E103: Tech layoffs surge, big tech freezes hiring, optimizing for profits, election preview & more
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what? What are you wearing, Jason?

What uber hat? A big week. So this is the uber .

a .

among Clair cross .

uba t you don't know about the .

apple moncler. Or are the commemorative mug .

or are the new .

tax you don't know about the new neck tax that are coming from one Clair that up.

So good to say .

somebody got their regret. I'm not saying that I got one hundred thousand dollar sponsorship, but we don't have a rule in the agreement about logo placement. Do IT listen.

jake. Elf, anyone was willing to sponsor you every school. Your clothing would be covered in ads like a race car driver. Look, earning a jump. Moncler .

sponsorships are great. This is five, five dollars plus seventeen dollars of shipping from france on its i'm ready to go.

We open sources to the fans .

and they got.

How was everyone's weak would you guys do this week?

I just busy working on trying to be helpful where I can, and we'll be the extent of my comments today.

How is market street this time of year?

Look, there's all sorts of world, but i've got ten all sorts of inbound from people ask me if I am like leaving craft ventures to do something at twitter or no, it's not true. Where does this I are just pitching in, helping out. While elan establishes his permanent team at that company, elan is the CEO he's running IT, he's the decider, is making the decisions and that some of us are just kind of helping out in any way we can.

And that's really the extent of IT, IT said. You know, very much part time thing. We're just helping a friend, but it's been like blown up and by the media to something much more than that actually is.

IT is a hundred percent accurate. I am still doing my day job, podcasting, investing in one hundred companies year, just helping out on the margins that .

the do you wants to try talking about one issue that's already public because it's already been tweet. So elan had to eat this morning about how there's now like an advertiser boycott going on. And this falls on the heels of a bunch of reports that came out over last couple of days that supposedly has been a big influx of like, racist tweet.

And Jason, I actually saw what was really going on, which was it's all not true. I mean, what happened is that within hours of you on taking over the company on friday, there was a fortune attack where basically people from this message board created bots to post hundreds of thousands of spare messages that contained racist words and empathetic. And within hours this has been detected.

And O, L, who runs the the trust and safety implementation? He met with me, and Jason and islam directed him to shut IT down, and he will actually post a tweet about IT. That's only one reason I feel comfortable talking about IT is because you already post the tweet summer.

Maybe people don't haven't seen IT or they haven't connected all the dots here. But what's really, I think, unfair about this is that, as have you seen, this sound like your feed was all of some full of racist things. These were spam accounts or about accounts they were posting to zero followers.

They generally have zero followers. If they do of followers, it's other boat accounts, right? So they're posting racist tweet into the either, so to speak.

It's not degrading anyone's experience. IT was shut down promptly. But then what these activist groups, they're monitoring the firehose, right.

And so they publish a report saying that racist tweet have gone up five hundred percent since elon took over twitter. The truth is, elon hasn't even had a chance to change anything about the content moderation policies. He's posted that, like guys, I ever change anything about content moderation.

Whenever the rules are, there are the same rules that existed, part of he, tim, taking over. And this is this, an organized Operation by people who want to create that report. So then these actress groups based publisher report, they feed to news outlets.

And then somebody then takes those reports and then feed them to advertisers and and you get a boycott. But I think that the point here is that london do this. This is being manufactured by people who are not Operating a good faith. They're trying to manufacturer in incident that they can then use to hurt the company.

Yeah and he was awarded immediately and fixed.

Have you guys seen episode three thirty three of the lex stream podcast um he interviews under a carpathia who is really I mean one of the great minds of our of our time, particularly around A I N M and the question that lex asked, which on expounded on, which I think is really interesting, is what is the next generation of boat look like? And I think where the problem gets very hard for all platforms.

So this is not a twitter witter specific discussion, is that you can now generate such real life like human images that are unique. And you can also generate high quality tax to things like GPT three that's also you know that can essentially push the boundaries of you know a low level to turing test. But I think the real problem over time for bots, for spam, for coordinated attacks on any platform is that when you use these tools, you're going to have to become very sophisticated in how you try to detect them and then to block them. It's a really interesting discussion between you know two pretty meaningfully smart people.

Croppy was the head of a autopilot tesla vision. Ah so he's really .

sort i've no doubt that on is going to do a much Better jobs stopping bots on twitter once he has a chance to do IT because he's got this amazing team of A I engineers and and he just can be more focused on IT.

You know I like the most about that. What I heard this week is the idea that you can do either micro payments or subscription to the party content providers because I think so much of my news feed is delivered to me through the twitter APP and then I click on a on an article and then it's like a paywall or it's some sort of difficulty and kind of accessing the content, having some integration there, some ability to kind of make a micro purchase to read an article is going to be, uh, I think, a super feature.

The other thing that I would love twitter to experiment with this, if you have a micropayments model to publishers, IT would be great if you could publish content without a byline.

I love the economist and see what that does to, uh, information quality, right? You know, if you, if you, if you do not get any credit to your individual name for writing stuff, but instead IT goes to the master publication, whatever is the times, the post, I think you could have a really important behavior change in how journalists cover the news to th experimenting with at least. And if you're paying them enough money, I think that you could probably demand that facebook could probably demand that today, you know, strip the bullying away. And just as just as new ork times, just like today, is just as the economist .

yeah IT is a the economist is a very polar ized gig in journalism. For that reason, there are going to be actually a lot of journalists who would prefer to have their bite taken off. One of the problems with journalism today is even if you're doing reporting in good faith to math and you put your byline on there, harassment, threats, successor can become very cute if you're just covering certain topics. And so I actually think a lot of, you know, writers and journals would opt into this. They might prefer IT.

I think they should, because I think the two ends of the spectrum are Better than this, you know, gross middle that we have. The one end of the spectrum is you have the new york times, the washington post in the economist with no violence and no attribution reporters. The other end is, if you want to build a brand that's based on your name, go start a sub stack.

And I think that there's a very good baLance there. And and the new york times could syndicate that as well. But if you separate the two, all of a sudden the news becomes more likely to be truthful. News verses you well disguised opinion.

The other issue is, you know, for readers, if you do choose to do a mobile line publication, you really get any need time to build trust and for people to understand what you're doing because they will think you're taking the byline off in order to pursue a certain agenda, right? So that that is the suspicion that can build up the economy has been able to do this over decades with trusted reporting here.

And substance proves that you can have no reputation what soever. And if you're publishing great content, you can build a great business from scratch. So no, you don't need to you don't need to pay your dues, quote, quote, by getting a byline at the york times to be a clever writer, you can start that business today and get paid.

So I think the new york times should just focus on being the new york times and substance should focus on individual people. And I think if you could clean up the middle, that would be much Better for all of us. Anyway, i'm excited for you guys to help out and pitching. I hope you guys do some good with that. I'd love to come back and use twitter more often.

Can we talk about the reporting that happened with the two guys that trolled the journalists and pretended to be fired employees? Because I actually thought that was such an interesting moment this week that all the journalists immediately paraded IT because IT fed their narrative. But there was just a checking done.

There was no reporting done. And then several of them, including, I think, dear to bossa from C N B C, came out and publicly apologized for that report. And a listening aren't familiar with what happened.

These two guys came out. They pretended to be fire. Twitter employees on monday walked out with box on the life.

You know, the guys name is, one guys name is raw hooo lig ma, and the other guy's name is like mike Johnson. So whole thing was leg my Johnson. So I now here's what's so funny about due diligence.

So long I read this story without giving away that punchline to my kids. All of my kids immediately started calling they're like, dad, if you say these two names are liked, my Johnson and I was like, oh my god. So I know proteins can figure this out, but the socialism industry could not be kind of a very telling.

Some free made the key observation, which they didn't the narrative. So that fathers narrative.

this was my point about journalism. Just IT was so pointed to me this week when this happened, particularly as IT relates to twitter and the importance of college open journalism or citizen journalism in the integrity of kind of you know uh of the voices that we all kind of trust as are are kind of journalistic authorities that these guys came out and they were pond right outside twitter's offices into telling a story that fit their sensation narrative. And IT was really a kind of pointed moment for me.

What do you remember that story? I think he was originally a rolling stone and then rich out out, amplified IT. Where was an okhotsk? We're supposedly all these magarey licence were eating horse space because truck told him to.

And there this is basically, I thought I was like a covet therapy. And then they were going to the emerging rooms of all the hospitals, and then they were turning away. Hard attack victims, because there are so many.

These people go in the anyway, IT all turned out to be like a made up story, like a hoax. But the media reported IT because the story was too good. right? I just. If fit to me their preconceptions to .

me this also one there's another vector sex which is live coverage is um you know you really have to be careful because when doing live, people will call in and say all there at the scene of an accident and then they will do a boba boi or whatever you know kind of charades and so without fact checking and without saying, hey, we haven't confirmed the shent. But these two employees are claiming this people want to get real time coverage is find to the real time coverage. I think everybody in .

the audience that so much that there was a picture and I said, like my john. Watch one. No.

that course is cover people i'm .

not covering.

I'm trying to there's .

also you interact to me. Well, here's think there is a different standard for a live news coverage. And then there we ve ripped out fact checking from a lot of these publications and basic fact checking. And a little bit of time, i'm explaining why they make this mistake.

I am not protecting .

them a reason they make IT. That's part of IT. But we've also ripped out fact checking. And then they are in such a race to get the clicks on social media.

No, no, here's was going on. If the story fits their players, they run with the immediate and they don't do any fact checking because they don't want to know that it's not true.

That's what's going on.

will find check a story if it's a narrative they all like because they're going to they're going to try and make .

sure it's not true. It's true both sides and they will use parties .

as is only one mainstream media. This is the mainstream media .

alert .

is to you .

think journalists .

do this? Tell me the rider, tell me the writer .

on substate a fall.

What sub stack rider got fooled by lig ma Johnson?

not.

Definitely, i'm expected by lig ma Johnson know.

not defending IT don't make me defend liver. I'm not defending lisa.

I am telling .

you what is happening in journalism today. They have ripped out fact checking, and they are in a race to beat each other. Because the first person to get the story up gets up that the dish of day.

They try to create a story. When there was no story, they mpt out outside of an officer, and they said, hey, the sensational thing happening. And there was no sensational thing happening. And so the little drop that fell into their laps, the little thing that fell into their lapse, became the story because that the story they wanted to see created, there was no story beforehand, that then there were all these people being fired, walking out with boxes, and they said, let's go send live TV producers down there. They sent the live TV producers down there.

They did the same thing in new york at pair s cover when they had other major layouts. That pair surge to suffer back in the financial crisis. Of course, they think people to do life cover, not defending IT. I'm just explaining to you what's going on the background as well with live TV and and the guarding of newsrooms of .

having no fact checking.

A lot of these stories.

the editors, then these adults at these great, incredible publications, my kids started howling. They were like that you understand what you just said IT a but I mean, I mean, come on, this is like preview best and humor that these people fell for. Its it's ridiculous. It's embarrassing. It's early.

Embarrassing is embarrassing. And this connect with the first and board is the same problem. This is a grievances industrial complex, right there, manufacturing grievances.

It's funny in the case level Johnson. It's not funny in the case the forced board. But these are people who are inventing stories because there's a .

certain area to manipulate .

media because they know it's so easy to manipulate the media.

Anyways, big shout .

out to rah o lick. That was a .

great start.

Well play, be a huge fan .

of the all in pocket place layoff s and tack lift, thirteen percent. Rif, seven hundred boys like yesterday. Stripe, forty percent of a thousand employees open door time, dapper labs, or hundreds of employees open door of the most significant there, five hundred fifty, eighteen percent deber, twenty two percent. Uh, and twitter, we'll see what the winds up being, but that's occurring as we're taping here.

So and Jason apple did a pause. Amazon did a pause, right?

And google and facebook.

I have yes.

maybe trying, maybe signal applause, but haven't they've been hiring like absolutely uh and an crazy, crazy pace and will pull up the charity or actually instructive to look at facebook and google because they have not slowed down by any stretch of the imagination just by the raw numbers. Ah this all started to peak in june and now is starting up again.

So there is a website, uh layoff s start F, Y, I, that's been tracking all these layoff s you can see the number of layoffs, kind of major layoffs, the number employees impacted. I'm pretty consistent in the third quarter. IT started to die down in september from the peak in may in june and now to be picking up yeah feels like this is the double debt we were talking about.

I think this is the begin, not even pack. Well, I think that we had if you take a very baLance to you what happened this week, you have to start, I think, with the federal reserve. And really what they said is rates will probably be higher than all of you think, and you'll be higher for longer than all of you want.

And again, without debating whether you know that's gonna come to pass or not, the thing that you can do is you can build a little sensitivity model to understand the mathematical implication of IT. And basically, what IT means is that the dollar that's right in front of you is now meaningfully more important than the dollar that's far, far away from you. So let's just assume that you know the fed funds rate goes to five and a half percent or so, even five.

Let's let's let's go to the optimists and says it's only gonna to five tech companies have to achieve five hundred basis points above that minimum. So we all have to generate tend to eleven percent returns for us to be on a risk of justice basis Better than a government bond. The problem with that is all of a sudden, you know, if you're trying to generate cash, even three or four years from now, it's not worth that, but you need to generate dollars today.

And so you know they are really, really prioritising the value of shorter term profits, and that's going to affect how companies get money, the cost of capital. So how much delusion you have to take. So I think this is what companies are now bearing down for. They're realizing, oh, man, I need to get my cost structure way in line. IT is way Better. Now just to think about this contrast is way Better to grow at twenty percent and be profitable, then IT is to grow one hundred percent in burn money because it's not clear where that second companies is going to get the incremental dollars they need for growth. And that's just the mathematical realization when rates are five percent.

risk free rates or five percent. So this this is that moment where you see that pivot from, pivot wth to profit. Yeah, we talk we've been talking about IT for six months.

But this is is this is how IT is manifest in silicon valley companies, is of scale, is through layoffs, cost productions and and cost savings. So the investments in future growth are reduced and the timeline to drive greater profits is improved. I think what if what you want is gonna do a twitter or what is reported.

So this is nothing to do with anything. Anyone told me, just what i've read in the reporting is accurate, that he's going to cut so deep, he's going to cut thirty, forty, fifty percent potentially of the employee base. IT really sets a new standard for how profitable attack company can get.

And again, i'll give credit to uh, a twitter poster in post market who I didn't give credit to a few weeks ago when I read this tweet, which I think was a good one, which was that you want really onna show everyone just how profitable these tech companies can be. Just tell lean that can be. And you know, when you're doing a ten percent ref c thirteen percent rif, you may or may not even be getting to profitability with that ref.

When you cut thirty, forty, fifty percent deep and you can actually turn a real profit on a business and enterprise scale business like a twitter or like many other enterprise software companies that are out there right now, I really kind of sets a new standard that a lot of folks might then end up saying, you know what, maybe we should go deeper. And there could be the case that private equity firms take a look at this. And there's a lot of these distressed mid cap and small cap software companies out there.

The pride equity firms now realize, wow, you don't actually need fifty percent of the workforce in order to keep the product running and to drive the profitability. And you could see a bit of a flurry of bio activity as more folks come in and maybe trying to mimic the elon playbook. So you know, that's one kind of prediction I think may arise if elan is successful in making twitter a much more profitable enterprise, IT could set a new model that catalyze us. A lot of other M N A activity, lot of other bio activity of these distressed smaller make cap companies, uh, by h by other actors.

Can I build on what you're saying, nick, please just throw up that tweet that I said just for all of these guys to look because I think it's incredible relia credible slide. And essentially what IT those for those folks that are not watching this on youtube is um IT essentially shows the private software universe. And then the public software are universe at different levels, evaluation.

So as an example, right now there are fifteen companies, private companies that are valued greater than ten billion dollars, and there are forty public ones that are valued greater than ten billion. There are fifty companies between, we know, more than five billion, but only sixty that are public, that are valued more than five. And here's what's crazy.

There are four hundred companies who have an average value of three billion. And then there are already seventy companies in the public markets where they have a billion dollars of next twelve months of revenue. And IT just goes to show you, to your point, freeburg, if these folks have to generate an eleven percent hurdle rate, their cost of capital is eleven percent. The companies on the left will have to go through a lot of very difficult cost cutting, potentially headcount reductions, you know, repricing of the product, all kinds .

of things. And no.

not none of them have all of these.

I am many these on the left for under.

there's almost five hundred companies here that have to do an enormous amount of work so that they have a chance to be on the right hand side of this chart. The point is that you didn't have to do this when rates for zero. There is just an abundance of free money and risk seeking duration that is now out of the market.

But I think there's also a ory that of the two hundred companies that are often are public software companies that you see on the right, some number of them will need to go private in order to do the restructuring that the market is demanding that they do in order to get rightly valued.

And to your point, IT will happen at meaningly, lower valuations than where they probably went public or their last around.

What do you guys do? Ano guys at companies? The right.

How many of do you private over the next eighteen months to get restructured? Or what you want is doing? Everyone is possible. Twitter.

eighteen is eighteen months is hard to predict. But to your point, freeway, I think if you look at the number of them that are unprofitable, at least half of them will have difficulty. And about so I think about two thirds of these companies really have no line of site to profitability in the next two to three years.

And again, if you if you layer in this cost of capital argument, all of those companies, David, will have to raise money at very agreeable terms in order to keep themselves going as a public business. In which case they're alternative is to go private in A P, E. transaction. So it's probably at least half these businesses. I mean.

it's a lot of one hundred p deals to be done. Yeah one hundred. Wow sex.

What do you think? Because you know these businesses in the models, I mean, some of them is hard to get profitable to your scaling SaaS business, right? like. You have to get to a certain scale before it's possible.

Well, I I let's like a very specific question of like me and american get acquired by P E farms forces going public or going private after being public. That's like a very specific question. I think the larger point is just that IT feels me like the economies had IT off a Cliff right now.

I mean, I can tell you with an our larger portfolio of companies like I can see the trajectory. So after two one board meetings, I would say about two thirds of portfolio companies, we're hitting their numbers and one third were missing. And IT still appeared to be like related to those specific companies, not a macro trend, I would say after q two board meetings, two thirds were missing and one third we're heading their numbers.

And you could start to feel OK. Maybe there's like a macro trendier. And I would say after two, three bar mings, like now a that the his entire portfolio is is refocusing sting. Maybe there's like a handful companies here there that aren't if you're one of those congratulations, but like even the best companies are portfolio an hour seeing major headwinds. And this is just, I think, an economy wide .

slowdown and there's restructuring possible.

I mean.

kenney company is ask in the public markets doing those public companies can get restructured as public companies .

in order yeah well, of course is exam.

I don't even think I think expensive yeah I A coin base as an example. Like look, take coin base vis carvin a right? These are both businesses that issued convertible that sort of right before things got very, very hard.

And if you look at where they are convertible deck trades, it's trading basically at an implied deal of about twelve, thirteen percent, both companies. Now one is probably you know A A legitimate bankrupt risk, which is carver. That's what the market would think.

Where is the other one? You know, I think he has a very fortified baLance sheet and could weather the storm coin base. But unfortunately, in a moment where, you know rates are, again, the risk free rate goes to five, five and a half.

Our cost of capital to do business goes to ten, eleven. These guys have to pay twelve, thirty percent. My gosh, it's really, really deluded to be in business right now. So IT just goes to show you that you can stay public.

But if you want to get incremental money to cover your burn, the only way you can do IT without really, you know, blowing up your cap table and doing a massive recap will be through convertible debt, but IT as a huge overhang, and you risk turning the keys over to the dead holders of company. So the alternative for that business is to go into the hands of private equity and get out of the spotlight of these public markets. But public private equity is very smart.

And the thing that happened to them as they can't raise that, right. So what do you think they do? They just have to pay fifty percent less than what they would be willing to pay before because they have to write you know, one hundred percent, I would check. So there is no free lunch anymore. I think is the big is the big point to to, to point out anywhere in the market right now.

I think one of the things i'm most concerned about that would be is I was talking with a friend works at, uh, a private, you know you corn software company and we talked about the the numbers of the business. And as I go, that companies probably worth x and I gave them a number, and then I asked him how much money they've raised. They've raised more than x, so I was like, do your options are worthless? Like, you know, this is a real problem.

I think that's probably going to become very systemic for scale unicorn software companies. What happens to these businesses acts in the market, you know, as they kind of need another round. But the value of the companies now less than a total cash if y've raised that always sitting is .

preferred stock. Listen, its its survival of the crickets. Those who are most willing to adapt the most quickly are going na survive in the ones that are stubborn and refused to accept the new regime a the market regime are going to a die.

We show that change member that chart from skoal months ago on this podcast member that where IT basically showed what happens if you're a company that doesn't cut, burn until the very end, then you stuck around the money and die. But if you make the cut right away quickly, you have enough run away to weather the storm. And I think that what we've seen is at my from craft yeah this exactly IT yeah we showed this months ago, we've been begging our founders to embrace this.

We did support for a review with our entire um set of founders of our porfolio companies. We did want to in february when we felt the markets were changing and we did another one in may and we showed the slide. And this is the most important thing for founders to internalize is you have to make the change is quickly.

You know, one way for them to think about IT is let's you're a unicorn company, okay? And you raised at the peak, let's say, second half twenty twenty one, you raise one hundred million dollars at a billion dollar valuation. Then let's say you've got fifty million left in the bank, right? So you've burned fifty million.

A lot of these founders are thinking that fifty million you've left is only five percent solution, but that's what IT was historically. If you were to raise a new round today, you might only be valued at two. So that fifty million you have left is actually twenty percent solution. And that if you could even raise, which might be very, very hard, the most important thing founders can do is forget about the historical terms on which you raise that money, forget about how much money you are burning in the past, to think about how much money you have in the bank today. Compute evaluation to its you really eternal ze how much delusion that money represents and then create a new plan moving forward to preserve that cash as long as possible.

Can I say something else quickly on top of that? I think that's really good advice. The thing that, again, people should do is you should just build a little spread sheet for yourself to understand what the alternative financing options are for people who are in the business of investing.

So David, your point, the current three months table rate is four percent. You know you can buy munis now between four and five percent that are that that are triple tax advantaged, right? You can buy, uh, high quality corporate bonds that are six, seven, eight percent. And so I think .

that that have a divided yelled to five percent growth growing, market leading, growing.

And so all of the exactly.

And so all of a sudden.

like turning around and giving IT to a company where there is no end in sight in terms of IT doesn't get you to profitability is a really, really hard thing to do. I was talking to an entrepreneur's vid off yesterday and he said IT really well. He's like, listen, you know, i'm not a macro economist.

I'm not trying to forecast, but he's like what I understood yesterday. This is David talking about. The fed has an entrepreneur. The angle of attack has changed. The fed has said this is not going to be some triangle side tooth.

It's not going to go up sharply and then come back down sharply, which is what we would all want if we wanted things to get back to Normal sooner. The angle of attack is now a little bit slower, which means is going to take a longer to get where we need to be and then we're going na stay there for a lot longer than we want. Every new role. Those two things together, a lot of companies may run other money. And so if you can get the default alive, you have to look at your cost structure and figure out how to right size this thing, because the cost of capital is just going to be really.

really expensive. And this was the fed goal, right? They want to to take away this free capital. They want to show the me down. And IT seems like they're making progress that did the seven, five basis point hike this week.

But we're adding jobs, the economy, we have more job openings and we had two point six percent GDP roads. So I guess my question to the everybody here is what is the fed gonna to do? Or can they stop this consumer? And this growth is very strange.

right? Popolo said he'd rather overcorrect and break things because he has a tool box to fix the broken bones, but he doesn't have a tool box to fix if they under correct and they have rapid inflation mean not more explicit, you can't get Jason. So he's gona take rates until demand is destroyed and enough demand is destroyed such that inflation is tamned.

But that has huge implications to all of us because we all have to do our job trying to build a company, trying to raise money, trying to invest money. It's just getting much, much, much harder than I even thought. So like you know, for me, i'm like, well, I thought that we could get through the worst of this by mid twenty three, but now you have to plan for the worst, which means, okay, now i'm thinking that men rates could be higher for much longer, which means, you know, we could be in this market till early twenty five.

And you may say, hey, that's way to conservative yeah, but you have to plan for conservatism in this point. So how do I invest money right now? Honest, unlike, I should just put IT more into t bills.

Isn't that crazy if a companies like kate, months can have another ten, fifteen, twenty million books I like, wow, I mean, I don't think that that gets you anywhere. And oh, by the way, that ten or twenty million dollars I can generate four percent. What a, what a tough trade up, right?

For well, for somebody who has access to privates markets, which should be high growth companies, to take the guarantee for over the fifty x, twenty five x, ten x whatever we're trying to bed on here.

yeah, it's not just the guarantee for but if you want to take tech risk, then you could go by the corporate bonds, high quality companies for the ten or eleven percent. So you you take moderate risk.

So you're also competing with that, not as zero risk. Can you explain that for the listeners?

What that corporate that is in is more sure high quality public companies, tech companies, that s and that's corporate dead. And they obviously to pay a higher rate than what the treasury pays because the treasury is, is this free and corporations could default. So there is some risk.

It's not zero risk. But you know it's like if you're willing to take tech risk. Then why won you buy a bond, a temper cent, meaning the equity always has to beat the threshold return. But he, can we just go back to the jaws report for a second?

I mean, the U. S. Government could default, but it's considered the least likely to default of all issuers of debt in the world.

And that's why control the why people.

all the risk, free rate risk, the us. Can always replace as dead.

because the dead is dominated dollars. And the treasury can always, at the end of the day, print more money that would just vertie the debt. Other countries, that old money and dollars, and obviously don't control the U.

S. Meant they can do that so they could actually default. But since where the world's reserve currency, we are never going to default, however, the dollars that you get pay back by the U.

S. Government might be worth a lot less in the future because of inflation. And that's the real racy have to think about.

But there's no default risk, right? Whereas with corporate death there is. But let us go back to the the jaws picture for a second.

Jason, you asked about this. So there is news this morning that we added two and six one thousand jobs in october. And obviously, given the third and election in a few days, then the administration is eager to point to this.

But if you dig a little deeper in the report, I just post the link there. You see in the all numbers that there's actually three and twenty eight thousand fewer employed americans, and the number of unemployed americans actually increased in six thousand. So and the labor force participation rate declined for the third consecutive months to sixty two point two percent. So like I don't really understand like how all these numbers add up, but the point is like the data is very mix starting to and and this is the negativity and there and if this feels to me like the last gasp of the bulb market where there's like this residual job creation, but you look at like this was happening last week where it's stripe cutting, I mean stripes, probably the single highest quality I think is the most valuable private company is OK.

But like software .

peer software company, that at fourteen percent, you're start to see IT. Now the rift really start to pile up. So I think we're at the begin now of a long cycle of the unemployment rate going up.

I mean that this feels like the economy is slowing so fast. The markets are, you know, they've been picking up for six months. IT just feels like this is the beginning .

of like really serious recession. Yet we had GDP growth.

Yet we had job open with two quarters, two quarters of net negative G, D. P. growth. This is when we had the debate about what a ah recession is IT was true that if you looked at growth and ominous terms that appeared to be strong and then IT negative once you use attracted the inflation rate.

You know we said several months ago my prediction was a doubled the procession where you had this shallow technical session, then a bounced back in q 3。 But now I think we're headed into the second part of IT, which is the real recession, a recession characterized by joblessness. And you're start to see economists say we're going to go from three point something percent unemployment rate to say five or six percent unemployment next year. So I think we're just beginning to see the the job cuts start to add up.

This is I think this is what parliament, which is, you know he'll take IT as far as he takes and then he can fix IT on the back end by reintroducing, you know, aneta's easing in reintroducing lower interest rates to stimulate demand.

But there is what the odd gets this right. IT seems to me that the fed has a habit of reacting too slowly. They were too slow to react to inflation.

My guess is they'll be too slow to react to the recession. So i'll end up with a period of rates being higher than they share too long. And then they will correct, they will drop rates. But that could be two years and now and meanwhile.

we could be in a pretty recession. Probity charts free to look at the GDP by quarter and then after that labor participation rate. So there's A G D P, Q one, q two being negative, q three bouncing backs. So what happens in q four, four force participation rate for labor, as we discussed.

the thing with the labor participation is that we're still not sort of like truly factory in is like, you know, we had a million americans to die because of coffee and you know, starting in that trump presidency, we lost like seven, eight million immigrants. So those eight million people have a huge effect on this number. Ah right? And it's not properly really factor in because if if if you see that at the start of the trump presidency just fell off a Cliff basically and you also have people .

who retired early, that was a big trend. And this all peaked in two thousand. Labor participation hit them like sixty seven and sixty eight percent and think is the peak and just slowly going down as bombers retire early because they made so much on their foreign keys and homes. And then you you're right to off. We've had negative we've really cut immigration the list, whatever.

five, six years. I think there's an element in here that's missing on how much people individually are finding other ways to earn income that doesn't qualify and show up in the labor force numbers people have set up at stores. Shop fy stores have tripled since code.

People are making more money on youtube, on instagram, on tiktok than ever before. There is a whole new class of work that revolves around the individual creating um their own business, creating their own income stream that simply taken off and has taken off. IT was IT was kind of a trend pre coffee, but IT really took off during covered.

And there's an element of this that's really more about the transition of how people work and how they earn that isn't reflected these numbers. I don't think that the idea that everyone should go be an employee at a company is necessarily the right way to think about labor going forward. The amount of money that individuals are earning is probably the Better way to frame this up going forward and is really thinking about the earning power and the economic health of this country.

This is something important. You're bringing up your gig workers are about nine percent of the workforce and uh uber and dr had um they they grew over seventy percent this year. But I think the big number that I watch for was drivers are making thirty six dollars an hour in the united states working for uber. So you're exactly right. People are finding other options where ash.

uber and that in labor force, right? Because there no the independent .

contractors are counted.

Yeah they are counted.

That's a based on my preliminary research. If somebody wants to affect check is that would be great. But my understanding is independent tracts, which is what gig workers are classified under, are counted in labor participation. I don't know how they're counted. So uh, will look that up and figure that out.

There was a story in B, B, C. That the bank of england has now warned that the U. K.

Is facing its longest recession since, uh, records began. Some of this is getting to be free point. yeah. But look, here s what I think is scary about going into a cession is, number one, you don't really know how long is going to take to get out.

We know the average recession last about eighteen months, but the truth has wants to start, just don't know. And the second thing is, you don't really know he's been stressed tested. People claim that they can weather at the storm, but the truth is that there is no there's no way to simulate truly simulate a stress test.

They claim they can. But the only way is a really subject, you know, an institution to that pressure and that stress. And then you see if they come out the other side so that the issue is you just going into this.

There's there's those a lot of unknown, unknown. And and this is why I would just urge founders to be cautious, is because if the recession ends up being shallower and shorter than people expect, great, you surprised the upside. But if the recession ends up being deeper and and longer than expected, you don't want to go to business.

You won't be protective IT against that. So again, we've been saying this since february and may. But again, I just reiterate, I think IT really makes sense for founders to be conservative, prioritize your survival above all else.

You know, this recession probably will ask about two years you want to make sure you survive IT. And to your map point, if you survive IT with lower growth, that's fine. You can keep growing on the other end of this thing. But if you go out of business because you grew too fast, then you're not get the chance to fix that problem when the recession is over.

I just don't see anybody rewarding hyper growth that is burning a ton of cash where you have to be back in market every year because it's it's just very hard to feel comfortable that the conditions on the field aren't going to be drastically different a year from now, right? It's not like we know that it's going to be Better or worse. And I think that, that uncertainty is actually really bad for companies.

So to your point is just like a lot of folks have tried to shy away, David, from actually revisiting their valuations, they've done these complicated converts and they're you've tried to basically, you know, it's I think it's sort of like managing their ego or the board ego. And I think like the next shooter drop has to be these founders and these board just sing. Okay, let just take the heart medicine.

What's the real you know market clearing Price in valuation? Let's kind of third party to Price IT and let's get new fresh equity and then move forward because if you don't do that and you wait until everybody's trying to do IT, then it's going to be a really tough scenario. So Better to your point, you know, this is why, like stripe, it's so smart.

Better to cut. Now again, it's always hard to let people go, but it's Better to do that now than eighteen months from now because you just have no idea how much more expensive or heart it's gna be then and who's gonna even be in the business of lending money or investing money in eighteen months. And you know that that sounds pretty crazy. But it's it's like I think that the moment that were in.

to your point, uh, freebody, I did a little research here and according to the fed of saint Lewis, if you accounted uh casual workers, informal workers over doing over twenty hours a week of informal work, A K A gig work. You would increase labor participation between a half point and a point if you count that all of them maybe even in a set than more than two percent tage points higher. So probably about a point, uh, seems like a realistic way to look at labor participation. And of the eight points or maybe now the six or seven points to ten percent IT would then account for ten to twenty percent of the ten percent drop in labor participation .

is is alarming statistics because if most people have most of their personal network tied up in their home asset and their home values are declining or gonna decline. And we're seeing this dramatic Spike in consumer credit in the U. S. IT paints a really ugly picture for the next two years.

Oh, guys, i'm just looking. I'm just looking at the Marks today. Get labs s down fifteen percent.

Snowless down thirteen percent. Monday's on fourteen percent. At last things down thirty percent.

In day.

a yp is down seventeen percent. Open door is down sixteen percent. So IT is a hr, oh my god.

S the clock computing index. H W C, L, D is hit a new low for the year, is down to twenty three bucks. I think the previously is twenty five, down almost eight percent today. And this is on a day in which the attack is down less than one percent. So the point is being .

out of growth stocks, yeah.

it's just brutal. And so listen, if you're start of found here, you gotta realize these, like some of the highly quality .

public OS down forty percent day. Lilo is down thirty seven percent in a day today. Well, but guys.

this is, this is just math. You know, it's not a judgment on the need of these companies. It's just pure math is why I think you have to be ugly, unemotional in this moment. And if you are if you are a CEO running a company, particularly assays business, you have to really figure out how to how to right size your cost spaces and make this money less profitable.

And I had eet tweet about a few months ago about how the biggest stake people make is they just do like a tepid rif, like a ten percent ish rif. And they if they come back and they do IT again.

and they do IT again, this is what I think the the elon action this week really sets a standard. He shows the interactive silicon valley that you can cut deep and you can turn a profit and you can do IT fast. And I could set a new standard for how folks are managing this.

Jack welch used to, in his management principles, recommend dropping the bottom ten percent of people every year. And so, you know, the ten thirteen percent cuts don't really pass muster as a public marketing investor kind of looks at the the management across these different companies is to turn a profit. They're gna, say the folks that are making the deepest cuts, the faster the ones are going to get valued.

It's unfortunate and it's a difficult circumstance for everyone in silicon valley to deal with from the employees to the investors to the public and private shareholders. It's really brutal. One quite question is really just this kind of market motivation that's .

under way right now. Here's a chart um and my question for you is window, google and facebook stopped this. I mean, if you would look at the number of employees being added, IT is truly ordinary.

Here's the chart, and this includes the latest quarter. So they are not turning off hiring yet. What do you actually, don?

Did they announce hiring freeze?

They announced that they were a google. They announced that they were gona hold people accountable to Better performance, and they were going to go do more with less, and then they add more people. Facebook said they would .

do a hard well jobs last quarter.

Well, you right.

they just announced a hiring freeze. You look at the apple, apple just announced in non R N D functions to hiring freeze. This is apple, like the most valuable, most profile company in the world.

So if apple basically is putting the breaks on non engineering hiring, that tells you something about how fast the economy slowing down. I think that was a huge signal. Yeah, the point feeder makes us so correct, which is if you're doing a ref, obviously there a reason why.

But I think we were seeing too many refs where the details of the ref and the monitor the ref don't match up with what the objective of the ref is. The objective of the ref for a lot of these company, ies should be to get them casual positive, or at least to put them on a runway or trajectory where they can get cash for positive with their existing cash on the baLance. Y right.

They won't need to raise money again. And we're seeing a lot of companies where they don't achieve that and they have to come back again and again and hit IT again. And that creates more, more tour moil for the company, and it's more unfair .

for the employees. But I how deep these companies are cutting and how quickly management is expressing their shareholders, how they're going to turn a profit becomes a signal for those shareholders on whether or not they want to stay in that stock. And the companies that are doing at fast and are doing a deep, the investors in the sheer holder say you do actually have a path that makes sense. You on to stay in the door, cash today versus cash in the future.

To ask to ask you a question in terms of strategy for one of these companies to take the facebook CoOperation or perhaps you in google or apple, even if they were to cut their expenses, which might take obviously a ref and then because their stock Prices a surge depressed right now, maybe a mid cap one like a tWilly o or neuber or narb nb, they were cut costs and then start buying back their shares, of which some companies have been doing. What would that do in terms of the market, its appreciation of the stocks .

or management teams? I think it's hard to tell. I think the if you have not lost investor trust, I think that would be really well rewarded if you have become unreliable and undisciplined. Even those cuts, I think, would be met with some amount of excitement, but but probably not a broad base support.

So you know, IT then IT just goes to narrative, meaning if google did IT, I think that people really trust soon are and root and I think the stock would go bankers, they would they would probably move very quickly into the echelon of apple. And apple is sort of at first among equals like they're just there's just in a different class unto themselves. Facebook, I think, is a little bit harder because I think folks, i've gotten burned and you know they would have to make some really, really deep cuts.

But then you know where do you do IT? You can't capital late on this meta strategy, but then the other parties where you make all the money. And so you have this huge moral issue that you have to manage. So it's just a really .

hard game to play on the rift stuff. I think one thought experiment for founders is to think about what was your plan at the end of twenty nineteen.

Why do I say that? Because twenty, twenty and twenty twenty one or two, the most distorted years ever in the history of financial markets and the economy, because we had cove IT, and then we had the reaction to cove IT, right? And so you saw there was this um zoos market cap had one hundred billion and all the commerce companies we're doing extremely well.

You you know you had all this money printing, you know you had zero interest rates and so on. You had SaaS companies sitting all time highs at the end of twenty twenty one. So we live through this incredibly distorted time.

So as a thought experiment, go look at what you're for. Twenty twenty was supposed to be when you created at the end of twenty nineteen because that was the last time that you were thinking without any distortions. You know, that word then created. And I think if we were to go back and look at your twenty twenty plan again, created IT at the end of twin nineteen, you probably see that you could get by with half the headcount you have now because probably you double your headcount during the last two years, during these heady, heady times. And yet I think founder started thinking, all I can go back to Operate, and you know, I can't Operate at half the level of had count, but you were you were Operating with high level count by the definition at some earlier point.

I also think sometimes I think i've founder say, is, what will people think if I got fifty percent, meaning all of a sudden the perceived success of my business will be different. And I think that this is where you have to realized, no, like there's a lot of ego tied up in these things, which slows people down from doing the thing that they need to do. Yes, it's a really, it's a really .

it's hard to do. I mean, look at airbnb as an example. I mean, they did this giant orm's riff doring covered because they had no choice saving their their revenue.

You went essentially to zero. And now the business is incredibly strong. It's throwing off massive amounts of free cash flow. And stock market seems to really love whatever being bees done in a similar story over at uber in terms of having done significant refs and public could do significant weak clear.

Airbnb is still down almost seventy five percent of a tie. So when you said the stock mark love IT, so there they're up today, three percent. So meaning they're not down thirty percent of one day, but they would have gone down with the rest of the market.

They have gone down with the rest of the market. But IT feels like the business i'm talking about the business fundamental. When you're throwing off almost a billion.

they 加 了 个 照。

Yeah, now you're going to start people going to perceive that business maybe as a of this coward, the flight to safety, right? Or same thing with uber thwing off free cash on me. Body ber, I think the people thrown off the free casual are gone to look pretty attractive and be able to buy the stock back. Maybe, or you will, let's talk about the mid terms, a lot of big a senate races and of the governors pencil, ana, georgia, arizona company, ohio, all really important races. Sex, what do you think?

Well, IT looks to me like there is giving a republican wave. There was an interesting article actually on CNN, where they is called five scary numbers for democrats. And what they point to is that biden right now has a forty two percent approval rating, sixty one percent of the american people say he hasn't focused on the key problem.

So this is called the. Out of touch index, fifty one percent say the economy no one is you compared to to only fifteen percent for abortion and then seventy eight percent say we're on the wrong track. I don't think i've seen a right track, wrong track index that was so negative and seventy five percent of the country, he says, were in a recession.

So you know, when you look at polling numbers like that, you must translate, I think, into a republican wave. And you have now real clear politics currently has the G, O. P.

Gaining four senate seats. So waiting in the arizona naoto georgian, new hampshire, a big change from just a couple days ago and winning thirty one house seats. So this is this is kind of what is looking like right now.

But looked the the margin is still within the within the margin of air on the polling. So need so s pointed out that within one center deviation, you could either have a republican wave or you could have basically the republican fizzle out. So it's going to be very close. But ultimately, I think this breaks .

republican yeah to me. The way that I I am looking at a right now is that IT seems like most scenario the republicans will have the majority in the house. And the real question is what happens in the senate? It's really, really kind of a coin flip and that's gonna really interesting to see.

So you know things where I thought would break republican in the senate, like pencil ana, are now back to almost you know a statistical dead heat. So it's a really interesting moment. Actually it's a but most scenarios, David, I think you degree, is that the republicans win the house and then there's a non there's a plurality of scenarios where they also in the senate.

the house will almost certain ly republican, but I think the senate now the the official percentage of fifty five percent likely to tip republican.

But I I just think that in a wave year like this where the wrong track sentiment is so high, I think all these races that are a dead heat are there are more likely to break in one direction as opposed to like a random distribution, which is why I think you could just as easily end up with, you know, server being a fifty one, forty nine, seven IT could be fifty five, forty five, because all these things could break the same way. So right now, so I would slide disagree in pensylvania, I think oz has improved a candidate fetterman to that. And since he suffer that stroke, key kind came across.

How do we feel about that, that I had very, very hard to watch that happen. And yeah.

I mean, guy, the guy has suffered a sad he, he as someone who can be a senator right now.

I think I say about that like a we as a society, is this a good idea to have somebody post ropes and office? I'm not picking any political idea a about the the medical .

issue is actually doing the right thing right now, which is he's not actually focusing on that issue because it's so obvious he doesn't want to be seen as beating up on fetterman.

And the because a human.

he's focusing on the issues. And actually a federman issues are very unpopular in the state like pennsylvania. So I actually think for both reasons, od's gona win that I think veterans manifestly unqualified. But also, I think his positions are fairly unpopular. So I think pensylvania a will almost certain ly tip.

So let me up the chart here, just can.

oh, I O is going republican. And then arizona, I think, is really the interesting one where Blake masters is now tied after being behind mark Kelly through out this campaign. He is now tied in new pool forty seven.

popular. Your guy is really unpopular and now he's tied.

He was never the popular jack .

that .

was interpretation. I I listen.

I think that I think that arizona, probably me the closest race in the country, I think it's give me a nail biter, but I think it's going to pull that out.

sex. What do you think of the biggest policy shifts that take place in this country post this predicted red wave? Is there anything that changes? So just, you know, talk to folks about what's on the docket from a legislator point of view going into the next congress with all these new candidates.

The reality is we have a separation of powers in this country and you're going to have divided government. The republicans will will control congress. The democrats will control the presidency.

And so result you're going to be largely in a gridlock situation. But grid lock may be a lot Better than what we've had over last couple of years. So you've had basically this orgy of spending and money printing, and I think that's gonna stop.

Obviously, the other thing that's going to happen is republicans may not be able to pass much legislation, but they are going going to do investigations. And there's a lot of questions I need to be answered. I think about still about covet, you know, these lockdown policies that we had to start at the top.

And h why did they happen? We need to start having accountability for some of these horrible decisions that were made during covet. And there's been no willingness in washington to hold anyone accountable. And minimum, they need to have some congresses investigations and find out why we pursued such bad policies over the last couple of years.

But did you see did you see what happened this week where the C D C you know after this entire Operate epidemic and all of these um lawsuits, the cdc came out and actually said, hey, listen, we need to really make sure that were getting access, putting opioid in the hands of americans who are really suffering with pain management and what not and I didn't read the article to really understand the details, but I just thought I was an incredible headline where it's like it's just it's so counter to the narrative of what we've been told this happening, which is like overprescription and this prescription.

If we learned anything during cov IT is to question every organization, everybody, and to really collect your own information. While you know, looking at these organizations, we trust IT over time. I I know I look at the world differently now that you couldn't say coffee was possibly a label without having your podcast taken down or being banned on youtube.

And now pro publica has done an investigation and they're saying, along with any fair, and they going to win a policy for this. I bet that this conspiracy theory from two years ago is probably actually the leading theory. And that lab lab was showing if you didn't see IT reporting an incident in late november of last year before a covered .

broke nineteen. It's really article .

in the atlantic that came out over the past week call let's declare a pandemic amnesty. No, yeah, exactly. So basically all yes, all the experts who told us, Jason, that we weren't allow to have an opinion because we weren't expert enough that if we raise ed any questions about the origin, the virus that I might have come from a lab, that that basic needs to be censored.

The people who said we had to you lock down and implement all these authoritarian an tactics, now they're saying that they need an amnesty. And what that really means, no, learn, no, no, looking to criminally prosecute them. What we're looking to do is have some accountability around the public policy.

What they want is they want to pull the expert card to say that there are the only ones who get to have an opinion to make a decision. But then when IT all goes horribly, arrive, they basic want to be completely insulated, unaccountable and from their decisions. No way, no way we're not to give .

you full investigation, are in that we're in alignment on this for a rare moment of peace on this pocket. The same thing after nine eleven. Shoul all americans understand what happened after nine eleven and what the failures were in our intelligence just so we can get Better.

I'm not picking a political here here, but it's kind of crazy that you could people said to our pocket and other people who are questioning IT, forget about where political party range. We want to understand how the world works. Where are the chances that this breaks out in the one or two places where they're studying in the corn of vice that you have a lab leak? IT was so obvious to everybody.

The other reason why you need to have accountability for this is that there is still a long tail, especially around the damage that we did to our kids educationally. yes. And now and now the overprescription of stimulus. And so if you don't fresh answers, you can go after these problems like there is a there is like stimulate prescription is now the single biggest epidemic and children IT is now twice prescribed as contraceptive and asthma drugs.

And why to off? Why are we doing this to get them to score higher on the test to be more attentive in school?

Well, it's it's actually this negative feedback group where these children were missing ducato during covet IT had huge psychological and academic damage to them. Our test cores have fAllen and off of a clip relative to how we used to do relative to other countries. I think the teachers unions have found a way to try to explain IT, to basically shield themselves from any sort of critique. And so the and then part of that loop is then to look at a bunch of kids that are under performing in school and instead of saying, well, maybe these lockdowns and masking and all of these things that we implemented actually had a huge impact, they say, you know, you're misbehaving so let's put you on a.

yes, crazy.

We're in that loop right now. Just see you guys know the data is outrageous. Twice as many prescriptions for stimulants as the sum of contracts, tips and as medical gs for all american kids.

Yeah, it's not that suddenly everybody is got D. H. D. So we felt them. We felt our children, we're going to s catch up now, but we be doing in ols fail failed them because of our response to cover IT.

That is why we the answers all that's not because you need to link these things together to have some real ability.

absolutely. Here is the um just that we have the people see the number of years of the five third poll of a how geo bidders popular has switched. This is six hundred fifty four days into his presidency, started out really strong fifty four percent and now a little rebounds ince the summer, obviously, that a dep started, uh, with the economy.

It's the economy stupid. And if we go down a little bit on the same page and you zoom in on the left there, you can see compared onal. He started out much more popular than Donald trump day by day, and now he's just as unpopular as Donald trump lies at this point in his presidency. Look.

but this set up is really interesting for twenty twenty four because it's probably going to be the case that were in middle of a recession going into that election cycle. Maybe we'll be sort of like getting ourselves out of IT, but theyll be a lot of economic damage, higher employment and you know typically folks empowers will have to sort of be held accountable for. That is a really interesting set up that both of new and and h rn. Descendest have to figure out now and navigate if they're gona get the nomination on each site.

And breaking news today, sex would love to get your thoughts on this, XO says, ah and we will go to science going to nets that trumps going out on november team that he is running for president. Look.

I can have the joo gan philosopher on this, which is, why give IT oxygen? Let this way and see. There's certainly no need to talk about before happens. You even passed this election yet.

But but hi, I want to go back to the the biden popularity because I think part of the issue here is what are the arguments that binders making to the country about why people should vote democratic? And he gave another speech on wednesday night where he basic claim that if you vote for a different party, that that is a threats to democracy. In other words, the perpetuation of single party rule is what you must do if you care about democracy.

That is a sales pitch that's not going to appeal to anybody outside of the viewers of M S. MBC is just not he's not talking about the issues that really matter to the country. You know, what the country wants to know is that he's focused on the economy.

He's focused on inflation, he's focused on crime. He's focused on the schools. And fixing this learning loss that month was just talking about he's not doing those things.

Instead, he's basically saying that the democrat should be kept in power forever because there was a ride of the capital on january six. And look, that was a stain on the country. Okay, IT was terrible that that happened, but that is not a reason and that is not a reason to keep democratic power forever.

And actually there's a um a liberal guy, liberal democrat name josh barro, who had a pretty good blog about this. And what he said is the message is that there's only one party contesting the election that is committed to democrat, the democrat, and therefore only one real choice available. If voters reject democrats at agenda or the record on issues including inflation, crime and immigration, they have no recourse to the ballot box, is simply must vote for democrats anyway.

And that argument is just not flying. And actually, he's A A democrats who is pointing this out. But I don't think that democrats are getting the message on this, but I think they will after the selection and I would have to find a new sales .

pitch to the country. Well, you know, and he does have a good self pitch, doesn't each math with this major bypass, san winds, he had the infrastructure deal got down, the technology bill and the chips, you got gas Prices going down. You get G, D, P, growth. If you get job growth.

The problem is that those things happened, Frankly, too early in his presidency and things are getting materially worse. So I just send you a link. Can you just throw this up here for second? You know Jason, you mention this cheaper guesting.

Yeah but the reality is um if you look at this, we have now depleted our strategic reserve by almost fifty percent. So we are running out of oil that we can introduce into the market and effectively zero cost to bring the Price down. And because we've lost our relationships with folks xxi arabia, there is no way to influence them in order to produce more.

In fact, they're gona cut supply so that they can control the Prices that they have, which that they can sell into the market. And so now what are we left with? Well, the only three places where you can have incremental supply of energy, which the country still needs, is from russia, iran and venezuela.

So, you know, all of these things, situation, I think, come back and really put by in a top place, because as a success, he does have to answer to all of these things, because these are his decisions. But guys do believe in the democrats. You know, I am hoping I gave a million bux uh, to the senate pack trying to sort of tip the senate.

I really think it's important that we have a split government because I kind I gave up on the house. I think it's clear that the republicans are going to win, but the senate is still is still up for grabs. And the reason is because I think that we need to sort of have spaces so that nothing bad happens between now and twenty twenty four because I think the economic conditions on the ground are going to be bad in and of themselves for then.

Just the one last thing i'll say is the instructive thing that I think we should look at is what happened in germany. Because what happens in germany is really interesting when the economy turns and inflation is out of control and energies is out of control. What they basically did was they sidelined the european central bank.

They stepped in with their own baLance sheet and said, you know what we're in nationalize assets. And I know that this sounds crazy to say, but if I can happen in a place like germany, I know most people say that will never happen in america, but i'm not so sure. And I think that you want to make sure that there's a split government so that these things are never possible.

And so hopefully there's some, you know, common ground in a democratic senate, in a republican house. And we just kind of get through twenty four ign, see where the chips land. And I still think it's gonna uh, scientist .

forces a newsome .

freebody final year observation yeah. Why did you just guide .

to give the money to me and freedom to get a .

play each other?

Think you .

cancel each other? I mean.

so far, Peter till made the Better trades. IT looks like the tio wave in the so .

I would say my very broad statement is democracies evolve in a technical nature over time. Write you you often see swings from one political party to the other. And um it's just the nature that once someone has been in office, they form the new establishment.

And then folks on the next election cycle, one to vote against that establishment because there are things that they want that they aren't being given today. And therefore the democracy forces a change from what is the current establishment back to the other side. And generally, political parties seem to kind of adopt whatever the other side is. And that's how the cynically evolution of democracy seems to play out.

The recent trend that has been more alarming, which I think we can kind of take pause to notice, is the the rise of popular, where populism is this really kind of element, die hard opposition to a leader and is the establishments that everyone feels kept down by and everyone feels take an advantage of by and um the rise of trump, the rise of bulls and arrow, the rise of boris Johnson and I would argue even the rise of aoc party standards and Elizabeth Warren all similarly speak to uh the the crying voice of the the the democratic 怕 relations that they want to see these establishments taken apart。 They don't feel like they are fair, they don't feel like they're just they don't feel like the institutions that oversee us and our mentor services are service. Um and so there was this big rise.

The problem is like a Normal pendulum would swing back and forth between one side and the other. With the rise of popular m, you get such a strong push of the pendulum, IT can knock through a wall. And I think we saw that on january six, and I think he gave a lot of people pause.

We saw the the the motion of break knocking through a wall, and we saw these kind of very radical outcomes. And then the cost of those outcomes blow up in our face. And as a result, I think we're seeing a bit of a receding of the ties right now away from populism during this current electoral cycle where folks are saying, you know what, maybe we just need to have some sort of an establishment so I can feel safe and secure less than the vote volatility .

that I experience. I think the economic mess were in, okay, populist did not cause that. Okay, populist did not cause ten trillion dollars of money printing.

IT was modern monetary theory. And the experts, the fed who did that, IT wasn't populous, who created the great financial crisis of two thousand eight that caused the serve. And we're still living with all the downstream effects of that. IT was the experts on wall street who said they could manage all these derivatives and the clatter ized mortgage obligations and all .

that they can. L IT wasn't .

an on cover. IT was not populist, who caused the horrible handling of that pandemic. Even though they were blamed for a member, we were told he was a pandemic of the unvaccinated IT turns out the vaccine doesn't stop IT IT was not popular, who caused the reaction to pandemic IT was the expert to the cdc and functioning people like that, who shut down our economy, who caused the learning loss IT was those experts to freeburg.

Listen, you may not like this populist wave with that we have in the country. And I get that it's in reaction to something real, which is the failure of this expert class. And if you want to stop having this populist wave rise up, we need to start having experts in position of power who .

actually know what they're doing.

I have any opposition to the populous with i'm making the observation that the a the effect of some of the popular movements have started to become too volatile for people to feel like they should continue forward with that electronic path. That was my observation OK. I'm not kind of criticising movement.

I'm just saying that events like january six and the conditions in the U. K, for example, are making people say, wait a second. Maybe I need to take pause on the extreme.

The bond market based fired less trust. I know she's not a populist and in a bl saro in brazil he actually just lost. And there was a big narrative that somehow he was going to not relinquish power, and he just announce he went relinquish h power, right? So you know, some of the stuff is about how populists post this great danger, I think, is threat inflation, and that the threat is magnified by etes you want to stay in power.

And the truth, the matter is, we need accountability for the people in power. And when they set the wrong policies and decisions, they need to be replaced. No more, no more. unaccountability. Yeah.

I have my personal belief hundred percent agree accountability is was lighting most across all of these institutions .

hundred percent gray countdown. Let may be competence and also .

transparency and accountability .

like I think that's what. There's no way to perfectly act the pandemic, but in your mistakes, owning them and explaining them would be much Better than trying to obscure fy and asking for amtech. Mh.

um if you want to hear an incredibly interesting interview because it's very thought provoking of a modern progressive um but with a very different mindset or sorry you know maybe you don't want to call progressive but is the um president of all or nothing bookselling and he did this incredible interview with tuck or crosson on fox news. I encourage everybody to watch IT on both sides of the political spectrum. That man is .

impressive.

Watch .

ker .

entertainer. I like to watch things on both sides, but that interviews is incredible. He is unbelieving impressive. And it's A A double clicks into, you know, the scepticism that smart people like him, the outsider class, has with the insider expert class, international shell. If you want to see IT, I would encourage you to water the interview because it's it's incredible, incredible really, Jason.

The presence with pitch forks are rising up against this elite class. You've put themselves up theyve ut themselves up as lords. They want exclusive control over their blue checks. And we're about to overturn this establishment because IT is corrupt and IT is incompetent.

IT would be great if the people who were trust coming back wed and we're transparent. You know, I think that's why people are opting out of this is they don't feel that there's a level of confidence in these institutions nor ownership and transparency and and IT really is frustrating, whether it's education or a health .

or you know any .

any of these topics we ve talked about here on the show. Let's go to science corner and we can rap. What do you got free breakfast breakfast to mock?

I think we were gonna cover the facebook meta announcement that the A I. Research team had generated the physical structure of six hundred and seventeen million proteins from these metagenomes data sets. And so remember, alpa fold made a big announcement that they had highly um accurate predictions of protein structure of three dimensional shape of proteins.

And remember, proteins are kind of the machines of biology that do everything from cats's to enzymes when they break them up down and they're like, you know, they have all the structure that allows them to do specific physical things. And proteins are coded in D, N, A. Every three letters of D, N, A codes for the mino acid.

A string of the mino acid makes a protein. And so now we have about a million species where we've sequence the entire genome of those species, only about three thousand animals, by the way, including humans, half a million from bacterial species, and then a bunch of viruses and other stuff, but but call IT about a million species that we've sequencing. And so, you know, earlier this year, google's alcohol project published the 3d structure of two hundred million proteins that they had derived from the whole genome databases that existed， where we've gone through and figured out what's the full DNA sequence of all these different species.

Now when you look at the DNA in the environment around us, you were just to take the DNA out IT. Turns out that we have seen very little of that DNA, the vast majority of DNA that you would find in a teaspoon of soil, for example. We've never classified.

It's not part of a species that we've actually built a whole year around. We may not even know what species that DNA is from. And so when you take um a teased oo of soil, you'll get about a hundred billion micro organisms in that soil from about a million unique species.

But you don't see those species because the way D N A sequencing or shocked and sequencing works is D N A is chopped up until a little two hundred and fifty base parallel hundred and fifty strength and those two hundred and fifty letters are read at a time. And then statistically, bio therm tics puts together all of that little DNA segments and tries to create long strength of DNA to figure out what the genes are or what the whole genome is. And so shot gun sequent gives us kind of a snapshot of the D N.

A. But until we've done the hard work of figuring out the whole genome, we don't know what species that DNA comes from. So when you take a sample of soil, or you take a sample of human poop, and you sequence IT, or even A A teased poot of ocean water, and you just sequence the DNA and IT, you get all of these little segments of DNA that we've never seen before.

And you can shrink them together statistically, because you get lots and lots of copies of them, and you can figure out the overnight, and then you can create these genes. And the gene is a segment of DNA, the codes for a protein. And those genes make up the metal genome, or the combination of all the genes that we find in in a piece of of of the environment.

And that matter, genome comes from millions of species that we've never seen before. So what out of what they did not matter is they took all of those genes that we pull out of the soil or we pull out of the ocean. They they picked a bunch of random samples, and they then predicted the physical structure of the proteins from just those genes without knowing what organism they came from.

And this gives us a whole new universe of proteins that we've never classified before or never seen before. Now I will just kind of speak a little, be critically about IT. Number one, they didn't do what alpha did. What alpha did is they took three d structures from typically X, Y Crystal graphs that they took the the D, N A code.

And they built machine learn models to figure out the 3d structure from the D N A code。 What these guys did um at meter is they took the three d structures and the code, and they basically did a fill in the blank. They found all the meat gene data out of these samples and a lot of IT was missing and they filled in the missing blanks using kind of common protein structure that existed out there in the world that we already knew from the alphago data.

And so they kind of get to fill in the blank. And as a result, to allow them to very quickly build these three d models versus doing the hard and rigorous work that alpha had to do. So they claim that IT was sixty times faster, but it's actually entirely different technique.

And the second thing is that they represent that only about a third of IT is high quality, meaning only about a third of the proteins that they've created structure for are really useful or or that can be kind of applied, uh, in terms of this is the real mentation. Now, why is this interesting and important? Proteins can form the basis of new medicines.

So, you know, uh, we can find proteins in the soil, a genomes in the soil, and proteins in the soil that can kill certain fund pathogens that can kill bacteria. And those can be turned into function sides. They can be turned into anti biotics.

We can find proteins that bind specific things. We can find proteins that fixed I regent from the atmosphere, and those proteins can be turned to the new types of fertilizer. So you know, searching through this universe of proteins that exists in the metal genome will allow us to find new molecules to do new and interesting things with in the applied engineering world. And I will say like this is.

what would the output of these bears? What everybody is.

is going to be thinking. And antioch s fertilizers. I mean, the idea of the metagenomes is, rather than start with the species and take the genes out of IT, just go get the genes.

The genes are already there. They're the they're in the ocean, they're in the soil, and there's millions of genes, hundreds of millions, billions of genes that we've never seen before. Therefore, there's billions of proteins.

Now we could randomly create proteins, but the number of proteins that could exist is more than the number of Adams in the universe. Because, remember, there's twenty to assets. So twenty to the two hundred power, twenty to the three hundred power, twenty to the thousand power.

Meaning how many different combinations of A S can you make that's more than there are items in the universe? So the best place to start is what evolution has already given us, all the proteins that exist in the environment. So let's go find those proteins in the environment and then let's figure out what do we think they can be used for. Can they be used .

in industrial applications .

in medicine and and a rug discovery minds proteins? IT tries to find proteins and figure out what can these proteins be used for. And now we have all these new data sets of proteins that are being generated from these merchants.

And so it's amazing. I mean, you know, look at the world around you, look everywhere up and down, on the walls, on the ground, below you. There are billions of species of organisms that we've never classified before.

They're making billions unique proteins that we've never classified before, and any one of them could unlock an amazing commercial opportunity for industry. So and for medicine and for human health. And I want so that's what's really exciting about this ability to kind of mind the medicine.

Silly question for you uh or maybe not daily. Um we have gotten the precursors to DNA for media rights, uh if I understand correctly, what are they call them nuclear basis in clay assets? Yeah yeah.

I mean, like things that exist in DNA that are precursors, we've never had DNA from space, obviously, but we could at some point start to find DNA out there in space. And this could haven't even crazy impact on what we built here. Is that the next car to turn over after I we home? What's here? No, I wouldn't say so.

I like, I think look, if if there's DNA that's coming to us for media rights, call IT a couple hundred genes, you could pick up a piece of a soil and find over a genes in that team soil, right? So, uh, we have far more to mine here on earth. And the low cost of D N.

A sequencing and child and sequencing couple with bio and frame tics where we take all that. So just to give you a tempo il and you get the D N A out and you um read the D N A out of a sequences. D N A that's potentially tens of gig bites of data. And then you can do that millions of times over.

And then you statistically can find genes and then statistically estimate what they physically look like, what those proteins look like, and then you can start to build models around which ones do we want to try and use for drug applications, which ones do we want to? So there's so much work to do. IT, just in terms of what we have here on earth and the tools are getting so cheap and so available, there are labs that are all over the world starting to get to spring up to do this work is super exciting .

to have any thought.

It's kind of, you know, just to put two ideas together. I said before, like the two big investable themes that i'm orienting my organization around, is this one is that the marginal cost of energy goes to zero. And the second is that the marginal cost of compute goes to zero.

And the second one is really about shifting compute to more parallel on GPU and a six in F P G S. But that's why all of this stuff is possible. The fact that, you know, matter can do this and google can do a alphabet is larger because the cost of all of the stuff is, you know, trivial for these kinds of companies.

So it's really exciting. It's going to move science, in my opinion, out of this in vivo, in vivo experiment model into silicon. And so those who can actually build learning machines will solve some of the most important biological problems. So I am a real believer in this stuff. I think it's super exciting.

When do you think this stuff actually hits freeburg hard life? That's always when people talk about .

these discoveries. Yeah, a lot of people don't realize IT, but so many molecules that Better used in agriculture, like fungicides, to kill fungus in the fields, those are derived from this sort of work. A lot of antibodies, uh, a lot medicines are already derived from mining genomes, finding new proteins and seeing what those proteins can do because these proteins didn't evolve in the environment randomly, they evolved to do something.

And in many cases, we can take that thing that they do and then harness IT into a product. And that was so exciting. And this this affects everything, material science in agriculture, human health. It's it's a food. It's it's .

really profound. awesome. All right, everybody, there you have IT.

That's another all in podcast in the free and going to make some joke. We no, we didn't. And so for all these stands, I just I hope you guys can excel. Take the brave man, have some, you know, eg. Mail and enjoy your weekend.

Enjoy you bye bye to see next time I.

Your winter.

Light man.

Open sources to the fans. And they .

have just got .

crazy with.

Sexual .

atten release here we.

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