The huge companies will create the substrates, and I think they'll be forced to scorch the earth and give it away for free. Now you can see what Zuck said last week.

Jason Calacanis 9:28 Look at this little victory lap here.

Mark Zuckerberg 9:30 It's probably also pretty bad for one institution to have an AI that is way more powerful than everyone else's AI. And I kind of think that a world where AI is very widely deployed in a, in a way where it's gotten hardened, um, progressively over time, and is one where all the different systems will be in check-

Chamath Palihapitiya 9:54 Yeah.

Mark Zuckerberg 9:54 ... in a way that seems like it is fundamentally more healthy to me than one where this is more concentrated.

Chamath Palihapitiya 10:00 That is, I think the definition of scorched earth. So and he's, he's running a really perfect play so far. He's open sourced the headset OS, he's opening sourced these models. He stopped training, I think, for Llama 3.5, was it? And now he's moved directly to Llama 4 just to try to head off GPT-5 at the pass.

Jason Calacanis 10:20 Mm.

Chamath Palihapitiya 10:21 Well, so what are we seeing? We're seeing the economic value getting disintegrated. There is no value in foundational models economically. So then the question is who can build on top of them the fastest? And Jason, to your point, Llama was announced last Thursday, 14 hours later, Groq actually had that model deployed in the Groq cloud so that 100,000 plus developers could start building on it. That's why that model is so popular.

Jason Calacanis 10:46 Mm.

Chamath Palihapitiya 10:46 So it puts the closed models on their heels because if you can't both train and deploy iteratively and quickly enough, these open source alternatives will win. And as a result, the economic potential that you have to monetize those models will not be there. And what that does is reinforce the existing economic moat that Facebook already has in monetizing their apps. Now, why the stock went down, I'd like to talk in contrast to Tesla a little bit later because this has nothing to do with that-

David Friedberg 11:15 We'll put a pin in that.

Chamath Palihapitiya 11:15 ... and it's more about squares versus sharps in the stock market.

Jason Calacanis 11:19 Uh, Freeberg, your thoughts on Meta embracing, going all in on AI. You were at Google, uh, your alma mater, and you watched them be proprietary and closed when it came to search and the search algorithm, but open source when they were behind. And then, and that's, I guess, the phrase we use here in Silicon Valley. When you're behind, you use open source to catch up. And when you're ahead, you close everything down. Facebook famously shut down all access to their APIs. You can't get into the social graph. But they're going open here. Why? Because they're behind. Your thoughts on this from say, a Google perspective, and then maybe how Google might react. And then just broadly, do you think open source wins the day getting to AGI?

David Friedberg 12:07 I would say the analogy for Google is Android.... where Google open sourced the Android operating system because the handset manufacturers and some of the big software companies, so Nokia and Microsoft in particular, Blackberry, had these closed proprietary operating systems and then the telcos put their apps on and made money and basically had control over whether or not people could access Google and Google services through their phone. So the intention with open sourcing Android was to make sure that Google was not disadvantaged in their core business over time. I think that there's a similar analogy here that by open sourcing these models, they limit competition because VCs are no longer gonna plow half a billion dollars into a foundational-

Jason Calacanis 12:53 Hmm.

David Friedberg 12:53 ... model development company. So you limit the commercial interest and the commercial value of foundational models. Now, the capex question is, is a really hard one to diagnose because we don't know how they're spending the money, where they're spending the money, what they're doing in there. I think that it's a really an- important sign that founder-led companies with these voting rights, you know, have the ability to make these sorts of hard decisions that it might be very difficult for a management by committee group to make.

Jason Calacanis 13:22 Got it.

David Friedberg 13:23 Look at how Mark is making these decisions and Elon is making big, tough decisions that it would very likely be pushed back on if they didn't have the voting rights, if they didn't have the control over the company that they had.

Jason Calacanis 13:35 It's a great point about founder authority. I think that's a, a really salient point. Shout out to Zuck. Would really be great to get him at the All In Summit. Sacks, we have some breaking news here. It turns out Llama 3, they just tested it in the benchmarks. It says here you can make the founding fathers any race you like. It's a really interesting feature. Uh, any thoughts on Facebook's strategy here? You are a master strategist, David Sacks. Give us your master strategy here. 1700, uh, chess rating. Sacks?

David Sacks 14:04 Well, we, we kind of glossed over what the real news was, which was that Meta released Llama 3, which they had spent billions of dollars creating in, in a completely open source way and the testing on Llama 3 is that it's comparable to GPT-4. And I think this is what Chamath means by scorched earth, is that we now have a free model that's as good as GPT-4.

Jason Calacanis 14:26 Best in class. Yeah.

David Sacks 14:26 Best in class. Or at least-

Jason Calacanis 14:27 Yeah.

David Sacks 14:28 ... tied for best in class. There are some slight differences and we've been playing around with it. It is faster and cheaper than using ChatGPT-4 but the context window is smaller. I think it has only an 8,000 token context window. So-

Jason Calacanis 14:45 Hmm.

David Sacks 14:45 ... that's something that the open source community is gonna need to work on is, you know, rolling out foundation models that have a bigger context window. Nonetheless, the point is that at least for now, until OpenAI comes out with GPT-5, which is supposed to happen soon, the open source community has kind of caught up with the top closed source model, which is OpenAI.

Jason Calacanis 15:09 Will they blow past the closed source models, Sacks?

David Sacks 15:13 Well, I, I still think that OpenAI is ahead because the scuttlebutt about ChatGPT-5 is that it's amazing and it's a big improvement over GPT-4 and supposedly it's gonna come out any day, week, or month. So-

Jason Calacanis 15:27 Hmm.

David Sacks 15:27 ... if GPT-5 comes out and knocks our socks off in a few weeks, then we're gonna see that, oh, they're actually a cycle ahead of the open source community. But as of this moment, in terms of what's been publicly released, I think it's fair to say that open source is largely caught up with OpenAI. And this is why, you know, bring up this tweet by Naveen Rao, who is a founder who created the company MosaicML, which was sold to Databricks for a unicorn outcome, and he says, "I don't think everyone has comprehended the massive disruption and distortion that's going to happen in the gen AI market due to Llama 3. Moats will be destroyed and investments will go to zero. Just like everything in gen AI, this will all happen fast." So, you know, it's a similar reaction to what Chamath is saying which is, we have a open source model now that erases billions of dollars of private investment.

Jason Calacanis 16:21 And by the way, you just said something really interesting before which is, okay, there's a limitation, right? You mentioned the context window, which was a problem. I just found this thing today. They solved it. Now they're at 96K context. (laughs)

David Sacks 16:35 Yeah. Wow, that's amazing.

Jason Calacanis 16:36 So, so to your point, Sacks, this market is moving-

David Sacks 16:39 Wild.

Jason Calacanis 16:39 ... so fast because you cannot compete with open source. So all these closed models, which means OpenAI and a bunch of these other folks, especially the ones that are sitting inside of these smaller companies, right? Snowflake has a model. I, I think Databricks has a model. There's a important question that has to be asked around the economic viability of these models in a world where open source is not only better and better funded, but they're iterating faster and the feature set is catching up to your needs. So the minute that Sacks says he needs a longer context window, within a week it's there. It's pretty-

David Sacks 17:13 That's pretty intense.

Jason Calacanis 17:14 Yeah, I think this is like one of the...

David Friedberg 17:15 What do you think, Jacob?

Jason Calacanis 17:17 Well, I've- I've got a totally, uh, different take on this. Obviously I agree with all you, uh, what you've said here in terms of the open source, uh, and the dramatic effect it's gonna have on pricing, but there's something people are missing. If you go to meta.ai for a second, Nick, and you pull it up, (clears throat) what you'll see is they've dedicated the meta.ai URL to a search-like experience. And then they've put search box at the top of Instagram, WhatsApp, and Facebook. And so they are going to put search engine essentially, their modern search engine, which is starting from zero, in front of three billion people using Meta's collection of services. And so just like Apple and Firefox were able to intercept search traffic, I think, and let's make a prediction here, that Meta is gonna get ten points of, uh, the search market. Now each point of the search market is worth, you know, what is Google's worth? About 2 trillion. If you take out 500 billion for YouTube and their other services, you get 1.5 trillion, which means ten points is worth 50- 150 billion in market cap.Now, as you well know, Chamath, and, and you well know, David, these two ad networks, Meta started with psychographic data, the person, who they know. And then, of course, Google had the greatest advertising product ever, intent. You type in Volvo, you type in Tesla, type in Tesla Santa Monica, used, you know ... (laughs) You don't have to guess what the person is interested in at that moment. Well, for the first time, uh, you know, one of these ad networks has intent, data, and psychographic, and they're gonna be able to put it together, and I think they take 10 points of search, but more importantly, they're gonna have data on individuals that will be unrivaled in the advertising space. Now, Google tried to do this themselves. They did something called Google+. I don't know if you were there, Freyberg, during the Google+ era. They spent billions of dollars on a social network. It failed. They shut it down 'cause they wanted to get that. So looking at this, I think, man, there's so much going on on open source, but now Google, and we haven't talked about Google's role in all of this, and Sundar being a hired gun, not having founder authority, to your point, Freyberg, you know, I think they're going after Google's search business as well as, you know, taking away and commoditizing all of the open source. So w- we might be sitting here in three or four years watching Meta have, I don't know, 10-

Chamath Palihapitiya 19:42 Nobody, nobody has to win in search.

Jason Calacanis 19:44 ... points in search?

Chamath Palihapitiya 19:44 It's just that Google can't afford to lose anything.

Jason Calacanis 19:47 Yeah.

Chamath Palihapitiya 19:48 Everybody takes a point here and a point there and all of a sudden Google could be in the high 70s of search and that would be economically disastrous for their stock.

Jason Calacanis 19:55 Yeah. You're gonna have to make cuts.

Chamath Palihapitiya 19:57 Why do you guys think the stock is down? Why is the stock down 16%? I ha- I have a theory as to why.

Jason Calacanis 20:03 Yeah, tell us your theory. Yeah. Go for it.

Chamath Palihapitiya 20:06 I think that there's a few times a quarter where you can really see the dispersion in the stock market between what I would call the smart money and everybody else. So, you know, using betting language, the sharps and the squares. And I think Meta was an example of the sharps taking a line, which I think is very accurate, and Tesla was the other great example this quarter. And so if you look inside of Meta, and this, Freyberg mentioned this earlier, I think, Freyberg, what people really reacted negatively to was the total quantum of spending and the idea that it's misallocated, not to AI but specifically to NVIDIA. And the reason is that, and we've mentioned this before, I've tried to talk a lot about this with Jonathan Ross from Grok, but AI is really two markets, training and inference. And inference is gonna be 100 times bigger than training, and NVIDIA is really good at training and very miscast at inference. The problem is that right now we need to see a CapEx build cycle for inference, and there are so many cheap and effective solutions, Grok being one of them, but there are many others. And I think why the market reacted very negatively was it did not seem that Facebook understood that distinction-

Jason Calacanis 21:30 Hm.

Chamath Palihapitiya 21:31 ... that they were way overspending and trying to allocate a bunch of GPU capacity towards inference that didn't make sense. And so I think what people were saying is, "Hold on a second. W- so far your plays are perfect. It's everything we want you to do. We want you to scorch the earth. We want you to open source the headset. But we also want you to understand the difference between training and inference in a little bit more of a nuanced way, build up the inference capacity, but spend a lot less money because you don't need to spend it on NVIDIA." And the reason is the sharps know that NVIDIA cannot do inference. And so I think that's why the stock is down this much, and I think it's important for people who care about AI but also make traffic in NVIDIA to understand why the sharps think that, and I think several of us have tried to explain it now for the last couple of weeks. But it is miscast, and so you're overspending.

Jason Calacanis 22:20 Up next, Tesla earnings. Elon's master plan part two is going, well, as planned. Again, this was voted up by our panel here in our group chat. Last time we covered Tesla was episode 164, early February, after a Delaware judge voided Elon's pay package. Since then, Tesla has made some giant moves. They launched FSD 12. I've been using it. It's pretty great. Also, they cut the price of FSD by one third from 12K to 8K. I think you can also get it for a hundred bucks a month. And they announced a 10% rift, gonna cut 14,000 employees, always painful to do that. They're looking to reincorporate in Texas, leaving Delaware for obvious reasons. Earlier this week, Tesla shares were down more than 40% year-to-date, mostly due to a decrease in demand for EVs. Market caps dropped from 750 billion to 460 billion. Shares dropped 12% when they reported Q1 earnings on Tuesday. Investors got excited after Elon announced that Tesla's new line of models could start production at the end of the year or maybe even early 2025. He shared some thoughts on the robo-taxi or cyber cab, which he talked about maybe five or six years ago, and he has had in the master plan for a long time. Chamath, you made some great calls on, uh, Tesla and made some great trades there back in the day. Your thoughts on Tesla in 2024.

Chamath Palihapitiya 23:47 Sharps love it. This is another one, sharps versus the squares. Why did the sharps love it? Why did it go up and everybody was so confused? And I think the answer is that he's actually executing exactly the plan, and so if you're investing in a stock, what you really want is the CEO to kind of stick to a plan that is well known. So we don't have to actually guess what the plan is because he puts it out on the website. Look at the master plan-

Jason Calacanis 24:11 Yeah.

Chamath Palihapitiya 24:11 ... part deux, and if you start reading down, everything that he said he's gonna do starting in 2016 is basically what it is. So let's take the first part, right? What did he say in the first part? He said, "Hey, listen, guys, this is 2016. We're gonna build a Model 3."... we're gonna build a compact SUV, the Model Y. We're gonna build a new kind of pickup truck. Okay. Check, check, and check. Then he said, "Oh, by the way, we're also probably gonna have to do a heavy-duty truck and a high passenger density urban transport vehicle." So that's the robo-taxi thing that he's gonna announce in August. Okay. Check and check. And then he talks about the software and the investment in FSD and trying to get to a place where, you know, you can just have a much higher probability that it will save you from an accident and it'll keep you safe when you're driving your car, which will be a large driver of why people wanna buy the cars themselves. And you can see, like these FSD models. So if you're a smart capital allocator, what you actually saw was a dislocated stock price. What you saw was a plan that, by and large, he's been executing on, at a strategic level. Underneath, there's the vicissitudes. What are the vicissitudes? Sometimes you over-hire, you need to trim some fat. Sometimes you overspend on CapEx. Now, he spent about a billion of, of CapEx this quarter on AI infrastructure, so H100s for training. But the market saw through it because that was a reasonable amount of s- money to spend on training for FSD, right? So you can start to see the tale of these two reactions. The sharps looked at the capital allocation and said, "Okay, you missed by two and a half billion this quarter, but that's gonna create a buying opportunity because we think it's roughly mispriced, and we think it's mispriced because going back to this plan from 2016, this is all the things that we've been underwriting from 40 billion dollars of market cap to 750 and now we're getting a 40% discount to buy back in." So I think it's a really interesting moment to just contrast and compare what sharps look at and then what the media breathlessly exaggerates.

Jason Calacanis 26:16 Hmm.

Chamath Palihapitiya 26:17 And I think what they wanted was to lionize the, the Meta earnings story, but the sharps rejected it, and they wanted to dump on Elon and the sharps rejected that, in size in both cases. And it's just a reminder to all of us, be very careful what you're reading. Because if you just took the headlines, you would've expected the two reactions to be exactly opposite, but when you vote with money, it's very clear and unambiguous because you actually move in the direction of accuracy, and that's what the stock market allows you to see, and I think this is a really interesting contrast to compare sharps versus squares here.

Jason Calacanis 26:51 Yeah. Just well recapped, uh, for those who don't know, sharps in gambling are people like or all about, friend of the pod, who are just the sharpest bettors in gambling. Vicissitude, that's an unpleasant change in circumstances, for those of you who don't know the word. (laughs) Sacks, I don't know if you wanna comment. I mean, you and I are biased in this with the relationship with Elon. Any, any thoughts on Chamath's take?

David Sacks 27:15 Well, I'm not gonna comment on the stock per se. I mean, Tesla's products are amazing. They seem to be really executing well there and I think that Elon foreshadowed on that earnings call what's coming in the future. I'm personally really curious about the Optimus robot. I mean, that has the potential to create an entirely new market and bring about something that we've only seen in science fiction. So, to me, that's very interesting. I think in terms of the company's problems, I think they're mostly dealing with m- some macro forces. So, first of all, the GDP growth rate has slowed to 1.6% f- in Q1, so this just came out, uh, and that was a notable slowdown relative to expectations. So, first of all, you're dealing with a slowing economy, it seems like. Second, high interest rates mean that car payments are higher. If you wanna finance the purchase of a car, your, your car payments is gonna be a lot higher when interest rates are above 5%, and I think that has been a pretty big headwind for Tesla and really all the car companies over the last year or so. But I would say that I think both of those things are ultimately cyclical and what matters is Tesla's products. I would say the only issue they have that's a real long-term issue is just the, the Chinese competition. Companies like BDY are ramping up production of knockoff products at low prices, and so managing the competition with China is probably the only one of these issues that's, I think, probably a long-term issue for them to deal with.

Jason Calacanis 28:49 Let me ask a question here. How do you rank these businesses: energy, Optimus, trucking, ride sharing? Energy, Optimus, the robot, trucking, ride hailing. Rank those, your number one or two, in terms of potential for Tesla-Chamath, round the horn.

Chamath Palihapitiya 29:11 That's a good question. Ridesharing-

Jason Calacanis 29:14 Is number one?

Chamath Palihapitiya 29:16 ... and the absolute probably by an order of magnitude.

Jason Calacanis 29:19 Oh, interesting.

Chamath Palihapitiya 29:20 And the reason I say that is in order for ridesharing and ride hailing to really work the way that they envision it, you will have level five autonomy supported in jurisdictions where, again, if you just look at part deux, the whole point is you can summa coop- summon a car from your app, and if you don't have access to a mobile phone, you can go to these bus stop equivalents and just press a button and the car comes to you. And so, in that world, there's just so much value add in terms of passenger safety and sustainability for the environment and less traffic. It's a gargantuan game changer. Meanwhile, what you're seeing-

Jason Calacanis 30:03 What's your number two?

Chamath Palihapitiya 30:04 Sorry, meanwhile, th- th- I'm sorry, just to contrast, Uber. Uber and Lyft seemingly are profitable because they find pricing power to raise prices. So if Tesla enters in as a third player in that field and just guts pricing, which I think would make-

David Sacks 30:17 Hm.

Chamath Palihapitiya 30:17 ... sense for them to do-

David Sacks 30:18 Yeah.

Chamath Palihapitiya 30:19 ... I think this thing is just gangbusters nuclear.

David Sacks 30:23 That's, uh, it's a really interesting point.

Jason Calacanis 30:24 What do you got, Sacks? You wanna round the horn here?

David Sacks 30:26 Well, I already said Optimus, but that's based on a long-term view.

Jason Calacanis 30:29 Yeah, l- this is a long-term question. Based on the long term, one and two?

David Sacks 30:32 In the long term-In terms of option value, I'm- I am the most intrigued by the robot play. And Elon has pointed out that once you have robots that are capable of doing lots of different jobs, pretty much any job you point them at, that we could have more robots on Earth than humans. So it's a- it's a big future market-

Jason Calacanis 30:56 So you got Optimus number one, and who is number two?

David Sacks 30:59 I agree with Chamath in the short term, that ride sharing could really reach its- its logical conclusion with- with robo-taxis. Remember when, you know, Uber first gained steam and people were speculating about how big the market could be? There was a lot of giddy talk about how car ownership would change, and you wouldn't need to buy a car anymore because you would just, like, use Uber all the time.

Jason Calacanis 31:26 We called it going full Uber.

Chamath Palihapitiya 31:28 Yeah.

David Sacks 31:28 Yeah.

Jason Calacanis 31:28 Back in the day.

David Sacks 31:29 And I actually, I went full Uber, or I- I shouldn't say full. I went mostly Uber, like, within a couple of years of discovering-

Jason Calacanis 31:35 Yeah, you were one of the first.

David Sacks 31:36 ... that product. Yeah. So I thought the potential was there, but the problem is it was just too expensive. I mean, Uber is still quite expensive, and the most expensive piece of it is the human driving the car. It's all that labor cost. So if you're able to charge for the ride purely based on fractionalizing the Cap X, and that Cap X isn't even that high because they're making these robo-taxis pretty cheaply now.

Jason Calacanis 32:02 Hm.

David Sacks 32:03 And you're able to get so much more utilization out of a car.

Chamath Palihapitiya 32:06 Exactly.

David Sacks 32:06 Right? Because, I mean, how many hours a day do you drive your own car? Like, an hour, maybe?

Chamath Palihapitiya 32:11 Less.

David Sacks 32:11 But a robo-taxi-

Jason Calacanis 32:12 90%, I think is the number, uh, on average that they're not used. Freeburg, who's your one and two?

David Friedberg 32:19 I think the Optimus has the highest alpha, but the highest beta so, you know, more upside than anything else. Just unclear how you get there, what the path is and the capital requirements. And I think there's gonna be a lot of commoditization in this space. But the ride sharing is built in, it's low beta and significant alpha, so...

Jason Calacanis 32:42 So you're one and two, R- uh, Optimus Rideshare?

David Friedberg 32:45 Yeah, Optimist Rideshare.

Jason Calacanis 32:46 Chamath, what was your number two again? Just so I can recap here.

Chamath Palihapitiya 32:49 I would actually probably pick energy.

Jason Calacanis 32:50 And why would you pick energy as your number two, after ride hailing?

Chamath Palihapitiya 33:01 You go to a website. Again, the biggest investment I've made is in a company called Palmetto. They are close to now the largest residential solar business in the United States, if not the largest already. Now, what- what do they do? You're a consumer, you can go and lease or buy, it doesn't really matter. And we give you a super cheap system that goes on top of your roof, plus a battery system, and all of a sudden you're totally resilient and independent of the utilities. And we help change the laws so that every time you have excess energy, you can put it back into the grid and get paid, which is called net metering. So if you have 100 million of these mini utilities competing against 1,700 incumbents that are forced to make huge investments and are mispriced, that's a- an upheaval of an enormous amount of market cap, but also an enormous amount of debt. There's like trillions of dollars of debt. So I've always thought a ginormous directional bet to make would be to go long the disruptor, the person that helps arm the rebels in this case would be the person that arms 100 million homes, and then eventually at some point just short the debt of these utilities because they won't be able to service them if enough people quit and don't need PG&E and everybody else, it'll be just massively, massively disruptive. So that's why I think that that market could be big. I like the Optimus market. The only thing that I'll say is in my experience when I've looked at these generalized robots, the conclusion that I came to, and I could be totally wrong, is I suspect instead of having a generalized robot, you have very specific use case robots that look differently. So for example, there's an example, Nick, you can throw a picture, but there's something called intuitive surgical, which is essentially a robot that's operates on you. And if you look at that, it doesn't look anything like what you would think a robot would look like. It look, just looks like a ginormous machine. And so I suspect that there will be people that become experts in these vertical use cases, and that will limit the TAM for a generalized approach. I could be totally wrong, but that's sort of why I ranked them the way I ranked them. But I'm pretty convinced that robo-taxis are number one and- and then this energy thing that upends these 1,700 utilities in America is number two.

David Sacks 36:02 All right, J-Cal, you are the third investor in Uber. Are you worried about your investment? As I understand it, you still haven't sold, have you?

Jason Calacanis 36:09 I've sold slightly more than the majority of my holdings over the years to private transactions, and then I held everything post going public. And, uh, I'm still long Uber. I- I give number one to Optimus by far and away because I think the build of materials on Optimus could be 10K or less. I looked at some of these other startups that are in the space, and I've been studying it a little bit just out of curiosity, and so at a 10K bomb, I think they could rent you one of these for-... $300 a month or something like that, a subscription. I think every human on planet Earth eventually will have a robot. So I know that's crazy, but I think Optimus will dwarf the entire- entirety of Tesla's other businesses. Number two is energy clearly, I think, and number three is ride-hailing. Number two, energy, fairly obvious what's happening here. If you look at what's happening with data centers, it spiked, I think, from like 3 or 4% of energy now to like ... is it 15%, Chamath? I think we had a discussion with Phil Deutsch.

Chamath Palihapitiya 37:14 Yeah. It's almo- it's almost- it's almost- it's- I think it's 18%. It's almost 20%. It's a huge number now.

Jason Calacanis 37:19 Okay. So we-

Chamath Palihapitiya 37:20 Huge.

Jason Calacanis 37:20 ... we dovetail the two stories together. These H100s are beasts.

Chamath Palihapitiya 37:24 Beasts.

Jason Calacanis 37:24 Cooling beasts. This is like you can't even ... Phil Deutsch was telling us in the group chat, like you- you can't even cool some of these places. And what that means is, there's gonna be demand for energy. To Chamath's point, if each home becomes a little provider, you know, it's gonna create some regulation change, I believe. I'm no expert on the regulations. We should definitely have Deutsch on the pod at some point to talk about this. But imagine these, um ... like in Texas, they keep having the grids go down. And in Australia, they have the grids go down. It- it's gonna be so annoying for consumers to have the grids go down. While demand spikes for data centers, all the regulations are gonna get opened up to put batteries and solar everywhere.

Chamath Palihapitiya 38:07 It's also dangerous. I mean, people die when these blackouts-

Jason Calacanis 38:10 Yes.

Chamath Palihapitiya 38:10 ... and outages occur. And also, like we saw in San Carlos here in, in the Bay Area, nat gas lines explode. PG&E is responsible for forest fires. I mean, if you can do your part to basically get off these grids, use somebody like Palmetto or somebody else and just get solar, Tesla, and be done with it, and at least you're not contributing to some of these downstream errors.

Jason Calacanis 38:36 Yeah. And so, I- I agree 100%. And by the way, if you can make money from your solar and your batteries, and somebody else picks up the cost of installation, I think there's some arbitrage here, Chamath, to be had, and I think that's like what you discovered when you did your first principled, uh, approach to this. So I think those two businesses will be far bigger than anything else they're doing. Now, on ride-hailing, I'm using FSD 12. I have been using autopilot. I was one of the first users of autopilot, you know, from the beginning, like literally. And FSD 12 is a significant improvement. That being said, all of these systems work really well in a controlled grid, like we've seen with Waymo in Arizona and in, you know, limited parts of Los Angeles and San Francisco. I think that vision is five, six, seven years out from having low single-digit percentages. And you may have seen Uber has incorporated Waymo and the taxis in London into their system. I think Uber's ultimately gonna be the place people go to call up one of 20 different self-driving ... I think a lot of people are gonna get there at the same time. Wouldn't be surprised if Elon gets there first. But I think that's five or 10 years out, if I'm being totally honest, you know, in terms of getting to scale. So I would never ever bet against Elon, seeing what he's done, watching the, um-

David Sacks 40:02 Wait a second. Wh- when- when are you saying that self-driving will be good enough to power just one robo-taxi? Let's just forget about the scale. Just like, when will it be good enough to have like a steering-wheel-free car?

Jason Calacanis 40:15 Yeah. So if you ... y- you can just look at Cruise and Waymo, and you can have your answer, which is, today, in a contained environment with remote drivers intervening on some regular basis, it works. So people are taking Waymo, San Francisco, LA on a pretty regular basis. Cruise, I think, got kicked out of San Francisco. But if ... in the Cruise data, there was a lot of interventions going on. I suspect Waymo's doing a lot of interventions. So I think-

Chamath Palihapitiya 40:40 I don't wanna be a proponent of this, by the way, but (beep) bleep out his name, was saying that, Jason, with FSD, they're very strict that you have to be holding the steering wheel and stuff.

Jason Calacanis 40:52 Yes.

Chamath Palihapitiya 40:53 But you can go to Alibaba and buy something that hacks that, right?

Jason Calacanis 40:56 It's a weight. A lot of people are doing this-

Chamath Palihapitiya 40:58 I'm not promoting that. I'm not promoting this.

Jason Calacanis 40:59 No. No, no, no, no, no, no.

Chamath Palihapitiya 41:00 I'm not promoting this. I'm just saying that it doesn't exist.

Jason Calacanis 41:02 So anyway, to answer your question, Sax, I think today, or let's just say by the end of this year, a FSD 12 could be operating in a constrained space, just like Waymo is. Now, to get it to all regions, back roads, you know, weather, there's a lot of edge cases here. So I think to ... the- the more important question is when can automated be 5% of rides or 10% of rides? And I think that's five or 10 years from now. I do think a couple of people will reach that moment at the same time.

David Sacks 41:30 Well, let me show you a video. This is ... one of my coworkers at Craft took this. This wasn't me. But he was riding in the back of one of these robo-taxis. I think this is San Francisco or New York. I'm not sure which one.

Jason Calacanis 41:42 Mm-hmm.

David Sacks 41:44 But there is no one in-

Jason Calacanis 41:46 Yeah.

David Sacks 41:47 ... the driver's seat.

Chamath Palihapitiya 41:48 Jesus.

Jason Calacanis 41:48 Yeah. But there's a safety driver watching this remote, I believe, which is what Cruise was doing. And then when they get to a point where they can't figure it out, the human comes in, intervenes-

David Sacks 41:59 I don't see a safety driver. Where's the safety driver?

Jason Calacanis 42:01 No, no, see, a remote-

Chamath Palihapitiya 42:02 No, it's remote.

Jason Calacanis 42:02 ... safety driver.

Chamath Palihapitiya 42:03 Remote. Remote.

Jason Calacanis 42:05 But I have to say, watching this video, that is the coolest bloody thing. I mean-

Chamath Palihapitiya 42:09 Yeah.

Jason Calacanis 42:09 ... this is amazing. I'll be honest, like I-

David Sacks 42:12 I think it's like-

Chamath Palihapitiya 42:12 Yeah.

David Sacks 42:12 I think it's underrated in terms of-

Jason Calacanis 42:13 Me too.

David Sacks 42:14 ... how significant this is gonna be.

Jason Calacanis 42:15 Me too.

Chamath Palihapitiya 42:15 Yeah, I totally agree with you.

David Sacks 42:15 And look, if this is a Jaguar ... Look at that, it's a Jaguar.

Chamath Palihapitiya 42:19 Yeah.

David Sacks 42:19 So you're telling me that Tesla's not gonna have something at least as good as this?

Chamath Palihapitiya 42:24 Better.

David Sacks 42:25 ... soon?

Chamath Palihapitiya 42:26 Yeah, exactly.

Jason Calacanis 42:26 Yeah. No, I think- I think they- they have it already if you drive F- FSD 12. I believe FSD 12 probably could be working today in San Francisco under a controlled grid with the remote drivers like the other people have. If somebody knows about this, by the way, can they send us information? I'm jason@kalekananis.com for live. Just send me a picture.I'll, I'll keep it on the DL, I won't reveal sources, of who these remote drivers are, what their setup looks like. I, I'm, I'm very curious to understand how the remote drivers work for Waymo and Cruise.

David Sacks 42:56 Can they park the car?

Jason Calacanis 42:57 They can take the car with a joystick, is my understanding, and move it around a garbage can in the middle of the street, Jamal.

David Sacks 43:03 Wow.

Jason Calacanis 43:03 And that might be the future of this. Like, let's say 10 or 15%... Let's say 10% of the time it needs an intervention, one an hour, two an hour. Having some remote person in Manila, wherever, watching 10 videos concurrently and looking for moments to do this.

David Sacks 43:21 That's incredible.

Jason Calacanis 43:22 Cruise workers intervened to help the company's cars every 2.5 to five miles, according to a New York Times article. All right, and just if we, uh, score everybody's rating here, I give two points for first place, one point for second place. Optimus got six points, ride hailing, four, energy, two, trucking, zero. There you have it, folks. There's your scores from the besties.

David Sacks 43:42 What is Waymo? What is that? Is that like Uber but-

Jason Calacanis 43:44 That's Google self-driving. They spun it out.

David Sacks 43:47 But what, what is it? Is it like a service like-

Jason Calacanis 43:50 LIDAR, $150,000 cars.

David Sacks 43:53 Uh-huh.

Jason Calacanis 43:54 And, um-

David Sacks 43:54 But is it, it competes with Cruise?

Jason Calacanis 43:56 Yeah, they're doing what Cruise did.

David Friedberg 43:58 It was the original self-driving car company that Google set up.

Jason Calacanis 44:01 Yeah.

David Friedberg 44:01 And then they, they set up Google X around it and-

David Sacks 44:03 No, I, just explain to me the market, guys. I'm not sure I get it. So there's Wei- Waymo and Cruise.

David Friedberg 44:07 It's Uber.

David Sacks 44:08 Yeah, there's Waymo and Cruise, which are like, there's no drivers, and then there's Uber and Lyft where there are drivers.

David Friedberg 44:14 Yeah.

David Sacks 44:14 That's the basic... Right? Is that-

David Friedberg 44:17 Yeah.

David Sacks 44:17 That's right?

David Friedberg 44:17 Yeah, yeah.

David Sacks 44:18 Okay.

Jason Calacanis 44:18 And there's also Aurora. Uh, does... I don't know if Uber has, owns a percentage of that or not, but I think you know about Aurora.

David Friedberg 44:25 Aurora was set up by Chris Urmson. He was the original engineering lead on Waymo inside of Google. When they did a management changeover, there was a big falling out. A lot of people ended up leaving the Waymo program. Chris left, took a bunch of people with him, and started Aurora, which was basically software to do autonomous driving that they were then gonna license into OEMs. So that company got backed by a bunch of VCs and ended up going public via SPAC, and it's publicly traded today.

Jason Calacanis 44:51 Ah, I see.

David Friedberg 44:52 Yeah.

Jason Calacanis 44:52 Uber owns 26% of Aurora, or actually now it's down to 20%. There's also Zoox.

David Friedberg 44:57 They made an investment in it. Yeah.

Jason Calacanis 44:59 Yeah. There's also Zoox, which is part of Amazon. So I think there's about ten people who are gonna get to the finish line at the same time. I think it's gonna be a very crowded space.

David Friedberg 45:07 But again, so- some of these guys are trying to make software for OEMs so that-

Jason Calacanis 45:10 Yes.

David Friedberg 45:11 ... the OEMs don't have to build their own autonomous platform.

Jason Calacanis 45:14 Mm-hmm.

David Friedberg 45:14 And some of them are trying to make a, a, a driving service, like Waymo, and then some of them are... Like, Tesla has a driving car. They actually sell cars, so different models.

David Sacks 45:26 Yeah, so I, I-

David Friedberg 45:26 But they're all, they're all gonna converge, yeah.

David Sacks 45:28 I actually disagree that there's gonna be 20 or 30 of these, because I actually think that self-driving is really, really hard. And we know that Tesla has been spending years getting to this point, and then, uh, Google as well. So I'm not sure why there'd be more than two or three companies that can do self-driving.

Jason Calacanis 45:46 Well, there are ten, there are ten or more pursuing it. I do agree it goes down to four or five, and then it's a question of does any... Is it a winner take all, winner take most? And that's what remains to be seen.

David Sacks 45:59 But, I mean, you need a ton of data to make it work, and-

Jason Calacanis 46:01 Yeah.

David Sacks 46:01 ... you need a lot of data around edge cases. And so the advantage Tesla has is they actually have real-

Jason Calacanis 46:07 Now they have so many cars on the road, yeah.

David Sacks 46:08 They have real cars on the road with real driver minutes and with drivers using the previous version of FSD and making interventions. So they're constantly getting better. I think Google seems to be putting enough resources into this to get somewhere, but I don't think a lot of companies are gonna figure this out. I think it's gonna be somewhere between one and three companies figure this out.

Jason Calacanis 46:31 Well, Waymo has the most on the road right now, and then Cruise is second to them in terms of in market. So the question is, how quickly can Elon get this out? Have you guys, any of you guys taken one of these robo-taxis?

David Friedberg 46:43 I haven't taken one. Uh, one of those-

David Sacks 46:45 No, that's what my coworkers.

David Friedberg 46:46 Yeah. We, we gotta do that.

Jason Calacanis 46:47 Friedberg, have you taken one?

David Friedberg 46:48 Yeah, they're cool. They just move around.

Jason Calacanis 46:50 You did take one?

David Friedberg 46:51 Yeah, they're-

Jason Calacanis 46:52 Okay.

David Friedberg 46:52 They're all over the city. You can take them in San Francisco now.

Jason Calacanis 46:54 Yeah. You have to download the Waymo app?

David Friedberg 46:57 Yeah, and there's like a wait list, and then you get on it and, uh, you know, they're letting people on, and then you just g- get on it and go for a ride. Pretty cool.

David Sacks 47:04 By the way, so- someone tweeted something kind of funny. They said, "You know, it took Uber years and years and, like, a trillion dollars to finally get to profitability, and now they're about to get disrupted by robo-taxis."

David Friedberg 47:15 (laughs)

David Sacks 47:15 It's just brutal. (laughs)

Jason Calacanis 47:16 Unlikely. (laughs) I think unlikely. I think it's gonna be a s- a very slow rollout. You know, one or 2% a year, so... But, you know, it compounds, and so

Jason Calacanis 47:25 we'll see. All right, everybody. Is this a big win for Lina Khan? The FTC just banned non-competes. Three of three people voted this up of the three besties who decided to vote on the docket. Federal Trade Commission this week voted by a three to two margin to ban non-competes. To give you a sense of the impact here, estimated of 18% of the total US workforce are covered in some way by non-competes, 30 million people. The ruling bans agreements entirely and requires companies to let their staff know that non-competes are non-enforceable. There are a few exceptions, like existing non-competes for senior level executives. I'm guessing, uh, when you buy a company, you can get somebody to non-compete for buying their company. The Democratic FTC commissioner, Rebecca Slaughter, called non-competes, "unfree and unfair." One of the sen- dissenting commissioners, Republican Andrew Ferguson, said the FTC lacked authority from Congress to make this ruling without specifying whether or not he agreed with it. Theoretically, the new rule takes effect in 120 days. Wow, we're on a fast timeline. After which, the ma- vast majority of existing non-competes will be unenforceable. Here in California, they're not enforceable as we know, uh, except under certain circumstances. So this is really an East Coast thing. People in Boston, New York, they're really affected by this, and people will actually enforce these for things as silly as hairdressers. There was a big lawsuit by hairdressers who had to sign, like, 50-mile non-competes with their beauty salons.The U.S. Chamber of Commerce says it plans to file suit over the ruling. FTC says the rule will create 8,500 new startups a year because people can leave and compete. Friedberg, your thoughts?

David Friedberg 49:05 In California, non-competes are not enforceable but outside of California, they are and they're often used, like in the agriculture industry, in the ag inputs industry where folks are developing new technology, mostly at companies based in the Midwest and East Coast, a- as you guys know, in financial services as well, they're often used that if you work for one company because you have a lot of trade secrets, you can't carry them over to others. But in Silicon Valley, we're very used to engineers, product managers, executives taking all of the knowledge and capabilities that they've developed at one business and leveraging that into a new role. It creates a dynamically competitive marketplace. It also inflates, obviously, costs because you're willing to pay more for someone who's worked directly at a competitor and has deep knowledge. But they are bringing IP often and there is, you know, a real risk that they take something from your company that you've invested in them to understand, then they take it to your competitor. So, I- I see both sides of this. I- I think non-competes give companies the ability to invest in employees and feel confident that the knowledge and information and support they're providing to those employees doesn't ultimately find its way over to a competitor and it gives you a rationale for paying more to your employees. It actually inflates salaries. If I'm fearful that someone might leave and take knowledge with them, I'm gonna share less with the employee, I'm gonna pay them less. So, I could see this going both ways. I'm really fairly torn on this issue, to be honest. I don't know what the right answer is or if there really is a- a strong kind of ethical case one way or the other. I think that non-competes can both benefit and hurt employees and benefit and hurt companies.

Jason Calacanis 50:47 Yes, there are unintended consequences. Chamath, where do you stand on this? Is this a huge win for Lena Khan, neutral, or a loss?

Chamath Palihapitiya 50:55 I don't see non-competes having any value in any market except East Coast financial markets. I've heard of folks getting something called beach leave, typically in finance. These are Wall Street jobs, hedge fund jobs. So, I know it exists there.

Jason Calacanis 51:13 What does it mean, beach leave?

Chamath Palihapitiya 51:15 Like, if you leave hedge fund A and you're gonna go to hedge fund B, they make you sit on ice for six months or nine months. Garden leave, I think maybe they call it. And the whole idea is that you don't take any active market thoughts to your next job, for what, for what Friedberg said. I just think the whole thing doesn't make much sense. I mean, like, intellectual property is the least valuable it's ever been, right? More people develop things now via trade secret than patents. The whole patent system has become a little bit of a game.

Jason Calacanis 51:49 We just talked about open source, right?

Chamath Palihapitiya 51:51 They have less and less value. So, innovation is happening in plain sight, and so I don't think companies are actually thinking about this issue at all anymore. They're paying people because they need to pay more to get the best and brightest. So, I think if you're hoping to rely on one of these agreements, if you're an employer, I think that you should just forget about them and just hire the best people, pay them the best, and if they suck, fire them.

David Friedberg 52:18 Did you ever see that movie Spanish Prisoner starring Steve Martin? You guys ever see that one?

Jason Calacanis 52:23 Oh, yeah. Great film. God, wow, that's a deep pull.

David Friedberg 52:25 Great film. Steve Martin plays the con man that goes to this guy and the guy is, like, a chemical engineer. Campbell Scott is the guy's name, the actor. And, uh, he has, like, a- a process for making a chemical and it's worth so much money and the whole movie is Steve Martin conning him into telling him the chemical process and eventually, he took it, he was gonna give him all this money, hired him, and then he disappeared once he got the knowledge, and that was the end of it. It's a great, great film.

Jason Calacanis 52:51 Shout out David Mamet.

David Friedberg 52:52 David Mamet, exactly.

Jason Calacanis 52:54 Yeah, fantastic.

David Friedberg 52:54 Um, but I think there's a lot of investment that goes into intellectual property businesses that include things like chemical engineering, obviously financial services, trading companies, algos in hedge funds, and a lot in software, that if you can access that intellectual property without stealing it, but actually hiring an employee that has it in their head, uh, you gain quite a lot.

Chamath Palihapitiya 53:21 But you can do that now. I don't see it-

David Friedberg 53:23 Yeah.

Chamath Palihapitiya 53:23 ... actually doing anything bad.

David Friedberg 53:24 So, I have had a lot of folks that I know in other industries outside of tech or software where California non-competes are not enforceable, that aren't allowed to go work at a competitor for one year, two years, three years-

Chamath Palihapitiya 53:34 No, no, no. I'm not disputing that it doesn't exist. I'm saying, where do you see it actually having negative repercussions in California? The point of the fact that it doesn't exist here is also seemingly that it doesn't mean anything.

David Friedberg 53:45 Yeah, the rate of-

Chamath Palihapitiya 53:46 I mean, otherwise-

David Friedberg 53:46 But- but the rate of change here is crazy. Like, the- the rate at which software changes, I think, is quite distinct from the rate at which, for example, a chemical engineering process might change, where you learn that process, you spend $200 million building a system, and then that- that employee can go and tell it to someone else and suddenly changes everything about that other business. So, I- I don't know. I feel like there's something about Californi- uh, software that gives us this- this point of view that maybe it doesn't matter, but in other industries, it might.

Chamath Palihapitiya 54:14 In that example, you'd still need to have- come up with hundreds of millions of CapEx to implement it, whatever-

David Friedberg 54:18 Yeah.

Chamath Palihapitiya 54:18 ... you know.

David Friedberg 54:19 Yeah.

Jason Calacanis 54:19 Sax, any thoughts?

Chamath Palihapitiya 54:20 I just don't think these things mean anything.

David Friedberg 54:22 Yeah. Do you care about non-compete, Sax?

David Sacks 54:24 I think one of the reasons why the tech industry moves so fast and innovates so well is because of the happy coincidence that California doesn't allow non-competes, and so the industry's never had them. And as a result of that, like you're saying, the talent just flows freely to wherever the opportunity is. And you have this dynamic in tech where the VCs and the talent all swarm the biggest and best opportunities and the newest platforms in a completely decentralized way, and there's n- little or no friction in doing that. If you were to impose...... non-competes on all of the talent, there's gonna be enormous delays and friction in them moving around to pursue opportunities. And so, I think it's been very beneficial to the industry as a whole that we don't have that. Now, it's hard for me to speak to other industries, but I think that if you're looking to maximize the pace of innovation, you wouldn't have these employee non-competes. So, on that level, I kind of agree with what Lina Khan's done. That being said, I do think the Republicans' point was well-taken in the sense that this was very aggressive rule-making. I mean, I think you could legitimately argue that a change this big should be made by Congress, but I tend to think this is probably a positive change.

Jason Calacanis 55:43 I think this is great, what Lina Khan's doing. And this is two for two. I think her Apple action was great, I think this is great. Love to have her at the summit. That would be an amazing fireside chat. Uh, so if anybody knows her, invite her to the summit. There really is three-way ... Oh, and by the way, Chamath, media business on the East Coast also does this, and that's why friend of the pod, Tucker Carlson and, uh, Don Lemon, both of them started shows on the internet, not other networks, because they have very tight non-competes and it's pay-to-play. They got paid out their full contracts according to reports. And so, there is something, I think, in a middle ground here, Chamath, where if you do want somebody to not compete, you gotta pay to play. In other words, they're getting paid-

Chamath Palihapitiya 56:28 No, but this is what I'm saying-

Jason Calacanis 56:29 Yeah.

Chamath Palihapitiya 56:29 ... it just tends to be examples, Jason, over and over of markets that don't really matter that much relying on these things and markets that are dynamic and add-

Jason Calacanis 56:38 Yes.

Chamath Palihapitiya 56:38 ... value and humanity just moving past them. So, it probably makes sense for all of us to just go move past them.

Jason Calacanis 56:44 Absolutely, 100%. This is gonna be great for the economy. Sachs, you were gonna say something?

David Sacks 56:48 Well, just because these agreements are no longer enforceable doesn't mean that businesses don't have moats. It just means you have to look in other places. I mean, you have to, you have to find network effects, you have to find data scale effects. There's other ways of building a moat-

Jason Calacanis 57:02 Product. (laughs)

David Sacks 57:03 ... besides just trade secrets or, or, you know, patents is another one, category where, you know, in the tech industry, patents have never really mattered that much and the only people who are seeking to litigate patents are basically patent trolls.

Jason Calacanis 57:17 Losers.

David Sacks 57:17 So, you wanna find real durable moats, not these like legal arrangements that try to protect your business through, you know, these-

Chamath Palihapitiya 57:26 That's-

David Sacks 57:26 ... these types of contracts.

Chamath Palihapitiya 57:27 ... well said. That's really well-said. That's exactly what I was trying to say. That's well-said.

Jason Calacanis 57:31 Well-said. Team, product, brand. These are the ways to build a great business, not legal-

David Sacks 57:37 Yeah, and-

Jason Calacanis 57:37 ... shenanigans.

David Sacks 57:37 ... and by the way, o- o- one of the reasons why the industry moves so fast is 'cause best practices get shared very quickly.

Jason Calacanis 57:45 Yes.

David Sacks 57:45 And one of the ways that happens is that everybody is moving around to different companies. I mean, what's the-

Jason Calacanis 57:51 Ah, such a good point.

David Sacks 57:51 ... average term of employment? One or two years-

Jason Calacanis 57:54 18-

David Sacks 57:54 ... and-

Jason Calacanis 57:54 ... to 36 months, hmm.

David Sacks 57:55 Right. And you don't have to worry that if you've got some knowledge in your head, that's, you don't have to worry that if you use it at some new company, you're gonna violate some trade secret. The, but the one thing everyone knows not to do is take anything with them in terms of, you know, IP-

Chamath Palihapitiya 58:10 Not everybody-

David Sacks 58:11 Well-

Jason Calacanis 58:11 Not Lewandowski? Was that his name?

Chamath Palihapitiya 58:13 Lewandowski.

David Sacks 58:14 Well, that's why it's really stupid.

Jason Calacanis 58:14 What an idiot. Oh, my God.

David Sacks 58:16 Yeah, I mean, sometimes people do break the rules. I mean, the rule is you don't take any work product with you. You don't take any documents, you don't-

Jason Calacanis 58:23 No thumb drives, (beep) .

David Sacks 58:25 Don't bring your old computer to the new-

Jason Calacanis 58:27 No.

David Sacks 58:28 ... to the new job. Don't bring any old code.

Jason Calacanis 58:30 No docs.

David Sacks 58:31 And there are people who violate those rules and that is definitely breaking the rules. But you're allowed to take with you anything in your head. And it is one of the ways that best practices sort of become more common.

Chamath Palihapitiya 58:44 You guys know the story, right? Like Steve Chen, before he started YouTube was an engineer at Facebook, and there was like, at one point, I remember being it's a meeting where it was like, "Oh, I think we found an early version of the YouTube code on an old-"

Jason Calacanis 58:58 Uh-oh.

Chamath Palihapitiya 58:58 "... on an old laptop that was a Facebook laptop."

David Sacks 59:01 (laughs)

Chamath Palihapitiya 59:01 That Steve owned.

David Sacks 59:02 Uh-oh.

Chamath Palihapitiya 59:02 So, I remember like the GC was like, "I think we technically own YouTube." (laughs)

David Sacks 59:07 (laughs)

Jason Calacanis 59:07 (laughs)

David Sacks 59:07 "I don't think we own-"

Jason Calacanis 59:08 That's, that's a good general counsel.

Chamath Palihapitiya 59:09 "I don't think we own YouTube." (laughs) Could you have imagined if Facebook sued Google to get YouTube?

David Sacks 59:16 Oh, my God.

Jason Calacanis 59:16 Speaking of startups, this is critically important for founders listening, if you're working at a company, the best practice is if you're gonna do a side hustle is to get permission and a waiver from your boss that you're working on that and also-

Chamath Palihapitiya 59:28 And get a clean machine. And get a clean machine.

Jason Calacanis 59:29 ... and you gotta go on a clean machine. Your machine is being monitored.

Chamath Palihapitiya 59:32 Cannot use your work computer.

Jason Calacanis 59:34 Your work-

Chamath Palihapitiya 59:34 Oh, my God.

Jason Calacanis 59:35 ... machine, I'm telling you right now is being monitored every step of the way. I had a-

David Sacks 59:40 Well, it's not just monitoring, it's about-

Jason Calacanis 59:41 It's not monitoring, it's-

David Sacks 59:41 ... who owns that IP.

Chamath Palihapitiya 59:42 ... it's their, it's their property. It's their property.

Jason Calacanis 59:43 Absolutely.

David Sacks 59:43 Yeah.

Jason Calacanis 59:43 And if you type on it, (laughs) especially in this work-from-home era and, you know, anyway. It, I had a situation, I wouldn't say at which company, where a sales executive left the company, went into the CRM system, downloaded it, and he was so dumb, he had written plans for his next employer on his computer and then in his corporate email, emailed the database-

David Sacks 1:00:13 Oh, my God.

Jason Calacanis 1:00:13 ... and his plans for the new employer to his Yahoo or Outlook email.

David Sacks 1:00:18 Oh, my God. Oh, my God.

Jason Calacanis 1:00:19 They busted him.

Chamath Palihapitiya 1:00:20 Of course.

Jason Calacanis 1:00:21 They dropped a legal letter on him. They put a legal letter on the person who's hiring him. The person who hires-

Chamath Palihapitiya 1:00:26 Of course.

Jason Calacanis 1:00:26 ... re- rescinds the offer. Obviously, they don't want some toxic nonsense and, uh, yeah, the person, you know, I have, I have no

Jason Calacanis 1:00:33 idea what happened to them.

Chamath Palihapitiya 1:00:33 You know, there's that very famous email that Steve Jobs sent to Bruce Chizen which goes something along the lines of, "Dear Bruce, it's come to my attention that-"

Jason Calacanis 1:00:42 Oh.

Chamath Palihapitiya 1:00:43 "... Apple never recruits from Adobe but it seems like Adobe is actively recruiting Apple employees, one of our practices have to change." (laughs)

Jason Calacanis 1:00:53 (laughs)

Chamath Palihapitiya 1:00:53 (laughs)

Jason Calacanis 1:00:54 Steve Jobs is a gangster.

Chamath Palihapitiya 1:00:55 So strong. You know, "Please let me know who..." or something like that. It's, uh, just a phenomenal email.

Jason Calacanis 1:00:59 Yeah, and it, they, they, this actually resulted in a bunch of legal action, settlement.... because I think Eric Schmidt and Steve Jobs, correct me if I'm wrong producers, or there was something between Google and Apple, where they agreed, and I think Sergey or somebody was, uh-

David Friedberg 1:01:14 This is correct.

Jason Calacanis 1:01:15 ... I'm not succeeding. Yeah.

David Friedberg 1:01:15 Yeah.

Jason Calacanis 1:01:15 Serhgy got in on this. He says, "I don't know if this is legal." But they didn't wanna piss Steve off because he's not the kinda guy you wanna piss off, because he can execute. And Eric Schmidt was on the board of Apple at the time. There's a very famous picture of them at the Palo, uh, the- the Sand Hill Road or Stanford Mall having coffee, and Steve is lit. He's not happy about this. And I think they agreed to not poach a certain level or something like that. Oh, there's the famous picture where they were breaking bread, and then Eric Schmidt did Android. Steve felt very betrayed by this, and Eric Schmidt left the board of Apple shortly thereafter, 'cause Steve reportedly felt like he was double crossed. But, uh, you know, all that is speculation so check your own facts. Any- any- do- do you have any other details on that, Freeberg? Do you remember that case? It was after your time, right?

David Friedberg 1:02:09 I'll tell you a funny story. We had a meeting with the exec team from Apple when I was at Google, and Marissa Mayer and Sergey and myself and one other person went to the meeting. And Marissa's idea was, why don't we pitch Apple that we could put a cache of the internet in 200 megabytes, like the most important 200 megabytes of the internet, cache it, and put it on the iPod so you could access the internet on the iPod-

Chamath Palihapitiya 1:02:36 Surf the web, right.

Jason Calacanis 1:02:38 Wow.

David Friedberg 1:02:38 So super cool. Basically, search- search a cached version of the web, and that was the pitch. And they kinda were, like, radio silent, and they didn't respond to the pitch, and then they kind of blank-faced stared at us. Two years later, the iPhone came out.

Jason Calacanis 1:02:50 Hmm. I have three amazing Steve Jobs stories. I'll tell you one of them right now. I was the co-founder of a website called Engadget, which was a large blog in the world. We wound up selling the collection of its blogs to AOL. I was at a conference, Steve Jobs was there. He sees my badge, it says Engadget. He goes, "Oh, Jason, Engadget, my favorite tech blog in the world. I read it every day," yada yada. And I said, "Oh, that's great," and, you know, da da da, and I said, "Hey, can I ask you a question?" He said, "Yeah, sure. Anything." And we're s- we're out there, beautiful view of the Pacific Ocean, and I said, "You know, Steve, um, I have the iPod," I pulled it out of my pocket, and it had a color screen, and I said to him, I said, "You know, it seems to me that I could download short video clips, like, of The Chappelle Show," and I used that as an example. And, uh, they could sell them to me like you're selling MP3s. You could just buy, like, a Ch- Chappelle Show issue, uh, episode, it's a pretty obvious idea, and then I could play it when I'm on the subway or something, or got some downtime in a café. I could watch The Ch- Chappelle Show clips. Could you make a video version of this since it's already got the, you know, storage and the- and the screen? And he looked at me, he said, "Jason, do you wanna watch a thumbnail-sized video?" I said, "Yeah, totally fine." He said, "All of our research says nobody wants to watch a tiny video like that. It's the worst idea ever." And I had this moment of, like, self-doubt 'cause he had that reality distortion field. I go back, I tell my guys what he said, and, "Hey, should we write a story about it?" And, uh, 30 days later, he releases the video version (laughs) and- and the ability to watch videos on it. He had the greatest poker face ever. It was just an incredible moment. Man, I really miss that guy. What an incredible- what an incredible friend.

Chamath Palihapitiya 1:04:36 Are we doing a walk down memory lane of our Steve Jobs stories?

David Friedberg 1:04:39 Did you have one?

Jason Calacanis 1:04:40 (laughs)

Chamath Palihapitiya 1:04:40 I have two, but I- I-

Jason Calacanis 1:04:41 Give us one. Come on, these are great. People loved, by the way, the segment when we went on

David Sacks 1:04:45 Yeah.

Chamath Palihapitiya 1:04:45 When I- when I-

Jason Calacanis 1:04:46 Yeah.

Chamath Palihapitiya 1:04:46 ... worked at WinAmp, my boss, when- when it was merged into AOL to create AOL Music was this guy Kevin Conroy, great guy, friend of mine.

Jason Calacanis 1:04:57 I remember Kevin.

Chamath Palihapitiya 1:04:59 And Kevin basically got us runway to launch a 99 cent music download store. And we were able to use AOL's cards on file, so there was, like, 25 or 30 million credit cards. And we were able to use Warner Brothers' music library because AOL had merged with Time Warner.

Jason Calacanis 1:05:22 Hmm.

Chamath Palihapitiya 1:05:23 And so we launched this 99 cent music store, and it performed phenomenally. And I went, and I did demos for Walt Mossberg, Takara. I went to Apple, I showed James Higa, Eddy Cue, Steve Jobs, all these guys. And AOL just couldn't do anything with the data. We kept pushing, Kevin kept pushing, but they were just so tied up in their own political nonsense, they wouldn't green light it becoming more than a beta, and then nine months later, the 99 cent download store launched on iTunes.

Jason Calacanis 1:05:56 Oh.

Chamath Palihapitiya 1:05:57 And I was just like, "Oh my God, this is execution." And they had all the labels, and it was a thousand times better experience than we'd created. But it was the first time where I stumbled into something relatively accidentally and just got, frankly, owned by an organization that's just a thousand times better.

Jason Calacanis 1:06:15 Sachs, you ever meet Steve Jobs in person?

David Friedberg 1:06:18 Nope.

Jason Calacanis 1:06:18 Freeberg?

David Friedberg 1:06:20 Uh, yeah, I met him at, uh, Macworld in 2003. He was walking the floor. It was at Moscone. I remember it 'cause I- I've been a Mac user since 1984. First Mac original, I still have it in my office. Diehard, diehard Mac fan. I read every edition of Macworld, Mac User, MacWeek. And so to meet him on the floor walking around, I was just like- like a 22-year-old kid. I was freaking out. It was awesome. Only time I met him.

Jason Calacanis 1:06:49 He was the greatest. He was the absolute greatest.

Chamath Palihapitiya 1:06:52 I have one other story, but I'm not gonna share it.

Jason Calacanis 1:06:55 Uh, you know-

David Friedberg 1:06:56 (laughs)

Jason Calacanis 1:06:56 You know what segment people loved last week?

Chamath Palihapitiya 1:06:58 I interviewed with him for a job.

Jason Calacanis 1:06:59 What? Oh, come on, you can't not tell that story.

Chamath Palihapitiya 1:07:01 Right when I left Facebook.

Jason Calacanis 1:07:02 People loved the story last week when we did our, uh, childhood, uh, businesses and

David Friedberg 1:07:06 Hold on, I wanna hear the story, Chamath.

Jason Calacanis 1:07:08 Come on, Chamath. You- you give us one more, I'll give you one that's recorded on video.

Chamath Palihapitiya 1:07:12 It's, like, so littered with my failures and my insecurities, but okay, like it was-

Jason Calacanis 1:07:16 Good. That's what we wanna hear. Let's hear them.

Chamath Palihapitiya 1:07:16 Yeah, that's what we wanna hear.

Jason Calacanis 1:07:17 Get it out. Get it out.

Chamath Palihapitiya 1:07:17 When you're so damn successful, be self-deprecating.

Jason Calacanis 1:07:19 Share with your brothers.

Chamath Palihapitiya 1:07:21 There was basically somebody at a well-known recruiting firm who pinged me and said, "Hey, th- there could be a consol-" This is right when I was leaving Facebook, and I had a pretty large project that never saw the light of day, which was this Facebook Phone. Although, people in the ecosystem knew that we were working on it. So, you know, Samsung and Intel were our partners, AT&T and all this stuff. Anyways, long story short, there was a rumor that they wanted to consolidate iPhone into one business unit, right? And at the time, it was kind of, like, very Balkanized or whatever, and I got approached by a recruiter saying they're thinking of creating a role which is kinda like head of iPhone. And at that point, I was like... This is in 2011, and I was adamant that I would never work for anybody until I heard it was Steve Jobs, and I was like, "I will do whatever he says." (laughs) "Whatever, John."

Jason Calacanis 1:08:14 Wow.

Chamath Palihapitiya 1:08:15 And then he's asking me-

Jason Calacanis 1:08:15 You were ready to bend the knee.

Chamath Palihapitiya 1:08:17 Dude, I would've driven his car. I would've... Yes, sir. I would've driven that car.

Jason Calacanis 1:08:22 (laughs)

Chamath Palihapitiya 1:08:22 I would've signed-

Jason Calacanis 1:08:23 You'd be driving Miss Daisy? "Oh, Steve Jobs, you're my best friend."

Chamath Palihapitiya 1:08:27 And-

Jason Calacanis 1:08:27 (laughs)

Chamath Palihapitiya 1:08:28 ... I went through a couple of interviews, I'm not gonna get into those details, and at the end of it, it was like, "Well, he's not gonna become, he's not gonna be the CEO."

Jason Calacanis 1:08:36 Hmm.

Chamath Palihapitiya 1:08:36 You know, "He's gonna become executive chairman, and so you'll be reporting to Tim Cook," and that's where (laughs) that process died. They said I wasn't a good cultural fit for Apple in the new era. Now, and then it turned out, what happened?

Jason Calacanis 1:08:50 Yeah, you would not have been.

Chamath Palihapitiya 1:08:50 Scott Forstall left. I was not a good culture, I would not have been a good cultural fit for that.

Jason Calacanis 1:08:53 No, he wanted radicals, and Tim Cook wanted, you know, optimizers. Yes.

Chamath Palihapitiya 1:08:58 So then I went and I started Social Capital, but that was my only job interview that I had when I was leaving Facebook, and it was... For me, to... I had the same reaction as Freeburg. I was like a kid meeting his... I don't even wanna call it idol, like... I think I was like a, a believer meeting Jesus.

Jason Calacanis 1:09:20 Hmm.

Chamath Palihapitiya 1:09:21 That's how it felt.

Jason Calacanis 1:09:22 I will, uh, I, I will save my, um... Y- Just to get this, uh, we gotta get through two more stories in the docket. I'm gonna leave my other Steve Jobs stories for another time. We got ti- It's time-

Chamath Palihapitiya 1:09:32 But you have that famous clip of you asking him that question where he basically was looking at you like... That's a very famous one because that, that... You, you really got the better of him, I thought, which is pretty good here.

Jason Calacanis 1:09:40 All right, all right. Will you, uh, help companies like ours, uh, sell podcasts? You know, be inaudible? So if we wanted to sell a podcast through your service, would you, uh, help us do the fulfillment? Um, you know, we're planning on having all the podcasts be free at first, but, uh, zing me an email with what you've got in mind, and we're open to anything. Sa- same email I always send it to you on? Yep. Okay, you got it. (laughs)

David Sacks 1:10:02 (laughs)

Chamath Palihapitiya 1:10:02 So strong. I mean, I gotta give it to you, JColle, you have (beep) balls.

David Sacks 1:10:06 (laughs)

Chamath Palihapitiya 1:10:07 I mean, man.

Jason Calacanis 1:10:07 The truth is, I traded emails with Steve many times. He, he was f- With the press, he was full contact, as you know. All right, it's time-

Chamath Palihapitiya 1:10:16 Full contact.

Jason Calacanis 1:10:17 It's time for Sax Red Meat, and we've got a double serving for Sax. Sax fans are gonna be really happy

Jason Calacanis 1:10:25 right now. TikTok's divest or ban bill has been signed into law. Senate passed a bill 79 to 18. We've talked about this year over and over and over again. President signed it. W- This thing's, uh, on the fast track. Divest or shutdown. TikTok bill was packaged, bundled with $95 billion in foreign aid, 61 billion for the Ukraine, Ukraine, Ukraine, 26.4 billion for Israel and humanit- humanitarian aid for civilians in Gaza, and, uh, about eight billion for the Indo-Pacific region, AKA Taiwan. House added a provision to the bill that would require the president to seek a $10 billion repayment from Ukraine's government finally. They're talking about the leaseback. Um, we'll see if that ever happens. I'm curious what Sax thinks there. Last year, CNBC reported that ByteDance was buying back five billion worth of stock, and early Thursday morning, it was reported that ByteDance is exploring selling a majority stake in TikTok's US business. Looks like gun to the head is working to a non-tech company without the algorithm. In other words, maybe they sell it to a Walmart, somebody who they don't consider super competitive. I'm not sure who the non-tech company is here. Could be Disney, would come to mind as well. And remember, Disney did look at buying Twitter, but they didn't want the toxicity of an open platform. Uh, TikTok is obviously heavily scrubbed of anything that is aggressive. You can't show a movie clip with somebody getting attacked violently. It's very PG-13. But this is the key part, Sax. No algorithm in the package deal. Your thoughts on this, and you can take it either way you like 'cause I know your fans wanna hear about everything. Do you wanna talk... Uh, ih, eh, the, the budget bundling or the TikTok ban which, and the divestiture, which seems to be happening?

David Sacks 1:12:14 Well, the overall theme is just that the national security state got everything it wanted. It got 100 billion for, to support forever wars. It got a TikTok ban. And this divestiture thing is a total fig leaf because it's not clear that China's gonna allow TikTok to divest, 'cause it would set a horrible precedent where the US could just pass a law and then essentially steal the value of a Chinese company. So I don't think they're gonna be able to divest. I think they're just gonna get shut down. So the security state's getting its wish there, and then another bill that you didn't mention, which they just passed, is they approved the warrantless spying on Americans. So the federal government can now spy on you and your, you know, communications without even getting a warrant.

Jason Calacanis 1:12:58 Ridiculous.

David Sacks 1:12:59 So-

Jason Calacanis 1:12:59 Disgusting.

David Sacks 1:13:00 The national security state just seems to get whatever it wants, and there were large bipartisan majorities for all of this. And the way they do it is they conjure all these fears to try and fear us into, "Well, if we don't agree to warrantless spying, then you could get a terrorist attack." Well-... when has a warrant requirement ever gotten in the way of actually doing what we need to do to stop terrorism? Never. But that fear was enough to get Congress to authorize that legislation. They're keeping us involved in this forever war in Ukraine by this fear that Putin's somehow gonna conquer all of Europe, which I think is total threat inflation. And this TikTok fear that somehow what videos we like is, like, precious data that's being shared with the CCP. Look, I'm willing to believe it's possible, but they never proved that. So there is-

Jason Calacanis 1:13:53 Oh, no. They proved that data. It's been proved that they spied on journalists.

David Sacks 1:13:56 No. You only showed us ... When we debated this, when we debated this-

Jason Calacanis 1:13:58 Yeah.

David Sacks 1:13:58 ... you showed one article from the New York Times-

Jason Calacanis 1:14:00 Yeah.

David Sacks 1:14:01 ... about how ... Yeah, that's not proof, J-Cal. Those were two rogue employees who shared some data with-

Jason Calacanis 1:14:08 I, I spoke to TikTok-

David Sacks 1:14:08 ... with some New York Times reporters.

Jason Calacanis 1:14:10 Yeah. Yeah. I spoke, I spoke to-

David Sacks 1:14:11 And that could happen to any company.

Jason Calacanis 1:14:11 I spoke to multiple TikTok, uh, employees myself personally, and they told me that the Chinese representatives are all over the company and inside of it. Freyberg, your thoughts?

David Sacks 1:14:21 But what was the, what was the judicial process or legislative process to prove that? Did they have hearings? Did they prove that? I understand that-

Jason Calacanis 1:14:29 Yeah. W-

David Sacks 1:14:29 ... you know, your hearsay and your view is good enough to ban it, but I'd actually like to see some proof.

Jason Calacanis 1:14:34 No. My, my position on banning, thanks for asking, is based on reciprocity and the potential damage it could do and based on how influential and powerful the product is and how they could change sentiment and censorship. And the Chinese government is fantastic-

David Sacks 1:14:48 Yeah. When we debated this, you could put all that-

Jason Calacanis 1:14:48 ... at censorship and they're doing massive censorship-

David Sacks 1:14:50 Handle it in the trade bill then.

Jason Calacanis 1:14:51 ... inside the app. Yeah.

David Sacks 1:14:51 Because ... Handle it in the trade bill because what we've authorized here is not a TikTok ban. It is a sweeping new federal power to ban foreign adversary-controlled applications. That's the c- new category. So, we have a new category of foreign controlled apps, whatever that means, and the government can now use it to shut down apps they don't like. And I guarantee you, I think here's where this goes next. I think Telegram is next on the hit list. You have a Russian founder, okay? You have rumors for years, I'd say unproven, that somehow Telegram's been backdoored by the Russian government. You know, we've all heard those, those rumors. It's kinda like the CCP-

Jason Calacanis 1:15:33 Where is it based though? Isn't it ... Isn't he out of there? He's in Monaco or something. He doesn't live there.

David Sacks 1:15:38 Who cares? Do you think that matters?

David Friedberg 1:15:39 No, he lives in Dubai. Pavel-

Jason Calacanis 1:15:40 He lives in Dubai. Yeah.

David Friedberg 1:15:40 Pavel lives in Dubai.

David Sacks 1:15:41 Here's what, here's what you're gonna see. You're gonna see e- at some point you'll see a media campaign that will be promoting the idea that Telegram is used by Hamas, by terrorists, by groups that the US doesn't like-

Jason Calacanis 1:15:54 Mm-hmm.

David Sacks 1:15:55 ... and that it's backdoored by Russia, and that it's got some shady investors on its cap table. And no politician's gonna wanna stand up and defend Telegram. And all the industry money that flows into Washington will be promoting this idea that we have to ban it because think about the market share gains-

Jason Calacanis 1:16:14 Mm-hmm.

David Sacks 1:16:14 ... that all of Telegram's competitors will make.

Jason Calacanis 1:16:16 Yep.

David Sacks 1:16:16 And they're the ones wired into DC. So, this is a foregone conclusion, I think.

Jason Calacanis 1:16:20 But you also said on Twitter you thought this would come to X and to rumble. You actually think they'll take this to American companies?

David Sacks 1:16:27 I think that T-

Jason Calacanis 1:16:27 That seems like a stretch.

David Sacks 1:16:29 Not really. I think that the first step is you go get Telegram because that's easy, you know. This guy is an agent of Putin, obviously, and anyone who says differently-

Jason Calacanis 1:16:38 Okay.

David Sacks 1:16:38 ... is, is themselves an agent of the Kremlin.

Jason Calacanis 1:16:40 How does it jump to X and rumble? Yeah.

David Sacks 1:16:41 That's how, that's how, that's how this rhetoric works. So, first of all, they'll whack Telegram. And by the way, we all know that companies are gonna benefit enormously by slurping up that market share. And then if Biden wins a second term, they will eventually set their gun sights on X. But look, that's a battle because I- in X, you have a billionaire who has resources who's willing to stand on his hind legs and fight.

Jason Calacanis 1:17:05 Yeah. I mean- (laughs)

David Sacks 1:17:05 And so they're not gonna do that before the election. But look, if we continue to see more weaponization and more censorship, I believe that eventually what they will do is try and push Elon to divest X. And look, all they gotta ... All, all they gotta do ... Listen, J-Cal. This, this act empowers the attorney general to open an investigation. So, I think that in a second Biden term, they will open an investigation and just start ratcheting up the pressure on-

Jason Calacanis 1:17:32 Yep.

David Sacks 1:17:32 ... Elon to get rid of X because that's clearly what they want.

Jason Calacanis 1:17:35 Yeah. And the TikTok guy is bought of Trump already so (laughs) he's gonna fight for it. Freyberg, your thoughts?

David Friedberg 1:17:42 I don't agree that I- the Chinese government will shut it down. I, I certainly don't have any insight into what the Chinese government is discussing or thinking about doing, but there's a lot of money to be made here. So, if I'm ByteDance, I'm very likely gonna hire a bunch of bankers, run an auction process and sell this thing, and I have a year to do it. This is a business that did 14 billion in revenue last year according to a published report. 170 million Americans are active users of TikTok. Uh, revenue grew 40% plus last year. So, I don't know how they would just say, "Hey, let's write this thing off and, and, and shut it down." When-

David Sacks 1:18:22 Well-

David Friedberg 1:18:22 ... we could probably generate-

David Sacks 1:18:24 I'm basing that statement on published