All-In PodcastThe AI Cold War, Signalgate, CoreWeave IPO, Tariff Endgames, El Salvador Deportations
EVERY SPOKEN WORD
155 min read · 30,563 words- 0:00 – 1:20
The Besties welcome Gavin Baker back on the show!
- CPChamath Palihapitiya
When I wasn't able to use the R word, I would use deficiente for two people.
- JCJason Calacanis
Mm.
- CPChamath Palihapitiya
Jason-
- JCJason Calacanis
And Fahamid.
- CPChamath Palihapitiya
... and Friedberg's dog, Marshall Friedberg.
- JCJason Calacanis
(laughs) Oh, come on.
- CPChamath Palihapitiya
I can't stand Marshall Friedberg.
- JCJason Calacanis
Come on. He's...
- CPChamath Palihapitiya
That little bastardino jumps on the table, eats the fucking nuts.
- JCJason Calacanis
The worst. The worst.
- CPChamath Palihapitiya
I hate Marshall Friedberg. I hate him.
- JCJason Calacanis
(laughs)
- CPChamath Palihapitiya
I can't stand this fucking bastardino.
- JCJason Calacanis
Look at the little guy. He's just a little guy.
- CPChamath Palihapitiya
Look at, look how he sits.
- JCJason Calacanis
He's so cute.
- CPChamath Palihapitiya
He sits like a moron.
- JCJason Calacanis
He's so cute.
- CPChamath Palihapitiya
He sits like an, he sits like a deficiente.
- JCJason Calacanis
(laughs)
- CPChamath Palihapitiya
Look at this dweeb-
- JCJason Calacanis
Oh my God.
- CPChamath Palihapitiya
... and this deficiente. Now, Nick, show them my dogs. Beautiful.
- JCJason Calacanis
Beautiful.
- CPChamath Palihapitiya
Valentina Zanini, she's the breeder of breeders. Look at these two beautifully elegant... Oh. Look at Aki and Dukie.
- JCJason Calacanis
Those are my dogs.
- CPChamath Palihapitiya
Look how, look how well behaved they are. You don't see them jumping on the table to eat the main course, Friedberg.
- JCJason Calacanis
No. No.
- CPChamath Palihapitiya
Marshall almost ruined our Christmas dinner. This is why I'm holding a real grudge against Marshall Friedberg.
- JCJason Calacanis
He ate Shemuf's nuts.
- 1:20 – 16:22
Nvidia balance sheet questions, CoreWeave IPO, M&A/IPO bounce back
- DSDavid Sacks
- JCJason Calacanis
All right, everybody. Welcome back to the number one state sponsored... I'm sorry, All In podcast in the world.
- CPChamath Palihapitiya
Oh. Oh.
- JCJason Calacanis
The number one podcast. Oh, sorry. Stray bullets. Here we go.
- CPChamath Palihapitiya
Oh.
- JCJason Calacanis
Back on the program. Our guy, Gavin Baker is here. You know him from Atrides Management, does private and public, four billion under management. And a lot to talk about with you.
- CPChamath Palihapitiya
GB1. Good to have you here.
- JCJason Calacanis
GB1 is here. Solo dolo. Core Weave IPO happening soon, uh, by the time you get this. And NVIDIA, you were there at NVIDIA. You were the one analyst, Gavin, that Jensen pulled up. You're loved by Jensen. What's it like to be loved by Jensen? Tell us everything.
- GBGavin Baker
Well, so first he did, um, there was, uh, Alfred fo... Was from Sequoia.
- JCJason Calacanis
Mm-hmm.
- GBGavin Baker
And then they had a, a nice sell side guy whose name is escaping me at the moment. But it is technically true, I was the only public equity investor on the buy side that Jen- Jen- Jensen asked. I've known Jensen for 25 years. He's, he's kind of the same guy he ever was, like, just maybe slightly calmer.
- CPChamath Palihapitiya
Gavin, can I ask you, like, all this stuff where they talk about the balance sheet questions that some folks have about NVIDIA, some of the accounts receivable issues and stuff, is there any legitimacy to those issues? The round tripping? Like what's the, what's the real story of someone that, that peers into that PNL and understands it?
- GBGavin Baker
Yeah, so we'll t- I guess maybe take them in reverse order. I really don't think, like if, if NVIDIA had no- not put any money into Core Weave, not put any money into kind of other of these neo clouds, I don't think it would've impacted their revenues at all. At all. They would have sold...
- CPChamath Palihapitiya
More to Meta and more to Tesla.
- GBGavin Baker
Yeah, more to Meta, more to Amazon, more to Microsoft. So the reason they did it is even three years ago, it was a very stable three player oligopoly from the cloud computing players in Amazon, Google and Microsoft. And if you're NVIDIA, that's not great to have just three big customers. Those big clouds, particularly in 2023 when there was such a rush to get GPUs, they each kind of want to do their own kind of custom version of an NVIDIA server. And NVIDIA, by giving kind of like a standard reference design, which someone like Core Weave bought to Core Weave, you got GPUs in the market a lot faster. And when you use NVIDIA's reference design, it's generally smoother and easier to stand them up. And so the big three kind of cloud computing, you know, hyperscalers, their incremental share of revenue went down and that was nothing but good for NVIDIA because they now have kind of a more fragmented base of buyers who have less power over them.
- CPChamath Palihapitiya
But what does it mean, Gavin, when like the accounts receivable jumps from a billion five or so to like five and a half billion year over year? Is that concerning or that's just business?
- GBGavin Baker
So look, it's never good, but if you think NVIDIA has gone through the biggest product transition in history-
- CPChamath Palihapitiya
Mm.
- GBGavin Baker
... in terms of Hopper. You know, this is a business doing tens of billions of dollars at scale. There's never been a product transition like this in the history of semiconductors going from Hopper to Blackwell, you know, kind of the 2022 generation GPU to this one. The only precedent for this on planet Earth is the iPhone. And there's something called the Osborne effect, which is, you know, when Apple comes out with a new iPhone for the three months before, nobody buys the new iPhone. And I think the only reason NVIDIA was able to grow through this product transition is because of reasoning models like DeepSeek, which are just so compute hungry. And this product transition does come back to that day's receivables.
- CPChamath Palihapitiya
The cum receivables now is like $23 billion.
- GBGavin Baker
Yeah. It's never good when accounts receivables go up, but if... This is the most understandable time for it to happen.
- CPChamath Palihapitiya
In a product refresh cycle, you're saying?
- GBGavin Baker
Yeah.
- CPChamath Palihapitiya
Yeah.
- GBGavin Baker
And because-
- CPChamath Palihapitiya
Yeah.
- GBGavin Baker
... a Hopper server, you know, it's a rack.
- CPChamath Palihapitiya
Mm-hmm.
- GBGavin Baker
It's whatever it is, seven feet high, weighs 1000 pounds. It consumes 60 kilowatts, which is 60 American homes, and it's air cooled. So you cool those GPUs, and the biggest problem with GPUs, one of the biggest, is they melt. You cool it with air. Blackwell weighs 3000 pounds, so three times as much, the rack. You know, it's eight feet tall, maybe five feet deep, uh, four feet deep, 3000 pounds.... and it consumes 120 kilowatts, so twice as much power and roughly the- kind of the same footprint, three times as much weight, and it's liquid cooled. So this is like an iPhone upgrade cycle, you know? It's like, uh, it's still a pain that we went from, you know, Lightning to USB-C. You know, I'll grab a cord and it'll be Lightning instead of USB-C.
- CPChamath Palihapitiya
Yeah.
- 16:22 – 28:37
US vs China in AI: Manus, China building its own Nvidia, and more
- GBGavin Baker
- CPChamath Palihapitiya
Do you think that there's any issues? There was a, a bunch of companies added to the export control list two days ago. Some were in quantum computing. Generally a lot of it, though, was in the NVIDIA ecosystem. So I think that the, the US government is really trying to make sure that these next gen GPUs don't go directly to China, but also don't go to countries that could then redirect them into China. Did you get a chance to look at that or did your team look at that yet?
- GBGavin Baker
Oh, yeah. And I think this will be part of, you know, the upcoming negotiation between America and China. But it is hard. You know, it's (laughs) like if we can't, you know, if America cannot keep illegal drugs out of, (laughs) you know, out of our own country, these GPUs are arguably dramatically more valuable per unit, you know, like a Blackwell is like, you know, the size of this, and it's just hard. Particularly like, you know, America, we're trying to keep drugs out. Here, China is trying to bring the GPUs in, and it's kind of, uh, significantly, you know, I think harder to prevent than, than, you know, uh, smuggling of illegal drugs. Now everybody does their best, but, um, yeah, the United States, I think it's always gonna be kind of a game of cat and mouse until you get some sort of grand bargain and right now they, they're allowed to sell certain kinds of GPUs into China, and I'm sure there'll be-
- JCJason Calacanis
Should we be doing that, Gavin? Is, is this going to be an effective strategy? You, you know, if you were advising the president, would you say, "Ah, just let NVIDIA sell them." I- i- it's a fool's errand to try to stop 'em 'cause they're all going to Singapore or wherever, Vietnam, and, and routing their way around?
- GBGavin Baker
I think we're putting enough friction into the system that it does theoretically give America an advantage at the cost of creating tremendous incentives for China to develop their own semiconductor ecosystem.... and, you know, pressure to kind of... You know, necessity is the mother of innovation, and these export controls are creating an immense incentive for China to be really algorithmically innovative. And you saw that with DeepSeek, where there were some real algorithmic innovations.
- DFDavid Friedberg
Yeah.
- JCJason Calacanis
So said another way, if we squeeze too tightly on letting them buy the NVIDIA chips, they might make a better NVIDIA-
- GBGavin Baker
I mean, I think that would-
- JCJason Calacanis
... and become resilient to-
- DFDavid Friedberg
I think they're doing it now. They're trying now.
- JCJason Calacanis
Yeah.
- DFDavid Friedberg
So that's-
- JCJason Calacanis
Well, they're trying-
- DFDavid Friedberg
They're trying.
- JCJason Calacanis
But, I guess, what are the chances they succeed, in your mind, Gavin, in creating something competitive with or better? And then what would that say about the AI race?
- GBGavin Baker
In the next five years, I think zero. I think it's really-
- DFDavid Friedberg
Okay.
- GBGavin Baker
... really hard. But over the 10 years, who knows?
- DFDavid Friedberg
Okay.
- GBGavin Baker
And if you're the CCP, 10 years isn't that long. If you're America, 10 years is an eternity.
- JCJason Calacanis
Yeah. They're thinking in centuries, and we're thinking in decades. Yeah, that's probably correct. Hey, um, let's pivot over to AI agents, since we're in the AI, and obviously there's other big topics this week we'll get to, even politics, and, uh, Signal, and all that kinda good stuff. But we have, uh, a company that seems to be, you know, having a moment. It's called Manus, uh, M-A-N-U-S. It's currently in private beta, but they're creating agents, and we've been talking about this agentic revolution. Basically, little, you know, jobs going out. We used to call them cron jobs back in the day. But going out and doing things for you, and it seems to be working, and it's pretty impressive. What do you think about this company specifically, if anything, and are we getting to a point where we're gonna have the same ChatGPT-2.5 moment, but with agents? And then if we do have that, Gavin, what will that look like in terms of employment and how companies are run?
- GBGavin Baker
Look, I do think, uh, if agents materialize as a reality, and, you know, Manus is maybe a little bit of a ChatGPT moment for that, I would say OpenAI and Anthropic... Anthropic developed something called the Model Contact Protocol that OpenAI just adopted. I think it will become a standard, and it makes it really easy for an LLM, like Stripe can just integrate with MCP, and then any LLM that uses MCP can, you know, interact with Stripe. And this is solving a big, big problem for agents, um, in terms of just making them, you know, much easier to use, much more standardized. But if agents become a reality, one, the ROI on AI and Blackwell is gonna be very high. And two, what will... It's not good for human employment, but what will be kind of, I would say, the rate-limiting factor, is just compute. In a world where we all have agents doing things for us all day long, it's going to be a long time before we have enough compute in the ground for that to be a really, really widespread reality. And I think that's why, you know, OpenAI was talking about pricing their first agents at $2,000 to $20,000 a month. Like, this ROI on AI question, I think, to me, really does come down to agents in the short term.
- JCJason Calacanis
Freeburg, your thoughts on these agents and the impact they could have on running businesses, employment, and just generally efficiency. We now are starting to have some standards. MCP stands for Model Contact Protocol. Your thoughts, Freeburg, on how this might impact, you know, architecting a business, which you're doing right now with Ohalo. How, how might this change how people work on a day-to-day basis? Let's maybe give some examples for the audience.
- DFDavid Friedberg
Uh, look, I'll take a slightly different view than Gavin. I've said this in the past, but maybe I'll try and contextualize it a little bit. I think that the big unlock with these kind of agentic systems is not necessarily about replacing the easy human tasks, which everyone kind of thinks are kind of the obvious application of them. I think what we're missing is the ability to unlock really complex tasks that are not really manageable today. I can't come up with a very grand project planning exercise with the team I have today. I'd have to go hire 30 people. L- let, let me give you an example. I want to go build a plant breeding facility under the ocean, okay? So how do I do that? So to do that today, I'm like, "Well, I gotta go hire people that understand oceans, uh, u- understand engineering, that understand how to do underwater engineering. I have to hire material scientists. I have to hire physicists. I have to hire construction project planners." There's a whole group of complicated people I would need to kind of put together to be able to kind of execute on that opportunity. But now, a smaller group, maybe three or four people, or two people can say, "Okay, let's use these agents to help us build that project plan and spec out every step of the process, define how much everything will cost, what workloads are needed, who's gonna do what." So suddenly, that difficult project becomes a reality. Here's another good example, the California high-speed rail program that's ballooned to this $100 billion. What if we had a- agents organizing and running that program? Well, maybe the cost of that program and the reality of that program makes it a reality now. So it suddenly becomes a program that we launch, we get it done, we build this railroad. Whereas all the people, all the complication, all the confusion has... and, and whatever grift has been going on has led to $100 billion balloon budget with no outcome. So I think complex projects can actually be tackled in an easier way. That actually unlocks a tremendous amount of building, a tremendous amount of opportunity for new employment, for people to come in and s- small teams of three or four to get hired that can now do the work of 300 or 400 really deeply sophisticated, highly technical people with a very small, less technical group. So I think there's gonna be a tremendous amount of opportunity in biotech, in engineering, in...... manufacturing, in urban design, in transportation, and on and on and on, where small groups are gonna get spun up that can use these systems, uh, to do really complex projects. It's less about, like, oh, you're going to replace call centers. Like, sure, m- maybe, but, like, what are we going to be able to do with these things that I can't even think about doing today?
- JCJason Calacanis
Chamath, let's level this up and just talk about the bigger picture, which is our giant rival in China. They're actually catching up, in some cases exceeding us. If they get to AI first and then are able to execute on this, given their top-down controls, uh, given the size of their population, given their advantages in manufacturing that we're seeing now with Xiaomi making cars, you know, what, uh, BYD is doing in self-driving and cars, what we're seeing now with chips versus Nvidia, it's kind of getting set up that almost everything we're building here in the US, China's copying at a very fast pace and then exceeding. So what's at stake here, big picture? And then, I guess, we'll then look at-
- CPChamath Palihapitiya
Look, why-
- JCJason Calacanis
... what should our, what should our philosophy be, you know, uh, on a, in a geopolitical way? Yeah.
- CPChamath Palihapitiya
Let's just do an economics lesson. Why does anybody invest? They invest because you... let's just take a dollar. You want to generate a rate of return that's better than all your alternatives, and the riskier it gets, the more of a return you want, right? That's the basic idea. So if you invest a dollar in bonds, you can get 5 or 6%. If you invest a dollar in an early stage startup, you wanna get 50 or 60% returns. Okay, that's, that's obvious. But the return that you generate is in part driven by how profitable is this company, obviously. And if you have a 300-person group of people that has to do something, it's a lot harder for them to generate profit and then to generate a rate of return than it is if you have two or three people. So the Chinese strategic imperative is no different than small startups versus an incumbent, which is to be as hyper disruptive economically as you can. So I think the big risk is not necessarily Chinese, but many of these alternatives will come from China, which is to say that where are the incumbents? Most of the incumbents are American companies. If you look at SaaS software, that's a perfect example of where there is trillions of dollars. The, the software industrial complex, as I call it, right? That's like a three and a half, $4 trillion industry. It grows by 10% a year. So every year, it's adding 300 billion of "enterprise value". Is that value that is being created? I think a lot of the customers would say no. So if you're a startup or if you're China, what is the most disruptive thing you could do? Well, you could take a three-person team to disrupt a 30,000-person team and blow a hole right in the side of that $3 trillion economy. That's the big risk. So whether the risk comes from here or whether it comes from the Chinese, I think what you're seeing is that if these agents can scale the OpEx, the actual load of making something will go down by an order of magnitude, and that is... and maybe even two orders of magnitude. That is incredibly disruptive because the existing incumbents cannot compete with that cost scale.
- JCJason Calacanis
And, Gavin, to just bring this around the horn here, China is playing a different game, and obviously there's other competitors on a global basis, but they are subsidizing, for example, their cars and their entire car industry. So the margin of cars here in the United States and Germany and Japan, that's their opportunity. They don't actually need to make a profit on it. They could just break even. There are cars now, 10, 20, 30, $40,000 cars now being made there. So this then leads us to, oh, my goodness, will Americans buy these? We're pretty great customer. Will Trump block them with tariffs? So let's make the jump. What would the
- 28:37 – 53:05
The Administration's endgame for tariffs
- JCJason Calacanis
tariff policy be if, as Chamath points out here, we've got this big broad side of our battleship that they can put a giant hole through, which is our software industry, our car industry, pick an industry that they might be able to just blow a hole in because they don't need to make a profit. They just need to have jobs and break even?
- GBGavin Baker
What should our tariff policy be or what is it? I mean, we know what it is for autos. It's 25%-
- JCJason Calacanis
Do we know what it is? (laughs) Yeah. I mean, it s- it seems like it's in flux. So maybe we start there. What should the policy be? What do you perceive the policy is? Because it does seem to be a moving target. We'll see what happens on April 2nd because Trump keeps tweaking, let's say-
- GBGavin Baker
Yeah.
- JCJason Calacanis
... adjusting in public.
- GBGavin Baker
Yeah. I mean, this is... So traditional economics would say, "Hey, tariffs are not a good idea. We should have free trade." You know, everybody understands the principle of comparative advantage. I do think the Trump administration is pretty convicted that that approach has not worked well for America over the last 20 years. And maybe it's worked well for knowledge workers, but it hasn't worked well for kind of ordinary Americans, and I think they are very convicted in changing that and trying to bring back kind of good, high quality manufacturing jobs to America. I think they see tariffs as an effective way to do that.
- JCJason Calacanis
Are they right? I- is, is it going to be... because a lot of what we're seeing in factories is automation. So while they may have been right about tariffs bringing back high-paying middle class jobs for the past 20 years, we cannot go in a time machine and change that policy, and isn't where the puck's going that we're going to have Optimus robots, Figure robots, pick a robot company doing all this work.
- CPChamath Palihapitiya
No, but look, here's what, here's what tariffs do. Tariffs are a level-setting mechanism that fixes a historical imbalance.Look, the reality is that we have had meaningfully lower tariffs for products coming in than those reciprocal tariffs exist for our products going into these other countries. That's true. And the one thing I'll say about Donald Trump is, you may not agree with the tariffs, but he's been incredibly consistent. I was on YouTube yesterday and I stumbled into an interview he did, Nick, maybe you can find this, with Larry King in 1987, and he ran a full page ad in the New York Times talking about this exact issue and then went on Larry King and he walked through the entire trade imbalance 40 years ago.
- JCJason Calacanis
Yeah, he's been on this, yeah.
- CPChamath Palihapitiya
So this is not a fly by night thing. So what do they want? What they want is to create the economic incentives to re-shore as much industry as possible into the United States. The delicate balancing act though is that after 20 years of globalism and a perverted version of free trade, 'cause it's not what it is today, it's been perverted, it is incredibly difficult to do that without these whack-a-mole problems emerging in other areas, right? Whether it's inflation or whether it's retaliatory tariffs or consumption taxes, all of these complexities I think are what has to get figured out.
- JCJason Calacanis
Got it.
- CPChamath Palihapitiya
But the structural reason of why tariffs make sense is not necessarily to overly penalize one country over another, but it's simply to say, "If you charge 5%, we charge 5%. If you charge 10%, we charge 10%." Nick has a clip. He's just- just listen to this from 40 years ago.
- NANarrator
We don't have free trade right now because if you want to go to Japan or if you want to go to Saudi Arabia or various other countries, it's virtually impossible for an American to do business in those countries. Virtually impossible. So the fact is that you don't have free trade. We think of it as free trade, but you right now don't have free trade.
- JCJason Calacanis
So Gavin, let's get back to this original question with Chamath's important context. Trump has been on this for a while, but is this where the puck's going? We have the lowest im- unemployment of our lifetime. Wages are obviously not where we want them to be. So is the right solution to inf- put in a bunch of tariffs, create trade wars, and then hope that people are gonna build factories that employ humans when in fact it probably will be robots? So w- is there another solution, like maybe raising the minimum wage? I don't know. What are your thoughts?
- GBGavin Baker
Well, one, I think as Chamath in that clip illustrated, he is convicted in this. It's 40 years old.
- JCJason Calacanis
It's happening.
- GBGavin Baker
Yeah, it's happening. And so I would say two things. Like one, I think it's al- something I'm always conscious of at, um, my wife Becky, one of her college or high school re- reunions, there's a guy there who'd been in our class and had been in the Navy Seals and he deployed to 80 countries, he'd been in the Navy Seals for, like, a decade, and I said, "What's the one thing that you learned?" And he said, "The one thing I learned is everybody in America is always trying, is always focused on making America better. Having been to 80 different places all around the world, our only goal should be to not screw it up in America."
- JCJason Calacanis
Yeah.
- GBGavin Baker
"Just don't make it worse 'cause America is so much better than everywhere else." So the first thing is, like, you know, Chamath said the word delicate, and I think that's right, and if I had one thought for the administration, it would be every time they say the word tariff, whatever they think, Wall Street and the markets, and I would say, you know, I think a lot of business leaders are convinced that tariffs are bad. Now, maybe Wall Street is wrong and the administration is right. One thing everyone agrees on is deregulation is good. So every time they say the word tariff, they need to say the word (laughs) deregulation two or three times because the best way to, I think, maximize the odds of this policy succeeding, despite the headwinds from automation, I think it's gonna be a long time before we have hundreds of millions of robots. You know, even between China and Tesla, I think it's gonna take a long time to make vast numbers of humanoid robots. The best way to encourage this re-shoring is just making it easier to do business in America.
- JCJason Calacanis
Okay.
- CPChamath Palihapitiya
100%. Can I just add one thing? That's really, really important, what Gavin said. There's a third thing I would add, Gavin, to your list, which is we need to figure out the difference between manufacturing and IP. And I think what we want to do is make sure that we trap the real value back in America as well. Look, I've told you guys this story before, but when I was helping to run Facebook, I was a signatory. When we were setting up Facebook abroad, we exported all of our IP to Ireland and lo and behold, who do they sue? Zuck, Meta, and me.
- JCJason Calacanis
Bink.
- CPChamath Palihapitiya
And we've been in this 10 year lawsuit, 15 year lawsuit with the IRS because they're trying to come back and say, "Hey, Facebook, you owe all of this money." Why? Because we exported all of our critical IP to Ireland and we trapped it there. That should not have been able to happen. We can fix it. Separately, there's many companies who are abroad who live inside the American market who, if given a mechanism, would import their IP into the United States if there was a mechanism to do so. So not only can you have manufacturing, you can also have the critical knowledge, not just of that manufacturing, but of that product, of that supply chain. Those are the incentives that these nuances, if we get right, it's really a renaissance for the United States.
- JCJason Calacanis
Let's talk a little bit about maybe other solutions. Friedberg, obviously perhaps raising the minimum wage or increasing corporate taxes in order to do that, would that not also help us maybe build back the middle class? That is the criticism I think some other people have. We, you know, Trump when he did his TCJ- JA, if people remember the Tax Cut and Jobs Act, corporate tax rate was 35%, we put it down to 21, and now repatriation of cash from overseas, as Chamath's pointing out, I think it's only 15%. It's, like-Everybody can kind of afford that, so would that not be another way to solve this problem of the bottom half, the bottom third not making a mo- enough or maybe even lowering their tax rate, which is already pretty low?
- DFDavid Friedberg
Uh, well, I think the, the proposal that I've heard from this administration that we heard from Howard Lutnick when we met with him was they're gonna cut all taxes for people making less than $150,000 a year, so get the tax rate to zero. And that'll g-
- JCJason Calacanis
Do you, do you believe that? Do you think it's realistic now that it's a week-
- DFDavid Friedberg
I do.
- JCJason Calacanis
... after you do that? You, you actually think that could happen?
- DFDavid Friedberg
I 100% do. And I think-
- JCJason Calacanis
In what timeline and why?
- 53:05 – 1:09:42
Signalgate: context and fallout
- JCJason Calacanis
SignalGate, SignalGate. On Monday, The Atlantic published a story titled The Trump Administration Accidentally Texted Me Their War Plan. Somehow-
- DSDavid Sacks
(laughs)
- JCJason Calacanis
... Atlantic editor-in-chief, Jeffrey Goldberg, was added to a super high profile Signal group with our Secretary of State, our Vice President Tulsi Bassett, the CIA Director, the Secretary of Defense. How is this possible, folks? They added a journalist, the editor-in-chief of The Atlantic, to their war planning Signal group. They shouldn't be using Signal, obviously, to do this stuff. And inside this group, they discussed the plans to strike Houthi targets across Yemen. Nobody noticed, nobody checked that the editor-in-chief of The Atlantic was in the group chat. They included the exact targets, the actions, the timing of all of this. It was apparently cut and pasted from some other system by Hegseth, our Secretary of Defense and former Fox commentator. That's not a dig, it's just a fact. I- I'm not saying it as a dig. Chamath, people are losing their mind over this. I could get into all the details. I think most people know it because it's taking up the whole... All the oxygen in the room, in the media, in the group chats. Number one, what's your general take on what happened here? How stupid is this? How ridiculous is it? Does it matter? Go ahead, Chamath. T- start us off here.
- GBGavin Baker
I think that what folks have stopped talking about entirely-
- JCJason Calacanis
Mm-hmm.
- GBGavin Baker
... which I think is just worth touching upon-
- JCJason Calacanis
Okay.
- GBGavin Baker
... is what is actually going on that necessitated-
- CPChamath Palihapitiya
... this group chat to be created in the first place in such haste. So I have a couple of images that I pulled just to explain what this issue is. So the problem that we have is that somewhere after the war with Gaza, Iran continues to fund these Houthi rebels in Yemen, and what do they start to do? They start to invade and flood into the Red Sea, and they start to block up the Suez Canal in different points, making it very perilous for freight traffic to get there. So what do folks do? They're either forced to go all the way around the Cape of Good Hope or risk attack through the Suez Canal. So what do you think happens? Well, the traffic through the Red Sea and the Suez Canal falls off a cliff, and then you would ask, "Well, why is that important?" Well, the problem is that because of that other chart and this chart, prices start to skyrocket. So if you're trying to ship things, even going into the United States, prices start to rise 30, 40%. Going to Europe, prices are rising 300 and 400%. If you add that all together, as Gavin said earlier, we're in this very delicate moment where we're fixing all these parts of the economy, the thing we can't have is productivity go down. You can't have a recession.
- JCJason Calacanis
Mm.
- CPChamath Palihapitiya
And so if you have a bunch of input prices that go up, or trade slow down, now you're bringing the likelihood of a recession to the forefront. So that's one thing. The second thing, which was included in the group chat, is it turns out that nobody was in a position to fight off these Houthis except the United States. The British, the French, all of their naval capacity wasn't strong enough or adaptable enough to fight these folks off. So the United States had no choice but to attack these guys and reset. And so what happened? Now all of a sudden traffic is reset, right, volumes are back up. By the third week of March, which is where we are now, we're back to where they were even a year ago. The price of shipping is now contained, the inflation risk is contained, the productivity hit is contained. It's just important to understand-
- JCJason Calacanis
Okay, that's all great. Yeah, that's-
- CPChamath Palihapitiya
So this is-
- JCJason Calacanis
That's the context-
- CPChamath Palihapitiya
So this is ... okay, so this is what happened.
- JCJason Calacanis
... of why they did the attack. Great.
- CPChamath Palihapitiya
I find it crazy that we still actually, for 95 articles though, Jason, on Signal-
- JCJason Calacanis
Hm.
- CPChamath Palihapitiya
... we have only less than one article on this. So I just wanted the smart people-
- JCJason Calacanis
Yeah, sure.
- CPChamath Palihapitiya
... that listen to our pod-
- JCJason Calacanis
Le-
- CPChamath Palihapitiya
... to actually understand it. The second thing, the second thing I'll say is-
- JCJason Calacanis
And we're gonna send the bill to Europe because this is really a European problem because-
- CPChamath Palihapitiya
Okay, so-
- JCJason Calacanis
... we have the whole Pacific Ocean we can accept things through-
- CPChamath Palihapitiya
So-
- JCJason Calacanis
... and you can go through ports in Texas, or you can go through this-
- CPChamath Palihapitiya
So the point is, so the point is we're on a shot clock.
- JCJason Calacanis
Yeah, Panama Canal. Yeah.
- 1:09:42 – 1:20:31
El Salvador deportations
- JCJason Calacanis
let's move on to our final two stories. The Trump Administration has deported 238 alleged gang members to a pretty severe prison called CECOT, C-E-C-O-T, prison in El Salvador. Here's a clip of them being dragged out of the United States and put into this extremely notorious prison. This was all done under the Alien Enemies Act of 1798. This allows the president to detain and deport individuals without due process from, quote, "An enemy nation" during an invasion or, quote, "Predatory incursion." It's been used before, but only during actual wars. FDR used it to deport thousands of Germans, Italians, Japanese during World War II. The Trump Administration is claiming that the gang members were sent to the US, intentionally calling them a "Hybrid criminal state." Not surprisingly, most of them, or not all of them, had criminal records in the US, uh, this was confirmed by ICE. And obviously, some number of them appear to have been misidentified as gang members or terrorists. I can tell you, (laughs) you know, coming from a law enforcement family, and just looking at the statistics, out of 238, you're not gonna bat a thousand, so maybe you get a couple of these wrong. Former pro soccer player, Jersy Reyes Barrios, he fled Venezuela after being tortured by the government for protesting. He's a refugee. He has been mistaken for a gang member, according to his people, because he's got an arm tattoo supporting his favorite club, Real Madrid. And there is a social media post that ICE officials believe featured him making gang signs, but it was actually the language for "I love you," according to his attorney. Second example, a shoe salesman and social media influencer, Norberto Rodriguez. He fled Venezuela for Colombia out of desperation because he and his family were starving, he's a father of three. He was also suspected because of a tattoo which features playing cards and dice. His family says he got to... he got it to cover a scar on his forearm. And third, and final example, stylist and makeup artist, Andre Hernandez. He is being represented by the Immigration Defenders Law Center. He claims he has no criminal history. He sought asylum after fleeing Venezuela where he was persecuted for being gay. Again, his arrest was based on tattoos that his attorneys claim are not gang affiliated. This has caused a US district judge to pause these deportations. The administration has apparently continued these deportations, and they're even gloating by doing videos, highly produced videos, threatening people with the prison in El Salvador. Again, the CECOT. Your thoughts, Chamath, on this extradition process, if any?
- CPChamath Palihapitiya
I mean, as long as there's a mechanism for these mistakes to get rectified, seems like the overwhelming majority of these folks should not have been in the United States and were part of illegal criminal organizations.
- JCJason Calacanis
Okay, so there should be a mechanism. Gavin, your thoughts?
- GBGavin Baker
If innocent people were sent to a prison, like, that's a terrible mistake, and you know that, that happens-... and it shouldn't happen, and hopefully it gets rectified. But I guess my bigger thought is a little bit, you know, the, this administration, as we discussed, they have a really ambitious agenda. They want to fundamentally change America in ways that they think will be better for kind of blue-collar, normal working Americans. And things like this, you know, Signal Gate, if you, if they made a mistake and sent innocent people to this prison, there's only so many of those mistakes they can afford before they lose kind of the mandate necessary to accomplish their goals. And, you know, hopefully it's, you know, we're, we're, we're in whatever, we're not in, even into the, you know, third full month.
- JCJason Calacanis
66 days.
- GBGavin Baker
66 days. We're into the third month, but um-
- JCJason Calacanis
We're 4.5% (laughs) of the way through this second term, and it feels like... (laughs)
- GBGavin Baker
Yeah.
- DFDavid Friedberg
Six Scaramuccis in.
- GBGavin Baker
Yeah, six-
- JCJason Calacanis
It's brutal. (laughs) It ain't easy here. This is such a good point though, Gavin. Continue.
- GBGavin Baker
They just... Execution matters. Like if they-
- JCJason Calacanis
Yes.
- GBGavin Baker
... they, to accomplish their goals, they need to execute at a high level and communicate-
- JCJason Calacanis
Hmm.
- GBGavin Baker
... clearly and effectively. And just if innocent people were sent to, you know, this prison, mistake.
- JCJason Calacanis
Hmm.
- GBGavin Baker
Signal Gate, look, you know, hey, maybe it's a big mistake, maybe it's a small mistake depending on where you sit. I thought Marco Rubio's response was good. But just, like, I think execution is important for them to accomplish their goals.
- JCJason Calacanis
Great. Friedberg, any thoughts here?
- DFDavid Friedberg
I do not agree with sending people to prison or a detention center without due process. I felt similarly-
- JCJason Calacanis
Why?
- DFDavid Friedberg
... about Guantanamo Bay 'cause I don't think it matches the rights and the values that the United States should stand for. I think it's different if you believe that they're here illegally, they're part of a criminal enterprise, and we don't wanna try them in courts here, then we should ship them back to a port of departure somewhere else in another country, maybe it's back to Venezuela, and let their courts try them. But I will talk a little bit about this El Salvador motivation. Uh, as you guys know, the El Salvador prison that they set up for putting the, um, the gang members in had a radical impact on living standards in the country. In 2015, the homicide rate per capita in El Salvador was 103 people per 100,000, so one out of every 1,000 people were murdered every year. They introduced this aggressive policy of rounding people up without due process and putting them in this prison, and through that action, they were able to reduce the homicide rate per capita below two per 100,000, which is what it was last year, 1.9. So it had a radically positive effect on society, but obviously, at the cost of a value that we in the United States hold dear, which is the, the value of due process and, and the importance of due process 'cause all it takes is one innocent life being locked up. Oh, sorry. You're saying El Salvador, there was no due process? There was no due process, and so there are plenty of stories, if you watch the documentaries on this prison, there are plenty of stories of people that later were released when they were found to be completely innocent and randomly rounded up or caught up in a sweep or something that they shouldn't have been at. Um, and there was actually one fascinating interview I saw of one of the guys who spent over a year in the prison, was completely innocent, but he said, "You know what? It was worth it because the government's been able to clean up the streets." I gotta find this clip, but I was really, like, shocked. I couldn't believe that a guy that spent a year in this prison actually had something positive to say because it was such a profoundly-
- JCJason Calacanis
Or maybe he had to say that to get out. Who knows, you know?
- DFDavid Friedberg
Well, it was such a profoundly difficult place to live, uh, in El Salvador, and we've all heard these stories, but I do think there's an, a cue being taken by this administration that there's a way to kind of very quickly resolve to a positive outcome with respect to immigration and crime. But I do think Gavin's point is right, that we do have to have some boundary conditions, particularly as it relates to human rights that we do value here in this country. And as long as there's a court trial, as long as there's a judge, as long as there's some sort of... It doesn't need to be a jury of peers, but as long as there's some evidentiary hearing to make the determination that someone is, you know, likely this criminal, it makes sense. But again, I'm much more in favor of if there's gonna be forced movement of people, I don't think they should necessarily be moved into a prison as much as moved to a port of departure and have them tried in another country if there's a crime. Or we try them here and put them in prison.
- GBGavin Baker
I agree so much with what you just said. Due process is important. Like, America, like, human rights are a core American value. And it was great you acknowledged that, like, the outcome in El Salvador was good, homicides down 99.9%, lots of lives saved, and just, you know, there needs to be a balance between these.
- JCJason Calacanis
Yes.
- DFDavid Friedberg
Then let me ask you guys a question, very pointed question. If you guys could implement an El Salvadorian-style incarceration system tomorrow and it would have the exact same effect on American crime, so...
- JCJason Calacanis
Yeah. Absolutely not.
- DFDavid Friedberg
Cuts it by 9% with-
- JCJason Calacanis
Yeah.
Episode duration: 1:27:59
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