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

1. 0:00 – 5:20

   Bestie Intros: Reservation Tips!

   1. CPChamath Palihapitiya0:00

      What did you think about that reservation article thing? Oh, that's crazy.

   2. JCJason Calacanis0:04

      Well, this is a great topic. There is a guy-

   3. CPChamath Palihapitiya0:07

      A pretty industrious kid, it turns out.

   4. JCJason Calacanis0:09

      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.

   5. CPChamath Palihapitiya0:45

      (laughs)

   6. JCJason Calacanis0:46

      Uh, that was gross.

   7. CPChamath Palihapitiya0:47

      (laughs)

   8. JCJason Calacanis0:47

      That was gross.

   9. CPChamath Palihapitiya0:48

      I've never had problem getting a reservation at any restaurant in New York.

   10. JCJason Calacanis0:52

       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?

   11. CPChamath Palihapitiya1:09

       Oh, all the time.

   12. DSDavid Sacks1:10

       Yeah, sure.

   13. JCJason Calacanis1:11

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

   14. CPChamath Palihapitiya1:15

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

   15. DSDavid Sacks1:21

       I'll tip the bartender to keep the ice cubes cold.

   16. DFDavid Friedberg1:24

       The bartender got 100 just for keeping the ice cubes cold.

   17. CPChamath Palihapitiya1:27

       (laughs)

   18. JCJason Calacanis1:27

       There you go. Oh.

   19. CPChamath Palihapitiya1:29

       (laughs)

   20. DSDavid Sacks1:29

       This guy has a C-note for you, a C-note for you.

   21. DFDavid Friedberg1:34

       I'm going all in. Let your winners ride.

   22. JCJason Calacanis1:37

       Rain Man, David Sachs.

   23. DFDavid Friedberg1:39

       I'm going all in.

   24. DSDavid Sacks1:41

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

   25. CPChamath Palihapitiya1:45

       Love USC.

   26. JCJason Calacanis1:46

       A queen of quinoa.

   27. DFDavid Friedberg1:47

       I'm going all in.

   28. JCJason Calacanis1:49

       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-

   29. CPChamath Palihapitiya2:58

       How much are you tipping, 100?

   30. JCJason Calacanis2:59

       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-
2. 5:20 – 22:20

   Meta goes scorched earth in AI, why the stock was down despite beating on earnings

   1. JCJason Calacanis5:20

      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?

   2. CPChamath Palihapitiya7:16

      800 million when I left.

   3. JCJason Calacanis7:18

      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?

   4. CPChamath Palihapitiya7:30

      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.

   5. JCJason Calacanis8:18

      Mm. Here we go. This is a black and white flashback. Chamath in turtleneck, go.

   6. CPChamath Palihapitiya8:23

      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.

   7. JCJason Calacanis9:28

      Look at this little victory lap here.

   8. MZMark Zuckerberg9:30

      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-

   9. CPChamath Palihapitiya9:54

      Yeah.

   10. MZMark Zuckerberg9:54

       ... in a way that seems like it is fundamentally more healthy to me than one where this is more concentrated.

   11. CPChamath Palihapitiya10:00

       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.

   12. JCJason Calacanis10:20

       Mm.

   13. CPChamath Palihapitiya10:21

       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.

   14. JCJason Calacanis10:46

       Mm.

   15. CPChamath Palihapitiya10:46

       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-

   16. DFDavid Friedberg11:15

       We'll put a pin in that.

   17. CPChamath Palihapitiya11:15

       ... and it's more about squares versus sharps in the stock market.

   18. JCJason Calacanis11:19

       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?

   19. DFDavid Friedberg12:07

       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-

   20. JCJason Calacanis12:53

       Hmm.

   21. DFDavid Friedberg12:53

       ... 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.

   22. JCJason Calacanis13:22

       Got it.

   23. DFDavid Friedberg13:23

       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.

   24. JCJason Calacanis13:35

       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?

   25. DSDavid Sacks14:04

       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.

   26. JCJason Calacanis14:26

       Best in class. Yeah.

   27. DSDavid Sacks14:26

       Best in class. Or at least-

   28. JCJason Calacanis14:27

       Yeah.

   29. DSDavid Sacks14:28

       ... 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-

   30. JCJason Calacanis14:45

       Hmm.
3. 22:20 – 47:25

   Tesla's roadmap, ranking the company's highest-upside bets outside of cars for the next 10 years

   1. CPChamath Palihapitiya22:20

   2. JCJason Calacanis22:20

      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.

   3. CPChamath Palihapitiya23:47

      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-

   4. JCJason Calacanis24:11

      Yeah.

   5. CPChamath Palihapitiya24:11

      ... 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.

   6. JCJason Calacanis26:16

      Hmm.

   7. CPChamath Palihapitiya26:17

      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.

   8. JCJason Calacanis26:51

      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?

   9. DSDavid Sacks27:15

      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.

   10. JCJason Calacanis28:49

       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.

   11. CPChamath Palihapitiya29:11

       That's a good question. Ridesharing-

   12. JCJason Calacanis29:14

       Is number one?

   13. CPChamath Palihapitiya29:16

       ... and the absolute probably by an order of magnitude.

   14. JCJason Calacanis29:19

       Oh, interesting.

   15. CPChamath Palihapitiya29:20

       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-

   16. JCJason Calacanis30:03

       What's your number two?

   17. CPChamath Palihapitiya30:04

       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-

   18. DSDavid Sacks30:17

       Hm.

   19. CPChamath Palihapitiya30:17

       ... sense for them to do-

   20. DSDavid Sacks30:18

       Yeah.

   21. CPChamath Palihapitiya30:19

       ... I think this thing is just gangbusters nuclear.

   22. DSDavid Sacks30:23

       That's, uh, it's a really interesting point.

   23. JCJason Calacanis30:24

       What do you got, Sacks? You wanna round the horn here?

   24. DSDavid Sacks30:26

       Well, I already said Optimus, but that's based on a long-term view.

   25. JCJason Calacanis30:29

       Yeah, l- this is a long-term question. Based on the long term, one and two?

   26. DSDavid Sacks30:32

       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-

   27. JCJason Calacanis30:56

       So you got Optimus number one, and who is number two?

   28. DSDavid Sacks30:59

       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.

   29. JCJason Calacanis31:26

       We called it going full Uber.

   30. CPChamath Palihapitiya31:28

       Yeah.
4. 47:25 – 1:00:33

   FTC bans noncompetes: impact on startups and company formation

   1. JCJason Calacanis47:25

      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?

   2. DFDavid Friedberg49:05

      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.

   3. JCJason Calacanis50:47

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

   4. CPChamath Palihapitiya50:55

      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.

   5. JCJason Calacanis51:13

      What does it mean, beach leave?

   6. CPChamath Palihapitiya51:15

      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.

   7. JCJason Calacanis51:49

      We just talked about open source, right?

   8. CPChamath Palihapitiya51:51

      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.

   9. DFDavid Friedberg52:18

      Did you ever see that movie Spanish Prisoner starring Steve Martin? You guys ever see that one?

   10. JCJason Calacanis52:23

       Oh, yeah. Great film. God, wow, that's a deep pull.

   11. DFDavid Friedberg52:25

       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.

   12. JCJason Calacanis52:51

       Shout out David Mamet.

   13. DFDavid Friedberg52:52

       David Mamet, exactly.

   14. JCJason Calacanis52:54

       Yeah, fantastic.

   15. DFDavid Friedberg52:54

       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.

   16. CPChamath Palihapitiya53:21

       But you can do that now. I don't see it-

   17. DFDavid Friedberg53:23

       Yeah.

   18. CPChamath Palihapitiya53:23

       ... actually doing anything bad.

   19. DFDavid Friedberg53:24

       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-

   20. CPChamath Palihapitiya53:34

       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.

   21. DFDavid Friedberg53:45

       Yeah, the rate of-

   22. CPChamath Palihapitiya53:46

       I mean, otherwise-

   23. DFDavid Friedberg53:46

       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.

   24. CPChamath Palihapitiya54:14

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

   25. DFDavid Friedberg54:18

       Yeah.

   26. CPChamath Palihapitiya54:18

       ... you know.

   27. DFDavid Friedberg54:19

       Yeah.

   28. JCJason Calacanis54:19

       Sax, any thoughts?

   29. CPChamath Palihapitiya54:20

       I just don't think these things mean anything.

   30. DFDavid Friedberg54:22

       Yeah. Do you care about non-compete, Sax?
5. 1:00:33 – 1:10:25

   Besties reminisce on their encounters with Steve Jobs

   1. JCJason Calacanis1:00:33

      idea what happened to them.

   2. CPChamath Palihapitiya1:00:33

      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-"

   3. JCJason Calacanis1:00:42

      Oh.

   4. CPChamath Palihapitiya1:00:43

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

   5. JCJason Calacanis1:00:53

      (laughs)

   6. CPChamath Palihapitiya1:00:53

      (laughs)

   7. JCJason Calacanis1:00:54

      Steve Jobs is a gangster.

   8. CPChamath Palihapitiya1:00:55

      So strong. You know, "Please let me know who..." or something like that. It's, uh, just a phenomenal email.

   9. JCJason Calacanis1:00:59

      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-

   10. DFDavid Friedberg1:01:14

       This is correct.

   11. JCJason Calacanis1:01:15

       ... I'm not succeeding. Yeah.

   12. DFDavid Friedberg1:01:15

       Yeah.

   13. JCJason Calacanis1:01:15

       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?

   14. DFDavid Friedberg1:02:09

       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-

   15. CPChamath Palihapitiya1:02:36

       Surf the web, right.

   16. JCJason Calacanis1:02:38

       Wow.

   17. DFDavid Friedberg1:02:38

       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.

   18. JCJason Calacanis1:02:50

       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.

   19. CPChamath Palihapitiya1:04:36

       Are we doing a walk down memory lane of our Steve Jobs stories?

   20. DFDavid Friedberg1:04:39

       Did you have one?

   21. JCJason Calacanis1:04:40

       (laughs)

   22. CPChamath Palihapitiya1:04:40

       I have two, but I- I-

   23. JCJason Calacanis1:04:41

       Give us one. Come on, these are great. People loved, by the way, the segment when we went on

   24. DSDavid Sacks1:04:45

       Yeah.

   25. CPChamath Palihapitiya1:04:45

       When I- when I-

   26. JCJason Calacanis1:04:46

       Yeah.

   27. CPChamath Palihapitiya1:04:46

       ... 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.

   28. JCJason Calacanis1:04:57

       I remember Kevin.

   29. CPChamath Palihapitiya1:04:59

       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.

   30. JCJason Calacanis1:05:22

       Hmm.
6. 1:10:25 – 1:27:22

   TikTok "divest-or-ban" bill is signed into law: Will China comply? What's it worth without the algorithm? Will a deal get done?

   1. JCJason Calacanis1:10:25

      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?

   2. DSDavid Sacks1:12:14

      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.

   3. JCJason Calacanis1:12:58

      Ridiculous.

   4. DSDavid Sacks1:12:59

      So-

   5. JCJason Calacanis1:12:59

      Disgusting.

   6. DSDavid Sacks1:13:00

      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-

   7. JCJason Calacanis1:13:53

      Oh, no. They proved that data. It's been proved that they spied on journalists.

   8. DSDavid Sacks1:13:56

      No. You only showed us ... When we debated this, when we debated this-

   9. JCJason Calacanis1:13:58

      Yeah.

   10. DSDavid Sacks1:13:58

       ... you showed one article from the New York Times-

   11. JCJason Calacanis1:14:00

       Yeah.

   12. DSDavid Sacks1:14:01

       ... about how ... Yeah, that's not proof, J-Cal. Those were two rogue employees who shared some data with-

   13. JCJason Calacanis1:14:08

       I, I spoke to TikTok-

   14. DSDavid Sacks1:14:08

       ... with some New York Times reporters.

   15. JCJason Calacanis1:14:10

       Yeah. Yeah. I spoke, I spoke to-

   16. DSDavid Sacks1:14:11

       And that could happen to any company.

   17. JCJason Calacanis1:14:11

       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?

   18. DSDavid Sacks1:14:21

       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-

   19. JCJason Calacanis1:14:29

       Yeah. W-

   20. DSDavid Sacks1:14:29

       ... you know, your hearsay and your view is good enough to ban it, but I'd actually like to see some proof.

   21. JCJason Calacanis1:14:34

       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-

   22. DSDavid Sacks1:14:48

       Yeah. When we debated this, you could put all that-

   23. JCJason Calacanis1:14:48

       ... at censorship and they're doing massive censorship-

   24. DSDavid Sacks1:14:50

       Handle it in the trade bill then.

   25. JCJason Calacanis1:14:51

       ... inside the app. Yeah.

   26. DSDavid Sacks1:14:51

       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-

   27. JCJason Calacanis1:15:33

       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.

   28. DSDavid Sacks1:15:38

       Who cares? Do you think that matters?

   29. DFDavid Friedberg1:15:39

       No, he lives in Dubai. Pavel-

   30. JCJason Calacanis1:15:40

       He lives in Dubai. Yeah.

Episode duration: 1:41:25