Tariffs, Trump's Economic Endgame, Market Chaos, Bitcoin Reserve, CoreWeave IPO

1. 0:00 – 3:51

   The Besties welcome Joe Lonsdale!

   1. JLJoe Lonsdale0:00

      Brian Johnson, that's so funny. I, I, uh... Who knows?

   2. CPChamath Palihapitiya0:04

      I am the king of nighttime erections.

   3. JLJoe Lonsdale0:05

      (laughs)

   4. CPChamath Palihapitiya0:06

      I go to bed thinking about myself and I wake up thinking about myself as well.

   5. JLJoe Lonsdale0:10

      (laughs)

   6. CPChamath Palihapitiya0:10

      Just a, just a big erection in between. (laughs)

   7. JLJoe Lonsdale0:16

      (laughs)

   8. CPChamath Palihapitiya0:16

      Let your winner slide. Rain Man, David Sacks. I'm going all in.

   9. DFDavid Friedberg0:23

      NSN, we open source it to the fans and they've just gone crazy with it.

   10. CPChamath Palihapitiya0:27

       Love you, Wes.

   11. DFDavid Friedberg0:28

       Queen of quinoa.

   12. CPChamath Palihapitiya0:29

       I'm going all in.

   13. JCJason Calacanis0:31

       All right, everybody. Welcome back to the number one podcast in the world. Man, we're starting off with three of the four original band members. Chamath Palihapitiya, he's your chairman dictator. The sultan of science, David Freiberg, and of course, I'm your host, Jason Calacanis. And David Sacks, from the original band, will be on the second half of the show. We're gonna do some of the classics. Yes, we'll get some of the classics, including Ukraine, Ukraine, Ukraine, coming up-

   14. JLJoe Lonsdale1:00

       (laughs)

   15. JCJason Calacanis1:00

       ... on the second half of the show in our Greatest Hits Revival Tour. But with us again, sitting in the red throne, is the one, the only, Joe Lonsdale is back. He is, if you can imagine, further right than Keith Rabois and Sacks. They tell him to pump the brakes. Welcome back to the program, Joe Lonsdale. How you doing, brother?

   16. JLJoe Lonsdale1:20

       Hey, Jason. Doing great here in Texas today.

   17. JCJason Calacanis1:23

       Ah, yes, I, I see you right over the hill on the ranch. Our ranches are within 20 minutes of each other. Joe Lonsdale and I are shooting guns at our ranches.

   18. DFDavid Friedberg1:31

       Are you on a ranch, Joe?

   19. JLJoe Lonsdale1:33

       Uh, well, I bought a bunch of the homes and connected them, so it's kind of like a ranch, but it's actually-

   20. DFDavid Friedberg1:37

       Wow.

   21. JLJoe Lonsdale1:37

       ... a suburb. Yeah.

   22. JCJason Calacanis1:38

       It's more like a compound. He has a compound.

   23. DFDavid Friedberg1:41

       (laughs) Suburb. Suburb.

   24. JCJason Calacanis1:42

       That creaking sound you hear are the libs rolling in the guillotines. Yes, he bought the small town (laughs) he lives in. Joe Lonsdale's here. Of course, he is a venture capitalist, the founder of 8VC, they've got six billy in AUM. Co-founded Palantir, OpenGov, and Addepar, $3 billion plus companies he co-founded. And an early investor in Andro. I'm in the market for secondary shares. You know how to reach me, folks. If you're selling your secondary in Andro-

   25. JLJoe Lonsdale2:10

       (laughs)

   26. JCJason Calacanis2:10

       ... I'm building a position, for obvious reasons. And Oculus, Wish, Oscar Health amongst his other investments. Hey, what was the feedback, Joe, on your first appearance here on the All In pod?

   27. JLJoe Lonsdale2:19

       People loved it. You know, you guys gave me no warning, so I was, like, on a mobile phone sideways, but it worked out. It was great. Everyone saw it. I guess, it looks like people actually watch your show, Jason. I was surprised.

   28. DFDavid Friedberg2:27

       (laughs)

   29. JCJason Calacanis2:27

       Apparently, people tune in from time to time, and that's why we call it the number one podcast in the world. How are you doing, Chamath Palihapitiya? How you doing, brother?

   30. DSDavid Sacks2:36

       I'm doing really well.
2. 3:51 – 8:29

   Jason recaps an eventful week in Washington

   1. JCJason Calacanis3:51

      today. Let's just start with... I'll give you a quick recap, boys, of the week since we last taped. To say the, uh, zone was flooded, in the words of Steve Bannon, would be (laughs) an understatement. Here's your Trump tsunami for the week. Thursday, when we taped, the Epstein file dump fiasco. You remember that, Joe, right? Big zero, big nothing burger. Then Friday-

   2. JLJoe Lonsdale4:15

      (laughs)

   3. JCJason Calacanis4:16

      ... Zelenskyy was dressed down and kicked out of the White House by the vice president and presidents, markets collapsed, they rebounded. On Saturday, we got a beautiful day off, video of Trump dancing down a catwalk to a YMCA. Maybe he played some golf. He was at the White House South, Mar-a-Lago. Sunday, 9:24 AM Eastern, the president pumps three specific cryptos, Solana, Cardano, XRP, to be in the first government strategic crypto reserve. Joe Lonsdale starts tweeting, I start tweeting, everybody's tweeting. He quickly retweeted himself, included Ethereum and Bitcoin, some decentralized coins. Reaction was, wow, crazy. You had a little bit of a spicy take, Joe. We'll get into that later. And I'm sure our friend, David Sacks, will have much to say in the second half of the program. But it was pretty negative. Cardano ripped 70%, XRP 32%, Solana 25%. And then there was this crazy trade. One whale went 50 times long on BTC and ETH, $200 million position on just a $4 million investment. Everybody trying to figure out who that was. I'll leave it to you to speculate. Then we start the week, Monday, Trump says, "Significant tariffs with Canada and Mexico." The market collapsed. He walks back tariffs couple of hours later, and the market starts to rebound. Then at 2:38 PM Trump announces $100 billion investment from TSMC in American fabs. Huzzah for that. And our boy, David Sacks, gets dragged out to the podium for a quick 15-second cameo. Very nicely done to our boy, David Sacks. And then Tuesday, we have the most chaotic State of the Union I've ever seen. Highlights include an angry man shaking a cane (laughs) and getting kicked out. There were some auction paddles from the libs. I don't know what they were bidding on. There were 13 Biden mentions and one Pocahontas. Wednesday-We have news that the Doge blitz might slow down, Supreme Court chimed in with a 5-4 decision, backing the federal judge who ordered the Trump admin to pay out two billion for USA contractors. Then there was a closed door meeting with the Senate, with Elon, maybe they discussed an approval process, maybe some voting type things, and then here we are today, Thursday, when we're taping. Market's down 2% on more tariff news. Breaking news drops at 11:30. Trump announced tariffs are off for Mexico. Markets aren't rebounding. We might be leaving NATO.

   4. CPChamath Palihapitiya6:34

      Can I- can I-

   5. JCJason Calacanis6:34

      Hold on. I'm almost there.

   6. CPChamath Palihapitiya6:36

      Yeah.

   7. JCJason Calacanis6:36

      Breaking... We might be leaving NATO. Breaking, we're shutting down the Department of Education site, we just found out we're not. Okay, gentlemen. That's the week that was.

   8. CPChamath Palihapitiya6:45

      There's... No, there's- there's three things that are also kind of interwoven in all of this. OpenAI dropped GPT-4.5.

   9. JCJason Calacanis6:55

      Yes.

   10. CPChamath Palihapitiya6:55

       And I think it was not really that well received.

   11. JCJason Calacanis6:58

       I didn't even know. Nobody's talking about that.

   12. CPChamath Palihapitiya7:01

       Qwen, which is the open source Alibaba, dropped a rev, which seems actually really best in class.

   13. JCJason Calacanis7:08

       Mm.

   14. CPChamath Palihapitiya7:08

       So that was really interesting.

   15. JCJason Calacanis7:10

       Okay.

   16. CPChamath Palihapitiya7:11

       Then there was a story that said LLaMA is going sideways.

   17. JCJason Calacanis7:15

       Facebook's open source LLM.

   18. CPChamath Palihapitiya7:17

       Yeah.

   19. JCJason Calacanis7:17

       Yeah.

   20. CPChamath Palihapitiya7:17

       And then the markets have just been going, I think, the craziest I've actually seen in 20 years of following the markets, and specifically you're seeing the Mag 7 compress towards the rest of the S&P 500, and then you're seeing this insane trade away from Europe. So, there's a ton that happened this week.

   21. JCJason Calacanis7:39

       I mean-

   22. CPChamath Palihapitiya7:39

       Yeah.

   23. JCJason Calacanis7:40

       I don't remember-

   24. CPChamath Palihapitiya7:40

       A ton.

   25. JCJason Calacanis7:41

       ... a more eventful week, Joe. Is this a little too much, maybe?

   26. DSDavid Sacks7:45

       You guys missed the Shalom Hamas tweet by Trump too, which for a lot of us is a big (beep) deal. He said, "I don't know if this is hello or goodbye," but he's threatening them really strongly, so for people who care about that part of the world, it's interesting to watch what's gonna happen.

   27. CPChamath Palihapitiya7:57

       So that also happened, yeah.

   28. JCJason Calacanis7:59

       Oh my Lord. Well, and Shalom is hello and goodbye, right? Just to clarify-

   29. CPChamath Palihapitiya8:03

       Yeah.

   30. JCJason Calacanis8:03

       ... as a word you would say it both, right?
3. 8:29 – 26:25

   Trump's tariffs: endgame, impact, chaos, master plan

   1. JCJason Calacanis8:30

      This is confounding to most people. Maybe since I just did the whole rundown-

   2. DSDavid Sacks8:36

      Mm-hmm.

   3. JCJason Calacanis8:36

      ... I won't go into all the details about tariffs again, but just looking at it from first principles, Joe, I asked a couple of group chats, you're in one- one of them, in fact, and I have about, let's say about 400 people total in these four group chats. What's the strategy here? What do you think Trump is trying to accomplish? And man, I got a range of answers. Let me ask you-

   4. DSDavid Sacks8:57

      Yeah.

   5. JCJason Calacanis8:57

      ... what is Trump, in your estimation, trying to accomplish with the tariffs on, the tariffs off, the tariff ons, the tariff offs? As Chamath said here, this is creating more chaos than any of us have ever seen in the markets.

   6. DSDavid Sacks9:09

      Listen, Trump's negotiating, right? So I- I actually ran into David Sacks. Each senator gets one guest. We were both guests in the Senate dining hall, hanging out with a bunch of these guys. Multiple of the guests, some of them were spouses of the senators, multiple of the guests were people who'd lost kids to fentanyl, right? And so this actually is a very serious issue. It's a big thing on the populist right, as it should be for all Americans. We've lost, you know, tens of thousands of young people recently to fentanyl, and- and- and Canada has done nothing about their border, and so, you know, you just reported breaking news, I hadn't even heard yet that Mexico might be off, Canada's still on. He's using this to negotiate. So I talked to the senators and I asked him what's going on because obviously I import things all over the place, I'd like to know what the hell the rules are, but th- he wants people to actually crack down on this stuff and save American lives, and I- I think that's a reasonable thing to use to negotiate and force him to do that.

   7. JCJason Calacanis9:56

      Okay, so you believe it's negotiation because of the fentanyl issue. Chamath, let me go to you, because many people are saying this has more to do with some great reset and maybe the 10 year. Do you think this is about fentanyl at the border or something else?

   8. CPChamath Palihapitiya10:15

      I think that this is the first week where I've seen the first real schism in how people are interpreting what's actually happening. I think that Trump and Elon were very much in a honeymoon period until this week. And I think there was the benefit of the doubt. But what I saw on X was a real divergence where on the one hand, there were people that were basically saying, "Doge is deranged, Elon is crazy, Trump is lighting the world on fire," in one camp-

   9. JCJason Calacanis10:51

      Yeah.

   10. CPChamath Palihapitiya10:51

       ... and the other camp saying he's sticking to the plan. And when I thought about this a little bit, if you went back to November the 5th, I do think it's important to remember that we were at this moment where you had this fork in the road and you had all these important issues where I think the best way to generalize it was that the Democrats believed that the lines should continue to be blurred. So whether that was on gender or race or merit versus some other immutable trait or fiscal and mono- monetary policy, things were just getting more and more blurred. And then Trump and Elon basically showed up and said, "Actually, we want to refocus and we want to make the lines very visible and clear on all those dimensions."

   11. JCJason Calacanis11:44

       Hmm.

   12. CPChamath Palihapitiya11:45

       And the majority of Americans voted that in. But I think what you're starting to see now is the difficulty in actually implementing that plan. And what I mean specifically is tariffs are very nuanced and complicated. On the one hand, there's these short-term wins, there's these impacts, you could deem them positive or negative to the dollar.There's impacts to US bonds. There's impacts to US bond markets. There's impacts to how countries deal with foreign reserves, and then there is this impact that happens when the markets react to a tariff, and then Trump takes that off the table, and then they snap back. So you have this weird set of boundary conditions right now. So I think right now we're in the very difficult part of sorting through what the long-term implications are, and I can get to some of them later, but I think that's where we are.

   13. JCJason Calacanis12:42

       I think that's really interesting. The goal of tariffs, in your mind, for Trump, is fentanyl?

   14. CPChamath Palihapitiya12:49

       No.

   15. JCJason Calacanis12:49

       Finance related?

   16. CPChamath Palihapitiya12:50

       No, no, no. It's-

   17. JCJason Calacanis12:51

       W- g- give me your definitive, what you think this is about.

   18. CPChamath Palihapitiya12:53

       I think what tariffs allow us to do is rebase the long-term reliance on the US dollar. It allows us to rebase our ability to fund our own deficits, and it allows us to rebase the long-term ability for American companies to be economically vibrant.

   19. JCJason Calacanis13:20

       Okay. So Freeberg, we got one person with fentanyl on the border negotiating, we got one person on trade. Some portion of this I hear, and I- when I asked in these four group chats, I got, "He's throwing stuff at the wall, the border, he's trolling the 10-year note, and he doesn't care about stocks," and then I got onshoring and manufacturing as a possibility. "We're gonna make it more expensive to bring things in, so why don't you consider making stuff here?" Do you think that third possibility is what's going on here? Does David Freeberg pick one of these three choices or another? What's going on here with tariffs specifically? I don't sit inside of Trump's head, and I don't have any direct line of communication to folks that are constructing the theory and the policy.

   20. CPChamath Palihapitiya14:06

       Okay.

   21. JCJason Calacanis14:06

       If I were to say, "What's the most masterful plan, in an optimistic way of what could be going on here? What's the master plan?" I would kind of craft it as follows. Tariffs aren't being done in isolation. They're being done along with a coordinated policy effort to reduce income taxes, and another policy effort to reduce government spending. So those are three actions, three legs on a stool. So tariffs... Mm-hmm.

   22. CPChamath Palihapitiya14:35

       ... reduced income taxes, reduced government spending, and they are related to each other. They're related to each other because if we increase tariffs, one element of that is that to import products is more expensive. For example, I buy LED lights in my greenhouse, and the price of the LED lights just went up by 25%. This week, I actually spoke with the CEO of an LED company, and I was like, "Why don't you guys make the LEDs here?"

   23. JCJason Calacanis15:00

       Huh. And there starts to become a crossover point where it actually makes economic sense for the company to make the LEDs here instead of sourcing them from Asia, and there's 100,000 examples of this. When the industrial supply chain goes to the lowest part of production, it's gonna end up offshoring when there's no tariffs-

   24. CPChamath Palihapitiya15:18

       Mm-hmm.

   25. JCJason Calacanis15:18

       ... and if there are tariffs, then you start to do production here. So you're increasing both kind of security for the US supply chain, but also increasing demand and creation of a workforce. Now, I think that the income tax piece is critical here because in order to make the capital available to build that industry here, we need to ha- unleash capital, and reducing of income taxes, the economic theory would be that capital will now flow into these entrepreneurial activity, these opportunities that have emerged, where suddenly it makes sense for me to make textiles, to make metals, to make materials, to make cars, to make all this stuff here in the United States that I otherwise wouldn't be making. So both the corporate and the personal income tax, by reducing it, unleashes capital that instead of going into the government, it now goes into the private sector into building businesses. Okay. I think that there's another theory about this, which is as you drop the income tax, one of the kinda key theories that I've heard spoken about a lot lately, and I think we're gonna hear about it a lot more this year, is trying to get the United States to move away from an income taxation model to a consumption taxation model. So effectively, what the tariffs do is there's a tax for you buying certain things. So now, instead of getting taxed when you earn money as an individual, you get taxed when you spend money, and some people think that that's both a more fair system and a more kind of economically vibrant system because that will drive investment in the things that people want to produce because the money's going into production. So ultimately- You think that, do you think that, Freeberg? I'm curious. I, I don't know. It's a really interesting economic theory. I mean, I am not opposed to seeing some sort of an experiment play out where we look at a shift from income taxation to consumption taxation, and see if it actually does have an effect on economic growth and productivity. It has not been done in 150 years. There's a lot of economic theorists on both sides of the equation saying this does work or it doesn't work. Okay. And let me just say one last thing. By reducing government spending, we are moving workers from the government into the private workforce. So as those new industries pop up, as those investments start to get made in building new industry onshore, where are the workers gonna come from? Remember, the government's 30% of the US GDP today. So if that's not a great way to invest money, maybe the private industry is better at investing money and employing people that will unleash the workforce, and it will counterbalance the inflation that we're experiencing. So there's a lot of inflation because of tariffs, and by reducing government spending, that's the offset to inflation. So those three actions, I think, are three legs of a stool, and they actually are all interrelated to one another. So that would be my grandmaster theory of what might be going on. This is an interesting triangulation theory that people have been speculating about, and there are a couple of caveats here, Joe. Number one, we do have lowering income tax and lowering services experiment. It's called Florida, (laughs) taxes in a couple of the states where they have lower income tax and, and more consumption tax. We pay a lot more... Yeah. ... in real estate taxes here, something we consume. Putting that aside-

   26. The really interesting issue is, we're at the lowest unemployment of our lifetime.

   27. CPChamath Palihapitiya18:20

       Mm.

   28. JCJason Calacanis18:21

       4%. Where are all these workers gonna come from? What do you think, Joe, now that you've heard the two other panelists here discuss it? What are we trying to get to? Where is the destination? At the end of this term, Trump's lame duck, he can go wild here, he's not running for re-election and, you know. What, what do you think he wants to see? Do you think he just wants to cement some sort of legacy, and if so, what's that legacy and how do these actions equal his goals and legacy?

   29. DSDavid Sacks18:52

       No, listen, I agree with what David, with what David was saying, Jason. And, and it's, it, it's a really important point also, uh, that we should mention, is that the last four years, the economy's looked okay, but part of that is because government's been hiring like mad. And so the point he made is that actually, you know, having twice as many people, you know, harassing me, I just got back yesterday, no action on an audit they'd been harassing me on for three years, they found nothing. Having twice as many people doing things like that and, and, or like, you know, running TSA or pushing papers around in the Department of Labor, uh, doesn't actually add output to the economy. And so, you know, it, it does seem like it makes a lot of sense. Let's take a million workers out of the consulting class around DC, out of the, you know, paper pusher class around DC, and let's actually deploy them to the actual productive economy. Elon and Trump have both been saying that. I think David's 100% right. And it is true, a lot of my companies, thanks to ta- the tariff stuff, are looking to build stuff here. So, I'm not a huge fan of tariffs personally, but it's, they definitely make sense for things in defense, they definitely make sense for negotiating with countries, and it is true, it is pushing certain people to, including me, to build some more things in America.

   30. CPChamath Palihapitiya19:52

       Here's where tariffs make a lot of sense. If you have markets where there are domestic alternatives, and/or where things are fundamentally commodity, there's no reason why tariffs can't work to create the incentives to re-domicile economic productivity inside of the United States. That's a, that's a slam dunk, I think.
4. 26:25 – 53:42

   DOGE, IRA grifting, do campaign contributions need to be capped?

   1. JCJason Calacanis26:25

      new desgraciad.com for the week.

   2. (laughs)

   3. Look at this, Chema. You wanna talk about software and waste. 35,855, according to DOGE, breaking news, ServiceNow licenses on three products only being used by 84 people-

   4. Oh my God.

   5. ... in our government.

   6. Are you kidding me?

   7. 11,000 Acrobat licenses with 0.0 users. Desgraciad!

   8. CPChamath Palihapitiya26:53

      (laughs)

   9. JCJason Calacanis26:54

      (laughs)

   10. Absolutely abhorrent. And I'm saying it right now, I want an investigation into procurement. Who sold this? Who bought it? This could be a crime.

   11. Okay.

   12. This could be fraud. There could be kickbacks. I'm saying there could be.

   13. CPChamath Palihapitiya27:07

       Well, I don't think it's that-

   14. JCJason Calacanis27:08

       Number two-

   15. CPChamath Palihapitiya27:09

       But I do think you have to look at the earnings of these companies in question. Where's all of this-

   16. JCJason Calacanis27:13

       Totally correct.

   17. Number two.

   18. CPChamath Palihapitiya27:15

       There we go.

   19. JCJason Calacanis27:15

       Totally correct.

   20. If ServiceNow ever wants to work with the government again, Mr. President, Mr. President, our president, I want them to pay us back for the unused licenses, and I want a full audit for those last-

   21. CPChamath Palihapitiya27:30

       This is-

   22. JCJason Calacanis27:30

       ... 10 years.

   23. CPChamath Palihapitiya27:30

       It may-

   24. JCJason Calacanis27:30

       If they don't pay us back that money and give us a credit-

   25. CPChamath Palihapitiya27:32

       Hold on, hold on. Listen to-

   26. JCJason Calacanis27:33

       ... banned forever.

   27. CPChamath Palihapitiya27:34

       Hold on. It's not-

   28. JCJason Calacanis27:35

       Thank you, Mr. President.

   29. CPChamath Palihapitiya27:36

       This may- this may not be ServiceNow's fault. This may be the ineptitude of the people-

   30. JCJason Calacanis27:40

       Correct.
5. 53:42 – 1:03:36

   CoreWeave IPO

   1. JCJason Calacanis53:42

      talk about this CoreWeave IPO. If you don't know, CoreWeave is part of a new type of infrastructure provider called NeoCloud. It's a fancy way of saying using GPUs to build data centers. This is a really interesting company because they got onto GPUs early and they had a lock in on a large number of NVIDIA's GPUs. They've, uh, got 32 data centers with 250,000 NVIDIA GPUs. As an example, when Elon built the largest, fastest, uh, data center, Colossus, that was 100,000. So this is, you know, really, really, uh, a big company. They're gonna do an IPO. Analysts are estimating they're gonna raise at least 3.5 billion at over $30 billion. Their secondary was 23 billion in November of 2024. So this is cooking with oil. They've got...... incredible revenue, by the way, 1.9 billion in 2024. But if you look at two years ago how much revenue they have, the growth is amazing. Nick, put a chart in here in post because, uh, it's like a 10X I think each year or something crazy like that when I talked about it on the other pod. But they're very unprofitable, almost a billion dollars in loss in 2024, and that's interest payments on a lot of their debt. They have almost eight billion in debt, huge debt load to buy all these GPUs, and that has been the question we've been talking about here, Chamath, is, are these GPUs, are these Neoclouds, fancy way of saying-

   2. CPChamath Palihapitiya55:08

      I'll give you-

   3. JCJason Calacanis55:09

      Yeah.

   4. CPChamath Palihapitiya55:09

      ... a couple factoids about CoreWeave-

   5. JCJason Calacanis55:11

      Okay, go ahead.

   6. CPChamath Palihapitiya55:11

      ... which I find super impressive. So the first question is like you would say, "Why didn't AWS, GCP, and Azure eat these guys for breakfast, lunch, and dinner?" And as it turns out, they had one very specific technical decision that I think was extremely valuable, which is that these guys did not use hypervisors.

   7. JCJason Calacanis55:30

      Explain what that is.

   8. CPChamath Palihapitiya55:31

      So a hypervisor is basically a middleware layer of software that allows you to abstract units of compute so that then you can make them available, and instead, they basically allowed you to write to the bare metal and this very native approach that allowed them to get a lot of traction. So it's a really interesting thing to note that just that simple thing, like one simple technical design decision, can allow you to build what looks like, at least from the revenue perspective, an incredible business, right? So kudos to them. Super awesome to see that you can still maneuver around the big giants. I think that that's cool. I think the big question with CoreWeave is, what is the period of amortization and the useful life of these GPUs from NVIDIA? And I think that that question is up in the air. As you said, Jason, a lot of their losses are these interest payments, and as long as that they have that calculated right in their models that they use t- to borrow all this money to buy all these GPUs from NVIDIA, this is gonna be a killer business. To the extent that they got that calculation wrong, meaning we thought the useful life was ten years, but it turned out to be five, this business is deeply under water. So I think that that's the bet. The bet is they've built an amount of h- headway. They're gonna continue to do this good technical engineering, but the other side of it is, is the useful life right? Is the technology curve right? Is Moore's Law and all these other things, will they work in its favor or against it? And I think that's the-

   9. JCJason Calacanis57:04

      Yeah.

   10. CPChamath Palihapitiya57:05

       ... that's the decision.

   11. JCJason Calacanis57:05

       And, Joe, people say useful lifespan, GPUs, three to five years before the next generation is so much more powerful, especially in relation to power consumption, that it's worth running it. Now, with servers, old CPUs for running Facebook, it's a totally different story. You can keep those running five to seven years before it's not worth running and you have to turn them off. What do you think here of CoreWeave's business?

   12. DSDavid Sacks57:28

       I think, I think you're right. There's an economic question on the power and all these things. I actually know Brandon. He lives nearby me in my house in Montana. He's a really smart guy, and I think the really interesting thing, you know, when they built this that I think is relevant going forward is these guys were commodities traders, and they were originally buying stuff to like mine Bitcoin and other stuff like that. And then they realized, as commodities traders, there's like a certain supply and demand in the market of GPU chips, but also of all the data centers, by the way. And it's really, it's really interesting what they did is they locked down the full supply of tons of data centers, tons of the power they needed, tons of the chips, and they're, they're very, very thoughtful. I mean, they're effectively... They're traders, and they're, they're very economic, and they have, I think they have bottled this stuff well.

   13. CPChamath Palihapitiya58:05

       That explains the technical decision because they have to have very low latency throughput in order to transact efficiently as commodities traders, I'm guessing as well.

   14. JCJason Calacanis58:13

       There is one-

   15. DSDavid Sacks58:14

       Exactly.

   16. JCJason Calacanis58:14

       ... Achilles heel-

   17. CPChamath Palihapitiya58:15

       Yeah. That's cool

   18. JCJason Calacanis58:15

       ... here for this company, Friedberg. They had massive revenue growth, but they have a dependency, 60% of the revenue now from Microsoft, and Microsoft seems to have done this either, it's unclear, but maybe to service the OpenA- AI deal where they-

   19. DSDavid Sacks58:30

       Yeah.

   20. JCJason Calacanis58:30

       ... needed to give them a bunch of infrastructure, or it might be for Azure. It's unclear. People have been asking this question for a couple of years now. But what do you think of a business with one client with 60% dependency?

   21. DSDavid Sacks58:41

       And, and this is how these things work, Jason, is they just... One client tends to grow really, really fast, and they, they're actually... You know, so they do this orchestration framework called Sunk. I know a little bit about it, and it's like really easy for scheduling, workflows with batches and all these things, but I think a lot of other people are using really well. They've just bought Weights & Biases, right, which like everyone uses-

   22. CPChamath Palihapitiya58:59

       Yeah, that's a great-

   23. DSDavid Sacks58:59

       ... basically.

   24. CPChamath Palihapitiya59:00

       Yeah.

   25. DSDavid Sacks59:00

       It's a great buy, right?

   26. CPChamath Palihapitiya59:00

       And they're killer-

   27. DSDavid Sacks59:01

       That's awesome.

   28. CPChamath Palihapitiya59:01

       They're killer for training. I mean, I think these guys crush in training.

   29. JCJason Calacanis59:04

       Satya Nadella said that Microsoft was doing this maybe not for a long-term usage. So, Friedberg, your thoughts on CoreWeave.

   30. I'm not as deep as you guys are. I remember in 2003, I worked for nine months at a private equity firm, and I would cold call like companies that hadn't raised venture capital that were profitable and fast-growing and see if they would take our money. That's the business model.
6. 1:03:36 – 1:14:19

   Trump 2.0 favoring Main Street over Wall Street, bond market breakdown, re-balancing the economy

   1. JCJason Calacanis1:03:36

      Chamath, you know, we've been going back and forth in the group chat and, and you've been talking about it publicly, maybe Main Street versus Wall Street and what's going on in the markets here. 'Cause there's EU, uh, bond issues. We obviously... Uh, it seems like in some ways maybe the Trump campaign is not thinking about the stock market as much as they're thinking about the bond market. Explain to us your take on markets right now.

   2. CPChamath Palihapitiya1:04:01

      Yeah, I think that there's three markets that are important. There's the US long end of the curve, so this is the 10-year bond yield. I think then there's the US equity market, and then the most next important market are the European bond and equity markets together. And I'll explain why in a second. But just on the first few, I, I mentioned this before, but I really do think we're in a secular shift where I think the MAGA majority and the base of people that can be a reliable voting bloc in the future, as I've said before, are working and middle-class folks that don't necessarily own a ton of stocks, nor do they own homes, of which there's a lot. Second cohort are people that are pro-innovation and pro-tech. And the third are patriotic business owners. I think that cohort is very large. And I think that when the core strategists inside of MAGA figure this out, one of the big takeaways is that they're not gonna care about the stock market and Wall Street. And a lot of the policies will be viewed through the lens of Main Street. And I think that you started to see this rhetoric now, one from Besant, and we'll play this clip in a second. And the second was just today from Trump himself. But Nick, do you wanna play the Besant clip if you have it?

   3. JLJoe Lonsdale1:05:26

      I think o- over the, the medium term, which is what we're focused on, it's a focus on Main Street. Wall Street's done great. Wall Street can continue to do fine, uh, but we have a focus on small business and the consumers, so we are going to rebalance the economy. We're gonna bring manufacturing jobs home.

   4. CPChamath Palihapitiya1:05:47

      That was the first one. The second one was just today, Nick, I sent it to you. Do you wanna just show it to these guys? Which I think is really interesting.

   5. JCJason Calacanis1:05:53

      So it says here, "Breaking news from, I guess, unusual whales. Trump has just said he's not looking at the stock market." Hmm.

   6. CPChamath Palihapitiya1:05:59

      Okay, so-

   7. JCJason Calacanis1:06:00

      Not sure I believe that, but okay.

   8. CPChamath Palihapitiya1:06:02

      So why is this actually valuable? Well, if we are incentivized, if the government of America is incentivized to implement policies that crack the equity markets, it's actually really good in some ways. Number one is, if you deflate asset prices, you also deflate inflation. Okay? And you-

   9. JCJason Calacanis1:06:23

      Give an example there for the audience, so we make it clear.

   10. CPChamath Palihapitiya1:06:26

       NVIDIA is ripping at all-time highs. You are like, "Oh, wow, I'm so cash rich." You can go get a margin loan. You take that money, you reinvest it in a second home and a third home. You sell some stock. You start to buy cars, all this other stuff. It drives consumptive behavior-

   11. JCJason Calacanis1:06:42

       Mm-hmm.

   12. CPChamath Palihapitiya1:06:42

       ... that on the margin isn't there if...... the markets were much, much lower than this. So if you rebase the equity values that people have, what you do is you actually depress the amount of free cash flow that they have to spend on other things. So it's a deflationary tactic. How the bond market reacts to that is if the stock market goes down is y- you start to become a flight to quality, right? "Oh, my gosh. There's volatility in the stock market. Oh, my gosh, I don't want to deal with the stock market going down. Let me just sell, take some chips off the table and buy 10-year bonds." When you buy the bonds, the interest rate goes down. Why is that good for America? We have $10 trillion we need to go out and borrow in the next nine months. And so if we can pay 3%, 3.8%, 4%, we save us, ourselves trillions of dollars versus if we had to pay 4.5, 5, 5.5%. So that's the second thing. And then, the third thing is that right now, what we had this week because of the Ukraine and Zelenskyy thing is basically Trump saying, "We are totally risk off this war." And I'm not gonna debate whether that's right or wrong, but that's what he said. "We're gonna curtail the aid. We're not even gonna share intelligence. They're on their own." What did that force? What happened this week was the Europeans had to basically circle the wagons and they said, "Okay, we're gonna step up." And what they announced was a four-year plan to borrow money to invest in defense. What they also did, which was really interesting, is the UK specifically said, "We're gonna borrow it in this clever little way," this is their interpretation, "so that it doesn't actually count in the debt to GDP calculations of my country."

   13. JCJason Calacanis1:08:27

       Oh.

   14. CPChamath Palihapitiya1:08:27

       So they're start- they're starting with-

   15. JCJason Calacanis1:08:28

       Convenient.

   16. CPChamath Palihapitiya1:08:29

       But then, so then how did-

   17. JCJason Calacanis1:08:30

       Yeah.

   18. CPChamath Palihapitiya1:08:30

       ... the bond market react to it? Nick, you can show it. They're like, "You know what, guys? If you wanna fight this war, obviously you're allowed to do whatever you want, but the cost that you're gonna have to pay is gonna go up." This has been going up-

   19. JCJason Calacanis1:08:43

       Yup.

   20. CPChamath Palihapitiya1:08:43

       ... every day. And-

   21. JCJason Calacanis1:08:45

       Yep.

   22. CPChamath Palihapitiya1:08:45

       ... you're at a point now where this is severe fiscal pressure on these governments. I do not know how they sustain their deficits-

   23. JCJason Calacanis1:08:56

       Hm.

   24. CPChamath Palihapitiya1:08:56

       ... and raise more debt. So all of this is happening all at the same time. I think Trump-

   25. JCJason Calacanis1:09:00

       Yep.

   26. CPChamath Palihapitiya1:09:01

       ... is pro-Main Street. Equity markets basically do not get bid. The bond markets respond positively. Yields go down. Good for America. They extract themselves from spending programs li- like, again, it's more than a spending program, but I'll just say it in this context narrowly. Russia-Ukraine is a spending program that, that if you take off the table, that balance of responsibility goes to Europe and then the markets are saying, "This is not right. We want this war to end and we're gonna make it more expensive for you to litigate it." If you put it all together, it's a really interesting moment in the markets I haven't seen in a very long time.

   27. JCJason Calacanis1:09:36

       Joe, do you think this i- the refinancing of our debt is the end game here? There is, like, maybe 10% of people who seem to have fallen in that camp when I queried on these four group chats. "Hey, you know, if we can depress everything, we lower consumption, we break inflation even more. Maybe people lose their jobs, you know, less consumption and, and rates go down. We have to cut rates three or four times, put pressure on the Fed, then we can maybe refinance our debt, which is coming up some percentage of it." What do you think of that theory?

   28. DSDavid Sacks1:10:11

       Y- you know, Jason, Chamath has a lot of interesting thoughts here. And I, I think it's, I think it's a very smart analysis. I'm not fully aligned. It is true bond markets hate war. War is expensive. War is inflationary. It's very clear Europe is going through, okay, you know, war is more likely for us to spend money. That, and that hurts them. You know, in the US, I think the number one thing that Scott Besson and Trump would want around this is, is to fight for Main Street, like they said, but that really is, you know, the kind of populist energy we have right now. And so I think they are focused on lower interest rates. Lower interest rates, you know, I have some- someone who works with me, uh, their spouse, you know, is a real estate agent and that they're having a really tough couple years because interest rates spiked up. If you get interest rates down again, there's so many different places in America where people start making money again, with, with the title companies, with, uh, brokers, with, uh... There's so many things that happen, right, with that. And so-

   29. JCJason Calacanis1:10:54

       Trickle down, yeah.

   30. DSDavid Sacks1:10:55

       It's, it's... Well, it's not just trickle down. It's like this is the part of the economy that, that just really does start to turn on and certain transactions can happen again. And, and you're right. It, it is cheaper debt that is, that is an advantage as well. So I think disinflation is very important and I think we have to find some way to get there. Chamath may be right that it's worth hitting assets to get to this inflation. That's something that Scott could be working on because of all the debt. But it is, it is true that-

Episode duration: 2:06:33