Scarlett Johansson vs OpenAI, Nvidia's trillion-dollar problem, a vibecession, plastic in our balls

Jason Calacanis 0:00 Now, I just wanna be clear here. W- I'm trying to do a docket and, uh, we have to put the kibosh on this insanity of the soap opera that is becoming OpenAI, Sax. Because every week, it's three, four, five stories. Have you seen what's happened this week?

Chamath Palihapitiya 0:17 Yeah, of course.

Jason Calacanis 0:18 We gotta catch the audience up here. Let's catch the audience up on what's happened here. (instrumental music plays) This week on General AI Hospital ...

Chamath Palihapitiya 0:27 (laughs)

Jason Calacanis 0:27 ... is Sam Altman's job security in jeopardy?

Chamath Palihapitiya 0:30 (laughs)

Jason Calacanis 0:31 Whose data was stolen this time?

Chamath Palihapitiya 0:33 (laughs)

Jason Calacanis 0:34 What did Ilya see?

Chamath Palihapitiya 0:36 (laughs)

Jason Calacanis 0:36 Why isn't he talking about it? And with our special guest-

Chamath Palihapitiya 0:40 (laughs)

Jason Calacanis 0:40 ... will our special guest get her revenge? General AI Hospital.

Chamath Palihapitiya 0:45 (laughs)

Jason Calacanis 0:45 Brought to you by the drama queens at OpenAI.

David Sacks 0:48 Wow.

Jason Calacanis 0:50 Did that land? (laughs)

David Sacks 0:50 (laughs)

David Friedberg 0:51 Who made that? That was great. Did you make that?

Jason Calacanis 0:54 Yeah, that was me.

Chamath Palihapitiya 0:54 10 outta 10.

David Friedberg 0:55 That was great.

Jason Calacanis 0:55 That was, that was my idea, but Nick's and Lon's execution. So shout out to-

David Friedberg 0:59 Nice work, team.

Jason Calacanis 0:59 ... Lauren Harris and Nick Kalikanis.

Chamath Palihapitiya 1:00 You f- finally landed the-

Jason Calacanis 1:01 Hey.

David Friedberg 1:02 Yeah.

Chamath Palihapitiya 1:02 ... the plane.

Jason Calacanis 1:02 Broken clock's right twice a day.

David Friedberg 1:04 Took four years.

Chamath Palihapitiya 1:05 (laughs)

David Friedberg 1:05 That was awesome.

Jason Calacanis 1:06 A broken clock is right twice a day, the Jason Kalikanis story.

Chamath Palihapitiya 1:09 (laughs)

David Friedberg 1:09 That's my lullaby on the-

David Sacks 1:12 I'm going all in. Let your winners ride. Rain Man, David Saag. I'm going all in.

Chamath Palihapitiya 1:19 And I said we open source it to the fans and they've just gone crazy with it.

David Friedberg 1:23 Love you bet, Heidi.

David Sacks 1:24 Queen of quinoa. I'm going all in.

Jason Calacanis 1:27 But seriously, there was this, uh, big drama, Sax. I don't know if you saw this. But, uh, uh, you couldn't have missed it with the ScarJo. So, they made an emergency, they had an emergency meeting, got all the developers together and they've reset. They took Scarlett Johansson out and they got a new person. I think arguably better. Um, Freeberg, I'm curious-

Chamath Palihapitiya 1:44 Oh, wow.

Jason Calacanis 1:44 ... your take on this. It's a better-

Guest 1:46 Hey, Judge GBD, how's it going?

Chamath Palihapitiya 1:48 Good. Good. Yeah, good week. What's going on?

Guest 1:51 I'm doing fine. Uh, I'm gonna be a father real soon.

Jason Calacanis 1:54 (laughs)

David Sacks 1:54 (laughs)

Guest 1:54 Uh, and I think I can have your help with some dad jokes. Um, I'm gonna tell you a joke and you tell me if it passes as a dad joke.

Chamath Palihapitiya 2:03 I've never done that before.

Guest 2:05 All right.

Chamath Palihapitiya 2:05 (laughs)

Guest 2:05 What do you call a giant pile of kittens?

Chamath Palihapitiya 2:09 Give it to me.

Guest 2:10 A meow-ntain.

Chamath Palihapitiya 2:13 No, didn't quite land.

David Sacks 2:15 (laughs)

Jason Calacanis 2:15 All right. There it is, folks. If you want, you can switch to Saxypoo. So just go into OpenAI-

Chamath Palihapitiya 2:20 You're saying they stole my voice now?

Jason Calacanis 2:22 Yeah, they stole yours. Go into OpenAI, go to Voices and then just pick Saxypoo.

Chamath Palihapitiya 2:27 (laughs)

Jason Calacanis 2:27 It's right there between Putin and Tucker. Putin, Saxypoo, Tucker.

David Sacks 2:33 (laughs)

Chamath Palihapitiya 2:33 (laughs)

Jason Calacanis 2:33 You can find all your favorite MAGA guests on the number one MAGA program, All-In Podcast. Here we go. All right, we're off to a strong start here. Everybody's in a good mood. Let's, uh, let's keep the good times rolling

Jason Calacanis 2:46 here. And let's go over this ScarJo saga. Uh, to recap, (laughs) if you're living under a rock, this week it came out that OpenAI, specifically Sam, had contacted Scarlett Johansson multiple times about lending her voice for one of OpenAI's chatbots. Obviously, you know, she famously was the voice of Samantha in the awesome film, Her, and according to ScarJo, Altman told her she could, "Bridge the gap between tech companies and creatives and help consumers to feel comfortable with the seismic shift concerning humans and AI." And that her voice "Would be comforting to people." Although she declined the offer, OpenAI released a chatbot named Sky, which had a similar voice to ScarJo's. According to ScarJo, her friends and family thought the voice was her, she released a statement, yada yada. On May 13th, the day OpenAI launched ChatGPT-4o, Omni, which we talked about last week, Altman tweeted "Her," a reference to the film obviously. Now ScarJo is threatening legal action against OpenAI. Altman put out a statement apologizing and saying the voice was never intended to resemble hers. His quote, "We're sorry to Ms. Johansson that we didn't communicate better." OpenAI showed documents to the Washington Post that confirmed the voice was provided by a different actress who is anonymous. Post reporters also spoke to the unnamed actress' agent, who confirmed the story. I guess, Sax, you sent us a comparison clip. Maybe we start there and see what we think?

Chamath Palihapitiya 4:15 Yeah. Do, do you guys think they sound the same?

Guest 4:17 I can understand and generate human-like text pretty well. It really depends on what you're looking for in an assistant, what specific tasks.

4:26 When I was like, "Oh, sexuality." Like, it was like open my eyes to, like, some other thing. Samantha.

David Sacks 4:36 Lay- Where'd you get that name from?

Guest 4:38 I gave it to myself, actually.

Jason Calacanis 4:40 What do you think?

Chamath Palihapitiya 4:40 I think it sounds pretty darn similar.

Jason Calacanis 4:43 Dead-on.

Chamath Palihapitiya 4:44 I mean, I don't know if it's dead-on. It's, honestly, it sounds like a digitally altered version of her voice.

Jason Calacanis 4:50 Right.

Chamath Palihapitiya 4:50 That's what it sounds like to me.

Jason Calacanis 4:51 Sounds like they didn't get it perfect, right.

Chamath Palihapitiya 4:53 Well, no, it sound, it sounds like-

Jason Calacanis 4:53 Like they got it to what? 90%?

Chamath Palihapitiya 4:55 ... it sounds like it was her voice but then-

Jason Calacanis 5:00 Okay.

Chamath Palihapitiya 5:00 ... they changed it. So either that or they hired a voice actor who sounds like her, and that's what the company has said is that they hired a voice actor. But they won't tell us who the voice actor is, they said because of privacy concerns. Which doesn't quite make sense to me, because when you hire an actor, they want the credit, you know?

David Friedberg 5:19 Yeah.

Chamath Palihapitiya 5:20 So-

Jason Calacanis 5:21 Get more work.

Chamath Palihapitiya 5:21 ... they, the company could just clear this whole thing up by saying exactly who the voice actor is, and why wouldn't the voice actor want that, you know, want that thing?

David Friedberg 5:30 Because she doesn't exist, dude.

Chamath Palihapitiya 5:32 (laughs)

Jason Calacanis 5:32 Oh. Uh-oh. Back to the ... Bro, Q the general OpenAI bum, bum, bum. Wait, they made this actress up? (laughs)

David Friedberg 5:42 I mean, she doesn't exist. Of course it's a-

Jason Calacanis 5:44 (laughs)

David Friedberg 5:44 ... a digitally altered version of ScarJo, and they got caught. Okay? Cookie jar.

Chamath Palihapitiya 5:50 This is why Sam's call to Scarlett's agents, or her, two days before they launch is such a damning piece of evidence, because it sounds like he's trying to shut the barn door on something they've already done, right? They've got this demo ready.They're gonna launch it in two days. They're realizing maybe they don't have the rights to use her voice-

David Friedberg 6:10 Mm-hmm.

Chamath Palihapitiya 6:11 ... so you have to contact her to get those rights. But anyone who knows anything about Hollywood knows you're not gonna be able to make a deal with a major star to use their name and likeness in two days. It's impossible. So this seems like a really crazy thing to do. I mean, I think the mere fact that he contacted them and then tweeted out her, which shows that Scarlett was on the brain, those are really damning pieces of evidence, I think, in this lawsuit. And, uh, I think it's gonna feed into her case.

David Friedberg 6:38 I think, look, here's the thing. This company is gonna go down in the history books, in one part because the technical inventions that they've created are just next level and frankly, created an entire industry, and I think they deserve a ton of credit for that. But they're also gonna be written into the history books for two other things that are probably less aspirational. I think the first is that there's just all kinds of dustups and unnecessary drama that just seem to kick around every few weeks or months, and then the second is the sheer quantum of value capture that the employees have seen through secondaries before a fully functional business has been really created. And so I think it explains why folks circle the wagons consistently. It's a very, I think it's a very rational organization. They're technically ahead of everybody else. A lot of people want to put in money at, you know, crazy prices. A bunch of that value is transferred immediately to the employees who circle the wagons and do what's necessary to keep the taps flowing, and I think that that explains the whole thing. And I, and I think that-

Chamath Palihapitiya 7:49 Yeah.

David Friedberg 7:49 ... that explains many Silicon Valley companies, quite honestly.

Jason Calacanis 7:53 Circle the wagons, defend the company, sell your shares in secondary at 90 billion to Thrive or whoever. What's your take, Friedberg, on all of this craziness and drama?

Guest 8:03 I think what we will see over time is that rather than have the ability to sue for their likeness, a lot of AI that is like a celebrity, the value of it will arise from the celebrity's endorsement, not actually using the celebrity's features. So without the endorsement, I know everyone kind of wants to point to this idea of likeness, but I think that there's something about the authentic aspect of having the celebrity actually endorse and provide their, their signature, their stamp on it. Restaurants are a good example. Some celebrity chef says, "I was involved in making this menu." That's a lot different than mimicking the celebrity chef's menu from his restaurant, putting his or her name and brand on it. There's a bunch of videos on YouTube now, I don't know if you guys ever, you guys probably don't watch these, but I love watching these videos where, like, music producers make tracks and how they do it. And so many of these producers now are using AI tools, taking samples off of old records or other tracks and then telling the AI, "Make something that sounds like this or looks like this, but isn't like this." And so there's enough of a transformation happening that it isn't a direct likeness, and then they're able to create entire vocal tracks without needing a singer or without needing the celebrity singer. So they make like-

David Friedberg 9:18 So you're in the, you're in the much ado about nothing camp on the ScarJo thing.

Guest 9:21 Yeah. I'm in, I'm in the, like, like the content itself, I think, is probably less, like, compelling. "Oh, go, go after her because the voice sounds the same." But I do think that there's this element of, like, what if you could then say, "Hey, you know, Britney Spears actually lent her voice to this track," even though it was digitally rendered.

David Friedberg 9:37 So do you think if she, if she sues OpenAI, do you think it should just get thrown out? It's not a real case.

Guest 9:43 No, I think there's probably gonna be a lot of discovery, to Sacks' point, that's gonna show that they probably did-

Jason Calacanis 9:47 Yeah, that discovery is gonna be juicy.

Guest 9:48 ... deliberately try... Yeah.

David Friedberg 9:49 Yeah. No, no, no, I'm not, I'm not saying that. I'm saying, I'm asking you more that, yeah, even if they find it, your point is it shouldn't matter. My point is do you think-

Guest 9:56 Yeah, I don't, I don't think it will-

David Friedberg 9:56 ... that it should be thrown out?

Chamath Palihapitiya 9:57 Well, I don't know. I mean, hold on. Let's say you're casting a movie and, you know, you can't get Scarlett Johansson for it, and so you tell the casting director, "Get me a Scarlett Johansson type." I think you can do that, okay? Obviously. You can't-

Guest 10:07 Yeah.

Chamath Palihapitiya 10:07 ... you can't use her name, you can't use-

Guest 10:09 Right.

Chamath Palihapitiya 10:09 ... her likeness, but you could hire a different actor-

Guest 10:11 Yeah.

Chamath Palihapitiya 10:11 ... who might look or sound like Scarlett Johansson. If the company actually did that, and they did it nine months ago, this is what the statement they put out, I think they've got a decent defense.

Guest 10:22 Yeah.

Chamath Palihapitiya 10:22 But-

Guest 10:23 'Cause they may, they may, they may have done-

Chamath Palihapitiya 10:25 ... to, to Maus' point, I don't know if we believe that. I mean, again, why, why don't you just put out the name of the-

Guest 10:29 Yep.

Chamath Palihapitiya 10:29 ... actual actor, that voice actor-

David Friedberg 10:31 Well-

Chamath Palihapitiya 10:31 ... that you used?

Jason Calacanis 10:32 And there's a very simple test here. If the pers- if there's confusion amongst the public, which is what ScarJo put in her letter, and that was a legally written, deftly written letter to set up a huge settlement, because she said, "The morning this came out, all of my friends said, 'Oh my God, congratulations on your ChatGPT deal. This is great.'" The public being confused is the key issue here, and there's something called the right to publicity. This is basically how celebrities defend their rights. It's happening all the time to podcasters, by the way. There was a company that put me in their ads based on something I said in a show, and then they put ads against it. And Huberman's been having this happen. Joe Rogan's had it happen.

David Friedberg 11:11 It's happening. It's happening to me right now. I, I'm in the middle-

Jason Calacanis 11:13 Oh, yeah, it happened to you too.

David Friedberg 11:13 ... of this crazy thing with Facebook, and they've been doing a very good job, the team at Meta. Ashley, thank you. But hundreds and hundreds and hundreds of automated accounts pretending to be me, selling all kinds of random stuff. It's predominantly on WhatsApp and Facebook and Meta, and I don't know what to do because I, we worked together with them. We shut it down. I've actually had to reactivate my Facebook and Instagram accounts which were dormant so that we could actually have them be verified, so that then it's easier to shut them down, but it is an impossible task when somebody's impersonating you-

Jason Calacanis 11:46 Yeah.

David Friedberg 11:47 ... to fight it, at least in my experience.

Jason Calacanis 11:49 In this case-

David Friedberg 11:49 It's been a month and we, it's just like-

Jason Calacanis 11:51 But it, it-

David Friedberg 11:51 ... every hundred we take down-

Jason Calacanis 11:52 Yeah, it's, it's whack-a-mole.

David Friedberg 11:52 ... another thousand pop up. It's a whack-a-mole.

Guest 11:54 But in both, in both of those cases, you guys have your exact image of you being shown-

David Friedberg 11:58 Yes.

Guest 11:58 ... to sell, to sell stuff. I think that in this case, it's also unique to ScarJo because she was the voice from her.

Chamath Palihapitiya 12:05 Yes.

Jason Calacanis 12:05 There is no, like, if this were, like, a voice sort of like Cameron Diaz or sort of like Julia Roberts-

Chamath Palihapitiya 12:09 (laughs)

Jason Calacanis 12:09 ... it wouldn't be as big a deal because it would certainly got some differences to it. But it's because they're trying to mimic the movie Her.

Chamath Palihapitiya 12:15 Well, didn't-

Jason Calacanis 12:16 So this, the-

Chamath Palihapitiya 12:16 ... didn't Meta use Morgan Freeman when, like, Zuck created, like, an AI or something as a project? Do you guys remember that?

Jason Calacanis 12:22 Yeah, and-

Chamath Palihapitiya 12:22 Wasn't Morgan Freeman the voice?

Jason Calacanis 12:23 ... they paid for it. And, uh-

Chamath Palihapitiya 12:24 They paid for it?

Jason Calacanis 12:25 ... there's a company, Speechify, I'm not an investor or anything like that, but they have Gwyneth Paltrow as a licensed voice to read your stuff. So if-

Chamath Palihapitiya 12:33 They should've just l- they should've just licensed Gwyneth's voice, obvious.

Jason Calacanis 12:35 She, obvious. Like, just whoever wants to get paid, here's the opportunity. If three people say no- But what do you guys think about the fact that they're not trying to say, "This is this person's voice," but they wanna say like, "Hey..." Let's say you just can prompt the AI and say, "Generate a voice that is sort of like movies that are comfortable and calming to people to listen to, and you know, that, that we've s- that, that we think people will be comfortable." And the AI generates something that sounds like ScarJo.

Chamath Palihapitiya 12:59 I've said this before.

Jason Calacanis 13:00 But it's not deliberately trained on ScarJo.

Chamath Palihapitiya 13:02 Prob- You, using a computer to probabilistically copy something is still copying something.

Jason Calacanis 13:07 Yes.

Chamath Palihapitiya 13:07 Come on, guys. Let's not make this too complicated.

Jason Calacanis 13:09 Is the public confused is the only test you need for you.

Chamath Palihapitiya 13:11 What if there's two public actresses-

Jason Calacanis 13:13 Okay.

Chamath Palihapitiya 13:13 ... that both have similar voices and then they both claim, "Hey, you tried to make this sound like me"? What do you do in that case, Jamal? Well, which one did you call two days before the demo? (laughs)

Jason Calacanis 13:21 Yeah, exactly. (laughs) And did the CEO tweet her?

Chamath Palihapitiya 13:23 (laughs)

Jason Calacanis 13:24 I think your whole point about discovery is what is gonna get them in trouble in this case because they were clearly, they were clearly trying to do an impersonation of her, right?

Chamath Palihapitiya 13:31 Yeah.

Jason Calacanis 13:32 Right.

Chamath Palihapitiya 13:32 If they never reached out to Scarlett-

Jason Calacanis 13:35 Yeah.

Chamath Palihapitiya 13:35 ... they could claim it's just a coincidence. But they called her twice.

Jason Calacanis 13:39 Yeah.

Chamath Palihapitiya 13:39 They called her-

Jason Calacanis 13:39 Many more.

Chamath Palihapitiya 13:39 ... some months before and then two days before, which indicates panic.

Jason Calacanis 13:43 Judge Sax, give your verdict. I'm starting a new spinoff show.

Chamath Palihapitiya 13:46 Judge Sax says that-

Jason Calacanis 13:48 Judge Sax says...

Chamath Palihapitiya 13:48 Guilty.

Jason Calacanis 13:49 Okay. Guilty on all charges.

Chamath Palihapitiya 13:51 They called, they called-

Jason Calacanis 13:51 Judge Sax, sentence now. What's the sentence?

Chamath Palihapitiya 13:55 The sentence is that Scarlett Johansson is gonna end up owning more of this company than Sam Altman.

Jason Calacanis 14:00 (laughs)

Guest 14:00 (laughs)

Chamath Palihapitiya 14:00 That's what's gonna happen. Look, they call, they call her two days before. Why do you do that?

Jason Calacanis 14:08 Guilty.

Chamath Palihapitiya 14:08 Because you know you have a problem.

Jason Calacanis 14:10 (laughs)

Chamath Palihapitiya 14:10 And you're trying to put the horse back in the barn.

Jason Calacanis 14:12 Exactly.

Chamath Palihapitiya 14:12 Now what they should've done is as soon as she says no, you just change the voice completely.

Jason Calacanis 14:18 Or you get a fixer.

Guest 14:19 Right.

Jason Calacanis 14:19 Get Michael Cohen in there and get a settlement going. Get some, let's, let's get some, uh, fixer in there to fix it. Uh, okay, listen, enough with OpenAI. Oh wait, there's more sc- (laughs) Oh, geez. It's ruining the docket. I guess we have to talk about the next drama from (laughs) A- OpenAI this

Jason Calacanis 14:37 week. Former employees sign an agreement that they're forbidden forever from criticizing the company or even acknowledging that the NDA exists. If a departing employee declines to sign the document or if they violate it, they can lose all vested equity they earned during their time at the company. In practice, uh, this means ex-employees have to choose between giving up millions of dollars they've already earned or agreeing not to criticize the company in perpetuity.

Chamath Palihapitiya 15:03 Well, I can see why-

Jason Calacanis 15:04 This is a lot of details here. No, no, Jamal-

Chamath Palihapitiya 15:06 Or, or Jamal-

Jason Calacanis 15:06 ... yeah, we'll go to you. Yeah.

Chamath Palihapitiya 15:06 Well, you can see why they wrote that in there. That makes sense if you think, hold on a second, if an employee can leave with, you know, a random copy of, like, some old weights as a starting point to rebuild a model, that could be very valuable or there's all kinds of-

Jason Calacanis 15:21 Well, that's IP. Yeah.

Chamath Palihapitiya 15:22 Yeah, but well, there's all kinds of, like, kind of quasi-confidential information or knowledge or knowhow that you leave a place like that with. So I could see why there was a justification to be very heavy-handed about it. But again, the question isn't whether you're allowed to be heavy-handed. You are. The question is why backtrack and then obfuscate and lie after you get caught? That's- Well, right. What did, well, what do they say?

Jason Calacanis 15:49 ... that's the crime.

Chamath Palihapitiya 15:49 They claim it's an accident once they get caught-

Jason Calacanis 15:52 Yeah.

Chamath Palihapitiya 15:52 ... with their hand in the cookie jar, which like you said, Jamal, is just a heavy-handed agreement. It's in the company's interest to do this.

Jason Calacanis 15:58 Yeah.

Chamath Palihapitiya 15:58 They just say it was an accident, just like the Scarlett thing is an accident or a coincidence. It's just getting hard to believe.

Jason Calacanis 16:04 Just own it and say, "You know what, guys? This is a really valuable company. There's a ton of very valuable trade secret knowhow, IP, confidential information, and we're gonna be extremely..."

Chamath Palihapitiya 16:13 Litigious.

Jason Calacanis 16:13 "... on the offense and protect it because our-" Aggressive. "... and it's correlated to the importance of the company and the ecosystem." You could've said that and people could've been upset, but they would've understood. Here's what Sam Altman said. "There was a provision about potential equity cancellation in our previous exit docs. Although we never clawed anything back, it should never have been something we had in any documents or communication. This is on me and one of the few times I've genuinely em- been embarrassed running OpenAI. I did not know this was happening and I should have. If any former employee who signed one of these old agreements is worried about it, they can contact me and we'll fix that too. Very sorry about this." So he's very, very so- sorry. It's starting to be like BP Oil, this company. Like, they're just so sorry about everything. (laughs)

Chamath Palihapitiya 16:59 Here's the question is, these are form documents at the end of the day.

Jason Calacanis 17:04 Yeah.

Chamath Palihapitiya 17:04 And form documents don't write themselves. Lawyers write them. And-

Jason Calacanis 17:08 Right.

Chamath Palihapitiya 17:08 ... when you get a novel change in one of these documents, somebody thought that through and thought it'd be a good idea and put it in there.

Jason Calacanis 17:14 Right.

Chamath Palihapitiya 17:15 And like Jamal said, there is a way to potentially defend that. It's not like these provisions don't exist. It's just a novel application to try and claw back someone's already vested equity from a company-

Jason Calacanis 17:25 Well, that is not-

Chamath Palihapitiya 17:26 ... on behalf of these things.

Jason Calacanis 17:27 Yeah, that is not exactly standard. Sometimes it is, sometimes it isn't.

Chamath Palihapitiya 17:31 No, that's completely non-standard. I'm just saying that-

Jason Calacanis 17:32 Yeah.

Chamath Palihapitiya 17:32 ... these provisions exist in other contexts and their application as a, as a clawback of vested employee equity is something that I don't think any of us have heard before. So-

Jason Calacanis 17:42 I haven't, yeah.

Chamath Palihapitiya 17:43 Yeah, exactly. So my point is just, uh, this didn't happen as an accident. Somebody made a strategic business decision to do this 'cause they thought it'd be in the company's interest.

Jason Calacanis 17:52 Yeah, so just in layman's terms, the clawback means you had 10 million in equity. You earn 75% of it, you got 7.5 million in equity there. You say something disparaging about the company, uh, they can take it back from you.

Chamath Palihapitiya 18:07 Once you leave a company-And you vested equity, you don't lose it. I mean, as long as you, you have some period in which to, uh, exercise your option, if it's an option-

Jason Calacanis 18:16 Sure.

Chamath Palihapitiya 18:16 ... rather than stock, but other than that, I've never heard of a situation where-

Jason Calacanis 18:21 Yes.

Chamath Palihapitiya 18:21 ... employees can lose their vested equity.

Jason Calacanis 18:22 Even in a situation, Sachs, we've seen this, where somebody commits fraud, they still get their vested equity and then it's up to the company to sue them for fraud separately, right? Like, we've seen instances-

Chamath Palihapitiya 18:33 I guess that's right, yeah.

Jason Calacanis 18:34 ... of that, yeah.

Chamath Palihapitiya 18:34 I mean, I guess that's right.

Jason Calacanis 18:35 Like, in c- uh, committing a crime.

Chamath Palihapitiya 18:37 Look, I think the question here is, is it credible that they keep having these accidents and coincidences?

Jason Calacanis 18:45 What does Judge Sachs say? (laughs)

Chamath Palihapitiya 18:47 Judge Sachs says there's, uh, uh, one too many coincidences, uh-

Jason Calacanis 18:51 (laughs)

Chamath Palihapitiya 18:51 ... you know? Look, I think like Tomas said, you couldn't just own this and said-

Jason Calacanis 18:55 Yeah.

Chamath Palihapitiya 18:56 ... that-

Jason Calacanis 18:56 This is a-

Chamath Palihapitiya 18:57 ... defendant in the way he said and said, "But you know what? It was too aggressive, and we pulled it back."

David Friedberg 19:00 I think the thing is, look, if you, if you think about the pendulum of culture in Silicon Valley, we used to have a very tough culture of founder-led businesses, where there was extremely high expectations, and if you transgressed, it was p- very punitive. And then the pendulum swung in the e- all the way to the other opposite end, where you had this, like, coddling daycare-type approach that existed for, like, the last 15 or 20 years. And probably what OpenAI is, is an example of a company that needs to be run a little bit more like the former, but stuck with a bunch of people that still pull it towards to be the latter. And that's the cultural tension that they're gonna have to sort out because in order to be this incredible bastion of, like, AGI and innovation, I suspect that it's gonna look more like a three-letter agency in terms of security and protocols in the next five or 10 years than it is gonna look like the Googleplex. And I think they just need to own that, and this is probably a little bit of an insight into that tension. And they're gonna have to go in, more in that direction.

Jason Calacanis 20:06 I think it's a good insight.

David Friedberg 20:07 You're not gonna be allowed to build these incredibly crazy world-beating technologies where people are running around in an eight-seater bicycle. It's just not gonna work, guys.

Chamath Palihapitiya 20:16 Yeah, and, and, and by the way, I mean, because it is such an industry-leading company, I think we could end up with some very bad fair use precedents or laws because Scarlett Johansson is so sympathetic as a plaintiff compared to OpenAI. And it's, you know, unless they show us some discovery that proves that they really did hire the voice actor and all the rest of it, I mean, this could lead to some very bad precedents for the industry around fair use.

Jason Calacanis 20:44 Well, and here we go, I think the Microsoft will pay the speeding ticket, and we'll just all move on, but Freeberg, my God, can you imagine, like, being two or three PhDs in, you know, machine learning or whatever, you've studied your whole life, you're pursuing general AI and, like, people are coming up to your desk and creating all this drama and nonsense, and you're in the middle of a soap opera while you're trying to create the technology that creates super intelligence. It's nuts.

Guest 21:10 Yeah, I find it annoying too, just listening to it.

Jason Calacanis 21:12 Okay. Well, then in that case, we will move on from OpenAI. Ah, sorry. (laughs) There's one more drama going on. (laughs)

Chamath Palihapitiya 21:19 It's not just drama. I mean, it's, there's now a lawsuit. I think, I think-

Jason Calacanis 21:23 Yeah.

Chamath Palihapitiya 21:23 ... it's a very interesting case.

Guest 21:25 The fair use case is interesting for sure.

Chamath Palihapitiya 21:26 I think it's a legitimately interesting case that's gonna-

Guest 21:28 Yes.

Chamath Palihapitiya 21:29 ... if it goes all the way, if- g- if it goes the distance, it's gonna create some really interesting precedents.

Jason Calacanis 21:34 Well, I mean, it, you-

Chamath Palihapitiya 21:35 And I'm not saying-

Jason Calacanis 21:35 This, this is already-

Chamath Palihapitiya 21:37 ... we have all the facts yet, but-

Jason Calacanis 21:37 Yeah, these, the, what happens in these content cases is they get settled almost every single time, so the case law doesn't get codified, they just get settled out of court. If you go look at all the fair use cases, they, they almost never go to the mat, and so this one will just be settled. It'll just be a question-

Guest 21:53 I think the-

Jason Calacanis 21:53 ... of, uh, at what price.

Guest 21:53 ... I think the other, the, the interesting part of the other story is that the reason all this stuff came out about the Equity Club Acts was because the safety team quit and it got leaked-

Jason Calacanis 22:02 Yes.

Guest 22:02 ... during that process.

Jason Calacanis 22:03 All right. So this is the third dramatic story of the week that will go on.

Guest 22:05 And I think that, yeah.

Jason Calacanis 22:06 Yeah.

Guest 22:06 That, that one I think begs a little bit more of a-

Jason Calacanis 22:08 All right, so let me tee that up for you then.

Guest 22:10 ... question of-

Jason Calacanis 22:11 Yeah. Two heads of OpenAI's Superalignment team left the company last week, the day after GPT-4o launched. Ilya announced he was leaving the company. He was their chief scientist. A few hours later, his partner on the Alignment team, uh, Jan Leike, also announced he was resigning. In a later thread, Leike explained that he left due to, quote, "Safety culture and processes have taken a backseat to shiny products." Okay, there's a little bit of disparagement, uh, to our former point about non-disparegence, non-DE, uh, and NDAs. So AI- OpenAI lost both its heads of AI Alignment one day after it launched that new product. Is that a coincidence? It's interesting. If you don't know what Superalignment is, it's basically making sure that (laughs) the software doesn't go Terminator. What are your thoughts on this, Freeberg?

Guest 23:09 I don't know. I mean, it could be some bad bureaucracy, bad politicking, not being listened to, but I think the real interesting question is who's gonna ask these guys what's really going on from a technology perspective and what is that gonna reveal? Because these guys clearly are on the frontier of model development and the performance of models, and so my guess is there are certain regulatory people who are gonna have interest in the fact that this team just left. They're gonna make a phone call. They're gonna ask this team to come in and have a conversation-

Jason Calacanis 23:44 Oh.

Guest 23:44 ... and they're gonna start to ask a lot of questions about what the state of technology is over there. And I, I suspect that some things are gonna start to come out.

Jason Calacanis 23:52 Sachs, i- it was reported that Ilya was on the side of the nonprofit-y, slow down AI, be cautious group when they fired Sam. So what's your take on what's going on here with Superalignment inside of OpenAI, Judge Sachs?

Chamath Palihapitiya 24:11 Let's, let's call this what it is, a mass resignation.... and we don't really know why. I mean, apparently, they were promised something like 20% of the computing resources of OpenAI, and they didn't get that. I definitely read that somewhere. And so that is part of it, I think, but we don't really know the whole story. And, you know, when you look at this issue of the mass resignation and then you look at the issue of the clawback of vested employee equity, you're like, "Well, wait a second. Maybe they felt like they needed that clawback in order to deter all these people who are leaving-"

Jason Calacanis 24:47 Mm-hmm.

Chamath Palihapitiya 24:48 "... from spilling the beans about-"

Jason Calacanis 24:49 Right.

Chamath Palihapitiya 24:50 "... whatever was upsetting them."

Jason Calacanis 24:51 Got it.

Chamath Palihapitiya 24:51 Something clearly upset them, right?

Jason Calacanis 24:53 Yeah, that's why people are saying... There's this meme, "What did Ilya see? What did he see?" Right?

Chamath Palihapitiya 24:57 Yeah, and then like you said, the board did fire him, and the only explanation they provided was that he wasn't being candid-

Jason Calacanis 25:04 For 12-

Chamath Palihapitiya 25:04 ... which at the time we thought was an incredibly damning statement, and we thought we'd get some explanation of it. We never got any explanation whatsoever. You know, I thought that the board was being incompetent because I thought that either they fired him overly hastily or they had reason to fire him, but then they communicated poorly. And, you know, it... You add all these things up, and it definitely seems like-

Jason Calacanis 25:26 Hmm. Well, you know what?

Chamath Palihapitiya 25:27 ... a lot of smoke.

Jason Calacanis 25:27 Sam's a straight shooter. We should just have him on the pod to explain all this.

Chamath Palihapitiya 25:30 (laughs)

Jason Calacanis 25:33 (laughs) I mean, he'll clear everything up.

Jason Calacanis 25:35 Uh, stop me if you've heard this before. NVIDIA, NVIDIA just smashed all expectations while reporting record profits and revenue. The AI train continues. On Wednesday, NVIDIA reported earnings for the fiscal Q1. Revenue was 26 billion, up 18% quarter-over-quarter, 260% year-over-year. Basically, they quadrupled, year-over-year, on billions of revenue. This chart is bonkers. We've never seen anything like this in the history of Silicon Valley or corporate America. This is if somebody, like, literally was mining coal and then found a diamond, a gold mine underneath it.

Chamath Palihapitiya 26:10 (laughs)

Jason Calacanis 26:10 It's bonkers what's happened here. When you look at the revenue there, the, you know, sort of slow growth or moderate growth revenue that they experienced, that was all because NVIDIA was primarily providing GPUs for people playing video games or mining crypto. And then what you see with this unbelievable six-quarter run, uh, and, and five, six-quarter run is companies like Microsoft, Google, Tesla, OpenAI, et cetera, buying just billions and billions of dollars' worth of hardware. I'll end on this, and Chamath can get your take on it. Here's 2019 top companies by market cap in the world. Obviously, Microsoft, Apple, Amazon, Google, Berkshire, Facebook, Alibaba, Tencent. And then you get some of the, you know, incumbents and legacy companies, J&J, Exxon, and JP Morgan, Visa. Way down on the list in 2019, number 84, was NVIDIA. Today, NVIDIA is the third-largest company by market cap behind Microsoft and Apple, and ahead of Google, AKA Alphabet, and Saudi Aramco. Chamath, what's your take on this? Will it continue? And how do you conceptualize this level of growth on such a big number?

David Friedberg 27:30 I mean, I think it's a really, really incredibly fun moment if you're involved in anything AI-related, just because it shows the level of investment that NVIDIA's customers are making into making this new reality available for everybody, right? So, when you're spending effectively $100 billion a year on the CapEx of chips and then a couple 100 billion more on all the related infrastructure, and then another couple 100 billion more on power, you're talking about half a trillion to three-quarters of a trillion dollars a year being spent to bring AI forward to the masses. So, I think that's the really positive take. The other exciting thing is if you're on the other side of the NVIDIA trade, which is you're working on something that does what they do cheaper, faster, or better, it's also really exciting because at some point, the laws of capitalism kick in, right? We've talked about this. When you are over-earning so massively, the rational thing to do for other actors in the arena is to come and attack that margin-

Jason Calacanis 28:38 Mm-hmm.

David Friedberg 28:38 ... and give it to people for slightly cheaper, slightly faster, slightly better, so you can take share.

Jason Calacanis 28:44 Yes.

David Friedberg 28:44 So, I think what you're seeing and what you'll see even more now is this incentive for Silicon Valley, who has been really reticent to put money into chips, really reticent to put money into hardware. They're gonna get pulled into investing in this space because there's no choice. You, you, you have a company that went from 100 billion of market cap to two and a half trillion in four years. It's just-

Jason Calacanis 29:07 That's incredible.

David Friedberg 29:07 ... way too much value that, that is there to then be leaked back. You know, the interesting thing to remember, during the PC revolution, which is really mostly the '90s, right? It ended in the late '90s, I would say like '98, '99, right before the dot-com bubble took over. Intel's peak market cap was, I think it got to about $200 billion. And then their average growth rate from 1998 to today was negative 1.4% a year, right? So, it went from about 200 billion to about 130-odd billion. And why? It's not that Intel was a worse company, but it's that everything else caught up and the economic value went to things that sat above them in the stack. Then it went to Cisco for a while, right? Then after Cisco, it went to the browser companies for a little bit. Then it went to the app companies, then it went to the device companies, then it went to the mobile companies. So, you see this natural tendency for value to push up the stack over time.

Jason Calacanis 30:06 So, let me ask you, then-

David Friedberg 30:08 And in AI-

Jason Calacanis 30:08 Yeah.

David Friedberg 30:08 ... we've done step one, which is now you've given all this value to, in- to NVIDIA-

Jason Calacanis 30:11 Yeah.

David Friedberg 30:11 ... and now we're gonna see it being reallocated.

Jason Calacanis 30:14 So, Chamath, who's in the arena trying stuff, some of these things working, obviously, and some not working?

David Friedberg 30:19 Well, e- everybody, right? So-

Jason Calacanis 30:19 So-

David Friedberg 30:19 Yeah.So right now, what you do is you speculatively bet on anything that kind of, like, quote-unquote "rhymes with Nvidia." So AMD is ripping. The companies that make... HPM is ripping. So all of that stuff, the folks that make optical cables, this Japanese company that I found that makes, like, the high bandwidth optical cables, ripping. So every- anything related to that ecosystem right now is at all-time highs. But at the same time, what you find now is, like, every other day when you wake up and read the, the trades in tech land, you find that there's a company that's gotten seeded with five to 50 million bucks to create a new chip, right? You're also starting to see folks that are working a little bit above the stack and build better compilers, right? Things that will allow you to actually build once, run in many different compute environments. So all of this stuff is starting to happen. At some point, the spread trade will be that Nvidia loses share, even though revenues keep compounding-

Jason Calacanis 31:23 Mm-hmm.

David Friedberg 31:23 ... to these upstarts.

Jason Calacanis 31:25 Yeah. Death by 1,000 startups. All right, Sachs-

David Friedberg 31:27 Yes.

Jason Calacanis 31:27 ... I guess, one of the questions, uh, people are asking right now is, have we ever seen a company at this scale and the impact it's having, not just in technology, which Chamath just pointed out beautifully, but also it's having (hands clap) a huge impact on Wall Street, on the stock market, on finance?

Chamath Palihapitiya 31:44 Well, the, the company that everyone compares Nvidia to, or asks the question about whether a historical comparison should be made, is Cisco.

Jason Calacanis 31:55 Right.

Chamath Palihapitiya 31:55 So there's an article in Motley Fool saying, "Is Nvidia doomed to be the next Cisco?" There was one in Morningstar called "Nvidia 2023 vs. Cisco 1999: Will History Repeat Itself?" The reason they're asking these questions is that if you go back to the dot-com boom in 1999, you pull up the stock performance chart, you can see that Cisco had this incredible run. And if you overlay the stock price of Nvidia, it seems to be following that same trajectory. And what happened with Cisco is, that when the dot-com crash came in 2000, Cisco stock lost a huge part of its value. Obviously, Cisco's still around today and it's a valuable company, but it just hasn't ever regained the type of market cap it had. The reason this happened is because Cisco got commoditized. So to Chamath's point, the success and market cap of that company attracted a whole bunch of new entrants and they copied Cisco's products until they were total commodities. So the question is, will that happen to Nvidia?

Jason Calacanis 32:53 Yeah.

Chamath Palihapitiya 32:53 And I think the difference here is that, at the end of the day, networking equipment, which Cisco produced, was pretty easy to-

Jason Calacanis 33:01 Pretty one-dimensional.

Chamath Palihapitiya 33:02 ... pretty, yeah, pretty easy to copy.

Jason Calacanis 33:03 Just moving data around, yeah.

Chamath Palihapitiya 33:04 Right. Whereas if you look at Nvidia, it's th- these, uh, GPU cores are really complicated to make. And Jensen makes this point that the H100, for example, has thousands of components and it weighs, like, 70 pounds or something like that. I mean, it's just-

Jason Calacanis 33:20 Yeah, it's like a giant oven. I mean, and then frame-

Chamath Palihapitiya 33:23 Yeah, it's like a mainframe. It's not, it's not just like a little chip. So it's a much more complicated product to copy. And then on top of that, they're already in the R&D cycle for the next chip, right? Whatever it's gonna be, the H200 or whatever it is. And so as people try to catch up with H100, they're gonna be on to H200. So I think you can make the case that Nvidia has a much better moat than Cisco. And just by the way, on this Cisco comparison, just to, just to finish the thought, people were making this comparison six months ago.

Jason Calacanis 33:52 Hm.

Chamath Palihapitiya 33:53 And what's happened since then? Nvidia's had two blowout quarters.

Jason Calacanis 33:56 Yes.

Chamath Palihapitiya 33:56 And the competitors don't seem to be that much closer, maybe a little bit closer, but... So, you know, look, I think it's an open question.

Jason Calacanis 34:03 So there's a counter here, Freeberg, which is obviously, if you follow the Cisco analogy, one of the things that also sunk Cisco was, once people had bought all that capacity, there was no need, there was no file size that was so great that it couldn't be moved easily around the internet. You know, y- you make movies HD, Super HD, 2K, 4K. The, the ba- we've created too much bandwidth, there was no use for it. So I guess the... That's a counterargument for maybe when, if we build up too much capacity, Nvidia also could, not by competitors, but just by the buildout being enough. So what's your take on that counterargument? And then whatever other thoughts you have.

Guest 34:41 I think that the Cisco analogy, it's a pretty different situation because Cisco evolved the business to become much more enterprise-centric. And they were able to, to run an M&A process like we see with enterprise software, where they could acquire and roll up lots of different product companies and sell into their enterprise channel, so do a lot of cross-selling. Nvidia is not a super acquisitive business, and it doesn't make as much sense because they're selling much more, kind of, infrastructure tools, whereas Cisco moved really high up in the, in the enterprise stack. They were selling stuff into office buildings, they were selling software, they did acquisitions to kind of fully integrate, but they had a very diverse set of products that were selling through an enterprise channel further up the value stack and a pretty distributed customer base. No, no serious concentration. Even though they did sell a lot into data centers, they were also selling to telcos, they were selling to enterprises, they were selling to governments and so on. If you look at Nvidia's revenue, they did $26 billion of total revenue in the quarter, 22 billion of which was data center, and about 40% of that was from the top four hyperscalers. So a, a full one-third of Nvidia's revenue in the quarter came from, I believe it's Google, Amazon, Microsoft, and Meta. And so between those four businesses, you know that those companies each have, I believe, at least over or close to $100 billion of cash sitting on their balance sheet. They can't find great places to invest that cash to grow revenue, and so they've rationalized away the idea that they will make CapEx investments to build over the next five to 10 years, and this is where that money flows.

Jason Calacanis 36:15 Yeah, we talked about that in a previous episode, 'cause there's no M&A, to your point.

Guest 36:18 Yes, so-

Jason Calacanis 36:18 Unicon's not gonna let you buy stuff or the UK's not gonna let you buy stuff.

Guest 36:22 So I think that they're gonna have less maneuvering-

David Sacks 36:24 ... capability than Cisco had in the future, and obviously there's this deep concentration risk which is gonna be deeply challenging.

David Friedberg 36:31 I think NVIDIA, just to build on Sax's point, is gonna get pulled into competing directly with the hyperscalers. So if you were just selling chips, you probably wouldn't, but Sax is right. Like these are these big bulky actual machines. Then all of a sudden you're like, well, why don't I just create my own physical plant and just stack these things and make racks and racks of these machines and go head to head-

Jason Calacanis 36:55 And go head to head with AWS instead of selling to them.

David Friedberg 36:58 It's not a far stretch, especially because NVIDIA actually has the software interface that everybody uses, which is CUDA. So I think it's- it's likely that NVIDIA goes on a full frontal assault against GCP and Amazon and Microsoft.

Jason Calacanis 37:12 Mm.

David Friedberg 37:12 That's gonna really complicate the relationship that those folks have with each other. But I think it's inevitable because you're ge- how do you defend, it's kind of the Apple problem, how do you defend an enormously large market cap? You're forced to go into businesses that are equally lucrative. Now if I look inside of compute and look at the adjacent categories, they're not gonna all of a sudden start a competitor to TikTok, right, or a social network. But if you look at the multi-hundred billion revenue businesses that are adjacent to the markets that NVIDIA enables, the most obvious one is the hyperscalers which are multi-hundred billion dollar revenue businesses. So they're going to be forced to compete otherwise their market cap will shrink and I don't think they want that, and then it's going to create a very complicated set of incentives for Microsoft and Google and Meta and Apple and all the rest, and that's also then going to be an accelerant. They're going to pump so much money to help all of these upstarts, to your point Jason, chip away and nip at the- the Achilles heels of NVIDIA until they fall.

Jason Calacanis 38:18 Yeah. And there's a great, uh, precedent for what you're saying because, or clues, Amazon is making chips, Google's making chips, and in fact Apple-

David Friedberg 38:26 Facebook's making chips. Tesla's making chips.

Jason Calacanis 38:28 Yep, and then Apple-

David Friedberg 38:29 Apple's rolling chips. Everybody is rolling chips.

Jason Calacanis 38:30 ... makes their own chips and they got rid of Intel. And so this is, uh, how it's going to go. Your margin is my opportunity. Uh, and you know, with all this market cap increase, the good news is, uh, it was just reported that Jensen has bought a second leather jacket, so well, this market cap has enabled him to (laughs) expand the wardrobe a bit.

David Friedberg 38:47 He looks, by the way, I got to say he looks really good. He looks super fit.

Jason Calacanis 38:50 He looks great. Yeah.

David Friedberg 38:50 You know, he's late-

Jason Calacanis 38:51 Pull up a picture of Jensen. Let's man crush him.

David Friedberg 38:53 How old is he? Is he late f- is he- is he in his late 50s?

Jason Calacanis 38:54 He's going into his Harrison Ford era.

David Friedberg 38:56 He looks great. He looks great.

Jason Calacanis 38:57 The salt and pepper.

David Sacks 38:58 He looks six, 61.

David Friedberg 39:00 61?

Jason Calacanis 39:01 61?

David Friedberg 39:02 He looks amazing. He looks amazing.

Jason Calacanis 39:04 I'll tell you something in the zombie apocalypse draft, I'm picking him. That guy seems crafty, you know, like resourceful.

David Friedberg 39:09 He seems like he's-

David Sacks 39:10 No plastic in his balls?

David Friedberg 39:10 What do you think he does for exercise?

Jason Calacanis 39:12 No, plastic ball f- plastic free balls.

David Friedberg 39:15 No, no, no, no. His balls have plastic. All of our balls have plastic.

Jason Calacanis 39:16 Steel. He's got steel in there.

David Sacks 39:18 (laughs)

Jason Calacanis 39:19 Nah, nah. He's got, his have brass in them.

David Friedberg 39:21 Nah, his has brass.

Jason Calacanis 39:21 He literally had brass put into his balls.

David Friedberg 39:23 No, all of our balls have plastic apparently.

Jason Calacanis 39:25 Okay, well, (laughs) we have two choices here. We can go with another tech story or we can go directly to science corner and- and-

David Sacks 39:32 Well, no. I think we should do state of the economy and then do science corner.

Jason Calacanis 39:35 Okay. So you want to talk about-

David Sacks 39:36 That's my vote.

Jason Calacanis 39:36 ... our pocketbooks and then we'll talk about our pockets and then we'll just make a quick detour to the right and then talk about our balls because we're in the same vicinity, so-

David Sacks 39:44 I think we should end on our balls.

Jason Calacanis 39:45 Okay, great.

David Friedberg 39:46 Yeah, yeah. Let's end, let's end with our balls.

Jason Calacanis 39:48 I mean, Frameworks, only likes to start with the balls, so I don't know because everybody's got different kind of vibes here.

David Sacks 39:54 The ball play should come a little bit later in the, in the program.

Jason Calacanis 39:57 You want to save the ball play for later, Sax?

David Friedberg 39:59 Okay. Yeah, yeah.

David Sacks 40:02 (laughs)

Jason Calacanis 40:02 (laughs) I'm having a hard time keeping this together, guys.

Jason Calacanis 40:06 More than half of Americans think we're in a recession. I think we're in a vibe session right now because we're not in a recession, but people are feeling really bad. A Harris poll conducted by The Guardian shows that 50 cens- 56% of Americans wrongly believe the US is in a recession. Not surprisingly, they blame Biden. The poll highlighted a bunch of misconceptions. 55% believe the US economy is shrinking; it's obviously not. 56% think the US is experiencing recession; it's obviously not. 49% of people believe the S&P's 500 stock market index is down for the year. It's up 12% this year. It was up 24% in 2023. And 49% believe that unemployment is at a 50-year high when it's in fact at a 50-year low. And Americans are really concerned about the cost of living and inflation. Fair enough. 70% said the biggest economic concern was the cost of living. 68% said that inflation was the biggest economic concern. Important quote here, a majority of respondents agreed it's difficult to be happy about positive economic news when I feel financially squeezed each month and that the economy was worse than the media made it out to be. According to the poll, 70% of Republicans and 40% of Democrats think Biden is making the economy worse. Chamath, you have some thoughts on this.

David Friedberg 41:25 I'm going to go out on a limb and speculate that a lot of the big numbers that we use to gauge how we should feel about things-

Jason Calacanis 41:36 Mm-hmm.

David Friedberg 41:37 ... in today's day and age are pretty brittle-

Jason Calacanis 41:40 Okay. Explain brittle here, yeah.

David Friedberg 41:41 ... and fragile and may- may actually just be totally wrong. So what's an example? So for example, like if you look at something like non-farm payrolls, right? So the first Friday of every month you get this report that comes out from the- the Department of Labor and it shows what- where unemployment is. But how do they calculate that? Do you think that they have a real-time sense of exactly every person in that month that entered the workforce or exited the workforce? No. They do a survey and then they extrapolate. And if you do that survey incorrectly, and Jason you've commented on this before, for example, if you don't capture adequately the number of people that are on the sidelines and never join the workforce or the number of people that are part of the gig economy so they are kind of working, you get an inaccurate sense of where the real economy is.I think that GDP is somewhat similar because if you just break down what GDP is. So, Nick, there's a very simple pie chart I sent you. What is GDP? It's the sum of four things. Most of it is what people spend.

Jason Calacanis 42:43 Okay.

David Friedberg 42:44 Then the next big chunk is what companies and governments spend, and then the last is what we export to other countries. So let's just pause for one second and think about, what do you think happens when rates are zero versus when rates are at 6%?

Jason Calacanis 43:00 People spend a lot more.

David Friedberg 43:02 Well, people are tend- are- tend to save when interest rates are high, just like in the natural thing, like, "Why would I buy a pair of these Nike shoes? I'll just put it in the bank and get 6%." But when the bank pays you zero, you're like, "Ugh, let me buy these Air Force 1s and move on." Right? It turns out it's the same for companies. Companies find it easier to invest when rates are at zero because it's cheaper. It's much more expensive because they're borrowing money at 6% versus at 0%.

Jason Calacanis 43:27 Or more. Corporate gets charged-

David Friedberg 43:28 Or more.

Jason Calacanis 43:28 ... a higher fee, right? Yeah.

David Friedberg 43:30 Then when you have high interest rates, you have a currency that appreciates. It makes exports less attractive to other people, which means then you become a net importer. Okay, so what is the last thing that's left? The last thing that's left is government spending, and you have to ask the question, "What should governments do when rates are high?" There is a chart I published in my annual letter, if you just go to that for a second.

Jason Calacanis 43:56 And just going back to this chart right before it, just so-

David Friedberg 43:58 Yeah.

Jason Calacanis 43:58 ... the people who are listening, if you put the pie chart part in there, important for people to know, consumer is about 70% of the economy. And if you put investment and government together, that's just over, maybe, 34%-

David Friedberg 44:10 35%.

Jason Calacanis 44:10 ... 35%, something like that.

David Friedberg 44:11 Yeah, exactly.

Jason Calacanis 44:11 35%. So, it is a consumer-driven economy, but hey, you know, corporate and government spending is a major piece as well.

David Friedberg 44:19 And then- and j- I just wanted just to highlight that when interest rates are very high, all of a sudden governments are faced with this very difficult problem, which is, "Oh, man. I have to spend a ton of money on interest," just like if you had a bunch of credit cards and all of a sudden the interest rates went up. So, the choice is twofold. Do governments spend less? But unfortunately, it turns out that our governments in America, they just keep spending more and more. So, even if net interest income is small, even if net interest income is high, they're just like, "Forget it, the taps are on." So, what does this all mean? I think what it really means is that we do a very poor job of measuring all these dynamics together. And so I actually trust the survey data of these individuals more than I trust the GDP report in the sense that I think it more accurately captures this dynamic. Rates are at 6%. People are saving more. If they're not getting paid more, things are costing more. The government is giving you free money, so you kinda feel like everything is moving, so that the GDP measurement, the way that it's classically done shows that, "Wow, we grew at 3 or 4%." But the average individual American isn't feeling that. They're actually-

Jason Calacanis 45:30 Yeah, they're not part of that

Chamath Palihapitiya 45:30 Mm-hmm.

David Friedberg 45:30 ... feeling that they have less money. So, I would actually go with them and actually say if we don't revisit this thing from first principles, we're gonna get this dynamic where we think one thing is happening, but the actual exact opposite is happening. In this case, I do think we're in- we're in a quasi-synthetic recession.

Jason Calacanis 45:50 Sax, what's your take on the vibe session?

Chamath Palihapitiya 45:54 Well, look, I- I tend to agree with Chamath on this. I think this is a classic story of who do you believe? Do you believe the experts or do you believe in the intuitions of the American people? And the experts have some statistics on their side, but, you know, the old saying goes, "There's lies, damn lies, and statistics." And then the American people have their actual lived experience on their side. They know what they're feeling, and I tend to trust in that. Now, obviously, we're in an election year, and the press knows that, so they're trying to do this big clean-up effort for Biden. But why is it that people are feeling this way? Number one is inflation. And if you look at this chart, you can see that if you look at household net worth since the start of the Biden presidency and compare it to the change in household net worth at a similar point in Trump's presidency, in nominal terms, it appears to be the same. But then if you adjust for inflation, in other words, you look at the real household net worth, you can see that household net worth during the Biden term has been flat. Actually, it's down. It's-

Jason Calacanis 46:57 Because of inflation, right?

Chamath Palihapitiya 46:58 Because of inflation. And-

Jason Calacanis 46:59 Where did the inflation come from?

Chamath Palihapitiya 47:01 Where did the inflation come from?

Jason Calacanis 47:03 Yeah.

Chamath Palihapitiya 47:03 Well, Larry Summers warned in the first quarter of the Biden administration that if you pass an unnecessary $2 trillion of COVID stimulus, you would produce inflation. The inflation rate when Biden came into office was 1.7%. We had a rip-roaring economy, eh, but he started stimulating, and we talked about Bidenomics is this new policy of pumping trillions of dollars of stimulus into a healthy economy, which we've never done before. What happened? Inflation went all the way to 9%. So, people's wages have not kept up with the rate of inflation. This is why they feel worse off. When you actually look at purchasing power, people are worse off in terms of their actual ability to buy things. Their purchasing power has gone down. Wages may have gone up a little bit, but they have not gone up as much as inflation, so people feel worse off. Now, Larry also had that, I think, really informative study showing that inflation would have peaked at 18% if you include cost of borrowing. So, again, to Chamath's point, if you're trying to get a mortgage and you're paying 7 1/2, 8%, you'll feel way worse off. If you need to buy a car and make a car payment, you feel much worse off. If you've got credit card debt, which has now hit an all-time record of something like 1.1 trillion, your credit card rates have never been higher.

David Friedberg 48:18 Right.

Chamath Palihapitiya 48:18 So, the average American feels worse off because cost of borrowing has a huge impact on their household finances. And that's why if you read, like, one of the last paragraphs in that story that you referred to, they use the keywords, "The consumer feels squeezed. The average household feels squeezed." They may not have lost their job yet-... but they've lost purchasing power, and they've lost-

Guest 48:38 Yeah. They're under-

Chamath Palihapitiya 48:39 ... net worth.

Guest 48:39 They're under-earning. They're under-earning.

Chamath Palihapitiya 48:41 Yeah.

Guest 48:41 And so the projection-

Chamath Palihapitiya 48:42 So this is obvious. And, you know, the pre- the press can gaslight us all day long about how wonderful things are under Biden, but the average American, I think, understands differently, based on their own experience.

Guest 48:53 I think the whole thing comes down to the projection of an individual or a household of their lived experience onto the economy. You assume that because you're having a tough time, the economy is bad. That... A- and the economy as a definition for them is, "How do I earn and how do I spend?" And if I'm under-earning, that means there must be serious job loss and things are more expensive and my ability to purchase isn't improving. And so I think, uh, we're all kind of gonna end up on the same take on this one. I mean, Nick, if you wanna pull this image up. This is, I think, a helpful one, which is disposable personal income relative to outlays that folks are needing to spend more than they're making. So clearly indicating that they're feeling like they're under-earning. So the projection of that is the economy is bad, without recognizing that it is an inflationary experience. Whereas economists use the definition of, of, quote, "economic growth" being gross production, gross product. And so if gross product or gross revenue is going up, they're like, "Oh, the economy is healthy. We're growing." But the truth is, we're funding that growth with leverage at the national level, the federal level, and at the household and domestic level. We are borrowing money to inflate the revenue numbers. And so the GDP goes up, but the debt is going up higher. And so the ability for folks to support themselves and buy things that they want to buy and continue to improve their condition in life has declined if things are getting worse. And if you go to the next image, as Sax pointed out already, here's the image of total outstanding credit card debt, over a trillion dollars. It's totally spiked, and it's gonna continue to spike just like federal debt because of the next chart, which is the sudden jump in interest rates. So we've seen credit card interest rates jump from 12% on average 10 years ago to 21.19% right now, and it was at 14% at the end of 2022. So we've gone from 14% average credit card interest rates to 22% now in just about, uh, 24... 20 to 24 months. And so the, the projection that I think of the, quote, "economy must be bad" is resulted from the fact that income to spending is actually pretty negative. So here's the real median family income. This actually only goes through 2019, so it doesn't even capture the er- (laughs) the era that we're talking about, but this has been going on, uh, for quite some time. That the average American's ability to improve their condition has largely been driven by their ability to borrow, not by their earnings. And this has created a substantial set of precedents that we're now running into a wall with interest rates spiking and inflation hitting us because of the overall federal debt that we've taken on.

Jason Calacanis 51:39 I think we're probably gonna go around the horn and all agree. Obviously, the crazy spending started in the Trump and COVID era, and that caused a lot of the inflation as well, just to be fair to, to administrations that are just out of control with spending. But, uh, the way I look at this is the Mickey D economy. People may not know this, but 96% of Americans eat meals at least once a year in McDonald's. 8% of Americans eat at McDonald's on an average day. And when you look at the prices of McDonald's here, uh, if we look at this image-

Guest 52:09 Yeah. This is incredible.

Jason Calacanis 52:11 This, this is...

Guest 52:11 This is incredible.

Jason Calacanis 52:12 ...unbelievable. Medium french fries at McDonald's, a buck 79 in 2019, and now 4.19. And then if we look at just McNuggets, uh-

Guest 52:20 My gosh.

Jason Calacanis 52:21 ...4.49 to 7.58, 68% increase. McChicken, 1.29 to 3.89. And then here is a very interesting one. This is CPI versus McDonald's (laughs) Big Mac prices. Take a look at that. E- as much as the consumer price index has surged, Big Macs have exceeded that. And so Americans are seeing this over and over again when they go to McDonald's and other places, and, and that's what's causing the feeling because when you spend-

Guest 52:49 Jake Halton, go back to the chart.

Jason Calacanis 52:50 Yeah.

Guest 52:50 Go back to that McNugget chart. I just wanna see wha- what is it? End of 2019. So this is basically, you'd wanna look at the four-year stock price, right? So, like, these guys have jacked up prices.

Jason Calacanis 53:00 Massively.

Guest 53:00 If you, you look at what's happened to the stock, the stock is way up. It's kind of been... They've been very motivated and rewarded as a company for just rewarding the shareholder and kind of screwing over the cons- customer.

Jason Calacanis 53:11 If you own equities in McDonald's and you're in the top third or half of... Maybe half of Americans who have equity exposure, you're feeling great. If you're on the bottom third or half and you're buying at McDonald's and you don't own equity am- McDonald's, you feel terrible. Friedberg, you had some additional thoughts.

Guest 53:26 Yeah. But remember, what McDonald's and other fast food companies have said is that labor costs have climbed. Here's a chart on labor costs that Nick- Yeah. ...can pull up. Workers at Walmart and McDonald's have had pay increases, but this has really been to try and keep up with inflation, the inflation of other costs. So a lot of people will say, "Oh, they're price gouging. They're ripping off consumers to make profits for shareholders." But the truth is, the biggest component of running those restaurants is labor, and labor has gotten more expensive because the employees that work there have to earn enough to pay their bills and to afford their food. And this-

Jason Calacanis 54:03 Yeah.

Guest 54:03 ...is the cir- circular effect of inflation. It finds its way all through the economy, it filters down, and it eventually hits everyone.

Chamath Palihapitiya 54:10 Look, fast food's a pretty competitive business. I mean, I think the reason why McDonald's is raising prices is 'cause everyone else is raising prices. I mean, otherwise they'd be losing share.

Guest 54:18 Totally.

Chamath Palihapitiya 54:18 And just lo- go to the grocery store and look at the price of steak or chicken or whatever, or eggs. It's gone up tremendously over the last few years. I mean, the-

Jason Calacanis 54:27 Sax, let me ask you a candid question. When's the last time you were in a supermarket? Be honest. When's the last time-

Chamath Palihapitiya 54:33 Look, I'm not saying that it-

Jason Calacanis 54:34 ...you literally went to a s- I'm just curious.

Chamath Palihapitiya 54:36 Uh, uh, it's not relevant. I mean-

David Friedberg 54:39 Yeah, look.

Jason Calacanis 54:40 It's a different show.

David Friedberg 54:40 Obviously, we know that the price of eggs doesn't affect me. Okay, great. I'm in a fortunate position. That's not what the topic is. The topic is-

Jason Calacanis 54:45 Yes.

David Friedberg 54:46 ... what is the impact on the American people, and why- why do 70% of the people in that poll feel that we're in a recession even though the expert tells us we're not? And I've explained it.

Jason Calacanis 54:57 Yeah. A- and the other thing is, there's a-

Guest 54:59 I went to the supermarket the other day.

Jason Calacanis 55:01 ... people conflate ... I- I like going to the supermarket. I take my girls with me every week.

Guest 55:03 I go every ... I could not believe how expensive things ... I mean, some of the stuff, I was just blown away-

Jason Calacanis 55:07 It's bonkers.

Guest 55:07 ... how expensive things ... It's bonkers.

Jason Calacanis 55:09 I bought the- look at the- look at the package I sent you guys, the Driscoll's Super Sweet Strawberries.

Guest 55:13 How much were they?

Jason Calacanis 55:14 $6.99, $6.99 a package.

David Friedberg 55:14 You quartered the market on them. I went and tried to find them here in San Mateo, and there's none left. They said Chamath quartered the market.

Guest 55:20 You sent in your assistant?

David Friedberg 55:21 I went to Sigona's. Nat and I do- no, Nat and I go to Sigona's every week, A-

Guest 55:25 Mm.

David Friedberg 55:25 ... because we like buying our own fruit-

Guest 55:27 Yeah.

David Friedberg 55:27 ... but also, B, 'cause our kids like to do it, and they like to see-

Guest 55:30 Yeah.

David Friedberg 55:30 ... what things cost, and they like to pick stuff, but-

Guest 55:32 Fantastic.

David Friedberg 55:32 ... you know, this sweetest batch was seven bucks.

Guest 55:35 For how many strawberries was that, by the way?

Jason Calacanis 55:37 How many str- how was it by the way? 12 strawberries in there?

David Friedberg 55:38 Is it good? Well, so here's what I'll tell you quite honestly. I'm like, I think that you need to put these guys on notice.

Guest 55:45 Oh, on blast.

David Friedberg 55:46 The perfume, so th- th- the nose, like, just like, it's incredible.

Guest 55:52 Mm-hmm.

David Friedberg 55:52 Okay.

Guest 55:52 The aroma, yeah. Yeah.

David Friedberg 55:53 The smell is- the aroma is just absolutely incredible.

Guest 55:56 Yeah.

David Friedberg 55:57 But to be totally honest with you, the mouthfeel and the sweetness is not what this label would imply.

Guest 56:04 Yeah. What were you expecting-

David Friedberg 56:05 And so-

Guest 56:05 ... in terms of mouthfeel?

David Friedberg 56:07 I was expecting, like, something juicier, more succulent.

Guest 56:12 Mm-hmm.

David Friedberg 56:13 Um- Let me ask you a question about, do you have a sommelier for your fruit?

Guest 56:16 Yeah, me-

David Friedberg 56:17 I mean, you seem like a real connoisseur here. What, do you do tasting notes?

Guest 56:20 Yeah.

Jason Calacanis 56:20 Yeah.

David Friedberg 56:20 No, I tota- I've- I've been texting-

Jason Calacanis 56:21 A fruit- a fruitatelier.

David Friedberg 56:21 (laughs) A fruitatelier.

Guest 56:22 A fruitatelier.

David Friedberg 56:22 I've been- I've been texting Freeberg about these-

Guest 56:24 (laughs) A fruit tester.

David Friedberg 56:25 ... for months. I am a connoisseur of fruit. Okay? It's very important to me. I like good fruit. So, you know, my wife and I go and find good fruit for our family. And it's really expensive, and even this overpromises and underdelivers. So Freeberg, if you can-

Guest 56:39 You need to get the Hokkaido strawberries.

David Friedberg 56:40 ... if you can land a GMO strawberry, I'm gonna put it in my belly. Give me a GMO strawberry, Freeberg, twice as big, three times as sweet, get in my belly.

Guest 56:51 I think we should all go to Tokyo for a weekend and do some fruit tasting in Tokyo, where you can have the best fruit.

Jason Calacanis 56:56 You have to get on the Hokkaido strawberries. This is where it's at. You have no idea, like, what you can spend on strawberries. People are spending 10 bucks on a strawberry. It is bonkers.

David Friedberg 57:07 I bought a $100 mango once in Tokyo.

Jason Calacanis 57:09 Yeah, incredible. You know, the other thing, I think, with these numbers is, if you're an economist and you're like, "Inflation has gone down," that means the rate of inflation's gone down, from 6 or 7% down to 3% or 2.9 or 3.1. That doesn't mean prices aren't still going up. And so, the question is-

David Friedberg 57:27 By the way, if you wanna r-

Jason Calacanis 57:28 ... how do these cycle down?

David Friedberg 57:28 ... if you wanna replace- if you wanna replace GDP, there's a very good article in the Wall Street Journal a few weeks ago about how there's been a- just a total breakdown in what these high-level numbers say, kind of what we've been saying and how Americans feel. And they introduced a different score. Well, they- they gave it publicity. It's not their score, but it's something that they call the core score.

Jason Calacanis 57:49 Okay.

David Friedberg 57:49 And what that does, it's, I'll just read it to you just so you can understand it. It's a county-level index of wellbeing using measures of economic security, economic opportunity, health, and political voice. And so the lowest possible score is zero. The highest possible score is 10. As it turns out, when they use this across every county in America, the distribution is basically as follows. The- the most, quote-unquote, "prosperous" county is Falls Church, Virginia, which is a 7.86 out of 10, and the lowest county is Jim Hogg County of Texas, which has a score of 2.25. So, to the extent that you wanna start to look at granular measures, this is one. I'm not gonna advocate for it, but it's an example. But what are you noticing here? What I notice is that there's a lot of patches of, like, meh to not good in most parts of America. And so other than a very few small pockets where people feel great, most of the country is sort of dissatisfied. And I think that that's a really important thing to internalize.

Guest 58:54 Yeah.

Jason Calacanis 58:55 Some of this-

David Friedberg 58:55 Yeah.

Jason Calacanis 58:55 ... is classic psychology. You know, people do focus on the negative. The media focuses on the ne- negative, and then with social media, people are seeing lifestyles that are unattainable, just like they're seeing body types that are unattainable because people are doing filters. You're also seeing people living a lifestyle that's unattainable, and then it makes people, because their expectation of their life is so high, when they then subtract the reality of their life, they've got a deficit. And really, happiness is like expectations minus reality equals happiness.

David Friedberg 59:25 Y- yeah, but you had that same dynamic when consumer sentiment was much higher in a previous administration and people were feeling much better about the economy, so that's a constant.

Jason Calacanis 59:34 Yeah. Well, people were having free money dropped on their head.

David Friedberg 59:35 I think you're trying to- you're still- you're still trying to make the-

Jason Calacanis 59:37 People were having free- Trump dropped free money on people's head, so your argument that Biden's-

David Friedberg 59:40 No way.

Jason Calacanis 59:40 ... crazy spending-

David Friedberg 59:41 No, no, I'm talking about before COVID.

Jason Calacanis 59:42 ... Trump sent them free checks with his name on it.

Guest 59:44 (laughs)

David Friedberg 59:44 Yeah, when the economy- when the economy was down 33% year over year, okay?

Jason Calacanis 59:48 But you admit that he spent way too much money, right?

David Friedberg 59:51 And both parties-

Jason Calacanis 59:51 You admit he spent way too much money.

David Friedberg 59:52 Well, both parties- both parties thought that we were headed for a depression, and so we had-

Jason Calacanis 59:57 Right.

David Friedberg 59:57 ... a bipartisan stimulus bill during an actual crisis.

Jason Calacanis 1:00:00 Right.

David Friedberg 1:00:00 Once the crisis was over, there was no need to keep spending.

Jason Calacanis 1:00:03 Got it.

Guest 1:00:04 Yeah.

David Friedberg 1:00:04 And Biden-

Jason Calacanis 1:00:04 So, when Trump signs his name on those checks-

David Friedberg 1:00:06 (laughs)

Jason Calacanis 1:00:07 Mm-hmm.

David Friedberg 1:00:08 There's no comparison.

Jason Calacanis 1:00:08 He wasn't responsible, and Biden is- okay.

David Friedberg 1:00:11 Once the- once the seal has been broken-

Jason Calacanis 1:00:12 Yeah.

David Friedberg 1:00:13 ... I think it's fair to say both sides of the aisle now believe that they can give away an enormous amount of money, both-

Jason Calacanis 1:00:22 Absolutely.

David Friedberg 1:00:22 There- there's nobody that feels-

Jason Calacanis 1:00:24 That's my point.

David Friedberg 1:00:24 ... like they have a responsibility to stop. But I think- I think what Sachs is-

Jason Calacanis 1:00:28 Exactly my point. Yeah.

David Friedberg 1:00:28 But Sachs is right in the sense that, so if you take that as a constant, right, that there will always be handouts now of all kinds.

Jason Calacanis 1:00:36 Yep.

David Friedberg 1:00:36 There'll be different flavors depending on whether it's a Republican or whether a Democrat. A Democrat may-

Guest 1:00:40 And all- and all rationalized to be good.

David Friedberg 1:00:42 It's- it's all- it's all-

Guest 1:00:43 Yes.

David Friedberg 1:00:43 But- So then, what I'm saying is-

Jason Calacanis 1:00:44 That's my point.

David Friedberg 1:00:45 ... this abstraction, though, doesn't solve what's happening now, because this free money is in the system, it's constantly in the system, it comes in different waves.... so people should feel better. The fact that they don't in the face of this constant money train-

Jason Calacanis 1:00:59 Yep.

David Friedberg 1:00:59 ... I think is actually quite alarming. This is, I think what the point is, which is we are economically in a very complicated moment in the sense that there is no pandemic to blame. There's no economy that's totally shut down. In fact, there's an economy that seems to be moving, but leaving an enormous number of people behind. So however it has been structured, just sitting here today in 2024, it's broken for more people than it's working for.

Jason Calacanis 1:01:24 Yeah. Trump, just to give facts, Trump will have spent 7.8 trillion, Biden will spend slightly less, like 6.X trillion at the end of these things. They're both gonna have added 15 trillion.

Chamath Palihapitiya 1:01:33 You're, you're missing the fact that Trump had 2020 with when we had the COVID depression, or what would-

Jason Calacanis 1:01:40 Yeah.

Chamath Palihapitiya 1:01:40 ... could have been when the economy is down-

Jason Calacanis 1:01:41 And a, and a terribly timed tax break.

Chamath Palihapitiya 1:01:42 ... 30% year over year.

Jason Calacanis 1:01:43 Yeah, and a terribly timed tax, by the way did you guys see it break-

David Friedberg 1:01:47 Listen, just... Hold on a second, let me just make th- this one point.

Jason Calacanis 1:01:49 Yeah, go ahead.

Chamath Palihapitiya 1:01:49 Just because both parties have been irresponsible in spending doesn't mean that we can't make further judgments about who's been worse.

Jason Calacanis 1:01:57 Sure.

Chamath Palihapitiya 1:01:58 What's happened in the Biden administration is just quantitatively worse.

Jason Calacanis 1:02:02 Well, no. Quantitatively, Trump spent more. But you're saying qualitatively, Biden's is worse because he didn't need to.

Chamath Palihapitiya 1:02:08 There was no crisis.

Jason Calacanis 1:02:09 Right, okay, I got it.

Chamath Palihapitiya 1:02:10 They're completely out of it.

Jason Calacanis 1:02:10 So one spent more, one spent less, but one didn't need to-

Chamath Palihapitiya 1:02:13 No.

Jason Calacanis 1:02:13 ... and one absolutely did.

Chamath Palihapitiya 1:02:14 Look at, look at Trump's spending-

Jason Calacanis 1:02:15 Yeah, I got it.

Chamath Palihapitiya 1:02:15 ... before COVID. Look at Trump's spending before COVID. It was like a 5% bump on Obama's spending.

Jason Calacanis 1:02:22 Well, the, the tax break was the one that, that accounted for a lot of, yeah. But anyway, we can sit here and debate Trump versus Biden all day.

David Friedberg 1:02:29 Let's talk about my balls, boys.

Jason Calacanis 1:02:30 Yeah, w- w- we're wasting time here. Wasting time on Trump and Biden, when we could be talking-

David Friedberg 1:02:35 Let's get to my

David Friedberg 1:02:36 balloon.

Jason Calacanis 1:02:36 If we're gonna talk about our balls-

David Friedberg 1:02:39 (laughs)

Jason Calacanis 1:02:39 ... we need to go to somebody who's an expert on our testicles. Freeberg, let's go right to science corner.

Guest 1:02:47 Our balls have been on your face. (laughs)

Jason Calacanis 1:02:47 Let's talk about our balls with the sultan of science. There's been a study on phthalates, our balls, and plastic in our balls. Freeberg, tee this up.

Guest 1:02:58 Yeah. The Consumer Reports put out a really interesting, or what has become pretty widely covered now, story a couple weeks ago where they measured phthalates in common foods. And Nick, if you wanna just pull up the image, that's been repeated in a lot of media, a lot of press. People were going nuts over this. Phthalates are these chemical compounds that are used in plastics, or used with plastics to soften them. So when you make plastics, you can kind of, you know, make them softer and, and form them into all sorts of different shapes and use them for different applications, like plastic bags or wraps or cubes or all sorts of things. And, uh, phthalates are these kind of smaller molecules that, that kind of go along with the polymers that, that are the basis of the plastics. And they measured phthalates, which are known to be toxic in terms of if you get enough of them, they can be carcinogenic and cause cancer, and they showed that every product they tested had phthalates in it. Wendy's chicken nuggets had, you know, 33,000 nanograms per serving.

David Friedberg 1:03:58 Oh my gosh.

Guest 1:03:58 If you scroll up to the top-

David Friedberg 1:03:59 Look at the... Wait, look at the Chipotle chicken burrito. Oh my God.

Guest 1:04:02 Right. And just to be clear, guys, this is not just about packaging. Packaging plays a role, but the whole food supply chain, the way we wrap food, all of our water, all of our dust, all of the air we breathe, we have measured phthalates in everything. So these phthalates end up in the animals that are used to make milk and the animals that people eat. They end up in the water that goes into the vegetables that we grow in the ground. They end up being used to make the little plastic jars that we feed our kids out of, the little yogurt pouches that our kids drink out of. Everything, all... Just to move food around in plastic packaging-

David Friedberg 1:04:36 But sorry, Freeberg, Freeberg, why would the chicken nuggets from Wendy's though be so-

Guest 1:04:41 Mm-hmm.

David Friedberg 1:04:41 Is it because they are eating?

Guest 1:04:43 They are eating things that have plastics in them.

David Friedberg 1:04:45 Plastics in them.

Guest 1:04:46 But, but we also don't know. And so what goes on-

David Friedberg 1:04:48 So we're eating the chicken, so we're eating the plastic.

Guest 1:04:50 We're eating the plastic, and it's also the fact that the way that they process the chicken and the material that they use and the packaging that they use and how they move-

David Friedberg 1:04:56 Wow.

Guest 1:04:56 ... this stuff from one place to another, you got bags that are holding chicken breasts that then get put in the thing.

Jason Calacanis 1:05:01 (laughs)

Guest 1:05:02 Ev- And then the oil has, has, you know... The oil is transported in plastic. We don't know.

David Friedberg 1:05:06 So it's plastics all the way down.

Guest 1:05:08 It's plastics-

David Friedberg 1:05:08 Guys, look at this.

Guest 1:05:09 ... all the way down.

David Friedberg 1:05:09 I mean, like, the- these are the things, like, look at Annie's. I... First of all, I really dislike Annie's labeling and patch- packaging. I think it's very ugly. So I've never bought it for that reason. But I know that there's a lot of private equity moms that buy Annie's because it's supposed to be better for you.

Guest 1:05:25 (laughs) Here, go. Keep going, Tucker. This is a really, it's a really good point.

David Friedberg 1:05:28 Private equity moms.

Guest 1:05:29 Hold on, Jamal is making a really good point. Go ahead, Jamal. This is really good.

David Friedberg 1:05:31 And, and so the problem is you see organic. When you go... Like, we, again, we go to Draeger's. That's typically where we go. Sometimes we go to Whole Foods. But we go to Draeger's and Sigona's. That's the places we go to in our neighborhood. And when you go and you look at these things like prepared meals as an example, the thing that has always attracted me to Annie's is because it is positioned as, it is cleaner and better for you, and you see everybody buying it. And what you actually see sitting on the shelf that's left over is actually the Chef Boyardee and the Campbell's. And I always thought to myself, "I won't buy Annie's because I actually don't like the label, to be honest." That was, uh, like, that was really why I, I di- just deeply disliked the packaging.

Guest 1:06:12 Yeah.

David Friedberg 1:06:12 But it turns out it's the absolute worst for you.

Jason Calacanis 1:06:14 Yeah.

Guest 1:06:14 It is. And, and let me just tell you guys-

David Friedberg 1:06:16 Virtue signaling.

Guest 1:06:16 Let, let me tell you guys some stats about this. So we produce about three million tons of phthalates a year, creating them that we use in our industrial supply chain. The global market for phthalates is about $10 billion per year. We find it everywhere. In our tap water, as measured in the US in multiple places, there's about one microgram. So tho- those are nanograms, so you kind of divide it by 1,000. So that Annie's thing has 50 micrograms of phthalates in it. But there's about one microgram of phthalates per liter of water that you're drinking. Now, here's... Um, a study was done out of Germany where they basically tried to estimate how much people were consuming. And on average, people consume or ingest about six micrograms of phthalates per kilogram of your body weight per day. So an adult male is make- is consuming about 500...... micrograms of phthalates per day. That's half a gram per day. And the human body metabolizes and excretes it, it comes out. The EPA, all of the administrative, like, agencies that oversee this stuff, they're like, "It's okay. We metabolize it. As long as we don't consume more than we can metabolize, it's gonna be safe 'cause it's not gonna stay in our bodies, it's gonna wash out." Here is the problem.

David Friedberg 1:07:24 Huh.

Guest 1:07:24 While it's in your body, while it's moving through your body being metabolized, it is what's called an endocrine disruptor. And we talked about this in the past with respect to the sunscreens. These phthalates actually interfere with the hormones that are made by things like your pituitary gland, your thyroid, and even some of the hormones that are produced in testicle cells. There was another study done that really tried to estimate what the impact was, and here is a study that showed how do phthalates actually interact with different parts of the endocrine system. And they went through and they found all these places that biological hormones and the endocrine system are disrupted by the phthalates, and, and we'll put, put, put credit for everyone, um, that, that, that shared these papers here later. And they basically showed the mechanism by which the phthalates are actually disrupting endocrine systems. Now, what is the endocrine system? We talked about endocrine disruptors in the past. The endocrine system is the interaction of hormones with cells in your body produced by all these different glands in your body, like your thyroid, your pituitary gland and so on, controls things like growth, tissue development, reproductive tissue activity like making sperm cells, autonomic function like body temperature, blood pressure, sleep, heart rate regulation, injury and stress response, your mood. All of those things are regulated by your endocrine system. And so when the, the, the hormones or the proteins or peptides that are made by those glands are disrupted by these phthalates, it can actually disrupt those systems and mess them up. So while we're not consuming, generally speaking, enough phthalates to cause cancer, and therefore we all say, "Hey, it's okay. These phthalates aren't that bad. We're not gonna all die from cancer," the truth is there is demonstrations now on how they can actually disrupt the activity of your endocrine system, and as a result, have all of these deleterious effects. Another study done on 125 men out of China. This, this paper was done out of China. They saw damage to testicle cells that would die, testicle cells that would produce fewer sperm, and then testicle cells that produced sperm with extra nuclei, and they actually demonstrated this in rats. So, the set of compounds can be fairly disruptive. So now we'll go to the next story, right? (laughs) And the next story is the one that everyone's writing about, which is, "Oh my god, there's plastic in balls." So a team at University of New Mexico, that was published in the Journal of Toxicological Sciences just last week. They took 47 neutered dogs' testicles from a local pet clinic where they were getting neutered, and they found on average 128 micrograms per gram of microplastics in those testicles, and it was mostly, you know, polyvinyl chloride or one of the, the main plastics and polyethylene. And again, phthalates leach out of these plastics and leach into the cells. And then they went to the medical investigator's office and they found these, uh, the testicles that were frozen for seven years, because when they do a medical investigation and they keep all the body parts, they keep them on ice and then they throw them away after seven years. So before they threw them away, they got permission-

David Friedberg 1:10:27 Of humans?

Guest 1:10:28 Of humans. They got permission to use these testicles to figure out, are there plastics? And they measured them.

David Friedberg 1:10:33 In the frozen balls?

Guest 1:10:34 In the frozen balls.

David Friedberg 1:10:35 These are ancient frozen balls? How old are these balls?

Guest 1:10:38 23 frozen balls.

David Friedberg 1:10:39 Seven years.

Guest 1:10:39 About seven years old. Yeah.

David Friedberg 1:10:41 Okay, seven-year-old balls, frozen.

Chamath Palihapitiya 1:10:42 Wait, are people donating their balls to science? Is that how this is happening?

Guest 1:10:45 No, it's like when there's like a homicide-

David Friedberg 1:10:47 (laughs)

Guest 1:10:47 ... or someone... and... or you don't know who died-

Chamath Palihapitiya 1:10:49 Jeez.

Guest 1:10:49 ... or there's an investigation into why someone died, the aut-

David Friedberg 1:10:52 Got it.

Guest 1:10:52 ... the coroner, the coroner keeps the body parts in case it's needed for a, uh, like a police case later or a prosecution.

Chamath Palihapitiya 1:10:59 All right. I just wanna state on the record, I don't want my balls used that way.

Guest 1:11:02 (laughs) Okay. You don't have the frozen balls on your driver's license? Like, "Freeze my balls."

David Friedberg 1:11:06 They asked me to, to store my balls, I think.

Guest 1:11:09 Yeah, right. (laughs)

David Friedberg 1:11:09 They said, "You've got such huge balls. We can store them."

Guest 1:11:11 Anyway, they got 23, 23 of these, these balls from these bodies and they found, um, plastics, uh, on average 328 micrograms per gram of, of testicle in, in these balls. It's a really, uh...

David Friedberg 1:11:26 What do you usually find, Friedberg? What do you usually find in these balls?

Guest 1:11:29 Well, we don't, we don't know 'cause we've never taken human tissue and tried to take it apart in a very detailed way to figure out, like, how much plastic is there, you know, what is it doing to our body? But now I just want to connect the dots. So now we have a sense that there's these phthalates and these other compounds that come with plastics that leak in that cause all this disruption. Separately, we're seeing this accumulation of these little plastic particles. And remember, plastics are polymers. They are long chains of monomers, and so they can be short chains, they can be long. So they break apart, break apart, break apart, and little tiny bits of them end up and they're very hard to metabolize, and they sit in your tissue, and then they can cause all this disruption. So, you know, I think these are, like, generally not-

David Friedberg 1:12:07 I'm just gonna say it. I'm just gonna...

Guest 1:12:08 Yeah.

David Friedberg 1:12:08 First of all, I really appreciate that you did this. I think it's so important. We talked about microplastics a little bit ago. You know, JCal moved his whole family away, I guess, a few years ago from plastics.

Guest 1:12:19 Yeah.

David Friedberg 1:12:19 I've started to do it four or five months ago after Nat-

Guest 1:12:22 But you can't get away from it. It is everywhere.

David Friedberg 1:12:24 No, and, and, and, you know, and Nat tried to get us-

Guest 1:12:25 It's in the supply chain is your point.

David Friedberg 1:12:26 So this is-

Guest 1:12:27 It's in the supply... It's, it's in the water, it's in the air, it's everywhere.

David Friedberg 1:12:29 This is what I was gonna say. I think our food supply, I think we should just say it out loud, is totally corrupted. And I think there's all of these other factors we look at, the rise in the use of SSRIs, the lack of sexual function in young men, the lack of sex, the low birth rate. I think these are all related and part of it is the food supply, and part of the food supply problem is the fact that it is corrupted by these materials that should never be in our body.

Guest 1:12:59 I wanna just push back on this because I don't, I don't wanna limit it to-

David Friedberg 1:13:01 I think it's... That's a guess, but I honestly think it's the truth. Yeah. That's an educated guess.

Guest 1:13:03 I don't wanna limit it, I don't wanna limit it to the food supply because here's the other thing. All of us are wearing clothes that use polymers, which are plastics.... all of us are sitting at desks that have coatings of polymers on them. All of us have iPhones that use polymers. All of us, uh, s- uh, drive cars, and the rubber, one of the ways that they found that, uh, plastic, these micro particles are getting in the air, is through tires. When we drive, little particulates end up in the atmosphere, we breathe them in, and then they end up in our body. Every part of our industrial supply chain uses polymers. Every part of our industrial supply chain-

David Friedberg 1:13:36 I hear you, but the concentration, I'm gonna guess that the concentration when you actually put it in your body, and then your intestines and your organs are bathed in this stuff, I'm gonna guess that the food supply has a huge part to do with this.

Guest 1:13:53 Yeah, but when you're... w- let's say you take, let's say you're wearing, uh, clothing. W- well, almost all of our clothes now, or many of our clothes have polymers in them. We put it in the washing machine, it ends up in the water supply chain. We consume that water. I, it's very hard to say that there's a specific action. Our whole system has been inundated with these lower cost-

David Friedberg 1:14:11 Okay then, let, let me say it-

Guest 1:14:12 ... high value.

David Friedberg 1:14:12 ... in a way that maybe you will agree with then. We need to fix something. My starting point would be the food supply. Yeah. Where do you start? Yeah. Water?

Guest 1:14:21 Well, yeah, my big, my big takeaway is, is sort of like yours, which is almost impossible to alter this industry overnight, given how ubiquitous these compounds are in everything we do and touch, tires, phones, clothing, et cetera. But I think that this is gonna trigger, and is the beginning of a wave. I'm