E29: Coinbase goes public, direct listings vs. IPOs, portfolio management, unions & more with Bestie Guestie Brad Gerstner
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oh my god, oh my god, get mine. Is this like a kidnapping? And you guys GTA take drop up. Hind, hind, the little cars.

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Hey everybody, hey everybody. It's another episode of the all in podcast we took this week off because I was spring break and we all needed a break. Hope you had a great one. Two with us today, of course, the queen of kin wa, from an underscore sed Sunny I location gave freedoms .

g he looks at red city is a regular city rain .

himself David sacks ready for governor sax 点 com and of course the king of all backs red gardeners with us again， the new dictator filling in four triumph polypoetes y of the dica trial polypoetes of the dictator is here as well and special best Jason.

Jason, Jason.

not when you.

I don't know what that means, but we're anything that out of the show that's a budget beams. But welcome, brad sitting in a just for a moment here because tra mah was gonna. He was a no.

we need action.

Emergency is a little flattery for cheap.

The truth of the matter is to mah to math is pony and h you know I think, uh, h it's been incredible to watch the competition and choice and is cheap knows. I participated in a couple of the deals that he's done, and I think we all share the same film, which is, you know there's been a uh uh a system that is pretty business team that wasn't serving the founders who we are uh you know care deeply about.

And so i'm just unthrilled whether it's directory. My gw blocks died a few weeks ago that we we help do. And you know or whether it's chmagh and the incredible innovation the he's happy to do or we're lucky, we've we've invested in building a capital markets business on top of this uh this back and and and then you know worked with a gra B2Bring a g re at pub lic com pany thi s wee k.

So let's get to the direct CT listing. Uh, good segway clear. The biggest news of the week is coin base, the largest direct listing ever. Bill girl somewhere is smiling. And that's on top of road blocks, which I think was the second biggest a twenty twenty revenue, one point two billion.

Bright did did no flag direct list or that was a traditional.

no traditional like.

I don't know who got their bad week, their wet, their bikes on this one. thanks. Did you have a little bit.

had a little tasty pool.

little tasty pool.

I had, I had a lot showered upon me.

explained by, you're in rebate, right?

And I was Mickey, one of Mickey's largest top. He said .

michels.

a, who runs a rabbit capital, who on seven percent more, ten percent, seven, eight percent coin base. And what was incredible was I got distributed all of IT yesterday, which, by the way, I think for drug listing, the strategy to me makes a lot of sense.

I made a mistake in hind sight, if I think about my distribution strategy, because myself excelling and reason, when we did the slack relisting, we distributed probably five, ten percent, and then we waited, and then we trickled IT IT out over time. But by definition, I think the Price action on drug listings shows you that you top take the top Price at at the moment on the open print. And so you know if you're going to sell, you're probably Better off selling absolutely right away.

And if you look at the Price action on drug listenings, it's basically been one way direction down from the point of the drug listing. Spotify did that for two years if kind of languished, you know selected that until the sales for acquisition. Um so in general, I think if if a drug listing happens when you get distributed, the stock you should probably sell right .

away and that uh means IT was Priced correctly as opposed to enterprise. Is that what we should take from that?

Well, no, because I know what what's T, B, D is. What is the moral heads of the company to see a one way direction down in, you know, a stairway down on the stockbridge? So maybe IT was good for selling shareholder is not necessarily good for the moral of employees, which then could impact the launch enterprise value that's being built at a company. So I think there's a bunch of tbs. I do think that reckless things are administrative vely clean in some ways, but company building may not necessarily win.

But to you, you had a point of view. I think that was last year, two years ago, about how and I I read some papers at one of the analysts and while three put out showing that there isn't much of a benefit to lock ups. So with respect to short or long term, uh, Price volatility, do you still hold that point of view?

I think log ups, I think locus, are really unfair because they their attacks on the people that have been there the longest, which are the employees. So you know the idea that somebody that comes in at the absolute last minute, you know, brother, I have done a bunch of IPO recently where you d like you get allocations in a book, he and I had nothing to do with companies but get a shares and we sell a day one.

Then there are people that have been in that company for six, seven, eight, nine, ten years who sit around, you know, twittering their, watching all these other people generate one one day returns. There was a tweet that bill girly had yesterday that says there is a well known cross over fund that over the last year has printed a billion dollars of one day share gains. Well, that's crazy. So I think that lockup s are kind of A A regressive tax on the people that do the work, and they are just rewarding people that have nothing to do with companies.

What what did you do in grab because you lock yourself upright for a couple years? And or is there a lock up for the existing shareholders and grab?

Yeah so first, I totally agree with timah. Lack ops are one of the most insidious things I think about the traditional ibo process um you know the fact that dorax employees are sitting there watching the stocker from one hundred to two hundred and then you know all these other folks are selling well to watch the soccer from two hundred back to one hundred, I would think is incredibly demoralizing and IT does.

Here's the thing, IT doesn't need to exist in robo ks. There wasn't a lockup. The employees were free to tell.

But guess what? A lot of them chose not to sell, right? It's fair and quicker Price discovery when you actually allowed the supply and demand to exist imbaLance. So what what we did IT um a grab was we fought hard for the most open unlocked right day one week across we get um in that case, there a lot of big shareholders who are on the board.

So there are deemed deflates under section sixty curious ly so they can sell right? They are deemed to be in voters right and um but we at the end of the day all employees counsel there is a group of senior management that said, hey, we want a voluntarily lock is a signal to the market but all other employees in the company can sell so there over five thousand employees in the company um and all of the early shareholders can sell on day one and I think this was uh the first time i've seen this you know this alternative I P O. So we have a almost a third uh of the entire uh share base, the company that is available for sale on day. incredible.

He break task. One more question, the um the the economics for grab or are they Better under your structure that they would have been for traditional IPO to get the same of capital in the paying seven percent to .

the other writing banks as we all know you know bill gurley has has laboriously pointed out, documented that there are two expenses to a traditional ipa, right there's the upfront fee, five and half six percent whatever they're paying on the amount of capital race.

But he would argue that much bigger expense right is the indirect cost of the structural enterprise right right? So in a traditional IPO, let's say you have a ten billion dollar enterprise value raising the billion dollars if it's been enterprise, he would argue structurally by forty percent. We can all debate that, but that's four hundred million dollars of delusion. To employees into existing shareholder.

I I think everybody in the grab process um both the bayside portfolio managers from fidelity, janus t rotta as well as the company believe that we got a twenty two thirty percent higher Price than a bank would have got because of the conviction the portfolios managers had as a result of the significant investment we are making in the company, as a result of the fact that we were clocking up our promote chairs or sponsor shares for three years. Um and so if you say it's thirty percent on a four billion dollar raise, that's over a billion dollars of savings, right over a billion dollars of indirect cost savings to the employees and the shareholders. And like for me, our our star is founders and so we literally have deconstructed the IPO at every step of the value chain.

And to say, you know like rich partner, my my thought partner in this, he's taken so on. The board of netflix public took zillow public, took the a public and he said, like we can make this Better at every step of the value chain. And so we've thought about IT like a product, and we've built in a capital markets business that says part of IT, right, is eliminating the commission.

Part of IT is getting a fair Price, but part of IT is curating that day one capable, right? Because these companies are stepping into the public markets. And you know, as Richards said and others have said, think about all the creation that goes into a private capable.

Now when you go public, rich calls IT a capable random zone event, right? You lose total control of your company, right? Wherein the case of grab, we hand selected what we think are the world's best public market shareholders to be their day one capable.

So it's a very different outcome, and it's not just about cost savings. It's not just about a trying to get a fair of prize. It's actually making the process Better at each step of the value, too.

So we were talking about coin base last year when they had a big ruhar, and brian ong said we are not going to talk about politics inside the company. Um you can have political views but not inside the company. So actually did some tweet about this .

what you're not yeah I mean apparently coin basis ban on politics in the workplace and they are refusal to submit to york times interview did not prevent them from creating an eighty five billion dollar you shocked shock that they were able to to do that that's basis what I tweed and you know this shows the founders can do things their own way.

They don't have to submit to, you know, the woke mob and that's basic what I tweed and then know, of course. Well, the first is been to see the reactions. The first day I got like ten thousand likes, and then the second day IT seemed like some sort of s SOS went out. And now i've been sort of surrounded. There's been this like outcry, and I take away is that the walking mob really doesn't like to be called out as a wo mob and a sort of surrounding me with pitch forks now saying, how dare you call us a mob sex?

Are you running for a governor? Because he looks like you've taken botox. Do know he botox? Did you take botox? He's in. I mean, very believable.

I've got a new and i've got five different technology me here.

but you do have your pin on today and you do look very well. And I notice that you.

I wearing my miami pen. This is my city of miami pin. France gave you. Frances gave me the pen.

Fans.

do you tell you? Never call me Frances.

What is the big announcement today? We're really excited to hear.

Yeah tell us, governor, sex outcome. Would you got on deck?

There is nothing is a Jason construction.

And what I get to do, we have a do we haven't explorer ory committee .

set up in let's get sex out of the game. I need that deal with guys.

guys. Obviously, if this comes to past, we're going to rewrite history. As David sacks was our manian candidate, I at the trial on there was a layup for David sax to come in alu p and dunk on gather ism.

No, look.

no. Lux, no.

The world, I tell you, newsom is doing everything is power to to blow this recall because, I mean, timing is working in his favor. I mean, he's done a horrible job and everything vaccine related. But the reality is covet is winding down. It's going to be over. So even though he delayed um everyone gave the vaccine by by weeks.

if not months months probably yeah by .

much we've got seven million unused doses sitting on the shelf phin california because all of his crazy eligibility requirements despite all of that, by the time we actually get around to the recall, which will be about five or six months the recall election, you know the economies can be booming again over covets can be over, people will probably forget.

But but for the fact that he is now saying that he cannot guarantee that schools will reopen in the fall. So we now have we now have schools reopen in, you know, every public schools open basically in every other state. You have private schools are all reopened in california. And he still cannot guarantee that schools will be reopened. Not not now.

but in the fall, David thrown down the the guarantee made or you will open all the public stores. Why the of day one and why .

this is the window.

David now or never not .

saying that that i'm running. But at one thing I would say .

is that whoever, if an.

I would one hundred percent absolutely guarantee that school open in the fall. What we need, what we need is a governor who will go to the teacher's unions and say, listen, you will either report for duty the first day of school, five days a week, no exceptions, or you go look for another korea.

That is what we leave .

more four.

four year.

Let go, let go. Let's go. Can you make all eventing machines free?

Yeah, sure.

We can do that too. O K, can you? Can you get rid of all my dad?

Why not? O K, O.

K, I mean, can we go back to the to the mark just .

for one second? Because I just want I want to ask a couple questions. Brd, uh, q one was not.

Let's get some color commentary from, uh, a big player in the capital markets. You talk through us talk to us through what's uh, factor rotation. IT was talk to us about your reactions to this.

Are chagos capital thing about inflation also good check? Like what is what is what is the rest of the year look like? Like talk how what is your sentiment, how you're feeling? Just give us a reaction on just the economy and on weren't .

you like the bigger shareholder are in united at point .

was a bad way to start off two thousand. And the bad however, I would say that IT ended up being the best year in the history, the firm. And so you know, like we like everybody else, how to reinvent a lot of things about our business last year. And and we learned a lot from that moment and and the courage that a lot of people at united show through through that period of time without a lot of help. Uh, a lot of people think the government was helpful.

There is a lot of unhelpful things that we're being done, but not with standing that fact to to to mass point um from that I think I went on the cnbc and you've ever just like when we Normalize, there is no reason that the ten year shouldn't be uh a back at the level. Wasn't january twenty right? For every one percent move in the ten year, you've got a tend to a twenty percent draw down in growth multiples.

And the reason for that is very simple. The long duration asset, you just counted back at a higher rate, and so you have multiple compression. And so we were starting at an all time high in terms of growth equity multiple for both software and internet.

Uh when you look at october, november of last year, we've seen about thirty to forty percent retracement or you know give back in terms of those multiples, right in some names is bigger and some some names is less. I suspect there's another ten to twenty percent to go right? Uh, for a ten years that's gonna be sitting here one eight um I just got done talking as part of this road show.

As you know, all the biggest growth equity portfolio managers on on the public byte, I can tell you they're all d leveraging growth. They are not adding. They're not looking to add dollars to growth.

And these are the biggest, uh, managers in the world. And so we're not through that process. There are some people have anchored themselves to the fact that zoom was just at five hundred.

Oh my god, it's going straight back to five hundred. No, five hundred was the outlier of IT. That was the all time high multiple event. IT will get there in the forest of time, but it's going to have to get .

there through many. So so what you think that happens in the private? And you know there's a lot of talk about certain firms, some of your competitors in the growth stateside ripping capital into companies every twenty four hours or forty eight hours.

Where where does that the Normalize? Because aren't we setting up a dynamic where if you have a bunch of growth firms pricing crazy rounds whose valuations can then will not be able to be held up in the public markets? Aren't we creating a different kind of problem?

Well, um you know you and i've watched this dynamic play out probably four, five times over the course of last fifteen years where there's this inversion, private capital markets. Private markets are actually overvalued relative to public markets. I just look at a few IP s this week over over last couple. We deliver you hot private company down thirty percent in the IPO apple love and came out this week twenty percent in the IPO right at the end of the day, the great day.

You know as monger likes to say, you know the markets are a voting machine in the public markets are a brutal voting machine um and so you know I just is gonna take remember when group hg got done that last private round at twenty billion and then about nine months later trading at five billion or singh, I mean go through this. We've watched this, you know so IT just takes the smack down and people losing actual money um and and however, so that's the one side, right this is a temporary dynamic. Markets were clear.

I think IT is possible. You reference you know um uh a good friend of a of mine you know whose supposedly writing a term sheet every two days um you know uh at tiger the truth of the matter, you can you can hold simultaneous troops. You can believe the next three months that we're likely to have more multiple compression in the public markets, right? You could head your public book in a variety of ways against that like we did and and announced last last december.

And at the same time, you can believe that the secular trend in technology has never been more right. And I believe that if you own an index of the top thirty percent of technology companies in the world today and you're willing to hold them for five to ten years, you will be incredibly well rewarded. The the most asem tric bet maybe in the history of all of investor is having a golden ticket to have access to the best technology companies in the world today.

It's like unfair play. And everybody on this call is playing in what is a highly asem, tric and unfair game stacked in our favor. Now we can screw that up by trying to think we're good at short term trade inner do a bunch of other stuff. We get individual things wrong. But if you bet on the top, the top core tile of technology companies on a global basis like tiger and others are doing um and and you have time on your side, you're going to .

be well rewarded. We talked about the mid market late stage venture space being a no mans land of four tex, the value being created in the late stage and value being created in the early stage, but the money in the middle becoming a commodity because of tiger go to and others coming in and just coming over the top. Do you subscribe to that, brad? Do you think that's just a financial transaction in the medal, not a lot of .

value to be made there? Or do you think, listen, IT doesn't matter in snowflake whether you invested in the hundred million dollar around the two hundred million dollar around, the five hundred million dollar around, the billion dollar around where the coya came in, know if the companies going to two, three, four hundred billion dollars, right? All of those are extraordinary returns.

So ultimates described itself, uh, often as a lifecycle investor, right? I represent the biggest portion of the capital in the firm long term in downtown, a number two and number three. And we have a multi decade view in the world, in our view, is the one that I just articulated.

I want to have maximum dollars. I don't care that is all in the B A, the C A, the d year, the IPO. Or you know, I want to have maximum dollars behind our best ideas, and I want to be an incredible partner to these companies as they move through the lifecycle. Part of the reason we build a capital markets business to help founders in a Better way step into the public markets is is part of our mission, right? Like I want you know how frustrating IT was to me, Jason, and to be premark or pri po in mongo or tWilly o or october.

And then when IT came to the IPO, I have to go to the banks and gravel, right, and gravel for an allocation, and the driver, five or ten million, and I see them handing big chat, you know, big allocations to people who I know we're gonna flip IT and I actually want to own this stuff is very frustrating. And so we think there's a Better way. And when those companies .

come public in the future, you said something which H I want to use as a question to freedwoman sax and Jason because these guys are involved. Very sense in one way.

And what i'm going to say, which is you said gross tonnage of dollars, one of the most incredible things that I thought about the coin base um uh s one was the amount of unbelievably smart buying that and resented and I thought to myself and recent just outside the choir, and what do you guys think about sort of how they've been able to to actually execute IT? Just seems like reason is done. An incredible, incredible job.

I don't want you, I mean, chasing your clothes a coa. So are you freedom? I just want you to react that.

No, you got you ve got to give credit on coin base because I think they made the they made the most money. I guess um rabbit and gerri initialize may have made the highest R Y because they invested a smaller count dollars earlier.

My return, my return in rabbit, the mayor from iconic me, was five hundred and .

six times actually. So riba made the five hundred x and I guess and and but in recent made like twenty billion of returns, of which you know, they are prolixity twenty five, thirty percent. So they they made the most money, may not have been the highest irr, but IT was the most money. And you're right, they doubled LED down in this like two thousand and eight, two thousand and eighty periods. And like they were doing a bunch of secondary buying.

they read the stock at twenty five bucks.

They bought IT all for credit. Well, sing in new square much as for me ah they were just they did what socket did with twitter right and with and started dying out.

But they did IT but they did IT at a time where people are losing faith in crypto. There was like member there's like this bit pipt winter yeah there was a bit craft to boom and like i'd say december thousand seventeen and eight, two thousand and eighty and then I kind of collapse and mirs the Price of bitcoin. You had big coin reached peek o about twenty thousand and crash all the way down to four to three or four thousand. Obviously, that was a great time to buy bitcoin, but IT sounds like these guys are also buying coin base at that time. So that was a pretty that was a remarkable double way.

It's it's a good validation of bread point uh about you know market perturbation being fairly independent of value creation. 我忘了 and you know you have faith that this is where value will be created over a period of ten plus years。 Um you know you you when you have an opportunity to buy in buy in and don't let the market perturbations drive your decision making or else you end up in this market trading trap yeah I I think when we talked about this a lot warn buff for talks about IT a lot I think to motheh ve made the point about um not timing the markets but you're time in the markets and this notion that when you have conviction in the business or idea thesis, uh you know you can continue to double down on that conviction regardless of whether you think relative valuations are appropriate or or kind of disjointed at the time.

It's even more acute because what happens as we make short term decisions and then the short term decisions often times to prove to be right in the short term. And let me an exact and then that leads to behavioral or lock in. So at the end of two thousand and thirteen bitcoins at on one hundred dollars a year, we get, I get very interested in cypher.

I think this is one of the most asem tric bet I see in the world, right? I have I think it's the low probability event, but if you win the size of the Price is absolutely dragon IT, right? So we're looking at a deal with um in Jason um because I thought balloon was one of the smartest people in the space.

The company was called twenty one dot code idea of mining for bitcoin. On a trip on the ever the deal, my partner and I said, you know what? I believe that we should place our bet in in bitcoin because i'm not sure whether not this mining company is actually going to work out.

okay. So we pass on the deal cry pta. Bitcoin goes from twelve hundred to three hundred and like a straight line down.

And what was my take away? My take a is like me, and i'm so smart. I'm so smart.

We passed on that deal. okay? Rather than being curious, rather than learning more, rather than developing. And what indecent ted during that period of time is they stuck to their belief that this could be a highly asem, tric outcome.

Ultimate ran a decade, hang a board member coin based the night of the IP of and he said, brad, you know um do you remember you know twenty one dot code as like yeah he goes. Those were some of our original shares in going base. We sold that company to base wow right.

And and and, you know, it's just for me. I sent this note to our team because I said, you know what, guys, in the face of having some good wins, I want to remind you of some really poin near, near winds and misses. And my mistake at that point in time was I locked mental flexibility.

I got locked in to this idea that I was really smart by having missed twenty one, rather than learning from that moment and say and listen when I started to see IT move. And then I moved pretty quickly as I, oh, I miss IT. It's just like a stock.

We do the same thing. The reality is you should allocate to things that you think are thematically highly S A emetrius and great ideas. And and this was one of them, and one we missed.

Can I just guy at that? I was in twenty one, just twenty one six. I remember getting in the coin by shares.

So I you did not own the don't.

preferred.

I prefer I invest .

the press stack in the wrong series with one thing i'll .

add to that is you have to look at the Mandate of these funds. If you're an early stage fund and you have the ability to sell at five hundred x or thousand x or two thousand x, sometimes you gotta lock that in and give something to your your peas. And I think this is where, you know, thinking full life cycle. You said off, like, what did you learn from all this?

Is building a business, right?

Well, I mean, one of the things I learned this, I didn't even know what para really was when I started my crew. I didn't do rada in uber anything. And now my position is I am going super parody in our winners, so not on a holding winners. I'm trying to get to ten, fifteen percent ownership in these companies and it's starting to happen, you know, with companies that are worth five hundred or seven hundred million.

And so that is the not that the change in behavior i'm doing, which is either to your point, if you bought snowflake at any time, you feel great about IT, but then you have to have buying from your L P S that they agree with that and that they're okay with you taking a longer strategy and then at some point, you want to return capital and that becomes super problematic. You're in seven, eight, nine, ten of your funds. You wanna take some ships off the table.

And so what i'm going to do now is I think i'm going to try to do both where I have a group of L P. S. You want to buy shares and I don't know how to figure this out. And maybe somebody could advise me here because I have had other venture firms who have this chAllenge where though I don't .

I don't I don't want anything you.

Because of you, why do you .

say yourself.

you looking for me?

But the whole point of .

this test is for me to draft .

of people who are smart to than me. Mission accomplished.

So here we go. Yeah, we still teach you out a second, I see, to buy .

your house and the process.

sorry, a miniaan new borried. But here's the issue. Can I be an Angel investor in uber and then be selling shares in uber to my other L P. S. And creating that sock a secondary market?

Was that, uh, I think this is public. I don't know it's public. I will say that anyway because I think it's well known. But um sounders fund had early space like chairs that they thought I was prudent to sell in the early funds of the space like chairs.

The later fund was buying SpaceX chairs in that round um and so they were in a circumstance where they had such a big markup on the early round, the early fund um that they had to kind of distribute and lid liquidity, those space that shares. Meanwhile there some were the good, good overlap of lp. S were buying in the other fund at at a higher Price.

You are speaking to something. I lived out in the early venture funds of social capital because when I was not entirely my own capital base, I felt that pressure. And I did similar things because I was like, oh, wow, we're in year seven, eight, nine.

I had and I had great L. P. It's like, wait, I how can I not give capital back to the broad or mail? These are phenomenal institutions.

They weren't pressuring me at all, but I felt internal pressure and I started to make sub of table decisions for myself. I couldn't make really you clearly the best optimize decision, which we've been to hold everything as long as possible. You know, to cheer point, like if you're in the top cortile things, the best thing is to never sell.

And it's an incredibly special place where you can actually have that freedom to do IT IT. Whats interesting is I actually think that the folks that are in the best position to are actually employees. And you I actually think that randomly doing this when you look at the turn rates of employees today, like I saw this crazy start, the average tenure at uber is one point eight years.

That's crazy. The average tenure at tesla, two point one years. The average ten year at google is three point two years. So if you think about a traditional ten year korea in the valley, you have somewhere between you know three and five, three and five different baskets of shares that you're getting. And you know those are those are costless options.

Effectively, that's actually an incredible form of portfolio construction for these people because if you never have to sell those things, you can wait, they go public and you can underwrite them forever. That's probably what uh, a lot of employees and silicon valley have figured out implicitly. I have a question I want to ask you guys as well, which is um I just want to go back to the public markets for second. I tweet out some of these amazing things I learned from the BIOS. Oh my god.

this is demented. Did you guys .

see what I tweet? I you're .

today and i've been reading IT.

It's unbelievably it's do you have IT in front .

of I i'll just give you the trio tweet your high level. Twenty eight percent of purchases on amazon are completed in less than three minutes. I think we've all done that. Fifty percent of purchases is on amazon are completed less than fifteen. And if you actually look at that and I think this is a really I don't know if you made this calculation.

no, this is bases rooted in the letter this so .

if you value your time at ten dollars and now a very low one, um that's seven hundred fifty dollars a year um and that means your prime is free of one hundred and twenty dollars a year.

Let me let me see thirty and profit. Let me say difference. Uh, the average trip to the store driving, buying, coming back is an hour.

So what basis said is that typically, we will save you seventy five hours because we can make all of that more efficient for you at ten box an hour. That's for seven hundred and fifty dollars. We only charge you one hundred and twenty for prime, which means you you get six hundred and thirty dollars of savings.

But then he goes on to say, and we have two hundred million customers on prime, so we're saving them one hundred and twenty six billion dollars. My instant reaction was two things. And so the last two points in that twitter mine one is, holy fuck, that's more in one year than what most companies are worth in their entire lifetime.

And the second is that you can buy amazon for thirteen times one years. Worth of savings for a customer is just if you look at prime yeah ah which which makes amazon seem exceptionally cheap. But I reason I brought up amazon is he also wrote there about his responsibility to his employees and we were just talking about employees and turn. And this was incredible to me that seventy percent of their employees voted down the unitization effort. And obama, I just wanted to get sexy poo yeah red red pilot crush its noted what what you got to say yeah well.

I mean what what happened is you had in alabama there's a amazon plant there that uh, where they there basically was an election to decide whether they would go union or not. And there were twenty five hundred and three six workers who voted in this union election.

About eighteen hundred voted against unionization, versus seven hundred and thirty eight who voted two union eyes and then baLance from another five hundred and five workers were either were chAllenged by either amazon or the union s so we don't know yet what they mean, but those those won't change the outcomes. The election is over now. This was a heavily lobbied election. I mean amazon was lobbing um employees, but so were the unions. And IT looks like the unions at the end of the day, or at lost and the employees voted, you know, remain union was really.

really think I thought IT .

was a beautiful defense of capitalism that's very much needed right now. Yeah you know um IT reminded me a lot, Frankly, of the gates foundation and a letter you know where the get to say and you know capitalist is far from perfect, but it's resulted in the most important era of prosperity and health and wellness in the history of the planet.

And you know I said on C N B C, this you know we live in a moment where capitalism is absolutely under attack um and I truly believe it's the greatest force, the greatest potential force for good in the world. IT brought us a vaccine, right? IT brings us innovation that pulls people out of poverty, that makes people healthier.

The there's an opportunity for people in rural areas that are empower shed to be educated. But I do think it's in combat upon basis. I think this was very much a robber baron sort of defense of building railroads.

And I thought IT was brilliant in its execution, but I think it's important in, in, in for all of us to stand up, not defensively, but to say, what are our obligations to make capitalism the greatest force are good. You know, chamakh, whether you and I talking about invest amErica and C N, B C. And giving every child in this country a participation in the ownership society, right? Or all the other initiatives that we need to work on to deck to make the case, we need to make a Better.

And I think one of the issues here is, you know what we see on twitter being part of the twitter ROI is, you know, people who are super world socialist, whatever, talking about this. But in reality, the workers don't want IT. And I was talking to .

somebody in the immediate, no, no, hold on. Can I just say something slightly, Jason? I think what workers don't want is the version one point of of unions.

Okay, because I think what they see that as is attacks that then goes and fills the coffers of certain people. I think you seem like, you know, a bunch of waste, a bunch of graph, a bunch of corruption. People have been arrested.

Unions are not effective anymore and collective bargaining, they're not they don't have any data, they don't have any facts. They're going to be power. They are, but they're not set up to win.

So I think in my opinion, I think unions have an important role. But you need a version two point of you need some Young, smart, bright people to reframe what unions are. And then I think you would see everybody collectively organized, which is it's not about dose.

You don't need hundreds of millions of dollars to to all of a sudden, like used to then like certain people. And that old model is breaking. It's breaking everyday. Instead, I think what people need to do is like if you come together and like you understand what are the products we make, what are the margins we have, how's my contribution measured and then you're able to use data, in fact, to really collectively bargain. That hasn't happened yet.

So I think but or could be a free market and people could go work at starbucks or for post mates, get pay more.

But if capitalism allows both to exist.

if if you think about what the union is, you can almost make an argument that IT is the ultimate manifestation of a free market system, because IT is basically like a bunch of people spinning out to have their own started. And so you know that that group of people are saying we're not charging enough for our product or service today. The value that we are creating is worth more.

Therefore, we should go create a you know a different business in charge more and effectively compete the marketplace, uh, with a higher quality product at a higher at a higher Price point. Um and I think that that may be kind of you know the the the distinction between one of people kind of view to be regulatory capture from unions where there has been government involved in in the past versus what may be possible. I think i've heard some people talk about how, you know, at some point in the world, we end up with at some point the evolution of capitals and end up in the place where there are no employees, there's just a ton of independent contractors doing independent work. And maybe there is an organization of people around doing the same work over over together as a group, uh where you charge one kind of you know uh aggregated fixed rate for that service.

The the other thing to me was like all of a suddenly brought into such a star contrast, this wasn't like fifty five, forty five. This was seventy thirty. Probably IT could have been eighty, twenty or ninety ten.

And so I said to me, wait a minute, there is a very small vocal group of people who are screaming from the mountain tops about this. Level of unionization and organization. And then the people that are actually the the participants of that system are like, no, thank you.

yeah. In don't feel like they're under bed.

Media companies have been going through a unitization process from cocker to vox in new york times has already had one, and you're starting to see a bunch of folks voting on that. I was speaking to somebody who runs one of these companies and they said the in the short term is fabulous because they set the Prices of employees. So when somebody comes soon says I want to raise.

They say what we can't because here's the payscale that you negotiated. So we have to stick to that. I can give you more than other people because one of the things you fought for as a union was pay parity.

And so you've got five years, years, as on the chart, five years. So I made everything predictable. And they said, they like that. They said, the problem is over the long term, when you get to hear ten of a union in order to fire somebody who's not doing a great job, you have negotiate with the union that they have to get all these warnings and it's uncomfortable so than the managers don't do the performance plans, they don't do that. And then eventually who's left in the organization, the lower performers, and then who leaves the higher performers who can command more money. So once you get the union than going inside of a media company, in the short term of controls cost, in the long term, IT kills excEllence. This was what .

somebody told me. Have you guys seen the movie? Uh, american factory? I think this was on netflix. IT was actually created by IT might. IT was a first film produced by baroque tile, obama's production company.

But it's a very interesting film on about there is a chinese billion air who goes to kind of the rust belt to outside a little city outside the ohio, and there is and basically opens factory producing class windshields for cars. And this factory have been shut down. The whole town was kind of out of work.

They were kind of down, down in the dumps. And so this crazy chinese billion aire comes in there and reopens the factory. And all he and he crafted like two thousand jobs for for people in this town.

And everything starts off great. There are these really interesting sort of culture clashes between the american workers and the chinese executives. And so it's kind of comically and they showed in the movie, but that about half fully through the movie.

And by the way, like these are people who are out of work and know this chinese company comes in. They do things kind of their way, but they pay people pretty well and creating a lot of jobs. And initially, everybody's very happy with that.

And the politicians are all encouraging IT. And then about halfway through the movie, the unions come in and the unions started agitating, and they start telling all the workers that you're underpaid or mistreated. They start their sort of intimidation tactics being used. And then the politicians come in and, you know, these politicians are sort of, you know, this ohio, right? And so the politicians start telling the workers at this plant that they should get unionized and IT turns as this giant battle, because, and the chinese company basically threatens to leave, because they came into this town and made something like a five hundred million dollar investment in this plant based on an understanding of a certain cost structure.

And now of the son of the union wants to change that, and you turns into this giant conflict, and you realize that, look, the workers in this town had a good deal, and then the unions are about to like, blow the whole thing and and erect IT, and they are about to drive this chinese company out of the town. And then they do this election kind like what amazon did. And ultimately, the chinese company wins.

And the voters choose not to go with the union, but you just feel like you can. Is this so frustrating to see this? Because it's not like this particular union is benefiting the workers, about benefiting the union. Representatives were then .

paying off the politicians, which gets back to our discussion in your little speech for your governor run that you're going to fire all the teachers comes september first .

if they don't choke for work.

No, but look, it's it's a really interesting movie because because I think what IT does the highlights that what's in the interest of these labour union leaders is not necessarily what's in the interest the employees.

Anybody want to know there? This guys look that this is like the simplest form of incentives to understand. You pay dues as a union member.

Those revenues get allocated and controlled by a handful of people in union leadership. So this is this shouldn't be a surprise that their incentives get misaligned, especially when you go from a small effective union to abroad. You know, union that represents all kinds of different workers is an impossible infrastructure to manage.

And IT becomes on wheels. Unions can be effective. There is a value in a place for them. They need to get reinvented.

I I looked this up, you know the average wage, uh the average fees to be in the union, uh, across all union in the united states as a percent. Labor, I want to go to guess wanted a half percent yeah I said to.

yeah. So the argument is.

if they can increase wages net to those employees by more than one a half percent, IT pays for itself, right?

That's the argument. And so I .

totally get to start up .

of themselves.

They are an asset manager, right? Their goal, more .

sets .

grow, you know, the the bigger their business .

the way in which you know rating this backed basis as annual letter, right um we've been presented this false choice for two decades between some form of the and rani, an capitalism and a ni state right, right, right? Either everything's unionized or we have no intervention at all.

What what I love about this moment time, what I love about the leadership of beno, bazas or gates, even Anthony ten, this incredible mission values driven leader who's using the power capitalism to update tens of millions of people in southeast asia, is that I see a totally new generation of leaders to understand the responsibility. Like they're charting the middle way, right, and we can equally reject lara gonzi, right? And at the same time want to have fifteen thousand minimum wage in the data of point, like those two things are mutually compatible. And so um that's why is to run, he's got a chart. The third way.

let me ask this bread, would you put up two hundred fifty k for an exploratory fund?

Bread do you put do do you believe in a lar minimum way?

Oh, I be fine. I be fine with is not that's .

not that's oh, it's on. He took a blue pill, took a blue pill. Give everyone everything.

I think certainly .

to say to california, I think that makes sense. You know I think, look, there might be some parts of the country where the standard of living is much cheaper. I mean, I think probably the only way should be a state issue because there's such a disparity in different costs of living in different states. So i'm not sure I federalize IT, but i'm but certainly california. I think fifteen bucks.

I know. What about twenty box? yes. Why not?

Why not a thousand? Yeah, one .

thousand one.

Can everyone?

Can everyone get a free tesla? no.

But I can make the point about unions and california. I think there's a huge difference between private sector unions and public sector unions. So IT, look, i'm not against collective bargaining when IT comes to these private sector unions, okay, because the workers do have know these plants involve can involve very tough working conditions as physically dangerous.

You know, there before there were labor reforms are working really long and seven hours or safety issues, okay. I think IT makes sense to have some so collective marketing and there's somebody to negotiate with. There's the management.

The company has an incentive. And so you have some given take and you have a negotiation that produces an outcome. Public sector unions are completely different, right? Because when the teacher's union goes and negotiate, who are they negotiating with? The negotiating with governance. And the teachers union is his biggest contributor. So who hasn't instance to oppose their demands?

It's no market.

There's no market. And so IT, at a minimum, takes a politician who has a lot of integrity to stand up to the .

teacher's unions.

because bird did do IT.

But this is a true market dynamic for everything that that relates to to government spending. If you think about when the government says it's going to spend something on someone on something, legislation passes and IT Mandates that something needs to be brought. When that happens, there is no negotiating power because there is no marketplace to achieve the objectives.

They have to spend the money on the thing that they said they were going to spend IT on. And at that point, there is a seller who sells that thing, who says, oh, shit, these guys have to buy IT. I'll double the Price.

Okay, great. That's just the natural law of government inflation that happens to happened with everything that we've seen inflated in this country. Education, health care is all because it's a government Mandates service.

And so then the service providers to the government have a single captive customer who has to spend the money. And so the same is true of education. The government has to educate. Therefore, I can show up as an education union and say, i'm going to double my Price to educate your people because you have to do IT by law, and you have passed all these laws that say you have to do IT, and there is nothing the government can do about IT.

And so, you know, I think IT is worth highlighting that the lack of a marketplace meeting, if you were, didn't negotiate with the company but said the company had to buy productivity software, are for its employees. IT could decide whether or not buying that productivity software generated a positive return at the Price point that the sellers are negotiating against. You say, i'm not going to bite.

Everything's too expensive. I'm going to go find another way. The problem is governments are Mandated to spend that money on that particular service, and therefore there is no room. And so unions are manifest this fundamental problem with giving governments large budgets and relying on the government to provide the service to us outside of a market driven context. So I think the question really is, can help care and education? Can we have been inflated with the government having such an active role be provided in a way that the governments facilitates their provisioning without the government being the customer?

This is a good jumping off point to one very a to the next ten topic. There is a bunch of things happening in government that I just want to get you guys this reaction to, one which was uh the crazy summary that somebody did about the reaction to bite and pulling out of afghanistan. okay.

The second is um unfortunately by and reiterated trumps decision on uh refugee numbers just today. Um so he's not he had a pledge that he would you know go back to the the original numbers of the obama level numbers and he said he's not going just going to keep IT at the trump level, which basically says no very nominal refugees. And then the third is the growing frustration and perceived incompetence of the cdc. And now you have the entire business community starting to push back. Those are three completely different things, but they just speak about some government things, some curious about your reactions to anybody.

And I mean, in the thing that that highlights for me is the media double standard. And I think this is why a lot of people are going to centuries and why this podcast has become a purple podcast, irrational podcast, because aoc was going down to the border hysterically crying. Remember the photos, they were all dressed in White.

And is there any difference between what prompted at the border and what's happening now? Doesn't feel like IT feels like it's a problem that they're both trying to solve in its ninety percent the same outcome. And then you look at afghanistan, you know, trumps like we ve got to get add to here and then the press dunks on him, like how could you do that? And now bidens doing, and he's getting high fives.

And so I would just like to see some consistency from the press and the reaction and americans on these issues, which seem to be not win able. Or you know how much do you lose in this instance? Like afghanistan are lose, lose and the border is a lose, lose like there's there's no winning. I don't think in these in some situations that a president has to face. I may just that would success to say, well.

yeah, I saw, I saw that tweet storm on the media double stand around afghanistan and we should show that and linked to IT in the show notes because whoever IT was inco, it's incredible. I this is like definitive proof of the media doll standard, where he goes literally, he does a side by side of every single major, precise media outlet.

Their coverage on trumps sus biden drawed down in afghanistan trun trumped the major draw down, and I think got us down to maybe like fifty hundred troops there. I think he missed a politic opportunity not to to go all way down the zero. Then he could have taken credit for ending the war, which I think he wanted to do, for whatever reason, get IT done.

And he basically handed by IT in a beautiful opportunity just to kind of end the war once for all. I think it's very popular people. We've been there for twenty years.

I think people want to get out. So I think binders decision was politically correct, and I think IT was the the right decision as well. I think we've it's time to be out of there. But yeah, the coverage in the press was just completely historical about trump doing IT was predicting all sorts of negative consequences and then when bended IT like like Jason saying IT was nothing but kudos. So not only is a press not objective and not impartial, but they change their mind about a particular issue based on which team is doing IT.

Yeah I mean, if you look at the two quotes, they have a CNN tweet that then he just Green grab CNN on the same issues. This is reckless and it's really risky of trump s plan to retour troops. And then the next cnm tweet from this administration, president obama praise president bines bold leadership to withdraw a ash afghanistan by september 1。

And there's dozens of these N P R C N N year times .

washing and over again. And then I think this is why americans hate the media.

absolutely. And this is the what the the conservation I will call the mainstream media. No, M S N. And but they are proving their bias right here. I mean, and they're increasing irrelevance. This is why american public don't trust them to into them and don't care what they have to say.

Bad what you think.

Well, I I wanted, you know, at the federal level, we really can't opt out of the need of this, right? We're not gonna leave the country. We got an election every four years. So we are just talking about market failures in the state. california.

And one of the most beautiful designs of our system of federalism, back to this idea of markets right, is the fact that you get to choose what state you want to live in and in a post coveted world, we have the greatest A B testing in the history of federalism um because now you can live and work from anywhere. And the differences between state policies have never been greater. And so we've never had this invention that we can all watch and live tweet about on twitter.

And so now taxes in florida, they get to make choices. California is to make good choices. And then we get to see and political scientists are going to have a field day in five to ten years um and people are voting with their wallet today, the A B test in real time.

We have the largest economic migration in the history of this country occurring right now. And gave newsom and the rain ogalalas. They're going to have to be held accountable for the conditions and safran, cisco for the decisions with respective companies live in the state.

People live in the state. And Frankly, it's not about lower taxes. I would contend the event bigger issue is the contempt for capitalism, the contempt for entrepreneur ism and innovation that exists in california.

I have no intention to leave, but I will tell you this, like, i'm gonna fight like hell for a third way, right? That actually says capitalism can be a forced for good in california. And that's why sex needs to run.

Well, the way I I love, I love this idea of of a state by state ab test. I mean, what what was the old line I get? IT was IT was fd rs line.

That federations m is the laboratory, the state of the laboratory of democracy? yeah. So I I want to show this.

I just posted a link in the chat of covet. Death rates are in the U. S. By state. And it's really remarkable because every state has we've seen a lot of very different coveted policies by state. What we see is that california and florida have almost the same death rate.

I think california is like one hundred fifty four per ten thousand and florida like one fifty nine eight is a very, very small gap um despite the fact that california has had the longest and most severe lockdowns in the country and calf and has been the most open. And then meanwhile, you look at states like um like michigan, which has also had very severe lockdowns and has had a much higher death rate. And so you see that there's there's really no correlation between death rates for covet per capital and the severity of of lockdowns.

Basically, the data shows that lockdowns don't have an impact on a state success of battling covered. And you know, is this remarkable that we still aren't despite this data, despite the fact that, you know, science is now showing us, we still have lockdowns in the state of california. We've loosen up a little bit, but we're still talking about orange tears.

And it's just i'm here in ford a right now. It's open. It's open. And florida has a lot more old people than california and the death rate is just about the same as california.

So IT is remarkable to me that we are stuck in in this mentality of locked down. And I think it's because num has brought into the savior myth that he has. I think he's remembering all this pressed he and quo got at the beginning of covet about what great saviors they were and how they protected the population from covered.

But it's also been compounded by federal failure because the cdc basically said I were not, that they revealed themselves to be incompetent. You know, the same person that we all thought was an incredible genius fouche increasingly looks like a somewhat of a an idiot, and, you know, not completely informed on the topics that he should be informed about. And then, you know, you have these federal agencies come.

So, for example, when you put the cdc in the ft. Together, some of their decisions are just complete heads atures. Like, for example, this past week, you know, if F, D, A stop the use of the Johnson and Johnson vaccine, because seven women between the ages of eighteen and forty eight got a blood cut and one passed away. And if you think of the over seven million, right? And seven, seven is literally seven, four.

seven million about people died in car .

accidents on way to get vaccinations and actually died from a blood drive.

And more than lightning strikes.

more lighting service is bad risk assessment, but has also been very bad P. R. For for the vaccine. So in the wake of that with the polling on vaccines went down by like fifteen points, and so they're scaring people away from getting vaccines.

I don't know if that polling was just on j and j or whether IT applies to other vaccine as well. But the most important thing that the health officials could do is just convinced people to get vacation ated. And the decision they made on rolling back j and j has really hurt that.

And then also know the fault. I comments said, even if you've vacation ated, you can go to movies, you can go to sporting events, you still to wear a mask. You still can't get together in groups, indoor spaces. Well, then why would you get vicinity? Why would you take .

that chance that is so critical free? Do you think if you get a vaccine, you should be allowed to take the mask off like .

that could be a reward? Look, I mean, a it's a bigger question and a science question, right? But I certainly don't think that there's any risk to you or people around you. Won't you ve been vaccinated with respect you're wearing a mask um and so uh you know the the the mask Mandate, I think as you guys pointed out as a little bit more kind of political and social posturing, uh then that is kind of you know scientifically reducing the the spread of the of the virus once you've been vaccinated when you've been vacant. Ated in the clear theoretically can do what you want to do.

of course. So so this to be really clear, once you get vaccinated, there's no reason to where a mass remember the reason for the mass man dates with source control, right? To prevent other people from getting the virus.

Well, if you're not Carrying the virus, you're not admitting the virus. There's no need for you to wear a mask to insist that people were a mask if they've been vacant. Ated is performative vely anti vx because you're sending the message that the vaccines can be trusted.

You agree with that. freeburg. Yeah, it's a fair point. I totally I mean, I think it's it's a really fair point. and. Uh and you know the the whole counter argument to that, which is counter factual, is, you know hey you you can still transfer the virus. We don't know that you can transfer the virus, but you know you can be radically saved that about anything.

We know deterministic ally ah we don't have empirical evidence that we can say statistically here's how likely you are to translate the virus, but we know deterministic ally. This is the process by which of vaccine works. You're not going to be having replicating virus viral loads in your body, therefore, you're not going to have a high viral load coming out of your nasal passages, your mouth, therefore, you know and this is the case with all these kind of vaccines like the flu. We you know you shouldn't be be needing to have to wear a mask. So like um you know totally make sense.

What's the upper bound feedback of the number of people that that are gonna vaccinated us are we're gonna get .

to sixty percent percent. Yeah I would get sixty, sixty, sixty five percent because remember, one percent of the people under sixty and twenty percent.

I think that right?

Yeah, yeah. I think we've really, we've really botched this. I think we're totally botch this vaccine roll up.

by the way, I will tell you, because of the upper bound being where IT is, I still think we'll end up at a point where we're going to have a lot of people that are gonna immune because they already had coped coupled with the vaccine, we're going to have extremely low numbers. But the reality is the numbers are not going to get to zero. We talked about zero as in a couple podcast ago, because we're not going to get to zero.

I think this is a really important thing to remember. The way that we've tuned ourselves to react to cove IT IT was initially remember was intially about, you know, minimize the surge. And by minimizing the surge, we will keep the health care system for being overwhelmed.

Now we've transitioned into the we can like covered spread. But as we've seen, the reality is cannot stop code from spreading the matter. How many locked down you put in place society, people still get together in their homes.

And I will give each other code. And because some number of people will continue to have code, we are gonna have covered in the united states for years to come. IT is not going to go to zero.

And the question we have to ask ourselves is, how are we going to allow ourselves to Operate? How are we going to live our lives? If the covered risk is non zero and IT will always be on zero. And by the way, the measles risk is non zero, the chicken pox risk is not zero, there are already non zero um no transmits simple um infectious diseases out there that have some degree of fatality rate to them. But um I think the biggest thing we should all be concerned about is this notion that we are like shifting a new Normal that will last for many years because we will never be a zero.

So can I am moving at you if that's the case? I'm little .

ally going to there .

be one that nobody is .

gonna and for um we already see you know chesty went on C N B C this morning and you know basically said, you know they are batting down on all the hatches because there's no is like the demand for travel is literally going to blow the roof of the building totally right? Like people too smart people make risk reward decisions in their personal lives every day. And if the government tries to lock them down, there are gonna tear down the gates, like not going to have.

But what you're saying those at what the implicit thing about what you're saying, which is scary, is unlike times before about measles or chicken pox, you we now are basically debasing the credibility that these government institutions have about anything they say. That's the real enemy in the room. And this is all said and done.

So now you have people that are acting on their own. So the cdc says, you can't fill middle seat. The airline safe. Now go fuck yourself. We're going to feel whatever seat we want and nobody is is gonna complain back to what brad said because they're risk and writing for themselves and saying, but you don't know what you're talking about anymore.

And so where .

does that leave? Is that a good thing or a bad thing? States where main power was information control, right? right? There is no information control today anywhere. In fact, we are frictionless, less information, which means that by definition, I think there's greater chance for decentralized.

I mean, remember, you know the arab spring governments were overthrown on the basis of twitter, right? I don't believe we live in a hob sy and state, uh you know of suffering in in the natural order of things, right? But I certainly believe the government has a role to play to help organize us and uh you know because there are big issues that we face in the future. And you know, I just hope we can find a baLance uh you know uh in the past forward.

But this I I think about this is um an inoculation, I think to bad institutions. If you look at people who spent two hundred fifty thousand dollars going into dead at some big expensive ve college, these Young folks are saying, i'm not gonna that anymore. Now those colleges have to react and change. And now we're seeing you .

with the teach this. But I think Jason is actually more extreme of that, like we're learning that institutions aren't reliable, number one. And then the second is that we're learning that those institutions are static.

So meaning like today, there's I think that there's a lot there's a big case to be made that the cdc doesn't really know what they were doing and that in some cases, the fda has been a little over reactive. okay. Now what can we do about these things is not like we can have a new cdc that we all create and believe in or a new fda.

These are the laws of the government. Those laws will change because there's a bunch of incentives for folks who are currently empower that oversee those things to remain that way. So now you know exactly a sax said on the wim of Frankly, like, you know maybe in over reaction, we pull vaccines off, then we pull them back on, then we pull them off.

Know the reaction to the astro ec vaccine was kind of a little, uh, on inspiring, you know, oh, it's bad. No, it's okay. Oh, it's good.

No, it's bad. Take IT off. Take IT on.

Put IT on. And that's that's been a global reaction. So you add all of these things up. I think the takeaway is what freeburg said. Institutions are broken because the incentives of the people that run D O, M are not aligned to the people that actually expect output for.

I'll say two things to this that that's an important point. One is institutions to me, or like, like, like any living organism, they want to grow. And so, you know, every government wants to add laws, spend more money, grow its budget.

Every company wants to have more power, grow its top line. Even every university, harvard and damon d wants to grow over time. He wants to do more research.

IT wants to have more classes. IT wants to have a bigger campus. Every institution as a result is then trying to aggregate um more resources and more power and more authority.

And so you know then when you have these moments where the institution doesn't serve the stakeholders that IT is meant to serve, you have this breakdown of trust in my institution and institutional begins whether that's the financial system and me and the evolution towards uh decentralized finance and bitcoin and so on or the failure of government and the ignorance against laws and what the government is telling us to do and so on uh or in companies um and so the big question for this century is going to be, are we going to allow that to happen? Now I mentioned this a few pots ago. What I most concerned about is the absolute um uh alternative to an institution is a mobile.

And a mobile as we've seen where you get cancel culture and you get um you know game stopped going through the roof and you get trial before, uh before without a jury uh and and trial without a judge, uh can be really ugly, can be really nasty. And so the original intention of many of these institutions was to create a system by which there are rules and values that we all described to. And those values go out the window when those institutions fail.

So the big, the big chAllenge, you know, we is as as a, as a as humanity are going to face the centuries, this, this, this psychotic y, between the failure of institutions and the need for institutions to constantly grow versus the chAllenge of not having institutions with respect. How do we Operate society with mob rule, uh and distributed rule um and and it's going to be interesting to to kind of see this going to be a lot of back and forth over the next couple of decades. I would imagine with the respect of how do we make uh, economic, government and business uh uh uh decisions and how they play and whether institutions or kind of distributed decision making place a role. Good.

good segway here to european josh. How holy sex I I never thought I would see the day that a republican wanted to bust of all the big companies, but he says no acquisitions by companies with a market cap over a hundred billion. Putting aside the fact that this wasn't Elizabeth warn or berny sander's proposing this, this was your your best to your judge. Holly sax, have you met him or donated IT him? I haven't met him.

I haven't made him. Make the second question.

You make a little donation there to holy.

Maybe maybe one day we'll see see.

What do you think about this concept?

Two points. okay. Number one, you're right that this is showing. There's a big political regnant underway. This legislation could have come from elias warn or bernie Sanders, I think would have justified in different ways.

I think what hall is concerned about is a concentration of power by big tech companies are than using that power to sensor people. So that kind of the impetus, I think, scanners and warn their empty s would be around more of a concentration of wealth and money and the power that, that create. So slightly different motivations.

But I think they're probably on the same page here. It's kind of this populist while fire that's that's kind of burning in both parties. So I think that sort of the first observation is, is kind of this new populous realignment of our politics.

The second point i'd make about this is that this legislation is what I would call sort of performative legislating. I mean, I don't think this bill is a serious proposal to become um it's too much of a sledge hammer. I think that if the goal here to try and rain in big tech, I think this banning. Any acquisition by firms over one hundred billion or market cap IT is way too much of a um it's not it's not crafted enough. I mean.

there any maritim, how would you change its sex?

IT would have tons of the consequences for what we do. I mean.

we've got isn't IT good for what we do though? I mean, if company stops s selling early, if instagram and youtube stayed independent witness have been .

much Better with a blanket IT was a blanket statement that at any company can do IT if they were over hundred billion, right? So broke your healthwise business boot done.

gone to zero, I mean, instrument. And look, even for us, right? There's only three, I guess two or three good outcomes, right? There's IPO s directness, respect, just put him in the category of .

the company going to popular.

then there is ma. okay. And then the third outcome is basically the company goes under IT go bank, right? So if you take ema off the table, you are basically denying a lot of attractive exits for risk capital.

And that's going to ultimately hurt the return to risk capital and leads a less of IT. There are a lot there a lot of companies where you know founders create a technology that's valuable, interesting, but I can't monitor ze and at least be part of something larger. And if you deprive every, I guess, big company have been able to buy of rd acquisitions, it's sort of crippling the economy for no reason.

I don't think IT really addresses the issue that holy really wants to address, which is censorship. So my point is I would find a different way to address IT. I think at the end of the day, this legislation is not meant to become law, is meant to make a statement and to to be a warning to big tech and to get and holy trying to appeal to a constituency on his side of the eye. And I think it's sort of it's is performative in that regard.

I an like he votes against the election. He comes out with this assi solution to his sensor should be you know like this is the problem of the grand standing of these politicians on both sides. They aren't focused on like how do we make sure that everybody's participating in the ownership society?

How do we deal with you know you know issues of diverse is h you know it's so far removed from actual pragmatic solutions to the real problems facing us that IT just drives me insane. And so um he will most certainly not beginning a donation from a and you know like but what I am going invest aggressively in you know and what I think we ought to be doing and I I I I hope to math will take me up on this right? I don't want to go spend ten million in washington to lobby them to create the investment amErica account.

Let's you and I put up the money. Let's incubate this. Let's tie A C, E.

O. Let's you know, let's let's put up ten, ten, fifteen million box. Let's distributed to families.

Two thousand box at the pop. Let's build a proof of concept tire. Great o that's what we do and prove that IT works.

Yeah, that's Better. That's actually a more practical giving pledge. And the giving pledge.

Oh my god, what a great idea.

If we should just do that right now and basically name and shame everybody that doesn't want to contribute who's make money, because the reality is we all have been extraordinary ily lucky. Yes, we've worked hard. But Frankly, you know, none of us deserve any of this. We've been lucky. And so whatever representative share that you could contribute, and what IT does that gives, you know, a low income person of color, minority person in america, somebody whose you know a disadventure ge, a two thousand dollar had start when they're born.

is a fucking a may. We could raise a hundred million dollars in the next three months from because do you know the reason people people like I don't want to pay taxi because they don't believe government is going to use the money wisely.

If we went told all these folks that we're going to use IT to give two thousand dollars directly, right, to create on a sense of ownership and participation in the american dreams, their little slice of tesla, of walmart, of amazon, of google, you like, the money will come in from all the folks that you mention. And I would love to see this crew get on board with that. I think we could do IT over the course.

The next six laman, let's do IT.

The audience who doesn't understand we're talking about, imagine we put a thousand dollars into a four one cave, or two thousand four one k for an american, every american born, what would that look like when they're sixty five years old? And what a five hundred of the two thousand was in a five twenty nine. What would that look like when there eighteen years old? New at a college that was my little punch up to office, you know, put half of the in retirement, half half an education IT.

Turns out if you put your stimulus checkout each of the last three stimulus checks into doge coin, you will have three or thousand dollars. Okay, so there there may be, there may be alternative investment .

accounts that you know the two thousand .

dollars by the time you sixty five at at eight percent, which is, you know, if you just buy the S M P T F would be about three hundred thousand.

two hundred and ninety seven thousand more than enough to comfortably tire in style. And if you were to put five hundred of IT into an account for college, maybe you get twenty five care or something. And that what are equal in eighteen years?

But buffet is talked about in snowball. The behavior of economics are, if you have savings, you save more, right? What this is about education. Yeah, people feel part of the system, feel like their part of the game.

I listen, another amazing episode. De, thanks, men. Thanks for coming on, for coming on. We don't have a nickname for bread.

We never king of stacks are just get.

Happy to hand, i'm happy to hand the ground. Just I just wanted be called king.

Five boys.

somebody pick me up and let's go have a guys trip. What are we doing here, guys.

where we got I just want to say, well, since David is in miami, since David is in miami, i'm going to tell you guys that my favorite prime number has .

always been don't know what that means. What's a joke?

my.

Let's go .

love .

you next. I love you best. You love you bread, love you bread, bread.

Say love you to sex. See what happens. Brad, say love you to sex. So what happens?

Love you sex.

Your winners, light .

man.

We opened, sorted to the fans and .

just got crazy with.

Like sexual .

attention to release b.

we need to get much.