E92: Adam Neumann's second act, a16z's $350M bet, housing policy, Inflation Reduction Act & more
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What's IT feel like to be a guest .

on your own podcast? I'm excited. So you did a great job. The punch up to the formatting. We actually put the questions .

in yeah think it's I wanted to all agree on the stuff. We wanted rock .

in a professor T. V. show. They would have three interviews with everybody, get all their positions. Then they put the positions into the document, and they know they basically do always called the pre interview. Or here's another idea. You could do your job well, I mean, and do your job about, how about you find that now you, or how about I turned you three miserable folks into actual likeable people in ninety one episodes, which nobody thought is possible.

I actually think i'm becoming less like a about the long gram on this.

I think correctly, all of us, all of our lives.

man.

We open sources to .

the fans and hello and welcome .

to the all in pod. I am your moderator for today out of the hot seat doing the easy beat dave freeburg. I'm joined today by our steam panel back from his european and shopping spring, our national treasures, america's favorite dictor, to a to how are you feeling? Feeling great? good. I got .

a little head of.

oh, oh, sorry to hear that. Hope it's not copy to.

But no, I tested.

I'm coit like IT, my god. okay. Also with us as usual from his emergency bunker ahead of the U.

S. Civil war, the rainman. David sax, how are you, David? good. Happy with the late start this morning, i'm sure.

And of course, everyone's favorite ski bum, producer of the woodstock of tech conferences, the one had done all in summer. Miami, Jason, hello, king of Jason. What's IT like to .

be a guessed y today? H, it's so delightful when you said you wanted to moderate that to me was chefs kiss. I get to, I get to comment and not be the moderator I love. Yes.

where we're mixing IT up a little bit today. I'm going to take the league J S GTA. Sit back. I'll say a couple words before we start because I think last week we got a little nasty ah definitely heard that from listeners um and so I want to to just address IT really quake and then we can kick off the show.

I I think it's important to say that none of us really started out doing this pot as a job or thinking that I would become a real regular thing. We started doing IT for fun ad hawk from time to time. And then I became the thing that people listen to, and I became the thing that we started doing every week, and people actually cared about IT, and suddenly became this real obligation.

It's almost like we got pregnant and had a baby, and now it's like four men and a baby. And so you know, I think we all feel this like, you know, chAllenging obligation that we never expected to take on, if like taking care of the show, taking care of the pod. And we all have like different points of view and what we want the pod to be and what we wanted to become.

J hell cares about know getting up in the rankings and listening to the audience and ultimately has shared that he wants to motives. You know, at point, we've not always agreed on different points about that. Tomato has the things he wants to bring the table, success things he wants to talk about.

And so you know, it's really difficult kind of running the pod, managing the pod with four very different points of view, very different perspectives on what IT is. We all want to, to get out of this over time. And I think IT causes us to get really frustrated with each other.

We end up having real fights. You know, you have the biggest fights with your best friends. Uh, you know, you really let loose and lash out.

I think last week I listened back I was pretty contemptuous in my kind of order to J L. About hitting up on the inflation topic. And I to apology to j, do I think IT was, uh, you know, I think, yeah, I think I was a little rough.

But at the same time, I just want to point out, like you know, we're going to keep doing the show um because because I think you know as much as we all disagree, as much as we fight and as much as we may even start to dislike each other uh and not get along, I think it's really important that we keep doing this. And and I think restating that commitment and trying to do Better h is really important. So you know we're going to try different stuff out, try to find ways to find common ground and keep you in the show productively with each other.

Uh, as one experiment this week on to moderate, we're, you know, try and take IT that way. But you know, I just wanted to say those few words before we take this off guides because I thought I was important, especially after the last couple of weeks, I think it's been a bit of struggle. We've been have a tough time. And I just want to be open about IT and you know, highlight that, you know, as an example, you can fight with people, you can disagree with them, and you can still keep trying. And I want to cept that example.

I want us to keep doing that. So anyway, just, I would just like to say, apology accepted. And I thought there was a lovely opening.

One thing I I would just punch up there is the real reason we did this was because we missed each other, we missed hanging out with each other. And then this is you something that's become more successful than any of us ever imagined. It's got nobody in size.

That is just, you know, hard to imagine how many people are listening to this, which then does put a little bit of pressure on IT. We wanted to be great for the audience. And I just want to say like I don't take a personally when when we battle on stuff, even with politics and sacks and stuff that I respect each of you, you are each brothers to me.

I love each of you deeply uh, and when we fight and things don't work out, I look at IT as like personal growth or progress towards some other goals that we each have the amount of support i've gotten in my career from David's acx and chamar h has been unparalleled. David sax was my first lp. He encouraged me to create my first venture, al fund.

Chamfers is to supported me relentlessly in my career. I showed up for me every event I ever did, and I tried to do those same things for them. You and I haven't done much business together freely, but i'm enjoying the business that we ve started to be yes, started to you and and I showed up for both of you are events when you needed me yeah, doing some cynics with you. And I love doing this each week.

I love doing this each week. Yeah, it's like I think my point was its a lot easier to be friends and have wine together and play poker together. Then IT is to do a job together and this has become really a job.

And so now you can have really good friends, and then you try to start a company together, do your job together, you can hear each other. I think IT doesn't mean that you guys stop being friends or that we should stop doing the work. I think we should still keep trying to, doing the work, figure out a way to make IT work. So, and that was the point I wanted to make.

that the end of my my same as was worn prepared. Those are just reaction to yours. I don't to say I did IT OK. Let's just have any emotions right now.

Exactly what are you feeling? Yeah I mean, to math, do you think grasped is Better or the regular .

built got sex? I we're texting while you guys work. We're hugging IT out talking about different kinds of jerky beef jerk hope.

But we were jerky. Each other of you guys were researching .

jery grave. Jeri was a big .

time to him.

Oh, great joy. So first a thing to talk about today, and I kind of wanted to take IT in a little bit of a different direction that I think all the other tech media have kind of addressed this. You know, adam newman is back.

He raised three or fifty million dollars from in recent horror, there was announce, met this week for his new company called flow, which, as we understand that, is trying to develop residential apartments, you know in the same sort of vibe, quality and attention to experience as maybe was intended with we work uh and flow you know seems to have um started originated with adam doing a bunch of acquisitions of real estate with his own capital and now he seems to turn this into a real business and money from the recent so there's all the commentary and joking about and recent putting this money and or they are crazy as well as all the you know commentary about adam human. How can anyone back in the guy was so awful the first time around? Let me just do a quick round the horn with you guys, you know, initial reactions to the to the adam human deal.

And then i'd love to talk about founders having a second act because, you know, adam happens to be high profile. So his failure with high profile, but a lot of founders have a failed low profile first experience and come back and kick us the second time around. And investors have taken notice of that.

And so i'd love to to go there, but maybe we just do a quick reaction. J, K, I know you ve talked about this on your other show. Maybe can can give us your quick commentary on the opportunity, the transaction and what are people talking about with respective this this deal happening?

You know, people are wondering why he's able to raise money. And what I always tell founders is when you see these like weird founders, and you can keep your heads around them, IT typically, ally has to do a track record. And credible audacity trumps prior blenders.

So say what you will about, uh, adam newman. He is audacious and he has credibility. People forget his origin story.

They only remember the moskos I son, four billion dollars and what happened and what he did with that. And that was a complete cluster fuck. He went off the rails. He did all kinds of inside dealing and and IT was matus. But before that, he did Green desk.

He was a bootstrapped entrepreneur, and then he created the category defining co working space, which, to this day, when you say, I need to get office, the first thing people say is get a, we were just like they say taking uber, just like they say google IT, just like, you know, any other verb that we talk about. And so it's very easy to dismiss him and say, the tech industry has no morals. They just blow back anybody.

He has a probably traded company that's in the market right now. He defined the category and he also put three hundred million dollars, apparently of his own money at stake to buy these apartments. Ah so I think it's A I would say the bed make sense to me and I think that will make sense if we go into the bed, which I love to everybody else's thoughts on. It's an audacious bet because housing is one of the hardest industry is to tackle and he already did IT for commercial. So why would would you be able to .

do IT for residential sec in the market? Did you guys take a look at IT or have any points of you on IT?

No, I mean, don't write through and fifty million dollars size checks. So is not something that we're going to take a look at. For that matter.

We don't really do non software. We don't do in the you know physical role type investments. And i've kind of learned that doing anything in the physical world with Adams is ten times harder than doing anything with bits.

So know one of my take ways of the last few years is we tend to like pure software models, not even hybrid or technical models, because IT really does take a telex on for nor to do anything in the physical world. So we we software is kind of our kitting. And we we like to stick to that in terms of know in recent horis making this investment is right or your larger topic of of repeat founders, most startups fail in.

Most founders or good founders have an opinions street in them. And so you combine those two things, and this can be a lot of repeat second time found of people who are fundamentally entrepreneurial. The first thing doesn't work out. I think that, that can be a positive thing to invest in, because theyve gotten some of their mistakes all the way, and they have learned from that experience.

So I think the question we would just ask is what were the learnings and did they conduct their failed start up honorably? You know, if they lie to investors or misled investors, then obviously, we don't want any part of that. But I don't think most failures are like that. And and so as long as the founder, I think, conducted themselves honor believe had some good learnings, it's certainly not disqualified for their next up.

I mean, math, you've been open in the past about startups that waste money and do the kind bars and red brick you know offices and you know easy live in at the office. There's no Better example of over the topic zuberi as there was we work right. I mean, does that indicated that this guy doesn't never clue in terms of how to be prudent with investors capital and is not active? Or how do you .

think about IT? I have a couple of thought. The first is that we work um is a really interesting business, but that business has been built many times before and it's called the rat.

And I think what adam was able to arbitrage was a period of time where he pitched a non real estate investor, a technology company that was really just a real estate investment trust, and that's why he was able to get these incredibly heady evaluations. I think the peak valuation of we work was like forty five or fifty billion dollars. What happened, which is that when we work ultimately went public, the collective intelligence of the public markets imposed a rate based valuation model on rework.

And IT is now a three point six billion dollar public company. And I don't think you can dunk on adam for that. It's hard to build any kind of company, let alone a three point six billion dollar company.

And he was instrumental in that. So he should get some on a credit. But the reality was that he was pitching people that didn't want to hear about a business that was a real estate investment trust.

They wanted to hear about some technology and all of these other things. But ultimately, when you stripped IT away, IT was a read. Now you started again in from the outside, in not knowing anything, because we don't know anything. What IT looks like is the beginnings of another read, except focused on residential, right? So when you buy hundreds of thousands of apartments, but again.

they take different .

like the the the issue at handle is that, again, he is found a technology investor to buy a technology story. And again, time i'll tell whether there is a technology business here. But if IT ultimately is an amalgamation of a bunch of apartments with some sort of you know interconnected technology that helps enable a Better community or what have you, those kinds of reads have also been built before, and reads are valued in a very structured way on this thing called ffo, funds from Operations.

And you know what the upper bound evaluation is, which is if you go and, you know, look in the stock market, the most valuable read in the world is a company called pro logis. They have about a billion square feet under management. They are about a hundred billion dollar company.

We work as about forty five million square feet under management. There are three point six billion dollar. So if you just interpret from those two data points on the residential side, Adams can have to buy, you know, if you think an average apartment is fifteen hundred graphite, yes, to buy, you know, six hundred and sixty five thousand more partment.

In order for that to be pro logic scale, you know, I don't know, to invest in a billion dollar valuation or one point five or two ever, the number turns out to be make sense if you think the upper bound is unlimited. But if you think the upper bound is three or four billion, the only reason to do IT, by the way, IT still makes sense for end reason to do IT. And this is why I think people get tilted because now this comes to my second point, which is that what adam newman is able to take advantage of is a very obvious powerful understanding of the venture capital business model that other founders don't, especially the ones that dunk on him.

And let me just explain this. We talked about this last week, the only mistake I think that softbank really made was the velocity of money mistake, which is not setting the investment cycle of their vision fund to be ten years instead of five. Well, every other fund e has a five year investment cycle, two, including a ages.

And so when you have tens of billions of dollars under management, guys, guess what? They have the same problem solve, banked, except with just a different quantum of capital. They want velocity of money. And so if a founder comes and asks for three hundred and fifty million dollars, IT actually, in a perverse way, makes your life easier. Because now that saying yes once first is saying five or six times to people asking for fifty million dollars, or haven't forbid, three hundred and fifty times for people asking for .

a million dollars. And so if you if you're mat seat to out, if you're in the investor, see, are you putting all that capital once with the one guy who is managed that money before? Or do you want to find the guy who has IT or the guy who has a you have .

to understand the in recent business model and recent horders business model is to become blackstone. But for technology in .

like thirty billion, a right.

right, which is still you know a drop in the bucket. So if you look at blackstone, right, blackstone is one hundred plus billion dollar a cab company, right? Built on three pillars, credit, private equity and real esta c.

You can make the argument that technology is near is as important as those three categories. And so you know, if I think it's pretty obvious that and reason is trying to build a publicly owned, able security that represents all things in technology. So again, I don't think that they are necessarily out to generate massive returns for L P S. They want to become a credible, reliable institution for to absorb hundreds of billions of dollars.

And so ultimately.

the objective you think is in the the ultimate goal is to mot is for and recent and horror ds to monodist the equity of and rest horror ds. Yeah, that's a that's a lot of goal. It's really hard to build a business. They built an incredible business, and then they should get credit for that sex.

You agree? Well, mean, they are. They, I think the moths, right, that their stated goal is to build like a larger institutional VC type investor.

I mean, doesn't reason. Have a portrait. J P. Morgan, hang s something. I mean, they want to turn VC from being like a little craft business is something larger and more institutional.

So yeah, i'm sure they jump at the chance to write a three forty million or track if they believe in the company. But cash shift this conversation for a second. So i've done a lot of commercial real stay investing.

I think there are reasons to think that flow this new company could actually be Better. Then we work. And let me to explain.

So with we work, if you talk to commercial office space owners, landlords about we work like ten years ago, what they would have told you is, yeah, look that males great. But we want tenants who are high credit and sign long term leases. why? Because they are not worried about what happens in a bull market. They were worried about what happens in a recession, and they want to make sure they can cover their bank debt. So landlords have always cared not just about rents, but also about having high credit, long term lease.

What we work basically did is arbitrage that, of course, IT was a much Better deal for start up because if you're started up, you don't want to go through your complicated a procession, at least you could just go month to month at a wee work and you would be able to pay a premium for that. So we work business work great during an up market because they would run space for safe fifty box of foot, least IT for one hundred, and they would capture the spread. The problem is the business was highly levered to a boom cycle.

And at the first recession of bus cycle, all of a sudden they're going to have massive vacancy because everyone can leave and all the sun, their rents go below the the rents are collecting go below the rent they're paying and the overcharge goes away. They magnify that problem by making two mistakes. Number one, they signed a lot of top of market leases, right? They were signing the leases and one hundred dollars post per fit in hot markets.

And the other thing is I didn't seem to have a lot of financial discipline. You know, I guess that show kind of make fund of these sort of balkan parties they had and so forth like that. You can get away with a lack of spending discipline if you're a ninety percent gross margin business like a google. But when you are a real state business who's got real cogs, not having spending discipline is actually a problem. So for all those reasons, I think we were kind of contain the seeds of its own explosion inside of their model, and they needed to manage or mitigate those rifle out Better.

That's not to say though that .

IT wasn't .

a great product. I mean, in early days to point, they were taking under market like really low a cost square for the space, like in the tender line and then selling IT for, you know, Brant and third street rents, right? I mean, that was the arbitrage and IT worked. It's only they lost that discipline. Sounds like in the second half of the company's story.

right? What I think is interesting about flow is that a sort of multi family, these apartment type buildings, those tend to be, you know, let's call a one year leases anyway and they're owning them. They're not leasing from a landlord.

They are basically or so. To right is basically a standard department replay where newman is going to create a consistent experience and brand across the country. I'm not sure that's really been done before where there is like a brand for apartment .

livings never been done.

yeah. And so actually, it's pretty simple in terms of measuring if it's going to work or not, which is simply can adam newman deliver lower vacancy rates and higher rents and then you buy apartment buildings at market Prices. So in other words, that's arbitrage. Is can he extract more rent and less vacancy from apartment units by creating this national brand? And this experience we do with .

financial is my point.

Everything you talked about us, how we would actually do a tear down of any other read that was looking for money, David, you know, we would look at what is the F, F, O, ultimately, it's like, you know, what imply corporate? What's the f can you get paid for in this? You have to spend and can you get back? And this is where this is what I think like, you know, trying to then, you know, so if if if on if on the inside of IT, what instead IT was not that, but IT was pitched as some, you know, convoluted technology play.

It's a little bit harder to believe. Again, we don't know the details. So maybe I .

sure .

actually what I would say building on a sax entry, mates, if they are going to do seven hundred thousand apartments, you can actually put some numbers on this. You know, seven hundred thousand apartments, you think, think, think get extra hundred, may be a hundred fifty box out of a renter. I think they could for like that experience where people pay a little, they're not going to pay three hundred more or four hundred more because then they would just get a larger apartment and you know they could spend that money because you would be Better spent. They have seven hundred thousand of those.

You're talking about a billion dollars in revenue a year that with seven hundred thousand apartments, okay, ten times profits, you know, whatever ten billion dollar valuation of interests and hers is buying in at one point five or two extra s saying is probably rect somewhere in that ranged IT about twenty percent. okay? Yeah, maybe they get a six or seven baggar out of this, but it's a six or seven background on a big number.

Three, fifty. It's not like at twenty x or fifty x. And you also get the branding, which I would not under value here of being the firm that backs bad boy entrepreneurs and is like willing to go there and support.

I think it's a real positive for any reason. It's like, look, yeah you know you just the time of money. Well, guess what? You've got to put that money out because it's not as if they're gona think to themselves.

Well, I really only want to run this fund over three years instead of two. They are not thinking that they're like, I want to keep going out because I think their business model works by taking as much oxygen in the room as possible, which means to be actively fundraising. Always that it's tight.

It's true of blackstone. It's true of Apollo. It's true of car. While it's true of K, K, R. Any of these publicly traded on investment managers, they live and die by their ability to constantly be raising funds, which implicated means you have to constantly be writing funds, the returns decay.

But that's okay because now you're feeding you you're taking money from pension funds and other institutional limited partners who are fine because their hurdle is like six or seven percent. So if you deliver eleven percent, used to look like a genius because you can absorb so much money. So and recent wins by showing that adam newman goes and picks him.

And recent wins because they have the ability to write a three hundred and fifty million dollars check. And recent wins because they have three hundred and fifty million dollars less that they have to actually put into the hands of other entrepreneurs. Now they can do IT with just one check. So it's a multifaceted in for them and it's a multifaceted in for newman.

I think there's also brand value for the entrepreneurs that have had failed S T A R T - U P. Or issues with their first start up plotting and knowing that they're still a second by to the apple. I remember a survey and I I just tried to pull IT up, but I couldn't find IT.

So I may be wrong on this. But first round capital years ago surveyed uh or did an analysis of all the investments they had made. And I think one of the biggest predictions of success in the startup was that I was the founder second startup.

And so if you've had fAilings the first time around, you're more likely to have learned from those fAilings to improve your performance the second time around. And so as an entrepreneur, R I looked to in recent horror ds after this investment and think, you know, these guides will still back. Great entrepreneur s even if things went sideways, there was an issue the first time, and you've got, you know, the ultimate kind of case for that.

okay. Speaking of and recently I going to move us along. You guys wanted to cover this topic, not my favorite topic uh just because I want to be careful uh about um you guys decide what you wanted say but um i'm going to bring up the um the and rein nb is a saying in afternoon guys wanted to cover this right now comes up sure I mean I mean okay well what I mean everybody talking .

about why wouldn't know everyone is .

talking about IT. okay. So you're coit you're in cov IT market and recent wrote A A N S A uh uh called build and I am going to read next year.

He says, you don't just see the smug complacency, the satisfaction with the and the unwillingness to build in the pandemic or health care generally. You see IT throughout western life, and specifically throughout american life. You see IT in housing and the physical footprint of our cities. We can build nearly enough housing in our cities with surging economic potential, which results increasingly skyrocket housing Prices in places like and Frances go, making IT nearly impossible for regular people to move in and take the jobs of the future.

And then last week, uh market, his wife law submitted a letter to the town of african um to uh fight against a multi family housing, saying i'm writing this letter to communicate our government objection to the creation of multi family overly zones in african please immediately remove all multi family overlays ones projects from the housing element which will be submit to the state in july. They will massively decrease our home values, the quality of life ourselves in our neighbors and immensely increase the noise, pollution and traffic sex. I'm just onna hand the mick.

Well, I mean, i'm happy to defend the residents of afternoon this. I am going .

to take the arian standpoint. But well.

look, I mean, do we have a problem where housing is too hard to construct in the state of california? yes. And there's a bunch of reasons for that.

The permanent process is business. Teen IT takes years. All those delays costs money. The tenant rights movement has gone so far that landlords basically can't um it's almost impossible to vit on anybody and that makes us so no one wants to be a lord.

No one wants to build these a multifamily uh buildings uh or or buy them and then yeah you've got like all these taxes. So this kind of and a cissy o for example, they just pass to six percent transfer tax where if we talk about and they basically just stuck six percent of my home and is like nothing you can do about IT. So there's a lot of reasons why people don't want to invest in more housing in california.

And I think that this average examples sort of Cherry pick because what this is, is really zoning. You know um there are the suburbs and it's not just athon. I mean, you ve got the ebay as well where people live in these areas that are zone for single family residences as opposed to multi family.

And that determines the character for the nearest od. Now, if you go buy a house in one of those neighborhoods with that zoning, then that's what you expect to be the case. I mean, you have to spend more money buying house than neighbor d.

You are investing in the character of that neighbor. Od, so IT is unfair to the resistance that neighboring hood for a developer to come along and say, hey, i'm going to change the character this place so I can make money. I'm going to take a bunch of single family lots, turn them into multi family apartment complex or something like that so I can understand why the resident would be against that.

So I would differentiate between legal reasons for zoning and then um things that the state or cities have done to uh undermine the market for housing basic creating frictions or impediments the market for housing. Now IT is the case that s cities get bigger and need to free up land that you might need to resolve. But the areas that you should look out for that should make sense, right? I mean, I don't think you go off to A T and change the character that you can buy five more units. yeah. I mean, you you should look at at why not look at the areas around, say, public transit like the barts ince of forth, where you could basically go up around there and you would make sense for neighborhood.

Mean example I would give to kind of paint an extreme picture is, let's say you on a farm in the countryside, someone buys the farm next to you and then decides they want to build a fifty story told skyscraper next year. farm. You would have a serious suggesting because I think that the I mean look look at the town of Venus in italy.

I mean to know if you're you've been there recently, but um you know communities local communities can define the character of their community by by making zoning laws that you know a allow a small city to remain like a small city. I've also always been against this notion that we should allow any developer to build any size, building anywhere they want, an inference system, which has been an art and cry from silicon valley progressives for years, that we need to let them build, let them build. But at the end of the day, I moved to seven, four, seven o twenty two years ago, and he was a small coin city.

IT felt like a small city. And building skyscrapers made IT more congested, made IT less inviting, made IT feel more industrial. And IT wasn't appealing to me as a resident, and I think that residents need to have the right to define what they want to the community to be.

The question that brings up there is, where do you build? Because all residents everywhere would want to block family housing, multi family housing, sky's scrapers. So I mean, too much. I don't know you have a point of view to counter what we're saying, but you know how how do we think about solving this problem at scale if everyone wants their local communities to remain quite and interesting and and not be built out?

Well, I I think I think that's true for people who can afford really nice homes in the suburbs, right? But there are a lot of people that live in highly dense housing in urban environments. And I think that's where we need to focus. First, if you look at the data, california needs to build three and a half million extra homes by twenty twenty five.

That's a rule, right?

That's so, David. right? Like focusing on a town with a population to seven thousand people is not going to solve the three and half million homes we need to build.

And IT brings up a bigger question, which is then who is going to pay for all the physical infrastructure that's gonna required? Less to say, you are able to actually double the population of other to fourteen thousand. Well, you know, I live near that area.

So what i'll tell you is assert has, uh, bad flooding. They've, you know, sex actually used to live near their two. So sex this, you know, depending on when IT rains, huge pockets of water just collect everywhere.

That infrastructure is bad. There are no sidewalks, right? So you kind of walk just on the road. It's a cards whipping by, uh, you know, could pick you off at any moment. Now those are decisions that, as David said, the residents of that town made decades ago because of the lifestyle that I created, and they trade IT away a highly deserve an environment, whether if you just move the mile, you know, self, there are parts of mental park and parts of polar auto that are already in a situation to absorb very dense housing where you could put that extra seven, eight thousand people pretty easily.

And do you do when those people in my neighborhood park, I don't want another apartment building here, I wanted to be down the road and accept, right? how? How do you resolve this conflict? And I just want to remind everyone in september bills, right he said thirty one affordable housing bills, which Mandate by zip code in by city and by town the building of affordable housing to create equity in this problem uh or uh which basically means all these cities and all these terms are now scrambling to figure out how do we meet our state Mandates, objectives of new affordable housing in our zipo.

our town. And I think exactly as you said, what will happen now as he goes to some state commission. And I think that state commission can issue some sort of penalty or something.

So you I think the residents will pay for that freedom, if you will, to to not have that building happen. But again, I just go back to IT doesn't solve the crux of the problem. The crux of the problem is we need to solve this housing crisis in the order of magnitude of millions of homes.

okay? And so millions of homes can only be absorbed mostly in cities. So the real conversation, and you know, is I have more sympathy for the residents of arterton than I do for residents of the city of Frances.

go. Okay, because there is dense housing and sentences go. There already is an infrastructure, social services that were designed and built.

There are sidewalks. Again, simple example. There are stop lights, you know, in 3Francisco that a lot of these towns don't actually have。

Now again, that was a decision they made fifty years ago. They would have to change that decision. But my point is like there are there are places that are already shovel ready.

And the real question is why can't we build hundreds of thousands of units? And so this is a good article to right, because it's a tony neighborhood and know there a few thousand folks. But I think the real issue wok solved until we figure out how to Green light hundreds of thousands and millions.

because we are three .

and a half millions. The truth here that this is not about africa. This is every town, every city in california is fighting all development. Because if you fight the development, yeah, you would obviously have less traffic and supply and demand. Your homes become more valuable.

The the place that thought at most of all of sanford cisco in the city where you cannot convert homes, you cannot take your Victorian and make IT into A A town home. And then if you look at what's actually happening here, what they're fighting against this, the hypocrisy of IT is, you know, these are town home. This isn't like a twenty story, you know, giant apartment building.

They're town homes and they're going to be three million dollars each and they're not gonna be for scary people and criminals and ruining people's quality life. It's gonna the venture partner or the receptionist. Not even the reception is going to be a venture partner.

It's going to be a cat, a tech company who's going to be able to buy this and then be that much closer to work. And so IT does rik of hypocrisy. And there's a really simple solution here, which is, you know, there are cow train stations up and down the pencil.

There are, you know, in some place you have other municipal transportation along those corridors. They should build up and they should build ten story apartments. Aca, redwood city did this recently. We've all been there and seeing the apartment of the .

courage they'l you're talking about. You're talking about the exact kind of solution we need because instead of trying to solve a hundred units here, there, red wood city did an incredible job. They solved IT in the scale of ten of thousands of units, and IT completely changed. The downtown of red with .

city IT is off and it's awesome. And what is afraid of? So what is that? This is the bias.

M at its worse in my mind, I am not going to specifically make about money. I think everybody you know has the right to live in the neighbor they want. They get to state their feelings. I think what we need to do is convinced people, and I think there's too really good arguments here. Number one.

do you want your shaft to vince to their neighbors od change .

till let them evolve modestly to have homes that their own children were their own chefs and housekeepers and associates. We all know people in the in the area who have bought apartment buildings for their nAnnies because you couldn't get a nani, but you can not get a shape so you you bought some unit in red with city and you rented. We don't really I know people I multiple who have considered IT.

And so that's the way you would convince nb able to to evolve here. And then there's a second one. This has to do with work from home.

When you commute, you know the issues of domestic violence, depression, drug abuse, substance abuse, alcoa abuse, all of that goes way up. And it's it's somewhere between thirty and forty minutes of a commute. You start to see people's quality of life seriously deteriorate.

And so if we want people to come back to offices, which apple just Mandated last week, everybody is coming back three days a week like IT or not, tuesday, thursday and you pick the other wednesday, you want come to work. I guess, if we want people to come back to work, what you are, we going to have to build some towler homes. The ceos, the founders of the companies, founders of the venture firms.

It's not about marking things about everybody. They don't have to commute. The office is within walking distance or a bike ride of their office. People need to start thinking about their nani, their chef, the .

firefighter and their employees. Jason, I made me right IT, but they wouldn't solve the problem for the nani. Wouldn't be that because the that read IT said that you would have qualified by building what's called an A D U. On your property.

Yes, so what? So people would have built IT for their grandmother. They are in law.

My point is the the law as proposed was already hacked. And so I was never have accomplish what you are saying. I think the answer to what you're saying is what red wood city did.

It's what towns all around the country should be doing, which is like in and around, particularly like transportation hubs. You should be Green lighting, a lot of dense housing, but j and those are not A D use that sit on the product. Five hundred. And by the way, also required not just the infrastructure but IT also requires the financing and all the, you know, the banks and construction .

companies constructed. That's not a problem in california. The opposition is the problem, which is why the federal, i'm sorry, the state government, getting involved and supercede ding or trying to supercede what happens on a local level. That's why I gave a newsies. Passing these things is because each town is refusing to do IT. But another possible solution is, if attitude is so good at blocking this stuff and they have so much money, let them pay a penalty and have reward, city or san, car los or another neighborhood d mild brain that wants money, and they want to build up mill brae is building cosetta a barz station ends is a Miller building up there.

Where are describing all these contortions and what should be a more free market for housing construction? I mean, the reality is we've done so many things to disturb the market. Agree with his labyrinth permit process processing delay projections for years and years to um to all the taxes and another because .

they fight fight there is a little .

different so the same factors into the permanent process. But I would again I A different shade zoning. But my point is just we've like so broken the free market for housing that we then come along and say, see the free markets not working.

We need more government Mandates. Look, is this happening in my amy? No, go to miami. There are cranes everywhere. They're are building. They're building multi family are exactly so in these, Frankly, red cities, red states, which are much more lightly regulated, they're building a lot more. But at the same time, it's not like in new york.

which is constrained so you have to build up.

But houston has no .

zoning in new york city has always had a very non sentimental view towards construction. The city has always said, okay, I if you want to build something bigger and Better, you can tear IT down and start over. I mean they have like air rights and so on, the if respect but but york city is never buy a large, they don't constantly um label buildings is a story I C and say you can't touch them and things like that in new york city.

He is always wanted to keep being dynamic and growing. Um so there are other places that do s not have this problem and they're able to achieve this growth without building an apartment complex like in a lot next to you if you live in the suburbs and have a single family residence. I mean, so I just think like the politicians in california have so thorough broken the market for housing and now what happens is you get an article like this that's basic scape going. The residents of a suburb as being the source of the problem when didn't create this problem.

They're just fighting to keep the state school so they're perpetrating.

I would say that first, i've special for us. I I live there a couple years and it's kind like a step community I mean, I had to move back to, well, i'm like, you know, I somehow just more come for stepping over dirty needles and .

you're voting with your dollars .

I moved back to center OS cope but massins yeah but look, evidence like a really weird place because .

I like alpaca in the devils s advocate in in addition .

to that are being no sidewalks, there's early, no offices, there's no grocery store, there's no commercial real state of any kind. There is no downtown there is there, you know? So I don't know like where the hook is that you had obviously put an apartment complex.

I think you are literally can be building IT in someone's backyard. So the character that neighbor is doesn't support IT. And I think you know people coming together to form their own cities under the principle of subsidiary should be allowed a reasonable freedom to basically construct a city as they in the way that they want to live.

And there are other cities that competition freeway, there are other city's competition. Houston has no zoning essentially. So you can if you have a lot and you want to make IT into a school or uh a hotel or a restaurant, you can do IT.

And then outside, you can have that same thing. People build all kinds of weird compounds and stuff. Just following is a competition between those cities. And I think servers goes losing .

yeah you guys following any of the startup cities that are being built where there's like a new city being built from the ground up and any of those seem like the things I don't know the names of any of them, but called the mean these real are these real projects. Are we going to see these emerging like next genius that you know could be viable places to move to in liver? Is that really just about, you know, transforming somebody cities that are less regulatory and that's ultimately what will win the market?

You know, part of why the the regulation has gotten so perverted in a lot of these towns is because you ve been able to jury matter how you know these public school districts get funded.

And so you know why folks are so protective of of IT is is again and and you know to to underscore one of saxes points, this is much more prevalent in democratic states and democratic cities where you know coastal elites have really Jerry mander these school districts. And that's a large reason why they uh, they don't want a lot of building. They want to protect the tax base and they want to be able to fund those specific tax dollars into a few schools for their kids. And that's IT yeah .

and so .

is that is actually a really .

good point about people don't know this undercurrent.

which is o is by the way, this is the dirty is little secret and democratic states yeah again, mostly democratic. But if you look inside of california in a couple of other states, how horrendous y Jerry mander IT is so that you can basically the district, in a way to corn off tax dollars to only then sent to one or two public schools that sit inside of your area, your zip code, because that's what the law says, it's a zip code. Orient scheme is perverse, is created incredibly horrible incentives for people. So acting, David, is, which is there a contortion of laws that come together that underlies some of these decisions that they in a petition like this and it's a they all need to get cleaned up.

And tramp is it's it's even worse than that because the same people who have rigged so that all their tax dollars stay in their non development community, then they're over funding their public schools. They could have feed easily if for private, but they're using all that money for just their private school and the one in the town next to the east part after whatever, they have no money.

And then these people have the audacity to fight against school choice so that those poor people can take tax dollars and then pick up a Better school. So it's hypocras y all the way up and down. And you know, I think this is why people are, are, are largely moving to different places around the country and is a competition .

between states and cities OK. We're going to go from super local to global. This is the topic I A about today because I I want to bring together a couple of of reads and get your guys as take on, you know, all of these things kind of coming together and what that means for foreign policy and um how things might play out on the global stage in the next um you know call IT years to decades decision paying.

It's been reported this week is taking a trip to sadi rabia. You know this is just a few weeks after, uh, joe bye and made his trip to sati arabia. I'll read just an excerpt um he's gone to end his more than two years of self imposed in person diplomatic isolation and its first grip is gonna be two saudi arabia a uh, you know this is from unnamed to ty sources, so it's unclear this isn't an official statement.

Uh, this is just reporting, you know, the wall street journal reported in march. But after six years of negotiations, china and saudi arabia are getting close. Uh, for china to start pay uh h paying you on uh for oil that they would be buying from the sauce.

Um so there is an important cut of economic tie up that may be emerging that that could affect the U. S. Dollar and the the importance of the U.

S. Dollar on the global economic stage. And meanwhile this week as well, it's been reported that china is doing military exercises as with russia inside russia. So there is um an extension of china and their influence and their economic types and their military activity with both china are sorry with both russia and salty. I also want to highlight another important point that came out this week.

A saudi raka reported their earnings, the largest earnings ever for a company, forty eight billion dollars of net profit in a quarter that is more profit than microsoft, apple, facebook and tesler combined in a single quarter. IT is the most profitable business, and saudis have been very public about their intention of divesting their interest in saudi aramco, which is their state owned and state run oil company. And moving into other businesses over the past couple of months, um it's been reported that theyve accumulated in nearly hundred billion dollar equity portfolio owning stocks like alphabet, zoom, microsoft and others.

It's also been reported that they own over hundred and sixty billion dollars of U. S. treasuries. So the U. S.

Is very dependent in the private equity community, in the VC community and in the public markets. On saudi dollars, saudis have been large holders of U. S. dollars.

And now through china, IT looks like the saudis may be having a tie up that brings them closer to china is through the trade relationship with you on and the visit from jian ping, while china is actively um you know the military inside of russia is the future of china, russia, saudi access. And should we be concerned and should we be changing any of our tactics on foreign policy? David sacks, as this um you know set of friends plays out over the next couple of months and and going.

yes, I think we do need to make some changes buds backing away from this now. But in his first year, he declared the salty peper is, and he did push them into china's arms. What was the point of that? Bian recently had to go to the middle east to basically beg si ababa, increase the production of oil.

So he's already acknowledge that policy didn't work, and one of the reasons didn't work is because simultaneous ly, with declaring these allies to the enemies, he basically restricted U. S. Energy production, which is started, undermined.

The U. S. Has military bases in saria. Very strategic assets for the U.

S.

military. Yeah, we.

the web, the ship with sorry, babies always can be complex. There are a complicated friend to have, but it's much Better to have of them as a friend than basically drive them into china's arms. And the reality is, whatever you think about the regime there and how oppressive IT is, first, all we don't get to choose the people running these countries.

That's the lesson. We should have our over and over again from all these failed regime change Operations. Second, to have any reason to believe that if that regime got toppled, IT would get replaces Better.

I think we all know that if the regime they fell, IT would probably be replaced with something fundamentalists that we would like even less. And certainly, if another nation were to basic dominate the region like iron, that would be worse for us as well. So our religion with them is complicated, but ultimately they should be, I think, allies of the united states, and we should not be working overtime to push them into china's arms. And I think similarly with russia, we basically declare ourselves to be engaged in this proxy war with russia, which strategically there's nothing in IT for us. You can sympathy with the people of ukraine all you want, but I think it's dangerous.

You ve said in the past, I think the question is, does this china military exercise in russia indicate an escalation of our conflict with china to you um you know or is this something that just kind of part for the course in terms of a neighbors conducting a shi ma.

just an article and foreign fairs talking about ukraine war, reminding us that is still going on. I think people, I think that this war is a stable and will settle into forever worst that is kind like like afghanistan and these conflicts. No, lisa went on forever.

It's actually very dangerous. IT could always esperit out of control. And as long as going on, I think we just have to remember that is going on. IT poses a huge global rest.

And I would say that one of the things that, again, we should be aware of is this idea that even though we have problems and conflicts with multiple nations, we still don't usually want to push them into each other's arms. Again, the civil union in china during the cold war being the key example. I mean, this principle of geopolitics goes back thousands of years of the romans, right? A divide at impera.

Divide and rule. You do not want to unite your enemies. And what we've done here is we keep pushing them together.

You know, china and russia IT historically have not been friends. They share long borders together. Neighbors generally have problems with each other. These are nations with serious conflicts are differences of interest. And we've made IT really easy for china yeah to to turn russia into the junior partner in that relationship to do you think U S.

Foreign policy needs to change and that we're setting up this you know um access of conflict, um this access of allies, uh that we don't want to have the allies and what you kind of advice and and also you know do you get concerned about this oil? You want trade where there may be some you know economic type s that that really could affect uh um you know the the dollar .

is a reserve council. A couple of things. I I think it's really dramatic to kind of painted in the dark, kind of like bipolar terms.

I think you are post all of that. So I understand how in the cold war, IT was easy to fall in the binary definitions of good and evil. One in zero, us verses them.

Team makes s his team b, but in twenty, twenty two, I don't think that's how things work anymore. We are in a highly interconnected, highly global world is very complicated. Uh, dollar flows are real time.

Their massive CoOperation is real time. It's all over the world. It's with every country. So IT allows every country actually the first chance that they've ever really had to maximize their own potential for their own citizens. And that's really what every countries go is right? And so in that lens, look what just happened today. Gas prom said they're gna shot off nord stream one just for a final a few days, right? But as a result of that, eu net gas is just gone absolutely nuclear and just close at all time.

High teen x fourteen x where IT was pandemic, right? You know, Price unit for your head.

So if you take a step back, we are at max energy production with all of the capacity all around the world, a hundred plus d million barrels today. Okay, global productivity absorbs up. There is a very little room right now to expand that without pushing the date in which that capacity is available out until you know twenty, twenty eight to twenty thirty, so effectively a decade from now.

So if you're in the situation in europe, country with vast natural resources, of which i'll just remind us, amErica is one, I think the most important thing you can do for your own citizens is to monetize these pet chemicals now, get IT out of the ground in a reasonable way, sell them in the marketplace because there's demand for IT, take that money and reinvest in your people. And I think if you look at IT that way, the best run countries are responding to this moment in time, like any company would. How do you max ize, demand and sell the product you have to the most number of customers globally.

And so I think the middle ast is doing an incredible job. The us, by the way, by passing the I R. A.

Finally, I think, is on the right footing because we can talk about this in the moment, but the path to permitting in the past to clean up. And by the way, he puts fossil fuels on a level playing field with with clean energy alternatives. Malawi, the best thing that could have happened.

okay. So I think we're all behaving in a very rational market focused way. And so I would focus less on trying to dramatically kind of resolve these things as a few countries versus everybody else. I don't think that's what's happening. Yeah now much more complex, much more complicated than that.

But I think the simple explanation is people with resources in the ground of the country in which they rule have a responsibility if they believe that there's market demand to absorb that so that they can take the revenue that comes from IT and reinvested in their people. That is true for the united states. It's true for not arabia. Ia, it's true for every country in the world.

I media is clearly making these investments right and 加入 and saudade is becoming much more liberal as a result too。 right? The education stand.

Yeah, if you look at the investment like you know, you didn't you didn't need to go to daves once in and understand portfolio allocation, although I think the guys in sauty are smart enough to have probably done IT. But if you if you have a lot of money coming from one kind of business and you need to make sure that you can diversify so that you can reinvest over a long period of time.

If you look at countries that had huge Peter chemical related revenue flows, the nor dict, what did they do? They stood up these huge sober n wall funds and those sovereigns, alf funds, went abroad and they bought all kinds of non correlated assets, those petrochemicals. That is the same thing that saudi's doing, the financial security for their people. But it's like, it's like, what is the further uncorrelated asset from oil IT turns out its apple.

facebook and google. Yeah hey, jack, jack, let me let me ask this control question for you because you you often talk about the authority ism uh, of these ate saudi, china, russia, you know IT seems to me as we observe what's going on in saudi. And maybe the case could be made in china to some degree, although their art steps taken back, but also in russia, that the U.

S. Influence, the, the, the economic and the political influence associated with these these foreign policy conversions. Could they maybe be driving these these countries to be more liberal? You know, we're seeing in in sound out that women can drive, that there's new industry, that there's education, that there's a technology industry booming, that the you don't need to have a turnover of government and a turnover of what is often classified as authoritarian regime for the Operating model to be influenced by the west.

In such a way, that change happens more slowly. And you do see liberalism emerge in these countries with Better educational standards, more equality, more, more human. And so do you think we're because you often kind of paint A A picture that is bad guys verses us, you know do you not think that we're making an influence on these places locally.

take exception to like its bad guys versus us? I I don't think we want to create a allegiance of dictor in, nor do I think that's what this is. I would actually agree with acx. We should be embracing these folks um and having strong relationships with them, even though we are fundamentally different um Operating .

systems for our countries. Democracy in embracing relations .

one hundred percent we did right. I mean obama was making some progress on that and we we did some great work um when and obviously trump has a very, very long standing, very deep we don't exactly how deep relationship with pun. And we we did great work with, we did me, they did the he did is paged over there on making some jokes. They .

bought a lot.

Propose, let go. But we do great work with china in terms of containing north korea nuclear ambitions, right? And so there are things we can collaborate on. I think the most important thing though is that while we are embracing them, building fabric between them, communication, trade, whatever IT is, we are not relying on them.

And and that's really what we have to look at when he comes to the kingdom because if not for the fact that the kingdom one e born on top of oil fields a lottery, we would not be uh in A D relationship with this country. They are living under a tenth century you know rule um in terms of how I shit women, gay people accelerate the human rights and important issue. And we wouldn't have a deep relationship with them if we didn't have to do the oil, but we do.

And so what I think we really need to be focusing on here is maintaining great relationships with them. Yeah, we don't want to drive them to each others arms. But to your match point, I don't think they're creating the legion of doom to take on the U.

S. I think they're just doing what's in their economic interest. And we need to do is in our economic interest, which really is investing in nuclear, investing in solar batteries, wind and even in rich and free world europe actually.

And if we are independent of them, then we don't have to go over there and kiss the ring like biting. How to do? We don't have to, you know, deal with excuses a when they do horrible things like murder cha shogi.

Or you know, just this past week they put a somewhat l shahab in jail is A P H D student university leads. She's now going to go to jail for decades because when he went back to salty arabia on vacation, this happened this week, gentlemen, because SHE retreated. people.

And so these human rights violations, the murder of, could show all these things. Add up the wagers, and we'll have a Better ability to negotiate and lead them as the shining city on the hill when we work on being the shining city on hill and were not dependent on them. And that's really what I think we have to focus, is reducing the dependency on these countries. I think we will all agree with whether it's medical devices, pp drugs, making our iphones or or oil are to keep us right and then sort of europe and that's where new idea comes in.

Speaking of producing dependency, you know, uh, job ite and signed the inflation reduction act. Some people have said this is the most important bill signed in years, if not decades uh by uh you know um passed by U. S. Congress, signed by a president because IT touches on so many points um that folks believe will really move the needle with respect to climate change tomorrow. I think you made an interesting point in our group chat, and I think maybe we should start there, which is, you know, at the end of the day, the systems of industrial production on planet earth.

We're made in such a way that we never accountant for the costs of the external output of assistance, meaning we can burn fuel, put C O two into the atmosphere or put nothing into the atmosphere in the case of animal agriculture. And we get a low cost product that we consume, and ultimately no one specifically pays for the cost of the carbon going into the atmosphere, which I and you know many scientists what argue is having an anthropogenic ic effect on um the warming of the planet and and more catastrophic whether and and all these other risks that were now facing. And so the idea was, you know, first principles, you should tax people for tax industry, tax businesses for the production of atmosphere carbon. That causes us an effect that we're all gonna to pay to repair over time. So you know, is that a point of view that you hold you up because you brought this up in our group tax, but that be the the ario to resolve climate change is if you just tax carbon, we kind of you know have A A real solution here and that this whole bill is ultimately, uh, you know, meant to kind of resolve the fact that we simply cannot find a way of a carbon tax.

I actually think that what this build was killed, the idea of a carbon tax, I think that makes IT completely an important and it'll never see the light day.

Why I think it's because in the absence of what we did in the I R, A, there wasn't a clear way of doing exactly what you said, which is letting people figure out what the equivalent trading Price would be for burning a pound of coal verses, you know, generating the energy needed to run something off of nuclear. There was no market clearing function for that. And the reason is because you couldn't get an equivalent amount of capacity effectively available on lines so that they could compete one for one.

What we did through this irr ray was essentially use money to create so many subsidies and then to also Green light the way that incremental false of fuel projects would come to market so that now they actually going to be put on a level playing field in the broad open markets if they can compete. When that happens, I think you will make those trade ffs, Better yourself. And as a result, I don't think that there will be necessary offset mechanism m, that'll be required because this plan will still get us to about forty percent of the way there where we wanted to be by twenty thirty, which is still a pretty decent leap forward.

There is no plan that gets us to where we all need to be anyways. And I think that the appetite to go from this plan to where we need to be doesn't really exist. So I think that we're just going to have to kind of greater teeth get through the implementation of the I R A.

And realized that this is the beginning of a probably a hundred plus year project. Nothing's going to to get out by twenty fifty. Maybe you will see something done by twenty one hundred.

Probably not. It'll probably will be at twenty one and fifty thousand, two hundred kinds of objective. And in that lens, I think like a whole bunch of business models got turned upside down.

So I think carbon markets and carbon trading are not gone to be the thing that we thought I was going to be. I think stuff like direct air capture again, are gonna be toy projects off to the side. I don't think that those tools are those are not onna be credible businesses like we thought they were going to be. Instead, the raw tonnages of dollars will do what amErica was able to do for solar and pv over two thousand to two thousand and twenty two, which is just crush the cost per watt into the penny so that I can be equivalent to hydro, coal and nuclear and put everything on a level plane field and then allow the market to figure out.

yeah I mean, there's a lot of other stuff in this bill I want to highlight for you guys. I don't know if any of you looked at the cbo. So the cbo, the congressional budget office, any time the bill is being a IT on, they do an accounting analysis on how much spending and how much revenue there will be .

as a result of this bill .

for a ten years. For the next ten years. The cbo score for this bill is that are going to spend an incremental we're going to increase the deficit by three hundred and thirty billion dollars for the next five years, and then we're gonna decrease the deficit by three hundred and twenty billion in the five years after that.

So the net effect over ten years, there were only spending seventy billion dollars on the on the bill. And then on the revenue basis, the expectation is we're going to generate sixty seven billion in revenue in the first five years and then another twenty billion in the in the back five years. So this is actually being accounted for and presented as deficit reduction.

And that's because there's eighty seven thousand new I O. S. Agents being hired to go out and out of people and find new revenue. And there's a fifteen percent corporate minimum tax being imposed on all companies. And what this means is that companies, public companies, private companies doing over a billion in revenue historically pay taxes on a books basis. Now they're paying taxes on a financial statement basis, meaning we actually accounting to be present to .

their shareholders. I can I ask you guys a question, how much who was given to the irs?

Eighty billion? yeah. yeah. Tens S A billion.

Yes, eighty billion. How much do you think IT would cost? I don't know. Pick your pick to pick the most excruciatingly expensive third party outsourcing firm, you could okay to build an entire system to basically automatically review every single tax return and throw exceptions and machine learn and machine learn what fraud look like or what this presentation, let's say, five billion dollars IT be the most expensive piece of software ever written. And this is what was so kind of like. That was the only part of the bill that made not a less sense to me. I think like if you put really smart computers on the case, or gave me a deep mind that google and said, can you guys build this, the system, shine learning and a tax .

and a simpler tax, which I guess this is trying to do. But you know, freeborn, I looked at you sent my initial this old that .

you will be impossible for these guys to find eighty seven .

thousand humans that want to work at .

the IOS number one, ready for where IT waiting to, like, have guns and like to put their body in harm.

As I got the crazy, I was like, up your real, anyway, the greatest. This is what I got from this excel bread. The greatest tool for writing fiction is not microsoft d it's excel.

Like, there is no way this thing is netty out to zero. Like these things that access us a fortune. Government is in shambles. We don't know what we're doing. I thought that the links you sent for the podcast with the prosing coins of the carbon tax was really interesting because IT is so complicated when I heard these tax experts explaining how you would implement a carbon tax and the import and export, and then how often you would have to be tweet, and then who decides what your corporate footprint of your watches and and where did the minerals come from to make the watch and who gets paid on carbon IT just seemed to me there's a false eron would be much Better to just .

what if you your watch is made from diamond and not carbon?

Well, in that case, you should just pay a million .

dollars because you are the coastal. And we should just start with you and watches.

What I realized was what we really need to focus on you. You tell me if what you think freeburg instead of doing this carbon tax, which seems incredibly elegant, but we all know is impossible to get consensus across hundreds of governments and locales to negotiate this, it'll never happen, at least not effectively.

And in real time, wouldn't IT be a much Better technique to do what we do in venture, which is, here are the biggest problems in the world. Here are, which, in this case, we be the biggest emitters. Here are the best solution.

Here are the teams working on the best solutions. Let's give you the teams working on the best solutions money to walk down that list. And if IT happens to be, you know, ships coming from china, you know, with a bunch of containers, ARM and container ships, we we measure that.

And you know the the thing i've learned after the first six months of investing in carbon, because we have a syndicate now at Molly wood was working with me, this climate syndicate, we couldn't find a lot of great investments, you know, that made sense, that weren't, you know, asset heavy. But then we started to find, we found two great monitoring companies, and they're mooring air pollution and they're mooring ship pollution, and we made investments in both of those. And that seems to be where rat is. We should be monitoring and figure out where the carbon is, and then trying to solve IT based on which one's are easy to solve.

Let me just say two things on that. Bill gates is on a great job of this. You can read his latest book or go to gates notes and he's not exactly what you described, which is get all down, show what we should do.

And that's actually how his own money, he's putting his money worth south that. So there's a really good blueprint for. He has done the best job of anyone.

I've said the issue with the carbon texts is you have to come up with a consistent, reliable with measuring the carbon, and then you have to do IT consistently and broadly. How do you miss you? You miss one factory or another. Then you have to rach IT up the Price over time.

So first thing is, the chAllenge of how do you agree on measuring? Second is, how do you agree on broad accountability? Third thing is, how do you reach at the pricing over time? Fourth thing is, how do you deal the offshoring problem? As soon as you start taxing companies in the U.

S. For carbon emissions, all the production is going to go off, sure, where they are not taxing for carbon emissions and there's no way to account for what they're doing offshore. And this the chAllenge with china there is because of the first problem. Ah sorry, let me just the final one will come back to but the final big one is just the equity and carbon tax people said that the ultimate increment in cost of production is going to adversely affect lower income people because they cannot afford the Price of some stuff going up by twenty five to fifty percent and it's really you know a luxury good luck xury um kind of privilege to be able to pay for the incremental cost stuff uh to account for the carbon offset needed so that the set of issues that have been pushed back back against the carbon tax and that's why it's been impossible to get implemented and to really get into market.

Sorry to go now I just going to say party the the problem in in in all of those issues, if you offshore are still that there's people pushing for what's called the scope three accounting, which is like, you know, you ve got to go back to your supplier and your supplier, supplier and your supplier, supplier, supplier. And what is impossible, where is the end? It's not credible.

So you know, I think that the bill has actually cleaned up a lot of future question Marks about what we have to do as a country to go about doing our part for climate change. And I think IT probably creates a reasonable blueprint for everybody else. And now they're going up to do some version of the same thing. And what's amazing is that if we actually pass this framework, which is still yet to be written uh, around how to make permit more seamless and efficient for these hydrocarbon projects, IT will really unleash um a massive tourist of both revenues back to the united states. Um IT will increase our national security um and will allow us to really kind of put a dent in this thing because it'll pull forward the amount of uh competition that he creates to actually get off the side carbon.

which is all can you I got I I got a notice from someone who an investor, so there's a lot of climate tech funds, a lot of funds, ji said. You ve got syndicate and carbon, but there's A A lot of investors that are putting a lot of capital just into early stage climate technologies um which travels everything from energy to materials to food uh uh industrial and manufacturing and so on.

I got a note from one of um these these these companies start up that highlighted that the dollar twenty five per gallon credit uh tax credit uh for uh you know uh clean production of fuel, which can which has to demonstrate a fifty percent emissions reduction in the manufacturing process, will now make this start a profitable and by the way, you get an extra penny per gallon for every one percent reduction in emissions below that fifty percent rushed. And so there is a lot of startups that i'm hearing about that their unit economic models were questionable before now because of this bill, they're flipping profitable. And so I personally think we are going to see a significant influx of venture capital and support for a lot of these client tack and you know new energy, material and manufacturing projects that otherwise may have been held back because the subsidy will kick start.

The question for me that I still don't have a good answer to is, are they sustainable over the long run if this bill gets shut down, a repeal and the funding source of stop in the subsidy stop? Do these businesses survive? Or we simply creating regulator in capture models like we did with other energy products in the past with food?

If you're not a contribution margin positive today, free this bill in climate change. And the bill is the only way that you get there. Your D O. A, you just don't know.

Great point sex. The biggest line in this bill is the corporate minimum tax. I know if you saw this, but fifteen percent minimum tax applied to the accounting profit reported by any company over a billion dollars, and they're estimate IT will generate three hundred and thirteen billion of incremental tax revenue over the next ten years.

Do you have a point of view on whether this corporate minimum tax is going to cause an issue with startups and companies going public or evaluation in the public market? Or is this just, you know, hey, this should happen IT doesn't matter. I mean.

know if you spend much time on this. Well, no. I mean, I think that the issue here is that why is that, that these companies are able to pay so little taxes? Well, the reason is because there's a zelia loopholes and incentive and tax Price in the existing code they're taking advantage of.

I mean, these large companies have lots of accounts and lawyers are not deliberately violating the law. They scrupulosity and hearing to IT and taking advantage of IT. So it's all these tax breaks that they're able to use to pay no taxes.

What does this bill do you talk about the the spending on climate? You know the three and eighty six billion, most of IT is tax incentives and some block grants. So this is now the preferred form of qua quote.

Spending in these bills are tax credits and incentives. This is the way they are going to change people's behavior. So in other words, the bill on the one thing is complaining that corporations don't pay in enough taxes because treaty tax breaks, while of the other hand, creating a whole su of new tax breaks.

So there's little bit of a contradiction there again. Why do why are companies pay no taxes? Because of the last ten bills, tax break that was was to move the behavior of businesses and subs in a certain direction.

So just recognized that that's the case. I think you also made a really good point about the phantom deficit reduction here. So like you mentioned, and we see this in osa bills, all the excess spending, all the death is spending occurs in the first five years. All the deficit reduction occurs the last five years. Something always in intervenes to prevent the savings for taking place.

Started projection, right? Sex.

yes.

like some guy will cut .

the budget next year, you know. And so just to give an example of this, so this A C, A is extension. So this is the obama subsides, about sixty seven billion a year.

They're extending IT for three years. But there, assuming is is going to die, that point is supposed to keep being extended. And no one gonna want to vote to make that go away in three years, just like that. I want to vote to make IT away now.

So if you extend that subsidy three years or now, just that one item alone makes the debt reduction, this bill goes from three hundred and five billion over the ten year period to negative hundred and fifty five billion. So just at one item, if you continue IT and don't sunset IT, just that one thing makes this a hugely deficit, not reducing bill, but definitely increasing bill. And so you wonder what promise this bill really solving, and they can't seem to agree on that. I mean, first you're telling us is a defect reduction bill, then are telling us is a climate bill, then you're telling us is an inflation reduction bill. IT seems to me that if they're really proud of this and believing that they would choose a name for the bill that actually reflect IT what I was.

well, all bills would be named. Something for everyone is set. I mean, like that's how all these bills get in order to pass a bill by parties. And bill, you got to give something, everyone, I mean.

but this is mostly, you know, this is mostly a climate related. Bill, no, this is mostly, this is mostly tax breaks. And bi, there's a huge .

tax issue with the the the I R S agents of the corporate minimum tax, but there is also a huge component on prescription drugs too much.

I don't know if you spent any time looking at this, but here so the claim of the administration and the sponsors of the bill is that this would not increase taxes on anyone sort of middle class. And so the republicans, I think there's one of the few politically smart things I did, the interests in amendment basically prohibiting these new eighty seven thousand years agents from conducting audits.

Of anyone making less than four hundred thousand dollars a year, which was what biden said, no, he went increased taxes and went about four hundred thousand. That amendment was rejected on straw party lines. So this idea, yes, it's called the crapper amendment, was fifty fifty and vice president hair said to come in and and make the time breaking vote.

So obviously, they know that this can be a lot of net new audits on people making you love for that. Yes, exactly. So that standing .

of this is it's like small oas people who run a small business and a service business. And are they really accounting for their books correctly? Are they really expanding the .

right things and said.

are they accounting for close?

They're going to get, yeah, they are going get this because, look, let's face IT billie e is ready saying, listen, I get audit as a matter of course every year. You know, these people already have.

So I do I use a big accounting from you mean, the amount of overtime is a part. I have a part like Anderson, that is literally an put .

them in your put them in your twenty people .

that I mean, by the way, sax sax is right. Like if you look at them, you know the ultra wealthy, I I think you would be I would be shocked if any of those folks were actually avoid taxes at OK because it's impossible the way that this infrastructure runs. Like know you're getting k ones from black stone.

What you going to do, you can change that. Like like do you guys even know the pin number of your bank card? I have no idea.

So so complicated. Yeah okay. So so my point is I don't think that if there is if there is cheating of taxes is happening at that level.

What happening at that level are much more structural issues like Carried interest, which they decided not to touch. S I don't think my point is not mistakes. There's nobody with a pencil really filling out A K one for bill gates. Dume.

let's my point. No, I know. But people can make mistakes. What if a key one gets left off? That's what i'm saying, is when .

they find .

something is usually easily and I decided, I don't know.

I know that i'm talking about is what are the irs people going to find?

I tell you what they're to find. They are going to be they are going to find a lot of middle class and upper middle class folks, and they're gona have to focus on them because individually, IT may not represent a lot. But when you multiply by the number of people inside the united states, and this is what the wall street journal and a bunch of other folks have been saying now, when you apply eighty seven thousand people and task them incrementally with doing a job, it's not going to touch these folks that are already added. It's going to touch the folks that are not ordered and buy a large a much, much larger majority of medal income and upper middle income people are not audited, which is why I think you could spend a lot less than eighty billion dollars and just build software that guarantees only those that should be ordered or and uses machines to help figure out these league .

e or start simplifying the tax code. Because when you add this fifteen percent minimum freedoms g, what is that gna do to the strategy of a public company? okay.

So we should show less earnings, put more to work. Oh, we're not going to be able to appreciate this or whatever. I mean, it's going to create all the second, third order impact impacts .

that we don't know. Well, I think saxes point is important, which is one that we don't yet have insight into, which is what is this going to canalized because ultimately, if there is a minimum tax IT doesn't make sense to pursue um incentives that create a tax break today and therefore, those incentives won't be invested in whatever those incentives are.

I don't know what they are, you know low income uh manufacturing zone development or or whatever who knows um you know what they are um you know come and build your business here and get tax breaks, a local, state and federal tax breaks. Um if they will start to um get written over, then there's going to a be really adverse effect. And I think that that's something to watch.

I don't understand IT well enough, certainly a modern account, but I I I would be kind of a worried about and and keeping an I on that front, I do think the bigger question, which is a biotech one, the prescription drug Price cap minimizes the profit that a number of pharmaceutical companies will be making. A IT gives the authority to go negotiate Prices. This is the second largest line in the bill.

And there was a survey done by health affairs dot org on an R N D survey, which said, will you guys reduce your your investment in new drug development? And I think that they based on this bill, and I think that they came up with some estimate that there would be um two uh the number two fewer drugs um that would be kind of you know made available per year because of reduce spending as a result of the Price cap, which basically reduces revenue, which will uh in essence reduce R N D investment. You know uh guys like berny Sanders will say, hey, that's not true.

All that mony's going to share by backs and dividends and so on. But IT is a fact that those shares by backs and those dividends will still continue. And if they are reduced, so will the R N D expense. And if the R N D expenses reduced, fewer drugs will come to market.

And so you know, there's also a question mark, and people will debate this for the next decade, which is how much will this prescription drug Price cap actually have an effect on R N D investment and ultimately, a new drugs that come to market in in my person opinion is I don't think that this will have a huge effect. I think this is an excEllent part of the bill. I think that the government should have authority to go negotiate there, the largest pie of these grounds, and typically when the U.

S. Government, the federal government, steps in to be the largest spender on a particular line, the cost of that line balloons like we've seen in health care, like we've seen in education and like we've seen in military defense spending. And so I I am hopeful that this will actually provide A A more effective market force in allowing the biggest customer in the market to negotiate Prices and that the VC, instead of making forty eight percent I R R, the ultimately make twenty eight percent I R R on the investments that they're making a biotech startups.

Well, what exactly doesn't mean for the governments and negotiate Prices as opposed to the government, is to fixed Prices because this this Price fixing.

well, the right answer through .

the largest single largest customer sex, right? I mean, you know, and then they are the market. I me.

what's the right thing to do?

Well, I mean, you you're saying that these drug companies are going to make a lot less money. Obviously, that's gonna a downstream impact and the willingness to fund new drugs, new new invest, new r yeah, now no one likes farmer companies are not defending exorbitant profits or whatever. But I don't really know what that means for the government to say they're negotiating.

I mean, the government just tells you what it's going to be, and that's Price fixing. And these companies are going to adjust. Yes, the government will pay less money in the near term. In the long term, there could be reduced investment. R, N, D.

I think we'll be a baLance of, you know.

you don't all governments chh don't all governments I know that you're close to some of these uh drug companies. Don't all governments negotiate um the purchase of these drugs? And then if they don't like the Price, there are alternatives drugs and i'll say, hey, listen, your drug is too expensive compared to these other two solutions. So we're going to buy this one primarily for our universal health care.

There's an interesting thing that happens, which is that there's a there these drugs that are propriety under pattern, okay, this could be chemical drugs or they could be biologic, okay? And eventually what happens is when they go generic, then folks will step in and make lower cost versions of those generic like you know I mean, i'm on a statton.

I think a couple of you guys are on a statton like I don't IT, it's it's lipitor, but it's not lipitor, right? It's a tof a statton. It's like some generic drug that I just take, okay as an example um and uh, there's a lot of folks that make that and the cost of those pills basically go to zero.

But there is a bunch of categories, particularly for biologic drugs, where is very different. It's very difficult to make up what's called the bio similar. This is a generic drug.

So long and short of IT is there's all these classes of drugs that kind of like stand alone without enough competition. And I think there are two ways to solve this problem. One is where the government steps in, which I think is is good.

But the Better way has already is already been happening in the the united states. So there is a nonprofit which is a collective between a bunch of hospitals called civic up. And I think that's a really interesting example.

And what those guys do was they said just going to create our own generic drug manufacturer and we're going to make the drugs we want. We're just going to make them super cheap. And now they're in the midst right now completing a massive facility.

Uh, I think it's in Virginia where they'll be able to make as much insulin as is needed for the entirety of amErica for no more than thirty five boxes dose. Gangster, that's gangster. It's super.

Gangs make our own. And by the way, when california said they are going to make their own, what they really meant was that they gona go and R F, P. IT out.

And my hope is that they end up going with somebody like siva, who has the experience of actually building IT others. SE is just going california. Wait, hundreds of million .

people if you don't know what is request for.

but there are these emerging nonprofits that are basically doing the work of the government. I think that's a Better solution to what tax is. Actually petition, right? It's going to .

create competition.

I we do a great job, free burgrave, just one moderate to another.

exceptional job, you know, appreciate. I think one of the interesting thing sitting in your seat, J, L, is you see everyone else is face, and you see the bottom and the annoyed that people experience during the the point for a drink, I think I think eating .

fund that is jy eating jy.

you, I don't to .

be on the .

park .

what was a .

CNN anchor .

who on zoom accidentally. He master bated on a zoo m call with this. The fox is, I had to do with beef jerky, he said, jerking and I just nose.

and I was eating just, just longer. I oh my god guy. I stop.

No, so I was so matter him. okay? So you know, I finish.

I finish I finished the fuck in transaction to sell the warriors is a six months or deal, okay? I started in november, right? I'm starting to sell.

I decide i'm going to sell the warriors. I sell IT to, uh, a large private equity fund in november, december. And then we had to wait for them to close the second fun. And then we saw the rest of IT and I closed in jujuy.

And then I put out this tweet, right, like thanking everybody and thanking how you the same line in which I am like, I thank Peter to and I think everybody is happy, except for help you who called me and is angry and he's like, I you know, he had this issue with how he was characterised, that how he had introduced me or something where he wanted credit story should ban Harry up. And I was like, wilt, what if I had made me money? Would you have just made me whole? Like, what would you have done? Like, he's like you, like the architect of this thing.

Anyways, I was so mad, I just said i'm not talking about his dipt t anymore. I'm done with him. I'm done.

I'm breaking up with him. And he would call me when I was in euro, and I would ignore. And I would get this incredibly enjoyment from just pressing too, to voice meal.

He would send me text messages, ignored. And then I, I mean, this is always, that happens this way. I didn't want a nap cop machine.

Like, why did you ignore his vocal? And I said, I hate film. I bedroom help you.

I told her the story. SHE got so fucked. Imad me. And then I had to send this text. I'll just read you the tax because I think it's just so fucking hilarious.

I was going to ignore you for the rest of my life based on your tantrum with me earlier this year. But that has convinced me to see where you are coming from. In part anyways, were good. Call me later.

He called me what later he was waited. He had your dexterity I did to picture your net me or money. He is your friend.

The world you gotten be a such a jerk. He, your friend. You have no friends. Your friends are away anyway.

back and news.

you, you got to play poker. Do you need, in a great game before we wrap axis is going to give us.

instead of doing science, corner corners.

never been there. Never been there. But no, I I wanted to I want to give, uh, a shot to this article.

But last week I take some heat because somehow I guess you're not able to question anymore. The attitude of the FBI, the J A R hovers FBI were not out to question anymore. Or a lot of people feel that way. There was an article that came out in real clear investigations just, I think, yesterday. And what IT expose is pretty amazing.

The group, the unit within the FBI that conducted the rate on moral logo is the the same group that conducted the investigation into trump back in two thousand and sixteen, that lie to the fires accord, that had its members at leaders Peter struck were fired for basically wrongdoing, whose members are actually under investigation right now by the special council, john dam, and you've got people who are on problem right now. So this is the same unit that basic conducted the rate on moral logo. So I think there's still more to come out about this.

But this is amazing to me, actually, that Christoph era, the head of the FBI amErica and the head, the D. O J, thought that this wouldn't create the appearance of a conflict of of interest or impropriety. The fact that you've got the same unit that previously was disciplined for wrongdoing in an investigation prompt is the one conducting the right of moroccan.

So pretty amazing. Take.

i'm sorry, but we're talking that. No, i'll tell you. No, I I .

just wanna I.

A couple .

of child actors, beautiful.

That's what you're seeing there. Hold on, sex before you get back to trump. What you're seeing there is family unit. This is when a family gets together and expresses love towards each other, but continue .

about moral go. That's wonderful. Once this one.

you could take a picture of this and you could send IT to your friends of Christmas.

Jason, you you are um you do not accept the real clear investigation report that maybe there is .

some long time I I have actually some feedback. G is nothing to do with tax. I just think a lot of times I get positioned as sometimes when i'm moderating, I like to chAllenges ts, last week, I chose to stay out of IT.

I let him go. And I think one of the reasons people didn't like your comments last week, I was other than, you know, jail grew over being dead for fifty years. Putting that aside at being relevant, I think the reason people didn't like IT was because I didn't come back at you and question some of the things you were saying.

And so I think they felt there was an unbaLanced cussion. They expect me to do that. But I don't want to be pained as the adversary to to saxes positions in every case because i'm an independent, i'm a moderate.

I voted for of I voted uh democratic whole life. I voted for both of those parties. But I do think that what's happening here is you, trump is under five different investigations.

He's got a career of doing disGraceful, criminal, fragile, lent things. And I feel very bad for G, O, P. friends. I feel bad for republicans because they have to Carry water for him.

And if they put themselves in this really difficult position of defending him, and you know, we've talked on this pocket about january six. We talked about voter fraud. My good friend, one of my best is dave actually said he doesn't believe that the election was there was electronically.

He doesn't. He did. He thought january six was disgusting. I'm not speaking for you. That's what you said. And so I think you know the fact that the republicans field they need to defend him constantly is one of the big promising.

And I think on the other side, the fact that the media is forcing republicans to defend him and creating this narrative in the S S like, oh my god. Z he's doing. S by night.

This might be very simple. Trump lie, cheated, stole his whole career from trump university to what happening with the trump CoOperation. Now with a CFO and his nonprofit. This is his life is a history of griffe and crimes and unethical behavior. What the G O P needs to do is stop defending him and just let him go off to the sunset, as sex pointed out last week.

And that's what this pockets needs to do because there's no reason for meta city here and do the left wing talking points, or for, you know, sax to do the right wing talking points. The fact is, first principles trumps grifter. He's a democrat who produce the gp.

That said, my point is not to defend every shady deal that trumps ever done or even to defend trump at all. My interest is having A D O J FBI that's not politicize and is not used as a political weapon or to pursue political targeting or veneta. And the reality is, at some point we're going to move past trump as a country.

But the presidents that are created now, we're going with us for a long time. And the reality is we should not have an FBI and a unit within the FBI that is pursuing these political and data. And in this article, by real clear politics, the amazing thing, yeah, the amazing thing is Christal ray prohibited this unit from seeking warrants from the fires, a court, so he knew there's enough misbehavior last time to basic prohibit them. But seems to me that's a very narrow takeaway. IT seems to me that the takeaway should be, we don't allow this unit to pursue trump again.

because they committed so much wrong doing.

Why won they do that?

Yeah, that's if it's true, because that is from a bioscience.

And if IT is true, that I mean really pois like a political look.

Guys, this has been a love on J. L. Thank you for letting me sit in your seat today.

Yeah, good, great. I appreciate that. IT was. IT was a lot of fun. Maybe sex would would like to have a run in the seat .

at some point here he doesn't.

But for as your guest moderator for today on day free berg and bits is your all in part. Thank you. Bad bye.

Rain man.

give IT out.

We open sources to the fans .

and crazy with.

You try.

We should all just get a room, just have one big, huge, or because they all like sexual attention. And we just need to release some. You b.

your B.

B. Good way to get 东里 东。