All-In PodcastNvidia's Historic Quarter, SaaS Comeback, Bessent vs Druck, America's Debt Crisis, Cancer Vaccine
EVERY SPOKEN WORD
95 min read · 19,485 words- 0:00 – 3:31
Bestie intros: Recapping recent interviews and the state of American science
- JCJason Calacanis
All right, everybody. Welcome back to the number one podcast in the world, your favorite podcast, your podcaster's favorite podcast. Yes, it's the All-In Podcast. The core four, the Fantastic Four, the original quartet is here. David Friedberg, hot off of his deep state conspiracy interview with Eric Weinstein. Amazing. He did a little run to DC. Great episode, Friedberg.
- DFDavid Friedberg
It was fun. Eric is one of a kind. I saw Kratzios too. Kind of two sides of the coin of science in America was the basis of those two interviews. They were fun.
- JCJason Calacanis
Who is Eric Weinstein?
- DFDavid Friedberg
He's a scientist who works with Peter Thiel from Harvard, has done some really-
- JCJason Calacanis
Used to.
- DFDavid Friedberg
Used to be.
- JCJason Calacanis
Used to be at Thiel Capital.
- DFDavid Friedberg
Yeah.
- JCJason Calacanis
Yeah.
- DFDavid Friedberg
And he, um, he had a podcast for a hot minute. He is a heterodox thinker in science.
- JCJason Calacanis
What is his heterodoxical thought about science?
- DFDavid Friedberg
There's all these things that everyone takes as fundamental premises in modern physics, like the string theory as an example, and he thought it was [beep] and called it out as [beep] . So he's been kind of outcast in the scientific community as-
- JCJason Calacanis
It is [beep] .
- DFDavid Friedberg
Right. And so he's made this case, and he's proposed alternative theories that kind of create a grand unification theory of physics, and then he's been outcast by the scientific community, and people say that he's a quack and he's moron, and he's talked about UFOs, and he's talked about Jeffrey Epstein, and people kind of say, "Well, this guy's fringe," or they use these different terms to chastise him. And over time, you know, the point is, similar to what Kratzios has said, like so much of science has kind of followed this sheep-like mentality where everyone has to line up, agree to the same general theory, or you get outcast. You don't get grant funding. You don't get tenure. You don't get jobs. You don't get invited to do lectures. You have to follow the mainstream in science or you're outcast, and it used to be that science was all about-
- JCJason Calacanis
But that is... But that's true
- DFDavid Friedberg
... heterodoxy. Yeah.
- JCJason Calacanis
I know, but it's very rational to say, until string theory is proved, it's unproved, and so if you wanna use the adjective [beep] , that's fine. It'll probably offend some people, but he's more right on the substance of what he's saying than he is wrong. It's unproved.
- DFDavid Friedberg
Right. It's like Jay Bhattacharya being like, "Hey, you know, COVID may have come from a lab leak," and when people were saying this, they were, they, they were told, "You're creating conspiracy theories. You're pushing misinformation," when there is no misinformation. If there's no absolute truth that you're talking about, it's theory. Everyone was starting with theory of where the COVID came from.
- JCJason Calacanis
You're talking about a level of corruption in a very narrow, specific realm of science, which is the funding and grant approval apparatus that forces-
- DFDavid Friedberg
And getting ten- tenure, and getting professorships, and so if you don't follow the voting, the methods, the theory-
- JCJason Calacanis
Right
- DFDavid Friedberg
... if you don't follow the mainstream-
- JCJason Calacanis
You gotta stay in line
- DFDavid Friedberg
... you're outcast.
- JCJason Calacanis
By the way, I buy that. I don't, I don't know Eric Weinstein-
- DFDavid Friedberg
The argument is-
- JCJason Calacanis
... but I buy it
- DFDavid Friedberg
... this is what has led to stagnation in science in America. Because if you're not part of the mainstream, you get excluded, and because everyone has to now think in the same way, you don't have heterodox thinking. You don't have outside-of-the-scope thinking, which means we're not pushing the envelope and discovering new things anymore, and that's a very kind of pointed issue right now. That's why I went and talked to Kratzios once.
- JCJason Calacanis
Said differently, there's probably a lot of incrementalism in 2026 that didn't exist in 1926.
- DFDavid Friedberg
Totally. That's exactly right. When you think about the general theory of relativity being published, it was completely outlandish, but people still studied it, assessed it. They didn't discredit it and say, "Oh, you're an idiot, and if you're thinking about this general theory of relativity as being real, you're a moron." That's what goes on today in science, where if you say stuff that's too far outside of the realm of the standard approach to things, you're, you're chastised. You're outcast. You're
- 3:31 – 9:05
China's Robot Olympics, Optimus update, Grok Bot
- DFDavid Friedberg
excluded.
- JCJason Calacanis
Do you guys see the, uh, Olympics? You see the Robot Olympics, Sacks? Check this out.
- DSDavid Sacks
I did see it. Yeah.
- JCJason Calacanis
This is pretty crazy. They had these, uh, Olympics in China, and-
- DFDavid Friedberg
Oh my God. They copied how Friedberg actually runs it. Look at that. [laughs]
- JCJason Calacanis
There it is. Look at that. Yes. That is definitely a Friedberg sprint. [laughs]
- DFDavid Friedberg
The Friedberg sprint. I like it.
- JCJason Calacanis
And they're doing the Friedberg sprint. Look at this one. He backs up, and then boom, explodes.
- DFDavid Friedberg
That's more my sprint. That's like me skiing right there.
- JCJason Calacanis
Yeah. Look, and there's Jason Koon setting records at 42 years old.
- DFDavid Friedberg
Yeah, this is Jason Koon right here.
- JCJason Calacanis
Here's Jason Koon.
- DFDavid Friedberg
Yeah.
- JCJason Calacanis
Yeah. With his shirt off at the poker game. Don't like that.
- DFDavid Friedberg
[laughs]
- JCJason Calacanis
Put your shirt back on, Koon. You know, I, I was thinking-
- DFDavid Friedberg
[laughs]
- JCJason Calacanis
... about this, Sacks. You know what I realized? I think you're 100% right about the PR, and I realize that the Chinese, the CCP, is [beep] brilliant at PR. Look what they did. They got a bunch of Chinese people to fill a stadium and cheer for AI and robotics. They're cheering for it. They're rooting for it, and then we got Dario saying all jobs are over. We're gonna be the last company in the world, and it's the end of days. I give the Chinese a lot of credit.
- DFDavid Friedberg
Why are you back on Dario? We're not talking about Dario this week. We're not talking about Dario this week.
- JCJason Calacanis
Your grand unifying theory is that in a country of a billion people, they couldn't find 4,000 to show up to watch a bunch of robots run around a track? Are you really this brave?
- DFDavid Friedberg
No, they've... This is the perfect-
- JCJason Calacanis
That's your grand unifying theory?
- DSDavid Sacks
Well, it is true that China is much more optimistic about AI than we are. AI optimism in China is over 80%, meaning-
- JCJason Calacanis
Yes
- DSDavid Sacks
... they poll on the question, do you think AI will be more beneficial than harmful? Over 80% of Chinese people say yes. In the US, that number is in, like, 30%.
- JCJason Calacanis
Hmm.
- DSDavid Sacks
So I've been saying for a while that the US is ahead of China in every category except one, which is optimism, and that is the biggest risk to us winning this AI race against China, is doing something that will shoot ourselves in the foot because we're so pessimistic about what AI might do.
- JCJason Calacanis
I think it's all psyops. They're making you feel... You see that... Show the s- the, the robot blowing up at 16 seconds, Nick. This is all staged. It's a psyops. This is a psyops. They make you feel bad for the robots. You, they make you cheer for them. This is gonna be, like, a major thing.
- DFDavid Friedberg
No, it's the red robot. The funniest thing was when the red robot lost his legs, there was, like, a couple tweets that I thought were hilarious. Like, one guy was like, "Oh my God, he tore his HDMI, his CPU." [laughs]
- JCJason Calacanis
[laughs]
- 9:05 – 33:32
Nvidia and Salesforce rip after big earnings: AI Capex Bubble and SaaSpocalypse narratives get reversed
- JCJason Calacanis
get to work. We got a lot going on. Nvidia just had a record-setting earnings report. I mean, they blew the doors off this. And, uh, also, uh, we'll talk a little bit about Salesforce also coming back and the SaaSpocalypse ending. Stock was up, Nvidia's that is, 9% on huge numbers and even huger guidance, $96.2 billion in revenue in the quarter, Chamath, up 106% year-over-year, more than double. Wall Street's expectation was $92 billion. They guided for 70% growth next year. That is well above what Wall Street was expecting at 45%, so let that sink in. The number people are going crazy over, $60 billion in net profit. That is the most profitable core business quarter of any public company ever. Google and Amazon, they've had higher one-off quarters, uh, obviously. Here's your chart, Nvidia net income and revenue quarterly. Just blowing the doors off of it. [clears throat] Stock is up. It's, uh, reaching its all-time high again, getting close. Heading into earnings, Nvidia was only up 12% year to date, on par with the S&P 500. But they were lagging the broader chip index. I guess the headwind, Chamath, is that people believe there's competition coming. We'll talk about that. Nvidia is the world's most valuable company, $5.5 trillion. Polymarket says 79% chance. Here's your Polymarket, our great partner, Polymarket. 79% chance Nvidia ends the year as number one, $6.3 million in volume. In other news, Salesforce up over 20% on Thursday after they also reported a big quarter. Revenue up 11.3 billion, 11% year-over-year. Uh, that was in line with expectations, but they, uh, beated their adjusted EPS by 80%, $5.90 versus $3.27. They got a big jump because they are major investors in Anthropic. They raised their full-year guidance to $46 billion. You called it. Let's give Chamath his victory fap. Here he goes, the victory fap. The lap. Chamath on May 15th. What's your take on this? You've been pretty critical of the SaaS space in previous episodes.
- DSDavid Sacks
I think the high end of the market where Mark operates, where the large monoliths operate, is quite safe. What people are finding is, "Hey, hold on a second. This is a lot harder than we thought." It's not like boop, boop, boop, put in a prompt and beep, bap, boop-
- JCJason Calacanis
[laughs]
- DSDavid Sacks
... it all works. It's not how it works. I think we're a little oversold. Now I think this consolidation and the re-rating can happen in the opposite direction. So what is the opposite trade? The opposite trade is who has constructive net dollar retention, who has negative churn that's been really predictable, which is a way of saying who has the best relationships. Those guys I think are positioned to crush.
- JCJason Calacanis
All right. There you have it. Chamath, your thoughts on Nvidia and Salesforce blowing the doors off of their quarterly earnings reports.
- DSDavid Sacks
There's a lot there, so maybe we'll start with Salesforce first, and then I'll go to Nvidia.
- CPChamath Palihapitiya
'Cause I think the Nvidia one is actually a good segue into talking about the national state of finance. Um, I don't know. It was pretty obvious to me in May that Salesforce specifically was meaningfully oversold. I think what I was trying to say there, and maybe I can say more precisely now, is we're getting to the end of this second phase of AI. So if the first phase of AI were models, and think of like a model as a brain, the second phase of AI is harnesses, right, and agents, which is the analogous equivalent of giving a brain a pair of eyes and hands and a notebook for memory and a keyboard to type things on. So you're sort of taking this primordial object that was really good at Q&A, and you're making it more useful, almost like an autonomous being. But we're starting this next phase soon, at least I see it in the enterprises that I work with, which is that that's still insufficient, and what you now need to do is make that autonomous agent much more informed and give it context and allow it to do a job much more intelligently. So meaning you take a brain, you give it arms and legs and limbs and eyes and et cetera, but then you have to train it to be a lawyer or be a customer service rep or be a sales agent or what have you. And to do that next step, you need a ton of contextual information. And so the people that control that today, the large systems of record, what I said before and what I'll double down on now, is that those guys hold an incredibly special place in the ecosystem if they do it right. And I think what you're seeing is Mark is finding a way to play well with the models, support harnesses, but also build his own, and now start to push into this next phase. And I think that's why his net dollar retention is strong. That's why his revenue is strong. That's why he's guiding up, and that's why the stock's ripped, I think. Was it like up forty-three percent since I said it had bottomed? I mean, it took a few weeks for-
- JCJason Calacanis
Yeah, it was up twenty percent today just on that. And Friedberg, I think you were in... Were you on CNBC, or were you just on the quarterly call?
- DFDavid Friedberg
I went to Benioff's office for the earnings-
- JCJason Calacanis
Nice
- DFDavid Friedberg
... setup yesterday. So Dario was there. Dario and Mark did their CNBC bit. They set up a studio for the earnings call on the sixtieth floor, you know, where we've all had dinner up there. And then I did the earnings call with Mark. 'Cause, you know, about a year ago, I think I mentioned this to you, Chamath, like we kind of over a weekend built a CRM tool internally using, uh, Cloud Code and Cursor and stuff and kind of spun it together and, and stood it up. And we were using it, and then it's like, well, you gotta add this feature, and you gotta change this, and then account and security and access, and where's the data repository that makes it protected? And there was a lot of kind of back and forth on all the features we ultimately needed to build to make it truly useful and scalable. Meanwhile, we've got competing interests at our company on where we can build software that's unique to our company, like plant breeding software, which is what we do as kind of our unique advantage as a company is plant breeding. So how do we build a better breeding technology platform? How do we build software that gives the, the people in the lab and in the greenhouse and the breeders tools? And so we started building all these internal tools, and eventually realized our time, our efforts, our energy is better spent building the workflows that are unique and create value for our organization uniquely versus recreating a bunch of software that other people have already made. Where's your best ROI, your best return on time spent and your best return on dollars spent? And it's not on rebuilding a communications tool like Slack or a messaging tool like Gmail or a CRM tool like Salesforce. And at the time, Mark and I were talking on the phone, he's like, you know, "Hey, try Salesforce. I'll set you up. Come on, do it." And I was like, "No, no, no." And then he's like, "Yes, yes, yes." And he, and he's so persistent. You guys know Mark. He's, like, so persistent. [chuckles]
- CPChamath Palihapitiya
Yes.
- DFDavid Friedberg
He put his, like, best sales guy on a text with me and kept texting every day. "Are we up yet? Are we up yet? Are we up yet?" [chuckles] Until the sales guy, I said, "Okay, go to my office." He goes to my office, he gets set up, and we're, and then we're done. And then we realized, oh my God, this is actually a much better way for us to do this. So Mark asked me to come and recount that story at the earnings call and talk a little bit about the view on this change. So I do think, and I've shared this in the past, I think the horizontal platform companies, these tools that are horizontal, CRM works across many different verticals, industry verticals, and Gmail works across many industry verticals, and Slack and so on. E- Excel, no one's gonna go rebuild Excel. The, the real value is in the, the s- the software that's unique for your vertical. That's where AI plays a role in building custom workflows and custom software. And so I think that's kind of how I view this, the real SaaSpocalypse. It's more of a vertical SaaSpocalypse, which is software that's designed for just one vertical.
- CPChamath Palihapitiya
Hundred percent.
- DFDavid Friedberg
Um, and that's where I think things get blown up-
- CPChamath Palihapitiya
I totally agree with you
- DFDavid Friedberg
... versus the platform like Salesforce.
- CPChamath Palihapitiya
I totally agree with you. I totally agree with you.
- JCJason Calacanis
Sacks, let's talk about Marc Benioff. He is just an incredible salesperson who just fought through the SaaSpocalypse and then figured out a way out of being put in the bucket of SaaS roadkill and then just massively, um, integrating AI into the platform. Maybe you, you, you've known him for a long time. Maybe you could talk about him as an executive and what we can learn from what he just did in terms of going from, in the market's mind, roadkill to leading the pack, let's say, in SaaS again.
- DSDavid Sacks
Well, this narrative of the SaaSpocalypse was totally overdone. I mean, this whole SaaS is dead narrative is just getting shredded today with Salesforce being up over twenty percent. You could go back and look at some of the clips I've been saying now for months. I do not believe that core systems of record like CRM are gonna get ripped and replaced with something vibe coded. I've been saying that for a long time. Enterprises want certainty, they have compliance, they want professionally managed software that's been running and debugged for years. I mean, just think about all the bug reports that have been filed against Salesforce for over twenty years, right? And that's the hard part to get right. I mean, when I play with all these agents and AI, you're dealing with something that's probabilistic, and there's so many edge cases. When you're dealing with a core system of record, you just wanna know that it works, and the expense of it is low enough that you just don't wanna basically jeopardize one of your core systems by ripping it out and replacing it with something built in-house in a kind of DIY way. So I, I just think this whole SaaSpocalypse narrative was overplayed. Now, at the same time, to your point, Jason, I think Benioff is doing all the right things here, and you could kinda say it's, uh, if you can't beat them, join them type approach, which is he made this deal with Anthropic. What is that deal? I mean, first of all, he's gonna be offering Anthropic's models inside of Salesforce. More importantly, I think, this is really the critical thing, he is integrating Salesforce into Claude. He's willing to allow Claude to be the front end, to have the sort of the primary user relationship, and Claude is now gonna be able to access all of the data in Salesforce and all of the workflows, all the actions that a user can take. So in other words, Benioff here is willing to risk disintermediation in order to ride this AI wave because he knows it's what the customer ultimately wants. You know, you don't wanna go into Salesforce or any SaaS application to write your agents. You wanna create agents in the AI program that you're using, and you want those agents to be able to run across all of your SaaS platforms. So he's willing to, again, to give up a big piece of the user relationship in order to make himself more relevant. Now, why is this ultimately good for his business and not bad is because, like I said, I still think that you need systems of record. You need the AI agents to basically go to those systems, get the data from a canonical source of truth. You just don't want there to be any probabilistic variability around that, and you want AI agents to be able to write back to those systems, and you wanna be able to write back to those workflows. So what's happening here is that it's not a rip and replace. Their layers are getting built, right? You've got the database layer, then you've got applications and workflows, and then you've got agents, and then you've kinda got the, the AI, uh, user interface. And Benioff is saying that the AI is now the user interface. He's basically acknowledging that, and he's leaning into it. Now, here's the thing. I talked to him this morning, actually, and, and a point he brought up with me that I think is underestimated is that he says there's a lot of trapped value in Salesforce. Meaning, we know it's got this incredibly broad, rich platform with tons of functionality. The average user's never gonna find all those things, but the agent will.
- JCJason Calacanis
Hmm.
- DSDavid Sacks
So think about all the cases where now the agent is gonna go to the user and say, "Hey, I just saw that there are these actions you could take in Salesforce that seem to line up with what you're telling me to do. Do you want me to do this?" And the user's gonna say, "Yes." You know, and then the-
- JCJason Calacanis
Which then codifies Salesforce as the system of record. Yes, Sax?
- DSDavid Sacks
Yes, exactly. Because now th-think about the agent as a power user of Salesforce-
- JCJason Calacanis
Yes
- DSDavid Sacks
... that knows how to use Salesforce perfectly. You don't necessarily need to hire this, like, team of highly priced consultants to figure out Salesforce. The agent knows how to do it, so it can unlock the full value of Salesforce and all these actions. And then after you develop trust in your agent, you, the user, are just gonna s- click the Always Allow button, and now the agent can basically tap the full capabilities of Salesforce. So I mean, that's where this is headed. But now it raises the question, okay, so how do SaaS applications play into this AI and agent wave? You have to have great APIs, and you have to have a great CLI, the command line interface, which is how the agents are gonna relate to the SaaS tools. I think in the past, the way that most SaaS products thought, they spent a lot of time on their user interface, and now they really gotta think about the agent interface, not just the user interface. You have to build the best agent interface, and you've got to, I think, relax the idea that you're gonna fully control the customer relationship. You have to think of agents created by the AI companies as being an extension of your platform and not feel threatened that you're losing the customer relationship. If you can do all those things and become a source of truth and a system of record, then you've got a big opportunity.
- JCJason Calacanis
I, I gotta say, he's, like, one of the most underestimated and underappreciated product and sales executives in our industry because I was talking to him when we were at Davos, Sax, about Slack, and he was like, "Tell me about what you're doing." And I was like, "Listen, you have all my data. I can't get my data. My team wants to move off Slack. They wanna use this open source product specifically so I can get all this information." He, again, to your point, Friedberg, put me on with the sales team, and now I have complete god access to our Slack. And they built a product called Slack Today, which they've been slowly rolling out, and it does the promise of OpenClaw. And what Sam did by buying out the founder of OpenClaw, right after he bought OpenClaw's founder, Peter, and he started working at, uh, OpenAI, just OpenClaw just faded. Like, no more innovation. Uh, and I'm, I'm not trying to say this to say Sam did something nefarious or that OpenClaw is, you know, terrible or anything, but they just lost their edge. And now the version of Slack today is, like, a seven out of ten, and it's getting, like, ten percent better every couple of weeks, I'm noticing. So he's gonna do a parallel thing, Sax. He's gonna have his own agents, and he's gonna let you come in with your agents. His agents might be-
- DSDavid Sacks
Yeah
- JCJason Calacanis
... a little bit behind, but you're also gonna get those agents for free inside of Salesforce. It's like a, a two ways to win.
- DSDavid Sacks
Yeah.
- 33:32 – 1:01:33
Bessent gets called out by Druckenmiller for bond market interference
- JCJason Calacanis
All right, let's keep moving through the docket. Bessent's new bond strategy got criticized by his mentor, Stan Druckenmiller. Last week, 30-year Treasury hit a 19-year high, five point three percent. You've been talking about this a whole bunch, Freeburg, so I'm interested to get your take on it. Uh, in response, Bessent doubled the Treasury Department's long-dated bond buybacks from two billion to four billion on August 19th. CNBC reported Bessent is considering ramping up bond buying, and, uh, Fox Business said he wants to put the fear of God into traders that are shorting long-dated bonds. So a lot of interventionism going on here. Stan Druckenmiller, Bessent's former mentor, published an op-ed in The Wall Street Journal opposing his plan. His main point was Bessent is wrong for trying to manipulate prices rather than fixing the core reason yields are rising. America has a spending problem. We've talked about it over and over here, $40 trillion. No more DOGE, no more cutting costs, and obviously we got a war that's quite expensive. Every five months, Freeburg, I think you said last episode, we add a trillion, so we're adding two point five trillion a year. We'll add 10 trillion during this second, uh, Trump term. Your thoughts on what's going on here, Freeburg, in terms of the bond market and Bessent and Druckenmiller going back and forth. Chamath, you and I can also talk about using AI to write pieces [chuckles] , write your thought pieces.
- DSDavid Sacks
Okay.
- JCJason Calacanis
Yeah.
- DFDavid Friedberg
I'll, I'll start with the relationship. As you highlighted, Bessent and Druckenmiller worked closely together and are close and respect each other, and Kevin Warsh, in a similar position, he was working with Druckenmiller the last number of years in his office every day. They're extremely close. This is a triumvirate that I don't think in history you've had three people who are so close in these positions, one leading in kind of market activity with Druck, one running Treasury, and the other one running the Fed. It's, it's pretty unprecedented to have this sort of closeness in those positions. A- and, you know, I, I think that-
- DSDavid Sacks
Who's Caesar?
- DFDavid Friedberg
What's that? Yeah, right.
- DSDavid Sacks
Who's Caesar?
- DFDavid Friedberg
[chuckles] There's, there's a-
- DSDavid Sacks
You called it a triumvirate.
- DFDavid Friedberg
The triumvirate. [chuckles]
- DSDavid Sacks
Who's Caesar, who's Pompey, and who's Crassus?
- DFDavid Friedberg
I'm gonna leave that to them to debate.
- DSDavid Sacks
[chuckles]
- DFDavid Friedberg
But, uh, if you pull up the yield curve from, uh, COVID era, I think it's worth just taking a look at the Treasury yield curve. So this shows, depending on the duration, is it a one-month or a 30-year Treasury bond, so across that whole time duration, what's the yield? You know, how much does the federal government have to pay in interest to get people to loan them money for that duration? And so this is, uh, right, uh, around COVID era, kind of 2020. You can see that because interest rates were low and the inflationary effects of stimulus that came about during COVID had not yet hit the market, we were looking at sub-half a percent, sub a quarter percent, all the way out to the three-year and five-year, and then a slight climb up where you could actually get 30-year Treasuries at one point seven percent. Again, going back in history, it's always easy to rewrite history. The federal government should have rolled all of its debt into 30 years at this point, but the debt is balanced across this Treasury curve. So let's look at where the Treasury yield curve is today. So this is what is the market charging the federal government to loan it money to pay its bills, and on the low end of the Treasury curve-
- DFDavid Friedberg
You're looking at just under 4%. So for the federal government to borrow money for one month, they have to pay a 3.8% vig, uh-
- JCJason Calacanis
Ouch
- DFDavid Friedberg
... to the lenders for that money. And if you go out, the 30 year is now at 5.2%. So it is very expensive now to borrow money if you're the US federal government, and the reason is persistent inflation, I would argue because of excess government spending on social programs and other things, and the big problem at this point is the federal government is spending so much that if the g- federal government were to cut spending aggressively, the argument and the concern is it would hit unemployment and it would cause a recession because the federal government is such an intricate part of the economy now. That's the argument. But it's causing inflation, and it's, it's causing deficit spending. So this year the deficit will be roughly, call it, $2 trillion. And as a result, the market is saying, "We're worried about the US fiscal solvency over the long run, or there's a higher risk. As a result, we're gonna charge you a higher interest, 5.2% on the 30 year." Now, what does this mean for the federal government? Well, today the federal government's average cost of debt is 3.4%. That's what we're paying on interest on average on the $40 trillion of debt that the federal government has outstanding. For every 1% change in the interest rate, the US government has to pay 1.25% of GDP in excess interest each year. 1.25% of GDP in interest each year for that 1% change in the interest rate. And we're now looking at a 30 year at 5.2 and a short-term rate over four. So the federal government has a problem because over the next 12 months they have to refinance $10 trillion of debt. That debt is coming due. Those bonds are now due. They have to pay the principal back to the bond holders, and they gotta go back to the treasury market and sell more treasuries to borrow more money to refinance. So the borrowing cost now is gonna climb up, and when that borrowing cost climbs up, the federal government's burn goes up and the fiscal deficit goes up. So my theory and my argument on this is there is no action that Bessent can take that's actually gonna have a meaningful effect on the long end of the curve. We have fundamental fiscal spending problem with the federal government right now, and I think that the note that Druck wrote, whether AI wrote it or he wrote it, it doesn't matter. The point of the note is correct, and the note is meant to provide cover to Bessent. He is saying it is not Bessent's fault or Bessent's responsibility to solve the yield curve problem. It is Congress's responsibility. It is the president's responsibility. It is the responsibility of the holders of the budget and the accounts that should stand up and say, "We are going to cut spending," 'cause if we don't cut spending, there is going to be a spiral which we are now going to face over the next 12 months as we have to refinance $10 trillion of debt. So Bessent's doing his job as treasury secretary. He's saying, "I'm going to market. I'm gonna buy treasuries. I'm gonna try and lower it." But he only has maximum, maximum, maximum a trillion dollars he could use to buy debt. He's still gotta go sell $10 trillion of treasuries in the next 12 months. $10 trillion he's gotta sell. So even if he maxed out his buying authority in the near term, that's only a trillion of buying, and then he's gotta turn around and sell 10. So the market is what the market is.
- JCJason Calacanis
Is it performative for Burke?
- DFDavid Friedberg
And Druck's, Druck's note is coverage for Bessent, and it's pointing responsibility back to Congress, back to the president to say, "Guys, we have to solve this deficit problem."
- JCJason Calacanis
So is this like cafe performative between the two of them and they're kind of like supporting each other is your theory, Friedberg?
- DFDavid Friedberg
They don't... I don't think, I don't think they're allowed to talk. I don't think they do talk.
- JCJason Calacanis
Okay.
- DFDavid Friedberg
I don't think that Druck's allowed to talk to Kevin or I don't think any of them are allowed to talk to each other, so I don't think that's happening. But I think that Druck is sending his signal to the market and saying, "Guys, this is not Bessent's responsibility."
- JCJason Calacanis
Got it.
- DFDavid Friedberg
"The burden's not on his shoulder. He can't be Atlas. He can't lift this Earth. He can't solve this problem. You guys have to act."
- JCJason Calacanis
It's not possible. Got it.
- DFDavid Friedberg
And I think it's coverage for Bessent.
- JCJason Calacanis
Got it. Okay. That's what I, that's what I'm sort of getting at. Chamath, what's your take here on what's gonna happen going forward? You know, we're past 5%. Does this break? What does it do to, uh, interest rate cuts, and how bad could this get if we can't get it under control?
- CPChamath Palihapitiya
The tactical answer to your, the question that you asked before is why is he in the market buying bonds? It's called yield curve suppression, meaning when you buy bonds, you bid up the prices and the implied yields go down, which allows Scott to then finance at a lower borrowing cost because then if yields are 5.1 versus 5.3, and then now you're issuing bonds, they're marked against that 5.1 print versus 5.3. So it, the yield suppression is trying to help what Friedberg talked about, which is just this refinancing tsunami that is coming. Okay, but look, just, just take a step back for a second. I think the very big issue is that Congress is ultimately responsible for spending. Congress is completely unable to do anything to get these budget deficits under control. It is consistent. It's n- not a Democrat nor a Republican problem. It is a congressional problem, meaning both sides consistently spend way more than they should. So you have the debt growing at 7% and you have GDP between, you know, 2 and 4%. So that's a recipe for disaster. What Druck said in that note is you have to cut entitlements. He's probably right. The question is when and who will force the United States to confront this issue? Who will force the United States Congress to confront the issue? And what he is saying is the bond market is gonna start to do this because that single price is the true reflection of the good faith and trust in the United States. And as that yield goes up, the very simple rubric is trust is going down. Yield goes up, trust goes down. The other thing that I would say is this is happening at an incredibly awkward moment, which is that we are supposed to be in the middle of an enormous financial build-out to support AI. And if you go all the way back like 100 years, you know, the Industrial Revolution, the Grand Bargain, all of this stuff, the United States government was the balance sheet, right? They were the ones that were able to step in. And unfortunately, because if it's financial situation, the US government is not able to do that. That's why, thank God, we have companies like Nvidia and Google and Microsoft and Meta and Amazon who take on that burden. And so y- I just wanted to tie it to this other thing because there's so much chirping, by the way, on the internet about the balance sheet of Nvidia and blah, blah, blah, and I think people completely miss that these guys are putting the entire US economy on their back. 100 years ago, it would've been the US government that did this, but the US government is not in a position to do it because Congress cannot get their act together on spending. The president actually has done something pretty incredible, which is on the tail end of those trade deals, if you guys remember, he was able to find $2 trillion to pump into the US economy to support this build-out. But the practical reality is that 2 trillion comes from other nation states, and their processes are long and meandering. So you have this situation where all this money has to be invested. It should be backstop by the US government. It's not in a financial situation to do so. The president has done some magic to try to relieve it in the short term, but it's only a short-term band-aid. The real solution, as Friedberg says, is Congress needs to come together and realize that they must now fix this problem. Because if you see yields, if you see the 30-year at 6%, it is the beginning of a death spiral. It's not gonna be immediate, okay? So don't freak out, but it is the beginning of some extreme pain, and that pain will last years. And the only thing that solves it now is getting the budget under control, which is a congressional act. It must happen. Whether it's this year or the next year, it just has to happen.
- JCJason Calacanis
Sacks, the president was quite vocal about cutting costs early on in the presidency, but we haven't heard much from the commander in chief about this. Is the issue that no politician can touch cutting spending? It's just too toxic because Trump's in his final term. He's lame duck by definition, right? This is his second and only term, hopefully, unless he decides to take a third. Um, but he hasn't been vocal about this, and is it just too radioactive for anybody in politics? And you got to spend a little time. You dipped your toe there in, in DC. Is it just too toxic for anybody to take on spending cuts? He sent Elon in there. That was, you know, pretty spicy, and it's obviously, um, not occurring now. We're not cutting things massively and in cra- in fact, the s- the debt's going faster than it-
- 1:01:33 – 1:15:00
AI writing controversy: Druck used AI to write his WSJ Op-ed
- JCJason Calacanis
Let's do a little side quest here. What did you think of Druckenmiller writing his piece with AI and getting busted, and then the Wall Street Journal saying, "Hey, it's totally fine"?
- DFDavid Friedberg
I thought that it was the left that virtue signaled, but I, I actually think it's a class of people that virtue signal.
- JCJason Calacanis
Okay, here we go.
- DFDavid Friedberg
And they judge, and they're judgemental, and they can't see the forest from the trees, and this is probably, they're like the loudest chirpers in the peanut gallery.
- JCJason Calacanis
Hmm.
- DFDavid Friedberg
Stan Druckenmiller is the most incredible investor of our generation. Maybe, sorry, maybe like top three or four.
- JCJason Calacanis
He's up there. He's up there, yeah.
- DFDavid Friedberg
And so just shut the [beep] up and read what he says. And you have an opinion, and you're like, "Oh my God, he has an em dash. Oh my God, he used the-
- JCJason Calacanis
[laughs]
- DFDavid Friedberg
"... AI flourish." It's like you're missing the script. He's telling you what's about to happen.
- JCJason Calacanis
Sacks, you agree? You think that-
- DSDavid Sacks
Yeah
- JCJason Calacanis
... the opinion pieces in the Wall Street Journal and New York Times should be written by AI, not the person who puts their name on it?
- DFDavid Friedberg
It's still written by him.
- JCJason Calacanis
He, he didn't say it was written by him. [laughs] He, he admitted it's 100% AI.
- DFDavid Friedberg
He prompts, he prompts it. He shapes it.
- DSDavid Sacks
A, a-
- DFDavid Friedberg
He guides it
- DSDavid Sacks
... yeah, a more precise way of putting it is the take is his, and then he uses the AI to help him write it. Look, I don't get all the pearl clutching about this. I mean, you gotta be pretty dumb these days not to use AI to help you write, and he's definitely not dumb. This is his opinion. It's his take. It's consistent with everything he's been saying in the past for decades, and in fact, the piece cites the many times-
- JCJason Calacanis
And he's right. And he's right
- DSDavid Sacks
... yeah, the, yeah, the piece mentions the many times in the past he's weighed in on this. I think that this clearly came from his mind, and he uses the AI to help him write it.
- DFDavid Friedberg
The morons on X should be like, "Wait a minute. How does this affect my company? How does it affect my portfolio? How will it affect my 401 [k] ? What will it do to my parents' retirements? How should I think about hedging this?" Instead of that conversation, all of you people were like, "Oh my God, he ha- he used AI." It is-
- DSDavid Sacks
I think, Jake, uh, do you have a problem with this?
- DFDavid Friedberg
You're missing the, you're missing the-
- DSDavid Sacks
Are you one of the people that has a problem?
- JCJason Calacanis
I do think it's kinda the lip-syncing of, uh, writing. As a writer, I find it offensive to like let the system give your entire opinion, as opposed to using it for research, which is totally fine. Use it for proofreading, totally fine. But to me, it feels like I went to see Adele and she's lip-syncing.
- DFDavid Friedberg
Yeah.
- JCJason Calacanis
I really wanna hear him construct-
- DFDavid Friedberg
Don't use Excel. Only go to the guys that use, do hand calculations
- JCJason Calacanis
... Adele. No, no, no, no, no. Here's the thing. I, I would rather see him write-
- 1:15:00 – 1:22:52
CIA Chief visits Moscow, Meta's settlement and new teen rules
- DSDavid Sacks
[laughs]
- JCJason Calacanis
The CIA director made an unannounced visit to Moscow. John Ratcliffe made a surprise visit on Tuesday and flew back the same day. First visit by a sitting CIA director since November 2021. That was when Bill Burns went to warn Putin not to invade Ukraine. He invaded three months later, obviously. Wall Street Journal reporting Ratcliffe was there to warn Russia it should not attack a NATO country. New US intel reportedly shows Putin could be planning to test NATO's resolve with a limited assault in the next few years, anything from a cyber attack, small land incursion, et cetera. Polymarket says only 21% chance we get a Russian-Ukraine ceasefire by the end of the year. Freiberg, you were on fire in the group chat about this. What are your thoughts of what's going on here?
- DFDavid Friedberg
There's wild speculation. Wall Street Journal and others have reported that the message that was delivered was, "Don't invade NATO-
- JCJason Calacanis
Hmm
- DFDavid Friedberg
... and don't use nukes on Ukraine." So there's been this kind of wild speculation about what this means. It just seemed like there's something meaningful going on, but to Sacks' point in our group chat, this is speculation. There's no evidence or Putin's made no statements.
- DSDavid Sacks
Yeah, and m- and more than that, the president-
- DFDavid Friedberg
Yeah
- DSDavid Sacks
... I think called into a show to basically say that that w- story was not true, and the contact was routine. And then the Russian readout said roughly the same thing. So the truth is we don't know what the meeting was about, um, but, you know.
- JCJason Calacanis
Quite dramatic.
- DSDavid Sacks
I think, I think it's all speculation.
- JCJason Calacanis
Hmm.
- DFDavid Friedberg
I, I know what it was about.
- JCJason Calacanis
Oh, here we go.
- DFDavid Friedberg
Druck's AI-infused memo [laughs] at the Wall Street Journal.
- JCJason Calacanis
Yes. He was warning, he was warning Putin to not use AI to write his next-
- DSDavid Sacks
Putin warning
- JCJason Calacanis
... his next-
- DFDavid Friedberg
Warning
- JCJason Calacanis
... his next essay [laughs]
- DSDavid Sacks
What you're reading may be AI.
- DFDavid Friedberg
We flew over there to deliver a very strict message, which is we expect non-AI tool usage because we are journalists at our core.
- DSDavid Sacks
Yeah.
- JCJason Calacanis
That's it.
- DSDavid Sacks
I think it's possible, JCal, that the trained journalists got this one wrong and were engaging in wild speculation and hyperbole without actually knowing what the meeting was about.
- JCJason Calacanis
Well, I mean, wild speculation's what we do here. It's a podcast. [laughs] Uh, that's the whole point of the show is to speculate what the hell's going on here.
- DSDavid Sacks
First of all, both the American and the Russian side have denied these dramatic speculative claims that somehow Ratcliffe was there to warn the Russians not to invade Europe. I actually believe those denials because it, it wouldn't make sense for the Russians to invade NATO countries. This is the same kind of threat inflation that we've heard for years from neocons about Russia's supposedly imperial ambitions to conquer all of Europe. There's simply no basis for believing it, and frankly, the war is not going badly for the Russians. It's certainly taken a lot longer than anyone thought, and Russia has paid a heavy price in casualties. I don't know that the numbers are what you said, Freiberg. But I think if you look at most of the sources now covering the war, what they're saying is the Russians are making slow but steady progress, and it's Ukraine who is suffering the most. First of all, the Russians have air superiority. The Ukrainians are basically out of air defense, so Kiev is getting bombed on a routine basis. The Russians are able to pretty much destroy whatever they want at will, so the Ukrainian infrastructure is paying a heavy toll. And this is coming on the eve of what is expected to be, you know, a pretty cold winter, and Ukrainian power is getting taken out. Moreover, Odessa and the Black Sea ports of Ukraine have been bombed and basically shut down, so their economy's paying this incredibly heavy price right now. They're not able to export grain, so their economy is basically getting destroyed, and they're running out of money. Zelensky's running around saying that he needs another $35 billion, or they're gonna be out of money. The US is not funding that, but he's trying to get that from the Europeans. And then their casualties, although we don't know the numbers, are also huge, and now there's been stories about them potentially drafting women because they're so low on soldiers. Keep in mind, Russia has four or five times the population of Ukraine, so they're able to sustain much greater armies. So things do not look great for Ukraine, and frankly, Zelensky should've listened when President Trump told him, "You don't have the cards in this war. You should make a deal." Zelensky didn't wanna do that. He didn't wanna make a deal. He still doesn't wanna make a deal. He should make a deal, and, um, frankly, I don't think Ukraine's gonna come out on top on this thing.
- JCJason Calacanis
Chamath, you have any, uh, thing you wanna add there, or we'll just wrap? Yeah.
- CPChamath Palihapitiya
Thanks to Meta for solving my biggest problem, which is imposing [laughs] limits on Instagram. Jesus.
- JCJason Calacanis
Yeah. Okay, we didn't even get to that story. It's a big story.
- CPChamath Palihapitiya
I'm tired of playing whack-a-mole with my kids, and I can't do it, and they have fake accounts and secret accounts and this and that, and yeah, please, thank you. Should've done it sooner, but I'm glad you did it.
- 1:22:52 – 1:36:37
Science Corner: Moderna's mRNA cancer vaccine
- CPChamath Palihapitiya
party.
- JCJason Calacanis
Hey, Freberg, what's going on with this cancer vaccine and the stock that tripled in the last two weeks? We didn't get to it last week, but I know I wanna hear about it, and I'm sure the audience does.
- DFDavid Friedberg
Yeah, Moderna stock I think is what you're talking about, right?
- JCJason Calacanis
Yes.
- DFDavid Friedberg
I think they went from, like, a 20 billion market cap to 60 billion market cap on the positive readouts from this thing that's being called a cancer vaccine, and I think it's worth highlighting how this cancer therapy system works. This goes back to the '90s, where there was this idea that you could create what are called neoantigens. These are small peptides or proteins that mimic a peptide or protein that's unique to a cancer in your body, and so that antigen, which means that your immune system sees it as an invader, causes your immune system to start to make cells that destroy that protein. And so by putting that protein in your body, your immune system gets activated, and it gets turned on to go and find that protein in other parts of your body and destroy that protein. So the objective is figure out what is the protein that is unique to a particular cancer, make that protein, stick it in your body, and your immune system will go and destroy the cancer that's in your body. And so this immunotherapy, the system of basically using an antigen that's designed for a cancer in your body to go and attack it, has been around since, call it the late '90s. And there was this big revolution in DNA sequencing where we identified that we could take samples of cancer, put them in a DNA sequencer, and look at the sequence of the genes, the proteins that are made, because they're made from genes that are unique to that particular cancer, and therefore make a personalized neoantigen that's personalized to the unique cancer that's in your body, 'cause all these cancers mutate, and they're different, and no two cancers are identical. So the-
- JCJason Calacanis
How do they get that key for me personally versus you? How do you get that into the mRNA?
- DFDavid Friedberg
They would take a sample of-
- JCJason Calacanis
Yeah
- DFDavid Friedberg
... of your, your tumor, um-
- JCJason Calacanis
Got it
- DFDavid Friedberg
... or cancer cells. So when you take your... Let's say you have, you know, melanoma, and the reason that melanoma is one of the kind of biggest targets for this immunotherapy is that melanomas have very kind of unique DNA mutations because of UV light hitting the skin. And so the particular cancer that you'll get in a melanoma that you have is going to be very unique with respect to the rest of your body. It's gonna be a very unique mutation. So they take the, the little bit of the melanoma. They get the DNA out of it, and when you do DNA sequencing, you multiply the DNA by millions or billions of times. You put all that DNA in a DNA sequencer. It gets chopped up and read, and then the sequence data comes back, and it says, "This is what makes this cancer unique. It's this little sequence of the DNA."
- JCJason Calacanis
Mm.
- DFDavid Friedberg
And that sequence of the DNA- ... causes that cancer to make a unique protein that is basically like a key or an ID or a fingerprint of that cancer. They then take that DNA and make protein from it, put that protein in your body, and now your immune system goes crazy and starts attacking that protein 'cause it's like, "Oh, antigen, antigen, I gotta go get it." Now that those cells are activated, those immune cells are activated to that protein, they'll eventually go destroy that cancer. So this has been successful. There've been hundreds of trials with this neoantigen-based therapy for many different types of cancer, and there's all these trials that have tried to figure out what's the right technique for delivering the neoantigen. Do we make the protein and then stick it in your body? Or in this case, with what Moderna did, make mRNA and stick it in your body. And the mRNA causes your own cells to now make that protein and spit it out, ends up in your blood, and now your immune cells got activated. So rather than making the protein ex vivo, which means outside of your body, you're put making the protein in your body, in vivo, and now your body's making the protein. So the, the, the idea with the mRNA concept is you can get one shot. That shot goes into your body, and now your body's making that protein, just like we made the COVID vaccine.
- JCJason Calacanis
Yes.
- DFDavid Friedberg
Your cells would make a particular protein segment that would activate your immune system, and it would go kill that cancer. There's other questions around what are the other adjuvants, what types of cancer can you use this system for, and then combination therapies. Are there other cancer drugs that you can do this in combination with? And the, all the trials that have been going on are all about this delivery mechanism, the technique that's used, the types of cancer, the dosing, and getting all of that stuff right. Now, what's interesting about this is it is much more of a technique than a drug. In the traditional sense-
- JCJason Calacanis
It's a process of-
- DFDavid Friedberg
It's a process.
- JCJason Calacanis
Right.
- DFDavid Friedberg
So the process is-
- JCJason Calacanis
And then it's customized per person, so there's some cost to doing it per person.
- DFDavid Friedberg
That's right. But the cost, uh, 'cause I do DNA sequencing at my company all day long. Getting that sample, very cheap. Getting the DNA data, very cheap.
- JCJason Calacanis
Mm.
- DFDavid Friedberg
Actually doing a lot of the upfront work, very cheap. Now, theoretically, making the mRNA or making the protein should also be pretty cheap, but it's human trials and human safety, and so there's a lot of questions around how do you make sure that everything's safe and what's the right combinations that people don't get overreacted immune systems or that people don't have adverse side effects. So that's all of the tuning of this. But I think what frustrates me the most about all of this, and everyone's kind of lauding this as some unique breakthrough and special and powerful, and it's not. Because a lot of people are going to places like Montana, and they are getting peptides printed for their particular cancer sequence, and they are making their own neoantigens, putting it in their body, and getting cured of their cancer. You can pay someone $50,000 to do this for you today. There's a lot of clinics that'll do it, and it's not a special FDA-approved drug. To your point, J Cal, it's a process. The process is take the DNA sequence from my cancer, make a protein, put it back in my body, my immune system goes and destroys the cancer in my body. Great idea. So why is Moderna saying that they're gonna charge $500,000 for this? And that's what I think frustrates me about all this. Everyone's lauding this, and everyone's very happy about this, but I'm actually pretty sad and frustrated and disappointed by this. I don't think that this technique, which has been largely developed through several decades of iteration, research, and development, which was largely funded by NIH and other public funding dollars, that has led to this incredible concept of neoantigen immunotherapy for cancer, which can eradicate or theoretically eliminate many different types of cancer, should now be patented, FDA approved, and charged half a million dollars for people to get treated for this.
- JCJason Calacanis
Yeah.
- DFDavid Friedberg
And so what I don't like about this story is that a private pharmaceutical company has seen their market cap go from 20 billion to 60 billion 'cause they went through this regulatory process to create what in my mind is a form of regulatory capture, and making the case that it's all about safety and trials and we've got patents and all this other stuff, when fundamentally there's an underlying technique that was funded by a lot of public research dollars that I think should be more open sourced, more ubiquitous, and every hospital should be trained on how to do this process to treat cancer patients.
- JCJason Calacanis
Do you think-
- DFDavid Friedberg
And it should become much more of a ubiquitous thing.
- JCJason Calacanis
Do you think that people-- I have two questions. Um, we can end it on that. But, um, do you think they're gonna be able to successfully defend this patent, uh, in the United States and then also globally? Because there's obviously a global world here, and people do travel for treatments now. Medical tourism is a thing. So if it's a half million dollars here, can it be done for 50K in South Korea, Japan, other places?
- DFDavid Friedberg
So, yeah, Moderna's got all these-
- JCJason Calacanis
And then second, these-
Episode duration: 1:36:40
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