E118: AI FOMO frenzy, macro update, Fox vs Dominion, US vs China & more with Brad Gerstner
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You wanna run a marathon at fifty seven years old.

fifty two, fifty one, two.

fifty two. Are the honest I miss you. Can you come back the united states?

You can be b as much fun if i'm not there.

He plays a bigger states and it's more chAllenging, but it's not as much fun.

There's not much laughing. What's on the menu tonight for austerity twenty twenty three?

The amuse bush is a madeleine with like a tree flag, a on a .

refreeze g and .

then rut, big rut, a bigger salad and then some duck thing that.

but you know, I love to and .

then and then butterscotch panacea.

wow, that is great. And you know what? I'd like the idea.

We're doing some poetry.

He feels very like engaged. He was very engaged, kind of going for IT. He's been on, yeah that was quite niche other day, brad, because it's austerity measures. We had this incredible dead and we're eating IT and then he said the heavy hearts on the bottom and I like so we just we don't put the heart 的， 就是 会 让 他 给 的 come .

work is down the i'm .

not like.

I like.

oh god. No, he did say kw on the bottom top, this.

We open sources to the fans .

and got this.

Are I axis here? Everybody said that means we have a corum, hopefully the sult of science who is uh, on wall street today, uh, taking a company public or congrats to our basic freedoms. G he .

couldn't .

IT is at a dinner. So with us, the fifty beat as IT, where the gardener is here to talk all things. Mro, welcome back to the pod. How's life been?

Go to be back a little more gotto to you, Jason, as you eat your way through japan.

Yes, I am on my colony, for i'll be back sunday, but I am having the time of my life here.

Are you running ad words on your food blog?

That's what it's come back up back to the weblog in days. I'm just trying to make twenty six hundred dollars today.

I noticed your tiktok got twenty two legs.

Yeah you know i'm trying to figure out tiktok i'm going to a right as they shut IT down. That's when i'll figure IT out well.

that retry by you. Another japanese pancake.

E, R O, those pancakes. Men are next level the fluffy ancap here. Everything actually, with the exchange for IT coming to japan is so affordable.

It's nuts. And this is a crazy because tokyo athon. But everything is so affordable. The people are amazing.

It's the best country to visit the world .

for me it's italia spin I an italy after or two.

But I was said, japan is like, it's definitely top two or three.

What do you love about .

IT best food? You know, I went there. I took the, I took the cause like five years ago, the older three at the time, but they were Younger. And you is, there's a negative birthday in japan.

And so number one, when you have any kid, but Frankly, multiple kids, the the japanese embrace you with so much love because they love seeing these big families. Yeah, they're unbelievably kind. We went to kyoto, did the professors walk, saw the Cherry bloss and festival, basically either way, through japan.

That was my, that was my only vacation trip I did. I don't like ten or twelve trips for work. Once we, I went with, we huffman and read, set up this thing where we went through all these different parts of tokyo and eat this incredible sushi place. You have to go with somebody who can dial IT in, yes, and have all the hook ups.

You spend much time in tokyo, in japan.

Um my heaven, i've been their own twice and that was one as poor. And I stayed a really small room and ate really shit food.

H all right, so you saying twenty in twenty, twenty two, when you became forgan? Okay, great. Like brand jo 叫 we have robes， like he's our hostel ah and with us, of course, the next department uh, what kind of position you go for sex which we which we start flowing .

here oh my god, here you are the disinformation starting already.

It's a compliment, secretary of stasis with us.

The scentin had a pretty great article on the world street journal.

really, when they revoked .

the special administration of status for disney. He wrote on, I think, was wednesday, tuesday or wednesday in the wall street that .

what was his promise, that they was a corporate .

or a culture that voguish is basically modern marxism, and we have to defeat IT. This is his language, not mine at every turn. And disney needs to just be business people and not feed the vocal minorities inside of their company, like every other company, they should be subject to shareware concerns that apply to the majority of shareholders.

Well, I think this is why I think the scientist is doing well with the republican basin. If you see polling up the republican primaries, he, that is not good enough just to have this sort of rain s total hands off government approach, because the radical left is advancing agenda, not just legislative ly, but through corporations, through sg really, through taking over key private sector institutions.

And so he is willing to use government to push back on that agenda on behalf of parents or behalf of, you know, what he sees as the majority of the country. And so it's a very different approach. Then know, the republic ican party would have been thirty or forty years ago. This is why, you know, in the parLance of the base, he understands what time IT is. And what's required here is not, again, this totally laser fair approach, but rather a much more energetic, aggressive approach towards checking these bad ideas, whether they come from, yeah.

it's not the only one. And if you saw this week bill marr went on a bit of press tour and he was on the tapper, and he made a very interesting, I think, point about liberalism versus vocational m and he was, quite articular know, is a pretty good observer of culture. He said they're kind of casing at the liberals in the party for the swan ism.

And the nature of the woke e movement verses the liberal movement, specifically under the lands of trans rights. But let's put that aside for now. We got a full docket before into the cultural wars and the presidential elections.

Let's start with that. We will go private markets to public markets because they obviously doubt so nicely. Ep, I don't want on the doctor today. There is just a massive A I formal frenzy going on. Economist published piece this week about the insane fundraising in the general of A I space and stuff like ChatGPT, a stable diffusion you for these names.

And, uh, there are now five hundred gender of A I started up according to this report, that tracks with what i'm seeing in the early stage, and not counting the OpenAI ili from microsoft investment donation, rev share, round trip, whatever that is, they have so far collectively raised more than eleven billion dollars. The article included this chart, uh, which you can see if you are on our youtube channel and just tons of folks working in audio, image and text. So we're basically looking at the multi media basically revolution of pcs in the nineties occurring again, and a complete plata platform shift. A doug leoni from sqa, one of the greatest investors in history of silicon valley, had this to say. And we will comment on the other side of this fifty second clip from duck.

I actually think that A I is the next platform shift in the same way that was the one before internet was the one before. So I think he is real. But I said earlier, we are going to over estimated in a short term, we're good invest in everything in the same way that in nineteen nine, nine, we invested in everything.

But then google came out of that or facebook came out of that. So I think you have to have a good head on your shoulder where you don't practice formal, where you don't chase every company. A, I is real. A I, A next platform. But how do we not invest in everything that works? How do we make certain investments base and mark maps, based on four processes that are more rational and not do every best in just because every other adventure form is doing every best.

right math? What do you think of this massive influx?

I think it's important to think about what the incentives are. The charlie monger says, show me the incentive and i'll show you the outcome. I posted into a group chat credits, weeks sent all their private banking customers and offer, they are now offering six point five percent for three months, six point five percent.

And if you go back to what we talked about before, when the risk free rate is somewhere north of five or five and half percent, and banks are willing to give you six and a half percent in the short term, you have to generate more than three times that to make an investment make sense when you're investing in the long term. So three months money is going to pay you six and a half for seven if you're going to invest for ten, fifteen years, which is what you need to do. Typically for a startup, you need to get one to twenty five percent.

So there's gonna a lot of pressure for venture investors to put the money to work because otherwise their L P S, their limited partners, the people that given the money will have this attitude that go somewhere along the OK i've committed to you. Why aren't you investing? Because othe wise, I can get paid six and eight percent on the front end.

And so this is becoming very problematic. What am I paying you for? What am I paying you two percent a year and management fee for?

So I think what happens, unfortunately, the opposite of what dog says, I think good investors will try to follow dog feedback and advice. And the ones that have a track record of distributions of D, P, I can do more of IT than not. But I think most people will be under pressure to deploy the capital. And so the five hundred dot companies chasing you mention we ll get a lot of IT and it'll get torched because most of them probably want amount to much of anything. In the short term, you will create wait too much correlation and you will have zero time diversity, which, as we've learned, is a recipe for terrible returns.

Time diversity being, hey, you deployed all this, web two capital, web three capital, sorry, crypt out, whatever, in this very sure period of time. You overpaid. You know, I do not. R D, uh, when you hear trim talk about the six point five percent, and then you look at private markets, you are invest across the life cycle of companies. Obviously, you in some private companies, we are know very well famously. Snowflake, I think your biggest, whenever crack me, i'm wrong in terms of a private how do you look at this when you are a student of capital public markets, private markets and then just yolo, just put IT into you know some charge tea beers or yeah bonds or whatever.

I think first less is frame right to change that you show I think you is said, you know x OpenAI I don't know some like ten or eleven billion dollars has benefited ted to some five hundred I companies. I mean, I have to agree with dog that this is a platform shift on the same maga ude is the internet mobile itself. In fact, that may be bigger than both of those.

But you know, when I look at ten or eleven billion dollars, you know, let's put you in contact matter, is gonna spend twenty billion in one year alone on A R V R. And this is on an entire platform. So I I don't know.

I I think whenever you have something as tec tonic as mobile or internet, IT deserves a lot of investment. And yes, it's GTA be messy. And yes, chmagh right.

The cost of capital, Frankly, is limited. The amount of money going into these businesses are ready. So we see a lot of dry poder sitting on the sideline.

This chasing new ideas. I think one way, one way to frame IT as well as I think about two thousand. We all knew that the internet was going to be big. We may have been lucky enough to conclude that search was gonna be big, but if you invest in in yahoo or info c railway .

are exact, you taught all .

that money went to zero, right? So now think about just these large language models, right? The foundation which are driving and enabling motivate OpenAI. You got a OpenAI, you got a dropidas got got cohere you got character, you got stability, you've got lambda.

IT is almost impossible to know within the certainty, much like IT was with the search changes, ninety nine, two thousand, who's going to emerge where the value capture is going to be at may all end up with microsoft, google. I mean, this may end up looking like IOS and android at the foundation model level. And so you know, I think as investors, for example, on the foundation model side, I think it's very difficult to choose just one, particularly with the largest one is Frankly captive and approaches to microsoft in their captain european side return.

So like those are difficult investment decisions, that doesn't detract from the fact that I think IT is his biggest dog suggest, and I do think they're gonna applications. And two in layer to come out of this is gonna ce really big winners? I would say that we are spending an extraordinary about the time in the space.

We haven't made a lot of investments. I think you have to study, you have to get deep by the china, certainly, and I have been investing in the space for at least a decade, maybe fifteen years, but don't underestimate that. The transformer model really did change the game here, and we're now producing impacts much larger sax.

Last week, he said lab three and crypt o didn't kind of stick with you. You didn't see the use cases.

And you in the first ending here, or first that bad, you rattled off three or four really compelling news cases from summaries to know the assistant guide on your side concept, is this a can in your mind? Cause bridges said that could be bigger than mobile internet, mobile A I revolution, if you need to look at those three, if you think is bigger than actually mobile, and then will get into return profiles of six point five on cash verses. What are VC is going to be able to do in this kind of market?

yeah. I mean, so I I agree with brain and dog that this is the next big platform shift, whether it's as big as mobile or it's more like social or cloud. I mean, those have been the big platform shift of decade or two.

And I think this is definitely on par with those. I think, brad, right? We don't know where the value capture is gna be. Maybe IT is all into a creating to the big companies. You can make massive investments in the space.

You know one difference between the internet ecosystem today and twenty years ago, as you do have these giant companies who are not totally incompetent, right? I mean, they are they do have lots of talents, engineers. And you know, like twenty years ago, you'd have company the big companies were just on their hands in the face of a platform shift and they d just be sitting ducks who get disrupted.

And that's not going to happen today. That being said, I do think that any new platform just creates opportunities for startups and IT may not be efficient the way that these options get suit in the sense that yeah dog's right, that is me a lot of spray and pray, but I think that is kind of efficient for the ecosystem as a whole, right? Because like any smart engineer with a half decent idea and up getting funded and out of all of that, you get kind of a create camera explosion where you know the ecosystem evolves a lot of different types of businesses, most them don't work, they get wiped out, they go extinct.

But we'll be some good things that get fund IT. So we're more like, I think, dog in how we see that we don't want to spray and pray. We would be very selective.

We want to put IT more money behind fewer opportunities that we think are Better and double only. I think he generally gives good advice of the tough of variety, and this is of a piece with that. And so I I agree with him, dabbing said. There is a certain values of the ecosystem and having all these seed funds to spay and pray, right? Because this gets a lot to play, a lot of flowers, and then you see what blooms.

I would say, yeah, to build on that sex, a perfect inefficiency, you man, you see IT from the outside. You're like, what? This is super inefficient.

Why so many companies? If you free your mind and just say, there are experiments, two or three percent experiments, five hundred k to a million and a half in the first stage. When I invest before you do, when you do your series is at five or ten million.

Milestone based funding is back in the tech industry. And that was something try out that we lost for a little while there. People just come out and they would raise a series, be out of the gate, no product market fix etter.

Now what we're seeing is people are raising at twelve to eighteen months. They got their backs up against the wall. Speaking of tough of with you reference sex, that tough love of, hey, you have to hit the next mile.

And what did you accomplish with the one point five million in order to get the ten million, in order to get to thirty million? That five hundreds gona go ten x it'll be five thousand and these startups PS, but I will quickly whittle down win h as people go through this milestone based funding system in silicon. valid.

We haven't given enough time for ological framework of investing to develop, which also is tied to a logical framework for entrepreneurship to emerge. We're just way, way wait too early. So the thing with all of these language models is that they are grist for the mill.

And we talked about this before. If IT was a highly proprietary asset, you would have never sold forty nine percent of IT to microsoft for ten billion dollars because you would assume that IT was worth a trillion dollars. So it's a huge tell on the part of OpenAI.

They are deep understanding and they understand IT Better than anybody else. That is a bit of a capped upside. So what is uncapped? T I guess, is maybe the Better question.

Well, if you look at the eighteen forty nine goldrush as an example, the people panning for gold, in my opinion, are the people building language models today. They're going to come and they are going to go. But who's gna win?

Well, the pick shovel providers, one leave, I strs one. So what is the equivalent of that today? I think it's at the silicon layer because you need to really rearchitects how compute will actually work in the world of all of these models.

Those folks will get paid. If you look at A M D and invidia, they've been getting paid for years. They continue to get paid. They probably will continue to get paid even more.

And so folks that actually take a step in to doing something hard and difficult to eye, like custom silicon, could get rewarded. And then there's what I call the White truffles. What are these unique alba White truffles? These singular sources of data that, when used in reinforcement learning, make your output just sing.

And that's where I think facebook is, an obvious White travel coras, a White traffic. But there are a lot of startups that could become White travels if they gather thern of data. And that's like a pretty reasonable framework.

And so in that framework, if you apply today, there's way few silicon startups and there's way few why troubles and said is everything is the bony in the middle, which is random people talking about some random model that's just gna again, become highly commoditize. You have remember, all these models are open source and none of them mean anything. In the absence of the .

data you give IT to train .

up hundred percent I D. One of the piece of news that we saw this week, which is open A A I announced that is developer AI. They were cutting the uh, tax on that or basic the meter rate they charged to use IT by ninety percent.

So I think this can be a game changer. I think this is based on the ChatGPT three point five API and of course, are coming out with four point o later this year. I've ready had explained .

to the audience what an A P I is in why this is important for those people who don't .

know this application programing interface that allows a of some other application to build on top of you. So in other words, like a developer wouldn't have to use this chat interface to get access to the large language model. You could just submit your request through the API. And so an example .

of of like A A popular APP and how they might use. So I think like .

notion actually had a demo that they published with aco. IT was a pretty incredible demo. We can find IT and IT would do think they added actions in the demo, like generate a task less so you could take like a document or meeting summary and would split out recommendations for next steps or task IT could split out a table, basically they all to complete for everything that we talked about, right?

So now notion doesn't need to build their own L M. expertise. They just use the API.

So when the notion APP, you say, hey, i'm building A A marketing plan and you say, well, okay, give me a list of things that should be on my marketing plan for my new APP. IT sends a signal to the ChatGPT A P I, which will be on azure microsoft platform. And then he gives, 对， werf notion .

has all the content that they need, but they don't have the A I expertise now. They don't have to generate your or create AI expertise s in house, they just use the API I once really powerful. And but just to fish the thought here, I think that one of the things is probably misleading about these stats around funding.

And the dial is like almost six hundred starts ready their A I startups is that, you know what happens when there's a new wave is I founded or smart, right? And they know how to market themselves in the way that is most compelling to vcs. And they know that like vcs, Frankly, are little but liming like in terms of their migration to the next wave and wanting to glam on to the next big wave. So VC are now looking for A I if you're a founder and you you, you build one feature on top of the you OpenAI API. Now of this, you're going to market yourself as a AI company, market yourself as just assess company.

And so that's valid. Yeah I mean, he could be gamed or I could be like a great private.

you know yeah, and it's not it's not totally one of the other. I mean, it's just that if you have a paul connection to AI as a founder, you're gona start marketing yourself as an A I company. And so that's how all of a sudden you can have six hundred of these companies, you know, that are all the sun out there in the wake of of this sort of ChatGPT as I think a lot of companies are recognizing themselves.

I literally have this experience, not three weeks ago, before I went to japan, sero founder and team that we backed for that had an exit, said, can I show you something? I said, yeah, got on the zoo. Showed me a little proof concept using ChatGPT and he said, this is my idea.

This is the vertical. And I just said, okay, what do you want? He said, five hundred k for ten percent.

I said, okay, done. great. Let's learn. And it's so easy back for us to make because we know it's a zero team for OpenAI.

The way that I could become a trillion dollar company is actually by cutting the cost to such a low degree that nobody is can effectively compete with IT. And then at that point, they can become a small, small, small tax. You'd rather just pay IT and try to compete with IT. And I think for OpenAI, that's just a very brilliant strategy. So that's how they they could get to become very, very large evaluation would be to become so pervasively relied upon and where they take such a miniscule take rate of their participation in you building a company that could be really effective for the cloud computing.

we're going to take such a small tax.

No, that's not a small tax. That's a large tax.

That's a pix and travels play in a way to create the developing ecosystem for A I and it's about to your point I mean, I think you, raisa, good point that you know always our motivation to take such a delete of round you know, the temple and that was Vivian at thirty thirty yeah and that does that imply that they are not confident?

I mean, that the footsie IT could be maybe they know they want to compete on the basis of rapidly, you know, becoming the developed platform. And so they're going to subsidize the developer platform with negative gross margins for some period of time. And maybe that's why they need all of capital.

And they were in kind of a reflexive loop of just cost of getting Better versus the amount of money they had to get Better. And so maybe they were forced to do IT. And then in that point, how would you justify you would say, well, the other fifty percent is still hugely valuable. So that's enough for us. And I think that that's that's very logical .

on but you have your finger on the pulse of lp s limited partners who back funds like chaos, sex is mine and yours. We heard six point five percent on your money for no risk. Well, you in to moth's position as he have tripped that if you want to be a private market investor, that's about twenty percent, twenty percent one of seventy two that I mean, every three and half years you got to double.

If you're doing that for a ten year fund, you're looking at a five vex fund is kind of table stakes. Then I think just back in the envelope math, what are L P S thinking right now? Are they looking at this world and saying I should just be all in cash?

They saying, yeah, everybody thinks we should be all be in cash. Therefore, there's not going to be enough money in private. Therefore, there's an opportunity there.

We know the six point five percent, right? You know that's not going to be here forever and maybe here for a little while, but we need we need to keep investing in venture. Uh, or they just cut out about IT like this pause venture investing.

private market investing. Uh, it's a great question. First, when I look at the three year treasury bill at four point seven, not to clipper here. So I think chem asks, get a little gucci cy on this six point five. But the the fact of the .

matter is the cci.

good cy, you are your super special, your V I P J P.

Maybe it's like some sort of like a bond grade that include a corporate or something that .

i'm getting five point two from Robin hood, my Robin hood comfortable trading.

So what is in that? What is in that dress? And they play, got some .

junk bonds .

and that ripping you off.

what whatever is getting.

it's hundred percent T, B, print sees and junk on santo, look at the .

fine french L, P, S, have a ten year view. They understand, like most people, I listen, if you look out at the tenure, the reason the tenure is you know that we have real interest rates at about one and a half percent. So that's the ten years less expected inflation when you look out is because if people expect inflation to come down and they expect rates to come down.

So if you are an L P, and you said i'm not a invest venture in the next two vintages, which may be the best two vintages we've seen in a long time because Prices are just in a seattle and i'm going to move IT all into some rate bed first. This is very difficult to do. They don't move their allocations around that quickly.

Now a wealthy family as an L P could move their allocations around really quickly. But if your taxes or your ohio or you're a sovereign l fund, you're bedding on the arc of value creation. I would say this the consequence is the narrowing their appetite as to the venture funds .

they want ah the power .

law and the truth that the matter is whether we're talking about A I or software or anything else that you know people are gonna funding, it's ten percent of the investments that are going to yield ninety percent of the returns.

And so they're looking at that and saying, who are the top ten firms and sick value, you don't want to get allocation to those firms who are seeing the best deals, converting the best deals and are a selective of like sex talk about or we just don't want to allocate. So I think, you know, what we saw of the last two years station was an explosion of new funds and explosion of new, uh, you know, first time, second time funds. I think subscale small funds with no D P, I, uh, they're going to find a really, really time to chaos point about D P, I raising capital. Going to see the scale player .

scale support of that is clearing out the inventory from the last cycle. Two new stories this week about companies, you know maybe struggling. So qua got off the board of citizen, if you don't know.

Citizen, that's that APP that tells you where crimes are happening in your city. Very popular in samford. Co, uh, it's literally goes off every ninety seconds pretty to stop in h that company.

Citizen h, which is a pretty cool APP, uh, has raised one hundred thirty million today. So quail had the series into two thousand seventeen. Uh, they did a pay to play round if you don't know what that is.

Um basically, if you don't invest, you get crammed down. How does the cramdown work? Well, your shares in the company went down ten to one, and you probably got moved to, uh, common shares as a as opposed to prefer, which has a series of protections they get them on.

I, but qaa refused to participate according to this F. T. story. Again, sqa did not comment on this. It's it's kind of something you don't do at A V C. When something goes bad at the company and you leave the board, you generally don't want to say bad things retained the company any more than leaving the board does.

So a bunch of cram downs happening and then doubt telling with that instinct, according to the wall street journal, had a big q four as a prepared to public installed. If you remember, we talking about on the show, cut its internal valuation seventy five percent. Last year, from thirty nine billion to ten billion, according to sources, install ards q four results, according to the wall street journal, up more than fifty percent.

Even the order volume grew only sixteen percent. Why they turned advertising on the APP, just like uber and amazon, a lot of its commerce for folks are building add business inside of theirs. Uh, so what do you think about what's happening as we clear out private? Anybody have lots of instagram or the cram down rounds? Go either way with this and .

they will go to I won't forest on the two companies. I think we're going to see in the second half of twenty three and all of twenty four is a lot of medicine being taken, a lot of downtown ounds, a lot of structure is going to be a tale of two cities. The hot area you AI is in a continue receive new investment.

And all these companies that that receive peak valuations in twenty twenty one are gonna have a day reckoning either, you know, if they're lucky. No, they have a flat round or modestly up round. A lot of them are going to have downward ds or restructurings, and this is gonna going on for the next year and a half.

What your philosophy? Ks, on leaving a boy, this is a really dicey issue. When you give up on a company, what's the best practice? They're how do you do IT without damaging the company? And obviously, to found a relationships can be hard. What have you learned about this as as a private .

market of I think I think that sometimes we like flip board members internally at craft is because people have different mouth of capacity. That's not a statement at all about the way craft fields about the company is just a reflection of our individual band with or whose expertise are needed at that time. But when the firm itself quits aboard, I think there's no way to read that all and a statement of protest. And I don't know what happened to that company. But that seems to me that, you know, again, IT could be a sign that a the venture firm is unhappy with the way that they're .

being treated. The cram down to me, that's a bitter pill to swallow. Why would founders do this crammed down instead of just adding a little more to the top? Is there a way to do this without, you know, going scorch earth or poisoning the well as IT? Were we amid, again, putting this APP and go this, this happening all over the ecosystem. So is there a way to do this Gracefully? It's just going to be messing.

I think it's gonna really messy. I mean, to state the obvious, no, no venture capital investor ever quits the board voluntarily of a great company that's doing well that would be done. So as David said, sort of like the promising, the putting there.

And at the same time, there are a lot of companies who don't want to see the writing on the wall and will do all kinds of genetics to try to stick a landing on a contorted financing. And sometimes those things have real consequences to other investors who just don't think it's the right thing to do. I wouldn't read too much into this except that good founders have a responsibility to do what's right for themselves in their employees, nobody else.

And the thing to keep in investors, really, no, I think I think you absolutely have to prioritize the people doing the actual work. And if and if you actually did prioritize them, what you would probably say yourself as, oh my god, there are people who I work with. Why look in the eye every day? Because investors, you'll see once a quarter.

But I I have my fellow employees that as a founder, that I look in the eyes every day, who've been toiling with me for ten hours a day, every day for years, and they are now totally underwater. What is the right thing to do for them? And I think if you just answer that question, you wouldn't do all these controller things. You would just reset evaluation, you would refresh the equity pool, you would issue options back out to those employees and you would move on. It's all these other things are getting way of answering that simple, simple question where people fucker IT up.

And i've done that before. You actually.

you don't have a team and you don't have a motivated team.

You have nothing done that before. I don't want to rehash one of my more miserable experiences, but I was dealing with the company that had a growth ly inflate evaluation. IT was a total case. We've voluntarily such a evaluation and have and issued options to the employees to keep motivated. So exact.

It's not that it's no big deal, but IT requires some amount of fortitude and like you know understanding your priorities.

I guess you like first, I think it's revealing that we think what happened here is so out of the ordinary, I mean, you flash back to two thousand and one to two thousand and four.

So coy, I don't think funded a single loser in their portfolio, right? Like that's a time where you walk away from the ones that weren't winning and you fed the ones that were because you have a limited capital and you don't know when you're gona raise your next capital. This idea that you have unlimited capital, you can give money, anybody, no matter what they're doing with respect.

Their plan, I think, is A A functions of the last ten years. But to chaos pots, the idea of tough talk, you know, either out of CEO or out of board members has been in short supply in silicon valley. This idea that saying the truth, just speaking the words about needing to get fit or needing to lower the valuation that somehow that is founder and friendly is nonsensical.

The truth is founder friendly by definition. And I think to to max point, the less complicated you make this right, you reset the valuation, you read up the option pool and then everybody has a choice to make. And if the people who are on the board and backing the company choose not to re up for whatever reason, they no longer believe in the pattern for the company that the company upon the founder to go to find people who will.

That's not abandoned as it's being framed in this story. IT is a trade. And I think maybe if you look at public market, investor is bread. Nobody gets upset by a trade, trade to trade. But in the private markets, there's a lot more emotion involved, a lot more relationship material.

And the founder friendly concept of like you're abandoning me is like, no, the the trade here makes no sense for this firm and for this fund and for these L P. S. Right time.

Sometimes the founder needs to have the courage to look at the mind and say, what i'm doing is not working. I had a plan. I missed the plan by seventy percent on lighting capital on fire.

This is a charity, not a business. It's best to say IT didn't work. Shut IT down and move on and do something else OK.

So of course your reference ing sales force will pay to that choking uh, it's not that ad uh, but I think this is a good time to maybe talk about the public markets and inflation and what we're seeing in mro.

So can .

I be .

podcast? I laid out my theory of how you could just use the to your bond rate relative to the fed fund, right, to understand where the bond markets sort of prediction market about inflation is going. And a month ago, the two year borne rate was at four point one percent relative to four point five recent for fund rates.

In other words, the bond market was bedding that interest rates would go down between now and two years and now relative to where the fed had IT. So therefore, I believed that the inflation had been conquered now fast for just one month later. And the two year bond rates said about four point nine percent here, the fed fund rates about four and a half percent.

That is a massive swing, basic eighty basis point swing in the agency to your bond rate. And so the market seem to be saying all of a sudden not just that they expect rates to be higher longer, but also that the fed needs to keep raising, and that is a big change. So bad, what is the basis for that? And what do we now believe about inflation? I think just a few weeks ago, we were thinking that this problem was liked and the market took off like a rocket IT ripped. Now this that seems like investors are really worried that inflation is not over. So what where is the stand right now?

But I think when we started the year, you know the ten year was close to three, two or now were closer to four percent. The ten minus two is is negative as if it's been in the last five, ten years. So the market is clearly saying, you know, we saw some inflation, prince, that came in hotter. I think it's now consensus what you guys been saying on the part that you know, although the second derivative is slowing, that is, is sticky, right? We're going to a get stock at this four four and a half.

three and a half. And it's the .

slope of the curve, dawn. Where is gonna slower? Um we've gone from thin. We're gonna have two twenty five and now thinking three or four, you know. And so I think everybody is now bracing for more inflation.

But remember, when we started, they are in january first, the consensus wisdom was we were going to retest the S A. P. At thirty two hundred. We are gonna an earnings recession and the inflation was gonna. Ue, to run hotter. The only surprise in my mind so far this year is how well the equity markets have held up in the face of a tenure that's go on parabolic.

right, and the actual earnings recession.

right. And you you know you you posted you know in our thread out about just quality of earnings. You know even the earnings speeds are pretty low quality. And so I think, you know we now are going to have a couple inflation prints coming up over the course of the next couple weeks that are going to be important. My heart is, you know, everybody has tilted again on, you know what we saw the last couple prints.

My suspicion, if you look at Morgane standing government sacks, the consensus view is that we're still heading in the direction of four percent faster than I think people emotionally think. So I would say there's maximum uncertainty in the world. The fear that inflation is uncapped, the way Larry summers was articulate, november and december is less today than IT was.

But what's emerged is this idea that we're going to have higher rates for longer and we're going to have higher inflation for longer. Now the the question I throw back at you is the market of hours uncertainty. The markets done totally fine during periods where we had three percent inflation.

And five and a half percent rates, right? The internet boom that was you know two thousand and two thousand and five rates were hello a lot higher than the rates are today. So I don't think the higher rate and higher tion means that we can, you know invest in, venture back companies that have huge secular growth.

the world doesn't end.

But what I do think that means is like if there's massive uncertainty in the world, if allocators of capital don't know whether rates are gonna double again, whether inflations gonna double again, then everything to shut down. And that's really bad for the economy. I don't see that happening right now, but I do think that the prince, over the course of the next eight weeks are going to be important.

Trump, I have been a macros at the same time. This is happening. We saw rents broke in the last month, so rents got cheaper .

by governing principle. I think I probably too many times, but I said again, are gonna higher then we like, and it'll stay here longer than we want. So if you use that as a principle, whenever the consensus thinks were done, it's been pretty profitable to be on the other side of consensus.

And so I still kind of maintain that we're probably gonna have a five and a half percent fed once rate, which means that meana may be credits. White will offer me seven and a half percent on three month tables, but we're going to have higher rates. And I do think bridge right though, in the sense that as long as we know that, then that's IT and we can forecast IT into the future without a changing too much, it'll be okay.

But right now, what what you're seeing is a lot of make belief going on in in the stock market. So nick, if you want to, just for all that image. So this is a really interesting chart .

of a cash low for the earnings. yeah.

So this is something that I saw blueberry, which I thought was really interesting. And if you focus on the period of twenty twenty to twenty twenty four, what you see is the White line, which is net income adJusting for depreciation amias ation, and the blue line is cash flow from Operations. So what does that mean?

And this is for, uh, S M P. Five hundred firms.

This is the best five hundred companies in the world. yeah. And the White line is what you tell wall street in terms of what you make on paper.

The blue line is what actually appears in the bank account. So why could there be a gap between what you tell somebody you made? I made a dollar first is what's in the bank fifty cents.

Well, the reason is that there's all kinds of accounting tricks that you can use, a cruel inventories, and all of these things allow you to present a healthier earner's report that is actually true. And so right now, we have the worst earning situation. So the worst gap between what we are telling people versus what is actually the bank account that we've had for thirty years since nineteen ninety.

And so IT just brings into focus the fact that we may be, in the last few innings of trying to make sure this all looks okay. In which case, one faction of the investing world who thinks that this morning's recession is actually at hand would be kind of right. And then what they would say is that once we all realized that these earnings are fake and you reset down fifteen percent, that's where you get to the mid three thousand in the S.

M P. I've found the right now around four thousand. I don't know that. Sure not, but there is more, more evidence that would support that the way that they see the world could be credible.

The other side says, hey, listen, this is a bump in the road. We're getting a handle on things and it's stabilizing. So even though higher we'd like, it's not going to change that much. So now just think about ten and fifteen years from now, and let's go. And those are folks I want to rip the money into, grow stocks.

And tex talks again. How does the consumer plan to all this record low unemployment, like it's one percent in utah, three and half percent for the country, two and a half jobs for every american who's unemployed, and then these rents coming down. But consumers have seem to have burned off all that extra money they had so brave. You look at the consumer driven economy that the world lives in.

that's not true because you've to understand stimulus is still entering. The economy is just harder to measure. So for example, take social security. You have cost of living adjustments in social security that's lifting payments by ten and fifteen percent because it's back dated for what was going on last year. And remember, last year, we add two, three, four, five percent inflation rates.

So there is more and more money coming into people's pockets that we don't realize, and we're all on the hook for that as U. S. taxpayers. So I think it's very dangerous to kind of look at one data point and try to pick off what's happening in consumer land because there's all kinds of hidden ways in which money gets .

back to people but not on the consumer because, you know, H I test IT does seem like consumers are still spending money, but the cost of goods, in some cases, is coming down. And how do you look at the consumer and try to make sense of what's going on here? Because IT does seem the united states in its own bubble here, a world of just over employment still even. Are we saying these layoffs tech?

Well, I would say number one, uh, that the pop we've seen in rates, which impacts consumers by way of higher mortality, higher variable expenses on their credit cards, was offset over the last few months by lower energy costs. The costs of gas ine went down.

Add in the things that chaos talking about, and i'm not sure you took a lot of money out of people's pockets, I would say this that again, what we're talking about here, retail sales have continued to do really well. E commerce sales in january were quite strong. That would all be consistent with the soft landing.

But here we are, you know, again, talking about macro. I think when you spend as much time talking about macro, doing what we do, you know, like last year, i'll be the first to raise my hand and say, you know like our friend bill girly would say this in the wrong direction. The first the matter is it's totally unknown and unknowable where we're going to go over the course the next three or four months. I think there's a Better ability to predict maybe over the course of the next couple years. Um but the fact is if you would have told any I was just with a bunch of uh, investors, you probably represent a trillion dollars of public market to may intend uh or so long only investors if you had told any of them that the was a three ten the opposite so I think you got you know you're you have a bunch Better chance but to go if your plane at home we're hate then trying to to guess the direction of that. Find five companies that you think are gonna grow uh and earn more money irrespective of the direction of rates and inflation on those uh and enjoy your life.

But i'm looking at the world and going sax. I A lord. I'm seeing great founders, great companies and five to ten million dollar valuations.

And I can buy five, ten, fifty percent at ties companies. Uh, this feels like the best, uh, it's been for me as an ancient investor seed investor seed fun for a long time. This is fantastic, a great deal flow.

The deals are taking six weeks to close or having very thoughtful discussions. People are taking a real focus approach to how they deploy the capital IT is not you low? People are building models again.

People are showing their cake. They are being thoughts about how they spend the money. They're being thought ful about salaries and hiring. So what what your you seem to think that you know what we're seeing here is chAllenging or a problem. What are your thoughts about affecting your day to day business as somebody who is a company .

builder to separate two things? So there's the technical system there, the economy 后， the fact the matter is that tech ity had its bubble in twenty twenty one. IT had its crash in twenty twenty two.

And now we're largely on the other side of that. There's still a lot of companies like we talked about there are going need to restructure who raised during the bubble and may not come to gripes with that. But if you're talking about new investment, new rounds, new companies are starting with a queen sheet paper and a blank slate, you're right.

Things seem good and Normal, right? People are making intelligent investment. And obviously, the innovation cycle doesn't have anything to do with the macro picture.

I mean, technology wants to evolve and its great engineers and product people who drive those ideas forward. And they're not thinking about interest rates. I never thought about the fed funds rate at all when I was a founder running companies.

So this is put that aside and acknowledge that great, great innovations going to to keep happening no matter what the micro ic picture looks like. That being said, I mean this for the liar. Listeners of the show aren't start up founders.

I tend to be a little bit gloomy about the macro o picture right now because yeah, it's true that what brad said that we've had good economies with five percent rates before. But I think you also to look at th Epace o f c hange o f t he r ate a t w hich t he f ed f und r ate h as b een g oing u p. And if you look at the chart of rate increases, IT is a very steep chart of great increases.

And I just think that for the last decade or so, we've been Operating in this like zero interest stator result environment with losses, monitary stimulus. And I think a lot of companies, a lot of part of the economy got addicted to that stimulus. They got hooked on drugs.

Now of a sudden you're putting him through. Withdraw very, very quickly. And obviously, to withdraw pings, you can be worse if you can't taper off slowly.

So IT looked like just a few weeks ago that the fed was done raising rates. Now we know that there are not. We do all really know when they're going to stop.

So I tend to be a umbc gloomy with respect to the the big macro o picture because I just don't see how you can change rates this fast. And I mean, you look at like real estate, for example, we just saw the first year over year decrease in the housing market in a while. And again, that's all driven by rates. The custom marker is going up and two .

big default and the first two big default.

yeah, so I I think that there's gna be some pain ahead. Now you know, ironically, from the standpoint of the tech equities is that we have already taken our medicine. We may already .

be something that is a good way to to look at as we took the medicine is painful him.

Just maybe maybe that's the same way to, uh, talking about any of I would say we haven't took IT. We're taking IT. We're starting to take our medicine.

What makes sense that bend off with his very loving family kind of approach to run the company might actually IT might take him a little while to become a bit cut rote. So as everybody knows, bending and sales force have had a lot of turn over. A lot of senior executives have left voluntary and voluntary.

But chairs were up eleven percent on thursday after reporting the two four earnings through, up forty percent year over year, small that loss. But the company bought back two point three billion dollars or worth of its stock, were going to see more of that for sure, and they are going to be increasing your backlog to billion dollars going forward. And like meta, which suddenly got fit and got religion benny off, is now basically with all these activists, I guess, on on as as he says a in this is the quote from the earnings call.

We're more closely scrutiny every dollar of investment in resource and very focused on driving Operational excEllence and automation across our business, focusing of worker. So long germ of thanks for structuring employee productivity. Uh, there IT is product innovation and building relationships with shareholders.

Profitability is are truly our number one strategy, and that's my number one strategy. That's the number one thing we talked about at the start of every meeting we have in this company. Quite a turnaround. Your thoughts.

brand, I don't think the story is, you know, that bend off, you know, made these cuts in the activists around the rim. What was significant was his comments, uh, really made. And I tweet about IT today.

You know, he said, every C. O. And silicon valley has looked at what elon mosque has done and ask themselves, do they need to unleash their own elon within them? And you know, listen, we've been talking about this for nine months.

The reality is, if you look at the employee count at sales force in two thousand and fifteen, they had nineteen thousand employees as of last year, they had eighty thousand. In seven years, they four x the number of employees, they were a mature company by two thousand and fifteen, their employees catered at twenty three percent. You know, we don't talk about IT in this way, but these large companies, these employee bases, they're not unions, but they may as .

well be right. Why would be I just .

think there there is during the age of access, where IT was just easy for people to hire more people and build more things, not to make tough choices at sea, right? We just had an explosion like we've never seen in silicon valley in the number of employees in these businesses. Meta went from ten thousand to eighty thousand, eighty five thousand.

Google went one hundred eighty five thousand. And at those levels is very difficult to governor. And when the C.

E, O, want to make decisions in the businesses. There will be protest revolts within the business. Thirty or forty thousand people with petitions have petition back to the office.

No, we're not going to work three days. A, no, you can't name our A, I bot. Uh, what you want to name IT because IT offends us.

And so to me, what's more significant is over the last six months, we've seen encourage gain momentum silicon valley, right? What's deeply under appreciated about meta uh, and the changes they made. There would be one thing if I was just window dressing.

We cut ten percent of the workforce, kind of tight bet a little bit. But zoey berg got on his colony, said, we only have two priorities in twenty twenty three. One is efficiency.

And he went on to depth about, once they started cutting people, how the company got faster, the product release cycle sped up, the employees got happier. And now it's an ending of itself to delay of the business. That's what we're hearing. Not have been the off as well. And I .

think it's .

you know, people can quibble with how elon went about the change, which you and you and uh David are very familiar with the twitter, but the reality is he lit a fuse and silicon valley that is giving courage. I tt. Whether its private companies, serious b companies, pri P O companies, public companies, i'd had that conversation more times, uh, the you can imagine over the course did not last six months. And I think it's a really important change because I think IT breathe new productivity into l all these businesses. And importantly, IT unleashes these engineers back into the ecosystem to start the next wave of company.

yes. So Jason, I mean, you and I got to tag along with elon during that transition phase, a twitter. And the thing that I took away from IT was just how much agency you know CEO have that they're not using.

I mean, elan went in there and he basically changed whatever he saw that he didn't like. I mean, unsentimental and quickly. And you know and so you look at all these other companies, you talk to see you sometimes and they act like their prisoners of their companies like, I can change this. I can change the yeah it's like I got all these employees and all these layers and but I can't you have always some reason afraid of the bad P R.

Or you what whatever IT is and know the thing I came away realizing is just how much agency particularly found our that they just don't use you know they're always like heming and home and ring in their hands and acting like they're tied down by this or that and the reality is they can do IT over. They want just about um you know with IT in the bounds of what's what's legal and and I think they're starting to realize a way to second like I actually can do that you know I can walk into my company one day. If there's a team that's not performing that give me answers that don't make any sense, I can start start over yeah robot.

I mean, if you can't get IT done, then we need to have somebody who can do IT. And it's it's incredible like that. We were doing an analysis on this week and startups of the you know employees per company and the revenue per employee per headcount.

And I got roasted for having this even having this conversation. And now here we arch him off. People are looking at efficiency.

We're looking at, you know really, uh how efficient can these companies, uh, be run? Is there a limit to where this is going? And and if we were to look at this as a process, where are the thanks, the amazon, the google, facebooks, where they add in terms of percentage .

to being at elon?

If if you were to put twitter and elon as the the goal, where are these companies? And I don't know that, that is the goal. Maybe maybe he's cut too much, if you know, will find out. I think it's it's it's a pretty radical experiments doing here.

I don't think that reasonable or an achievable goal for a public company OK. I mean, I think the thing we have to keep in mind, as islands also capable of doing that, because he paid forty four billion dollars of his own money to buy something that he owns out, right? That no longer has revenue pressure to outside stakeholders.

Different circumstances, revenue went down seventy percent. Twitter, while that only affects him in and his ability to pay whatever he borrows in order to buy that company. And as long as he's willing to fund that, somehow he is literally allowed to do whatever he wants.

That's no longer the case when you borrowing money from other people to build your business, which is what every other capital market participant does, public market participate does and private market participant. So I think that, that distinction is just a little bit important because IT probably means that there is a shadow of what elon is doing. That's probably the threshold of what possible and it's probably in a sort of fifty percent headcount reduction.

That's probably the the bound in which things break because I think the thing to keep in mind is that over time, this stuff is ecological in the body. IT, just like IT, creates these interconnected webs of just very difficult stuff that see you that you cannot take apart. So even if you try to go in and cut fifty percent of a company like facebook or google or microsoft, or apple or amazon, IT would be so difficult because all of a sudden, the ordination that happens at that scale, I think, would get lost.

So i'm not sure if it's possible you kind of have to do what they're doing, which is cut five percent, then cut ten percent, then cut five percent, then cut five percent. And I know what frustrates people on the outside looking in, but I think it's probably the only way I can be done without torpedoing the company. You have a culture basis .

then because that is the big critique you're creating out this culture of fear. I guess the opposite of that is creating cultural of performance and expectation. So think about on a culture basis because that keeps coming up from founders to David .

point IT depends because I think companies when there are smaller, I mean, I can tell you when I was a part of the facebook in your management team, we would rank all the employees. So we had a very good sense of who is the best in the most performance, all the way down to who was not. And we were able to do that probably up to two or three thousand employees.

That's not possible at fifty thousand. And north is fair. So because you don't know who these folks are, the real contributors are, you have to do what elon did, which is literally go person to person and say, who is believably performance or critical yeah, in the absence of doing that, you just don't know who to let go.

And so you have no choice except to bleed down the question that I have. And brad, maybe there is a smart analyst on your team that can do IT is or and it's more of a statement as well. Can you imagine the totality of stock base cop that's been given out by all these companies since two thousand and fifteen when they were tagging their employee bases by twenty five percent year? I bet you it's a trillion and a half dollars at least. You think it's that you think it's in that porter manager.

one hundred percent. This has been the greatest grip in the history of silicon valley, for sure.

Let's pause for second. Can you explain what we're talking about? Your stock base compensation obviously, is the stock given to employees. It's generally .

accounted well, let's let this way, let's say that you believe in capitalism. okay. So if you believe in capitalism, let's the four of us start a company and there's a dollar of profit and we each owned twenty five percent of the company.

Normally what you would say is each of us get twenty five cents. right? reasonable.

We own twenty five percent each. There's a dollar or profit. We each have twenty. So that means that in four years, right, we each we've made a dollar because so let let's just say cost a dollar to get off the ground or four dollars to get off the .

ground in summer budget.

Believe we all would have been made whole, we all would feel great. And then now every year afterwards, that twenty five cents we get as profit. Now let's say that, Jason, you had a fifth person and bread, and David and I can't say anything about IT OK.

And that fifth person now gets a fifth of IT, right? And so now all of a sudden hour, twenty five cents goes down to twenty cents. Then let's say you add five more people now with the sudden or twenty five cents went to twenty and then .

IT went to ten, ten.

And at some point, brad and David and I raise your hand, say, hey, this is not the deal we signed up for and you say, well, too bad because revenue would not be what IT is and profits would not be what is without this extra six people. And that's effectively what everybody debates when they own a stock to shareholders. Want that number to be as small as possible. And I think what bad is observing is that in silicon value, what has happened is there's been poor accountability for what all of those extra people do, and profits have been rising, rising fast enough to make the existing three people on the captain feel okay about IT. And that instead of talking about three people in six and a dollar, you you talking about trillions of dollars and hundreds of thousands of extra shareholders and millions of extra show.

I know we have some charts years so we can do some fun with numbers.

I think taking a step back, I think it's very important to realize that stock as a form of compensation to create alignment. Excitement in the early stage of venture capital is part of the true magic of silicon valley. You know, you're starting a company.

You ask somebody to go on this adventure, take a bunch of risk. They often have to cut their pay. They could get a google by half to join your adventure.

It's only fair that you give them stock in the company and they share at the upset if the company smokes IT, uh, they get rich for taking that incremental risk on their behalf and on their families behalf. What's happened over the last fifteen years is something totally different, which is the stock as a form of early stage compensation, right? continued.

And there's a feature in silicon valley as companies came public. One way to kind of hide an expense in a business is to bury IT in S. P. C.

So let's say google wanted to hire somebody for four million dollars, which doing today in A I, but instead of pain in four million in cash, which would all count against their Operating profit, they given five hundred thousand in cash and three and a half million dollars in stock. And might say they make all that stock festive immediately. Jason, in this year, it's obvious to you and I that's just cash.

The person turns around and sells IT. So really expensive business, really expensive the shareholders. But when they report their earnings and they reported justice ibaa, they are just out the three and a half million dollars that they gave by way of S P C.

Why did stock base comb S B C get excluded from accounting? What is the history of that? And is that onna change now? Are people going to say? And shareholders is demand in this new economy, in this new, you know, sort of reality.

Hey, you know, you can play fine with numbers here. Stock base cop has to come out. What what would you like to see? brand?

It's fairly as so tired, but they're back in the mid two thousands, two thousand four, two thousand and five. There is a an account. There is a big debate about this.

Warn buffs was famously saying, listen, IT doesn't matter whether you pay in stock, whether you pay in cash, whether you pay in cancer, bears like IT all costs the same, right? And so there was a debate. We had a statement and accounting statement as be one twenty three.

And in that statement, IT said gap ebdon must include the cost of stock, uh based compensation so all the sudden if I were reporting gape ata, I got include the cost of stock cop, which IT does today. what? what? What did everybody do?

But what happened?

They started adJusting IT out, right? Because they said, hey, this is a real expense, right? Because we're not it's not cash.

We're given up the order.

solid.

The crime. The crime here is that when rates fell to zero and everybody was making money on tech stocks, nobody wanted to rock the boat, and everybody just, you know, like a justice, but, uh, kind of ignored I can, I can model IT into my future delusion. So we model up share account, uh, over the course of the next three years.

But this literally over the last five years went to parabolic. Because I just shared with you the number of employees exploded. The amount of share based compensation exploded .

because of competition for .

those employees. We were same, I think, just reported S. P, C, which hold your hat sex, was seventy percent of revenue, nine, seventy percent of their earnings, seventy percent of the revenue just for coding, talking and for coring base in.

So you know, last week there was something that I thought was pretty brave. Booking dot com on their earnings call really call this out. And what they said is, listen, we've been playing by the rules.

We understand that stock base comp is cash. And they say every, every metrically report includes the impact of stock based compensation. And if you look over the last fifteen years, if I am an owner of booking dot com, I was only deluded by about five percent.

If I was the owner of sales force or expedia, I was deluded by about twenty five percent. That's twenty five of percent of my ups were given away, right? But yet those things were adJusting out when they reported earnings.

And so you know, what's become invoke today is C, F, O, S. Get on their calls and they say, no, no, no, no. Don't worry, we're going to a buy back a lot of here.

So we will have much delusion. Okay, but if you take my two billion of profits that chaocheng talk about and IT goes right out the door just to buy back the shares you just issued, you're effectively entropia money. Then IT just proves the point is cash, it's an expense to shareholders.

And my biggest problem with that is it's LED to the plots because if companies actually had to account for this as cash, right, as a to be able to do, they wouldn't hire as many people, they wouldn't pay as much in stock com. And I, I, i'll end with this because I want to end with the solution. Every comp committee on every board, Frankly, their heads spin.

When you start talking about this subject, they bring in a comp consult. And the comp consultant, they is really the C Y A for the comp committee because they want to approve a complaint that's been recommended by the management team and they just wanted, know, is this what everybody else is doing? Okay, so everybody y's doing IT.

So the comp consult looks around, says, yeah, all your peers are doing this. This is why charlie monger said i'd rather throws a pit viper down the front of my shirt than higher account console, right? What is going on on these come communities if you give bonuses to anybody in your business that are that is based on an adJusting by domelike rather than free cash, low per share per share is the key here.

It's negligence. It's negligence. So if company is just walking and they say the gold standard as a public company is fifty basis points annual delusion that apple that's booking 点 com these in master Carter， even below that, that's the gold standard winter in the public market and we will never incentivize our empty our employees on the basis of anything that excludes stock top and IT has to be on a purchase basis. That would be a massive leap forward .

for public company accounting on that stark best com. Alright, sex, you want to go?

You want to go? Fox, I do. Fox.

fox, I mean, fox is kind of crazy. Ah OK. So rule urd ch had been deposed here with this dimensions voting system lawsuit. They're suing fox for one point six billion and damages of our claims made on air. And that we all know around technology enable election fraud. We remember this wild period at the end of the last election cycle with this incredibly force for him that the election was stolen, something, you know, both sides of the ole said did not happen however, IT seems that the host on fox knew IT wasn't happen, knew IT wasn't true but were engaging um in entertainment of allowing these people to come on air and save election was stolen so murdoch said I would have liked us to be stronger in denouncing IT in hindsight and when asked if he could have stopped the host from highlighting these allow these false allegations air that we're obvious ous everybody he said I .

could have but I didn't he said the truth he's not a lot to line .

in court yeah just on court I mean sex to be fair like um you are really care about freedom of speech, you really care about the libel laws, you really care about the G O P. Obviously you bring IT up every week here. So when you looked at and but you were very clear, you were not happy about the election denial, all that like false claims that trump made and these insane people who put around himself.

So how do you look at the fox OS and listen? You've been on talker and other things, knowingly spreading lies about something as important as the election, and then doing that in the most cynical ways. We we sit here in every week, we rose the media, the mainstream media. You particularly go after the dams and the left and the media leads. How do you feel about these media elites who are part of the G O P machine, lying incessantly, uh, about something as important as the election integrity of the united states of america?

First all, you're going to take this .

up as some giant dc began.

exactly. Let's go back to november of toy three on the show because there maybe a lot of part of the audience that weren't watching back then. I was really clear that I said sydney power and little said and rudy Julian, I I thought they were waacs and the whole idea that the dominion voting machines have somehow been rigged and somehow involved hug o chavez was a wild spirit y theory.

So I said at the time, hundred percent that I also said that I thought that once the stream court denied social a trump, I said that he had his right to have his day in court to chAllenge the election in court, but once that the court throughout his claims and the stream court to the society, that the whole thing needs to stop and IT didn't stop. And that's why the republicans lost that produced run our seat and georgia on january fifth and your january sixth. So you i've been warning against this for a long time.

Jack out. Now with respect to fox, I think you need to basically get a little bit more nuance and what you're saying there, because I think within fox there were actually two groups of host. So there is one group of host that I think you could say, we are trump loyalists.

And they basically newly platform the sydney power lies, but also endorse them. And ripper murdoch admitted that they went too far and actually endorsed. And so you had hanney and a couple other hosts do that, even though hanney had some text messages that indicated you can believe IT.

So I think he came across the worst. However, there were within fox skeptics of the sydney power theory. And so I put tucker cross in that camp, I put Lorry ingram in that camp, and tucker had sydney power on his show on, I think IT was november sixth.

I think this was sixteen days after the election, was a twenty minute in interview in which he grew to her and he kept coming back to, what is your evidence? What is your proof? And if you are paying attention, he demolished.

I mean, I remember that notable. Yeah, exactly. So I mean, honestly, no one looks great when all your text must just come out. And you can nit pick about this or that text, but the bottom is, I think tucker did his job, you know, yes, he platform sydney power, but he platform her in order to dismantle her. And you can have to be pretty dopy not to see that he was dismantle after .

the apparently and talk box, be liable for knowingly platforming these people in endorsing them in some way. Or is that their freedom of speech in your mind? As an attorney, here are somebody with that legal degree.

Where does the stand? But put aside if this was, if this was CNN doing at M N B C switch, what publication, if this was the new york times, and they knowingly lied, knowingly platform some cooks with the conspiracy theory, what should the Price they pay for? And and then had, is that effect the freedom of speech that we all think, I think, univerSally on this podcast, especially, and in silicate ley, or at least we used to, that freedom of speech is really important. Do you have the freedom to lie in platform cooks like this?

Let me answer you directly. J, and I think this would be a Better world of fox, reliable, but I don't think they're going to be because that's not the legal standard. I believe that if a television knowingly spreads and endorses baseless accusations against somebody which they know where should know is basically untrue, I think they absolutely be like for libel or deformation.

But that is not with a lot requires. Under york times, for Sullivan, you are required to show that that they knowingly spread misinformation. But in addition, you have to show that they had actual mAlice, which is that their intent was malicious.

And I think river murdoch is a Willy old dog because he admitted on the stand everything. But the thing that was most important for the planets approve, which is actual Alice. He admitted that they platform things that they knew or should have known.

We're false. He admitted that he should have put a lid on IT sooner. He admitted that he knew that wasn't true, but he said the reason they did IT is because they're afraid of their audience or a portion, their audience going to some rival networks.

So basically what he said is, and not so many words as that, his motivation was greed. And in our system of law, that is a complete defense against claims of deformation. Now I think what we need here is to rewrite the deformation laws.

I think the street court needs to overturn new york. First is solvent class. Thomas is basically intimated that he would support that. I think that would be a great thing to do.

I think actual miles should not be the requirement for liable, I think of a television network for publication pull out information they know is false, they should absolutely be liable for IT. And that is enough to show. And if we did that, by the way, IT wouldn't just be fox, in this particular case, IT be CNN and M S N B C.

We have to completely revise their coverage. And all of these tech reporters who do nothing but to fame, the tech industry, the entire tech press, just about is a slow moving deformation lawsuit. Ellam must reply, be the richest man in the world is based on all the definition wales he could bring if .

we are to overturn new york .

times for children, the Richard, Richard guy, all they rich, the fame e mask every week, which flames that are ridiculous ous. So is this revise the whole thing?

Go folks. Very, very actually on. So like David.

so what you're saying is you expect the the minion lawsuit to fail? Can IT be appealed all the way to the same court? Can this be the case that rewrite new york?

First question.

question. I'm not sure. I mean, I think that be great if I did. Just be clear. Listen, I think that if fox were somehow found guilty, I think one to a hundred billion is a kind of a ridiculous amount of damages. I don't think the minium was damage to one hundred million, but do I think that that would be a good thing if this lawsuit were chAllenge always and the overall .

your time for A T S I D S, but I to do is .

not sum S M B.

C and CNN for all the nonsense they spread every night.

Just to be clear, I have a couple things that I would want to go .

and get clean up. I just want to be clear here though, brad David, guy tucker, he did the right thing. That's the most important part of the story is in a David that you're not being, you want .

to throw, talk into the bus.

I think talker did his job. I think talk.

talk, talk. Good job. I think I can. B, yes. yeah.

I think the guy who looks a little worse as energy because the energy in the text editor ity and believe this story but as a trump t. Loyalist, he endorsed the bullshit theory. That's no good.

bro. You come on the shower every a couple of episodes and pitching hero or field. Would you like to touch the third rail? What are your thoughts? And would you like to get some incoming email for more all of your L P S. About your position on fox?

And mean, I I should like to a million. I mean, I just feel like I said to a university, chicago o los go class, awesome and great. I think we have some good issues here that we still got to pick off on.

J, yes, okay. Well, we got to a talk a just for a second about china as IT relates to tick down because because they're right here on this holy hearing that's coming up. So we've got a hearing in congress.

Let's start with, you are a shareholder, a significant shareholder and by dana parent company tiktok, we have to say that to correct .

and you so you started that my kids take to, and my kid, I used real, and everybody had a debate you like, because, just like sex had to defend himself up before you got started. Otherwise you wonder what I do. I have to do the same thing.

I shareware of matter. Who stands to do incredibly well if tiktok in the U. S. Is banned?

So you spread, wait, you win. Either way.

i've got a head, john good OK. You know, we had a tiktok in U. S. in.

But you know the the context here is the tiktok ban debate is heating up, right? And it's all in a march up to the holy hearing. I think it's a march twenty third.

And there's real like we we spend a lot of time at the start of this pod on inflation. I think a much bigger issue right now. I was just with all these investors, the main issue on their mind was global decoupling between china and the united states.

We're gonna a see a level of chinese hate leveled out of out of congress, both sides. I mean, we heard a chaos at generator place not so long ago that this hearing is drawing more demand for speakers from both sides of the isle than any such conference are in a long time. But there's a lot there's a lot now around tiktok should have be been.

And when I when I look at the situation, if you frame IT for bike dance, because you not talk about this couple of weeks ago, it's been reported by dances revenue about one hundred and twenty billion dollars. It's been reported their profits are about twenty five billion dollars that is almost identical and size demea matters worth about four hundred, fifty billion, one hundred and twenty billion top line. It's also been league that in the tiktok is about fourteen billion of that and the U.

S. Tiktok is three to four billion. U. S. Tiktok three to four billion of one hundred and twenty and IT loses money. So there's a lot of debate. Should we be in IT? Should we not be in IT is a nal public and .

what you what you what do you want to have an a shareholder listen.

I think it's a public american. I think this is a public debate over a much bigger conversation that's going on. One of the things i've urged the company to do over the court the last several years is parental controls.

My kids use tiktok to use real, and what I want is to build a set effective time limits. And I also want tiktok has incredible uh, video content in math and science and history. I want to be able to set a slider and say, twenty percent of the video, uh, that gets shown over this one hour period have to include some of these math and science videos for my twelve year old.

Then he can like to not watch at all or watch IT. They announce those product changes yesterday, so they are team up those product changes. I don't happen to think there's an a ferrous plot, but I also want understand.

That people might not want this. And so like, listen, I think we should have a debate. I think that the CEO of tiktok should show up.

He should speak the truth at the holy earn. And if the U. S.

Congress wants to ban tiktok in the U. S. Or force to spin or a sale. I think we should do IT and stop debating IT. But the much larger conversation is whether we have a hard or soft decoupling with china. And I think this is just clearing the Colin.

all right. So let me just t up also um and to matha get your reaction. On monday, the White house gave government agencies thirty days to remove tiktok from all federal devices, or federal agencies must look tiktok from phones and systems and prohibit internet traffic from reaching the company.

This is following moves by canada in the E U. And taiwan. And um obviously, if there is a bigger house committee, a focus on china that held its first meeting this week, so there is the bigger picture. But let's start with the smaller picture number once much.

Do you think it's a security risk to have a chinese company have this kind of access and influence with tiktok specifically? And what do you think the remedy should be for that? And then we'll get big picture.

And what gets sex? Volt, this as well should IT be banned? Should they have this kind of access to americans .

and influence? Should I be banned? No, because I believe in a free market. Will you be banned? Yes, because it's. The most obvious cultural way to pick a fight with china without actually picking a fight with china. So yeah, I think it's going to be the most obvious victim of all of this.

And so I don't know my advice to my friends who are shoulders not just bad, but others is, sell, sell IT. Move on. It's in the warm buffer. T what warm buffalo calls the two hard .

bucket sax. Uh, do you think that this is a national security issue? Do you personally believe tiktok should be banned? Or do you, like me, believe that we should just do a reciprocation test in order for tiktok to be allowed here in the next states, then twitter, facebook matter, instagram linked in ACCA need to be allowed in china and you have this many days to reciprocate, or else I don't think .

marth is right that take off gonna, G, P, C, road kill and gpc stand for great power competition. You're going to start hearing that turn more and more. It's going to become the organizing principle of american foreign policy.

And I just think that tiktok is tiktok is all caught up in that. And you a person I like to to understand what IT is exactly that they're doing with tiktok. Save there's having these vegan accusations.

I actually really like to understand the surveilLance might be doing. I like, yes, I like to know a lot more about that. But in any event, I just think they only get caught up in this this, again, gpc, that's gonna the dominant organizing principal of our foreign policy.

I think that people are coming around to realizing that it's china, not russia, that is the central global competitor and adversary. The united states is the only country in the world that potential peer competitor to us. This economy is roughly the same size.

The us. Has got four times. Population is the one that we really need to watch out for. I think there is growing realization, washington, that the ukraine war is a little bit of a misdirect and that we need to basically get back to doing what we are doing before the war, which is preventing to asia.

And by the way, thinking about that just for a second in, I think David are totally right, because the game theory now, to me, makes a lot or send them frame in the framing of gpc.

So for example, if you think about what the chips act does, right, the chips act basically says we are going to near shore or onshore every capability we need so that we can make a manufacturer all the critical semiconductors for all of our interest, technological business, military eeta. But what is that really? What that is, is an option to not have to defend, I want.

And why is that important? It's because today, if taiwan run faded by china, we get pulled into a configure that we don't know how IT ends. We don't know what the beginning middle event of IT looks like.

It's extremely dangerous and precarious. So spent a couple trillion dollars create financial incentives, build the bridge to korea, into japan so that they bring onshore into mexico all the capabilities we need with western europe already, already, already, along with japan, korea. And now of a sudden we have complete optionality.

And now we can deal with the greater chinese hagen and a much more baLanced way. So I think the gpc framing is shared, by the way, between the democrats and the republicans. So this is why it's so much bigger than one single company. That's why I frame .

we're in competition. And part of that is gonna this decoupling. Is this decoupling helpful to america? Is IT helpful to humanity? Is is IT Better that we did couple a bit this interdependency maybe got a little too, as we saw during cove IT with supply chains. I mean.

it's in a in a great power struggle. IT is what the words imply, right? So I don't you know part of the reason you, anna, have trade, uh, which china part of the reason we don't have a hearty coupling is, uh, you know a long standards there ded company countries that trade together, less likely i'd go to war.

So you know I think if you listen to what's coming out of this, you know these uh select committee this week that held his first team in is on the uh on on on the extreme, you hear people saying hard to couple in right in the middle you have people say in lisa, we need to define as our conference around national security, and we need to the couple as to all things that are within that, our conference. Now I will tell you that the debate is about how large is that circle. So IT starts off as, for example, sophisticated computer chips out video.

So china, you know, can't compete with us in the A I arms race, but it's quickly emerged into, you know, batteries, energy, food supply chains. The conference has now become almost as largest the economy itself. I would argue that is not just the chips act, it's also I R. Ray, which is another trillion dollars of funding for uh basically on shing supply chains.

vital uh .

materials to build batteries at etra, you know. So I think it's a very reasonable policy by both parties to pursue. It's clear that we're going to have some decoupling. I think it's uh, uh, it's gonna lead to an interesting question on the part of china. You know, he was out last week saying, you know, i'm going to make a speech about peace with russia.

You know, this is more David territory, but my hatch shoes that there may be, you know of china a china thinks it's gonna a hard to coupling from an economic perspective. This is bad for global economic growth. This is bad for chinese growth.

I don't think it's bad for growth. I think it's bad for inflation. Explain well because I think that will have many versions of everything everywhere.

So we will some more redundantly more dare going to rely on central, south, south amErica in a meaningfully bigger way. And what that mean is that they'll be more jobs in economic prosperity for those countries. They'll ll feed the united states.

China will feed at last. And as a result, there will be more inflation because you won't have the cost advantages. By the way, china is not just gona sit there and take this lying down.

They've already punched back a few times. So for example, on the middle, the summer, china introduced a tariff and slowing the export of certain materials and technology to make solar waifs. Now why is that critical? Well, again, talked about this before.

But we are going to take the marginal cost of energy to zero in this country. And the levelized cost of energy, particularly via solar, is the cheapest been. And so what china sees is, oh my god, s if the united states has abundant free energy now is on a huge component of what drives cost is gone yeah so now the united states, good partner with elsa. mexico? Hondas, argentina?

brazil?

No, but i'm just think it's close by, right? And if you can deliver zero cost energy to those places now, the manufacturing capability could exist there. My point is it's such a complicated chess p.

So china is not taking any of this line down. But I think that what David's framing is totally accurate. This is the beginning of a gpc, and it's an economic tit for tat that we're going to play up.

We tax chips. They tax solar panels. We go after tiktok just as a confusion maker, right? IT.

This can be found. Its back to here. I can tell you the the this very easy test for if china sees tiktok as a strategic asset and that's it's onna create more shareholder of value, brad, if they were to spin IT out and make IT a publicly traded american company with american shareholder, would create more shareholder value for a bike dance.

Therefore, if they don't spend IT out, that means they're not acting in the interest of shareholders and shareholder value. They're acting the interest of their national security. Pretty clear reciprocation and collaboration would be a much Better model, I think, for for working with the chinese. And hopefully we can find some things and we to rate .

on brad rates that the chinese peace proposal in ukraine, which I thinks an interesting topic, can we you guys want to go there for a minute? sure. yeah.

I can. I take shot to explain what chinese we're doing. I think IT was a clever diplomatic mother by the chinese to try grab the moral high ground here.

They're basic saying, listen, where to in peace. We're going to put ford a proposal. The americans filing into the trap of basically dismissing IT right away, thrown cold water on IT.

The U. S. State promised this before. Remember, back in march of last year, enough toy Bennett from israel tried to negotiate a peace deal.

And he himself said that IT was the west, the americans who rejected IT. He thought he had a fifty, fifty chance of succeeding. You then have the peace process in istanbul, turkey, with other one presiding over IT.

You have the the instable community, which again, they were very close, having a peace deal and blinking in the U. S. Or cold water on IT.

So what's happening here is that the U. S. Is not playing its traditional role as peacemaker where we try to go in immediate these conflicts.

We're doing the opposite, that we're throwing cold water than peace process. Now why are we not acting as the mediator? I'll tell you why, because we are a cobo ignorant.

This is an american proxy war that we're flying in russia. So we have no interest in mediating a peace process. And more over, we're not trusted to mediate a peace process because .

we're one of the effectives, the strategy by sheering PaaS to take the global moral high ground with, I said IT on twitter, recovery. You like this. This is amazing that he's starting the peace process.

We want regime change. We wanted to plead and we wanted ankle putin. They want to keep him in the game.

The more despots there are, the the worst, the Better is for them. They would like to keep the legion of doom going. They don't want to change in democracy in russia.

Eventually.

I don't think, was very close to getting up years where I would disco through a little Better OK. But me explain .

OK good .

had so from the chinese point of view, the war in ukraine is like mona from a heaven OK. They love this war. Number one.

Okay, because it's interfering with the U. S. S. Pivot to asia.

We were basically in the Price of redeploying all of our force, all of our military to containing them in east asia and now were bogged down in europe. Okay, that's number one. Number two, we are massively deleting our stockpiles of weapons.

We've use something like nine years of stingers and five years of javelin. And we're running out of the immunity. I came into a world running out of occularium. The russians actually have a six to one artillery in, which is why they're actually doing much Better in this war than people are acknowledged. We should come back to that. The last thing is that the chinese now are benefiting from the economic sanctions on russia because russia is not selling them oil and gas and all their minerals .

and had been disa sub.

So it's been this has been a wonderful thing from the chinese standpoint. So this is the problem with us thinking in this marvel movie way of the world in which were the super friends and were against the region. To do m okay is because there is no natural alliance in the real world between china, russia and iran.

These are three very different regimes with different types of governments who naturally would not get along, they would be adversary's. Naturally they'd be suspicious each other as china and russia war during the cold war, but we have pushed them closer together. This is the problem with having this overly moralistic view of foreign .

policy over do you Jason, what do you think that's .

what's yeah, I mean, you frame .

IT as the legion of doom. So just explain .

the access of the, the, the.

Fifty percent sand iran and and .

and china worked together on nuclear technology so they do, when it's convenient for them, work on things like nuclear bomb. So, uh, there is an affiliation, but you're correct there there the fifty percent of the planet of human on this planet who live under authoritarians. And so they, their authoritarians, they're always going to think in their own interest.

They're always going to think in their own interests, above their own people's let along. The people of another country don't care. They don't care about human rights. They don't care about the rights of humans, uh and they truly they don't care about the rights of humans in other country.

And the west is uh a on a noble mission to spread democracy in the world and that to say no thing worth fighting for and is worth free countries from despots. I know that you are a fan of these folks, sacks, apparently, and you think they should be able to run a muck. I will take the other side of IT. I think the west should act in unison. The only critics I have because that we are not acting in unison, I would like to see the west, instead of sending bite into ukraine.

would say, hold, I would .

twenty talk enough.

You just accuse me of somehow being fans of these people. Where did I ever say that I was a fan of g and china, putin or the I atos in loan we provoked .

who invaded another count on you said we cost IT.

He chose the second. Hold on a second, I am arguing for a geopolitical strategy that benefits the united states on on team america. And your policy driving these people into an excessive evil is foolish for the reason I said, which is we are going to power up the chinese economy.

So there are a much more formative enemy to the united states. That is the last thing we need to do. Now we expect on second, we finished.

You have a chance with respect to ukraine and putin there. There's no question that putin invaded. Okay, he is the aggressor.

However, the question you have to ask is why and the fact? The matter is that, first, all we fermented a coup in ukraine in two thousand and fourteen. This is your democracy, spreading that you like is all of the sun.

We ve got these ngos, and we got Victoria newlin from the state department in their basic for mental, these cues. IT doesn't work out quite the way you think, jaco, that's problem. Number one, okay, then we try to run nato right up to russia's border.

okay? And you expect them just to accept that because we have been evolved superpower. That's not the way the real world works.

Pun was tremendous ly threatened by that. And IT wasn't just him. IT was all russian elites.

Billy burn's member from two thousand eight yet means that he explains that even the liberal elements within russia were tremendously threatened by nature, expansion. That is, what basically poisoned diplomatic relations to in the united states, in russia. And IT was a major cause of this war.

Now listen, just because you don't think it's provocative doesn't mean that the russians don't think it's provocative. You have to able to put yourself in the other guys shoes for just one second. And the fact that matter, is there a diplomatic steps that we could have taken to defuse this crisis in this war, and we didn't do IT.

And now look what's happened. Hundreds of thousands were killed, and ukraine's been destroyed, has been absolutely destroyed. And let me tell you, right now, IT looks like they are losing this war. So I don't see where your superhero policy has gotten us except to make china, Richard more powerful and to destroy ukraine. That is where your naive idealism has .

gotten yeah and I would say if you if if left to your devices and you are not engaging, not presenting a united front against putin n he will invade country after country. The west must fight for democracy. We must fight for human rights, even if it's uncomfortable, and you seem to think we provoke him to invade this country. He's a murdering dictor authority, an who has been murdering .

his own people .

under people for his entire career. And he will come .

to because you're putting words in my mouth, okay, when you say that, I think that we put what I believe, what I believe is that we took actions that in russian eyes were provocative.

I'm saying that .

from their subjective point of view, they saw these actions as provocative. They said, so listen, the russian.

which is, what else did we provoked? IT is your opposition?

No, I just explain this .

after I would use his position. Is that in their eyes they were present.

We're talking about, are talking about and what you're like, what you're doing right now is like dishonest. I just explain the language .

that I would use. Yes, yes, we provoke them.

We took actions that in russian eyes were provocative.

There's a difference. Provocative, provoke.

act of, provokes me too much OK.

Let's move on. We're never going to agree on this sex.

okay?

And I to remind the audience that nobody on this podcast isn't expert foreign policy. Sax is not handy kiser. I'm not obama. What I had .

come around to my of all on the very last show, you said this was a disaster, and now you.

are you .

ready? right?

No, I believe the west should present a united front, and we should hold the line with russia invading other countries. That's my belief. I do not think we should be doing the solo.

I think we should not be sending by in, we should be sending fifteen leaders of countries to ukraine, we should be sending people in, and we should be doing a piece process. And I think military industrial complex, largely driven by the G O P, is what a fault. Er they want to use these weapons.

They want to replenish the supply and they want to regime change. I don't think we should be going for regime change. I think we should be build in bridges. So point a little more to point a little more subtle.

You're doing IT right there. You're basically engaging in this ridiculous rhetoric that we've seen in the media, which is that if you simply want a more realistic american tragedy because you believe IT benefits america, that you're automatic accuses about being a pun sympathiser, you're doing what the mainstream media has done.

No, no, I just said to you, I should be the entire west as a group, as a block, negotiating with pun, what do you go? And is fine to sing pain to be part of that. I welcome you paying germany and the united states and france in the U. K. All getting together and trying to get to what .

you think we right or wrong with china, right.

right.

wrong, right and wrong or right wrong word.

I think we should be in discussions with them consistently. I don't believe we should be isolated them. I think we should be looking for areas we can collaborate on the environment where .

you agree with the chips act, you agree with basically on sharing, and you're showing all the critical infrastructure we need.

I think we should not be dependent on any foreign. We we should have energy security. We should have uh, metal logy security technology, of course, yes, but I think every country should I think china should have that. We should have. Every country should aspire to be resilient and not be dependent another country and being dependent on a dictator like germany was on putin or we were with china for medicines or for, you know, a medical equip or chips. We do not want to be .

an opposition ever. One place on ukraine. First, second, check out. Would you be willing, in order to achieve a peace deal for ukraine? Would you be willing to agree to two things?

Number one, that ukraine would be a neutral country instead of part of nato. A number two, that recognize for me being part of russia. Would you be going to give those two things?

I think that's up, not up to me. I think it's up to the people of ukraine and russia to sort this out, and it's up for the west to set the table for them to do IT. And part of setting the to do IT is to make IT more painful for them to stay at this war. So if they are told, if you keep fighting over these things and you don't come to a resolution between those two parties who have to live with that resolution, that is the uncomfortable thing that will force them. And that could be china, us in india, all working together, all of us working together, to force those two parties into a solution .

that works for them. And I I want to show you guys tweet about harvard students, and I want you guys to react to dream on s comments because of just cking incredible. I don't know if you guys saw this, but isn't that unbelievable? IT says there is a study at harvard that found that forty three percent of White students there are legacy athletes or related to donors or staff.

That's unbelievable.

Is that .

public knowledge? Was that like kind of leaked information? I wonder. This is from delis handy. I don't know who that is.

Maybe we can click on who the source of that is like this. He's GTA go right. That that concept, should I just go away? yeah. Are a valid reason to have legacy desire.

a valid reason to have legacy .

IT feels unfair IT IT feels unamerican that these important institutions give preference to people who are stupider and achieve less. If this is an achievement based, uh, system IT just feels unfair.

Yeah I mean, while we know we know that the first class had zero percent, so we know what the trend line looks like. So at some point we're approaching one hundred percent, I think is the .

question .

to see to maths is what's the relative performance ten years as after graduation between the legacies and the kids who had to fuck and scratch and fight to get into the place?

Oh my god, yeah. I mean, I think we know the answer, but you would .

think there will be higher performance, the latter group. But you would also think that if legacy got you into harvard, then the legacy and great, you can get you into other things right. You have the end.

In other places, they are the ones who are miserable and walking around, you know, rich and haven't achieved. Did anything?

Yeah was sex didn't get into stanford based on .

his dads buying a building.

right? okay. So here is a video from dream angry。

What I do want to go .

back to is a black history month.

This is actually the first time you see me a black history shirt, black history mum, and is very intentional. And I really just stood his shirt on because I didn't have another shirt to thrown on. But black history month, at some point, can we get rid of IT right at some point? While we got to keep getting, in short, this month to celebrate our history, you got governors want to take our history on schools and i'm not gone to beat a food to go say, yeah, we get celebrated for twenty eight days.

So at some point i'd like to get rid of IT is, you know, we were making all these changes in the world, can talk about these people can talk about those people can say this, say, at some point is time to give IT a black history. Mom, I get IT a black history like they're trying to do the black history month now teach, teach, teach my history from jane first to december er thirty first and then do IT again and then again and then again and then again. That's what i'd like to see 我 so good he is you need to clip .

the last ten seconds so .

that that we all need to tweet that yeah yeah uh.

there was, uh, a correction we needed to make about the struck week .

head yeah so you the we talked about some stripe stuff last week, and my analyst came to me after the show was published. There was a couple of miscalled in the spread sheet that generated at the graphic, which pick up to him for calling IT out very quickly. Anyways, I just wanted to show you the updated one just so that we could make sure we get that on the record.

I guess this would be a purple color is a purple? Yes, that's actually when you calculate net revenue. And I think what IT was calculated growth revenue, which is in the red. So we showed this, but IT actually should be purpose. So that's the updated accurate version of the analysis.

So there you have to make what does that mean for strike versus agent in terms of just which is a Better business. summarize.

I mean, I mean, to be honest with doesn't IT IT says what we said before, which is that the the previous valuation was very expectation heavy and the new valuation is definitely more online but still very rich relative to other companies who have large profitability and large growth rates. And I think that's the key takeaway, which is, is very hard to both have huge margins and grow at medium ly, high double digit rates and a few that can VISA master cardon tend to trade IT a very different valuation set, then everything else. And so I think that's a chAllenge for stripe .

if they can do IT theyll be in that class, okay, for the sult of science, doing his back in new york, having an incredible .

dinner in carbon, right? Enjoy the vegetarian. I pretended him, he take, he takes into a group, don't. And he said, let me know if you want me to dial in and save the episode. My instant reply goners on fire .

were also 带我去。 朱 大姐， 你 需要 当心。

No a he has to go .

find a replaced.

We love you. We .

love you .

so .

episode until words in english .

that you struck A L back on all .

the usual virtue signing in.

oh yeah yeah okay, who did you vote for in twenty sixteen?

Be honest right now. Look at.

you .

know.

there's actually a mean there's a meme on twitter that anyone who disagrees with me as russian .

disinformation or proper bally, I don't think you, I don't think you're problem. I underside during this entire year of ukraine, U, U, U, ukraine. I say every time to be clear, you're not saying pun is right for invading ukraine and you like.

no, no, thank you for .

saying that. No, thank you for you that I.

I, I O is a very and it's ai. We could nobodies in favor or of this war. Nobody, nobody y's in favor of IT. Everybody is trying to resolve IT. I think we just have different views of what resolution looks like.

Did you guys read this crazy article in bloomberg business week about pas Michelle founder, the cofounder of the fuji, and his entanglement with the one mdb scandal? Did you read this article? No, I have.

No, I like the culture at the end. Let's put the ten file hats on and do culture at the end. His phone rings and it's a chinese woman that something like, you know, your cousin wants to meet you.

He goes to the four seasons where he gets a note that says, walk around the building twice to make sure you're not followed, goes back into the four season, gets A A key card, goes up services into a room where they then escorted him to a different room in a pan house. Take all of his phones and he meets with the vice chairman of security for china, where that guy is asking for an introduction to trouble. IT is that heavy article starts IT is incredible reading, did you? Incredible, incredible reading. I encourage all of you to read IT it's so, uh, spite. What is that called juicy?

It's so juice. If you want to read some crazy story, there is a company called wire card in germany, and there's an an article about the biggest fraud in german history. I highly recommend reading this one. We didn't get to IT today, but oh my god, if we had like a long reads power .

would be incredible. I personally think we should promote any stories by .

the or thank you so much for filing in like, yeah, pretty good. Love you guys for the rain man. David acts the pacifist of peace.

The salt of science brag gardiner, the dictator chaos. I'm the world's greatest moderator and speaker at your corporate event for fifty to seven, five times. Check out.

Talk to my mako. Let's get this grip out. The people see the next week about you guys.

but.

Rain man, give.

We open sources to the fans .

and just crazy with.

We should all just get a room, just have one big, huge.

your.

Tear B.

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