E105: Tech culture wars: Elon vs. SBF, Sabotaging Republicans with Trump
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Can I tell you funny story? So I I was in, I was in and then I when I landed, there was an, uh, a system message on the plane and then the pilot text me like, hey, bad news were likely able to take you tomorrow. There's an error message and if we can't resolve IT, we can fly as IT okay, so I tech sacks i'm like, hey dude, i'm going a really tough spot.

Is there any way that, you know, I can catch a flight you with you tomorrow? Absolute that silence three hours later, paul pilot, paul tex, mean and says, good news cleared us. We're going tomorrow.

I text sex right away. Hey, no worries. It's all resolved in eight seconds. response.

Awesome with the escalator work. yeah. No, he is the so .

he had zero intention of bringing me by family with a zero.

I felt he fell. No, the truth is the plane was with me. I was using, I be happy to let let you bar the plane if i'm not .

using IT here sex less time we went to to dinner ready the check comes Miller locks lands on the table here. Sex, what you're saying? See that you know what that is? Sex going for a wallet?

You can just count IT the last time you picked up a check. check.

What are you every time I picked him up on the .

way and maybe for a slice of pizza?

Come on. Sex is one of the most generous people I know.

I remember we went to a bar once. We barely had time to get a glass of steel water, a diet coke and some of the free nuts. And then, jack, I was like, guys, it's on me. I told .

that at twenty I gave a right to the button. My N I got .

to return .

china.

You got the White truffles, the fate man yon last week. I think these bar nuts on me, it's it's only fair. yeah. So in some cases, es too, in the cashes and reasons the trail mits, i'll get the trail mits because you got the truffles last time to math.

Oh, my god.

Rain man, give.

We source to the fans and .

they got crazy.

Are everybody welcome to the all in podcast? We're still here episode one or five I don't if you saw boys last week, the pod hit a new high watermark, sixteen .

overall in the world.

So congratulations.

I thought we put at fourteen actually was IT fo people listen to this pod .

when I was in dc this week at a bunch of meetings. And so many of the of the staffers listen to the pod, and they came up to me, they're OK love. You guys listen every week. It's really, it's really crazy. Actually the rich of the thing, it's really cool .

now when you're in dc, how gleeful al worthy about saxes absolute access with that must have high fives all over the dams like they won twice, trump announced and sex lost this.

We think .

about S, B, F, and how much money he gave them in order to stop that red wave .

and take IT easy. I talk to, I talk to a lot of folks, folks. And what I would says, we talk a lot about energy policy, life.

Life science is obviously two areas that I invest lot of money in and foreign policy. And actually, David, you be surprised. But how many fans .

you have the well, I mean, like general mili, like we talk about last week, he's come around jack solve and just this week said that he told the ukrainians IT was reported that they can have comeback, get realistic. So jack Sullivan and Billy are like the voice, is a reason. Now, the administration on this, and they're the same, the same thing I ve been saying, for which I was exploration by the foreign policy establishment.

And I got into a little twitter spout with ian bremner this week because all of a sudden he post that, oh, everybody has been privately saying that we need to negotiate. No, no, you haven't. You were criticizing.

You were denouncing elon as a criminal's agent when he posted that twitter poll suggesting that the ukrainian should negotiate so you are publicly denouncing those of us who are calling for negotiations. And now of a sudden you're saying, well, this has always been the position, but I think was significant about that is the guy is just the weather vain for the blob and the the foreign icy establishment. And so the weather vain is now pointing towards negotiations. So that's the good new year.

Do you think that if the scentin wins the presidency, you will be nominated as second state treasury?

What would you take? Treasury of state?

If you offered a cabinet position.

would you what would you have understand is that my position on foreign is you specifically is not it's not it's not adopted by either party. I mean, mcconnell, the center republican leadership are very much on board with the by administrations policy on that. They are very, very hawkish. It's really the unit party on this issue. There's really just one consolidated blob.

okay. But back to the question, would you would you be a dream of yours? Would you find great joy in having a White house position to serve the entire to .

your country?

Would you serve what I serve?

The student, the night stays, calls you up and and ask you to do something. Obviously you have to to serve your country, but is not something i'm actually looking for.

That's yes. What if you ask you to serve as the U. S. Ambassador to bertino fossil?

Where what.

The ambassador world is so funny, it's like you have to compete for the good ones, and then some people get stuck with the bad ones.

Is available for purchase. Yeah.

yeah. exactly. You know, there is like a there's like a menu of these things like these ambassage ships, like I don't think it's like written down anywhere, but it's kind of like unspoken. It's like if you want the ambassador to the U. K, that's like ten million .

dollars.

And then the thing was with U. K. And friends, it's every every embassy, every ambassadorship comes with an annual budget.

But the cost of actually running that embassy and really throwing the parties is much more so for the U. K. In france, the gap is ten million a year that you have to fund out a pockets.

You have to be really willing to break the money up. But I got a part. My, my friend, my friend was the ambassador to the U.

K. A. Under obama, and I went to a party.

There is unbeliever, and he has the best life, because I can know he was meeting everybody in the world, you can imagine, goes through the U. K. And wants to meet the us. Ambassador IT was a great job for him.

right? But the money i'm talking about is the cost of buying one. At least you .

have to typically .

raise that much money under much money for the, this is I ve heard, I mean, I don't know, this is live heard.

Is that what does that mean? That S B S. Parents, if Elizabeth d was suppressing seems. But IT gets of the ship right now.

the illuminated right now, just revoked all of our illuminated cards. We're not supposed to think about this guys that you can buy and ambassadorship, but speaking of buying politicians and coverage, uh, and let's get update on t ex.

so what is from being of politics?

I think you bring talking about, I bring IT up.

I want to tell the first minute when the story FBI said that the reason why trump kept the boxes in his basement, they've now the FBI has definitely said, because you are just trying to preserve amenti, not try to sell state secrets to the saudis or something like that that like some people, we're making wild conspiracy theories about so jack looks like I I was right about that. In fact, I think we had that very discussion on this pot.

Yeah I mean, I I said I thought he was keeping IT for like keepsakes like momentous that .

position too because .

I I think if you believe .

that this was about momentous.

which every eyes now, said IT was, I think you also have to say that the fbs approach and rating his home with armed business soldiers was heavy anded. Now i'm not saying that enough the legal right to do IT. I'm sure they checked all the right boxes, but IT was heavy handed.

But look, that brings me to another point. Why do they do that? I actually suspect now that what the by demonstrations trying to do is keep trump in the news. I think they actually want to is the exact same thing.

Remember that the fifty million that went into republican primaries to support, you know, the election denier candidate, turns out that was a successful strategy for them, as much I hate to admit, IT IT. As reckless as I think that was and hypocritical because I don't think you can be out there or claiming that these candidates are threats to democracy the very same time you're funding them. So I think was completely hypocritical and sort of mocked value.

But IT worked. And I think in a similar way, what the democrat going to try to do over the next years is keep trump in the news as much as possible and effect in and ran his entire speech announcing last tuesday. I think for this reason.

if drop wins the republican and nomination he's going to, then he will lose the presidency because if you look at all of these examples that came out of these midterms, he's just so massively unfavorable. But that's not what's going to be you litigated in the primaries, and the primaries is just republican and republican. And there are a non trivial number of past where trump actually beats the scientists.

And I think that's a very scary to the republicans who wanted just move on and have a chance of actually consolidating power. And it's gleefully blissful for the democrats because if again, and we saw this, look if if if the democrats were able to fund and field mega candidates in the republican primaries that then lost in the general action, well, the best mega candidate of all is trump. So IT gave its axis to completely right now, like the baLance of power.

Here should be, if you're the democrats, whatever you can do to keep him in the news, whatever you can do to induce him to run, makes a lot of sense. Because he will. He'll cripple the republican party. He will split.

Look at how jake has gonna grit. He's admitting to the democracy, which in three years he screaming about what a threat a second you've been screaming about what a threat to democracy is, how he secretly on the payroll of the criminal or foreign governments, and yet, and yet you wanted keep in the news.

You wanted to be the only to have sense.

I.

And about you on this pot will never kk him out of the party. You should .

say you guys should .

all disavow him. Probably you disavow him.

I really said, I support the scientist I set up before the mid terms. What else you want me to do? But the I don't large, I think, I think, I think you and many other people on the democracy side in the media are being very hypocritical about this because you want to claim that he is this unique threat, democracy, while playing this game where you want to keep him in the news, you want to basic right with as much options possible, because you think he's more Beatable.

And by the way, I agree that he's less electable than scientists, which is why part of the reason why i'm on the essentials, I think the santis I also think the santis would get more done. But look, um I don't think it's a fork and conclusions can be the nominee. Did you see the new polling that came out after the mid terms? The sances is now the favorite in among republican primary voters among every different slices that you want to do of whether it's likely republican voters, primary voters, whether it's fox use viewers and on and on and on distances is now ahead of truck about.

I was to state my position because sex to directly seven times, I just would like to get my position on here. Number one, you all backed somebody who is a horrible human being, who may a terrible decisions. And now you guys keep supporting him.

At some point you have to put your foot down and say, listen, we don't want this guy. You have to publicly say, january six, you know, and this guy's approach, the election denial, you guys have to come out and just say, we don't want this person to run. I think you've been hedging too much and then got a now who I am not, I did the public party yes.

Now you always wear a little bit like, because I did guess you want and I D I you if he run, would you support him? Would you ever vote for him again? And you were like, wow, and you would vote for again. If he wins nomination, you'll vote for him. That's the truth.

Republicans was solve for him. Look, you know that before was popular before the mid terms. I was on the dissent to train. I was saying so on this pot for over a year when IT was very unpopular, certainly in the area which I live. And so, you know, and there are a lot of republicans now, most republicans now agree with me .

on this issue. According to the polling.

that place you want to buy into every bulls shit narrative .

that you've ever told about this issue.

About six bullet? No, if there was a lot, but I don't know you guys to speak and then .

let the other person speak and I don't we go again. I don't I want to rehash every single thing in the past, but look that the point is that I think we have more electable candidates. I think we have candidates that would get more done in office. But and I really said so, but but I that doesn't mean I believe this whole like threat to democracy thing. I think that is massive inflation of the actual threat.

But but look, if you want me to say that we have more electable candidates, we have cancer, will get more done, who Frankly would be less alienating to moderate and independence and could even win over some moderate democrats the way that the census didn't florida to win by nineteen points. Yes, happy to say that. And i've been saying .

that I will to say if, if I, if, if eberle allows me to make a point, I would like to say IT is a .

threat to democracy. January, six million dollars.

Cinner, because they wanted to win. Cynics .

sync. M yeah.

percent. But you mean to a question in the wrap on this, because I not so comfortable for free bird to watch mommy and dad quite.

You are no three .

of child. D, D, drama. Child, to draw is good. It's okay. Bobby. Dad is to love each other, even if we fight.

Sometimes I just makes me want to turn the volume go head.

What was done anyway?

I do think fielding moderate candidates is the path and and I think so much you brought the other to the time. So it's the race to whoever can get that moderate middle. And I hope that they feel Better candidates. But do you think sex he's running, this is one of the cynical takes is that he's running because you will help all the legal cases against him. Do you think there's anything to that?

My guessing is that, that they see him as an easier candidate to beat and they're going to do everything they can to try and keep in the news. And and I I actually I don't think that's your position. I actually think that you are being sincere, that you don't want him to win a second term.

I mean, remember, like we don't know, I think we all believe that we're going a pretty severe recession next year. So just because the democrats cynical strake in the mid terms of promoting, you know what they called election deniers in the primary that happened to work, but just because IT worked last time, doesn't meis onna work next time? And abortion.

absolutely. And a whole bunch of other things. I think I think the point is pretty much this, which is that people gave trump a lot of credit for being an idiots of ant.

But IT looks like he's more of an an adia save, minus the savant. Okay, this is a, this is kind of a goofball who has a brilliant media strategy. And he had his finger on the pulse s in a moment.

And then he just couldn't execute, couldn't put two and two together, couldn't put one foot in front of the other. And he was way too divisive. And he got booted out any lost fairing square. And now what the republicans have to realize is, if they don't figure out how to feed somebody out of the primaries that is three different than trump, the democrats wildwood. Because if IT is trump, whoever the democratic candidate, I don't think IT really matters, will crush them.

Yeah, look, I I think that's likely correct. I mean, I think I think that we taught about last week, you cannot win the present cy, with all the forty five percent of the vote. I mean, trump, capt.

Among and thing for republicans by the trumpet has a much Better job than anybody else and getting his base activated. So the thing that all these polls get wrong, and I think they've consistently gotten wrong and and as a result, have underestimated him, if they don't give him the credit he deserves due for being able to curate a fervent base of that thirty or forty percent of amErica that will show up for him.

And even if they didn't show up as much in the bitterness, they sure as how showed up in the primaries for his candidates, often times. So I just think it's a very dangerous cocktail that that you can sleep on. So the republicans have to take this really series of modern. Republicans want to have a chance of winning. You guys have to figure out how to be trump in a ground game because if his base shows up, he has a decent chance of winning the nomination, but then you will lose the .

general yeah, I think that's, I think that's pretty spot on. I think republicans really have to be smart and discipline and think about we have to nominate the the most electable candidate. But here's the thing is we're not even debating policy right now.

No one, no one really says that hey, on a policy basis, there is a huge difference between, say, trump in the answer to some other folks. It's all about personal style. And is IT really worth into the republicans potentially lose the next election based on personal, based on style points? It's a silly reason to lose.

You know, William ough bucky, a long time ago, said that he would always support the most unelectable conservative candidate. He didn't always go with the most conservative candidate. He wants to go with the most electable canada who met a basic policy bar.

And he's sometimes has gone trouble for that. For example, he supported put forty one over jack camp. I am going back a long way. But in any event, you know, having thinking about electability, this is really important.

This once of a landing here, the head of their republican party, rupert murdoch, has absolutely dist. Trump, I don't have you saw the new york post, but he put on the cover of the newer, like ten flat man makes announcement eight, twenty six. He announced, hub trump.

ready for president. And the funny thing was, the lap of murdoch is even even name truck as the president of the absolute last line of that column. And he said, h, and he also happened to be the, I say, yeah, that was very find a lot republican saying.

I think correctly, is that if you want to in elections, you have to look at the winship's, you know, not in the way of your mirror. And what we saw in the mid terms is that even talking about twenty twenty was at minimum a giant waste of time in a distraction and at maximum, potentially cause these candidates to lose.

I mean, the fact the matter is that a lot of candidate, including some I supported in battle ground states who got lord into trying to relitigate twenty, twenty, they all got v prized. And I just think it's stupid to be talking about the past. Voters want you to focus on the future and especially when there's no policy outcome that matters that at stake for you to be talking about a past election instead of the future. And the like this politically stupid freeboard.

if I may bring you into the discussion uncomfortably as IT, as uncomfortable ly as IT might be, would you vote for biden? Incredibly old. I don't know. He would be eighty one or eighty two in the next election. You go for bite in or decentest.

As I go through the list of things I most concerned about in the world today, number one is the debt and spending cycle of the federal government in the U. S. I think it's the most kind of scary set of facts and conditions that we're getting set up for.

Kind of a major crisis tend to fifteen years from now because, uh, you can afford all the debt that we've taken on as a country as well as the entitlement as well as defense. And so sometimes is gotto give and there's a bunch of pants that that could emerge from that set of conditions that are all really scary pads and not good. I'm more concerned about that than I am about nuclear war or climate change are just to be clear because I think that the social effects and the the the global geopolitical effects that arrived from the U.

S. Kind of d structuring because of our are are dead and spending cycle that were right now are are far more. And will experience over the same period of time.

And again, I do think that technology is gna resolve a lot of our issues. Climate change, and I think nuclear work, cool heads will prevail. Everyone got a family, so that's what I most concerned about.

So any kind of voting decision I make is that lands, which is what's the the best path to supporting some responsibility, step back or step back to resolve these issues, as charly monger said so well in the interview that was publish this week. And I I set up a few times on the show, but he he did. He's a much Better speaker than I uses far fewer words.

But you know, in democracy, eventually the populist realized, if they can vote themselves, all the money. And, you know, that's what we see happened in an accelerated way. In light america, we've see met with a lot of these democracies and ultimately resolved to kind of socialism.

And in the U. S. We're seeing a lot of this behavior where we're kind of voting ourselves. All the money we're putting in place politicians and the populist is saying, I want, I want, I want and more money comes out and IT IT um IT totally decreases the strength and the resilience of our nation, our economy. And it's the most concerning thing to me because the the incredible innovation and economic engine that is the united states threatened and IT really britains a lot of stability uh.

in the world did IT to any any final doctors. We wrap up the political discussion. I I obviously a democrats and you're voting for biden, but you also care about fiscal responsibility. So where are you at with your vote for twenty.

twenty four? I don't think that we know who's actually running on either ticket yet, just to be completely honest. So that's my perspective. My other comment is I think what David said is so spot on. The single biggest issue that we have is that we have made a huge decision to the globalize and that deglobalization has the risk of introducing a hyperinflation loop, and we won't know how bad that is for another year or two.

Why would I do that? Why would IT well, the delivery ation cost type per inflation?

So today, let's say you buy a chip to make iphone. You buy that chip from, you know, t sm c. That makes IT h in taiwan ships set to china and the entire world is service with that supply chain that keeps that chip as chip as possible.

Now with the chip stack as an example, we will build resilience and supply change where now instead of one place, it'll come from six places. Five of those six will be in allied territories, the united states, western europe, potentially mexico. The thing with that is that that now is six sex more equipment.

That dubai, right? Instead of one machine, you now have six machines. Instead of one person Operating the machine in one country, you have six people in six countries. As you can imagine, when you layer up all these costs, there is no world in which that chip is as cheap as IT was before.

And so the cost of that has to be born either by the consumer, who pays a higher Price that measured as inflation, or by the government, who subsidizes that at the point of import that will be measured by dead. And so one way or the other in our in our path now towards more resilience, ency and national security, which, by the way, I think is the absolute right decision. Okay, energy, independence, all of this stuff we have to do today, we are at risk of a hyper inflationary loop, if not managed well.

And so you have to be really on the levers of the economy. And you have to understand IT deeply, the person that deserves the most credit of preventing this hyperinflation ary loop right now is geo magic. And hopefully the history books.

Whatever jay Powell does, I think, has been good. But the fact that mentioned prevented six million more dollars are being pumped into the economy in the last two years is probably the single thing that prevented inflation. Instead of being peking at nine, from peking at fifteen or sixteen, I think you would have been a national disaster without that .

to moths is right. That extra six trillion and the mansion, I would have been a national disaster. But they also give credit to every republican, because they also voted against that. I mean, the fact china.

the pressure was not mentioned to do the thing and see the force from the trees.

and he did that. I agree that .

he was .

in the hot seat. Well, so a cinema, by the way, cinema didn't go for the three brilliant build back Better. But then mention, you went along with the seven hundred and fifty billion dollar lar version of bbb, which they were named the inflation reduction act.

That was kind of A A disappointment. So Frankly, like I give more create to the republicans are against all of IT and the democrat jambed through. So if you're worried about all of this trillions and chillies of venesta spending.

want to give the republica chance? I'm talking about the delta between what was spent and what could have been. The entirety of the gap is really was prevented by.

and I know, but I was so matched citing with the republicans. My point is, look, no, what is perfect on spending? They both want to spend too much money. But at this particular moment in time, the republicans are more restrained about spending than the democrats.

Let's go to number one issue for each personal. Number one issue for freeburg is fiscal responsibility. I was going to say the same thing. IT is my number one issue in this next election.

I want to see austerity, fiscal responsibility and get this spending under control so that our kids do not inherit IT, you know, stack flag, hyper inflation or whatever cocktail of disastrous economic policies we are handing to them. What is your number one issue? Sacks for twenty four. If you had to pick a number one issue, what would you be for David sax?

Look, I think it's simple. The present job is to ensure peace and prosperity. So you guys are on about prosperity side.

I think we do need fiscal responsibility. We need to have a good economy. There's like a bundle policies that go into that, starting with, I think, greater fiscal restraint.

And then on the peace side, I think we need to adjust america's foreign policy to be less interventionist. We're involving ourselves here, there and everywhere all over the world. And I am hopeful that what i'm hearing all the administration in the last couple weeks from the solvent for Milly, these are some good things that i'm hearing. But now I would like to see a dial back on the foregone interventionism. If you had to sixty.

forty or whatever is, is one more important, the other, or they both equal them. Go to which one?

But I mean, look, how can you have a successful united states? If were either in a recession or war, you don't want any .

either of those situations to those top two. Equally.

what is math? Third, which is culture. Jack, this wants a little bit hard to categorised, but I do think culture matters. And you know, I want to have a culture of excEllence.

I want in the schools, for example, I think schools should have grades, they should have advanced math, we should hold our kids to a high standard. And I think that we want to have cities we want you know have cities where crimes on out of control. Um we need to have you a sounds border policy.

So I think there's like a collection of policies there under you know schools crime border that are sort of broadly cultural, I guess but or maybe could call them quality of life issues. So you know yeah we need to have a good economy. We need to stay out of foreigners, but also we need to have high quality of life.

Can I still mend something for you? Because I I really agree with those three things, David, that you said. But I ve, i've spent a lot of time thinking about this, and my formation is that there's one thing that allows us to solve all three, if you bear with me for second.

And I think that that is the energy independence of the united states. If you look inside of what's happening in the U. S. Today, the cost of generating energy is effectively as cheapest it's ever been and as close to zero as IT ever has been, and it's only gonna get cheaper.

The problem that we have is that we have all of these decrepit laws and infrastructure and regulatory capture that causes us to always be in an imbaLance. And as a result, we do all kinds of crazy things. We borrow enormous amounts of money to create subsidies. We go when we fight all of these, you know, foreign wars that don't make any sense. We wrapped the energy problem and set in climate change language, which causes this cultural division.

But my belief cotoner ously, is that the the reason the iron ray was so important is, as IT is the most clarified piece of legislation we've seen, that essentially puts all forms of energy on a level plane field and has the chance to get amErica to permanent energy independence. And if the cost of energy is zero and we can abundantly created in the united states, what I think happens, David, is we have energy to rebuild our supply chain much cheaper. So inflation gets under control.

We don't borrow as much. We have a completely different lens on foreign policy so that this interventionism and fighting over resources is much harder to justify. And we put the climate change language aside, and we use energy independence as a form of national security, which gives us the courage to battle all these other cultural taboos that we otherwise have to say we agree with, even if they don't necessarily make any sense.

And there's a bunch of them. So I don't know. My, my, my answered to your question, Jason, is that one thing, if we accomplish them, the next five to ten years has a chance that really changed the course of the united states.

right? And then bite. So I am guessing then bite in your vote, because if IT is, in fact, but that because biden is the one who who pushed for these clean energy tax credits and this policy and IT.

would you cel you cancel energy independence? I mean, look, we were energy independent based on fracking. You may not like fracking, but dict as energy independent, you may think that there is environmental consequences to IT that you don't like and and that have to baLance.

But we did never been against tracking. I believe in that gas. I believe in coal actually as a bridge fuel. I believe in all of these things. I believe that these are all more important than going off to all of these foreign lands and trying to justify spending trillions of dollars and putting tens of thousands of american lives at risk, essentially for resources that we can actually create for ourselves at home.

Agree with you on that one percent.

I'm fine with. I cleaned fracking as a way, as a bridge ahead. To getting to you know more dependence through nuclear and renewable square.

But like I said before, china is declared that they are building four hundred and fifty nuclear power plants than that cost effective cost of electricity production out of a nuclear power plant is somewhere between one and five cents per kilo a hour. The U. S, on average, is paying eleven to fifteen cents per kilo hour. Nuclear is no three .

utilities of three per. That's with all the regulating capture and all that trash that you have to spend. For example, we have to spend two hundred and twenty billion dollars year to replace the power lines in amErica by law. That's two point two trillion dollars.

is there? right? And so the cost of solar and wind of grade, I think, is around three to seven cents to kill an hour in that range, right? So IT gets nowadays, it's it's got a much more competitive, but I think that the the nuclear solution is just not even being engaged in the conversation.

Now I want to go back to the previous point, which is cavan state the numbers before I just wanted state up because that they're so shocking. And this is what what shocks me. The current, uh, federal debt is thirty trillion dollars are GDP around twenty three trillion, five percent interest rates on thirty trillion dollars is one and a half trillion dollars in interest payments alone every year and our social security.

So so one of a fillion dollars, I mean, that alone is about six percent, seven percent of GDP. So you have to tax every transaction in the country by six or seven percent just to pay the interest payments on the dead. And then we have medicare and social security.

which that matter because you have maturities of all different types of different year matters .

in different coupons. It's not today's numbers is happening over time. So as you look out and you look at the the yield on treasuries and you apply that to the current death level, incremental in the debt level, you'll get to that level, right? You'll get to a trillion five year in interest payments that need to be made, plus another called three, four, five trillion dollars a year in Mandatory spending.

And so that's where the country starts to round into a problem because at some point, when you have to tack so much to cover the cash payments that need to be made by the federal government, the economy really gets hurt and things started to crip. And then if you were to take those entitlements away, social security, medicare care, you have a real problem with people's ability to support themselves in an economy where they are not working. These are elderly retirement people.

So there is a mate at or to pay these expensive medical bills. So there is a major crash coming if we don't figure out how to bridge our way to this cap. So if someone wants my vote and they are going to rent for president, they would put up a simple chart like girl clinton used to do and show me a tend to thirty year plan and just say, here's what we're headed and here's what were going to do to make sure that doesn't happen. And that chart alone, I think.

can win the vote. Okay, let's pull up the chart then. So here is the federal dead, total public death as a percentage gross domestic product. As you can see in the seventies and eighties h we were at under fifty percent. The nineties we started, you growing think this matters.

I think everybody, every self proclaimed intellectual looks of this charge and says, oh my god, we've exceeded one hundred percent. You know, the the empire going to go to ruin. That's not why the empire goes to ruin.

We have the reserve currency of the of the world, and there is an enormous amount of power that comes from that position. So what the right number is, is TBD. That's the most onest way to think about IT.

IT was a hundred IT said one fifty IT code, go to two hundred. Many countries Operated the levels above us and still haven't exploded per say. The real thing is what part of what freeburg said is, look, if you really want to look at what we pay today, we pay four hundred billion dollars this year.

That's the interest payment. okay? That's when you calculate all of the different maturities we have with all of the different coupons we have, that's what we owe today.

And David is right mathematically that if interest rates go to five percent and stay there forever, but we know that, that's not how economies work. They have flow. okay. So the real problem that we have to understand is how do you actually create enough growth.

And then the next time that we have a meaningful fall in interest rates, like every other person does, you know, look, a lot of people in amErica know how to refine their credit cards, refine their homeloans, refine their mortgagees. The united states could have had a much more aggressive and thoughtful strategy of refining by pushing out these maturities way into the future. And again, truck actually suggested that, but because he sounded like a goofball, everybody said absolutely no way.

But in hindsight, that one move would have saved us trillions of dollars over the next decade if we had done IT. And this time around, we have to have politicians were smart enough and have the way we felt to say IT doesn't matter where this idea came from, it's really smart. Rates are now back to two percent or one to a hundred percent. Let's now issue fifty, one hundred year bonds and let's refine this problem out into the future. That makes a ton of sense when we have to do IT.

The rei makes a time sense just to pull up a chart here and to counter your position. Now that IT doesn't matter to math, maybe you can respond to if you look at GDP ratio here, number one, two and three, japan venezia agrees. Sudan, and you know, you know, some smaller countries there, but united states court .

of these countries, none of these countries. Look this, this entire world runs on the U. S. Dollar complex whenever we raise rates. Yes, IT is true that on the one hand, our interest payments go up, but proportionately and on a relative base of heat, I think, I think maybe let me take a step back.

But what what are the most important things in investing which is appropriate here, is that people ask, what is the Price of a stock? Well, before you go public, you're calculating what the intrinsic value of the company is. Okay, all the things that they do, all the money that they make, here's what we think it's theoretically work worth.

But the minute that goes public, the intrinsic value no longer matters, is what is IT valued relative to everything else. okay? The united states is a relative, if it's a stock, if all these countries are stocks, we are valued relatively to others, not, not intrinsically.

And the reason why we have so much power is because everybody else is actually valued relative to us. So this is why I think the right thing to look at, Jason, is the rate of change of debt GDP for the entire g eight or g twenty or the rest of the world. And what you'll see is something that goes up into the right. Nobody in the world has been rewarded for not investing in their populations, and but, and basically borrowing from tomorrow to invest in today's human camp OK.

So we have a disagreement here freeburg using this, a major issue. Aga freeburg, I think there's two things .

that are missing. One is the inflationary effect. So you look at that list of countries that are there, they're paying higher interest and they are paying uh in the form of inflation so they have less than they can spend on their people. And ultimately, what ends up happening, just simple arithmetic, is not about relative value of a currency. It's the arithmetic that we have a check we have to write every month to pay for medicare and social security. And IT is written into law what that chick needs to be and the rate which we're having to write those check, check the increment of those checks is going up so significantly that when you add on the interest payments and you look at those checks and then you add on defense, somethings got to give because you cannot raise taxes in the amount is needed to fund all of that out way without this causing either number one, massive h inflation, if you just take on more debt or number two, you know, significant loss of services, either social security, medicare or defense. And so sometimes is gona give and the the distribution, I think.

is not being discussed. So I just just one point. The president OK can can anybody who is the president?

United states gets hold of their annual budget. It's about five and a half trillion dollars this year. So you're talking about interest payments that are still less than ten percent of the total budget. Now that includes the entitlement payments OK with about three billion dollars or three trillion. Sorry, three and a trillion is what you have .

to pay for twenty percent.

Now three trillion dollars is the sum of medicare and social security. okay? So the president still has wanted to have to two trillion dollars of lev, of which a quarter are that payments. So my perspective, quite onest, is mathematically, there's a lot of room to run here before these things get really out of control.

And even if they do, I think the relative problem is for the rest of the world will be so egregious that the ability for the united states to go to those banks and those economies, and basically selling more us det, is quite high because they cannot afford to own debt in their own country. So if you think that the united states is bad, go back to that list. Guess what? Those central banks in those countries are going to be buying U.

S. Dollars faster than they can go out to some. And let's we see some union of india, china, saudi, aba, russia, japan, brazil, obviously not japan, but some some of that consortia will become a closer trading partner and perhaps could cause a shift in the baLance of the dominance of the U.

S. dollar. And that's one path to to consider sex.

What do you think of the baLance you hear .

obviously to disaster. What are we are like one hundred and thirty percent of that to G D. P. I mean, we have like thirty, thirty trillion of thirty, yeah, stable. I mean, we are twenty .

seven percent of GDP right now. Seven percent IT should be fifty percent of the spending. Where is that number come from? Why there's a there's a bunch of economists who have shared these papers there on this on if you look at .

if you look at government tax or seats over time with all different kinds of tax rates, including very, very different top margin tax rates, what you see is that a federal tax received as a percent GDP is in the seventeen to ninety percent range. And like the best years, you make sixty percent, usually in a good economy.

In the bad economy, it's like seventeen percent and IT really IT doesn't matter whether raging was president or clb ill clinton and so on. So there's only so much blood you can get from a stone. And historically, spending was around ninety percent of GDP.

And so you would have a one two percent, you know, deficit every year. And that really accelerated. First you had the the financial crisis two thousand and eight, and then you had covered and freebooters right? We went from call IT you twenty percent of GDP spending to roughly thirty percent or more during covet as kind of this emergency measure.

But like everything else in government, you know, the emergency measure becomes a permanent program. So now were at twenty seven percent. IT doesn't secretly going down, and the democrats won a lot more.

I mean, we talk about IT build back Better would have been three and half trillion and seven and fifty billion if they just have one, two more votes now have so hold on. So freeburg is right. There's like nothing stable about the point we're at.

It's the point where ad is bad on its own terms. Having thirty trillion of debt list that interest strates stabilize at three percent. That's still a trillion year of debt service, which is more than .

the entire different .

if interest straight stabilized at three percent, which is optimistic and we're servicing a trillion, sorry, thirty trillion of debt, that's roughly a billion .

dollars of that payments. And can the .

averaged to maturity needs to be factored and there so over a fifteen year period, David, you would be right mathematically if all matured, but that's not what this is because you, you you'd have to refine and reissue a bunch of debt that is at lower yield right now at these interest rates. I want to be clear.

i'm not this is good.

I, I.

I stand why good or i'm not .

saying that this is a good or is a trend, but saying is I issue that all of a sudden people up makeup and you guys are doing IT now an arbitrary number with note rooting in history or fact and say this is bad. And all i'm saying is I know IT feels bad. Us and I think we would all run this country differently.

If we could could control of the baLanced, I would as well. I would try to get debt weight down. I would try to get deficits weighed down. But all i'm saying is using this justification of an arbitrary always falls flat. So i'm encouraging us all.

Let's find a Better model of reasoning because every time we point to some random book and say one hundred and twenty seven percent is bad, nobody listens. And I think the message that you should take away is this because it's impervious. It's not rooted in any actual logic.

And if there's a Better the reason I believe that this is concerning is I look at the top ten countries that have get right shows that seem out of work. And I think, wow, what is their fortune in for last ten years? Visit japan.

And then the right comparison, the right comparing back and look at the british empire. And when what was the date to GDP, when I started to .

actually follow and collapsed, collapsed.

i'm saying he was a triggered, was a triggers red by dead to GDP.

And I think your answer in part.

again.

they check, run as they took on, run as dead, and they could not maintain their empire more in the whole thing, collapse.

I'm just ask for miracle specificity .

going to get right now the first.

last. Yes.

there is a lot of numerical specificity. There is a ton of work done out of history. The best and the growth in in in a country is to have deficit spending be equal to or less than the growth rate of the economy of that country.

So for example, if your income, the the tax revenue it's been generated by the government is equal to, say, fifteen percent of G D P, you do not want your spending to be more than seven hundred and eighteen percent. If the economic growth rate is two to three percent, that's IT. If you do anything more than that, if you do anything more than that, you're borrowing from the future to pay for today.

That's the simple two. O K. So what happens?

And when you do that, the rates go up and the Prices go up and eventually your currency doesn't work at what? So you're making a bet. Read the book that I talked about last year. He goes through six stories with the economic data, approve IT the factual data, the history of what happened with six empires of the last five hundred years, where this exact same scenario has played out in some random arbitrator story, and and everyone, everyone had the exact same perspective that you have when they were living in those days. And they said, you know what, we're going to be OK because where the reserve currency and the world loves us, and where the empire we've influence everywhere, and they all lost primacy and their currencies collapsed and they all broke apart.

And they are not saying that that can't happen in america. What i'm saying is you get so full throated, I read that book is great narrative, but the numbers are brittle, okay? They're fragile and they're mostly made up .

every so all i'm saying .

is in the absence in the absence of numerical ical specificity, I agree with you that this trend is alarming and it's bad. I agree with you, and I agree that we should spend a lot less. What i'm saying is when you say to the world, stop spending because X, Y, Z number is bad, you have no credibility because it's not it's something that you can actually back up. And all i'm saying is if you could find a Better logical argument, you would probably get a lot more people to you, vince.

You not you don't want to actually believe IT the numbers are there. Show me that. I not saying I ging a diverging way. I think you're really just ignoring the number ers.

Show to me.

Show me they get upset in us for fighting.

I'll make you A P, D, F. Mob of you, I promise, and i'll posted on our frequent things .

that people can watch IT the the group chats going to .

be on fire this week. Final work now .

that i've never got into IT before like this. But opposite side, I, I.

I so respect and love each other.

If you go back in .

history and look at that A G, D, P levels, see, the only other time we are anything remotely like the level right now is right after the war or two, when we had just saved the world from notices. M, okay, that was worth going into dead for you. Look today, what is that that we've gotten into this hundred and thirty percent that to GDP.

What is the thirty trillion dollars of debt for? What if we bought with all that money, huge amounts of that have been spondee? You're right.

And buy one more if if the stop him, he would have spent a trillions. Not forgiving, forgiving a bunch of student loans for basic degrees or liberal studies or what have you. So let me graduate.

agrees that we finished .

that point. Number one is that this money is being stranded at levels we've never seen before and the squander is continuing. It's not like we've reached a steady state.

IT just keeps going and going and IT will break some point. I can't precisely thought I can't precisely say when it's going to break, but I do know it's going to break. The other thing, the point number two is about consequences. Today, there is a phenomenon economists call crowding out, where when interest rates go up, more, more money flows into the restraint rate of return. And then that crowds out investment capital.

And we've talked about IT on the last pod where if the risk rate is five percent and then like high quality corporate bonds are offering eight to ten percent now, equity investments must generate fifteen percent and VC must generate twenty percent. And there are very few VC investments I can generate that kind of iron. So what happens? The money flows out of VC and there's less money for risk capital.

What drives our economy? Risk taking on for nurses long. And so hold on. Second, this massive debt service that we have, which drives up interest strates, will cwd out the very kind of economic activity that the unstated needs to stay on the cutting edge.

Butter rea bottle to the rebuttal to the rebuttal? No, you're so right. So why did you just book in the argument exactly the way you just did? My point is not that you said IT just before that we don't know at what upper bound these things break or don't break.

And all i'm saying is every time you throw up a ranking number, you guys sound like the boy who cries wolf, okay? And you're shouting into a vacuum is is just the as the advice. And i'm trying to give you guys, I agree with you. I spend my entire days investing in and trying to figure out what is the risk adjust a great of return of the things that i'm doing. And i'm trying to tell you with somebody with some reasonable financial numeracy, every time I hear you or radially or somebody else say this number is worth that IT all breaks and IT doesn't you lose a little bit of credibility? Then you go to this number and you're like, go, I have one hundred and twenty seven years to get let me.

let me put you, let me how much is too much? How much dead can we handle and how much spending as a percent GDP should we handle? What is the limit in your mind? And how do you decide what that limit can or should be?

I think the honest answers is every time that I have been alarm, that we had hit a threshold that was meaningful. So for example, like I think under obama, we passed one hundred and IT felt very scary because I was like wild. That seems like a demarcation on IT turned out to not be a demarcation on at all because it's relative to every other country and what they're going through.

And I understand that you don't want to believe that, but I do think that america's economic fatality is not an independent uh, function. IT is a dependent function on everybody else. We are relative to everybody else.

If there's A A different Cosmos and a different planet somewhere, maybe this will all reset. But right now it's not. And so we all trade relative to the united states. And in that much, I would like to just say, I don't know enough to guess what this number is.

And I rather focus on what David said, which is there are things that we need to do that we need to incentivize people to invest in extremest, taking that create new businesses that move the world forward. You can have that conversation without bellic and crying to omi about A G D, D to GDP number. Because every time you thought out there, nobody knows what you're talking about, nobody knows what reaction to have and everybody feels over time, David freeport, that you're crying wolf.

So all i'm saying is I get that it's concerning to and a creates anxiety. But every time yeah you probably this is not the first time you've had anxiety. You have had anxiety at fifty, seventy five, one hundred hundred.

And guess what? I bet you've anxiety at one fifty. I don't know what that means. I do know what sex means.

So which is that right now, we have a risk free rate that's going to fight. We have corporate bonds. It'll be a tent. We have equity investing at the most, Chris taking, which is the usually stage venture that he has to return twenty five. And that is an incredibly high bar.

But we need to do IT and we need to do maybe fewer investments, quite honesty, with fewer participants, with less dollars that are more effectively put to work. okay. Maybe this is a good jumping off point to talk about all the waste and silicon valley. And that stuff can happen without .

debating incessantly .

this det. GDP number.

which is that a GDP. It's never been anything on my rather the conversation i'm trying to have today is the amount of spending, the federal spending, including interest payment as a percent of the G D P, as a percent of how much we can text to pay all those to make all those payments every year. And so what i'm concerned about is the ballooning cost of paying out all the obligations, the federal.

You say something different than what you are just saying that if you are cared about only that, then refinancing the dead is an equally .

valid proposition and change ballooning in addition to interest payments, social security and medicare payments are also ballooning.

And defense band of control spending.

Everybody has you add those four big categories together. You don't have any room left to over get.

You're talking about your talking about discipline in spending in defense. great. I agree. You're talking about discipline and capping health care cause great, I agree. What does i'd have to do with this other or foldal thing you've .

been talking about, which is this .

random number that to .

GDP IT go pant, discuss, look in in the interests .

of best to harmony. I will partially agree at the point that chmagh s is making, which is that for a long time in american politics, people have sort of cried wolf about detto GDP. For example, you remember, way back in one thousand nine hundred and ninety two, ross paroe basic, basic canada acy on the idea that the us.

Was racking up way too much debt. You know what? Detach GDP was in thousand and nine, two forty one percent. And people used to care a lot about this. Remember, when reading was president and jeg p was thirty percent, people were saying that he was just like, you know, wild spender.

okay? But I think that precisely because nothing broke at thirty, forty, eighty percent, one hundred percent, you then had the rise of this theory called mmt, or modern monetary theory, which said that the debts don't matter. If you're the reserve currency, you can pretty much money as you want. And so people started indulging in this. And so now I actually think we are at a point, I can't say precise where breaks, but I do think that because dette GDP didn't seem to matter for so long, I actually think we ve got Carried away. And now we're at levels which are just going to be ruinous, if for no other reason than our debt service is gonna crowd out, whether you want more guns or more butter in our federal budget, if you want more defend spending or more entitles you want more discussion spending, there's no question that debt service is getting bigger and bigger is going program.

There's no question we need to spend less. I A hundred percent agree with, okay, but all i'm saying we should spend less on defense because we have different ways of defending ourselves. That should be the logical argument for less.

Energy independence is defense. And the baLanced budget could be defense as well.

If you look at the I R, A, that was less than a trillion dollars over a decade. Okay, that has the potential to shift trillions of dollars a year .

in defense spending. yes. Okay, OK. So let me rap. Okay, let me wrap you for second. Thank you.

Can look at these bills inside of themselves and try to actually do the right thing that the country without wrapping up all of these random arguments. And I, by the way, to be .

the world moderator .

actually, in the obama president, see, we have to think called this request and know if you guys remember this.

Yeah, but republicans and democrats agreed that basically that because we have just had like these trillion dollar deficits because of the two thousand eight global financial crisis, they got together and said, listening are going to hold the line on spending and they'll be no increase on defense spending in exchange for no increase in directionally spending social programs. And for a few years we held the line on spending actually. And then, of course, both democratic republicans didn't want that for different reasons, and the sequester went away. We need to go back to something like that.

There are two days as you when you go and send a bill. So look, the way you pass a bill, right, you have to send IT to the cb o to get scored. One of the things that I learned this week is that sometimes A C bo, and they're not really empower to actually tell you how things get offset.

So for example, like if you have a medicine, what they will do and say we will look at, at the population level, how much would this medicine cost if it's taken by the population. But if that medicine then Oliver sudden has the potential to actually offer rap you over here, those savings are not really factored in as well. So David, to your point, another way that we can refine how we build budgets to make sure that we're not overspending is to actually improve the tool IT in the data that like the CPO is given so that when they score things, they can actually look at the total impact like, for example, like the I R A. Again, one of the biggest benefits will be the defend spending. If we choose to make those cuts, you will be able to do IT differently once we have you no reliance on foreign erg.

Okay, to rap this segment, the first segment, which of fifty seven years.

hey jack, a would vote for a sentences he promises his well.

here's the thing. I am going to take a look at the candidates. I'm going to make the best decision in terms of what I think is that that's for the country.

And I it's on if the santis .

gives you everything you want a fiscal policy, why went you vote for him?

If he stays out, if he in favor, choose the fifteen .

weeks that for the policy?

Or you know, I would take a look. I will take a look.

I also not to vote for fifteen weeks, right to choose, combined with fiscal responsibility.

voting for a .

moderate, this I want. And okay.

but to wrap up here, the two things that matter, I believe, and based on our panels discussion, austerity and excEllence, are what are going to get at this mess. Here is what the platform seems to be shaping up. Are twenty twenty four a platform control spending? Everybody here thinks that's important, energy independence.

Everybody here thinks that super important, stop fighting unnecessary wars. Uh, and maybe rethinking our foreign policy. I I think we all agree on that.

And the cultural focus on excEllence, not access, this is shaping up to be a little of an all in platform here. Great discussion, everybody. Speaking of austerity measures, I think, you know we should just talk right, right up top here about what's going on.

A google Chris home, I believe this your pronounced chis one. He sent a letter to google and amazon amazon today after already announcing ten thousand layoff s they just said again and he said, prepare for more layoff s in twenty twenty three and these are not factory workers. These are White color, high paying jobs that are being laid off here.

There are surplus elites.

surplus elites. Uh, IT is definitely a part of the eye s right now. So gonna reduce headcount, massive. But in this letter to shareholders, he points out, notably, not just hate google needs to do a ref, a reduction in force, but he points out of a more granular point that I want the panel to talk about here, which is he says, hey, you need to reduce the actual salaries at google, the average being two hundred and ninety six thousand dollars, sixty seven percent higher than an incredibly well paying workforce.

Microsoft quote, we acknowledged that alphabet employed some of the most talented and brightens computer scientists and engineers, but these represent only a fraction of the employee based. Many employees are performing general sales, marketing and administrative jobs who should be compensated in line with other technology companies. And he says we need to establish an ebata margin target, as you can see in this chart, and reduce the losses on other bats, perhaps increasing share buybacks as well. So what we're looking at here now, after what .

possible my god.

I mean, the business is not facebook. You worked there. What in this rings true to you, uh, or not? And then how many people does google need to employ to Operate the business and invest in the future of the business? In your mind, they have a hundred eighty seven thousand employees at google.

It's grown twenty four, twenty five percent, rounded up twenty five percent year over year, they grew twenty five percent. You're over a gear in their business. How many people need to run this business to have a aggressively grow?

Look, I think. There are um two main drivers of the issue that google maybe made a maybe twitter prior to alliance involvement and and really silicon valley as a whole uh the bigger companies have faced. The first is the war for talent.

The war for talent started I mentioned this last time around two thousand four, two thousand five, because prior to that there weren't as many grads coming out of um undergrad with computer science degrees, right? I think ten percent of grads and a baria schools were finishing with computer science degrees today. The numbers like sixty percent.

So you know, around that time, the war for talent LED organizations, particularly google, down a path of offering more perks and benefits to their employees to create a work place that was more competitive. And that ends up being a slippery, slow because then other organizations try and find parity and then other organizations try and overdo and pushing even further. So this leads to both wage inflation across the um uh the .

uh m but .

it's also LED to almost like the acceptance of the allowance for degrees of complacency. And so i'm not saying that the workforce is all complacent, but I do think that complacency is forgiven. Some amount of complacency.

I'm going to take a friday off. I'm going to take two fridays off. All the sudden i'm not working on friday. Is the other thing that happened is as this workforce has aged, I worked to the google twenty years ago, and a lot of the folks I work with, almost all of them now, have families at the time, everyone was Young.

And as the demographics of ilk on valley has matured, you have more people that are less, but killing themselves and giving everything that they have to their organization, and they're more interested in being with their families and now spending less time at work, especially in light of the fact that compensation has balloon to a point that you can now live a very, very comfortable lifestyle and you don't need to have a big payday in order to be able to take really good care of your family, which was the case of the start up. And then the other issue is just one of innovation at google. If you work on a new project and IT doesn't work, there is no loss.

You still have your job and they've started programme and they'll give you equity and you start up ideas or theyll give you all yourself. So we'll give you upset if you win, they'll give you bonuses if I succeed, but there's no downside. And so the pain in the burn that you would feel as a start up founder or is someone building a new business isn't experience ed to realize? And I cannot I don't need to tell you guys this, but for anyone else is listening that may not really be fully aware.

The lack of pain, the lack of risk s, the lack of downside, the lack of having no safety net and and falling through the pits removes all are so much of the incentive to succeed and to drive and to innovate. And I think that's become part of the complacency problem that caused larger org ization to simply say, let's throw more heads of the problem. And when you just throw more heads of the problem, you have more of kind of talents problem that I mentioned.

Number one, what is the 5.

two hundred, eighty hundred rounded up here that doesn't like I I don't know. That includes benefits is what I religious called three hundred .

thousand and year. And by the way, that doesn't mean that those people should all get fired. But I think IT speak IT speaks to the fact I think they're wonderful people.

There are some of my best friends work at google. It's a great organization. People do incredible work there. But in terms of return of dollars invested as a shareholder, that's the question. That's the that's the analysis.

That's the scope that the shareholder is looking at is do I want to spend a dollar to make a dollar five? Or do I only want to spend a dollar or I know and and get a dollar back? And so if you just bucket IT where the dollars are going, you would end up saying, you know what, i'd rather just focus on the places where I spend the dollar.

I get two dollars back or dollar A D back. And I don't want to do any other stuff where I spend a dollar make a dollar five back, and that's called R O Y C or return on invested capital. And that includes to return on invested human capital.

And so the analyst in the stock that that's an investor in the stock will look at IT through that lens. Where's everyone that working there is still contributing meaningful layer, still doing valuable work. But in terms of return on invested capital, a good chunk of the projects are not driving the majority the value, a minority of the project, a minority count, is driving almost .

all the valley. I mean, if you sensitize IT to what you said, David a, if IT was just seventy five or a half that number, then you know the stacks up thirty five percent overnight. And if IT goes up to the full number, yep, the stock goes up sixty five percent overnight.

I think that's totally feasible. And and then I think what you do is you take ten billion dollars a year and you have a high accountability model that you speak to the street about and you say here's how we're gona hold ourselves accountable to investing the ten billion dollars every year and not just have everything be a neb as fifty in your project and then it's always a fifteen your project and you're always just burning cash to go after those projects .

that are highly abused. If you had to steal the other side, I think the argument would be, I would say they would make probably three arguments arguing number one is like, look, don't get overly distracted by other bets because it's a small category of spending. We've contained that cost pretty rationally relative to the rest of the court business.

The second thing that they would probably say is there is an enormous amount of work that has never seen by wall street that explains how good our services, whether that you know in early iterations of you know technical capability like G F S and big table to things like TPU, to things like TensorFlow and all of that builds up um all the things that deep mind does, all the computer we have to throw again search to support that. So I think they would probably say what people probably don't have a great sense of today that it's not just twenty five percent of the team that's required. And then the third thing is what they would probably say is that it's very hard to explain, but google has all kinds of other things that they do for free to create the ecosystem so that the internet works.

Well, I heard this one thing where somebody was explaining that google is like, know the DNS server, right? Google is the time server and all of this stuff they do for free. And all of this is just about making the internetworking more efficiently.

And that has some coffee. That's probably how they would steal men, how to build back up to some number. But it's probably they're still a gap between that number, David, and what they're prevAiling head counters.

Yeah, I think I think that's that's totally true because the infrastructure team LED by earth is the most remarkable engineering organza on planet earth in my opinion. And they have laid um fiber lines across the atlantic.

They have built their own data set or infrastructure, their own switches, their own silicon, like everything is built by this team from the ground, from first principles that IT gives extraordinary motes and advantages to the business. IT makes the internet a Better place that allows you know ultra fast, super cheap youtube video viewing across the internet. I mean, there's just so much of of these core vanes in the business.

But if you look at the headcount over time, you have to ask yourself the question, you know how many of these investments that are core are really, you know, captured in the headcount that blossomed twenty thirteen, forty seven thousand people that the business has gone up in had count by four x in the last nine years. One of the things that jeff bassos was always so incredible that and I saw him give a speech on this, at one point, bassos gave a speech I saw and he said, we are really good at fAiling. And he showed all these projects that amazon tried.

And he said, we tried a nine. We tried to do our own search. We tried to build our own cell phone, the fireplace one.

We tried to do this. We tried to do that. When they don't work, we kill him.

And when they did work, they became hundred milty hundred billion dolente prise value creators for them, like U. S. Which was one of these projects. And so amazon was so good at taking the stuff that wasn't working, knowing when IT wasn't working and ending IT, and they were still able to drive an innovation engine.

One of the chAllenge of I see with alphabet is that they are so good at bringing the best talent to work on the innovation problems. But where they're not good is saying, you know what, this isn't working. It's time to move on. And if they did just that, if they added that one disciplinary capability, then I think this, as you said, the market cap would go up by six hundred billion dollars.

What about this? Um I just wanted your reaction to this thing that a lot of people whisper in silicon valley, which is part of what the big companies should do, is part of the positive game theory is to not let these talented people actually leave. It's Better to pay them three hundred thousand or two hundred thousand or whatever in state microsoft and matter.

And google would not then go off and start up build a start up that could actually then disrupt them. And so no, it's it's a cost worth bearing because it's actually medicating strategy, strategy. We think about that .

super interesting idea. I think that the people that are likely going to actually be able to execute on that are gonna do IT anyway.

right there. Surely aggressive entrepreneur s are not going to be. Look, I was not super.

I had made a little money when I worked at google, but I was not super wealthy. And I left the the vast majority of my stock options and R S. Use on the table when I left google in two thousand.

Six here, start climate cord because I could not help but do that. I could not help myself. I had to go do that thing course. I think the kinds of people that are gna succeed in entrepreneurs m cannot help themselves IT doesn't matter how much money being prone at them.

Here's a chart. Basically, these companies have been correlated their spend and their head count to their revenue, not what's necessary. You look at alphabet, total employee changes, twenty eight ninety five point three six percent.

I may I don't know that looks .

pretty good to revenue one hundred thirty two percent.

Pretty thing doesn't look .

like they were massively over hiring. If you ask me totally, think about so .

maybe I say IT. Look, a big part of Larry pages decision to the company from google to alphabet was he believed that the core business at some point would ultimately be disrupted, that the core advertising engine was gonna disrupted and there wasn't gonna the sustaining long term growth advantage at business.

Maybe he's been disproven or maybe IT hasn't been IT hasn't been proven yet, but the concept was we need to find the next google and we need to build the next google. And so we want to locate capital with an a portfolio of bets and have some number of those things, maybe not all of them, maybe not even a lot of them, maybe just one or two of them, turn into the next hundred billion dollar revenue line for us. Now he he always said that that's going to take a long time.

He definitely underestimated the quality of google search and the the dominance of IT. Now it's IT probably stands to reason that if we have enough innovation at the fundamental model level in A I particularly like a bunch of really powerful multi model models, the new form of search can disrupt google. But the problem is they are so ahead of everybody else with respect to those models as well.

So the real question is even that next big leap frog isn't going to happen without billions of dollars of capital invested. And you know, the most likely folks are able to do IT, I think OpenAI at some level. But again, they're gonna always have to raise money for other folks. Google can self funded and IT makes an enormous amount sense to drive that technical mode. So IT just seems like there what .

was going to happen here? Are they going to make the cuts or not? You think they will make to have the ability to not make cuts and just ignore a six percent year holder to moh or they just going to make them and they're going to go to the dynamic.

The dynamic will be how much truth is able to convict root tora is the CFO, and she's heart core. She's hard core. She's incredibly everyone of that leadership team is is incredibly impressive. But SHE um has a very particular lens, uh a wall street lens and he understands what the shareholders are thinking and looking at.

And SHE will convey these points to the board and um and there will be engineers and soon as an engineer and he will and he is a very good he's very good at gathering and the the different points of view and having baLance around this. And he will share his point of view at the board. And I think ultimately will come down to my guess is like we just talked about some portfolio allocation decisions, which is how much risk, how much beta, how much alpha and do we have the right mix in our portfolio.

And IT is inevitable. There is going to be some cutting. So I think that there will likely be some reduction. Um five percent.

ten percent, ten ten thousand employees that simply remember, yeah, yeah let's see, I got my guess okay sex, what did you take on austerity measures? Uh and moving to an age of excEllence and efficiency, which is happening inside of the tech industry as we speak, I think freebies.

right, that these companies could Operate a lot more efficiently. I think there's an economic argument there, but I want to up level at and talk about the cultural aspect of this for a second and also bring in to the huge stories this week, the S B F. Story, the interviews he do within your times and fox and then this historia around, you know, what's happening at twitter. Look, I think that there something clearly hit a nerve here in this last week where you have all of these employees who have voluntarily left creating all this drama and internet gracy Martini has had a good quote about this, but he said, what you want is doing is revolved by entrepreneurial capital against professional manager al class regime that otherwise everywhere dominates, and that same pmc, which includes the media ais treason IT. As an act of last major.

there is another version of this .

that came out a couple weeks ago. There is a good one to hear. There's an article on compact magazine a couple weeks ago where the ether just shean burger tweet, the layoff twitter or no different.

That was happening across the bali. But because ideological tagging ism, the profession onal left mask, they make clear what's at stake, the collapse of a jobs programme for surplus elites. And then and then there's a great quote from this article.

which again is so hard hitting.

I know it's exactly it's a deep .

well yeah exactly.

So a quote from this article. One of the biggest and least talk about social questions in the west is how to economic provide for our own modern version of Francis impecunious nobels. That is, how to prop of high status people who can't really do much economically productive work.

A, wow, I mean, like this was a bit yeah. Now I think this is really hitting a nerve because the fundamental quiver quote of our civilization is that in order to achieve economic and social advancement, you go to college and get a degree, and you submit to voluntary reeducation of yourself. And one of these work medora, one of these reeducation camps that's supply pro quote. And you get me. Now, some people.

did you punch up?

No, like this. Is this right belief? For a while now, there are some number of people who get useful degrees like computer science, engineering, but huge numbers of people get degrees.

And like we talked about the basket weaving, or ever the you place the correct degree is visual. And they graduate with a four million dollars in debt and no marketable skills, right? And bright.

And what was propping up all of these people were these fantastically ally, wealthy monopoly tech companies that we're hiring, huge numbers. These people now of the sun. We get to a point where were in an economic recession.

And these companies are starting to do layoff s and they're starting to do a bit more soul searching about who's really adding value. And people are starting to get laid off. And I think this hysteria a is coming from a place of deep and security.

You had all these people go to college. They did not learn critical thinking skills. What they learned was at, listen, if we pay lip service to the right platitudes, that we will have career advancement.

And now they're learning that that may not be true. And actually, the person whose pulled the mass of this entire regime is another other than S. P.

F. And he did IT in an interview with fox, and we have to go to this, okay, and said, yeah, he's the devil. But he basic pulled the mask off this whole civilizational equipped o quo.

That is a sham. okay. And here's what he said, that the vox reporter said you were really good about talking about ethics.

For someone who kind of saw all is a game with winners and losers, what did sb. F said? Yeah, he he, I had to be, is what reputations are made of.

To some extent, I feel bad for those who get fucked by IT basically all these people who incurred a corporation dollars and dead and think they can spouse the right protection. De, he says, by this dumb game, we woke westerns play where we say all the right triple less so everyone likes us. How stupid does that your times feel right now? How stupid do all these nonprofits and foundations who received all this money from S. B.

F? He played them. All he had to do was say the right words that say the magic woke words.

And they would basically cover for the most enormous grist that's ever been perpetrated. That is basically the critical al of our civilization is be woke. And you will have indefinite career opportunities, no matter hunt.

mean, virtual, be another way to say that to be the work woke audiology, but virtue signal and give donations to people. This has been a playbook of grifters for a long time. Burning night gave a ton of, you know, donations, and he used the same .

clever donation city gives the republican party. none.

They're not part of the regime.

How many? How many conservative?

And who are .

the charities? Thirty two. IT was all the right well causes.

IT was the c was not. He was just about the demise.

You kidding me, freaking out about the pandemic.

No pandemic questions was he pointed to me the neurosis.

No, no, no.

That was not what he was funding sex. I actually talked to me about this when I interview. He said he wanted to do pandemic uh prevention and early warning systems and wanted to invest in strategies .

to fight the and definitely freaking out about cover is was a central is of the professional managerial class .

to the last couple of years.

And but I want to make point.

I have you prevention. I mean, you can frame IT as not, but I actually .

literally talk to about that to steal money from california taxpayers via alla initiative to fund his brother's organization, which would have dispersed the money. And who knows what way is probably not legitimate out of a profess concern about the next pandemic. why? Because the pmc is neurotic about the last pandemic.

Come on, this is all part of first. Yes, thank anda. Now listen, why hold us? Why did this work? Why did this work for you signal work? And again, why were they only charities and causes that appeal to the sort of the left is?

Because there are the ones with the power in our society and in our culture to define what virtue is when your virtue signal, who are you signalling to the people with the power to decide what is virtue and what is vice, right? That is why people go to work at the euro times. That is why they basically go into all these influential jobs at nonprofits and foundations.

They are the ones assigning what virtue is. There are the dupes that ones were fooled. And now what's happening is there's an economic consequence to IT, which is IT is coming out. These people have no markable skills and companies are tightening their belts. And now of a sudden, they're starting to become deeply insecure about their own future.

My comment is that you know, when you look at twitter as an example, bill gurley had a reality powerful quarter as well, which is when companies cut, you know, they don't cut nearly enough and they and they must estimate and underestimate how resilient to company is back in you. Twitter had two hundred million and M, A, U. They had only a thousand employees.

And so clearly at that point, they knew what they were doing. And now the business has, you know, increased in M, A, U, by color, fifty percent to three hundred million. But the employ base increased by seven and a half x so clearly something is and I think the thing that you know people are going to find out is already .

with contractors, probably twelve X.

right. So I think that while there you go, so I think that the the thing that frustrates a lot of folks uh, that are leaving or that are trying to throw bombs is they don't want elan to be right.

Because I think the David point, if elan is successful, he has uncovered this very uncomfortable truth that was Frankly hiding in plain site, which is that many of these technology companies using technology get so much Operational leverage that they have some enormous efficiencies. And then it's only a decision by the professional managerial class to reward themselves with thigh tims and kingdoms of employees and you know, the serves that work for them. I mean, it's really quite crazy if you think about IT.

Well, freeburg made this, you know, early on in the history of this podcast. Think that, well, how do I want to enter your position? Prevosts something that s see your position, which is early in this poxy.

Is that the nature of organizations as they want to grow? And that's government, or even these departments are talking about anybody who runs the department is never going to say my needs to be twenty percent last so we can hit the bottom line. Then you can say, give me twenty percent markers.

Everybody also get twenty percent. And you if you layer in the charlie monger quote, show me the incentive and i'll show you the outcome. You can understand why, because the professional managerial class is rewarded by compensation.

That is actually independent of delusion, right? Because if you look at these compensation plans, all of these professional stock owners, they complain all the time about stock based comp, right? And these companies have budgets between two and five percent a year that they give away.

And so you have the situation where an engineer or an engineering manager or sales manager or marketing manager in success at a thousand people can grow to five thousand or ten thousand. Their compensation doesn't change in any other organization. Their compensation would change because let's say that it's a percentage of the profits that are distributed unless the company is phenomenally growing, eventually, you'll see IT in the bottom line of what you take home.

And so these folks are incentivised to have these status signals of value. I have a fifty, know you guys support this. I have five hundred.

I hundred. I oversee thirty five hundred employees and and everybody is condition to fake. Oh my god, that's incredible. You must be really important. And so we're going to a sort of now see in real time a questioning of that belief system.

And if elon proves to be right, it's a really important decision point for a lot of other technology companies because if you are an eighty and ninety percent gross margin business built on software, maybe you have a bigger responsibility that you've discovered to date to your shareholders and to the existing employees to find the efficient rate of return, right? What is the efficient frontier of head cap? The other thing is that now allows, lets you say that now twitter goes to a making up a number two thousand employees after this whole google form thing.

The great thing about the two thousand and first employee, for the two thousand employees and for the shareholders, he said that two thousand and first new employee is one hundred percent of line because they're coming into something, eyes wide open. And I think that that's also an interesting thing that isn't getting enough recognition is he's putting out there what he stands for, this hard core culture irrespective of whether we think it's right, wrong, all the people that they are voting that is right. And you know, as long as I stop breaking any laws, he's allowed to do that. And so if people now want to join that organization, they should be allowed to do that too, just like the people who don't want to should be allowed to lead sex.

You and I came up and we talked about this. I think unless we show maybe two weeks ago, we talked about what the expectation was in silicon valley at a started up, what start of culture was in terms of just the effort that was required to build a winning company. And we all said sixty hours a week was the baseline. That's something that you know has been I think a lot of people you mention this stream of people working to jobs for thirty hours a week. And take me two salaries for two of the fan companies.

Go to tiktok and search for you know, engineering salaries. You'll see some of the crazy tiktok kids are making three hundred and fifty k working thirty hours a week. It's not there. And so I think we're going to have to say.

I think we're going to have a cultural divide here. They're going to be a series of companies that say this is classic sloan valley. We're we're going to crush IT. We're going to work aggressively.

We going to be fifty, fifty, seventy hours a week, and we're all gonna benefit from that and theyll be another class of companies that says, hey, no, we want to have a more lifestyle business. And if people want to work thirty, forty hours a week and they contribute, we don't need to be perfectly efficient. And you know what? The playing field of rope, the playing field of capitalism, will show who is right? sex?

yeah. I mean, look, I actually going to a town a few days ago, so I wasn't keeping up with, you know, every detail of what was happening at twitter. And I started getting all these text messages about how twitter was dead or dying or whatever, like the site of an unplugged or what have you and i'm like, what is going on now? And you know, you tweet this morning, he is this working and i'm like, yes, like, guess it's working. Like your tweet .

this morning, is this working today?

And so my tweet throw.

yeah so I came to .

learn what they're talking about is that all you want did was give a voluntary offer that if you didn't want to stay, you could take three months servants. Now remember last week they had a ref, you know, which was basically economically require, in which they gave employees three months, seven years, which is fifty percent more than what he had to IT was generous.

Now IT seems to me that what if you're one of the employees in the other half that made the cut, but yet you're not really motivated to stay and maybe you don't really want to Operate like a start up. I mean, spaces saying we're going to go back to working and Operating like a start up. That means that you might have to work nights and weekends like a startup.

What if does not what you signed up for? You may be sitting there at twitter saying, oh, I wish I got riff. Well, now you want is offering you the opportunity to take the same package. So i'm like, how can this possibly be a Better is actually the great .

management technique that tony he rest in peace from zappos created. He would say, when people went through their first couple months of training, he say, now, if you don't want this job, I will pay you a month salary. This is on their first day.

After they were through training, the first like day on the job, he said, OK, now that you ve gone to the training, i'll pay you. I think he was five thousand dollars, three thousand dollars to not take the job and something like one out of five people would do IT. And so he said, listen, I don't have to fire them later on. This is gonna my management easier IT is IT IT is actually .

a kind thing to do to give you a reason how giving employees an option.

You know, why not is because the reason people are upset, let's beyond the sex is some people you live to work in, some people work to live. And the people who are working to live find the crazy that household culture even exists. And people who part of hostile culture, like the four people.

was pocket find, is just working.

Hostel culture is working above the hours being paid for. That's basically where households you pay for forty, you getting paid itself. Most people would .

define IT is is actually not you work for forty hours a salary means you get your job to okay.

that's how we look at IT. That is not .

how .

other people look at IT.

And those who, oh my god, is .

american acy. The other side, i'm still many other side. People look at their salary and they look at themselves as getting compensate for forty .

hours a generator. Not there are people Better working sixty, seventy, eighty hours a week as a teacher to make thirty forty k firefighters, you know working on oil riggs and to hear somebody like hostel culture at the start up or you're making three hundred and fifty grand and you're upset because like the marcha that ran out or whatever.

it's just so out of touch.

I'm not disagreeing. Yeah, look, my view on IT is that people need to love their jobs and love what they're working on because I think the only way to be successful is to work hard. But the only way to work hard and be happy is to really love what you're doing. And if there's a lot of people at this company or others who don't really love IT and they are just there to pay the bills or whatever, then I actually think it's extremely generous for elon to be offering .

them a package.

The thing to do, I don't understand how giving them an option was anything but positive. And yet the media has gone bizarre on IT. Meanwhile, while giving SBS a virtual pass on the largest one of the largest frauds in history, made off level fraud.

you read that your logic. No.

there's no allegiance, dude. It's come out. He loan himself like, this is just one data point. He loan himself a billion dollars, and he learned the head of engineering five hundred million dollars .

off the baLance .

sheet to see here what possible justification. And in sbf this.

just say the words to say the hard part out of the reason why these same publications are not covering this is because they were complicit in his reputation. Launder ing, yes, the new york times, before that article put out the southern fpees where they talk to him, and they were exploration on twitter, because I was like, not a single question about the fraud or legend. A rad.

less obvious.

Ly, obviously.

and no .

one knows where IT is. I'm willing just to call that a fraud.

You will like to judge the fence.

They're busy scrambling to sort of save their own reputations, which is why they are trying to like hide the cheese effectively and point over here and say, hey, look at what's happening. Elon sent an email, where is only one button? yes.

Mean .

that I ve.

H god, you I mean, you know, this is gonna get log.

It's too funny. It's so funny.

It's too good. It's too good to not put up on the screen.

I know that that nature photographer is the new york times. It's okay.

yeah. Don't see that there are two right OS they're forcing right calculating it's two two thousand and animals populating dog e star ten feet behind a nature please your behind i'm trying to be the world and photographer a nature photographer with a six thousand dollar tea you know photo but his ten feet behind them are the two rino s the two rhinos that says F T X losing over billion dollars of flying funds and the the photographer is centers calling for the ftc queen festing the thing is the photographers .

pointing and completely the .

wrong direction that is obviously .

right in front of face that he should be photographing.

Yes, is that long telephone.

And that that is in york times center. Warn that the point.

the era in the right direction, yes, point the camera on the right direction, is the point.

I just want to .

point out logy tweet, this is a .

capable of one seventy, but it's .

really more.

he says, think of a regulators, a binary classifier. What's your false positive and false negative rate? Bf, bitcoin etf block for years.

F, T, X, ignored for years. The actual filter is not. Is this a scam? The actual filter is, is this I am who is not consumer protection. It's reelection. But I can Young speech g make a banger out of that.

IT is a banner. It's not consumer protection.

It's reelections. If you are part of these inter locking power structures that we call the regime, it's the new york times. It's the regulatory state is a big party. You get .

a big part. Your team now controls a house. And so who's him, David?

I understand. But starting .

in january, you know there's any amount of congressional .

how hunter biden hundred to investigate?

No second. Now, the first investigation by the house of representatives needs to be S, B, F, N, F, T X, not hot der. Biden sbf makes hunter bine and look like a piker. I mean, yeah, you know, handbook was what? A couple million dollars .

of grip. This is ten bill touches.

divided, knows how to party. So let's be honest here. I mean, that is the issue.

I I just think the quote of the week goes to a john j. ray. He's F, T. Access new C. O. He famously over saw the liquidation of iron, and he says, I have over forty years of legal and restructuring experience.

I have been in the chief restructuring officer and our chief executive officer in several of the largest corporate failures in history. I have super situations involving allegations of criminal activity and mathesons, and run nearly every situation in which I have been involved has been characterised by deficits of some sort in international nal control record implies human resources and sory. Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trust over the financial information as occurred here.

This is the person who oversaw, and on saying this is unprecedented. Andron was the previous unprecedented situation, which is now being framed as manageable by none other than john J. Y. What a great name. Congratulations on being the cheaper producing officer of F.

T, X, there is an article that showed that if you could please throw the picture up on the screen of of all the people that invested the universe .

of S P F and my .

god and and the article headline was it's a whose who of VC in my comment is actually know this is to say who's who of people who did no diligence yeah so ever and I just wanted call one person, nick. If you look at the alameda research, this, uh, this firm called one H J L, invested in our firm named after the election.

what? Come back home, maybe come in the cold pledge, okay, but that cold pledge in the shrinking, you know, the street, listen, i'm a shower, not am a grower, not a shower or right? Listen, you guys coming up, everybody knows coming out of the cold plunge, it's not to be the best .

performance range. What is that?

We've a rap. I just too .

much you guys not think that all these investors receive auto financials and the legal .

ordinary firm was its called figger medical and that says is based in the metaverse. This is like .

the hollywood opposition's .

medical college center. I, his brother law IT was like was on a dead .

floor in the lifted .

and was the same in a secret .

loor with nobody on.

I mean, even in that case, people relied on an audit from A C. P. A. That said here, the number of and those numbers were fragile entry conveyed.

And I think that there's probably some know some forgiveness necessary here that there may there may have been serious rather took place. So I don't want to be too disparaging of all the people that work of these investment firms made an investment and they all got duped. And me, l peace, got duped. And so I don't think this is 4 amenti faure。 So we were part .

of the process where they tried to show. And I have to be careful, my lawyers remind to be that we're still under N D. A, actually with fx. But what I can tell you is we did not get any financial. So we were verbally, we we sent a two page of the, anyways, I can see more than, yeah, don't get yourself in trouble.

But I I want to say something else by the way, last friday David and I were a ury miners birthday party and there was a chest tournament and the, uh magness carlson was there and anyways, David was in the finals. okay? IT was David and his part. Look at the smile on dav met hold on weight. I'm getting to a great punch ine versus magness carson and his partner David .

one I partner, I say you, he's daughter who I think, anyway.

yeah, thank you was .

really unique in front of them as partner chest. My partner was a progne anda who is an indian grandmaster who was like a superstar. yeah. And look, playing you with max person was, obviously that was a real thrill you get.

So when you rank this with the birth of your children, your marriage and this, where were that rank on the scales? One to five, this is a the .

that just happy.

Oh my god, I haven't seen him .

that happy since .

you guys at .

that document. I just ics polled all includes and real state finance, material energy utility is a kind of the big bulky private only tape stop. So it's mostly tech consumer, six hundred and twenty seven I P S.

Since twenty twenty, more than half of them are basically half of them are trading at less at point two times the total cash they've burnt. So um you know you can look at total lifetime capital burned fy, these companies in the retain earnings line on the baLance ship. And so when you pull out the retain learnings, that shows you write how much money they burn over their lifetime. And so the total money burned by half of these companies is about one hundred and seven billion dollars um and the market cap of those companies is only twenty six billion dollars in aggregate. So a point two times return on capital invested to date in terms of enterprise value divided by total capital investing.

Let me let me see, let me say an english. You told me a five thirty, right? So six hundred and twenty seven non back, non real estate, non finance companies went public. So basically six hundred and twenty seven companies went public since two thousand and twenty. So two years yeah. And although six hundred and twenty seven tech companies, almost half or three hundred of them, forty eight percent of them are today worth about point two times all the money that when the .

yeah cash .

wo and then and then .

on the other half, the other half is is the ones that have worked. So this kind of goes back to a power law point. But like as a venture industry, you think once you get a company, public is successful.

And the reality is that many of these companies from a from an economic perspective are still not successful. IT looks like half um and perhaps much more if you include all the backmarker uh which uh is another couple hundred. And and I I would guess the vast majority those meet this criteria are trading at less than the total cash has been investing .

in them freeburg. This speaks to the age of access that we just went through. We just weren't as sufficient as we needed to be in running these companies. And now we're in the age of efficiency.

austerity, excEllence, bond. Um you can leave them out. I was .

talking about .

two weeks ago, three weeks ago he showed me in the, uh how much I see here. This is a big investment firm and they have a big growth portfolio less than uh, they've about one hundred and sixty uh investments, one hundred eighty investment in their growth portfolio. Eighty five percent of the returns are generated by ten companies of the hundred eighty and that's in the growth portfolio.

Supposedly, the businesses power and so exist even in grow, exist in growth. And as you can see here, the power law exists quite dramatically post IPO as well. So you know, as you can see here, only nine percent of these businesses have generated positive earnings over time. Um forty three percent about half of are worth more than the total cash has been invested in them. And that multiple .

board study here, by the way, this is you're .

done by your family ah yeah ah it's of public so the um the multiple on the value of the companies that are worth more than their cash invested is five point five times. So in aggregate, IPO since twenty twenty are worth four point three times the total cash it's been invested in them over their lifetime. Um but the crazy statistics is half of the rewards significantly lessen, the cash has been invest in them only point to time.

So the power law dominates both early growth and and clearly uh being public. But I think to your point, jc l IT also seriously speaks to the uh amount of access that is really going to rationalized, probably be on the conversations we have today. Two ter mata, google, amazon, oogly on. And this is, well, so certainly a good freak.

Correct me from working in rch months. We want more companies to go public and have that discipline of being a public company. This was the big critique of this quiet era of companies taking ten, twelve, fourteen years ago, public. This is gonna A A shrink for these entrepreneurs have to fight out in the public market under scrutiny. Correction month.

hundred percent. I think like the Chris hong letter, uh, I think that there are a lot of vcs on boards of companies who would love to say the equivalent thing to their .

private company. And and part .

of the the dynamics as as reber just said, because it's such a power law, people believe that. You being with other VS are really important IT turns out that most of these VS abandoned their role on these boards and don't hold people accountable because they are really affect their deal with. And the problem is it's a negative reflective loop is.

But so these companies do poorly. And then as a result, their view is not an effective of board member. And so the next deal they get is a poor and poor quality.

So the highly correlated portfolios and silicon valley are the ones that will get torched because most of those companies will receive very poor or no advice. And the few that will get to the end is because they have hard noise, people on the board that will force them to make really hard decisions. Yeah.

that's sex. Any thought here on the public markets' ing?

And by the way, to koa, who has had exceptional returns, has always been known to be hard most. You know a lot of people that critique against zoia from founders would be that, oh, if I takes a koa's money, they may fire me. What yeah because if you're not good, it's the the mission of the business is bigger than eurabia to be the CEO. And so you know you have to remember, like there is no free lunch. We were not giving out free .

money here for you can swang one direction too far. They used the tradition silk values to be, you always replaced the CEO, the founders, with the national C. E. O, uh, and google being the turning point there, or maybe the last one, and then I became founders, will control their companies with super voting shares forever. Hopefully the pencil em now swings to some equal liberum sex.

What are you seeing in private markets? Start up process for surplus elites is going away.

Management .

classes under pressure.

That's pressure.

If you went woke, you may go broke because you have no markable skills.

I think.

Oh, jackie, the joke like jackie E A joke man. Mark hading, you got a little nose alright for the certain of science. David freeburg and also the executive producer have all in summer twenty twenty three and the rain man himself, chess master and champion David sax, as well as the dictator going to go on a little road trip.

Aren't we? Dictator, a little road trip. The dictator in jack out could be fun. I am the world's greatest moderator who couldn't control the panel today. I'll Better next week.

byebye.

Rainman give.

We open sources to the fans and .

they just got .

crazy with.

You should all just get a room, just have one big, huge or because.

how?

To release b .

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