0:00

Oh no. Gosh, I'm having some

0:02

technical difficulties, Freeberg. There's something

0:04

happening. Oh, you got a bit? Oh, there's

0:06

a big... Something's breaking in. What's happening? Oh

0:08

no. My camera is not working. But I

0:11

sense something is happening, guys. It's

0:13

like a transformation I'm going through. You're not going

0:15

to believe it. Yes, it

0:17

is I. No, Shrinkalis, I'm here. I'm

0:20

here. No, Shrinkalis has arrived. I

0:24

have predicted the hot-swap sex. Can

0:27

I get my flowers now, Premusak?

0:30

You need to bring... Yeah, I give you... I absolutely give

0:32

you credit for that. You also predicted a speedrun primary,

0:34

which is the opposite of what happened. So

0:37

one out of two is not bad, though. No,

0:39

Shrinkalis did not account for

0:41

the Democratic Party being

0:44

run by the Deep State. I'm

0:47

having a vision. Producer Nick,

0:50

there's a vision for you coming

0:53

in to view. Yes,

0:57

your uncle has been bought out of the all-in

0:59

podcast that's going full MAGA. And he got the

1:02

$25 million buyout deal. And

1:06

he gave you 20% we're leaving. We're going to

1:08

start a new podcast. And

1:10

Jared Kushner is the new moderator here. Oh

1:14

no, wait, it's Alex Jones. Starting

1:17

next week, Alex Jones, the

1:19

new host. Oh wait. I'm

1:21

going away. Don't say, can't

1:23

he just be a fool to win? Rain

1:26

Man David Sattler. And

1:29

it said we open sourced it to the fans

1:32

and they've just gone crazy with them. Bobby

1:36

West, Queen of Kinwom. All

1:39

right, let's get started here. We've got

1:42

a full docket. We've got civil

1:44

wars. Everything is going down in all

1:46

inland. It

1:48

is episode 189. You're

1:50

not done with us yet, folks. The world's number

1:52

one podcast is still publishing. The

1:55

world is still publishing. spinning.

2:01

Hey, did you announce that you've moved to Texas?

2:03

I did. I did. I did a little tweet.

2:06

We moved to Austin a little earlier this

2:08

year. We have a horse ranch. And,

2:11

you know, we've always wanted to move to Austin.

2:13

We looked during the pandemic. Thanks for asking, Trimoff.

2:15

And we wanted to have

2:17

a ranch and horses and live a more homesteading

2:19

lifestyle. And obviously, a lot of our friends are

2:21

in Austin. So I'll still be spending a lot

2:24

of time in the Valley in New York, like

2:26

I always do in Miami. But

2:28

the home base and the girls are going to

2:30

school and in

2:33

Austin. How is it going

2:35

so far? It's super hot. No, isn't it? The summers are

2:37

hot. But most people decamp.

2:39

So we'll decamp for Tahoe or Park City

2:41

or something during the summer months in the

2:43

winter months to go skiing and get a

2:46

little late time or whatever. And

2:48

yeah, we're really, really excited. We

2:51

found an incredible horse farm. And

2:53

we're going to raise animals and horses and just

2:55

enjoy these last years with the girls. While,

2:58

you know, some big announcements coming

3:01

in terms of my accelerator and

3:03

my investing in startups in Austin.

3:05

So I'll save those announcements for

3:07

maybe the fourth quarter. Some big announcements will

3:10

happen. And yeah, I'm just

3:12

super excited. Obviously, I'm going to miss, you

3:14

know, the weekly poker game. But I will be back on

3:17

the regular. And we'll just do a double

3:20

second play Friday, Saturdays. You got

3:22

to get this for two days in a row.

3:24

We'll just do a full Friday session. Everybody take

3:26

my Fridays. I'm sad to see you go. The

3:29

one thing I'm sad about is like missing

3:31

the Thursday game. But I'll be back

3:33

regular. Don't forget Science Corner today. We got a

3:35

great Science Corner lined up. Absolutely. I was looking

3:37

forward to it. Sax is

3:39

all week about it. He's like, I

3:41

can't wait for Science Corner. Thrilled. He

3:43

was shaking nervously. He's ready. Sax

3:48

does not look amused. All

3:50

right, let's get started. Wizz has declined

3:52

Google's $23 billion offer and it intends

3:55

to IPO some big news there. Last

3:57

week we talked about Google offering to

4:00

acquire this cloud security startup for

4:02

23 billion, CNBC reported Wizz declined

4:04

Google's offer. Wow, that's

4:06

big time because Wizz was valued at 12

4:08

billion in its most recent funding round. They've

4:10

got about 500 million in ARR. So

4:14

this $23 billion is

4:17

a massive, massive 50 times

4:19

current revenue, 23 or so times for looking

4:23

revenue. They think they'll hit a billion in ARR. This is

4:26

a company that was founded in 2020. Just

4:29

so if you don't know what they do,

4:31

they help people secure their data in clouds

4:34

like AWS, Azure, Google Cloud, all that good

4:36

stuff. But high growth SaaS businesses are trading

4:38

at a 10 X for revenue

4:40

multiple. There's the chart. This

4:42

is obviously an absurd premium

4:45

and two potential reasons that

4:48

I can think of. And I'm curious, your positions,

4:50

gentlemen, of why they would

4:53

do this. I guess, Chamath, there's

4:55

two reasons. One, they think they can grow

4:57

this company at a high percentage, maybe fill

4:59

in that premium Google was willing to pay,

5:01

or maybe they're scared that they

5:03

can't get this deal through. You

5:06

know, regulators, what's your take here? And then

5:08

we'll go talk about the wider cloud and

5:11

Google Cloud and AWS in a moment. What's your

5:13

initial take care of why they would do this?

5:16

I actually wonder whether this deal

5:21

would have had more probability of happening had

5:24

the whole AT&T snowflake

5:27

leak not happened. Because

5:29

I think that when you have moments

5:32

like this, there's

5:35

a non-trivial possibility that

5:37

it supercharges sales even more.

5:42

I think the reality is that if you're

5:44

a hyperscaler, so if you're Amazon or Google

5:46

or Microsoft, your

5:49

business is pretty fragile and brittle

5:51

if the services

5:53

you provide or the services that third

5:56

parties like snowflake provide through you are

5:58

not reliable. I've never

6:00

heard of a business that has generated so

6:03

much ARR so quickly. I mean, from zero

6:05

to half a billion dollars in four or

6:07

five years. I mean, how do

6:09

you even build the product surface area quick

6:11

enough to capture that much revenue? I

6:14

think it just goes to show you how bad

6:16

security is in the cloud and

6:18

how needed it is. So it doesn't

6:20

surprise me that Google wouldn't

6:24

buy something like this. I think Amazon and

6:26

Microsoft would probably want something like it as

6:28

well. I suspect that if you

6:30

had to guess why they said no, it's

6:32

because they thought that they could grow revenue

6:35

much faster because of

6:37

recent events, as well

6:39

as their own just natural momentum. And I

6:41

think that if this thing had

6:43

not happened, I wonder whether they wouldn't have just sold.

6:46

All right, Sacks, I want to get your take on this after

6:48

showing you a couple of charts here. Google's

6:52

cloud revenue growth has been

6:54

absolutely stunning. Here is

6:56

a chart. They're going to hit, gosh,

6:59

in the first half, they did almost 20 billion.

7:01

So they're on a run rate of 40 billion

7:03

dollars this year. Last year, they did 33. Back

7:07

in 2017, they only did four. And

7:09

if you compare this to Amazon's AWS, again,

7:11

these are cloud services. People can buy, compute

7:13

in the cloud. AWS, if

7:16

you look at those first seven years, the

7:18

crack all in research team put these side

7:21

by side. Google

7:23

is tracking almost identical in

7:26

revenue to AWS's. Interestingly, Meta and Apple

7:28

do not have a competitor here. You

7:31

said on this podcast, Chamath, I think

7:33

last year, that would be

7:35

a pretty bold move by Apple to have

7:37

a cloud computing platform since they have all

7:39

the app developers. Sacks,

7:42

what do you think of this just tremendous

7:44

run by Google Cloud,

7:46

also known as GCP in the industry? Well,

7:49

all the cloud service providers are doing extremely

7:51

well. Cloud is still the future of software

7:53

and the cloud service providers are

7:55

still growing really strongly. On

7:57

Wizz, I think the most likely expert... explanation

8:00

is that they just want to keep building this

8:02

standalone company. I think they're probably also worried that

8:04

they can't get the deal through. The multiples that

8:06

we have right now are not that insane. I

8:09

mean, I think the long-term median

8:11

software multiple is around a seven. So

8:14

you see here the mid-growth median 7.7. We're

8:17

about tracking at the historical

8:20

pre-COVID mean. And

8:22

we had that really frothy, bubbly period in 2020 and

8:25

2021. And

8:29

that's clearly over. Now, in

8:31

terms of how our friends at

8:33

Altimeter break this down, I

8:35

think that high growth means a 30% or greater growth

8:37

rate. And

8:40

then I think the mid-tier is more like,

8:43

what is it, like 10% or 15% to 30%? And

8:46

then the low growth is like under 10%. Yeah.

8:51

So my point is, if Wizz is

8:53

growing at 100%, I mean, I

8:57

don't know if it's still growing at 100%, but I

8:59

mean, I guess they're projecting a billion. Even

9:01

50%, yeah, would be. Yeah, they're projecting a

9:04

billion in ARR next year up from, what

9:07

is it, roughly 500. Like,

9:10

that offer may not be that crazy.

9:13

Again, you're getting 10 times at a 30%

9:16

average growth rate. So let's

9:18

say they get to a billion in ARR next

9:20

year, and then they're forecasting whatever

9:22

it is the year after. The

9:26

23 may be reasonable. So I can

9:28

see why these guys would just want to go for it

9:30

if they think they're building a big standalone company. Freiburg,

9:33

let's talk a little, since you are a

9:35

Googler at some point. This

9:37

GCP product, maybe you could tell us a

9:39

little bit about, and I know some

9:42

of the people running it, how

9:44

meaningful this is becoming to Google, or

9:46

how much of a priority it is.

9:48

YouTube, obviously, Android priority is there at

9:50

the company. Then you have like the

9:52

next year down, Nest, Waymo, some

9:55

of those other projects. But how important is GCP

9:57

right now to Google? The

10:00

GCP in the last quarter did 10.3

10:02

billion in revenue, which

10:05

is up from 8 billion in revenue the same quarter

10:08

the year before. And importantly, in this past

10:10

quarter, they're running at a $1.2 billion

10:12

operating profit out of GCP.

10:16

So if you kind of think about what cloud margin

10:18

should be over time and kind of call it 20%

10:20

to 30% margin, this

10:23

cloud business could be generating 20 to $30 billion a

10:26

year of free cash flow. Now,

10:28

in the last year, if you

10:31

kind of look at, or even if you look

10:33

at the last quarter annualized, Google is generating currently

10:35

about $60 billion a year in

10:37

free cash flow as an overall organization, Alphabet

10:40

is. And they have

10:42

over $100 billion in cash. So

10:45

what can I do to accelerate this

10:47

cloud outcome given the risks,

10:50

the challenges, the slowdown with respect

10:52

to the core consumer business? Cloud

10:55

and AI-based tools really is where

10:57

it's at. And so

10:59

Google's asking this important strategic question,

11:01

I would imagine, what

11:04

can we do to accelerate outcomes in the cloud? And

11:07

what can we do that is going to be

11:09

big enough to matter? And

11:11

what can we do that is going

11:13

to pass antitrust muster? So we can actually

11:15

get it through antitrust authorities. So cloud security

11:17

kind of comes top of mind. It's

11:20

a fast-growing segment as evidenced by the

11:22

results with Wizz. And

11:25

it's an opportunity for Google to

11:27

cross-sell and to secure more enterprise

11:29

customers and theoretically cross-sell

11:31

more enterprise revenue by getting folks

11:33

on a platform that

11:36

Google could now offer. I

11:38

would imagine that what Saks is saying is probably

11:40

right. I have absolutely no sense of what these

11:42

individuals and board members at Wizz are thinking. But

11:45

I think what Saks is saying is right. This is

11:47

an incredibly fast-growing business. Peter Thiel

11:49

made the comment once, which I think is totally

11:51

right. Either the buyer pays

11:53

way too much or

11:56

the seller sells way too early when

11:59

you have a fast-growing business. It's really an

12:01

important question to kind of acknowledge that if

12:03

Wizz continues to grow at this rate, it's

12:06

conceivable they could be in the range of a Palo

12:08

Alto network's $100 billion market cap in a couple of

12:10

years, given this momentum and

12:12

if you progress it forward. So

12:16

if I was them, I would ask that question, could

12:18

we reach $100 billion if we feel reasonably confident? This

12:21

may be a risk worth taking. What's the downside,

12:23

right? The downside is they go public next year

12:25

anyway, and maybe they're only valued at $15 billion or

12:27

$20 billion. There's not a lot

12:30

of downside from this offer and certainly seems to be

12:32

quite a bit of upside. But I think for cloud,

12:34

the thing to watch is what they're going to do

12:36

next. Google wants to accelerate beyond AWS.

12:38

They want to become the leader, and

12:40

they're going to look for other sizable transactions

12:42

that will pass antitrust muster. And

12:45

so I think you could see them perhaps looking

12:47

at some public M&A in the same

12:49

space, and I wouldn't be surprised to see them start

12:52

to get active in that sense. YouTube and GCP are

12:55

the two money printing machines inside an organization that

12:57

have actually paid off. Android's

12:59

paid off in terms of

13:01

dumping more search from the default search

13:03

buttons or boxes. But

13:06

I guess to steal me on the other side, if you're on

13:08

the board and you want your cash, you

13:11

get 100% of it, you take no risk. And

13:14

what if Google decides they're going to make this

13:16

product free and bundle it, as

13:18

we saw Microsoft do in a number of cases,

13:21

and they just Microsoft Teams this or Internet Explorer

13:23

it, I guess that would be the risk is

13:25

if Google feels some vendetta

13:27

here and puts this product out for free.

13:30

As you alluded to, Chamath, it was

13:32

a big week for cybersecurity CrowdStrike. Had

13:35

a really rough week last week when

13:37

they knocked out eight and a half million Windows

13:39

machines. Just to briefly

13:42

explain what happened here, obviously,

13:44

Wizz is cybersecurity, and so is CrowdStrike.

13:46

CrowdStrike, instead of working on data sets

13:48

in the cloud, they work

13:51

on securing your laptop, your desktop, your servers,

13:53

all that kind of stuff for threats. And

13:55

they did an update. And when they

13:57

did their update, a sensor configuration update.

14:00

as they called it, to Windows machines.

14:02

They basically bricked them. And

14:05

this wasn't a cyber attack. They're a cybersecurity

14:07

company. They weren't attacked. They updated it

14:09

and it crashed all these machines. And

14:12

these machines all needed to have a hard reset by

14:14

IT. It wasn't something that could just be field swapped

14:17

apparently. People had to go back to their offices. In

14:19

some cases, Delta was hit hardest. They canceled over 6,000

14:22

flights. And

14:24

there's a Department of Transportation investigation going

14:26

on now. Those were down

14:28

25% since Friday. So that

14:31

represents $24 billion in market cap. CrowdStrike

14:34

CEO has been a clown

14:37

for his apology and explanation.

14:40

And the good news though is they sent

14:42

everybody an Uber Eats gift card. So I'm

14:44

super happy about that. Shmotz Sacks looking at

14:46

this in dovetailing with

14:48

the last story. This

14:51

is going to be an ongoing story and

14:53

one of the big trends in our industry. Is

14:56

there any major outages like this? I

14:59

think the reality is that that code is

15:01

still really brittle and there's

15:03

gaping holes everywhere. And

15:05

I suspect that the reason why foreign

15:08

adversaries don't hack us is because we could hack

15:10

them back. And so I think it's almost like

15:12

a mutually assured destruction is the

15:14

only reason why these things stay up every

15:16

day. So at some

15:19

point we're going to write better code. Maybe these

15:21

AI agents will do it and there won't be

15:23

like memory leaks and all this other

15:25

random stuff. But in the meantime, I

15:29

think you just have to assume that everybody

15:31

will get access to all of your

15:33

information and that eventually everything is hacked

15:35

and everything is leaked. Yeah, and act

15:38

accordingly. And act accordingly. Yeah,

15:40

assume every, the worst

15:42

conversation you ever had on social media or on

15:44

DMs is going to come out. All

15:47

right, I think we've kind of finished this. Anybody have

15:49

any thoughts on this CrowdStrike thing? It seems like it's

15:51

over now. I don't have a lot to say about

15:53

them except actually this is that

15:56

that company has some murky connections to the

15:58

deep state. Yeah,

16:01

well, apparently they're fingerprints

16:03

were all over Hillary's bleach server.

16:07

Then there's been other reports, which I don't know

16:09

exactly what to make of. I can say this,

16:12

that in the wake of this, Elon announced that he

16:14

was removing CrowdStrike from any of his company's servers.

16:18

Similarly, I had my IT department check

16:20

and make sure that we didn't have it running anywhere. We

16:22

don't. I'm just going to be frank,

16:24

I don't trust this company. All

16:26

right, there you have it. Deep State. Tinfoil

16:29

hat. Deep State. Deep State Accusation.

16:32

I'm sure of Tinfoil hat

16:34

today. I forgot. You believe what you

16:36

want. That's what I believe. There's a first time hearing about

16:38

it. I don't have my Tinfoil hat here. Who

16:41

knows? I guess. Use

16:43

their products if you want to. Use their

16:45

products if you want to. Okay, there you

16:48

have it folks. Saxx puts his

16:50

endorsement behind Palantir. Definitely not Deep State

16:52

Palantir. Look,

16:55

there's no question that Palantir sells into the

16:57

Deep State. I don't know that that makes

16:59

it Deep State. They're on

17:01

your team as opposed to the other team. No,

17:04

not on any team

17:06

in perspective. I

17:08

don't know what you're saying there. I'm just goofing. I

17:11

have shares in the company. I think it's a good investment.

17:14

Okay, there you have it. Let's go to the stock

17:16

market. It just had its first day. I

17:19

got to get a Tinfoil hat for a bit here. Nothing I want

17:21

to say. None of us are at

17:23

any risk of running Palantir on our servers. Okay?

17:26

CrowdStrike is running in the background of many, many

17:28

companies who may not even be fully aware of

17:30

it. And they were certainly

17:32

surprised when all those airlines computers

17:34

went down, right? So my

17:36

only point is maybe you should make sure about

17:39

whether you're running their products or not, and then

17:41

make a conscious decision whether you think that's

17:43

a good idea. That's all. That's all.

17:46

Just a little tip from the more you know from David's side. Jake,

17:48

I'll move on. That's good. I'm

17:51

trying to pass. The stock market just had its

17:53

worst day since 2020 on Wednesday. Clearly,

17:56

this is because of the January 6th insurrection, the

17:59

NASDAQ, which is the the most tech, I'm joking, the

18:01

Nasdaq, which is the most tech heavy fell 3.6%, S&P down

18:06

A bunch of the magnificent seven companies were in the red. But

18:09

you got to put this in context, Nasdaq and S&P

18:11

still up around 15% for the first half

18:14

of the year record setting territory.

18:17

Obviously, if that holds up

18:19

or increases, there's a

18:21

lot of theories about this that people are

18:23

rotating under the MAX 7 tech stocks, which were

18:26

a place that maybe got a little overheated with

18:28

the AI bubble. Here's

18:30

the top gainers that are not

18:33

in the MAX 7, as

18:36

you can see, financials,

18:38

energy, materials. Over the

18:40

last six months, S&P financials up

18:42

11, S&P energy 9, S&P

18:44

materials 9% as well, broader

18:47

index up 11, as we said. Tesla dropped 12%

18:49

after missing on earnings, but they had a massive

18:51

run up earlier this year. Google

18:53

dropped 5%. I

18:56

guess YouTube was what most

18:58

people pointed to, their revenue came in

19:00

lower than expected. So maybe some softness

19:02

in the advertising market, which would then

19:04

correlate with consumers. In video

19:06

down 7%, meta down 6%. Chamath,

19:09

any thoughts here on what we're saying?

19:11

You talked a lot about the consumer

19:13

weakening on an episode about six weeks

19:16

ago, I believe. So is

19:18

this just the manifestation of that prediction you made?

19:21

Not this specific thing. I think that when

19:23

you see a broad

19:25

base set of revenue misses, that that will

19:27

kind of mean that the consumer is really

19:30

under pressure. I still think that that's more

19:32

in the fall, but

19:35

we're headed in that direction. I think what

19:37

happened here is that the market

19:39

is just priced to perfection, and all

19:41

of a sudden we had all kinds

19:44

of volatility. You had the former president

19:46

almost assassinated. You have the current

19:48

sitting president resign. You have a

19:52

somewhat convoluted process to pick who replaced

19:54

him that at a minimum was opaque.

19:58

And all of these things create doubt. and

20:00

anxiety in the

20:03

people that own financial assets. And so if

20:05

you saw the volatility index, the VIX, that

20:08

has spiked. And so whenever you

20:10

see that stuff happen, people go risk off, right?

20:12

And when you go risk off, what do you

20:14

sell? You sell the things that are deepest

20:17

in the money where you think that they probably

20:19

don't have that much more room to run. And

20:22

that was the MAG 7. And so what you

20:24

actually saw was a huge rotation out

20:27

of those companies into everything about those seven names.

20:30

And I think that that's a pretty reasonable thing

20:32

to do. So I think we're in the part

20:34

of the cycle where people are getting a little

20:36

bit more sober and risk managing. We're also in

20:39

the middle of the summer where a lot

20:42

more vacation is taken, which how it

20:44

manifests is that people tend to be, frankly,

20:47

more risk off and be more liquid

20:49

because a lot of people are in and out

20:51

of the office. And

20:53

I think the real setup is for what happens

20:55

in September. Maybe there's a cut, which will help.

20:58

Maybe there isn't, which won't help. And

21:00

then the whole consumer cycle, the consumer

21:03

credit cycle, that

21:05

doesn't look good to be honest. And so I

21:07

think the fall is going to be complicated. Yeah,

21:09

absolutely. What an eventful week on a political front.

21:12

We'll get towards that in

21:14

a moment. But Freiburg, your thoughts

21:16

here, is it just people trimming

21:18

their perfect positions and

21:20

maybe a dispersion going out, people wanting to

21:22

own some other assets that maybe have been,

21:26

undervalued in this market cycle? No,

21:29

I think it's definitely this mini

21:32

AI bubble deflating a bit. Okay.

21:35

And transactions are, let

21:38

me get out of some of these high multiple

21:40

tech stocks that are expected to grow rapidly, get

21:42

to the AI and shift

21:44

more into stable market recovery. Interest

21:46

rates are going to get cut,

21:49

type trades that will benefit

21:51

there. So I think it's just a rebalancing and as

21:53

a result of the high concentration of the MAG7 and

21:55

the S&P, and

21:57

in the Qs, the NDCs look like they're coming down, but. Yeah,

22:00

there's obviously a lot of complexity in what's going

22:02

on in the economy right now, but I do

22:05

think that that's been a big trade for portfolio

22:07

managers over the last couple of weeks. Makes

22:09

sense. Yes, Axe, if you owned a

22:11

bunch of Nvidia and it ran up, Meta, Google, Apple,

22:14

other companies that ran way up, you

22:17

might want to trim your position here and deploy

22:19

capital and balance things out. Yeah.

22:22

Sure. I just don't want to

22:24

overreact or overread into one day in the market.

22:26

I mean, today's up. Yesterday was down. These

22:28

are blips in the grand scheme of things. Even

22:30

a 2% to 3% move is just not that

22:32

unusual. Yeah, especially given the

22:34

context. But definitely something worth

22:36

keeping an eye on is

22:39

what the earnings reports will say

22:42

for Q3 and Q4,

22:44

and those will come out towards the end of the year.

22:47

Okay. Some interesting news. Sam

22:49

Altman did a UBI experiment a couple of

22:52

years ago. He put 14

22:54

of the $60 million into this

22:57

experiment that was done by a firm

22:59

called Open Research. That's a nonprofit group

23:02

that was founded in 2015 out of an accelerator

23:05

called Y Combinator, first I'm hearing of that

23:07

one. Well, here's the experiment they did. This

23:11

took place between November of 2020, October of 2023, 3,000 low

23:13

income adults in Texas

23:15

and Illinois is making just under

23:17

$30,000 a year on average were

23:20

selected. A thousand participants received $1,000 a

23:22

month for three years. So

23:25

on top of the $30,000, they got $12,000 a year tax free. So

23:30

that's nearly a 50% pay increase for doing no

23:33

more work. 2,000

23:35

control participants received $50 per month

23:37

over the same period. And

23:40

the research collected and studied a bunch of

23:42

data. They did blood draws to do health

23:44

impact. They had a custom app that tracked

23:47

time usage, work, play,

23:50

etc. And they

23:52

checked everybody's credit reports and bank balances. So

23:54

broadly speaking, the research found almost

23:57

no lasting impact on everything

23:59

they tested. from overall health to work

24:01

to education. And here

24:03

are the quotes directly from the paper and

24:05

I'll get the gentleman's take on this. UBI,

24:07

super fascinating, obviously. The cash transfer resulted in

24:10

large but short-lived improvements in stress and food

24:12

security. We find no effect

24:14

of the transfer across several measures of

24:16

physical health. We also find that

24:18

the transfer did not improve mental health after the

24:20

first year. And by year two, we

24:24

can again reject very

24:26

small improvements. Final quote, we

24:28

also find precise null

24:30

effects on self-reported access to healthcare, physical

24:32

activity and sleep. I find this so

24:35

fascinating and reinforces a

24:38

bunch of intuition that I think we would probably all

24:40

have. Have you guys seen these studies

24:42

where when somebody has

24:45

an amputation or they get paralyzed,

24:48

they study their free

24:50

levels of happiness, their interim

24:53

level of happiness, and then they just kind of

24:55

mean revert to their natural state of happiness independent

24:58

of what physical calamity they may have

25:01

gone through. And when

25:03

you were talking about it, J.K. L, I was reacting in the

25:05

same way, which is in the absence

25:07

of, I think, purpose and

25:10

community, I think

25:12

children in many cases, it

25:16

just doesn't meaningfully shift any of these

25:18

curves that really matter. I think your

25:20

happiness levels mean revert. I think your

25:22

health levels mean revert. So it's

25:25

great to kind of confirm at least

25:27

my intuition, which

25:30

is that UBI is a wonderful

25:35

idea that I

25:37

think doesn't really understand how

25:39

humans are both motivated and

25:41

wired. Freiburg, your thoughts?

25:45

Yeah, so I definitely agree. I think I've talked about this.

25:47

We talked a little bit about it with Jonathan Haidt. There's

25:50

some great studies that I've shown in the past that

25:52

the change in income is a better predictor of happiness

25:54

than absolute income. Eventually, everything normalizes.

25:56

So I think UBI makes no sense

25:59

for three reasons. reasons. The first

26:01

is this normalization of spending level. So once

26:03

you've kind of had this increase, you have

26:05

a moment of happiness, and then

26:07

you actually start spending differently or spending more.

26:10

And effectively, every human has one

26:12

innate trait, desire. And

26:15

desire is what drives humanity, it's what

26:17

drives progress, it's what pushes us forward,

26:20

because no matter what our absolute condition,

26:22

it's our relative condition that matters relative to

26:24

others, or relative to ourselves in

26:27

the past, or prospectively in the future.

26:29

And so we always want to improve

26:31

our condition. So a UBI based

26:33

system basically gives a flat income. So the only

26:35

way for it to really work is if you

26:37

increase the income automatically by say 10%

26:39

a year. So in

26:42

a UBI world, no amount of money

26:44

will actually make someone satisfied or meet

26:46

their minimum thresholds, because those minimum thresholds

26:48

will simply shift. And you

26:50

know, the second issue is just the

26:53

net economic effect. If

26:56

we gave 350 million Americans 1000 bucks

26:58

a month, that's $350 billion a month, that's $4

27:00

trillion a year, our prospective budget

27:05

for next year is $7.3 trillion at

27:07

the federal level. So you know,

27:09

that's already more than 50% of

27:12

the total projected federal budget next year. Finding

27:15

the mechanism for funding this at scale

27:18

is not what this study actually looked at. Because if

27:20

you look at the net effect

27:22

would be inflationary. And that's the third

27:24

major reason is that ultimately this would have an

27:26

inflationary effect. Anytime we've stimulated

27:28

the economy with outside money

27:31

with government driven money, we see

27:34

many bubbles emerge and we see an inflationary effect.

27:36

So look at COVID. There were all these little

27:38

bubbles that popped up in the financial markets, we

27:40

had NFTs, we had crypto, we had all these

27:42

sort of new places that money found its way

27:44

to. And then we had an aggregate

27:46

inflationary effect, food prices are still up 30-40% against

27:50

COVID. And so net net,

27:52

I think that the study provides an interesting

27:54

insight into the micro effects, the psychological effects,

27:57

the social effects, but the macro effects are

27:59

what is So like simply arithmetically

28:01

obvious, which is inflation and

28:04

an inability to actually fund this at scale.

28:06

And fundamentally people want to work. So

28:08

they'll take that money and then they'll go find ways

28:11

to work and generate more money. And

28:13

you have this inflationary effect. So I think net net UBI

28:15

does not make sense. SACS participants were 5%

28:17

more likely to start a business by the

28:20

third year. Maybe that was the most encouraging

28:22

part of this. People worked slightly

28:24

less 2% decrease in

28:26

labor participation, but that seems negligible. People

28:29

in their 20s had a 2% increase

28:32

in enrolling in post-secondary education. Again,

28:34

very tiny impact. There

28:36

were major benefits to stress and mental health in year

28:38

one, but by year two, as we talked about, it

28:41

reverted to the baseline. How do

28:43

you think about UBI in a

28:45

world where let's say, I

28:47

don't know, we lost a large amount of

28:49

jobs in a short period of time because

28:51

of AI? So in that hypothetical situation and

28:54

we hit 20 or 25% unemployment from the

28:56

historic low we're at now, how

28:59

might you think about UBI? Well, that's positing

29:01

a future that I don't think is going to

29:03

happen. At least in my time here. That's why

29:06

I'm trying to give you a hypothetical. Yeah, no,

29:08

I don't really buy that. And so I think

29:10

this whole idea of UBI is

29:12

premature and very expensive and it doesn't work. I

29:14

mean, I think what we saw from the study,

29:16

just to echo what Freiburg said, is

29:19

that cash transfers don't work.

29:21

We saw this in the Great Society, just handing people money

29:23

doesn't solve poverty. It actually passed

29:26

people in conditions of

29:28

dependence. We also saw during COVID

29:30

that all those stimmy checks, it might have had

29:32

a macro effect in the economy of kind

29:35

of boosting the economy during what

29:37

could have been a COVID depression. However, at

29:39

an individual level, what

29:42

did we see? We saw people quitting or

29:44

quite quitting their jobs. They spent

29:47

more on leisure, alcohol and meme stocks.

29:50

In other words, it wasn't tremendously productive. I

29:54

think that what we've seen in the past is

29:56

just handing people money doesn't create

29:58

the types of outcomes that... people

30:01

want. And, you know...

30:03

Is all this virtue signaling, Saks? Is

30:05

it virtue signaling? Kinda. Kinda. I'm kind

30:08

of getting that tongue from you. Yeah,

30:10

I think it's a combination of virtue

30:12

signaling combined with, let's assume

30:14

that you want to become the first

30:17

AI trillionaire and people

30:19

are concerned about job loss. You're going to

30:21

virtue signal in the direction of, well, this

30:24

is giving everyone money. And

30:27

a lot of people in power will

30:29

love that because it creates a lot

30:31

of dependence. So it

30:33

serves the interests of tech

30:36

moguls and people in the

30:39

government. But I don't think it serves society. And I

30:41

think one of the most interesting data points in this

30:43

study, please confirm if I get this right,

30:45

but what it said is that the

30:47

people who got the thousand a month UBI saw

30:50

their incomes rise to $45,000 on average,

30:52

while the control group who only got

30:54

$50 a month increased their average

30:56

income to $50,000, actually just shy of $51,000. So

30:58

the people who

31:02

didn't get the larger stimmy actually

31:05

genuinely bettered themselves over the course

31:07

of the study while the

31:09

ones who got the $12,000 a year stayed in place.

31:12

And that's kind of what you'd expect, right? Which is

31:14

if you just hand people money without having to work,

31:17

it doesn't motivate them to work harder. It actually

31:20

motivates them to do less. And let's say that

31:22

you're in a point in your career where you

31:24

need to learn, you need to get mentorship, you

31:26

need to advance yourself. By giving

31:28

people UBI, you could be kicking out those

31:30

bottom rungs of the ladder where, you

31:33

know, the work isn't necessarily that fun, but you're picking

31:35

up very important skills that are going

31:37

to help you rise up in the ladder. And you're

31:39

not here like sending your kids to be a cashier

31:41

at a restaurant or a bus boy or a waiter.

31:44

Like that teaches them a work ethic.

31:46

I was a dishwasher. I did hard

31:48

work as a child. I was a

31:50

bartender. I mean, look, these are all

31:52

jobs that have dignity. I mean, I

31:54

think work has dignity and you need

31:56

people to start somewhere. And

31:58

if you just give them the stimmy. or the

32:00

UBI, it demotivates

32:03

them from starting their careers. And you trap

32:05

people at this lower level. So

32:07

I just don't think you're doing anyone any

32:09

favors by doing this. And I

32:11

just want to say, you know, my production company's in

32:13

full swing and we are actually working on a remake

32:16

of Cheers with David Sachs. Yeah, as

32:18

the bartender, as the lead character. It's

32:22

a really great show. Looking

32:24

at the back of the

32:26

envelope, Matthew, I had the crack research team

32:29

take a look at this welfare,

32:31

$1.1 trillion budget in 2023, eight

32:33

different federal agencies, Medicare, I'm

32:35

sorry, Medicaid is in there as well.

32:37

Unemployment, $33 billion paid across 1.8 million

32:41

participants last year. Food stamp safety,

32:43

$113 billion. We

32:45

put all those numbers together and

32:47

we've got about 100 million people participating

32:49

in these programs in some way for

32:52

$1.2 trillion per year. This is

32:54

all back of the envelope. It's imperfect, but that

32:57

turns out to be about 12K each, which

32:59

is exactly what the study did.

33:01

So not perfect math. But that's totally reasonable.

33:03

I grew up on welfare and

33:06

we needed it to make ends meet. And

33:08

we would have completely fallen through

33:10

the cracks without it. And so I'm

33:13

glad that I was able to be raised

33:16

in a country that has welfare. I

33:20

guess my question to you, Chamath, is do you

33:22

think all these agencies put together, with

33:25

all this administration and

33:27

all this complexity, would it be better

33:29

if we take something from this UBI

33:32

of maybe consolidating down? No, no,

33:34

no, no, because I think you

33:36

need to be motivated, as Zach said.

33:38

And so even though

33:40

we got support

33:42

from, I grew up in Canada, so

33:44

the Canadian government, there

33:46

was still an expectation where certain

33:49

things were not covered and you still had to

33:51

work. And so you had to find motivation to

33:53

pick yourself up and go out

33:55

and get a job. And it just so happened

33:57

that in our situation, even welfare,

33:59

and what my mom made as a housekeeper and

34:01

then as a nurse to say it wasn't enough

34:04

and my dad didn't have a job. So I

34:06

went and I started working at Burger King and

34:08

to Sax's point, it's pretty eye-opening

34:11

when you're 14 years old and you know

34:13

you're working the night shift and people

34:16

come in after going to the bars, they're drunk,

34:18

they're puking all over the place. Sometimes

34:21

you see people that go to your own high school

34:23

and it's a little bit embarrassing because you're working while

34:25

they're going out. But at the end of the day

34:27

it was very motivating and I think Sax is right.

34:29

If you take that away from people, I think

34:32

that you end up with the worst society. I don't think

34:34

that you have a motivated group

34:36

of people that want to go and

34:38

better themselves. I think they just become

34:41

really lazy. I think it's well stated

34:43

and I think the pressure cooker that

34:45

immigrants are under or you know people

34:47

who have tough situations, like it can

34:50

create the diamonds and man I

34:52

do think a lot of the folks here

34:54

on this podcast went through that pressure cooker

34:56

and it does create a chip on your

34:59

shoulder. And when people criticize these entry-level jobs,

35:02

oh they're not sustainable, well we do have

35:04

a safety net in both countries. I think

35:06

that's not, I think the problem is not

35:08

the entry-level job. I think it's the expectation

35:10

of people and Freiburg just mentioned this but

35:13

what you have is that there is

35:15

this desire doom loop

35:18

that we've fallen ourselves

35:20

into where what

35:22

social media does is amplify in

35:25

many cases a fake perception of what

35:28

your neighbor has that you don't have.

35:30

And so you're in this constant desire doom loop

35:32

so if you go to a job and you're

35:34

expected to work for four years, I'm just going

35:37

to make up a number before you get promoted.

35:40

And the perception is that your neighbor is getting promoted

35:42

after eight months, you're going to be mad and you're

35:44

going to be angry and you're going to feel like

35:46

life isn't working out for you. And

35:48

we have to figure out a way of

35:51

resetting that back to normal so that you

35:53

know that that is a lie that is

35:55

being told to get clicks and likes. And

35:58

the real truth is you're going to have to. to

36:00

just put your nose down and grind at something to

36:02

get what you want. And life is not perfect and

36:04

it's complicated and it's messy. And

36:07

we need to do a better job of that. Let me ask you a

36:09

question, Freeberg. If you were going to do a 2.0 of

36:11

this study, I was thinking about it, where

36:14

do you go from here? I just

36:16

had this idea, like, well, what if you put like half

36:19

of the money into like a perfect portfolio,

36:21

Wealthfront, one of those services, and

36:24

allow people to take out maybe 5%

36:26

of it every year, some sustainable amount. So they see,

36:29

you know, and get some education around that or

36:31

maybe put the money into a business

36:34

formation fund. People can apply to get

36:37

grants to, you know, maybe form a

36:39

business and you kind of reframe how

36:42

this UBI is distributed with milestones

36:44

and maybe some education

36:46

baked into it. That was my thought on

36:48

where to go next. But do you have

36:50

any thoughts of where you would do a

36:52

2.0 test of this or would you just?

36:55

Well, that's not UBI, right? And what you're

36:57

describing, I think exists and there are incentives

36:59

and programs and opportunities out there. People can

37:01

sign up with Roth IRAs, they can contribute some

37:04

percentage of their paycheck to a 401k if they

37:06

have a job that has a 401k set up

37:08

for them. There's a lot of systems

37:10

and mechanisms out there and you get tax breaks

37:12

for doing that. So there's mechanisms and incentives out

37:14

there to do that sort of thing. The

37:18

concept with UBI is can you

37:20

pay people a flat amount of money so that

37:22

they don't have to work and then

37:24

they end up being able to explore and do other

37:27

things with their life as the robots and AI

37:29

does everything for them. And I've

37:31

just always been of the belief that I don't think

37:33

that there's this natural border that we hit beyond

37:36

which humans don't work. I

37:38

think that AI based tools and automation tools

37:40

are the same as they've always been. When

37:42

we developed a tractor, people didn't stop farming,

37:45

they could get much more leverage using the

37:47

tractor and farm more and new jobs and

37:49

new industries emerge. And I expect that the

37:51

same thing will happen with this next evolution

37:53

of technology and human progress. Humans

37:56

will find ways to create new things,

37:58

to push themselves forward, to drive. things

38:00

forward and for the natural

38:02

market-based incentives that fundamentally are rooted in

38:04

this internal system of desire will

38:07

create new opportunities that we're not really thinking

38:09

about. So I don't believe in this idea

38:11

of UBI and some utopian world where everyone's

38:13

happy not working and letting machines do everything

38:15

for them. I think that the fundamental sense

38:18

of a human is to find purpose and

38:20

to realize that purpose to drive themselves forward

38:22

and progress themselves. And I think that that's

38:25

always going to be the case. The closest thing to leisure and

38:28

leisurely pursuits that we have today in

38:30

modern society is the Nepo baby. And

38:34

if you look at the Nepo baby, they're the

38:36

most miserable group of people I've ever met. They're

38:40

so unhappy with themselves. And

38:42

part of it is because they've only ever lived a life

38:45

of future. Shout out to Alex Soros. No,

38:48

I'm not name checking anyone. I'm just

38:50

saying when I observe it, I

38:52

think that you can see it

38:55

right in front of you, which is that there's

38:57

just so much inherent unhappiness because

39:00

you're not motivated to do anything. And

39:02

then that's amplified typically by guilty

39:05

parents because they've been working

39:07

so hard. And so I don't think you need

39:09

to run a second study. A different

39:11

version of an idea that a friend

39:14

of the pod Brad Gerstner is working

39:16

on, which I think deserves a

39:18

shout out is this idea of giving

39:20

every kid when they're born a retirement account.

39:23

And I think that that's an interesting

39:25

idea where you give them some amount of

39:27

money and it just matures

39:30

inside of an index fund that gets unlocked

39:32

for you when that kid is 65 or

39:34

70 years old. That's

39:36

great because it helps you

39:38

have a soft landing in retirement. I think

39:40

that that's very humane and a right thing to

39:42

do, but it doesn't rob you

39:44

of that motivation to work in your twenties, thirties, forties,

39:47

and fifties. And that's a much better idea than UBI.

39:49

And I think, by the way, it's really important to

39:51

state that UBI

39:54

can be more of a trap than a

39:56

benefit. It takes away

39:58

the opportunity for individuals. individuals to

40:00

progress because you no longer

40:02

have a system that says you progress,

40:05

you get richly rewarded. It ultimately drives

40:07

to an outcome where you spend all

40:09

the money and distribute it equally. So

40:11

everyone ends up having some sort of stasis. And

40:14

I don't think that that's really human nature. I do

40:16

think that systems and government programs

40:18

that support people's ability to succeed, to

40:21

work hard, to work smart, to progress

40:23

while providing these necessary safety nets is

40:25

a better solution. There's no

40:27

right or wrong way. It's

40:29

a very complicated system that's needed. And

40:31

I don't think that this UBI concept is

40:34

fairly naive. And I think that you'll

40:36

see it play out at both a micro and

40:38

a macro scale as being, I think,

40:40

net negative. Yeah. Just

40:42

wrapping up here so we can get onto the

40:44

rest of the very juicy docket we have today.

40:47

It does seem demotivating to just have money drop

40:49

in your head. That's why my experiment I was

40:51

referring to, Freeburg, was just forcing

40:53

people, not having these programs that

40:55

you have to go find out about and have

40:57

the social capital and fabric around you that you

41:00

know about small business loans, et cetera. But hey,

41:02

these three things are happening to you right now. This

41:05

money has been put into your account automatically.

41:07

And you can decide what to do with

41:09

it. And just raising the education level and

41:12

empowering people is a much better idea. I

41:14

feel like whatever the education system is, schools

41:16

or whatever, like actually teaching the vocational skills

41:18

or the skills on how to succeed in

41:21

the workplace, like here's how you go get

41:23

a job. Here's how you build a

41:25

business. Here's how you start something. Those

41:27

are the sorts of skills that are not taught in

41:30

the educational system that I think are

41:32

generally lacking. And then people kind of learn a bunch

41:34

of history or some algebra or whatever they learn in

41:36

school and they pop out the other end. And it's

41:38

like, okay, go figure out how to survive.

41:40

Go figure out how to get a job. Go figure

41:42

out how to build a business. To just build on

41:45

your idea. We need more healthcare workers. If you paid

41:47

somebody $1,000 a month and you paid for their school

41:49

for one year to become a nurse doctor, nurse practitioner,

41:51

whatever, that would actually have

41:53

a dramatic impact and solve a problem for

41:55

our society while not giving a

41:57

handout. I think we all agree on this

41:59

one. Let's keep moving through this amazingly juicy

42:01

docket. All right, there is a battle right

42:05

now for Rupert Murdoch's media empire. The

42:07

Times reported on a behind

42:09

the scenes fight for control of Fox

42:12

News, Wall Street Journal, New York Post,

42:14

and just tons of TV networks in

42:16

Australia, the UK. I think we all

42:18

know the new score up

42:20

holding set, a bit like

42:22

the TV show, Succession, which makes sense

42:25

because they based it on the Murdoch

42:27

family. It turns out this

42:29

article in The Times is based on a seal court

42:31

document that was obtained by them. Murdoch,

42:34

to remind you, is 93 years old now, and

42:36

his trust would have given control to his four

42:39

eldest children. However, he

42:41

changed the trust to ensure that

42:45

Lachlan Murdoch, who

42:47

is more conservative, would

42:50

take over these assets as

42:53

opposed to James, Elizabeth, and Prudence,

42:56

who are more moderate than Lachlan.

42:58

They are engaged in a massive

43:01

court case now that's going to start in September.

43:03

The trust is revocable, but it

43:05

contains a provision allowing for changes so

43:07

long as they're made, quote, in good

43:10

faith, and with the purpose of benefiting

43:12

all members. So Rupert argued that the change

43:14

is in the best interest of James, Elizabeth,

43:17

and Prudence as it keeps them

43:19

formally separate from Fox News without having

43:21

to worry about its political point of

43:24

view. Fox News

43:26

obviously has massive influence and has been

43:28

a bit of a disaster over the

43:30

last couple of years. They did the

43:32

largest settlement ever in a defamation

43:36

case with Dominion, $787 million.

43:42

You remember Tucker Hannity, Laura Ingraham, all of

43:44

them privately trashed the

43:46

people who lied about the Dominion case

43:49

on Fox News, and that all got

43:51

shown in text messages, and it was

43:53

a disaster for them. Sacks, any thoughts

43:56

on this and how this collection of

43:58

assets and the GOP have collaborated

44:01

over the years? I wouldn't necessarily call

44:03

it collaboration. I call it a market

44:05

position. I mean, Fox News has carved

44:07

out a powerful and profitable market niche

44:09

by being the one cable news network

44:11

that appeals to conservatives. Now

44:15

if, let's say the more liberal members of the

44:18

family like James take over and

44:20

change the content and the programming to

44:22

serve their own political views, they're going

44:25

to lose viewership. They're going

44:27

to lose their audience. It's a stylish idea

44:29

just from a business standpoint. So

44:31

I think that Loughlin is the right choice. I've met

44:33

Loughlin before, by the way. Nice guy.

44:36

Look, I think a pretty mainstream conservative type

44:38

of guy. He's clearly the right guy

44:41

in the family to run this. And the

44:43

siblings, I think, could really screw it

44:45

up. And I'm talking about not just from

44:47

a content standpoint. I'm talking about from a

44:51

revenue and profit standpoint if

44:53

they take it in a different direction. I

44:56

would already say that Fox

44:59

News has a market position

45:01

problem, which is that

45:03

Rupert is very much a neocon.

45:07

And neoconservatism is on the way out in the

45:09

Republican Party in favor of a more populist conservatism

45:12

that you see with Trump, or now his running

45:15

mate, JD Vance. Rupert

45:17

and Fox waged a really strong campaign

45:19

to keep JD Vance off the ticket.

45:21

Obviously, lost that battle. But

45:25

fired Tucker by far their highest rated

45:27

and most profitable host ever.

45:30

And it was over, again, this populism

45:32

versus neoconservatism direction. So

45:35

I think that Fox already has

45:38

a problem where they are

45:41

becoming misaligned with their audience.

45:44

And regardless of what you think of the politics, that's as

45:46

bad for business. It'll be really interesting

45:48

to see if Loughlin will

45:50

realign things in a

45:52

more populist direction. But definitely going

45:54

in a liberal direction that like James or the

45:56

other siblings want to go in, that would be a

45:59

disaster. Chamath, any

46:01

thoughts on this media empire

46:03

and secession planning? Man,

46:06

I think probate and wills and trusts

46:09

are of the devil's making.

46:12

Nothing good comes out of these things. And

46:15

I don't know, I just think some of these

46:17

assets should just be left to shareholders.

46:21

Just sell them. Or just sell them

46:23

and take the money, give it to the kids. Hopefully

46:26

raise good kids. They can all go and pursue their

46:28

own path. Because again, I think the

46:30

point is the path and

46:32

the journey is

46:34

the fun. And

46:39

these kinds of battles are really brutal.

46:41

And I'll tell you, to me, the thing that I'm

46:43

sad when I hear this whole thing is

46:45

you have four siblings that I'm

46:47

guessing grew up together. And

46:50

now are they ever going to talk to each other

46:52

again? Or is it like three versus one or two

46:54

versus two? And I

46:56

just think that that's ugly over what? Power and

46:59

money? If

47:01

I was the father, I would have sold the asset, given the

47:04

money to the kids or to charity or whatever. And

47:07

hopefully they would have found happiness in a different

47:09

way. But that is what they did with the

47:11

Disney deal. They took the cash and they distributed

47:13

it to the kids. So they each got a

47:15

pretty big windfall. And then I think the concept

47:17

was this remaining asset would be managed over the

47:19

long term. Maybe I'm speaking out of

47:22

school a bit, but I thought that's what happened there. They

47:24

did sell Fox. The

47:26

studio and then the library

47:29

and that brings X-Men Fantastic

47:31

Four, Wolverine back together

47:33

with the Avengers, which is most

47:35

important. 20th century Fox. Clearly they

47:37

didn't. No,

47:40

it's all coming back together now. Now they just got

47:42

to get Sony to give up. I mean, we want

47:44

to talk about interesting IP. Marvel just sold these characters

47:46

to the highest. Better in perpetuity. Such

47:49

a crazy weird deal. It's

47:52

like me saying, you know, I I've

47:55

collected some really nice belts and so I'm just going

47:57

to have like a death match between my five kids

47:59

to see. and see who gets the best built. Yeah,

48:02

I mean, and it's not

48:04

even about money actually because they have

48:06

enough. It's clearly about power. It's about

48:08

being picked. No, and it's about being

48:10

picked. Imagine if your father picks your

48:12

sibling and not you. Why

48:15

would you do that? Like

48:17

is the asset so important? As

48:20

Zach said, these are self-managing because business people

48:22

will make rational business decisions. So put it

48:25

in the hands of a rational business person,

48:27

keep the family intact. Because if you lose

48:29

the family, what do you have? Yeah,

48:32

shout out Tom. That's what I don't get. That's what I

48:34

don't understand. That's right, interesting. That's what I don't understand. That's

48:36

right, interesting. Joe Biden has

48:38

been hot swapped as no shit,

48:40

and as predicted. The speed run

48:42

primary, maybe that's been subverted. As

48:44

we all know, Joe Biden firmly

48:46

has it in the room. What's

48:49

your version? Maybe it has been

48:51

subverted. Maybe possibly could have been

48:53

subverted inadvertently knocked over, forgotten.

48:55

It could be an oversight. Anything's

48:57

possible. Joe

48:59

Biden formerly exited the presidential

49:01

race on Sunday after donors and

49:03

party leadership politely asked him to

49:05

enjoy his retirement. Nope, they shivved

49:08

him. By

49:10

most insider accounts, Biden was not happy

49:12

about the decision and felt betrayed. Nonetheless,

49:16

public has backed his VP Kamala Harris

49:18

who appears to have

49:20

already wrapped up the nomination. Survey

49:23

conducted by AP on Monday suggested that Harris

49:25

already had the endorsement of enough delegates to

49:27

secure the nomination in the

49:30

first round of convention voting. So

49:32

this won't be official until the

49:34

DNC that starts August 19th in

49:36

Chi-town. So far, no one has

49:38

stepped forward as a rival for

49:40

Harris. And in fact, many of her

49:43

would be competitors have already endorsed her.

49:45

That includes Shapiro, Pennsylvania's

49:48

governor, Newsom, California's governor,

49:50

Pritzker, Illinois's governor and

49:52

Whitmer, Michigan's governor. All

49:54

of those, I guess, potential VP candidates.

49:58

She is now the 90%. favorite

50:01

to get democratic nomination.

50:03

I'll stop there and

50:06

ask our panelists what they think of

50:08

this turn of events. Chamath, do you

50:10

want to start us off? I mean,

50:13

I don't think the process was super

50:15

open and transparent and democratic, but I don't think

50:18

they had much of a choice. And I think

50:20

we've talked about that because too much of the

50:22

money would have had to essentially

50:25

been returned. And I don't think you can

50:27

fight a federal election in 2024 with one

50:29

hand tied behind your back. So

50:33

she was the de facto nominee

50:35

when the rumor started. And

50:40

now I think the whole point is to

50:42

figure out where does she stand. I think

50:44

the thing that she will have to overcome

50:46

is that these last three years, three and

50:48

a half years, she's

50:51

been relatively

50:53

under the radar. MIA, some might

50:55

say. And I think that now there's

50:57

this whole controversy. I don't know if you guys have seen

50:59

this where she was named the borders are, but

51:02

then she was not the borders are. And I think there's a

51:05

mainstream media is sort of fighting with itself

51:07

from six months ago about the whole thing.

51:09

But the point is that we don't know

51:11

what she believes and we don't yet have

51:13

a sense of her agenda

51:17

really. And I think that over these

51:19

next two months, it'll be up to

51:21

her to really create a

51:23

very clear case of what

51:25

she believes in. And then it'll be really interesting to

51:27

see who she picks as her VP candidate. And then

51:30

people I think will be in a position to judge.

51:32

And I think that that's what I've

51:34

been kind of like reading the tea leaves from the folks that

51:37

I've talked to is sort of what they say, which is TBD.

51:40

And we need to figure out where she's at. Freiburg,

51:44

your thoughts on this unbelievable

51:47

10 days in the history of

51:49

our country where. President

51:53

was nearly murdered

51:55

by an assassin. And. Joe

52:00

Biden resigns and a 39

52:04

year old political neophyte venture

52:06

capitalists is picked as VP. I

52:09

mean, this is consequential. What

52:12

are your thoughts on this 10 days? I

52:15

think we talked about that last week, but the Kamala

52:18

Harris de facto nomination that took place

52:21

over 48 hours, um, I think was

52:23

a little bit shocking to a lot

52:25

of people I've spoken with that there

52:27

wasn't a bit more of a process

52:30

to identify a nominee

52:32

besides Kamala that effectively the party lined

52:35

up. Now, what I think

52:37

is, is relevant

52:39

here is that for the first time it's

52:41

exposing people to the way the

52:43

electoral process actually works in the United States, that

52:45

it's not a direct democracy where

52:47

every individual in this country votes for

52:50

their federally elected people. Remember the United

52:52

States was set up as a federated

52:54

Republic. That there was meant to

52:56

be these States, the States were in a Federation

52:59

and then the States would elect electors

53:01

that would go and figure out who

53:03

should be the president, who should run

53:05

the, uh, the federal office

53:08

and the States would elect their representatives,

53:10

their Congresspeople to go represent them in

53:12

the federal government. And so

53:14

I think a lot of people, you know,

53:16

whether it's just without thinking about it or

53:19

based on precedent assume I

53:22

get a vote and who gets to be president.

53:24

What you get to have as a vote and

53:26

who gets to be the delegate to represent your

53:28

state in picking the president. And

53:30

so this process where delegates very quickly

53:33

fell behind Kamala Harris because of the,

53:35

the, the, the significant coalescing

53:38

of power and influence within the parties,

53:41

the two major parties in the United States has,

53:43

I think, exposed a lot of people to

53:45

the lack of a democratic process for federal

53:49

executive role in this country. And I

53:51

think that's a little bit shocking to people, but it

53:53

is the way that and,

53:56

and the same thing with the popular

53:58

vote versus electoral college. people keep getting

54:00

confused by that. That's right.

54:02

And in this very unusual condition, where

54:05

a candidate who's earned all of these delegates

54:07

drops out of the race, it's shocking and

54:09

surprising to people that they don't get to

54:12

go and make a vote again individually. And

54:14

I think it feels unfair. And I

54:16

think that a lot of people are feeling that way. I

54:18

do, however, think that pretty quickly, there's a lot

54:20

of people who are anyone but Trump that are

54:23

going to rally behind her. And

54:25

she seems to be polling well in the polls that

54:27

have come out in the last couple of days here.

54:29

All right, let me hand it off to Sax, then.

54:32

You had a situation where

54:35

Trump was the runaway favorite

54:39

and this unbelievable unity at the RNC.

54:41

And immediately after

54:45

the RNC, the Democratic Party hot

54:47

swaps Biden for Kamala, and they've got

54:50

a lot of great VP picks that

54:52

they can choose from. Mark

54:54

Kelly looking like the possibility, which would

54:57

obviously give them a lot of support

54:59

in Arizona and with moderates and law

55:01

and order folks. So Sax,

55:04

we're looking at essentially a dead

55:06

heat. Some polls have them tied.

55:08

Some polls, Reuters, Ipsos has Harris

55:10

with the 2% lead, CNN has

55:12

Trump with the 3% lead. What's

55:15

your take on, forget

55:17

about how we got here, how

55:19

does this affect the race

55:21

itself? This is a

55:23

dead heat now. What are your thoughts on

55:26

the race going forward? Who's the VP pick

55:28

that you're most worried about going up against

55:30

the Republicans? Well,

55:32

look, this clearly reshuffles the race to some

55:34

degree. I don't think it's a dead heat,

55:36

the polling shows that Trump is still ahead

55:38

in most of the swing states. But look,

55:41

Harris has more upside than Biden

55:43

does because she can actually campaign.

55:46

I mean, Biden clearly was

55:48

a surefire loser. And

55:50

that was exposed in the presidential debate. And that's why there

55:52

was a total panic in the Democrat party. After

55:55

that debate, they're like, we got to get someone new and they drove

55:57

him out. I do want to just say a word about

55:59

that process. us.

56:01

Throughout that process, remember it started with Biden

56:03

doing that Stephanopoulos interview. He said that

56:06

even God Almighty won't get me out of

56:08

this race. Then he said, nobody's pushing me

56:10

out. I'm not going anywhere. I'm campaigning next

56:12

week. He expressed that what was happening

56:14

in the party was a revolt against him. And

56:17

then boom, all of a sudden

56:19

he's out. And all we really

56:22

know from the public reporting is that

56:24

Nancy Pelosi said, you know,

56:26

Joe, we can do this easy way or

56:28

the hard way. And he was out again,

56:31

less than 24 hours after he said,

56:33

I'm in and I'm campaigning next week.

56:35

And even his surrogates on the Sunday

56:37

morning shows were saying

56:40

that he's definitely in the race. The white house

56:42

staff didn't know his campaign staff didn't know. It

56:44

kind of came out of the blue. It's a

56:46

very strange process. And

56:48

it happened via him just

56:50

posting a photograph of a letter that

56:53

was on personal stationery, not even like

56:55

an official white house memorandum.

56:57

And we didn't get an update. We didn't

56:59

hear directly from the president about one of

57:01

the most consequential decisions of his

57:04

life and of his presidency until

57:06

Wednesday. Well, he did have COVID. So that

57:08

for an 80 year old is pretty hard.

57:10

Yeah, fair enough. That was the story. But

57:12

still, I mean, for us to be left

57:14

in the dark wondering what was really going

57:16

on for three days, it was very strange.

57:19

It certainly was not what you would call

57:21

a democratic process. There was no speed run

57:23

primary as you want to Jason. There was

57:25

no open convention. What happened is the delegates

57:27

fell in line instantly. As I predict it,

57:29

because I said that they would not be

57:31

able to handle the chaos, that they wanted

57:33

to basically fall in line immediately and end

57:35

the chaos. And they fell in

57:37

line behind Kamala Harris, who has never

57:39

gotten even one primary vote. Who

57:42

are you most as a VP candidate? Give us

57:44

that. Because we understand that. I'll be honest with

57:46

you. I think that the scariest, the one I

57:48

would pick is Josh

57:50

Shapiro. He's the governor of

57:52

Pennsylvania, rising star. Look, if

57:54

he can deliver Pennsylvania for

57:57

the Democrats, that's powerful because one way.

58:00

for Harris to eke

58:02

out a victory is if

58:04

Shapiro can get her

58:07

Pennsylvania and then if she sort

58:09

of tacks back to

58:12

appealing to the Arab and Muslim

58:14

vote in Michigan, to

58:16

eke out Michigan and then ekes out Wisconsin with just

58:18

one point. In other words, if she can hold on

58:20

to the blue wall and then she

58:22

loses the swing state, so Trump is very much ahead in,

58:25

like Arizona, Nevada, Georgia, North

58:27

Carolina, she can still win this

58:29

election by 270 electoral votes to

58:31

268. It'd be the

58:33

closest margin in presidential

58:35

history. So that's

58:38

the scenario and it's probably her

58:40

best path to victory is to

58:42

win by one electoral

58:44

vote. That's the scenario I'd

58:46

be most worried about as a Republican. Now the other candidate

58:48

you hear a lot about is

58:50

Mark Kelly, the senator from Arizona, who

58:53

on paper looks fantastic. He's an

58:55

astronaut. His wife was

58:57

a victim of a gunshot. Moderate, right?

58:59

Super moderate. I personally don't think he

59:01

is that moderate, but I think he

59:03

presents as one and he's made noises.

59:07

He comes across as tough and comes across

59:10

as someone who's wanted to be

59:12

tougher on the border, which is a huge

59:15

weakness for Harris. If he

59:17

can deliver Arizona, then he becomes

59:19

a strong contender, but I'm

59:21

not sure that he can. So if

59:23

it were me, I'd probably go with Shapiro.

59:25

I mean, I hope they're not listening to

59:27

me. I hope they go with Kelly. Chamatha, obviously

59:30

even in this heated thing, the good

59:32

news is that both sides are going

59:34

to accept the election results. We have

59:36

that fairness and that honorability in both

59:38

parties where we'll accept even a close

59:41

election. There'll be no drama after it.

59:43

But what's your thought on the

59:46

strongest ticket? Do you think Shapiro? Do

59:48

you think Kelly, CNN said,

59:51

hey, and this went viral. Do

59:53

we think a Jewish vice president, the country's

59:55

ready for it. They got kind of dragged for

59:57

that. What

1:00:00

do you think is the right VP pick here, Chamam? What

1:00:02

do you think the right VP pick here is? And

1:00:05

which one is the scariest to a Trump, JD

1:00:07

Vance ticket, which is a very strong ticket in

1:00:09

and of itself? So

1:00:13

if you look at Trump's VP

1:00:15

pick, it's about aligning

1:00:18

a philosophy. Donald

1:00:22

Trump created the MAGA

1:00:24

movement, this populist conservative right

1:00:26

wing movement. And

1:00:28

I think JD Vance has an

1:00:30

opportunity now to carry that torch post

1:00:33

Donald Trump. And

1:00:37

that is an ideology that spans

1:00:39

states. I think this

1:00:42

idea that you pick somebody because they can

1:00:44

deliver a state is pretty misguided. I just

1:00:46

don't think that that in reality is what

1:00:48

happens. So I think that

1:00:51

Kamala has to decide what

1:00:53

she stands for and

1:00:55

figure out whether she needs somebody on her

1:00:57

flank that represents a slightly different set of

1:00:59

ideas that will then maximize her appeal or

1:01:02

she wants to double down. And

1:01:04

then she has to pick somebody that sort of

1:01:07

like aligns with her philosophically. And

1:01:10

again, I would just say that it's not super

1:01:12

clear yet what she thinks. I

1:01:14

think that Joe Biden was more of a

1:01:16

traditional centrist that had to appeal to

1:01:19

the progressive left in order to get his work done.

1:01:23

So that kind of makes sense.

1:01:26

You can understand it. You don't have to agree with

1:01:28

it, but it's pretty obvious. I

1:01:31

don't know where she's at politically. So

1:01:33

I think that that's the first thing.

1:01:35

She needs to explain herself. Is she

1:01:38

a centrist? Is

1:01:40

she more of a moderate

1:01:42

Democrat? Is she more of a progressive

1:01:44

Democrat? And then we can

1:01:46

then understand who the best person to align

1:01:48

her with should be. But

1:01:52

if I was in the Democratic kind of

1:01:54

like Star Chamber, I

1:01:56

would kind of try to figure that out first

1:01:59

because I think that Donald Trump picked me. makes

1:02:01

a lot of sense because it basically moves the

1:02:03

Republican party in a very firm direction that Dye

1:02:05

is cast for the Republicans for many years to

1:02:07

come now. Okay, Freiburg, your thoughts,

1:02:09

who is the VP candidate? What do

1:02:11

you think of this race

1:02:14

and give us a prediction? You're

1:02:17

famous for your incredible insights and predictions

1:02:20

in politics. Give us your prediction, Freiburg. Who

1:02:23

should she pick? Who will she pick? Come on.

1:02:25

There's a lot of talk about Roy Cooper in

1:02:28

North Carolina. Sax

1:02:30

didn't mention Cooper, but sounds

1:02:32

like it could be in the

1:02:34

running and could be a leading contender for

1:02:36

the slot. I

1:02:39

think the Harris-Trump poll

1:02:44

is not out or there's a recent

1:02:46

one that shows Harris, yeah, 44,

1:02:49

48, Trump in the lead in North Carolina.

1:02:53

So there's some

1:02:56

room there. If you can

1:02:58

get the governor in that spot, that's a lot

1:03:00

of electoral votes. In

1:03:02

terms of who I think should be, I'm not sure. But

1:03:05

I do think that might be a top contender for folks

1:03:08

I've talked to. Any thoughts on

1:03:10

Shapiro and CNN's positioning

1:03:12

that the country's not ready for a Jewish

1:03:15

vice president? I

1:03:17

was shocked recently to hear about

1:03:19

a board, a pretty important

1:03:22

board, because it represents a large organization

1:03:24

and there was an individual on

1:03:26

the board who was supposed to be elected chairman. They

1:03:28

went in for the vote. In that

1:03:30

board meeting, this individual who happens to be Jewish,

1:03:33

there was a conversation that ensued about you can't

1:03:35

be the chairman at this time because

1:03:37

having a Jewish chair would be really

1:03:39

difficult in this current climate. I

1:03:42

was shocked to hear this. It

1:03:45

was not expected by folks

1:03:47

going into the meeting, things were supposed to be quite

1:03:50

different in the vote. And ultimately

1:03:52

the decision was made that a Jewish person should

1:03:54

not be the chair of the board at this

1:03:56

time. Jake, I'll take your question. I think that

1:03:58

behind closed doors, these are the... sorts of conversations

1:04:00

that are going on, that

1:04:02

there's a perception given the Gaza

1:04:04

conflict, that there is a

1:04:07

risk of having Jewish leadership being put

1:04:09

into powerful positions right now, Jewish leaders

1:04:11

being put into powerful positions. Wow.

1:04:14

That is shocking. That's insane. It's

1:04:17

just this is, this is what

1:04:19

is going what? This

1:04:21

is just, yeah, it's shocking and deranged

1:04:23

and the anti-Semitism right now on social

1:04:26

media and what

1:04:28

we're seeing online is just absolutely

1:04:31

heartbreaking and infuriating in equal

1:04:33

parts. Sacks, anything you want to

1:04:35

add to this as we wrap up our... What

1:04:37

the? Well,

1:04:40

I mean, just talk about Shapiro Sacks. Is

1:04:42

the country ready for this? You saw the CNN

1:04:45

clip and you know, sort of... Sorry,

1:04:47

can I just ask a question? I'm sorry. Go

1:04:50

ahead. What does it solve? What

1:04:53

does it accomplish? Less

1:04:56

heat coming into that board. Less

1:04:58

protests. Less protests. The protesters now have,

1:05:00

I guess what I would read into

1:05:02

this, correct me if I'm wrong here,

1:05:05

Freebird, is the protesters have

1:05:08

now won in that they've intimidated people

1:05:11

to an extent that they don't want to

1:05:13

go near Jewish leadership. Am I

1:05:15

interpreting correctly a possibility

1:05:18

here? Sorry,

1:05:20

say that again. The protesters what? So these

1:05:23

protests, the Gaza conflict

1:05:27

have reached a point where people

1:05:29

do not want to have

1:05:32

Jewish leadership because it would be polarizing

1:05:34

and create more protests. That's

1:05:36

right. That's that. And that's

1:05:38

the conversation that I hear going on behind closed doors or

1:05:40

I'm hearing about. And

1:05:42

so, you know, it's almost like

1:05:44

a cancel culture against Jews because

1:05:47

of the risk of a Jewish person being in

1:05:49

a leadership position that could drive... Or a big...

1:05:52

The APN was bringing up with the VP choice of

1:05:54

Shapiro. And that's right. I

1:05:56

think it's totally crazy. However, I definitely have seen people...

1:05:59

online, I mean, articles online, like

1:06:02

saying, like, is this an issue with putting Shapiro

1:06:04

on the ticket? Now, I

1:06:07

can't believe this is a problem for the voters

1:06:09

of the country. However, I think

1:06:11

if you're one of the Democratic

1:06:13

masterminds and you're trying to engineer enough electoral

1:06:16

votes for Harris to win, like

1:06:18

I said, you're trying to win that blue wall. You're trying

1:06:20

to get not just Pennsylvania, but Michigan. And

1:06:23

the problem that Biden

1:06:25

had, and now Harris has

1:06:27

in Michigan, is

1:06:29

that the large Arab and

1:06:31

Muslim population of Michigan is

1:06:33

really against the administration's support

1:06:36

of Israel. Now, this is

1:06:38

why Harris just snubbed Netanyahu when he

1:06:40

came to Washington. So they are immediately

1:06:43

trying to reposition that issue.

1:06:46

And remember, the margin of error in Michigan is like 2%.

1:06:49

So if they can win back

1:06:51

that vote by obscene to be

1:06:53

more progressive on the

1:06:55

whole Israel-Gaza war, then

1:06:57

there's a big electoral advantage for them. So

1:06:59

I have to wonder if this

1:07:02

is where this talk about,

1:07:04

you know, is it an issue for Shapiro to be Jewish

1:07:06

on the ticket or whatever? Again, it's

1:07:08

nuts to me that we could be even having

1:07:10

that conversation in this country, but

1:07:13

it's possible that that is what's going

1:07:15

on is it's like, can you win

1:07:17

Pennsylvania, but not lose Michigan? Well,

1:07:20

the inevitable outcome of identity politics by

1:07:23

giving everyone a definition on their race

1:07:25

or their gender or their background or their

1:07:27

religion is that you ultimately end

1:07:30

up picking winners and losers and

1:07:32

you don't just get to pick winners when you,

1:07:34

when you make selections or prioritize

1:07:37

things based on identity

1:07:39

like this, you also defacto

1:07:41

pick losers. And that's where this

1:07:43

unfortunate snowball.

1:07:46

When John F. Kennedy ran for president, it was a

1:07:48

big issue that he was Catholic. I mean, he has

1:07:50

to remember this, but in 1960, right? It

1:07:53

was a major thing in our family. It was a

1:07:55

major point of pride that we had an Irish Catholic

1:07:58

in the White House. Yeah. Yeah. And specifically. what

1:08:00

people asked is would he be loyal to the

1:08:02

United States or would he be loyal to the Vatican and

1:08:04

the Pope, who was his ultimate authority? And he made

1:08:06

a really clear look, I'm gonna do what's right for

1:08:08

the United States and he neutralized that issue. I

1:08:12

think that what matters about Shapiro

1:08:14

or any VP is their views

1:08:16

and their accomplishments, their policies, and

1:08:19

whether he's Jewish or not really is

1:08:22

secondary. Even if your

1:08:24

principal concern is Gaza, there

1:08:26

are still plenty of Jews who have

1:08:28

a wide spectrum of views on

1:08:31

that issue. So it is nuts

1:08:33

to me that this conversation is

1:08:36

seriously happening. Right, there

1:08:38

has been a kerfuffle, a

1:08:40

Donny Brook online between Paul Graham

1:08:43

and our bestie David

1:08:45

Sachs here. Here Paul

1:08:47

Graham threatening you, Sachs on X. Do

1:08:50

you really want the full story of what you

1:08:52

did to Parker being told publicly? Because

1:08:55

it's the worst case of an investor now treating

1:08:57

a founder that I've ever heard and

1:09:00

I've heard practically all of them, Paul Graham, the founder of

1:09:02

Y Combinator. I was talking recently

1:09:04

to another investor about whether you are the

1:09:06

most evil person in Silicon Valley, referring to

1:09:08

you David Sachs. He thought about it

1:09:10

for a few seconds and agreed and

1:09:13

he couldn't think of anyone worse. The

1:09:15

second tweet about you being the most

1:09:17

evil person, David Sachs in

1:09:19

Silicon Valley has been deleted. Well,

1:09:22

that's nice to know. Your response, it's nice to know,

1:09:24

yes. That's nice to know. There was also another unhinged

1:09:27

tirade that he had against me a few months ago

1:09:30

where he was commenting in

1:09:32

the Ukraine debate and was

1:09:35

responding to a Ukrainian partisan who

1:09:38

this guy is like a propagandist for Ukraine who

1:09:40

was embedded in the Azov Battalion. People

1:09:43

may know what that is. In any event, Paul went out

1:09:45

of his way. The thing

1:09:48

is I've never met Paul Graham. I don't know

1:09:50

him. I've never done

1:09:52

business with him. So it's just

1:09:54

weird to me that he has this animus and

1:09:56

this vitriol towards me. It's hard to know exactly

1:09:58

what this is based on. based on, I

1:10:00

think that part of it is that

1:10:04

he thinks he knows what happened

1:10:06

at Zenefits, even though

1:10:08

he wasn't involved at all. And he's

1:10:10

just listening to one guy who's been nursing

1:10:12

this vendetta for many years. And

1:10:15

then other people are speculating that there could be

1:10:17

other things involved. I don't quite know. You want

1:10:19

to set the record straight on Zenefits and just

1:10:21

say what happened? What is it that you guys

1:10:23

want to know? Parker apparently has done several public

1:10:26

interviews where he kind

1:10:28

of made claims, I don't know if I've listened

1:10:30

to him, I've just read the summaries, but JK,

1:10:32

you probably know that Parker's claim that he was-

1:10:34

I just said you ran a coup on him.

1:10:36

Obviously, for folks who don't know, there was an

1:10:38

SEC investigation and Parker

1:10:40

was ousted from Zenefits as the

1:10:42

founder CEO. He's very bitter about

1:10:45

that, did a revenge startup, rippling,

1:10:48

which is doing quite well from what I understand. And

1:10:51

he blamed Saks for all of this, even

1:10:53

though he was sanctioned for doing essentially assurance

1:10:56

fraud by helping people

1:10:59

lie on

1:11:01

a test for their insurance certifications.

1:11:04

And he got sanctioned by the SEC for

1:11:06

it. And as you pointed out, Saks, he

1:11:09

was the only person who was sanctioned for

1:11:11

that. So

1:11:13

he broke some rules and he

1:11:15

got pretty serious penalty.

1:11:17

Yeah. Do I have that basically

1:11:19

correct? Yeah, I mean,

1:11:21

look, that whole experience was easily

1:11:23

the worst year of my entire

1:11:26

professional career having to deal with

1:11:28

that mess that he created. And

1:11:30

look, anybody can now say anything

1:11:32

almost 10 years later in a

1:11:34

podcast, but the situation there

1:11:36

was thoroughly investigated by

1:11:39

regulators who had subpoena powers, who

1:11:41

did extensive discovery. They looked at

1:11:44

everyone's emails throughout the whole company.

1:11:46

They also interviewed something like a

1:11:48

dozen people under oath and took

1:11:51

witness testimony from them.

1:11:53

And then they sanctioned him, they fined him, and

1:11:55

they published an account of what happened. I

1:11:58

personally think it's a huge waste of time to be

1:12:00

honest. be like rehashing events are almost a

1:12:02

decade old, but I guess I'm being forced to by

1:12:05

this smear campaign that

1:12:07

he and Paul

1:12:09

Graham have engineered against me. If

1:12:12

you want to know what happened, just read

1:12:14

what the SEC said, read what the other

1:12:17

regulators said. There was

1:12:19

only one person who was named

1:12:21

as being aware of the

1:12:23

misconduct and there was only one

1:12:26

person who was fined and held

1:12:28

accountable by regulators. In fact, he was fined more

1:12:30

than the company. Now, if

1:12:32

he just said, yeah, look, I learned from

1:12:34

that mistake and I made some mistakes and

1:12:36

moved on and apparently he does have a

1:12:39

successful company so I don't

1:12:41

really understand why he's so bitter. He seems to have

1:12:44

like a, he's like disturbed about it,

1:12:48

then it would be fine. I mean, there would be

1:12:50

no reason to be talking about this, but the

1:12:52

guy refuses to admit that he did

1:12:54

anything wrong. And instead he's created this

1:12:57

elaborate story that his departure from Xenifis

1:12:59

wasn't related to massive compliance issues and

1:13:01

that somehow it was related to him

1:13:03

seeing a sales target or being the

1:13:05

victim of a coup. That's

1:13:08

not what happened. This was a

1:13:10

regulatory crisis that unfolded over many

1:13:12

months and kept getting worse and

1:13:14

worse and we kept discovering new

1:13:17

compliance violations and this created a

1:13:19

50 state insurance investigation that

1:13:21

could have shut the company down. And

1:13:24

he controlled the board. He didn't have

1:13:26

to leave if he didn't want to. He ultimately

1:13:28

perceived that it was in his interest to leave

1:13:31

and let us clean it up. And then he went on to

1:13:33

go do this other startup, which I think he was planning to

1:13:35

do all along. So his plan worked

1:13:37

out for him, which is he left a big mess for us

1:13:39

to clean up. And

1:13:42

went on to the other. That is very successful now with the new company.

1:13:44

Right. Right. Sacks, I

1:13:46

remember, I will just say, I remember how hard you

1:13:48

worked at that after you were in the

1:13:50

COO seat and then you were promoted to CEO and

1:13:53

I was really impressed watching it and seeing what

1:13:55

you did because you chose to step up and

1:13:57

take care of this company at a

1:13:59

time. where you expressed to all of us privately how

1:14:02

hard it was and what a challenge this company had

1:14:04

found itself in. And you

1:14:06

had investors that were friends of yours that were

1:14:08

involved in the company that were on the board.

1:14:10

And I think you did what felt like at

1:14:13

the time, and from my experience interacting with you

1:14:15

during this time, the right thing, which

1:14:17

was to step up and address this, rather than just throw your

1:14:19

hands in the air and say, this guy screwed things up, or

1:14:21

this company screwed up and walk away from it. You had personally

1:14:23

put money in your friends have put money in. And you

1:14:26

worked hard to try and help the business recover after

1:14:29

this miserable period of time. And it was really impressive

1:14:31

to watch you do that work. So I just want

1:14:33

to highlight my kind

1:14:35

of experience watching you. It was miserable

1:14:38

and obviously pretty thankless. And I did

1:14:40

it for no compensation. I did

1:14:42

it because like you said, I had a lot of friends who invest

1:14:45

in the company, I just thought it was the right thing to do

1:14:47

to do this cleanup. The lawyer said it

1:14:49

would take two years, we managed to get it

1:14:51

done in one year, we got a clean bill

1:14:53

of health and regulators, we had to remediate all

1:14:55

the compliance failures. And when I

1:14:57

then handed the torch to the new CEO, we

1:14:59

had $200 million in the bank and 60 million

1:15:01

of ARR with a clean bill of health. So,

1:15:05

you know, but I didn't know I'd have this

1:15:07

like crazy founder like lobbing bombs at me the

1:15:09

whole time. And frankly, if I had known he

1:15:12

was going to do this, I would have just

1:15:14

said, listen, man, you clean up your mess. And

1:15:16

he would have continued playing games and stonewalling

1:15:19

the regulators. And it would have been a

1:15:21

much worse situation for sure. Chamafie, you want

1:15:23

anything here before we wrap up

1:15:25

on this? Because I'll have two points to make, but I'll let

1:15:27

you know first. Look, I think that part

1:15:30

of what happens in

1:15:32

Silicon Valley is that there's these cliques and

1:15:35

there's definitely a YC clique

1:15:37

and they

1:15:39

protect their own in absolute terms. And

1:15:41

so I think there's a level of

1:15:44

morality that everybody else has to live

1:15:46

by that's not necessarily the rules that

1:15:48

apply if you're a YC CEO. Now

1:15:51

that was accepted in Silicon

1:15:53

Valley because in the early days,

1:15:57

they were frankly, One

1:16:00

of a very, very small handful of

1:16:02

games in town with respect to high quality deal

1:16:04

flow when you started to do series A, B,

1:16:06

and C. And

1:16:09

as a result of that, I think venture

1:16:11

capitalists essentially looked the other way because the

1:16:13

returns were so good. The companies

1:16:15

that were coming out of the incubator were so good.

1:16:18

But as with all things, when you're

1:16:20

successful and you try to scale, returns

1:16:22

decay. And this is

1:16:24

not a slight on YC's returns,

1:16:26

but it's what happens to everybody.

1:16:28

So if you look at Blackstone's

1:16:30

returns, they were incredible when they started.

1:16:33

And they're OK today. When you look

1:16:35

at Sequoia's returns, they were incredible when

1:16:37

they started. They're OK today.

1:16:40

YC's returns were incredible when they started.

1:16:42

They're OK today. And this is nothing

1:16:44

against any of these folks. It's that

1:16:47

in the business of building an organization

1:16:49

and scaling, that's what happens. And when

1:16:51

that happens, and a lot

1:16:53

more competition emerges on the scene, the

1:16:57

old tactics that you used to use

1:17:00

to run a protection racket,

1:17:02

if you will, just doesn't work anymore. And

1:17:04

I think part of what's spilling out in

1:17:06

public here is that

1:17:08

that kind of immature form of bullying

1:17:10

and intimidation is just kind of dumb

1:17:12

because it just doesn't

1:17:14

hang together anymore. So

1:17:17

I don't know. I thought the

1:17:19

whole melee, if you will, ruckus,

1:17:21

Jason, fracas, fracas.

1:17:24

Yeah. Donnie Brooke, Bruja

1:17:26

Hall. A clash was

1:17:30

more about a guy that

1:17:32

was engaged in this, trying to do what he

1:17:34

perceived to be the right thing for a YC

1:17:39

founder in his community. But probably

1:17:41

just he just needs to get back to work

1:17:43

and do something productive and probably this wouldn't happen

1:17:45

the next time. I'll just

1:17:48

make two points here. Y

1:17:50

Combinator has always, like

1:17:52

much of our industry, they're not unique in this, been

1:17:54

in favor of rulebenders, breakers and

1:17:57

naughty is actually something that's been

1:17:59

done. something in their interview process

1:18:01

that they optimize for. Sam

1:18:04

Altman has talked about this very publicly.

1:18:06

I had a YC alum who was trying to get funding

1:18:08

for me, hack my voicemail, and change

1:18:11

my outgoing voicemail. And that was

1:18:13

like a big bruhaha on Hacker News, etc. And

1:18:16

we kind of celebrate a little bit of

1:18:18

bending and breaking of rules. And

1:18:20

what everybody needs to understand is sometimes

1:18:22

if you bend or break a rule,

1:18:24

like insurance certification, like Parker did here,

1:18:26

here, that can be fatal for a

1:18:28

company, which it was, and it can

1:18:31

be really, really dangerous.

1:18:34

And so then you superimpose on top of this,

1:18:36

to your point, Chama, Y

1:18:39

Combinator, very big, powerful organization.

1:18:42

Some folks say Amafia, and they described

1:18:44

it as a bully stack. Y

1:18:46

Combinator does circle the wagons. They do bully people.

1:18:49

And they do put out

1:18:52

a presentation that we are the only

1:18:54

people in Silicon Valley who are founder

1:18:56

friendly, even though they're getting 7% for 125k, like we do in our

1:18:58

accelerator, Techstar

1:19:00

does, while also saying everybody else

1:19:03

is the enemy. Everybody else

1:19:05

is taking advantage of founders. The

1:19:07

truth is, we're all working really hard. Every

1:19:10

founder is going to hack their

1:19:12

way to success. Sometimes

1:19:14

you take it too far, like Parker did here, he

1:19:16

learned a lot of lessons. Like some

1:19:18

people say Uber did. Like some people

1:19:21

say Airbnb did. There's always been rule

1:19:23

breaking and bending in the entrepreneurial class.

1:19:25

And then you superimpose on it. Paul

1:19:28

Graham's feelings in the Middle East,

1:19:30

Saks, your strong feelings about Ukraine

1:19:32

and politics. And now the

1:19:34

footprint of Silicon Valley is just so powerful,

1:19:37

so influential on the global stage when it

1:19:39

comes to politics. It just reaches a level

1:19:41

of toxicity here that it doesn't need to.

1:19:43

We're all on the same team. Let's all

1:19:45

build great companies. Let's put this

1:19:47

ugliness behind us and get back to work. That's my

1:19:50

final statement. I wish for Canis to speak. I

1:19:52

like that statement. And if we

1:19:54

were just talking about somebody who had learned

1:19:57

their lesson, this wouldn't even be an issue.

1:20:00

that happened a decade ago, such a waste of our time

1:20:02

and energy even be talking about it. The

1:20:04

problem is that you have

1:20:06

people, really, we're talking about Parker and Paul

1:20:08

Graham, who are trying to smear somebody

1:20:11

as a way to... You. Exh- Yeah. They're

1:20:13

trying to damage your business, let's be honest.

1:20:15

They're trying to get founders to not work

1:20:18

with you. For sure they're doing that. And

1:20:20

that's bullsh-t, by the way. Look, Parker has

1:20:22

this very complicated story, and the

1:20:24

whole purpose of it is to exonerate himself, to

1:20:27

basically say that he didn't engage in any wrongdoing,

1:20:29

and somehow he was set up. Okay,

1:20:31

it's ridiculous. I mean, I don't have that kind of power over

1:20:34

the SEC. The SEC, they

1:20:36

sent us a list of people they wanted to talk to. I

1:20:38

was not on the list. And I

1:20:40

was like, well, wait, don't they want to talk to me? I'm the new

1:20:42

CEO of the company. And the lawyer said, no,

1:20:44

your discovery was clean as a whistle. They don't have any questions

1:20:46

for you. They only want to talk to people who

1:20:48

they saw in the discovery. There was an issue.

1:20:51

So the regulators prosecuted.

1:20:53

They basically conducted this

1:20:56

investigation. I had no impact

1:20:58

over that. It was a very serious issue.

1:21:00

This was not made up. So I

1:21:02

just think it kind of defies belief to now

1:21:04

say that all the

1:21:06

regulatory compliance issues which played out over months were

1:21:09

not an existential issue for the company. It certainly

1:21:11

was. But look, we have better things to

1:21:13

talk about. Did you see Ali Resnick's tweet? This

1:21:15

is pretty dark. Ali Resnick

1:21:18

tweeting here. Paul Graham reached out to

1:21:20

the key SV firms,

1:21:24

Silicon Valley firms, to attempt

1:21:26

to get Jewish VCs fired

1:21:30

post October 7. No idea if

1:21:32

that's true or not. But there

1:21:35

has been this Paul

1:21:37

Graham is anti-Semitic meme

1:21:40

going around. I don't think he's anti-Semitic, but this is

1:21:43

a pretty bold charge here. And I don't know if

1:21:45

it's true or not. Well,

1:21:47

I can speak to some of it. Okay, go ahead. Yeah.

1:21:49

I've talked to a few people who are involved in this.

1:21:52

Look, I think what happened is that in

1:21:54

the wake of October 7, there was obviously

1:21:56

a very heated debate online. PG

1:21:58

is on one side. that he

1:22:00

got into a supporters of Israel on the

1:22:02

other side. They accused

1:22:05

him of saying anti-Semitic things.

1:22:07

He took offense to that and basically

1:22:10

went over their heads to their

1:22:13

bosses of a couple of

1:22:15

different VC firms, at least two that I know of,

1:22:18

where he basically went to the heads of

1:22:20

these firms to express his displeasure, I guess,

1:22:22

with these exchanges. And

1:22:24

I think the feeling on the part of the

1:22:26

junior VCs, because the people he was going over

1:22:28

the heads of were not senior partners, whatever. These

1:22:31

were lower level to mid level

1:22:33

VCs at firms. You can

1:22:35

understand how they would receive that. The

1:22:37

head of YC is going over- Yeah,

1:22:39

Paul Graham is a giant. Yeah. Yeah. So

1:22:41

he's basically going to the heads of their

1:22:43

firm to seek a

1:22:45

correction in their behavior even

1:22:47

though this wasn't like a workplace

1:22:49

activity. And so they

1:22:52

certainly felt intimidated and silenced by

1:22:54

that. Or in the worst case that

1:22:56

he was trying to get them fired. In his case,

1:22:58

I guess he's trying to say,

1:23:01

hey, this isn't cool to call me an

1:23:03

anti-Semite on Twitter publicly. And the

1:23:05

truth may be somewhere in between. I mean, the great irony

1:23:07

of this, of course, is he's concerned

1:23:10

about his reputation being damaged. And

1:23:12

I know YC took it

1:23:14

very seriously, the claims that they're anti-Semitic

1:23:16

and Paul Graham's anti-Semitic. They took that

1:23:18

very seriously as they should. But here

1:23:22

he is out there trying to damage your

1:23:24

reputation. So it's a little

1:23:26

bit of hypocrisy here, I think,

1:23:28

if he's outwardly trying

1:23:30

to destroy your reputation with founders and

1:23:32

then he's concerned about his reputation. Well,

1:23:34

clearly there's a double standard here because

1:23:37

PG doesn't like being called names on

1:23:39

Twitter. Yeah. He

1:23:41

doesn't like his use being labeled and he's

1:23:43

willing to take those debates offline, go

1:23:46

over the heads, not talk to the people who said those

1:23:48

things, but then go to their bosses,

1:23:50

the heads of their firm, maybe not

1:23:53

threaten them, maybe not say, I don't

1:23:55

think he said fire this person or whatever.

1:23:57

But like you said, there's always an implication

1:23:59

of retaliation. because people understand

1:24:02

the way that YC operates. And

1:24:04

certainly those junior level VCs experienced it

1:24:08

as a form of intimidation. I

1:24:10

mean, this is the classic cancellation playbook, right?

1:24:12

And this is what people will do to

1:24:14

the left or the right or

1:24:16

they'll do it to advertisers. They'll try to get

1:24:18

advertisers to cancel. It feels similar

1:24:20

to that cancel culture, even if

1:24:22

that's not how PG intended it. Well, it's

1:24:25

also like rather hypocritical when he's

1:24:27

super sensitive about this type of thing. But

1:24:30

then he's instigating this

1:24:32

pylon when on this whole

1:24:34

Xenophthys thing, he's basically single source from

1:24:36

a disgruntled founder who has this vendetta

1:24:38

who's been nursing this thing for years.

1:24:41

He's never talked to me. Like I said, he's never even

1:24:43

met me, but he's willing to call me the most evil

1:24:45

person in all of Silicon

1:24:47

Valley. And then again, instigate this pylon with

1:24:50

like all these other people from YC. Yeah,

1:24:53

I mean, how dare him call you the most evil

1:24:55

person? That's my job here on

1:24:58

the podcast. And then

1:25:00

I saw like other people from YC, like Michael

1:25:02

Ceball, who I think is actually a really cool guy. He's

1:25:04

awesome. Yeah, super supportive of the founders.

1:25:07

And then he's tweeting that like, somehow I put up

1:25:09

my founders who were, there were a lot of founders

1:25:11

who basically spoke up and actually

1:25:13

said, including many founders who came out

1:25:15

of YC. So, you know, actually David's been

1:25:17

a great VC to us. And he's

1:25:19

saying, oh, Saks must have put them up to it.

1:25:21

No, I never asked anybody to do that. And a

1:25:24

good reason why is I don't want to trouble my

1:25:26

founders with like- Drag them into this. Drag them into

1:25:29

it. So I'm not going to make them do that.

1:25:31

So I had nothing to do with that. But frankly,

1:25:33

you know, old saying that every accusation

1:25:35

is a confession. Maybe

1:25:37

the reason why people at YC think that I might've

1:25:39

done that is because that's kind of their playbook is

1:25:41

they create these online mops. But like what

1:25:44

gives him the right to do that? I

1:25:46

can tell you. Go for it. He

1:25:49

doesn't have enough to do. He's

1:25:51

sitting around, he's got a lot of money. I mean,

1:25:54

he's been very successful. And as

1:25:56

far as I can tell, he's just getting into dustups

1:25:58

on Twitter and then- There's

1:26:01

a lot of amazing people, we all

1:26:03

know them, that are so good when

1:26:05

they're under pressure focused and grinding. And

1:26:08

then when you take a little bit of the pressure

1:26:10

off, they just go crazy. And they

1:26:13

don't have enough to do, and it's amplified by

1:26:15

money, and it's amplified their own perceptions of themselves.

1:26:18

So I don't know, maybe you should just go back to

1:26:21

work. So everybody back to work. When

1:26:24

these things get heated, here's an interesting idea for everybody.

1:26:26

Go get a cup of coffee with the person you

1:26:28

disagree with. Sit down, like we do here at The

1:26:30

All In podcast, and have a vibrant

1:26:32

debate. It makes life richer, it makes you smarter,

1:26:34

it gives you more perspective. And so PG,

1:26:37

Saks, anybody else involved? Just

1:26:40

all sit down and have a cup of coffee, try to hash this out. Good

1:26:43

coffee in San Francisco. That's my RX. Freiburg,

1:26:46

I've been talking to Saks privately. He has

1:26:48

been complaining to me for weeks that we've

1:26:50

had too much politics on the program and

1:26:52

not enough science corner. So

1:26:55

I acquiesced to Saks' appeals to

1:26:57

me and all of his supporters

1:26:59

to get a science corner in today.

1:27:03

Let's talk about nuclear power. Everybody's got

1:27:05

nuclear power on their mind. Obviously, China's

1:27:07

doing a really good job of executing

1:27:10

on it, and there's some new science

1:27:12

here. So fill us in. Saks

1:27:15

looks so engaged. Let's go. Well,

1:27:18

Saks might like it because it's a bit

1:27:20

of an economic story and a bit of

1:27:22

a China competitive story, which I think is

1:27:24

the main point here. The story is rooted

1:27:27

in a paper that was published out of

1:27:29

China on their new high

1:27:31

temperature gas-cooled pebble bed reactor, which is a

1:27:33

new type of nuclear reactor technology that shows

1:27:36

that this thing cannot melt down, which is

1:27:38

an amazing new technology. But I want to

1:27:40

just take a step back and

1:27:43

talk about general electricity production in the US

1:27:45

versus China and where it's headed. So

1:27:48

today, the US has roughly one terawatt

1:27:51

of total electricity production capacity.

1:27:54

China today has about three terawatts of

1:27:57

total electricity production capacity and

1:27:59

about 2-3% of that is nuclear today for China. So

1:28:04

by 2050, the US is projected to build out

1:28:06

an additional terawatt to getting us to 2 terawatts

1:28:08

of capacity. So we're going to double our

1:28:11

total electricity output by 2050. China,

1:28:14

meanwhile, has a plan, stated, to

1:28:16

increase electricity production to 8.7 terawatts.

1:28:20

So basically tripling between now and 2050.

1:28:24

88% of their power by 2050 will be renewables.

1:28:27

And by 2060, they've

1:28:29

stated this goal that they want about 18% of their overall

1:28:32

power to come from nuclear reactors. They

1:28:34

currently have 26 nuclear reactors in the construction

1:28:37

phase. They've got planning going on around building

1:28:39

300 of these. And

1:28:42

they've already got stated plans around 500 gigawatts of

1:28:44

capacity. Just to give you a sense of that,

1:28:46

500 gigawatts, which is what China's

1:28:48

got plans for, is half of

1:28:52

the total US electricity production today. That's

1:28:54

in their nuclear build-out. Today, just to

1:28:56

give you a sense on the relative

1:28:58

cost of electricity, China's about 7 to

1:29:00

9 cents a kilowatt hour. The

1:29:03

US is 17 to 25 cents a kilowatt hour. And

1:29:07

China is projected to drop their

1:29:09

price to less than 6 cents due

1:29:11

to the expansion of renewables and nuclear

1:29:14

power in the country. So

1:29:16

the US cost is about triple what it is

1:29:18

in China to build out new electricity capacity. That's

1:29:20

a really important point. So currently, we have about

1:29:22

a third of what China has. China's

1:29:25

going to triple. We're going to double by 2050. Their

1:29:28

cost is already lower than ours, and it's going

1:29:30

to get lower. And their cost to build out

1:29:32

new electricity is a fraction

1:29:35

of what it is in the US. So

1:29:37

this is a massive difference. The International

1:29:40

Energy Agency estimates that the electricity from

1:29:42

nuclear power costs $65 per

1:29:44

megawatt hour in China compared to

1:29:46

$105 in the US and $140 in the EU. And

1:29:51

recent data has US costs looking like they might be

1:29:53

anywhere from 5 to up to 10 times what it

1:29:55

costs to build out in China. So

1:29:57

this is a real important... long-term

1:30:00

competitive point. China has

1:30:03

more electricity production, it's cheaper to make

1:30:05

electricity, and it's cheaper to build new

1:30:07

capacity, and they're building at an accelerated

1:30:09

rate. And this really highlights

1:30:11

the industrial challenge the United States is

1:30:13

gonna have in the decades ahead. We

1:30:15

talk a lot about wanting to onshore

1:30:18

manufacturing in the U.S., build out new

1:30:20

manufacturing technologies, but ultimately, all of these

1:30:22

industries, particularly AI, are gonna

1:30:24

be driven by the cost of power. So

1:30:26

Nick, if you pull up this chart, so what's going

1:30:28

on in nuclear? Well, there's effectively

1:30:31

considered to be four generations of

1:30:33

nuclear reactors. The first generation was

1:30:36

all the early prototypes, and I've got an image

1:30:38

up here to show this comes

1:30:40

from the Department of Energy. The second generation,

1:30:42

which was the first kind of commercial power reactor, started to

1:30:44

get built out in the 1960s, 70s, 80s. And

1:30:48

then these Gen 3 reactors, where these lighter

1:30:50

weight reactors that were kind of

1:30:52

more advanced. Gen 4 is

1:30:55

the next generation of nuclear power reactors,

1:30:57

and their next generation, because they're meant

1:30:59

to be much more safe, where they

1:31:01

cannot theoretically have a meltdown. You can't

1:31:04

have a nuclear meltdown like you had

1:31:06

with Fukushima or with

1:31:08

Three Mile Island. And to be clear, Fukushima

1:31:10

was Generation 2. Those are the boiling water

1:31:12

reactors, yeah? Yeah, and

1:31:14

so these old reactors have this

1:31:17

risk where

1:31:19

you pump water in to cool down

1:31:21

the reactor and to drive the turbine. And

1:31:24

if the water pumping system fails, and you can't

1:31:27

get the rods out of the

1:31:29

reactor, then the

1:31:31

reactor keeps reacting, the uranium keeps

1:31:33

having this kind of chain reaction, gets

1:31:36

hotter and hotter, and eventually gets so hot, it

1:31:38

melts all the walls and all the surrounding materials of

1:31:41

the reactor, and all of the nuclear rods start

1:31:44

to evaporate and all this nuclear material is

1:31:47

released into the environment. That's the risk of a

1:31:49

meltdown, ultimately. This is not a nuclear bomb, just

1:31:51

to be clear. The temperature is melting the facility,

1:31:54

and then radioactive material escapes the

1:31:56

facility. The Gen 4 reactors are

1:31:58

designed And so one of

1:32:00

the first, if you go to this next slide, you'll see

1:32:02

just kind of an image here. This is the new reactor

1:32:05

called the Pebble Bed Reactor. China started

1:32:07

this facility. I

1:32:09

don't want to butcher the name, but I think

1:32:11

I will. It's at the Xia Daoan site in

1:32:13

Shandong Province. It's

1:32:15

a 210 megawatt electricity

1:32:18

production reactor. They

1:32:20

started construction in 2012. They finished and

1:32:23

started doing operational tests in

1:32:25

December of 22. They ran all the safety tests

1:32:27

in the summer of 23. Where

1:32:29

they turned off the cooling and basically simulated

1:32:34

that the system failed to see if it would melt down.

1:32:36

And that's the results that they just published, which was the

1:32:38

test they ran last summer. And even when they turned everything

1:32:40

off, the system did not fail. It

1:32:42

did not have a meltdown. It maintained its

1:32:45

ability to control its temperature and

1:32:47

not have a meltdown. And the way it works, as

1:32:49

you can see here, is that these

1:32:52

little pebbles, they're kind of like billiard ball-sized

1:32:54

pebbles have uranium in their core. These

1:32:56

pebbles kind of drop into the central

1:32:58

core of the central reactor chamber. And

1:33:00

when the uranium is close to other

1:33:03

uranium, a chain reaction starts to generate

1:33:05

heat. That heat is

1:33:07

actually in this reactor concept captured

1:33:09

by a helium gas that's circulated

1:33:11

inside around the reactor. That hot

1:33:13

helium gas heats up water, turns

1:33:15

the turbine, generates electricity. And

1:33:18

then these billiard balls fall out the bottom. So

1:33:21

what they did is they simulated that the system

1:33:23

stopped circling, that the power went out, and measured

1:33:25

what happened, ultimately. It was able to recover. It

1:33:28

didn't melt down. And this is quite different, Nick, if

1:33:30

you show an old model of an

1:33:32

old nuclear rod system. So here's nuclear rods. They're

1:33:35

made of uranium. They go inside these chambers that

1:33:37

have other uranium. And when they touch each

1:33:39

other or get close to each other, they heat up. And

1:33:42

you have water that has to be pumped continuously

1:33:44

to keep it cool to maintain a low temperature.

1:33:47

What happened in Fukushima and other facilities where

1:33:49

we've had meltdowns is that the

1:33:51

water stopped pumping. Everything kind of

1:33:53

evaporated away. And the rods didn't get pulled. If

1:33:55

the rods can't get pulled out and the water

1:33:58

keep pumping, you have a meltdown. When things

1:34:00

get so hot, it melts everything around it

1:34:02

and collapses. So this Chinese site

1:34:05

just demonstrated this pebble bed reactor, which is

1:34:08

a Gen4 reactor. And it

1:34:10

has extraordinary safety profile. There's

1:34:14

basically no condition

1:34:17

where the system would have a meltdown. So

1:34:19

these Gen4 reactors are smaller, they're more modular,

1:34:21

they're much, much safer, they're more efficient, they

1:34:23

have much less waste. You still have to

1:34:25

store those used billiards somewhere. So you still

1:34:27

have to kind of take them and put

1:34:29

them somewhere and keep them underground for 10,000

1:34:31

years. But compared

1:34:34

with previous reactors, this

1:34:36

plant is designed

1:34:38

to be much more efficient, much

1:34:40

safer. And they completed the safety test, they published the

1:34:42

results on the safety test. And

1:34:44

I think it really shows the performance is there.

1:34:47

And this was always meant to be future

1:34:49

technology, these Gen4 reactors. China opened

1:34:51

up commercial operations of this reactor in December of

1:34:53

2023. So it's running,

1:34:55

it's producing power, it's on the grid. And

1:34:58

this design, funny enough, was first proposed in the 1940s.

1:35:02

And it took us nearly 100 years to get it

1:35:04

to market, which makes me also

1:35:06

point out why I'm so optimistic 100 years

1:35:08

from now on fusion technology, which seemed crazy

1:35:11

today. And this sort of technology

1:35:13

seemed crazy at the time, but 80 years later, we've

1:35:15

gotten there. So this

1:35:17

was an exciting outcome, but I really

1:35:19

do want to highlight the competitiveness with

1:35:21

China, lower cost to produce, lower

1:35:24

cost to run, much safer. And

1:35:26

they're expanding like crazy. And the downstream is they

1:35:28

can power more H100s, run bigger

1:35:30

jobs. And

1:35:32

this is why I asked Donald Trump when he

1:35:35

came on the show, and I want to make

1:35:37

my passionate plea. This is why investing in and

1:35:39

deregulating nuclear reactor technology in the United States to

1:35:41

enable a competitive playing field with the United States

1:35:43

and China in the decades ahead is so critical.

1:35:45

Because if we don't, China will beat the United

1:35:48

States industrially, and we will eventually

1:35:50

find ourselves in a greater point of conflict

1:35:52

with respect to this rising power that

1:35:54

is going to be driven by low cost,

1:35:56

highly abundant power. And the United States does

1:35:58

not have that. Power equals AI.

1:36:01

You don't think that distributed

1:36:03

energy can basically deliver effectively

1:36:06

energy at a marginal

1:36:08

cost of zero? Yeah. The

1:36:11

solar build at Chumach is in the

1:36:14

US forecast where we could get in

1:36:16

an optimistic scenario a doubling of power

1:36:19

output from one terawatt to two. That's

1:36:21

in the system today in the forecast. But

1:36:23

how do we get to nine? That's where China's going to be

1:36:25

at by 2050. We

1:36:28

have to have this ability to

1:36:31

more rapidly accelerate high power output

1:36:33

systems like nuclear because while solar is

1:36:35

great, it's a low power output. You

1:36:38

need much more volume. This is a highly concentrated

1:36:40

system. The cost per megawatt hour

1:36:43

can be significantly competitive if you use these

1:36:46

small modular reactors and accelerate a lot of

1:36:48

China's work. What about carbon-based solutions

1:36:50

as they fall back? Difficult

1:36:53

to scale. We're not going to open up 500

1:36:55

more coal power plants in the next couple of

1:36:57

years. What about oil and NatGas? Yeah.

1:37:00

Today, NatGas is 44% of

1:37:03

US power production capacity. We

1:37:06

are going to build out and we are building out new

1:37:08

NatGas facilities, but that's in the forecast.

1:37:10

All of our forecasts today for the US

1:37:12

are mostly NatGas and a lot

1:37:14

of solar and wind going out

1:37:16

to 2050 to double our capacity. It's

1:37:19

already a stretch for us to be able to double our capacity. The

1:37:22

only solution is to rewrite the

1:37:24

regulation. We have to get

1:37:26

nuclear going in the United States and

1:37:29

these systems are safe. They are

1:37:31

scalable. If the United States

1:37:33

embraced this and we took a public policy

1:37:36

perspective that this is about competitiveness with China,

1:37:38

it's about national security, I'm hopeful that whoever

1:37:40

comes in to lead the executive

1:37:42

branch in this next administration will

1:37:44

be really thoughtful and make this a top priority. That's my

1:37:46

plea and my reason for going through this today. Yeah.

1:37:49

I agree with you. This

1:37:52

has been another amazing episode of

1:37:54

the All In podcast for- What

1:37:57

have we learned, Jason? It's important to have a job. Everything

1:38:00

just goes to pot. Yeah, do not retire.

1:38:03

Keep your mind sharp and shout out

1:38:05

to our friend Phil Helmut, doing really

1:38:07

great at the World Series of Poker.

1:38:09

Happy birthday, Xander. Happy birthday to

1:38:11

our guy Xander. Yada yada.

1:38:14

For the chairman dictator, the

1:38:16

Sultan of Science and your

1:38:18

Rain Man architect, yeah, David

1:38:20

Sachs. I am the world's

1:38:22

most moderate. We'll see

1:38:24

you all next time. Bye-bye. What? We'll

1:38:27

let your winners ride. Rain

1:38:30

Man David Sachs. I'm

1:38:33

going all in. And it

1:38:35

said we open sourced it to the fans,

1:38:37

and they've just gone crazy with it. Love

1:38:39

you, Westies. I'm the queen of Kinwah. I'm

1:38:41

going all in. What your winners ride? What

1:38:44

your winners ride? Besties

1:38:47

are gone. I'm going 13. That is

1:38:49

my dog taking a wish in your

1:38:51

driveway. Sex. Oh, man. That

1:38:55

is my future. We'll meet at play, so. We

1:38:57

should all just get a room and just have

1:38:59

one big huge orgy, because they're all just fuses.

1:39:02

It's like this sexual tension that they just need

1:39:04

to release somehow. What

1:39:06

your beep beep? What your beep

1:39:08

beep? Beep? What?

1:39:11

We need to get merchies. Are you allowed? I'm

1:39:14

going all in. I'm

1:39:21

going all in. I'm

1:39:25

going all in.