E130: DeSantis's Twitter Spaces, debt ceiling, Nvidia rips, state of VC, startup failure & more
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Look at john quinzy atoms here.

yeah. Hey, hey, quinzy, I don't.

But john Quentin Adams needed a .

wake to achieve this. Look, did he did? I did IT all nature. I mean.

it's a lot. It's a look. You're like some movie start from the nineteen seventies were still working to me if a picture of grade carder for second and and put that side by side with sex, let's see to see a zoom in on that fact.

This is where you're headed by one. You're headed to crazy town. This is where you're headed. You can just pull IT out on the sides and you get a little wolf scoop on the town.

See to.

this is where you're headed. Eccentric stacks. Pull up a picture of Steve baLance .

hair is a wise statement.

I think this is what happens when you get too close to power. You get more centric with your hair. So like, too much power equals crazy hair.

Now, look, this is my very grading. Carter, too much power. Vanity fair.

He went here crazy. Now you look at bon. You get me a banner photo.

Here you start to see they go longer, they go wafty. They just they get volume and they're just like rocket. I'm just i'm not going to cut IT.

I'm going to let you go wild. And of course, that the old I mean, he's the panel to me, but you look at trumps hair. This is where IT gets truly crazy.

This is where your head exacts. You keep getting this close to power. This is where your hair is, that i'm glad .

this podcast never broke up, because where would we get this amazing insight for J, Q, if not for keeping this all together? This makes IT all worth IT. It's very IT is true.

You get like a centric, and you get crazy. here. This is men get too close to power, and the hair gets wild. Unchecked power.

unchecked hair. We had a good meeting last night.

We had an all in summer meeting as if we we're give me call with catch up on the stuff he's like, i'm in the bath right now at my candles and i'm like, yeah, okay, whatever. That's cool he's like, no, no and he presses the video but and then i'm exposed I kid you not to the most bubbles i've ever seen in a bubble bath, I like bubbles and he is peaking his head out from over the bubbles and he like, look exactly that.

He flips, was the camera around and I got this toast potting out, and I did you out there, six canals around the best tub. I like this is like the prince of panic attacks. He had to come down for a phone call with me. So now, when he has a phone call with me is so intense, and everything's getting so intense with the summer, that he has to do self care.

Yeah, I to be emotion motion ally ready.

his self caring.

Your wife wasn't anywhere to be found in the battle.

Top of the candles I think about every night.

Who are you romantic yourself for what .

I think he was romantic the spreadsheet with the profit life.

Stop IT. I've about eighteen minutes of self care.

eighteen seconds. right? Let's get the show story. two.

give.

We source to the fans and they .

just got crazy.

Hey, everybody, welcome to episode hundred thirty, maybe of the all in podcast. We're still here cooked with oil with me, of course. The dictator himself, chamar ali hopeth, a principal ic, is excEllent ent of science, the queen of kinda freeburg and the power broker himself, the emperor, the insects, the empty of his new republic.

Anybody have any interest? Anything going on interesting this week? Any interesting moments for people on the national stage now? Okay, let's get rapid to the docket first or on the docket. Ron descendest, governor on descendest, announced bid on the internet on something called twitter spaces and IT looks like almost ten million viewers have seen IT so far across all the different spaces.

And dal truck wasn't too please, he said, rob, my big red button is bigger, Better, stronger and its working truth because when elon fired up the twitter spaces, he went to six hundred and fifty thousand viewers in under five minutes and then blew up everybody's phones. My phone was melting. I couldn't cook the egg on the back of the the twitter around crash so many times, but then sacks with his meager following or a half million people or something. Then we started the stream and so fifteen minutes of technical snaps oos relieved. And then there was a ah announcement and i'll let you take IT from their sex.

You may take you behind the scenes.

take us behind the scenes, us behind the scenes.

How do they come together? sets?

Oh yeah.

Even Better yeah. The way came together is I think the decentish team were interested in potentially, you know, doing something different for their announcement. He also did an appearance on fox news afterwards, and I think he did a town hall, but I think they saw up to break new ground here in terms of presidential announcements by doing on twitter spaces.

And so the essential campaign connected with twitter and elon, I agreed to kind of cose the space. And with him, and he does his announcement, now you're write, we had about fifty minutes of technical difficulties because the interest was so intense at the time. The room crashed.

IT had over seven hundred thousand people in IT, and there were IT crash. This someone who are trying to get in IT. I think there well over a million people trying to get in IT.

So you Normally don't have this kind of interest. I think this is by far the biggest twitter space. The engineers there told me that the previous order of bagni two is more like one hundred thousand, not a million. And then you combine that with the fact that elan's account has over hundred million followers and that basically LED to a new level scale. And you guys understand that when you get some new level scale as a platform, there's always going to be some um some chAllenges.

So the event the engineers where they're trying to figure out how do we solve this and we realize that they simply seem to do would be to restart the room on my account set of illos and then elon joints, the coast and we brought to santa and all worked perfectly at that point. The audio is press. We had over three hundred and thousand people in the room.

There is also another room that have been set up by mario newall, who's like a big twitter spaces host. And he had hundreds of thousands of people in there, and then he had live commentary from people he invited. And so this ability to fork twitter spaces into many different rooms in each room gets decide who they want to be, their host, their speakers, allows you to do life commentary in a way that you can ever have done before. So I was really innovative, I think .

super innovative. And for who don't know, twitter spaces was really a rush job at twitter. They did that in reaction to clubhouse. It's still basically a ba product that creates you on being there. And IT doesn't have yet the infrastructure scale of the code base. I don't think like youtube and twitch do, which you have been working on this problem for, I don't know, fifteen years, maybe the life products of inertia.

yeah. The first is I thought the scientists did a really good job just rolling with the punches OK.

Because I think .

whether he wins, you're not going to look back on this moment as the defining moment of the campaign nor whether he loses what you say, that this was where IT was at all the beginning at the end. Instead, what this was was a really seminal moment, I think, in further divorcing ourselves away from the mainstream media. And you know that IT was that important? Because biden tried to trolls the whole thing, nick, you can show this link.

This link works. And I actually think this is a really terrible idea by the biden team, because never was basically acknowledged how important the moment was. And the fact that even the president of the united states was grinding the link and couldn't get in because there were so much interest is really important.

And I think what IT speaks to is the fact that we are now showing, incredibly, that you don't need to listen to four channels to shape your consciousness, and you can just go straight to the source and what sex set is right. If you now have a moderated forum that then gets put out to fifty or sixty different witter spaces all at the same time, framing and reframing IT gives people a chance to come to their own conclusion in a totally unique way. So I think .

IT was really.

really an important moment for citizen journalism and podcasting and audio formats and all of the things that I think we've been a small part of. But I think that it's really must have tilted the mainstream media and IT tilted the establishment. And you can see that in biden street.

yeah going direct.

yeah. So that was the first thing. Second thing, I think the scientists did a really decent job in rolling with the whole thing and being super cool and just being committed to the process.

And I think that says a lot about him as well, which was, again, it's a question mark. And i've said this before, the big money guys got close and then took a step back. So this could be a very good moment for them to reevaluate. I thought he did a very good job.

so I agree. So you know, I was there, I was live and was happen hind, the scene when the scentin came on after we, you know, at fifty years, technical disputes, there wasn't a hint of anger, there wasn't a trace of ira. There wasn't any freaking out that we were potentially ruining his presidential announcement.

The guy was completely calm. And more than that, he was in good spirits. I mean, if you listen to the recording now, he is happy. He sister was really good.

I mean.

then, of course, IT was very substantive, spoke in a very particular way about all the issues. When congressman Thomas mass came on to make A A comment or question, he was telling a kind of amusing anecdote about when they were in congress together. And macy was the only members of congress who had a tesla.

But he comes from cantu's ky, so I think his license place that can tucky call on IT K Y call. So anyway, you know, the guy was in good spirits, and so I think he does say a lot about what he would be like as a president. Cool under fire doesn't get through an office game.

Again, not an angry guy, you know, which I think we'll be a real contrast with, let's say, from the other people in the race. Trump is sort of anger ly truth thing during the whole thing, you know. So I think that was a pretty strong contract.

The act of posting to truth, social.

exactly. So the contrast between the personalities could not have been stronger. Now to the other point, the trouth about traditional media, you're right about what they're saying.

If you look at that, the headlines this morning from trial media outlets that really started within minutes of the the techno difficulties, the new york times called the announcement of fiasco c news called a meltdown political called IT horrendous. You know why? I mean.

if you please call that winning, I mean, if they're losing their cool, that's clearly they feel threatened by the fact that a major presidential candidate chose to go direct .

in the world journal. Headline scientist looks to rebound after botched twitter announcement but again, what they failed to techno knowledges. I am not a business to supporter to say i'm open minded to him, but I haven't decided one or the other, but this is a guy that managed to get millions of people in a nanosecond to be activated to hear what he had to say.

That is different than basically giving talking points and having soirs blather through fox or C N B C. Here CNN two hundreds of thousands of people. This is a really important moment. I think OK got all the .

positive for that point.

So if this was a political rally, attritional political rally, that they started twenty minutes, would anybody have said that was .

a disaster? That happens all of the time. Now.

IT was the crashing that made people be .

like all my phone crash. You know.

your phone did not crash. Yeah, but I have that. look. This was, at the end of the day, this was an an event that started twenty minutes late once we started my twitter account in my twitter space, IT were perfectly, there was no problem.

And that's the recording that you can go on twitter now and listen to. We had about three hundred thousand people contempt in my twitter space. I think mario had a couple hundred thousand. But if you look at the numbers today, there's already ten million views for this thing.

But what times ten million on the replay and and that's what you have to look as replay because the world has moved to a synchro like this was three o clock in the afternoon in silicon valley, six or eight in afternoon in the afternoon.

So you have a hysterical ical overreaction by the trial media and simply don't like a that elan is just mediating them by letting the politicians go direct. And then b, he's restored the platform, being free speech platform. So they jumped on this the first second they could try to portray a disaster. But you know, there was an article in political this this morning and they were asking voters now what they think about IT and they're like, uh, what it's not yet.

It's no lead thing that's not yes, it's not even on the rider freebody. We heard all the positive here. Any constructive feedback on IT or thoughts on IT generally?

no. Look, I mean, I would love to see all the political candidates engage in long form discussion like this so that an audience can really get a sense of who they are and what they think in a direct way and um an an erupted way and in a deeper way, sort of like the conversation we all had with r of k last week and acted with the set to see after day.

And I would love for the voters who engage in that content to Better understand the candidates rather than tea off of short talking points and short ads. I think one of the sadness commentaries on modern democracy is that you can spend a dollar to buy a vote that all of these campaigns, functionally trained, raise capital to go due advertising, and that the advertising creates these little thirty second sound bites that actually change people's opinions. And it's a really sad IT, will they? Otherwise, they ouldn't spend the money.

And I think it's a really sad state of affairs that we spend money to change people's opinions by shorting everything to a sound bite instead of doing what maybe would have happened a long time ago. You know, we often talk about the town square. If you lived in a village with sixty people and someone was going to run for the mayor, that village you'd all go to the town square, you'd hear that person have a debate, have a discussion, you talk with them, and that dialogue would inform your decision about who you're going to vote for.

But you know, with three hundred million people in this country, and, you know, short attention spends and jumping around from one thing to another, there aren't a lot of great forum for any of us to really engage with candidates, particularly on the national level, and make a Better informed decision hearing from that person directly. Instead, everything is about driving narrative and shopping things up and getting the sound bite and driving the emotional reaction. And I think one of the the greatest things are happening right now that, you know, could be a great benefit for this modern democracy is the sort of stuff that we've been doing on our podcast and our k coming on board like last week, and more sexed with twitter. I really hope that more politicians do that, and that more people engage and consume that sort of content to make their decision and ignore the idiotical sound bites and the stupid thirty second ads and the nonsense that third parties you have to try and drive narrative. So yeah, look, I mean, I think that's generally the positive friend that that I take away from.

IT jack, what do you think I have some notes for sex? I always you know careful not to be too critical you know in the moment because I don't people will read nize them and oh, Jason said this because, you know, it's elon and his team, elon or his friends with sax.

But I think everything said so far, district the media, a great start at the thing that I think was there were probably one or two misses here that I think you can build on sax and you are very involved in the campaign with the santis. I think IT wasn't the free for all that iran had said IT would have been right. So he pitched IT as like, hate.

This is going to be uncensored and everybody y's going to get to ask hard questions. And that didn't happen. And you know, I think that is in stark contrast to what trumped because I was doing the media analysis of this.

And so I think the follow up needs to be where he actually takes questions, not from fans, not from people who already voting for him, but really know a little bit more of the intent queries, people, the people who maybe are voting for trump, the people who are maybe in the biding camp. And that's what was the master stroke, trumps C. N.

And town hall. He went into the, you know, the lions, dan, or what most people perceive was going to be the lions then, and he took on all commerce. He fought hard and that one was, I think, a bigger when I don't think .

to sand that was not a presentin announcement. So just to be clear, this was a launch event declaring that he is morning.

So in that context, yes.

you want to compare IT to what these things usually are, which is a guy standing at a podium, yes, in front of his supporters. Compare to that, this was much more interesting dynamics and engaging. I agree with you that at some point he's getting to step in the lions stand, do a town hall on a place like CNN.

And I think he probably will. In fact, I think, yeah, I think he did a town hall here. I think he actually did IT down all in florida later that night.

So yeah, I agree with you. I just wasn't that kind of event. Now, to the point involving more people, one of the things I learned hosting this thing is there are literally thousands people raising their hands.

Yeah, you can't store.

I was scaling through this in real time in the APP. I wanted to call them more people, but I was just, there was no way to do IT. This is something at scale.

They need to add to the interface, which is maybe repopulating a list, sorting IT by the number of followers, whatever. And this is my second point about this. So I agree with you as an announcement. This was lightened ahead as like a full court, you know, like shark about thing.

I didn't hit that note, but you can that's why I think to follow up, you know, having if dissentient wants to come here and have like a two hour discussion, we kind of get into IT a little more. That would be, I think, really good for him because I think he's got the potential to win over moderates. And I don't think this one over moderates didn't win over anybody who was in, you know, the left or you moderate left. And that was one of things I noticed is my second point about IT is what a great group of listeners, if you look at who showed up to listen, bill act, Michael double, no .

sorts by your followers.

So, but I think it's sorts .

IT by the number of us. See a member that OK.

Okay, sure. But there were still very prominent people in because prominent people follow you, okay, but they weren't coming to follow me. They were coming to listen to this. My point is still the same. I go down below action.

We're coming. So but that's why you saw them because .

they are your followers. I we all understand they still showed up this in the middle day. I think that is really interesting and that yeah ah yeah that's yeah that's all my points is really interesting .

that powerful people showed up for full of.

oh yeah and then I just had a couple of other ones. Elon was a bit under utilizing this format and that you know chAllenge when you have elon in the room because people want to ask elon question. So this is something I think he's gonna to, you know, content with.

People wanted to hear elon ask questions, then the people who are we're asking the questions wanted to asking one questions. So you do get like a little bit of how to utilize elon in this format. I heard a lot of bt channel from important people like I wanted iron ask a question or me of the two of them getting to IT.

So for a follow up, one, getting some people, you know, who maybe don't traditionally get to ask questions because let's face IT, in traditional media, the people get to ask questions. Are these anchors on news channels? I want to hear Michael dell or bill ackman ask the question. That's the opportunity. And twitter spaces maybe letting you on ask a tough question then to follow up, or, you know, like we did here with our, okay.

I would have been told up to that. I just to manage. There is just so many people in the room ency action, actually, I know I told, believe was there.

but I only critical, had a major onor and you stack the deck was the most cynical version of IT would like five people who are just super effusive. But this is this launch party. So what I think in that context.

I won't called on bill action if I known he wanted to speak, but I can see whether he raised his hand or not. I didn't see him in the room. So I to call on bill action and is like, guys, I don't want to talk, I don't want to put him in that spot.

Can we get on this post so we can grow them about abortion and fiscal policy?

Who bill action?

I don't know. I look, I don't speak for the campaign, but I can put in the request.

You put all you put a hundred fifty times and get a on hold on. Can you can you tell us the actual tiktok of how this whole thing came to be?

The campaign within the last week or two had the idea of should we explore doing on total spaces? And I think they were open to doing IT and sex.

They know about IT. When I put IT .

in our great job.

sex was like, he is, yeah, you found out .

about IT. K, look, the distance of people reached out to you on and twitter. They also reached to me about IT, and we discussed IT, and they were excited, breaking in the ground ring different. And I think that is credit for that.

Can ask a follow question just on the descending st. Thing himself, because you've cinna a close. Do you know why? Switchmen griffin, Peter phy, stepped in, took a half step back and do you know what it's going to take for them to just meaning and just make this effect comes so that he's really well and asked to be truck?

I don't know what the issues are, but I did see I don't know this. But Peter fy, whatever I don't I don't know him, but I did see press article and he was referencing book burnings so that to me, to shows that he was buying into .

some crazy .

left wing personality .

of the for a lot of people, was the book banning. Can you explain the issue and the spin and the clarification on books banning and flood is very simple.

They have been banned any books in florida. But the question is, what books are taught in the curriculum and what's in the school library? And some of these books were positively pornographic.

I mean, they had someone to send us an event where somebody was actually reading what was in these books, and the mirror reading of was in the books actually got labelled on social media by the algorithms. So there is a lot of stuff that is not appropriate for kids. No one is restricting your ability to buy or read whatever books you want in the state of flower is ridiculous.

There's a legitimate question about what's in the curricular. By the way, I remember when we had debates on campus about this is back a long time ago, like late eighties, early nineties, when they were throwing dead White meals at the curriculum, you know, plato, aristotle, shakespeare, people like that, the people on the right who were opposing that never made the argument that this was censorship. Everybody understands that when you're dealing with the curriculum, you have to make choices.

You can't teach everything. So the question is, what are you you going to limit IT to god? I think that when people actually dug into some of these books, they realized that they're not appropriate to vent.

And his answer was, along those lines, you should go listen to IT for yourself. But I think that he did address that issue. I think he's kind of exposed IT as a know, leering media narrative. And I think he deconstructed IT, and I think that was helpful. So I think there are a lot of centrists who all we've heard about scientists is that he's banning book or you or the disney issue, which we also ask him about and recovered that I think so um yeah the yeah we talked about some these controversies.

The issue here, just to summarize IT is the left is framing the banning quote on quote, but just the not inclusion of certain box which are graphic, that have sex in them from certain age groups in schools as part of a ricos. So they're saying these books are banded fludd. The more accurate way to say these books are not being used in curriculum.

You know, for these age groups, the parents, if they want to buy them, can buy them and then can read them. So this is where this conversation kind of breaking down, and I think is a complete and waste of time. All parents want control over at what age or what stuff their kids are exposed to. And so there is a thoughtful discussion to be out there. And maybe the discussion .

is this .

is a conversation.

right, of course, but it's not a conversation. It's a hoax. It's it's a fake media narrative of the turn to pin on him. And the sentence has been the the subject victim of these types of fake medium areas, which are deliberate.

The media not trying up a conversation, they trying to disqualify the guy, and they did this if this goes only back to cove IT when he opposed lockdowns and kept schools open, and they called him death scientists. So the media has had IT in for this guy since the beginning, because he refuses to go along with their narratives on things. This the same reason elon is, elon is defying their narrative control.

You put these two guys together, okay, all up even before the technical diflucan. Let's be clear, the media's heads were exploding that da santis and elon will get me in the room together. Look at the vanity fair article.

The headline was dsa tis announcing with ellam because David duke wasn't available. Okay, the atlantic was saying that this whole a twitter space was a hate group. I mean, literally.

So these people are losing their minds before we even got the technical difficulties. And then they poured on that, that there was a twenty minute delay. They pounced on that at some sort of fiscal.

which IT wasn't. Will descendest cut spending and cut taxes?

We cut spending .

way into that.

Have you ever had a conversation with him about budget federal.

you know, position on cutting like capital gains? And x.

let me give elevate patch.

I think the nut .

shell for the scientists is he calls at the florida blueprint. He saying, look at what we've done in florida. Look at what achieve florida.

Let's take florida nationwide. Florida has had a great economy. Florida had a about budget zero. Because I know that's a state.

If you have zero tax, you have my .

book OK. Later, the dictator has spoken.

If people want to look up this issue, there's a book called gender queer. And this a story about in the new york times. And it's autographic novel about coming of age for a long binary person, which is fine, great.

But it's it's very graphic. It's a graphic, graphic novel that has explicit scenes. And these kind of book's most parents would say.

I would like to cutting.

Okay, thank you. It's .

called the to come on.

guys overall, great up. And yeah, get them on the part here and we have .

a great discussion with him. Great job.

Please invite to our product. I think you know we each have our own issues or else we're just gonna with the other republican candidates.

Yes, I don't know. Well, guys, yeah, I think be great .

to get niki. No.

no, no.

that's great. Yeah, would be great. People want to hear for more folks.

So lot of other news going on. I think a good place for us to go to next. Maybe do we want to do the dead ceiling defense spending .

or in video go together OK. great.

We will go with the assault ton of science. U. S. det. Ceiling is at thirty one point for trilling, currently a treasure department.

Recent more in the federal government could be unable to pay its bills as soon as june first. Fish put the U. S. Credit rating, which is the highest rank of triple a, on negative watch.

So negative watch means it's trending towards bad and that it's imminent that they might low IT due to this dead limit deadline. IT seems like we're not making much progress every couple of days. We seem to swing one way or the other.

The stock market has kind of shut that off. And the last time the U. S. Credit was downgraded was in twenty eleven, but we avoided that to moh.

What's going on here? What do you think the eventual outcome? And is there a chance that these knock l heads who representations are going to default and cost cash? Or do you think this is all kobi theatre and we're going to wind up in the same place, which is they raise IT to make some modest concessions?

August fifty, two thousand and eleven, the S. M, P downgraded the united states from tripoli to double a plus. You know what happened? Absolutely fucking nothing.

okay.

So I do think that this is another opportunity for the little red riding hoods to get their panny at a bunch. But these downgrades .

don't mean much .

of but I think .

that these third party credit rating agencies are not particularly that accurate and sophisticated. They don't know anything that you don't know. They're not getting access to.

You gave S, B, N. A rating the week before I went .

into receivership. This none, this is my exact point. None of these companies know what they are doing. These companies are in the business, are putting as letter on a document and then selling access to that document.

So if you're gonna trust these guys to know what they're saying, either right or wrong, independent of what side you are outsourcing your decision making to the wrong body. So whether it's S M P feature moodie, I would tell you to ignore IT and come to your own conclusion. I think that this budget ceiling thing is happening now every couple of years.

And IT seems like the real thing we should be talking about is whether bindings going to use the fourth element and just RAM a budget through. And I think that, that so under under the fourth, the ema, the president, the united states has in their direction the ability to make sure that the united states can pay their deaths. And that wasn't necessarily thought of as a way to work around the death ceiling impasse, but because congress refuses to pass any structural laws that allow the budget to abb and flow with tax receipts, we get in caught him in the situation again roughly every handful of years.

So what biden could do is he could say, the fourteen th amended gives me the right. I'm in a pass, a budget via executive order from a game theory perspective. What that does is IT forces republicans to sue biden, take him to the supreme court and say, this is on constitutional.

The problem with that is that, that probably really does take the economy in the way that IT creates enough uncertainty or capital markets freeze up and liquidity just absolutely goes away. And again, liquidity been drinking for the last eighteen months anyways, so IT get even worse. So I think the brinkmanship right now between mercury and biden and is basically that vailed threat, if biden effectively isn't gonna something done, I think he's gna test the fourteen the member.

Now, if the fourteen the member IT turns out to be a reasonable way in order to pass a budget. The good news is not just for biden, but for any future president, including republican presidents, will not have to be held hostage by congress. They will, in the eleven hour, be able to pass a budget that works.

The implications of that, though, is that now you will not get consensus. And whatever happening in that moment, you'll see more up. So if you have a spending president, they're ders continue to spend. And if you have an austerity president, they'll continue to cut. And that i'll have implications on other side.

Sax, you think this is over a tious fourteen amendment or do you think it's a valid use of IT?

no. Why it's not onna fly. I mean, it's true that the fifth moment has some language about, a, the full faith and read the U.

S. Not be compromised. H, however, it's never been tested or or tried. No one exactly knows what that means.

Progresses are now saying that the language means that bian just give spending without the death limit being raised, but buying himself through cold water on this. He said that he didn't think he had that authority and even learns to Donald the other night. He is a big progressive on the media.

He was saying that the dens were going to take this tack. They needed to do what months ago before they started negotiating on a debt limit increase. So it's too late now.

In other words, if you're going to take that position, why would you have negotiated that? You the prisoner effect, conceding you don't have that authority when you started negotiating. So I think is too late to invoke the fourteen the moment they're gonna have to raise the debt ceiling.

That being said, I think they are going to be able to Rogers had a report this morning, the thirteen seventy two billion apart now in their positions, which is a relatively small amount. So my guess is they're going they are going to work this out now, which is the fate of the dette might be moving forward. I mean, the thing that so stupid about our budget process is we spend the money and then argue about whether we're going to pay the credit card bill.

The way that the debt limit should work is you raise the debt before you spend IT. Congress should have to have vote first on whether they want a deficit or debt spend, then you decide how much you're going to spend. So this thing, this vote, needs be moved up before they spend IT.

And I think if you did, that would be a lot hard for the politicians to spend money. Because if you had an upper down vote very early on, saying, should we even be in deficit, I think a lot you would say or not, we're not in a war. So why why would you have .

spend if we were to death killing if go the uh government accountability via v the defend spending.

I mean, look, we're running a two trillion dollar of your deficit and its forecasts to continue to be at that level for several years, and it's gonna .

take pretty .

rational changes in how we tax and spend to make up that gap. So you know this is a problem that is gonna continue and and IT does beg the question. You know you want to buy bonds from an entity that's generating four trillion in revenue and spending six trillion and has a plan to do that for the foreseeable future.

And it's only, you know seeing the economy or its underlying revenue base grow by two percent a year. IT seems like, you know that would be a very hard start up to fund and IT would be a very difficult a growth investment to make, particularly, uh, in an environment like this. So i'm just pointing out that this is a becoming A A more kind of systemically risky situation for the U.

S. That you know we spend the way we do and we have to keep coming back to having these debates about this is appropriate or not. And they've narrows down the way that the republicans seem to be kind of going about getting this done.

The deal done is are only focusing on the you know roughly fifteen percent of the overall federal budget. And there are some kind omics and tweet and in that in that will range there and save some, save some pennies, save some nickles. But uh, we've got a much more fundamental problem to deal with, which is how do we stop running these deficits and running the data. But I mean, sound like sound like a gun. No, I think you're right.

Clock point. I just the .

inflation is .

here and the crowding out of private investment and private borrowing is now occurring because the government borrowing is so big. I mean, are our treasury, our government out of what? Three, two trillion that has to finance somehow and all that money is going to finance government instead of being put to other uses.

So I think that the downsides are already here. You can't run two trillion doll deficits every year. That's unsustainable. Now I think that you guys reference what happened in two thousand and eleven that's worth is discussing for a second because I actually think that what was agree to in two thousand eleven was excEllent.

Obama and the republican congress agreed to a thing called the cluster where they agreed that they would freeze both defense and non defense story spending until they could get their act together and agree on what the budgeter looked like. And so the theory was the republicans agree to the pain of freezing defense, democrats agree to the pain of freezing non entitlement social spending. And that's how the deal was cut.

I actually think that made a lot of sense. I think we should have kept Operating under the sequester until we got to baLance budget. But the reason that broke, quite Frankly, is because of the lobby power of the military industrial complex is so great in both the republican democratic parties that they basically one of the quest are overseas. He raised the defense budget.

I think it's just that there's never been a degree of accountants for the spending that being done because of the assumption that will always be able to pay our dead and we'll always be able to take on more debt. And I think that you see the other conversation, the other topic that we're onna talk about was this lack of accountability in defense spending that you know we should play the john to clip, you know where I think who is the interview the undersecretary of defense or something.

what is heard title deputy ary secretary defense cataline hicks was discussing with defense budget .

when I see a state department get a certain amount of money in a military budget, be ten times that. And I see a struggle within government to get people like more basic services. I mean, we got out of twenty years of war and the pentagon got a fifty billion dollar raise, like that's shocking to me.

Now I may not understand exactly the ins and outs and and the incredible magic of an audit, but i'm a human being who lives on the earth and can't figure out how eight hundred and fifty billion dollars. To a department means that the rank and file still have to beyond food steps. Like to me, that's fucking corruption. I'm sorry.

And then there was a story that came out this week. According to bloomberg, government accountability office disposed that the on is currently only to account for hundreds of thousands of spare parts for the f thirty five jets.

The guns never passed in on IT. And it's accepted. And it's acceptable in the same way that is acceptable to never baLance the budget, to always spend and give everyone what they want and to find ourselves in, you know, this kind of late stage problem where we've gotten away with IT for so long that both of those factors, whether it's the the downgrade on the rating, whether it's the fact that we end up in these battles over whether to raise the dead healing every couple of years or whether we can pass on IT, all of these factors are symptoms of the same underlying problem, which is that there is no accountability for, you know, how we Operate. The, you know, the kind of fiscal condition of the the federal government.

You know, the other thing that leads to is all these optional wars. So let me give you an example. So all of these wars are always, yeah, they're all off.

look. So I take ukraine. We've appropriated what one hundred and thirty billion. That's not part of the defense budget. We have either a billion in the defense budget, but then we just stack one hundred billion. So if you quick on top of that and it's off book. Now if we said the reason we're funding ukrainians, does that improves the national defensive united states, why would that just come out of the defense budget?

If you force people to make actual choices, actual decisions, and they could say, okay, we could spend one hundred billion on ukraine, or we could spend one hundred billion on stockpiling tanks or f thirty five or whatever for the united states, now you actually force some prioritization decisions. But because the wars are always off book, there is additive. You just tack him on. And we do that with in afghanistan, we do that in, we spent something like eight trillion dollars, and that was just added the national debt.

Yeah, we can't afford this anymore. It's becoming clear to everybody that there has to be some accountability and cheap, I guess, is seems like there's a couple of unpopular stances to take when you're running for office. One of them is social security retirement in age as we saw other countries like france, where people are arguing over sixty two, sixty four years old, whatever is yeah.

And so these entitlements, job requirements, if you want to get unemployment and then of course, defense spending, you seem unamerican. If you don't want to take care of old people, you seem unamerican. And you know, week, if you don't want to support the government, is there a path towards celebrating an administrator as C.

E. O, an executive who tells honest truth to the american people, which is, hey, we we've been on a binge. We've been going on vacation, nobodies looking at the the bills and and we need to have a station.

We need to cut cost. We need some austerity. Here, is there a path for somebody wrong? essential. Chris cristi, R. F, K, whoever is to win over the american public, to win over moderates with an austerity and they baLance the budget message. Or is that just too unpopular to even bring that up?

I just think that you guys don't psychologically understand how to get what you want. I think the best way to get what you want, which I would want to, which is a healthy economy where there's accountability for spending, is to not look at expenses. And all of this talk is always about expenses, but to look at revenue and limit revenue more drastically.

And I think the best way to limit revenue dramatically at the federal and state level is to just minimize taxation as much as possible. And I think that is something that democrats and republicans have a hard time fighting. Nobody wants to raise their hand and say, I want new taxes.

Nobody says that, right? And I think that if you attach that to some sort of spending guidelines, like what David says with a sensible foreign policy, you just end up spending a lot less. You want to fight a foreign war.

Okay, great. Well, you know what is part of the existing budget? Let's go figure out why we want to do IT.

We want to have more accountability in defence spending. okay. Well, look, the defense budget is a half of what I used to be because we just have half the revenue.

I think that if you start to go and talk about austerity and cutting social security and health care benefits, it's literally a nonstarter. People close their eyes, they plug their ears, and you get nowhere. Now separately, I think the step, even before you look at taxation so minished government revenue, is to figure out how to refine that.

So if you are a whole owner and you got a mortgage in the eighties, you are paying twelve, fourteen, fifteen, sixteen percent. If when rates kept going down, you were the people around, you didn't have the common sense to refine and that that is negligence. Similarly, we're in a position today to refinance our debt wall and push out these maturities past one hundred plus years.

We are the only country that is a viable, stable economy that looks like you can still continue to thrive, ate scale, take advantage of that. You lose nothing by giving us the opportunity, generating some hundred year debt, refinancing a bunch of this short term stuff. And then second, inflation helps us and IT helps us because IT allows us to inflict the value of these dollars that allows us to pay off for short term maturity.

So these are two practical, simple things that are uncontroversial that should happen today. And then separately, I think you need to look at minimizing revenue and then you can cut expenses. But if you flip them around, i'm just telling you it's not like I want any of this to happen, but i'm telling you nothing will change and you guys will still be crying wolf in five years. It'll still be the same. We'll just be a different that to GDP number .

that gives you anxiety.

Speaking of anxiety, ty, free about your response. I don't agree. I think we need to baLance the budget. And I think that if .

financing pushing out hundred years, no, no, I don't .

reducing revenue solves the problem. I think that and by the way, one of the problems with the democracy to mop is that you speak about IT as if everyone benefit from attacks cut. Generally, there is some disproportionate benefit to a tax cut, and that's why it's less likely to happen because the majority will benefit by keeping taxes high for a minority, whether that some corporate minority or whether it's some wealthy individual minority.

And that's why I think the opposite is more likely to happen, which is worth more likely to see taxes go up in order to bridge the gap, to continue to fund programs that everyone wants. Everyone wants an am. They don't want an or another result, but cannot continue to seek revenue because there are other places to get revenue that don't affect me, meaning IT doesn't affect the majority.

And I don't mean me personally, i'm just speaking about a voter. And a voter would say if there is a way to tax other people for me, get the things I want, they will vote yes for that. And that's ultimately what the system ends up finding. And I think that's what's more likely to end up happening. That's .

yeah, look, I mean, I agree with part of both what you're saying, which is I agree with you ever that we need to bounce the budget. No excuse for running peacetime deficits this large. We're really going to regret this one day.

On the other hand, I agree with to moths that if you just try to solve the prom by raising taxes, the politicians will just keep spending. I mean, you have to start with the beast, I think in order to control IT. But at least I spend of you I think for a .

long time you you're going to .

not on that point. Here's a thing. You cannot solve this problem by raising up to seventy percent tax rates like we are in the nine hundred and seventies.

And I can prove IT pull this chart. France is a good example of this year. So what you see in this chart here is this is federal sea super cent of GDP.

What I see when I I ball this is if you were to put a regression line on that, that a bit around seventeen percent, and with a plus reminds of two percent, and the times when you get up to nine percent are a little bit close to twenty percent, or when we have great economic conditions or money printing. So the clinton era from was in nine, two to two thousand was an economic boom, and we got up to almost twenty percent. But we've never ever been able to get more than twenty percent of GDP and federal taxes seats. Even during the nine hundred seventies, when the top marginal rate was seventy percent.

What have you? Why is that the people's .

cal doing? Economic activity, investment and economy not solve.

and you can only .

get so much blood from a stone. And the in reality is, is that when you try to tax rich people on a confiscate tory way, they spend a lot more on lawyers and accountants to figure out how to structure their income and away that yeah are they me?

Where are they tap out? You know like if you're are paying fifty, sixty percent taxes, like what's the incentive to go to work? And if you're sitting on a big nut, you think i'll i'll just enjoy my life a little bit more because each incremental dollar, fifty, sixty percent going to taxes and then I have to pay my team and you just arted to get a dismission return.

I I asked a question on twitter, you know, because we all talked in our group chat about the the concept, the passing a baLanced budget amendment, which would be an amendment to the U. S.

Constitution that says, you know, the congress has an observation and the the executive french has an obligation to generate A A budget surplus, you know every every year and you can have a baLanced gentleman that provide certain exemptions to this, like in in a euro of a of war, for example, where congress declared an emergency or declares a war. And in those cases, theoretically, like if there's some sort of emergency that we have to address and over fund, you can not resolve to this. But man, I said, might you know we've we've .

been a war for something like to out of every three years since the cold war ended.

how many those war sacks were voted on by congress as the other issue?

Well, what happened is we did the authorization for the use of force, I think goes all the way back to was like two thousand one. Where basically we declare a war on terrorism in response to nine eleven, and they use that authorization to go to afghanistan, which I think was understandable. Then they use that same one to go to iraq, and they use IT to go to syria.

And only recently, only a few months ago, they actually repeal that use of force as a way to keep authorizing new war. So they really should go back to congress for every new war. But the problem is, you know, fever. I agree with you that we need have a bounce budget amendment, but is onna contain a caveat to exception for war and we're just not at war all the time now?

sure. But I think that there's ways to create some mechanism at forces. That issue to actually come from the center is supposed to being what you're arguing, which is hay is always on the backburner, therefore, it's always bubbling over. And maybe you drafted in that way. But what was surprising to me was just the incredible negative sentiment and I got from so many people who are so deep have this deeply health belief that the only way to support growth in our economies through federal spending, and that that has become the driver, that has become the handy cap of our country, that has become the handicap of our economy, IT has become a handicap of our people.

And that's a reside a handicap because that means that we now have this instead of having an incentive to drive productivity through private commercial and economic activity, through innovation, through productivity gains, through business building, is now dependent on what we have now identified is a highly unaccountable system of spending. And the unaccountable system of spending and putting a lot of dollars into the pockets of cronies and the pockets, uh, folks aren't actually driving job growth on driving productivity. There are certainly programs that work.

But overall, there's no level or degree of accountability that asked the question, did that program work? Did we spend a dollar and get more than a dollar back for what we spent? There's no assessment of that. Whether it's a war or whether it's defense spending is always some kind of intellectual argument.

That's that's true. I don't think that you I think the mb releases report after report saying that all of the stuff sucks and doesn't do anything, just nobody actions.

I think what you're saying is .

an accurate this is my point of thing, is important to get the fact right. What you are saying is not true. They do do in accounting that accounting sucks IT shows that there's sons of waste.

Nothing changes. So now what do you want to do, David, is the real question. What do you want to do knowing .

that we shouldn't spend on things that don't have a positive return? This is my point. That's why we're now in this very difficult situation. That's not happening now. What would you like to do?

Well, the reason doesn't happen is because the way that politics decides things has .

nothing do with the merits of IT has to do a special I agree.

the duc tion system is like firmly betrayed the country because we just keep teaching people that somehow the governments can solve all these problems, when really it's is the product of special interest lobbying for things. And that's why we perpetrate these programs that don't work.

I think the best way to think about government spending is that in every dollar, there's probably fifteen or twenty cents that actually does some good. There's probably fifteen to twenty cents that's like on the margins break even and then the rest of IT, which is half of IT, is wasted. That's probably rough, accurate, right?

You get things like tarp, which turned out to be pretty decent program. There were things like the D O E loans that you know got things like tesla into the marketplace, right? There is things like the I R right today that i'll deliver ourselves and create a piece dividend because we won't need to fight over resources and oil from other countries.

But the problem is that, that represents a minority of the dollars. okay. Now that we know that that's true and we've known that that's true for decades, I guess again, i'm just asking a practical question, what do you guys want to do now play the ball where IT lies? What do we do?

There are a couple things you can do. First of all, one of the point i'd make is I think you you're probably right in your assessment that fifty cents that what you're calling wasted, that money doesn't up somewhere IT ends up in someone's pockets, probably the pockets of the shareholders .

of some contractor .

or the doors of individual the employee class. Well, there's also there's also individuals that, that benefit. But functionally, what's going on is, is a system of worth transfer, and that's not necessarily bad.

The question is, is the transfer of wealth happening to the right groups that we intend to support with the social programs? Or is IT not? And I think saxes point, which I think we can all probably a line on, means it's not and I think that's probably a set of standards for accountability that .

we should probably try to. But where does where does that money end up? IT ends up buying homes, feeding people they're going to restaurants you're buying like a fleet of mega ots in america. Well, I I guess what i'm asking is where where even that leakage of fifty percent doesn't not just send up in the Normal economy supporting individuals and is what but that's what i'm saying.

That is a wealth .

transfer is a system of what world ends up in people's pockets and that that system ultimately benefits a lot of people in need and a lot of people that we as a society, intend to .

support here in the U. S. To poor .

people.

That's how much corporate welfare I can come on. It's not all just going to needy people. It's going to .

special interest on some level. We can accept the inefficiency of government. I like your idea of containing how much of canvas they have to paint with and how how how much revenue they bring in.

And I think what we have to accept is that the reason this country gets bailed out is because we have tremendous 的 entrepreneurs， an amazing capital allocation system of very fluid market for building the corporations. And capitalism is so vibrating here. But no matter what happens, we always seem to make the next google, uber, NVIDIA, whatever is R, B N B.

And I can tell you, you know, spending a lot time traveling, meeting with people in japan, in U A E eta, they're all looking at the massive entrepreneur drive that we have in the united states to build global companies and how we do IT over and over and over again. And the only countries that seem to be able to do this at scale, you know, maybe sweden and some of the nurses, obviously china, but other countries have not figured out how to build global corporations. And and that is what bells us out every time is entrepreneurs check out check out .

the deficits getting so big that we can't bail out that way. Think about IT. We have two trillion in deficit every year. That is two google yeah to .

apply in .

apple every year. We we have to address IT.

But the point is that how we have built ourselves out historically is massive capital allocation and entrepreneurship.

I want to remind you guys what happened at the end of the seventies. We had all these inflationary problems. We had all these taxation problems, where people thought all of a sudden seventy percent tax rates were going to solve the problem.

What you guys talked about, and instead the exact opposite thing happened, which was the guy I got elected, ron drake. And I just want to remind you what the electoral college was between him and chemi Carter, 4， eighty nine to forty nine, like a bigger just show lacking I don't think we've seen a modern U. S. Politics to the guy that basically said with this, we're gonna tune IT all down and we're onna cut revenues. So I do think that people have an appetite for them and .

I yeah the that to G D P. And one hundred and eight was only thirty percent. So we just have .

a lot less time to .

let me say actually agree with what you're saying in this sense. okay. If you look at my simple chart of federal tax reseats as percent of GDP, okay, the highest ever been in the history, the united states is nineteen point seven, five percent in two thousand.

We had the dot com bubble, okay, that's I ever been. And we had periods of high tax rates and low tax rates, and never went about twenty percent. So the simple, Matthew, is you do a forecast of what do you think G P.

S. Can be over the next year? You get independent economists to do IT.

And you say the federal government can spend more than twenty percent of GDP because we've never extracted that. We've never figured out a way to exit. perfect. More than twenty thousand. Logic is perfect of the economy.

The logic is perfect. Your aggression is so it's it's very important because what your aggression, we actually I spending a lot of energy fighting over two to three hundred basis points at any given time.

right? yeah. And what we should be focusing on is more important.

Why doing that? Why we spending so much time getting our panny in a bunch over two to three?

And we need to stop wars, increase our education system, stop the wars, by the way, and inspire people to start companies and make IT easy to start companies.

The B I L, the I R A in the chip, sep, all three, the biggest components, and all three bills, this is by signature legislation, is creating energy independence for america, which will have an enormous piece evidence. You will not fight these stupid, endless wars.

Every single one of them goes back. Well, with the exception .

is always about resources. Never been about resources in modern history. But.

and now it's going to be chips. Is the modern resources in video shares jump ed as much as thirty percent after reporting huge revenue guide and due to A I demand q on revenue seven point to bail up nineteen percent quarter over quarter not year over year.

Quality of a quarter revenue be analysese ments by more than six hundred million for people don't know in video is working on GPU as opposed to CPU the graphic processing units that are being leveraged in A I and there is a massive cycle going on. There is a wine out the door to buy these. When you see twitter going into A I facebook, google and obviously microsoft, all the cloud infrastructure is moving from C P U 和 G P U。 Yes riber.

Well, I mean, I was talking with the C E O and c fo of a major data that a read, and they shared with me that they're seeing more demand in the last couple of uh, months than they've seen in the prior ten years. Almost all of the data center a build up demand that will build data centers for soft companies, for other companies. Is coming from you know G P U rax.

And the G P U rax are much more energy intensive, more costly. But it's a pretty, uh, kind of significant shift under way that businesses that historically didn't even Operate their own data centers are now building up their own data centres, have their own training systems to have their own infrastructure to be able to run A I applications and tools. So it's it's a pretty significant shift. Other way of all of the growth that in video is projecting .

and highlighted in the .

earnings report yesterday is coming from their their data center line of products. And it's a pretty significant. I mean, I don't know people have said they have never seen a beat like this or never seen an a guidance update like this of the scale where I think the the street was looking for maybe a seven billion doar guide and on revenue for this. And they make him out and said they're going to guide to eleven next quarter, which is just the same for a nine day outlook.

I was told for one of their major customers that they had to bag like he is in beg for thousands of GPS. And like the lobbying effort, he said there's a line around the corner to five days and you you need only use ChatGPT or any stable diffusion a and you see how long IT takes to do a general AI to use these products.

It's like we're back to dialog modem act, where literally were waiting for a computer to give us an answer once the last time that happened that we had to sit there and wait for IT to do its job. And and I think this is the great renewal for america, another amazing american companies. Only three decades old. It's best years, best decades or in front of IT. Obviously, this is going to be a massive boon for yeah .

not only .

in video before amErica or S I say america, video is basically joined .

the trillion dollar club now in terms of market cap companies is really amazing. I mean, i'm kind of kick him myself because this was the easy by ever ChatGPT launched on november thirty. S we all saw that, that immediately usher in a whole new area and sink valley, there's a ton of VC funding that poured into A I startups, the need to train models and those models need to use GPU. So we all saw this coming. And so let me you .

let me ask you a question. So you say that you kick yourself, obviously, the general statement that you know A I is coming and in video is going to be a beneficiary or in videos products going to be and make sense. But when you look at the valuation of the business, they are currently trading at seventy times the next twelve month beta. So how do you think about valuation even at a trillion dollar market cap, at a trillion dollar market treating at seventy times next to them? But you know this seems like they're double in revenue six months though.

Do there are double .

revenue seven years here?

How high does a go? Because at a trillion dollars, what's the right eba level for a business to be worth a trillion? Llys is a hundred, right? Is that one hundred? But I mean, what's the number? And then the question is, if it's one hundred billion, how many years has to take them to grow into that? And you know, are you really paying the right Price? You paying a it's it's a moment of service and will be .

determined if they have competition. So is is your competition for this company from out? You'd think there's a competitor that .

will emerge that, you know, I mean, it's important to understand what A G, P, U is. Maybe so sure intel had the one of the place for the first forty years of compute because IT turned out that most of the things that we use IT for excel, microsoft, word, a browser, Operated well on A C P U, which essentially think about IT, is like a factory that takes in the first order, then puts IT up first in, first up.

And the great thing about G P U is that I can take multiple streams of work at the same time and work on the the same time, right? So it's very parallel and has a level parallel that makes me very well suited for A I applications. I think the thing to keep in mind is that IT is a by product of a GPU that tries to also do other things.

And so as a result of that, you are now seeing a lot of companies building their own silicon. And most importantly, all the big tech companies now have some pretty well evolve efforts underway. So a lot of these companies have figured out how to do customers that can do this massively processing.

And what you're now seeing is chips that are designed against specific models that are optimize for them. The other thing that you also seeing is that some people are saying, well, you know what? For these massive models, actually, you should just run IT all in memory. And so you're having folks that are doing IT in in massive rates of F, P, G, A that was microsoft first attempted all of this.

So what is the point of me telling you this? I think that again, we talked about this last week, the biggest cheerleaders of this first point of value creation has really been wall street in family offices that wanted a front run where the value creation was gona initially go. And they've been right, which is around chips.

But there is a tweet and make I posted that maybe you can throw up here that shows that if you compare this to the mobile internet, there's always this face approach in terms of value equation where russia, say, initially in a new market mobile a decade ago, in A I today, the first dollar of profits tends to go to the chip companies. That makes a lot of sense, right? Because they are the ones that are in the bowls of making the elemental capabilities possible.

And then you transition that value. And what facebooks says, as people realize he hold on, the profit dollars are not going to crew there, because, again, this beautiful principle of capitalism is that you can only over earn for a certain amount of time, because then competitors emerge and say, hold on, I want to steal those profit dollars from you and take them for myself so margins can press right, so in the end, and videos gains today will be then spread across and video. Facebook will have their own chip.

Amazon will have their own chip, google already does. Pa will have their own chip. All the memory companies will be in this space, right? Then the profits gets smear, their multiples compress. Then what is the value grow to the device companies in the mobile internet here, I think we still have to debate what is the device company in the world of A I.

But the most important thing I think to remember is that where the real value gets a rude IT is five, six, seven years later when the software services company show up and create a huge mode. And those in the google, in the facebook and the apples of the world. And so it's a really dynamic moment.

I think it's wonderful. Foreign videos is an amazing story for Johnson, who's been really at this game for a very long time. By the way, there's Johnson has a law of the zone that is a sort of companion to moscow called flying slaw named after himself, which you can read about, which is talks about the variability of the computer capabilities and G, P, S, vers C, P U.

So if you want to know that, he should get some create for that. But I think it's great. I think we're in the one apple is .

also making their own gp s that's wait when you here are the m two that has GPU in IT.

So you're absolutely for anyone. So we're going to have a few quarters for sure of this hype. And then the smart money will probably figure out where the next lily pat is, and then they'll go to the next.

Beautiful, beautiful. Any other thoughts of free burger wrapped up on that? I wanted to show this A I demo from adobe photoshop. You know, every week or so we see something .

that's insistance incredible.

And this one was, we shared in the group chat.

but for those counts.

keep this out now. yeah. So what we see here, if you're listening, is, you know taking a photoshop, creating an area and then instead of like cutting in places, pasting finding IT are putting in a tax prop and saying, oh, put um expand the and make this White screen or let me grab this deer out of a forest and then put IT on a wet ali at night and then you let me highlight this walls and put a sign and put a red arrow sign and IT just generates that and it's doing this. They made specific note when they launched this that all of this is done with stock photography that had the complete license to so they can monetize this without getting sued like microsoft is currently being sued. And microsoft actually in addition to the .

github lawsuit, its turns .

out twitter sent A A letter over two microsoft as well. So incredible demo the producers here at all in as our production team grows with a brian made a little video here. Here's chm off in before the europeana is that's .

that's time ford.

yeah that's time for this.

Is when that here?

Look at that hair.

tired? No, I night, that night. My god, I play poker. literally. I walked into that to C, N, B, C, squad deck .

and wait.

no tie, but he's .

wearing a tie. And time, he said, he said jama tried this without the, without ties. I look at.

oh, now you were time to time. Ford, great. what? A F.

T. Ford, twice in my life. I can stories.

okay. D on a second, also where the general Y, I add, make a yellow sweater is the prompt. Er, let's see if he goes to bert from ernie to bert, there is tree lock and bert, as we call .

him .

in the .

poker .

yeah yeah.

The demo to change .

his hair, can we? Can we have the hair be less in sink, less on and and more give I understand .

why they call you as easy and sorry, I think you had the here go on that the hair.

yeah, it's a lot of lift.

And what is that .

is a party? What is that is a party this six, eight years ago is, what are you using clay or party?

What it's like a stiff it's like a stiff hair while got IT.

Yeah.

i've come such a long way since much more.

much more styles. I mean, look at sex is crazy here as as we probably didn't call to open.

My thought on the adobe thing for its worth is like, I mean, do they want a molex on this twenty billion dollars fig the thing?

Or third.

do they get to see the ongoing. Revenues that fig is generating and you can see sure they're the making to lan icon.

all kinds of stuff. It's a different product though.

I mean, the A I stuff certainly has had an impact. But I mean, so much of the benefit of fig mas, it's web base, it's collaborative. It's like people kind of use IT online to make stuff together different than the other tools that they offer today.

So you don't think IT from september red .

now like nothing changes.

They should just close this thing at twenty billion inner.

You think that they should .

pay a billion break IT up and then redo the deal at ten, and then I cost what they say night. Remember.

not all break up. These mean that you can break up for any reason. So there's only this limited out on what you can pay a break up fee to get out of, one of which could be antrobus to regulatory, but otherwise you may be forced to close in court if you don't have a valid reason for terminating the day. There only hope is to get lean a up.

yes.

Makes them is your argument .

more that they bought fig ma top of market pricing, which no longer makes sense? Or is your argument that they're innovating so well, they don't need A I think .

it's a little bit of both, but it's it's more that I think this generator, the eyes stuff, allows you to refresh. I tweet this so that maybe you can build up there. But I think the first thing thing is that your feature side can catch up pretty quickly.

So even if you set out a team and I just copy exactly what fig my has with a copilot enabling fifty engineers that's like five hundred engineers cranking on something, I would be surprised if they couldn't just replicate the product. And then that's the first thing. Then the second thing is I think that you've seen V C funding basically crawled to a halt.

And so the question there is how many of those companies are just gonna p spending because are just not going exist? And then the third thing is if a sort of hash tio stern people are gonna, look at everything they're spending money on and try to be really disciplined about IT, if you roll all those things together, sacks, my thought is maybe the deal still make sense, but does that make sense at twenty billion? And does IT then just create a whole sweet of shared or lawsuits to the fact that are just going to say these three things and regenerate the notion that .

the curiosity I had well, so we here let's talk a little bit about the state of silicon valley sacks we were talking online after the show last week.

You've a slowdown investment .

at your firm craft. You're being thoughtful. You're working on the existing portfolio. How would you describe your activity so far in the first half of twenty twenty three as a firm if if you're so willing to share that might take .

on what's happening is looking belley right now. Our tech more generally is as the tail of two cities is the best of time for A I startups. In the worst of time else, the A I startups, as lot interesting things happening there and moneys being pushed up them by VC.

It's very frothy, arguably bubble. But then at the same time, if you are A P A I company, maybe the one that raised a lot of money to big valuation and twenty twenty one, it's a pretty tough time. I don't know of any start up, especially like later, say sharp PS who are hitting their numbers.

Everyone is we forecasting down, everyone's missing. I think that speaks to the larger economy is not doing that well. I think the economist year for now may say that the recession had already begun.

Certain ly feels like that's .

what drugs at the same conference. And I think that starts are absolutely seeing that in their sales right now. Sales are slipping.

It's taking long. Buyers are sharing their pencils. It's a really tough environment. I think for software startups that are actually trying to make sales A I starts are a little Better example for that because people are still investing based on the dream, not based on the metrics. And I would say that we're very interested in A I and we're going to make some investments, but we also like to invest based on matrix, not just on a dream. And so we're being somewhat cautious about how we approach IT.

So you make a small seat beat and somebody who has a dream, if I can translate here. But if you to make a big R T, A series series, be going to see some numbers on the board, you product .

putting IT because I think the standards change at each around and at the six stage, you can absolutely just make a bet based on the dream or just based on a founder, great founder, going after the I space idea, still a little bit to be flushed out. You can make that .

bt by five hundred seven.

even even like three million will do as a big ground. But but then when you get to series a and you want to write a ten, twelve, fifty million dollar check, we can want to see some revenue. yeah. And certainly by the time we get the series, be your service series, see we want to see like all the standard metrics, we want to see no dollar attention expansion, all that kind of stuff.

Yeah, it's it's really hard for the later stage startups because they raised and this is the lesson if you're raising at three, four, five hundred million sets quick, remember on here, you're not you have to build into that valuation. And let's face that, that valuation a was never realistic. He was over Priced.

And then be you ve got to headwinds and your customers are saying, oh, you are forty thousand and a year for the service product will give you twelve and what position are you in to turn down the twelve? You've got to take the twelve because you you got three competitors who are gonna ll up and take twelve. So IT, it's hard.

Can I give you an update? But I mentioned there is a start of my portfolio, actually my Angel portfolio, yes, that pay to play around the cram down, and I think is absolutely tragic because of what I learned, which is the founders got crammed down. Two, because a year ago, they brought in a professions CEO.

And I think as a result of this, they are probably you going to get nothing for ten years of work or as if they had just cut house. And you know that the company has thirty two million of A R R. So imagine if they cut their objects to a million a month, they could run twenty million dollars of ebadi pivot to the private equity model.

So that company for one hundred and fifty million, half what are gone to pay out of the investors in the other half what have gone. A lot of what had gone to the common, they play what to make, ten million dollars each. And I going to get zero because they burn too much money, didn't want to cut costs.

They bought into the dream of bringing the fresh onal. CEO is going to read a great growth. Never done out, never does. And so it's like so frustrated because I like feel so bad for these founders. I wish they had called me a year ago and I would have been one of the guys counting on the table just .

cut cost and then control your dest.

Listen, yes. And here's the thing is if you're only growing ten, fifteen and twenty percent, even fifty percent a year, you're not a VC backed able start up. You're a private equity play.

So you gotta give in to that model of making your business work as a casual positive business. That's how you're in again exit. And you know if you're going one hundred percent plus here, you can continue to be VC back. So is so important for founder to understand whether they're even eligible for venture capable anymore. And if there are not, you have to make a different kind of model work if you want to see .

your return yeah and when this happens, a cramdown round. Those founders, if they want a refresh, they have to prove their worth. They're not gonna get a refresh to keep the relationship going. This is thirty million dollars revenue. They don't need the founders anymore.

Look, these guys working for ten years. So even if they got to refresh that, put in four more years of work. And the other thing is this scrap down around, I think, was way too big. There is twenty five million with a three x lick breath press.

seventy five million off the top.

Off the top they got .

to take vig is triple.

yeah.

Oh my god, who this is where board governance is so important. Like, I mean, who is on the board of .

these companies, which on the .

board of companies, these are people to build a company, and they may be educated, or they may have been an exact at a company. And then some V, C, who was fevers, ly raising funds, just hired some dope put among the board of this company. And then just the stupidity compounds .

and trickles down, down, ding stupidity.

This is the beginning of the beginning. All of these people who have zero fuck so many companies up IT is the beginning of the beginning .

is not just the the bad board members. It's the view for so many years that who you put on your board didn't matter. Remember, there is all these VC who had a model where is like what we don't take a board seat and they were selling that to founders as a positive, as a feature, as a feature, not a bug.

And the reality is for a lot of VC, actually not being on the board probably is the best can offer. But that model works. That model works when everything is up into the right, where like this model of boards don't matter.

governance doesn't matter.

That is a model in a boom where everything just keep going up to the right when you tough time, that is when you need a board member who's seen this movie before. Who knows what I crammed down round is, who knows what's gna happen to you a year hands, when you get, you know.

screw into taking a thread where you.

a great hair .

pilot step you that right freeburg. You are always cindered about your own journey. You've had huge wins, climate that com for a Billy raising funds. But you know, sometimes things don't work out. Do what you're take on some of these hard lessons of great ideas, you know span up during this really hard market.

I mean, I think just to echo the point you guys are making, in the last fifteen years, we've been in a college structurally inflated environment because of the zero interest rate policy since the O A. Financial crisis. And everything's been up into the right or so much.

It's been so easy to kind of inflated things, fill apart our balloons and go up into the right. And unfortunately, most folks who are working in the investor community that are sitting on boards were around for the dot com crash, the lifetime this happened. And I think, you know just that kind of make your point White so chAllenging, I think, right now to figure out a way out there are there is a lot of failure going on in in silicon valley right now.

You know, sex, you talk a little bit about having pads for exit and options for SaaS companies, but there are many sectors and start a plant that don't have those sorts of options in biotech, in sin bio, in fin tech, in direct consumer e commerce. There's a lot of markets that a lot of types of businesses that feel like there isn't a great way out. And it's having a deep psychological poll on entrepreneur s, on founders, on C E O.

And everyone is experiencing some degree of failure in this environment. There are very few folks who aren't feeling the acute pressure and the accute pin. You know I heard some pretty uh horrific stories this week from a friend of mine and someone who ended up in the hospital because of the pressure he was under.

And it's really trying and you know even within our friend group， I mean not not our direct friend group with within our broader community of investor friends, there are very few people who aren't feeling this extraordinary pressure that we've got a book that is declining and value and they don't know how to get out of the whole. And you know that pressure is like, is generates deep questions about one's ability and generates deep existential thought, thought for entrepreneurs and investors about what the hell I good at. And no one's really talking about this out loud.

But IT is a happening across the valley. We all have these thoughts. We all have these dialogues as the failure begins to set in in the slow motion train right of a market that we've all been talking about four weeks and months.

How do you deal with that? Look, I mean, I just think that number one is worth technology dgm, and it's worth having the conversation that no one is alone going through this pain. IT is not a one off that these companies are fAiling.

IT is that we are all dealing with failure right now, and we are all trying to figure out what is the best path forward. And IT is a kind of thing that you just have to work your way through and you have to persist through this pain. But this existential question of, am I good enough? Do I have the skill said I thought I had, am I just an idiot? Did I blow IT up? Emperor has no cloth.

All the kind of interfere and turmoil that everyone dealing with. You're not alone going through IT. A lot of entrepreneurs, a lot of investors are in the exact same place now with respect going forward, I think having integrity with respect to how you handle these situations and having thought fulness about you know your reputation because this is not a one and done environment here in silicon valley.

Failure is part of the process. And how you deal your deal, deal with people, deal with investor, is, deal with entrepreneurs, deal with each other, deal your employees during these difficult time, says a lot about your character in your ability that when you do this, the next time, I will set you up for success. And you know, as any great athlete will tell you, you build muscle during the times that you're fAiling and then you're ready to go and execute the next time around. So, you know, let's save IT for the next quarter, but let's play well as best we can right now through this quarter to off.

Clearly, you want to jump in here. What are your thoughts on separating your identity from your startup, from your work and having a more baLanced view of yourself so that when things go wrong, maybe you're not as devastate you don't wind up in a hospital .

bed when things go wrong? They go wrong in bunches, just like when things go right, they tend to go right in bunches. I called freeburg class week, and I was telling a story about two or three of my businesses just all just pounding, eating dirt.

And what I said to him was and then we have a neutral investment that's doing pretty well. And I needed to use the one that was doing well to make myself feel Better about the three, seven eating dirt. And I said, doing something, the effect of it's just like nothing is working.

I feel like literally nothing is working. And a tough place to be the only thing that you can do in those moments. I just realize IT would be so much worse to just be on the sidelines. Oh.

I like.

And I think that's what you can do. Then you go at hang out with your friends, go hang out your family, kiss your wife, have as good of a time as possible outside the context of work. And then you just start the ground again. But yeah, we are in a moment where in most companies there is something pretty wrong. It's either you're .

burn product, attract customers, team can stand with table. And by the way, that's always .

the problem. But IT tends to be baLanced by a few things in your portfolio that are always going well so that as an investor, you can maintain some acquaint mity through the whole process. But freak is right when there aren't enough of these positives and there's just Operative terribles.

You're just like, wow, this whole portfolio is IT all about to fail. And then I get a massive wave of impostor syndrome of like, what am I doing here and then have to recognize holy should this is my twenty fourth year, take a deep breath. And it's great that is that that exhilarating, where I think it's back to two thousand. I just emigrated here.

The conversation to mother N. I has beautiful talking about, like a string of difficult things are dealing with, you know, a couple of weeks ago, we announce that we return all the money to learn that all our, uh, customers, a cana, which was this molecular beverage prester company, had been working on for a few years. I cloud north thirty million dollars of our capital into building this business.

We have two term sheet last year, both of which vapor ized. As the markets that degraded IT was really a brutal experience for me, and these were very high valuations. And we were we needed funding to get the production linstead up to manufacturer device.

So we were that close. And as the the market oneself, three revenue hardware companies became responsible. And despite our reputations and a great working product and the product and a manufacturing ready prototype, we couldn't get IT on.

IT was a really kind of brutal experience to go through the nose even after you've had a lot of success in your life. Believe or not, you've still a lot of free and nose and you get a lot of, I don't believe you. And then to just have to get to a point with this one was really difficult.

And then, you know, been another kind of frustrating experiences of late. And then, you know, you can have a call one day h with another investment and you're like, oh my god, this thing could be a home run and that just comes out of nowhere. And you know, as long as we kind of stay in IT as an investor and you keep, you know, as a builder and you kind of keep building, you don't know when that good knock on the door is gna come.

You you gotta a stay in the game.

You got still building a business. And one day you just nail a sale that you just want expecting a partnership or an ema and bound or something that happens that you weren't expecting. IT pays for all the pain and all the laws and all the turmoil and all the downside.

I always used to tell people forever, you know, four days i'd be fAiling. I have one day of success, but that one day of success will get me slightly ahead of where I was at start of the week. But eighty percent of IT was fAiling. I mean, right now, it's like nineteen days of failure in one day of success. But that one day success, the goal, if you have a couple of those puntuated moments that are big enough that make up all the stuff, if you if you just keep grinding and if you just keep riding as an entrepreneur, you keep riding as an investor and stay .

in the game living with the power you're describing, living with the parallel.

There's a very related able poker analogy in this. There's a there's a guy that makes poker content. His name is john athan little.

He's great. He'll he's wonderful. And been thinking about hoping into one tournon the W S O P this year. It's one of the big by tournes.

I am like let me just take a little tournament refresher and I was just looking for any content and I found his and he had this beautiful slide, which he said, if you are a midd level poker player, you should expect the final table every one in a hundred tournament, roughly. And I thought about that for second. I was like, that's a one percent success rate.

Now if that is your ninety nine tournament, you have to be pretty resilient to go through ninety eight losses for you don't cash, you don't make the money and you're just putting money out your deep in A J curve and you're like, this is ever gona work out for me. And so it's a really, really good reminder that IT is the ground. Yeah and I thought that was really interesting.

Had a single or double, I guess, with calling. Maybe you could talk a little bit about that experience and what decision you made there. We were obviously investors. So where did but even or your candid thought, somebody decided to sell yeah.

we put together a great team and then they built an amazing product I think is by far the best sort of social audio product. And then actually they add a video to IT as well and podcasting features. So it's kind of the synthesis of video and audio podcasting with social audio.

We got acquired by rumble. It's sort of like a base hit type acquisition. It's it's a small deal, relatively speaking, but the team wanted to do IT.

The main reason is because we got to hundreds of thousands of users. But in the consumer space, you really need to get to millions. And Frankly, tens of millions is what IT takes, have a successful consumer product.

Rumble does have tens of millions of of users. So the team wanted to find a home, and there's a lot of energy with rumble. Both companies have a mission that around free speech rumble, sort of the call free speech alternative to youtube.

So platform and what calling will do is give rumble seo capability. So that will be very interesting. Ce father creator smell to create content in call and and and then posted in rumble.

So it's not you know a huge outcome for anyone, but sort of a push for the investors depending on your rumble. Stock is up. But look, it's just you can build a really great product in a great team.

But unless you hit that lighting in a bottle of the distribution, you know you won't get to the next level. So I am happy about the deal. I think the teams happy about the deal and it's a good outcome for for everybody involved. But it's not you know it's not a home run is just it's more of a bashed and that's what most .

see things are yeah getting used to a high failure rate and living inside the power law where one investment out of third or forty or fifty results in ninety percent of your funds returns for you know that specific fund or so, or maybe two winds represent ninety five percent. That's a hard thing for the human brain to handle, as is the jack of a chaff.

You know, points correctly when you invest for two, three years, and then you watch that all those things go down in value for two or three years or the value i'm short of the portfolio down for you or three years before I actually rebounds and goes back up. I remember, man, I had a run where everything I touched turned to gold and then maho hit ten million in revenue and then one pound update and IT just goes up and smoke and you're like, what what has happened? I I saw weblogs eighteen months after starting IT.

I you know had the silicon I report. I just uber investment. Everything I touched went .

to the most working here yeah.

And then it's just a very frustrating experience where you can make something work and you know, like I should be able to make this work. Why is IT working?

There's a very heavy blanket of humility setting over a silicon value right now. And I think all of us who have had screens of successes and repeat successes, and you know, things that we touch of work and we do all the same things and we do the right things and we do in the same way, in the right way, and IT doesn't work. And then IT doesn't work again.

And then IT doesn't work again. IT creates a very different psyche whether you're entrepreneur building a business or investor investing in businesses that what used to be the case isn't the case anymore as the types have shifted. It's uh it's a daunting chAllenge to work your way psychologically through this moment.

But you know, progress doesn't change. Innovation is gonna stop, technology is not going to keep shifting forward. And uh, the opportunities to continue to build an innovate are not going away. So I for one deeply optimistic and excited about what the future holds. But man, you've tt a put your freak game face .

on right now to get through that. Well, yeah, is one other exhaustions variable here, which is I don't think any of us realized how much our sentiment was affected by one guy's decision at the fed. Like what interests .

are going to because yeah because .

you know what, when there's a lot of money in the system, everyone feels great and all the portfolios look great. And when the money is being .

sucked out of the spying.

like when the money has been sucked out of the system.

everyone's results like terrible. Yeah it's it's like before a tuna.

I the big wave gets put out.

S getting the .

money has been sucked out of the system, like the tie before sunni and the tsunami is give me all the failures and bank of seas. But what I would say is just in the same way that things worn as good as they appeared to be during the asset bubble, there are probably not as big as they appear to be. Now, however, you have to give yourself time to get through the color recessionary cycle and is so frustrating to me when founders don't want to cut the burn, is that one thing they told control, and they have all these excuses for why they can cut to an earlier level spending that they were the company was working fine at. And we can't get him to go back to cut back to some earlier status .

of being soccer. Bar can do IT. They can do IT.

And you know, after seeing what elon did, a twitter where he reduce the staff by eighty percent, i'm like I realized there's no good excuse anymore. For not giving yourself the maximum chance survival.

And if you over cut, like he admits, he probably did he literally in the the day farber grade interview he did with him, he said, you know, like we probably ever cut, we will cut people who are great and we hopefully can welcome them back to twitter as we get the thing on stable footing. But we're gona make mistakes because we had an existent al crisis. You want mut.

Too many people admit IT and says he's going to bring them back. It's no fault of theirs and he said he's going back at the growth mode. So you know like sometimes you cut you, you might cut too deep is the point and you know that set you up for girl th in the future to map you had someone dead.

I have two shout outs.

Okay.

here we go. The first is to one of our best ties. Got attacks from Jason.

Could he backed the main event at the train for two and a half million? I mean, he's so strides, the guys a beast. So a lot of on. It's so great to have .

a professional poker player in our circle. Finally, like great, insist on the over time where we can learn from. But he's so open and he teaches up just around him specially stable, rational, humble professional poker player.

like happens to basically be the best poker .

in the world. But you literally one train two point .

five million. yeah. The second, the second shout out is to the model y team A. I have been a die hard model x user from the beginning, right? I think I had number thirteen.

So I been, I been, i've had three or four these things and I was like, wait a minute, maybe this why is really all is crack up to be. And i'm a bit of a carmaker and I have high expectations. But I just want to say that car kicks absolute as IT is perfect o IT is incredible.

That model, why it's going to be the best selling car. It's going to be the best selling car america. If you get the base level, it's actually cheaper than the average car in america. Now within three tis it's so, so good, so huge child, many huge, huge child. To the model y team that you guys nail that .

readable product.

And I don't .

want to diminish the .

X I don't. But the why .

is about the bar to .

a great car.

to a great, great car with cyber .

truck .

thing? Uh, twelve year old h roads are out and my kids love going for ice cream in the the original roads to one point. I've been taking IT out every weekend.

Or number one, I have sixteen of the roads, sir, which somebody offered me a quarter million dollars. I paid a one hundred sixty four eight. I have number one of the model s signature series.

So I have signature sixteen of routes. So they did a hundred signature and they did a thousand signatures of the more less. And I have number one of that. And somebody offer me a .

million or that I have number of the founders edition.

number thirteen of the x yeah, that's very special. Yeah, I told not to that. Yeah, there is a special vehicle. Or I listen, everybody all in summit is, uh, basically.

So how are doing how we are all doing? Guys .

are, yes, so exciting .

are everybody for the sult of science, the dictator and Steve band in two point out it's acts, the architect, the arctic, the architect. I like I remain heven after sex is triumph spaces. I remained the world's greatest moderator.

So excited for this weekend. Boys, see you tomorrow at the turn. On the turn, you.

your.

Winter, man.

We open sources to the fans and .

just got crazy with.

A to.

live.