Presidential Debate Reaction, Biden Hot Swap?, Tech unemployment, OpenAI considers for-profit & more

1. 0:00 – 1:54

   Bestie intros!

   1. JCJason Calacanis0:00

      All right, everybody. Welcome back to the number one podcast in the world. It's episode 185, and, uh, you're gonna be delighted by today's docket if you're into politics. We, we moved the taping back a day, gentlemen, because we knew there would be a presidential debate. So, with me to discuss all things presidential debate and the news, finance, markets, maybe even a little science from our science boy, David Freiberg, is the Rain Man, David Sacks, yeah. His body probably has frozen (laughs) or he's staring everybody down. How are you, sir? We're about to enter the endgame, Jason.

   2. DSDavid Sacks0:36

      (laughs)

   3. JCJason Calacanis0:36

      Oh. Oh, the endgame is here. Okay.

   4. DSDavid Sacks0:38

      We're in the endgame now. (laughs)

   5. JCJason Calacanis0:40

      And from a We Work in the home office in Pasadena is, uh, our friend, the sultan of science. He's back to work. He's in his cube. Did you get the TPS reports done? How you doing there, Freiberg?

   6. DFDavid Friedberg0:51

      The humble headquarters of Ohalo Genetics. Beautiful lab downstairs. I'll take you on a tour one day.

   7. JCJason Calacanis0:57

      Oh, nice.

   8. DFDavid Friedberg0:57

      Can't wait to hear my friends gloat and bloat themselves on the show today after the debate last night. It's gonna be insufferable. I'm looking forward to it.

   9. JCJason Calacanis1:06

      Okay, so you're building the next $10 billion company and we don't get to invest, but we do get a tour. Thank you. It's good to know.

   10. DSDavid Sacks1:13

       (laughs)

   11. JCJason Calacanis1:15

       Not that we're bitter. Uh, we promote this (censored) every (censored) week. We came here on our own week s- If you guys want to put money in, I will open up the round again for you and you guys can come in. You said this three (censored) times. When do we wet our beaks?

   12. DSDavid Sacks1:24

       Jake, Hal's right about this actually.

   13. JCJason Calacanis1:26

       That's how you know the winner.

   14. DSDavid Sacks1:27

       (laughs)

   15. JCJason Calacanis1:27

       The one he doesn't let us invest in is the winner. Um- It's the easiest way in his portfolio. He's like, "Hey, can I, can I introduce you to a soda pop machine?"

   16. DSDavid Sacks1:37

       (laughs)

   17. CPChamath Palihapitiya1:38

       What's going on? Let your winners ride. Rain Man, David Sacks. What's going on? And it's sad. We open source it to the fans and they've just gone crazy with it. Love you, Betsy. Queen of quinoa. What's

2. 1:54 – 16:53

   Debate recap and analysis: Hot swap incoming?

   1. CPChamath Palihapitiya1:54

      going on?

   2. JCJason Calacanis1:55

      All right, everybody. Let's get to the show here. Enough of the craziness. Last night was the first presidential debate, and there's no easy way to put this, it was an unmitigated disaster for the Democrats and President Biden. Uh, gosh, he looked confused. Uh, lots of slips, lots of gaffes. If you are under a rock living in a cave without Starlink and you missed it, here's a couple clips. Everybody's talking about this one where Biden lost his train of thought for, I don't know, close to 10 seconds. Play the clip, Nick.

   3. JCJoe Biden (debate clip)2:26

      Making sure that we're able to make every single solitary person, uh, e- eligible for what I've been able to do with the, uh, with, with, with the COVID... or excuse me, with, um, dealing with everything we have to do with, uh... Look, if... We finally beat Medicare.

   4. JCJake Tapper (debate moderator clip)2:47

      Thank you, President, uh, Biden. President Trump?

   5. JCJason Calacanis2:50

      Gosh, that was brutal. And, uh, the reaction from, uh, CNN, even MSNBC's Joy Reid, as far left as you can go, was brutal and candid. And here it is. The knives are out from the Democrats for President Biden.

   6. VCVan Jones (CNN reaction clip)3:08

      Right now as we speak, there is a deep, a wide, and a very aggressive panic in the Democratic Party. It started minutes into the debate and it continues right now. It involves party strategists, it involves elected officials, it involves fundraisers. And they're having conversations about the president's performance, which they think was dismal, which they think will hurt other people down the party in the ticket, and they're having conversations about what they should do about it. Some of those conversations include, "Should we go to the White House and ask the president to step aside?" Other of the conversations are about, "Should prominent Democrats go public with that call, because they feel this de- debate was so terrible?"

   7. JCJake Tapper (debate moderator clip)3:43

      That was painful. Uh, I love Joe Biden.

   8. VCVan Jones (CNN reaction clip)3:46

      (laughs)

   9. JCJake Tapper (debate moderator clip)3:46

      I worked with Joe Biden. He did not do well at all. And I think there's a lot of people who are going to want to see him consider taking a different course now. There is time for this party to figure out a different way forward if he will allow us to do that.

   10. RCRachel Maddow (MSNBC reaction clip)3:58

       I, too, was on the phone throughout much of the debate. My phone really never stopped, uh, buzzing throughout. And the, um, universal reaction was somewhere approaching panic. The people who were texting with me were very concerned about, uh, President Biden seeming extremely feeble, seeming extremely weak.

   11. JCJohn King (CNN reaction clip)4:17

       This has been, quite frankly, a car accident in slow motion that we've seen over and in building and questioning it. And as has been pointed out, Joe Biden sought this debate at this remarkably early time because he knew he was losing and he needed to change the narrative-

   12. UPUnidentified CNN/MSNBC panelist4:34

       And he does exactly what you're saying right now.

   13. JCJohn King (CNN reaction clip)4:34

       And he did change the narrative. He sunk his campaign tonight.

   14. JCJason Calacanis4:39

       All right, gentlemen. There is absolutely no way any of us could have predicted this. Oh, wait. Nick, play the clip. Read the room, Democrats. You have put up a candidate that nobody wants. His policies on the border and some other issues are not in sync with the majority of the country. At some point, the Democrats just have to take a deep look in the mirror and say, "We fielded a bad candidate who's too old and people don't believe will stand up to scrutiny of, like, say, being on the all-in pot for two hours, or in the debates, or with a hostile interviewer, any of those possibilities." And so, I think if that's the case, we really need to have the Democrats think deeply about maybe fielding a different candidate. I believe that's what's gonna happen in the next 30 to 60 days. So, I'm predicting-

   15. DSDavid Sacks5:21

       You think there's gonna be a switcheroo?

   16. JCJason Calacanis5:23

       100%.

   17. DSDavid Sacks5:24

       (laughs)

   18. JCJason Calacanis5:24

       I mean, if you just look at the polls, it's- You, you really think there's a switcheroo? 100% there'll be a switcheroo. Who's the switcheroo? I have no idea. Could be Gavin, could be anybody. Anything's possible. I think Trump's gonna demolish him in, uh, the debate. I think he'll sink to 30% in the, in the polls, and then the Democrats will find a way to give him a graceful out, and then they'll field somebody else. I think the Democrats, as cynical as this sounds, were waiting to see what happens with this Trump trial's conviction, what you call lawfare, what other people call fair use of the law. And then they are gonna see how he does in the debates. That's why they moved the debate up from June. And I think they know to pull the plug on this if it gets too far gone. And they have the ability to do that, because all he's gotta say is..."You know what? Uh, I, I, I'm feeling old and I want us to win and I'm gonna slot somebody else in." All right, and to wrap this up, prediction markets showing Biden has plummeted to, let's check the number, oh yeah, (laughs) 33%. And the, the sharps, as, uh, you've referred to them on the program, uh, are basically saying Biden's gonna drop out now. 44% chance over on Polymarket, will Biden drop out of the presidential race? And then predict it, another one of these prediction markets where you can actually bet real dollars. It's not a plug for them or a commercial, it just happens to be two of the bigger ones. Newsom sits at 14% now, Biden 33%, Trump at 58%. (laughs) At the start of the evening before the debate, Biden was at 47%. Post-debate, Chamath, we see Biden drop from 47% to 33%. Nothing like this has happened in modern politics. Your thoughts, Chamath Palihapitiya? And then, Sax, we'll give you the, the, the remun-

   19. CPChamath Palihapitiya7:09

       Let me just start by saying that President Biden is a person that's given up his whole life to work on behalf of America in the best way that he thought was possible. He's overcome a lot of tragedies. I think he's worked very hard. He's diligently tried to do what he thought was right on behalf of the people of Delaware and then the United States. My honest takeaway is that that person, though, is no longer really in charge, and I think that that was very troubling for me. And it actually makes the last sort of six months make a lot more sense. So I thought the fact that we could not get a response from the White House to be... I took it a little bit, actually, personally. I was wondering why, for someone that had been such an ardent supporter, I couldn't even get an email back when I was consistently asking them to be on the pod. And now I see that it wasn't just one single act. It was part of a holistic strategy. It was the same strategy that boxed RFK out of the Democratic primary. Because could you imagine if this event had happened when he had to debate RFK in the Democratic primaries? It would have been exposed then. It's probably partly to explain how the law has been used in New York state, whether you wanna call it lawfully or not, but it was a very directed partisan action. And so all of these things are now three data points that are really important. You will not come on an open format show like ours to just speak openly. None of us were going to attack him or try to corner him or box him in. You prevented other people from actually challenging you and directly asking questions of you in the Democratic primaries. And then you try to put political pressure on your opponents. All of that is systematically about a group of people that are unelected who are trying to control democracy, and I think that that's the most troubling takeaway from this. I don't think that you should take away from last night that Joe Biden had a bad debate. I think what we should take away is that there is a person who should be allowed to transition into the sunset and be celebrated for what he's done. And instead there are people that, frankly, at the, at the margins are acting pretty unethically, and at the limit, is actually acting somewhat diabolically to prop this person up so that they can keep power. For example, you've been in situations where you would expect the team that runs a company to be able to stand up and say, "The CEO is not in a position to run this company anymore." That's what you would expect if there's good governance and honesty. You know, what was Ron Klain doing, as an example, when he was doing debate prep? Did he legitimately believe that Joe Biden was prepared for this or mentally capable of actually doing this? And the fact that they are allowing his legacy to be destroyed after 50 years I think is really tragic.

   20. JCJason Calacanis10:10

       Yeah. I think well-said, by the way, Chamath. Sax, your thoughts on what we witnessed last night and your reaction to it?

   21. DSDavid Sacks10:18

       Well, let me speak as a objective and independent political observer-

   22. JCJason Calacanis10:24

       Okay. (laughs)

   23. DSDavid Sacks10:24

       ... uh, just as independent as you, J-Cal.

   24. JCJason Calacanis10:26

       (laughs) Yes, let's do that. Let's be independent today's show. (laughs)

   25. DSDavid Sacks10:29

       Yeah. Look, anyone can have a bad night.

   26. JCJason Calacanis10:32

       Absolutely. God bless your nipples.

   27. DSDavid Sacks10:33

       Uh, I think (laughs) -

   28. JCJason Calacanis10:34

       (laughs)

   29. DSDavid Sacks10:35

       ... his campaign put out the word that he had a cold and, uh, maybe he just had a bad night. I mean, after all, it was media people like Joe Scarsboro just saying a week ago that not only was Biden cognitively fine, but in fact, he was the best Joe Biden he had ever seen. Just a week ago or two weeks ago, Reid Hoffman was saying that he had a two-hour lunch with Joe Biden, and Biden was regaling him with details of AI and Gaza and he was good.

   30. JCJason Calacanis11:04

       Mm.
3. 16:53 – 36:43

   Subverting democracy, power grab, Democratic party shakeup

   1. CPChamath Palihapitiya16:53

      subversion of democracy is really the real threat to democracy, to your point. You have the right to elect a person up or down. None of us are choosing to elect a shadow cabinet of handlers to run America. That's not what any of us are signing up for.

   2. DFDavid Friedberg17:07

      Yeah.

   3. CPChamath Palihapitiya17:07

      And I think that's what we have the risk of having for another four years if this lie isn't exposed. What I- what I find unbelievably shocking is all of these data points now just make so much sense because the through line is, as you said, a coordinated effort to kind of obfuscate his decline. Like, if you thought about this in a different way, if you took a 29-year-old and a 32-year-old, would you say that they're the same? Absolutely. Right? If you took a 39 and a 42-year-old, they're the same. A 49 and a 52-year-old, they're the same. But the reality is, a 79 and an 82-year-old or a 78 and an 82-year-old are meaningfully different. And the reason is that because there is significant decline every year, every month, every day, and you're seeing the impact of every week, day, and month, and year as a president of the United States wear on an 82-year-old body. And I'm not sure any of us would do much better. But the reality is that when you're at that age...There's a level of transparency that's required and we have the opposite. So take Warren Buffett as the counterfactual to this. Warren Buffett is in his early 90s, but what does he do every year? He marches tens of thousands of people into Omaha, he sits them down, he sits at the front of a dais with Coca-Cola and peanut brittle, and speaks for six to eight hours.

   4. JCJason Calacanis18:36

      And as sharp as a tack.

   5. CPChamath Palihapitiya18:38

      Well, the point is, if you decide after those six to eight hours of fully transparent, unedited interaction with Warren Buffett that you don't think he's capable of leading Berkshire, you can sell the stock. What they don't do is hide him behind the shadows, propping him out in package interviews and all of this other stuff. That is un-American and undemocratic, and you see why, because the importance, as Friedberg said, is so high. You probably do have a lot of people outside the United States really questioning what is going on in the greatest country in the world right now, that this can even happen. And the people that you thought were so anti-Trump, right, that they would do anything to make sure that Donald Trump was unelected, well, they're actually not that anti-Trump, they're just pro-power. Because the thing that they care more about than their hatred of Donald Trump is their desire to stay in power.

   6. JCJason Calacanis19:32

      Yeah, I think these are all very well said, Frank Friedberg. Nicely done. I mean, how is anyone at this point in time surprised? Like, we have been talking about his cognitive ability for couple of years here on this podcast. Everybody's been talking about it on Twitter, they've been talking about it on social media, everybody's been talking about it at every Christmas, every Thanksgiving for a couple of years right now. And, um, you know, this long form discussion podcast test is the ultimate test and I think people need to take that to heart. If you look at the long form podcast tests, and I'm not just saying this to toot our own horn here, it could be Joe Rogan, it could be Tim Ferriss, it could be whoever you want, Lex Fridman. When you saw RFK, Vivek, Trump, Chris Christie, Dean Phillips come on this podcast, talk for, in some cases, two plus hours, it was clear they were there. And this is completely selfish on the part of Biden's family, the people around him to, you know, stay in power, and the hot swap's coming. I just, I'm telling you right now, he is not gonna be in this race in the next 30 days and-

   7. CPChamath Palihapitiya20:33

      Well, the hot, the hot swap is gonna create a free for all, Jason.

   8. JCJason Calacanis20:36

      Which is better, better than running somebody who has a 30% chance of winning and, I'm gonna take this a step further, this is 25th Amendment territory. This person is not fit to serve as president for the remaining of his term. What we saw last night was incredibly troubling. He was not there. And I've been saying this till I'm blue in the face for months, this is absolutely disgusting that they did this. This is elder abuse. I don't say that as a joke, I say this sincerely. I remember when my dad had to take the keys away from my grandfather, God rest his soul, my grandfather wanted to drive that car, you know, on the streets of Brooklyn, his, his, his station wagon. My dad at some point said, "This guy keeps clipping other people's mirrors." (laughs) "We gotta take the car away." So you know what my dad did? He went to my grandfather, God rest his soul, and he said, "Listen, the car was stolen." And I'm sitting there as a seven-year-old next to my dad, and I'm like, "The car wasn't stolen." And my dad said, "You know what? The car was stolen, Pop. We can't afford a new car. I'll lend you my car once in a while." My dad then sold the car for 800 bucks and got out of there. That's what we need to do. You gotta take the keys away from Biden. He's not fit to s- finish the rest of his term. Jason Raffert (laughs) Period. Full stop.

   9. DSDavid Sacks21:50

      I disagree.

   10. JCJason Calacanis21:50

       And, and I'm glad everybody else now sees what, you know, half of us saw-

   11. CPChamath Palihapitiya21:55

       Hold on, Satire Sacks-

   12. JCJason Calacanis21:55

       ... for the last year or two.

   13. CPChamath Palihapitiya21:56

       Hold on.

   14. JCJason Calacanis21:56

       Okay, here comes Satire Sacks. (laughs)

   15. CPChamath Palihapitiya21:58

       I disagree, too. Satire Sacks has a rebuttal. Satire-

   16. JCJason Calacanis21:59

       Okay, go ahead Satire Sacks.

   17. CPChamath Palihapitiya22:00

       Go ahead.

   18. DSDavid Sacks22:00

       Well, look, who are you gonna believe? The J Cals uninformed non-expert opinion or the expert medical opinion of Dr. Jill Biden with her, uh, doctorate in education?

   19. JCJason Calacanis22:12

       Well, I mean-

   20. CPChamath Palihapitiya22:13

       (laughs)

   21. JCJason Calacanis22:13

       ... the bias is strong. When you see that clip-

   22. CPChamath Palihapitiya22:16

       (laughs)

   23. JCJason Calacanis22:16

       I mean, play the clip of Biden post... These guys are so deranged. These lunatics are so deranged, they thought they won last night. Here's a clip of Jill Biden telling-

   24. DSDavid Sacks22:26

       First Lady MacBeth.

   25. JCJason Calacanis22:28

       Telling Biden he did good.

   26. JCJill Biden (campaign event clip)22:31

       Joe, you did such a great job. You answered every question, you knew all the- (cheering)

   27. DSDavid Sacks22:39

       (laughs)

   28. JCJill Biden (campaign event clip)22:39

       And let me ask the crowd, what did Trump do? Lied.

   29. JCJason Calacanis22:45

       You're not running. Joe Biden's not running.

   30. DSDavid Sacks22:48

       (laughs)
4. 36:43 – 42:43

   Why tech job postings are down significantly from pre-COVID levels

   1. JCJason Calacanis36:43

      All right. There's a really interesting, um, trend going on that I wanted to get everybody's thoughts on, AI and corporate efficiency killing tech jobs. Let's pull up this chart. Uh, this, uh, somebody shared in our group chat from Fred. These are software developer job postings on Indeed from early 2020, that's pre-COVID obviously, to this year. Look at this. The number of job postings for developers has absolutely come crashing down by 80%. This is below pre-COVID numbers. In addition to this, we talked about getting back to work, Penske and Dell saying you have to be back in the office starting this fall four days a week, or resignation accepted. What are you seeing in your portfolios? Any thoughts on this trend of the major jobs, the high-paying elite jobs, Chamath, maybe going away? This is a trend we haven't seen in our lifetimes. There's always room for elites at elite companies and now it seems even the demand's gone. What's going on here?

   2. CPChamath Palihapitiya37:49

      Mm, I just think that company formation has changed after the end of ZIRP. And so I think that that chart speaks more to a couple of things. One is that where typically people were hiring for software engineering roles, which was a lot of SaaS businesses, contracted a lot, and the net new amount of SaaS startups also, I don't think, materially increased. And so that was one big switch. Second is you went through a whole bunch of layoffs at m- the big cap tech companies as they re-established profitability. I think when you layer those two things, that explains that chart more than the emergence of AI tools. Just practically what I see is all of these AI tools can add a 10 or 15% lift to an individual person if you are in a traditional organization. I don't think these things are the panacea that they're marketed as being. These are not creating 10X engineers. At some point, these tools will be good enough, and at some point, companies will get started from scratch that use those tools and create a level of productivity at one-tenth of the workforce, but that hasn't happened yet. So I think that that chart is more about layoffs and contraction in tech more than anything else.

   3. JCJason Calacanis39:00

      Yeah, and just to explain this chart a little bit more in-depth, the 100% number back in, uh, 2020, uh, then boosts up to two and a half times that amount and then comes back down to 60% of that amount, so it's an index. Uh, we don't actually have the raw numbers here of the number of developer jobs open or closed. Sacks, your thoughts. What are you seeing in company formation, to Chamath's point? And overall, what do you think this means for the American elite workforce, people with, you know, really high end degrees and really high end salary expectations?

   4. DSDavid Sacks39:33

      Well, I agree with Chamath that it's just too soon for AI to be responsible for this. I mean, the, um, AI productivity gains are just starting and we're not really seeing job elimination yet, or job replacement. I think this is just a symptom of economic weakness, and the main reason for the economic weakness is the rate hike cycle. Remember, we went from practically 0% interest rates to 5.5% in one year. And a lot of people were expecting that to cause a recession. That's normally what happens when you get a very, very rapid rate hike cycle, is it sucks liquidity out of the economy and it contracts economic activity and you get a recession. I was one of the people who thought that, and that didn't happen. I think one of the reasons it didn't happen is there was a huge backlog of jobs, of, of sort of, um, open job postings. I think originally it started at 12 million open jobs. Well, what's happened is, the rise in interest rates has created some economic weakness, it's caused a reduction in liquidity and investment, it's created more pressure on companies to be profitable. And so all those things have cascaded through and it, what it's doing is it's burning off this job backlog. So we haven't necessarily seen unemployment yet, but we're seeing a reduction in the, the job postings. And I, I think that's what's going on and I would just say that the economy may not be in recession yet, but I just think it's weak and, um, and this is just one metric showing that.

   5. JCJason Calacanis40:57

      Freeberg, you're, you know, running a company now, you're doing hiring qualitatively. What are you seeing in terms of hiring from when you were running Production Board and you had many companies, people were fighting it out in the peak ZIRP era, you know, and giving people incredible, incredible, d- you know, compensation packets, uh, packages. And then you also had, like, sort of people trying to take talent and maybe talent hoarding was going on. It seems to have dramatically switched. We've been putting job postings out and seeing hundreds of people apply for jobs that we would get dozens previously. What are you seeing? What's the game on the field in terms of hiring?

   6. DFDavid Friedberg41:31

      I'm not really, I don't really have a great perspective on this. We're, we hire very specialized people at Ohalo-

   7. JCJason Calacanis41:37

      Mm.

   8. DFDavid Friedberg41:38

      ... and in this special, specialty field we're in, we're the best in the world, so everyone wants to work here.

   9. JCJason Calacanis41:43

      Got it. Uh, any-

   10. DSDavid Sacks41:44

       I'll, I'll answer your question, J Cal.

   11. JCJason Calacanis41:45

       Yeah.

   12. DSDavid Sacks41:45

       I mean, what I see from our portfolio of companies is hiring's got easier. It is way higher-

   13. JCJason Calacanis41:50

       Much easier.

   14. DSDavid Sacks41:50

       ... much easier to hire devs right now, software developers, than two years ago. No question about it.

   15. JCJason Calacanis41:55

       Yeah. A- and I think globalization also having a big impact here. I, I honestly, my theory on this is that because there's not three competing offers, Sacks, from big tech when you're a startup (laughs) , you know, trying to land somebody and you're like, "We have to beat Uber or Airbnb or Coinbase," you know, like, a mid-market company, or the Google offer, the Apple offer, the Amazon offer, typically, like, a developer would have those three sets of offers. Here's a startup that's willing to give you 1% of the equity, here's a mid-market company, an Uber, an Airbnb, a Coinbase that's offering you 300K, and then here's the, like, incredible $500,000 offer from Amazon or Google. Those offers just aren't there, so then it makes for, uh, the ability for startups-... to hire great talent. This is the best time possible to be a startup. The talent on the field is

5. 42:43 – 54:11

   OpenAI considering for-profit conversion

   1. JCJason Calacanis42:43

      incredible. OpenAI is considering a for-profit, profit conversion, and that means possibly an IPO soon. According to reports, Sam Altman recently discussed this with major shareholders like maybe Microsoft, and it's possible OpenAI will become a for-profit benefit corporation similar to Anthropic or xAI. If you don't know what a for-profit benefit corporation is, a benefit corporation or B corp in the industry means you have a stated mission that the board is responsible for going after, you know, save the whales, uh, provide AI software for all of humanity, whatever it is, in addition to the standard, uh, acting in the interest of all shareholders. And so, this of course means OpenAI, which was valued at 86 billion could IPO at some point. What are your thoughts on this? Uh, we saw the revenue numbers are crushing it. Any thoughts, Chamath, on OpenAI IPOing? Is that a possibility in your mind?

   2. CPChamath Palihapitiya43:38

      I mean, it makes so much sense for them. So, I think they should do it as quickly as possible. We are in the first inning of what should probably be an enormous tectonic shift in technology, and I think if anything, whoever wins in the first inning usually isn't the one that's winning by the ninth inning. And so, I would encourage anybody that's winning right now to monetize, get secondaries, take money off the table as fast as possible because the future is unknown. And the more disruptive the technology is, the more entropy there is, which means that there's going to be more changes, not less. And again, I would just look at search as an example. I would look at social networking as an example. When you look 20 years later, the people who captured all the value were not the ones at the beginning who everybody thought was gonna win. And so, I think if it plays out similarly, it's important for the people that are in the lead today to recognize it's too early and they should monetize their perceived success as quickly as they can to the largest magnitude possible.

   3. JCJason Calacanis44:37

      In other words, y- you might be OpenAI, you might be-

   4. CPChamath Palihapitiya44:40

      Grab the bag.

   5. JCJason Calacanis44:40

      ... you might be Myspace.

   6. CPChamath Palihapitiya44:42

      Grab the bag.

   7. JCJason Calacanis44:42

      Yeah, grab the bag if you can.

   8. CPChamath Palihapitiya44:43

      Grab the bag. Grab the bag. But what is it called? Secure the bag. Sorry, secure the bag.

   9. JCJason Calacanis44:46

      Secure the bag. Yeah.

   10. DSDavid Sacks44:47

       Yeah, yeah, yeah.

   11. CPChamath Palihapitiya44:48

       (laughs)

   12. JCJason Calacanis44:48

       What are you, what are your thoughts here?

   13. CPChamath Palihapitiya44:49

       Secure the bag.

   14. JCJason Calacanis44:49

       Sacks, on a potential IPO by Sam and the team at OpenAI and the impact that might have on the wider space?

   15. DSDavid Sacks44:56

       Well, for a long time on this show, I've been saying that you need to clean up that, you know, convoluted Byzantine corporate structure with all the line charts everywhere. Uh, that, that structure is what created all the problems with this nonprofit board that they had. You've got a for-profit entity reporting to a nonprofit board. It created a culture clash and as we've said before on this show, it's not a good idea for a startup to innovate on structure. Using a tried and true C corp is the way to go. You're ready for IPO if you ever get that far. You don't need to, like, restructure the company.

   16. JCJason Calacanis45:29

       Mm-hmm.

   17. DSDavid Sacks45:29

       It was always funky and weird that OpenAI had this nonprofit structure and really, they should have fixed it years ago and, and like I said, given Elon his equity, given Sam his CEO package, and they didn't do either one of those things. And so now, they're left with this crazy org chart that's a mess and I'm not even sure, I mean, I think it's, I think you would want to clean it up as soon as you can because I think my sense is that the longer you wait on these things, the harder it actually gets, but-

   18. JCJason Calacanis45:59

       Yeah, more calcified these things get, yeah.

   19. DSDavid Sacks46:01

       I'm not sure how easy it is to actually fix this thing. But yes, they should fix it, they should make it a standard C corp, they should make things right with Elon because he provided the first 40 million-

   20. JCJason Calacanis46:12

       Seed capital. Yeah.

   21. DSDavid Sacks46:14

       ... of seed capital. They should make it right with Sam, he should get his CEO comp, and then they should IPO so that the public actually has the ability to invest in this AI wave and ride this wave as, you know, the same way they did with the whole dot-com boom in the late '90s. I mean, a lot of those dot-com companies didn't work out, but some of them did.

   22. JCJason Calacanis46:34

       Yeah.

   23. DSDavid Sacks46:34

       Amazon, Google and so on. And the public had the opportunity to participate in that huge inno- wave of innovation. And I think it'd be good if something like that happened here.

   24. JCJason Calacanis46:41

       We still need more public companies, right?

   25. DSDavid Sacks46:43

       Yeah.

   26. JCJason Calacanis46:43

       Friedberg, you got a thought here before we go into super intelligence and Ilya's new company?

   27. DFDavid Friedberg46:49

       I don't care if OpenAI's for profit or non-profit, affects a few people that put money in and the employees, doesn't affect anyone else, so.

   28. DSDavid Sacks46:56

       Well, no, it'll-

   29. DFDavid Friedberg46:56

       Whatever.

   30. DSDavid Sacks46:56

       ... affect the public if they can buy shares and they get to participate.
6. 54:11 – 1:03:20

   The problem with safety-focused AI startups

   1. JCJason Calacanis54:11

      all of this. Ilya announced his new startup, finally. It's called Safe Superintelligence Inc., or SSI. He, uh, was obviously an OpenAI co-founder, formerly their chief scientist and co-head of super alignment. Last month, he announced he was resigning from OpenAI after a decade with the company. And you remember, he was on the board that helped orchestrate Sam Altman's firing, um, and then he reversed course a few days after and expressed regret in it. Everybody was asking, "Where's Ilya, uh, during all of this?" on Twitter.The co-founders in SSI include Daniel Gross, a YC partner and Pioneer Labs co-founder and OpenAI engineer, Daniel Levy. Company's goal right now is in the title, develop a safe superintelligence. Here's what Ilya told Bloomberg, "The company is special in that its first product will be the safe superintelligence, and it will not do anything else until then." Friedberg, is this superintelligence, making safe superintelligence a great business model? Or is this something else? It's a little bit confusing to come into the market and compete with a throttle or a governor, I guess, on your startup. At least that's what some people are discussing. So what are your thoughts?

   2. CPChamath Palihapitiya55:26

      I have no idea. I don't know what these guys are doing. Have you guys looked at this company?

   3. JCJason Calacanis55:29

      Okay. (laughs)

   4. CPChamath Palihapitiya55:29

      I haven't seen anything. I don't know what they're doing.

   5. JCJason Calacanis55:30

      Well, I mean, we're just basing it on reports.

   6. DSDavid Sacks55:32

      I'll, I'll answer that question, if you want.

   7. JCJason Calacanis55:33

      Yeah, okay. Uh, Friedberg, another, uh, assist. (laughs)

   8. CPChamath Palihapitiya55:36

      Sacks is, Sacks is good for this.

   9. JCJason Calacanis55:36

      Okay, quick bounce pass to Sacks. Sacks-

   10. DSDavid Sacks55:38

       Yeah.

   11. JCJason Calacanis55:39

       ... give us your opinion.

   12. DSDavid Sacks55:41

       Let me, uh, caveat what I'm about to say by, by saying that I have not heard the pitch directly for this company. I've only read what you've read in, in the press, that what they're trying to do is the safe superintelligence. And I'm not bullish about that pitch because I think it, it makes the company a little bit schizophrenic. It's working at cross-purposes with itself. On the one hand, you're a new company, which means you're behind. You've got to catch up with OpenAI or Google, these other companies that now have been creating, you know, models for years. So you've got to move very fast. On the other hand, you're saying you're gonna basically make this very safe. Well, to be frank, safety concerns are a brake pedal. They don't help you move faster. They make you move slower.

   13. JCJason Calacanis56:25

       Yes, it's a governor, yeah.

   14. DSDavid Sacks56:26

       And in fact, I think that this is the main reason why Sam Altman either kicked these people out of the company or, or starved their resources until they left. Remember th- when a bunch of these people left OpenAI, they said that, "Hey, we were originally promised 30% of the computing resources by Sam, and then he reneged on that promise, didn't give us what we needed," so they all left. Well, I think that was, uh, that wasn't by accident. I mean, I think that Sam wants to win. He wants to develop AI as quickly as possible, specifically AGI, and he had this group inside the company that, frankly, was a lobby for moving slower. And so-

   15. JCJason Calacanis57:03

       So now they have their own startup based on that group-

   16. DSDavid Sacks57:05

       So now they moved, they moved-

   17. JCJason Calacanis57:05

       ... that he kicked out. (laughs)

   18. DSDavid Sacks57:07

       Right, and so I don't, but I don't think that's a recipe for winning because-

   19. JCJason Calacanis57:10

       No. (laughs)

   20. DSDavid Sacks57:10

       ... you're the guys who want to move slower.

   21. JCJason Calacanis57:12

       It would be like taking the DEI group from Twitter and having them start a new Twitter. (laughs)

   22. DSDavid Sacks57:16

       Well, I think that's a little bit harsh-

   23. CPChamath Palihapitiya57:17

       Yeah.

   24. DSDavid Sacks57:17

       ... 'cause I do think that, by all accounts, Karpathy is, like, a top, top-notch technologist, and he's one of the leaders in the space.

   25. CPChamath Palihapitiya57:27

       Yeah, of course.

   26. DSDavid Sacks57:27

       But I do think that he's gonna be hamstrung by his own concerns about safety. And I think this is maybe the, the tragic situation is we're gonna have this competition by all these different companies to advance AI, and the companies that care about safety more than others are gonna lose. And so you have this Darwinian effect going on where there's gonna be a race to AGI. And I think that is genuinely a little bit scary for where this, this all leads us. But I tend to think that it's not gonna be solved by trying to impose the, the safety governor, as you said. I think maybe the best you can do is impose a truth governor. So, you know, Elon says that, "We're gonna make sure that our model at xAI, the Grok model, is scrupulously honest." It's not gonna lie to you."

   27. CPChamath Palihapitiya58:16

       Hm.

   28. DSDavid Sacks58:16

       "And we're gonna make sure that our models are going to be truthful." And I think maybe that's the best you can do is, is advance AI to be truthful. But when you start injecting these other safety concerns, I just think it slows you down and hamstrings you.

   29. JCJason Calacanis58:28

       I think the best way (laughs) to hit truth is to cite your sources. I have been putting into... And I don't know if you've... Have you played with 4o yet or Claude's new sonnet, Chamath? Have you-

   30. DSDavid Sacks58:37

       Yeah.
7. 1:03:20 – 1:14:59

   EU charges Microsoft with antitrust violations for bundling Teams into Office

   1. DFDavid Friedberg1:03:20

   2. JCJason Calacanis1:03:20

      All right. Uh, we've talked about Microsoft and the bundling issues a number of times here. Sacchoo had a spicy, uh, take on this. Well, the EU just charged Microsoft with antitrust violations over how it bundles Teams, their "Slack killer" into Office. Here's a quick chart. Microsoft Teams obviously was bundled. Everybody has it automatically with Office. You don't get a choice. And they rocketed to 75 million members in 2022. Slack's 12 million. You've obviously got a lot of, uh, thoughts here, I'm sure too as well, Chamath, since you were the early investor in this. Looks like Salesforce, uh, just got a big win, uh, Benioff gave some commentary on X. "Microsoft excels with bundling. It's not... it's their not-so-secret weapon for dominating new markets. We know the playbook, Office plus Teams, Windows plus Explorer, Azure plus Visual Studio, 365 plus OneDrive and Xblos, plus game... Xbox Plus Game Pass." Here's a clip of Sax discussing this on episode 113 of Your All-In podcast.

   3. DSDavid Sacks1:04:24

      If Microsoft can basically clone the, sort of the, the breakthrough innovative product, you know, they'll... say they do one every year, and then they put a crappy version of that-

   4. CPChamath Palihapitiya1:04:34

      10% worse.

   5. DSDavid Sacks1:04:34

      ... in their bundle.

   6. CPChamath Palihapitiya1:04:36

      Yeah.

   7. DSDavid Sacks1:04:36

      Yeah, 10%, 20% or 50% worse, but they give it away effectively for free as part of the bundle, and then they basically pull the legs out from under that other company so it can't be a, a vibrant competitor. And then the next year they'll just raise the price of the bundle, right? And they've done that with Slack, they've done that with Okta, they've done that with Zoom. Can we have a vibrant tech ecosystem, at least in B2B software, if Microsoft can just keep doing that indefinitely?

   8. JCJason Calacanis1:05:01

      All right, Sax, you heard your quote there. I- I'm guessing you're not shocked by this action.

   9. DSDavid Sacks1:05:07

      Well, I think the EU made the right decision here. They basically sided with Salesforce who made the complaint and said that Microsoft was, uh, engaged in illegal bundling by combining Microsoft Office and Teams. And the reality is, Microsoft Office is a product that every company has to have, every... certainly every enterprise has to have. And by bundling, it means that that enterprise receives the team's product for free until, of course, the price of the bundle goes up the next year, which it has, uh, just about every single year. So what that does is, when that enterprise is evaluating the choice of do we use Teams or do we use Slack or, for example, Glue or some other tool, Teams on the margin appears to be free, whereas Slack is something you'd have to pay for seats. And I think that is, that is illegal bundling. You know, when you have a monopoly in one product and you systematically use it to keep adding new products that, again, on the margins appear to be free because you've bundled them. And I think the EU has done the right thing here, which is push to end the bundling. Every single product needs to have its own a la carte pricing, and when you add together the a la carte prices, it should equal the price of the bundle. So in other words, you don't get anything on the margin for free. The customer needs to have the discretion to choose what it wants. If we don't do that, I do think that Microsoft will use the power of the bundle to systematically dominate enterprise software, and they won't take on everybody at once but, like I said, they'll... every year they'll add a new-

   10. JCJason Calacanis1:06:44

       Yeah.

   11. DSDavid Sacks1:06:44

       ... product to the bundle.

   12. JCJason Calacanis1:06:46

       Chamath, what's the, uh, what's the middle ground here between the interest of consumers, which is, hey, I'm getting free (laughs) a free version of Slack-

   13. DSDavid Sacks1:06:54

       It's not free. It appears to be free on the margins because it's now part of the bundle, but then they raise the price of the bundle the next year.

   14. JCJason Calacanis1:07:00

       Correct. They, they boil the frog. So, seemingly-

   15. DSDavid Sacks1:07:03

       So once they've killed, once they've-

   16. JCJason Calacanis1:07:04

       Yeah.

   17. DSDavid Sacks1:07:04

       ... pulled the legs out, pulled the rug out from under their competition-

   18. JCJason Calacanis1:07:08

       Yes.

   19. DSDavid Sacks1:07:08

       ... and that competitor is no longer viable, now they can raise the price of the bundle.

   20. JCJason Calacanis1:07:12

       Okay. And so-

   21. DSDavid Sacks1:07:12

       It's kind of like dumping, uh, in a way. I mean, this is a very old antitrust argument.

   22. JCJason Calacanis1:07:16

       When you would dump product in the market to kill a competitor, or you would price under your cost to kill a competitor, right?

   23. DSDavid Sacks1:07:22

       Yeah, you dump to basically drive a competitor out of business because there's large cost of entry. There's large capex required to create a new competitor. And, um, and this is, this is basically what they're doing, is they appear to give you-

   24. JCJason Calacanis1:07:36

       So, Chamath-

   25. DSDavid Sacks1:07:36

       ... they appear to give you the, the Slack clone or whatever for free, but then once they've, uh, pulled the, the rug out, they'll increase the price of the bundle.

   26. JCJason Calacanis1:07:46

       So Chamath, what's the balance here between say, I don't know, Apple giving away a free note pay- note-taking app or a free journaling app to consumers, saying, "Hey, consumers, get this benefit of free product," uh, versus the bundling concept here with, "Hey, we'll give it to you for free, but eventually we're going to boil the frog." Wh- wh- what's your thought of how to adjudicate this or to execute on it, uh, in the best interests of consumers?

   27. CPChamath Palihapitiya1:08:12

       Microsoft- Microsoft has been bundling to- bundling products to kill competitors for 40 years. The, the 10 years that they didn't do it was the 10 years when Steve Ballmer was in charge, during which there was a legal document between Microsoft and the Justice Department, a consent decree, that prevented them from doing it. That consent decree came to be because of this exact strategy. And the most famous example that was the tail end of that process was when they used Internet Explorer and they bundled it with, uh, Microsoft Windows and they killed Netscape, right? So there, there's umpteen examples of this. So, I think that they've gone back to their old playbook. It's a playbook that you have to remember, the executives that run Microsoft have been there for 30 and 40 years. They know this play, and they know that it works, and they've been rewarded incredibly handsomely by the public markets, so they're going to keep doing it. Would Slack have sold to Salesforce... Now, look, I'm not complaining, it was a $27 billion acquisition. But the question is, if it were allowed to compete feature for feature, could it have beat Teams? Possibly. Would the board have made... and I was on the board of Slack... a decision to have tried? Possibly. But none of those options were on the table, because when you see a product, it doesn't matter how inferior it is, get bundled in, it's kind of DOA, and then, you know, you're on a melting iceberg. And so you have to make a very quick decision to preserve enterprise value. So, I think what this comes down to is the, the FTC and the DOJ need to dust off that old consent decree, read it, and figure out whether this makes sense again. It seems like folks in the EU have more recently read that consent decree than American regulators have.

   28. DSDavid Sacks1:09:56

       Look, what we've said all along is that the right approach to antitrust is to stop anticompetitive tactics. Bundling is at the top of the list. Instead, what they've stopped is all M&A, which is actually bad for the ecosystem because you-

   29. JCJason Calacanis1:10:09

       It's terrible.

   30. DSDavid Sacks1:10:09

       ... you deny risk capital reward, and you need that reward in order to induce the next stage of risk-taking. So again, I think this was a good decision by the EU regulators, and the, um, competition authorities in the US should actually be looking to this. Again, it's a better approach than stifling M&A.

Episode duration: 1:21:35