Summary E130: DeSantis's Twitter Spaces, debt ceiling, Nvidia rips, state of VC, startup failure & more - YouTube (Youtube) www.youtube.com
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Speaker 0 Look at John Quincy Adams here.
Speaker 1 Yeah. Hey, hey, Quincy. How are you doing?
Speaker 0 Out air. What's that hair.
Speaker 2 Quincy Adams needed a week to achieve this look.
Speaker 0 He did He did.
Speaker 2 I did it all. Natural all.
Speaker 0 I mean, it's a lot. It's a it's a look. Your likes. Some movie start from the 19 seventies who's still working. Do me a favor.
Speaker 0 Pull up a picture of Great Carter for a second and then put that side by side with Sa. Let's see. To see Zoom in on that. Fact, this is where you're headed by You're headed to crazy town. This is where you're headed.
Speaker 0 You can just poof it out on the sides. And you
Speaker 3 get a little roof swoop on the top. Pricey.
Speaker 0 This is where you're headed. Eccentric stacks. Pull up a picture of Steve Bannon hair.
Speaker 3 He's a wise statesman.
Speaker 0 I think this is what happens. When you get too close to power, you get more eccentric with your hair. A so like too much power equals crazy hair. Now, look, this is my theory great carter or too much power vanity fair. He went hair crazy.
Speaker 0 Now you look at Bannon, you get me a bannon photo here. You start to see. They go longer. They go w, they just... They get volume and they're just, like, fuck.
Speaker 0 I'm just I'm not gonna cut it. I'm gonna let it go wild. And of course, the the old... I mean, he's the pen ultimate, but you look at Trump's hair, this is where it gets truly crazy. This is where your head at sa.
Speaker 0 You keep getting this close to power This is where her hair. I'm so glad this podcast never broke up? Because where would we get this amazing insight from
Speaker 3 Jay cal if not for... Keeping this all together. Makes it all worth it.
Speaker 0 It's Very true. It is true. You get like eccentric and you get crazy here. This is man get too close to power. And the hair gets wild.
Speaker 0 Unchecked power, unchecked hair.
Speaker 3 We had a good meeting last night?
Speaker 0 We had an all in summit meeting. I Free Give me a call. Let's catch up on the stuff. He's like, oh I'm in the bath right now at my candles. And I'm like, yeah.
Speaker 0 Okay. Whatever. That's cool. He's like, no, No. And he presses the video button.
Speaker 0 And then I'm exposed. I kid you not to the most bubbles I've ever seen in a bubble bath.
Speaker 3 I like bubbles.
Speaker 0 And he is peeking his head out. From over the bubbles. And he's like, look,
Speaker 2 which had...
Speaker 0 Exactly and he flips. He would lift the camera around. And I got his toes pointing out, and I kid you're not there's 6 candles around the bathtub. I'm like, this is like the prince of panic attacks. He had to come down for his phone call with me.
Speaker 0 But So now when he has a phone call with me, it's so intense, and everything's getting so intense with the summit that he has to do self care.
Speaker 3 Yeah. I to be emotion, emotionally ready. He's self caring.
Speaker 2 Your wife wasn't anywhere to be found to suits you in the bathtub of the candles?
Speaker 3 I take a bath every night.
Speaker 2 Who are your roman ama? Yourself or what?
Speaker 0 Yeah. I think it was romantic the spreadsheet with the profit life of all in
Speaker 3 I've about 18 minutes of self care every day.
Speaker 0 18 seconds a minute. Alright. Let's get the show started in. 3, 2. What your winner ride.
Speaker 0 Rain man David Sack and open Hey, everybody. Welcome to episode. Hundred 30 maybe of the all in podcast we're still here. Cook it with oil. With me, of course, the dictator himself, Cha, Pal, principal is axel in science, the queen of Quinoa, David Freed and The power broker, himself, the emperor, to have been sacks.
Speaker 0 The emperor, of his new Republic. Anybody have any interest anything going on interesting this week, any interesting moments for people on the national stage No? Okay. Let's get right intros!(3 docket. First around the docket, Ron Des, governor Ron Des announced his bid on the Internet.
Speaker 0 On something called Twitter spaces. And it looks like almost 10000000 viewers have seen it so far, across all the different spaces. And Donald Trump wasn't too pleased. He said Rob, my Big red button is bigger, better stronger and it's working Truth Because When Elon Fired Up The Twitter Spaces, He went To 650000 Viewers In under 5 minutes And Truth then blew up everybody's phones. My phone was melting.
Speaker 0 I could have cooked the egg on the back of it, the Twitter app crashed so many times. But then Sa with his meager following of a half million people or something, then restarted the stream, And so 15 minutes of technical sn were relieved and then there was a announcement, and I'll let you take it from their sex.
Speaker 2 You're gonna take you behind the scenes.
Speaker 0 Pick us behind the scenes. He just behind the scenes.
Speaker 3 How did they come together, sex?
Speaker 0 Oh, yeah, even better.
Speaker 2 Yeah. The way it came together is I think the Des team were interested in potentially, you know, doing something different for their announcement. He also did an appearance on Fox News afterwards and I think he did a town hall, but I think they saw an opportunity to break new ground here in terms of presidential announcements. By doing it on Twitter spaces. And so the Des campaign connected with Twitter and Elon and I agree to kinda c the space with him and he did his announcement.
Speaker 2 Now you're right. We had about 15 minutes of technical difficulties because the interest was so intense. At the time the the room crashed, it had over 700000 people in it, and there were... It crashed to so many people were trying to get in it. I think there was well over a million people trying to get in it.
Speaker 2 So you normally don't have this kind of interest. I think this is by far the biggest Twitter space. They the engineers there told me that the previous order of magnitude is more like a hundred thousand not a million. And then you combine that with the fact that Elon account has over a hundred million followers and that basically led to a new level of scale, and you guys understand that when you get to a new level of scale as a platform, there's always gonna be some
Speaker 0 Yeah.
Speaker 2 Some challenges. So... Hey, event. The engineers were there trying to figure out how do we, you know, solve this and we realize the simplest thing to do with be to restart the room. On my account instead of Elon, and then Elon joins a Coast, and we brought Santa in and it all worked perfectly at that point, the audio was pressed, we had over 300000 people in the room.
Speaker 2 There was also another room that had been set up by Mario Noel, who's like a big Twitter spaces host, and he had hundreds of thousands of people in there, and then he had live commentary from people he invited. And so this ability to fork Twitter spaces into many different rooms and each room gets to decide who they want to be, their hosts and their speakers, allows you to do live commentary and in a way that you can never have done before. So it was really innovative, I think.
Speaker 0 Super innovative and from who don't know. Twitter spaces was... Really a rushed job at Twitter. They did that in reaction to Club house. They...
Speaker 0 It's just it's still basically a beta product that pre dates Elon being there. And it doesn't have yet the infrastructure or scale of the code base, I don't think like Youtube and Twitch dude, which, you know, have been working on this problem for I don't know. 15 years. Maybe the live products observations.
Speaker 1 Yeah. Go ahead. The first is I thought DeSantis's did a really good job. Just rolling with the punches. Okay.
Speaker 1 Because I think whether he wins, you're not gonna look back on this moment as the defining moment of the campaign nor whether he loses will you say that this was where it was at all the beginning of the end. Back Instead, what this was was a really seminal moment, I think in further divorcing... Ourselves away from the mainstream media. And you know that it was that important because Biden tried to troll the whole thing, Nick, you can show this link. This link works, and I actually think this is a really terrible idea by the Biden team.
Speaker 1 Because never we're basically acknowledges how important the moment was. And the fact that even the president of the United States was grinding the link and couldn't get in because there was so much interest is really important. And I think what it speaks to is the fact that we are now showing cr that you don't need to listen to 4 channels to shape your consciousness. And you can just go straight to the source and what Sa said is right. If you now have a moderated forum, that then gets put out to 50 or 60 different Twitter spaces all at the same time framing and re framing, it gives people a chance to come to their own conclusion in a totally unique way.
Speaker 1 So I think it was really, really an important moment for citizen journalism and podcasting and audio formats and all of the things that I think we've been a small part of, but I think that It's really must have tilted the mainstream media and it tilted the establishment and you can see that in Biden tweet. Yeah. Going direct.
Speaker 2 Yeah.
Speaker 1 So that was the first thing. Second thing. I think DeSantis's did a really decent job in enrolling with the whole thing and being... So super cool and just being committed to the process. And I think that says a lot about him as well, which was again, it's a question Mark, and I've said this before.
Speaker 1 The big money guys got close and then took a step back. So this could be a very good moment for them to reevaluate because I thought he did a very good job.
Speaker 2 So I agree. So, you know, I was there, I was live I was seeing what was happening behind the scenes. When Des came on after we, you know, had 50 minutes of technical difficulties. There wasn't a hint of anger. There wasn't a trace of irritation.
Speaker 2 There wasn't any freaking out that we were potentially ruining his presidential announcement, The guy was completely calm. And more than that, he was in good spirits. I mean, if you listen to the recording, You know, he's happy. He's...
Speaker 1 Tone was great.
Speaker 2 Telling was really good. I mean, and then, of course, it was very substantive. He spoke in a very articulate way about all the issues. When Congressman Thomas Mas came on to make a comment or question, he was telling a kind of amusing anecdote about when they were in Congress together. And Massey was 1 of the only members of Congress who had a Tesla, but he comes from Kentucky.
Speaker 2 So I think his license plates that Kentucky Cole on it. K Cole. So anyway, you know, the guy was in good spirits. And so I think it does say a lot about what he would be like as a president, Cool under fire, doesn't get thrown an office game, you know, again, not an angry guy, you know, which I think will be a real contrast with, let's say some of the other people in the race, You know, Trump was sort of angrily truth thing during the whole thing. You know?
Speaker 2 So I think it was a pretty strong...
Speaker 0 The Act of posting to truth social.
Speaker 2 Exactly. So the contrast between the personalities could not have been stronger. Now, to the other point, the t mouth about the traditional media You're right about what they were saying. If you look at that, the headlines this morning from traditional media outlets that really started, Within minutes of the the technical difficulties, the New York Times called the announcement of Fiasco, Nbc news called it a meltdown, Po political called it horrendous. And, you know, why?
Speaker 2 I mean, if you...
Speaker 0 You wanna call that? Winning. I mean... If they are losing their cool, that's clearly they feel threatened by the fact that a major presidential candidate chose to go directly,
Speaker 1 or even journal. The Wall street journal headline is Looks to rebound after bot Twitter announcement. But again, what they failed to acknowledge is, and I'm not a DeSantis. A support per s. I'm open minded to him, but I haven't decided 1 way or the other, but this is a guy that managed to get millions of people in a nano second the To be activated to hear what he had to say, that is different than basically giving talking points and having circuits, b through Fox or Cnbc or Cnn to hundreds of thousands of people.
Speaker 1 This is a really important moment I think what happened...
Speaker 0 Okay. We've got all the positive.
Speaker 2 Just to finish that point. So if this was a a political rally, Traditional political rally that it started 20 minutes late, would anybody have said that was a disaster that happens all the time?
Speaker 0 No. It was the crashing. So that made people be like, oh, my phone crashed. You know.
Speaker 2 I was using the app. I got crashed out of the app, but I my phone did not crash.
Speaker 0 Yeah. That's what Saying The app crashed a couple of times because the
Speaker 2 your phone did not crash. Yeah. But any event, look, this was... At the end of the day, this was a an event that's... Started 20 minutes late.
Speaker 2 Once we started it... On my Twitter account in my Twitter space. It worked perfectly. There's no problem. And that's the recording that you can go on Twitter now and listen to, We had about 300000 people come in my Twitter space.
Speaker 2 I think Mario had a couple hundred thousand. But if you look at the numbers today, There's already 10000000 views. Yep. For this thing.
Speaker 0 By the way that's exactly what I predicted. 3 to 10000000 on the replay. And that's what you have to look as replay because the world has moved to asynchronous. Like, this was 03:00 in the afternoon in Silicon Valley in 6 or o'clock.
Speaker 1 Sorry when was up in the afternoon
Speaker 0 in the afternoon.
Speaker 2 You have a historical over reaction by the nutritional media. Don't like a, that Elon is dis then by letting Yep. The politicians go direct. And then b he's restored the platform being a free speech platform. So they jumped on this, The first second they could.
Speaker 2 Yeah. Try and portrays as a disaster. But, you know, there was an article in Political. This is morning and they were asking Voters and Iowa what they think about it and they're like, what? You know?
Speaker 0 Not yet. It's an elite thing.
Speaker 2 That's not.
Speaker 0 Yes. Not even on the radar. Free, we We heard All the Positive Here. Any constructive Feedback on It Or Thoughts on it Generally?
Speaker 3 No Look. I mean, I would love to see all the political candidates engage in long form discussion like this? So that an audience can really get a sense of who they are and what they think in a direct way and uninterrupted way, And in a deeper way, sort of like the conversation we all had with Rf last week and sa it with DeSantis yesterday. And I would love for the voters who engage in that content to better understand the candidates rather than tee off of short talking points and short ads, I think 1 of the saddest commentaries on modern democracy is that you can spend a dollar to buy a vote that all of these campaigns functionally try and raise capital to go and do advertising and that the advertising creates these little 30 second sound bites that actually change people's opinions, and it's a really sad it will it they... Otherwise, they wouldn't spend the money.
Speaker 3 And I think it's a really sad state of affairs that We spend money to change people's opinions by shortening everything to a sound byte, instead of doing what maybe would have happened a long time ago, you know, we often talk about the town square. If you lived in a village with 60 people and someone was gonna run for the mayor of that village, You'd all go to the Town square. You hear that person have a debate. Have a discussion you talk with them, and that dialogue would inform your decision about who you're gonna vote for. But, you know, with 300000000 people in this country and, you know, short attention spans and jumping around from 1 thing to another There aren't a lot of great forums for any of us to really engage with candidates, particularly on the national level and make a better informed decision hearing from that person directly instead, everything it's about driving narrative and chopping things up and getting the sound bite and driving the emotional reaction.
Speaker 3 And I think 1 of the the greatest things that's happening right now that you know, could be a great benefit for this modern democracy is the sort of stuff that we've been doing on our podcast and Rf coming on board like last week and what Sa did with Twitter. And I really hope that more politicians do that and that more people engage and consume that sort of content? To make their decision and ignore the idiotic sound bites and the stupid 30 second ads and the nonsense that, you know, third parties use to try and drive narrative, So, yeah, Look, I mean, I think that's generally the positive trend that that I took away from it.
Speaker 1 Jake Ka.
Speaker 0 I have some notes for Sa. I'm always... You know, careful not to be too critical you, in the moment because I don't... People will weapon them and say, oh, Jason said this because,
Speaker 3 you know,
Speaker 0 it's Elon and he's team Elon or He's friends with Sa. But I think everything said so far, this tweak the media, a great start. The thing that I think was there were probably 1 or 2 misses this here that I think you can build on Sa since you were very involved in the campaign. With DeSantis. I think it wasn't the free for all that Elon had said it would have been Right?
Speaker 0 So he pitched it as like, hey, this is gonna be uncensored and everybody's gonna get to ask hard questions, and that didn't happen. And, you know, I think that. Is in stark contrast to what trump did, because I was doing the media analysis of this. And so I think the follow up needs to be where he actually takes questions, not from fans, not from people who are already voting for him, But really you know, a little bit more of the con people, the people who maybe are voting for Trump, the people who are maybe in the Biden camp. And that's what was the master stroke of Trump's, cnn town hall.
Speaker 0 He went into the, you know, the lion's then or what most people perceive was gonna be the lion's then, and he took on all come. He fought hard and that 1 was I think a bigger win. I don't think DeSantis's.
Speaker 2 That was not a presidential. Now. Spent. So just to be clear.
Speaker 0 Course. Yes.
Speaker 2 This was a launch event declaring that he's running.
Speaker 0 So in that context.
Speaker 2 Yeah. So you wanna compare it, to what these things usually are, which is a guy standing at a podium. Yes. In front of his supporters. Compared to that, this was much more interesting dynamic and engaging Agree with you that at some point he's gonna step into the Lion's den, do a town hall on a place like Cnn, and I think he probably will.
Speaker 2 Fred. I think he... Yeah. I think he did a town hall.
Speaker 0 We're here.
Speaker 2 I think he actually did a town all in Florida later that night. So, yeah, I I agree with you. It just wasn't that kind of event. Now, to the point about involving more people, you know, 1 of the things I learned hosting this thing. Is there a literally thousands people raising their hands?
Speaker 0 Yes. You can't sort that...
Speaker 2 Scrolling... Through this in real time in the app. I wanted to call them more people, But it was just... There's no way to do it.
Speaker 0 This is something at scale They need to add to the interface, which is. Maybe pre populating a list sorting it by the number of followers whatever. And this is my second point About this. So I agree with you. As an announcement, this was Light speed ahead as like a full court you know, like Sharp elbow blood thing.
Speaker 0 It didn't hit that note. But it can and that's why I think the follow, you know, having if DeSantis to come here and have, like, a 2 hour discussion we kinda get into a little more. That would be I think really good for him. Because I think he's got the potential to win over moderates. And I don't think this 1 over moderates.
Speaker 0 Didn't win over anybody who was in, you know, the left or in, you know, moderate left. And that was 1 of things I noticed. Is my second point about it is, what a great group of listeners. If you look at who showed up to listen, Bill Act, Michael Dell you know
Speaker 1 you... No. You source by your followers. So...
Speaker 0 But I think it sorts it by the number of followers to have.
Speaker 1 It sorts by your... Followers who then have the most followers. So you're gonna see... It's a bit of a echo chamber that way.
Speaker 0 Just feature. Okay. Sure. But they were still very prominent people,
Speaker 1 In Yeah because prominent people follow you.
Speaker 0 Okay. But They weren't Coming to Follow me, They were coming to Listen to this. My point is Still The same. Michael Bill Coming So...
Speaker 1 But that's why you saw them because They're your followers.
Speaker 0 I We All understand That. They still Showed Up for This in the middle of the day. I think That Is really interesting and that... Yeah. Yeah.
Speaker 0 That's... Yeah... That's all my point. It's really interesting That powerful people showed up for full stop. Sa.
Speaker 0 I have
Speaker 1 a question for you. Sorry, Jason, whatever you're done?
Speaker 0 And then I just had a couple of other ones. Elon was a bit under underutilized in this format, and that's, you know, challenge when you have Elon in the room because people want to ask Elon questions. So this is something I think he's gonna have to, you know, contend with. People wanted to hear El elon asked questions, then the people who are... We're asking the questions wanted to ask you elon question.
Speaker 0 So you do get like a little bit of how to utilize Elon in this format I heard a lot of back channel from important people. Like, I wanted to Elon ask a question or maybe the 2 of them get into it. So for a follow up 1, getting some people you know, who Maybe don't traditionally get to ask questions because let's face it in traditional media. The only people get to ask questions are these anchors on news channels. I wanna hear Michael Dow or Bill Act ask a question.
Speaker 0 That's the opportunity in Twitter spaces, maybe letting Elon ask a tough question then a follow or, you know, like we did here with Rf.
Speaker 2 I would totally open to that. I just couldn't manage it. There was just so many people in the room. I didn't see Act actually. I mean, Totally believe he was there.
Speaker 2 But I didn't see
Speaker 0 Only people Had Use. You're a major donor and you stack the deck was The most cynical version of it With Like 5 people who were just super offensive, But this is launch party. So I think in that context, Senator
Speaker 2 I I would've called on Bill Act if I known he wanted to speak, but I can't see whether he raised his hand.
Speaker 1 No. I can't
Speaker 2 see him in the room. So why I just do Paul Bill Black and he's like, guys, I don't wanna talk. I don't wanna put him in that spot.
Speaker 3 Can we
Speaker 0 get him on this pod so
Speaker 3 we can grill them about abortion in fiscal policy? Not.
Speaker 1 Who Bill Act?
Speaker 2 I don't know. Look. I don't speak for the campaign, but I can put in the request.
Speaker 0 Whoa whoa whoa. Put a hundred 50 dimes and get
Speaker 1 them on. Hold on. Can you can you tell us the actual tiktok of how this whole thing came to be?
Speaker 2 The campaign within the last week or 2. Had the idea of should we explore doing it on Twitter spaces? And I think they were open to doing it and
Speaker 0 Sa didn't know about it. When I put it in our group chats, Sex was like, he is. Yeah. You found out about it.
Speaker 2 Has been.
Speaker 3 He's joking. I thought
Speaker 0 you didn't go. No. Sometimes Elon will just tweet something without telling anybody. I just go directly.
Speaker 2 I mean, I helped... Look, the DeSantis's people reached out to Elon and Twitter. They also reached out to me about it and we discussed it. And they were excited breaking your ground to swing different. And I think that is deserve credit for that.
Speaker 1 Can I ask a follow, question? To just on the DeSantis's thing himself because you've seen them up close. Do you know why Sc Griffin Pet fry, stepped in, took a half step back, and do you know what it's gonna take for them to just lean in and just make this effect to complete so that he's really well finance, to be trump...
Speaker 2 I don't know what their issues are. But I did see... III don't know this... What's the name pet Fry or whatever.
Speaker 1 Yeah. Yeah.
Speaker 2 I don't I don't know him, but I did see a press article and he was referencing book banning. So that to me to show that he was buying into some, you know, crazy left wing narrative.
Speaker 0 That was the best part.
Speaker 2 Of. I asked the about that. So by the way, for people
Speaker 0 1 thing that was new news for a lot of people was the book banning Can you explain the issue and the spin and the clarification on book banning in Florida?
Speaker 2 It's very simple. They haven't banned any book. In Florida. Okay. The question is what books are taught in the curriculum.
Speaker 2 And what's in the school library? And some of these books were positively porn demographic. I mean, they had so on. Santa on an event where somebody was actually reading, what was in these books and the mere reading of was in the books actually got labeled on social media by the algorithms. So there was a lot of stuff that's is not appropriate for kids.
Speaker 2 No 1 is restricting your ability to buy or read whatever books you want in the State of Florida is ridiculous. There's a legitimate question about what's in the curriculum. By the way, I remember when we had debates on campus about... This is back a long time ago, like, the late eighties, early nineties when they were throwing dead white males out of the curriculum. You know, Plato Aristotle, Shakespeare, people like that.
Speaker 2 The people on the right who were opposing that never made the argument that this was censorship, everybody understands that when you're dealing with a curriculum, you have to make choices. You can't teach everything. So the question is what are you gonna limit it to? And I think that when people actually dug into some of these books, they realize that they're not appropriate. So they event his answer was along those lines that, you know, you should go listen to it for yourself.
Speaker 2 But I think that he did address that issue. I think he's kind of exposed it as a you know, left media narrative. And I think he d it. And I think that was helpful, because I think there are a lot of centrist who all they've heard about Des is that he's banning books or, you know, or the Disney issue which we also asked them about and you would cover that. I think So...
Speaker 3 Yeah. The...
Speaker 2 Yeah. We talked about some of these controversies.
Speaker 0 The issue here, just to summarize, it is, The left is framing the Banning quote unquote, But just the Not inclusion Of certain books, which are graphic that Have Sex in Them from certain age groups in schools as part of a curriculum. So they're saying these books are banned in Florida. The more accurate way to say it is, These books are not being used in curriculum you know, for these age groups. Parents if they want to buy them can buy them, and then can read them. So this is where this conversation is kind of breaking down And I think is a complete waste of time.
Speaker 0 All parents want control over at what age or what stuff their kids are exposed to. And so there is a thoughtful discussion to be had there, and maybe the discussion is this is something should decide. Right.
Speaker 2 Well... Yeah, of course, but it's only gonna come station is a hoax. It's a it's a fake media narrative they're trying to pin on him. And Des has been the the subject in victim, Of these types of fake media which are deliberate, the media is not trying to have a conversation. They're trying to disqualify the guy, and they did this.
Speaker 2 This goes all way back to Covid. When he opposed lockdown downs and kept schools open, and they called him death DeSantis's. So the media has had an in for this guy since the beginning because he refuses to go along with their narratives on things. This the same reason they hey Elon is Elon is defying their narrative control. So you plug you put these 2 guys together.
Speaker 2 Okay? Hold on. Even before the technical difficulties, let's be clear. The media heads were exploding. That Des and El elon we're gonna be in the room together, look at the Vanity Fair article.
Speaker 2 The headline was Des announcement with Elon because David Duke wasn't available. Okay. The Atlantic was saying that this whole Twitter space was a hate group. I mean, literally, so these people were losing their minds before... We even got into the technical difficulties and then they pounce on that that there was a 20 minute delay.
Speaker 2 They pounce on that as some sort of fiasco which it was.
Speaker 1 Will Des? Cut spending and cutter taxes?
Speaker 3 We cut spending.
Speaker 2 We didn't get into that. So...
Speaker 3 You have you ever had a conversation with him about balancing the budget and federal debt. Do you
Speaker 1 know his position on cutting like, long term capital gains and tax
Speaker 0 position on that? I can't.
Speaker 2 Bit Let me give you the the elevator pitch. I mean, the nutshell for Des as he calls at the Florida blueprint. He's saying, look at what we've done in Florida. Look at what we've we achieved at Florida. Let's take Florida nationwide.
Speaker 2 Florida has had a great economy. Florida A 0 budget 0 no. Because I don't... That's a... State that's case.
Speaker 1 You... If you have 0 times, you have my vote.
Speaker 3 The rail the dictator has...
Speaker 0 Spoken. And people wanna to look up this issue, there's a book called gender queer and There's a story about in the New York Times. And it's, you know it's a graphic novel about coming of age folk for a non binary person, which is fine. Great. But it's it's very graphic.
Speaker 0 It's a graphic graphic novel. It has explicit scenes for And these kind of books, most parents would say, I would like to wait when my trial
Speaker 1 is normal on cutting my tat to (0. Okay.
Speaker 0 There you go.
Speaker 1 It's... Called the gonna decided just to it. Come on, guys.
Speaker 0 Overall, great job and, yeah, get him on the pod here and we'll have a great discussion with him. Jobs Sa. Yeah.
Speaker 3 Great job. Please invite him to to our pod. I think you know, we each have our own issue. We'd love...
Speaker 0 Else, we're just gonna go with the other republican candidates, Nikki. And around proud.
Speaker 3 We're also start voting for... Yes. I don't know.
Speaker 2 Kids I mean, Alright. Well, thanks guys. Yeah. Look. Be great to nikki haley.
Speaker 3 That's no. That's. Just say no
Speaker 2 No No. I'm gonna put in the ass to the for sure. Alright.
Speaker 0 Well, that's great. Yeah. It would be great. People wanna hear for more folks. So a lot of other news going on?
Speaker 0 I think a good place for us to go to next? Maybe do we wanna do the debt ceiling, defense spending or nvidia
Speaker 3 Those go together in my opinion.
Speaker 0 Okay. Great. We'll go with the assault of science Us debt ceiling is at 31400000000000.0 currently. Treasury department recently won in the federal government. Could be unable to pay its bills as soon as June first Fit.
Speaker 0 The Us credit rating, which is the highest rank of aaa a on negative watch So negative watch means it's trending towards bad and that it's imminent that they might lower it due to this debt limit, deadline. It seems like we're not making much progress every couple of days. We seem to swing 1 way or the other, the stock market has kind of shrugged it off. And the last time the Us credit was downgraded it was in 20 11, but we avoided that? Sham, what's going on here?
Speaker 0 What do you think the eventual outcome in Is there a chance that these knuckle heads who represent are going to default and cause gas? Or do you think this is all K Theatre and we're gonna wind up in the same place, which is they raise it and make some modest concessions.
Speaker 1 08/05/2011. The Sap downgraded the United States from Aaa to aa plus. You know what happened? Absolutely fucking nothing.
Speaker 0 Okay.
Speaker 1 So I do think that this is another opportunity for... The little red riding hoods to get their panties at a bunch. But these downgrade don't need much
Speaker 2 of it there. He don't free.
Speaker 0 In a second. Is that Biden?
Speaker 1 I think that these third party credit rating agencies are not particularly that accurate and sophisticated. They don't know anything that you don't know. They're not getting access to...
Speaker 2 Moody's gave S a rating the week before it went to receivers ship.
Speaker 1 This is my exact. Well done. This is my exact point, none of these companies know what they're doing. These companies are in the business of putting a letter on a document and then selling access to that document. So if you're gonna trust these guys to know what they're saying, either right or wrong, independent of what side you are outsourcing your decision making to the wrong body.
Speaker 1 So whether it's S and P Fit fisher Moody's, I would tell you to ignore it and come to your own conclusion. I think that this budget sealing thing is happening now every couple of years. And it seems like the real thing we should be talking about is whether Biden is gonna use the fourteenth amendment and just ram a budget through. And
Speaker 0 I explain
Speaker 1 if that's... Yeah. So under under the fourteenth amendment, the president of the United States has in their discretion, the ability to make sure that the United States can pay their debts. And that wasn't necessarily thought of as a way to work around the debt ceiling impasse. But because Congress refuses to pass any structural laws that allow The budget to ebb and flow with tax receipts, we get in caught in this situation, again, roughly every handful of years.
Speaker 1 So what Biden could do is he could say the fourteenth amendment gives me the right, I'm gonna pass a budget via executive order. From a game theory perspective, what that does is it forces Republicans to Sue Biden, take him to the Supreme court and say this is unconstitutional. The problem with that is that that probably really does tank the economy in the way that it creates enough uncertainty where capital markets frees up and liquidity just absolutely goes away. And again, liquidity has been shrinking for the last 18 months anyways. So it get even worse.
Speaker 1 So I think the Brink ship right now between Mccarthy and Biden is basically that veil threat. If Biden effectively isn't gonna to get something done, I think he's gonna test the 14 amendment. Now, if the 14 amendment turns out to be a reasonable way in order to pass a budget, the good news is, Not just for Biden, but for any future president and including Republican presidents will not have to be held hostage by Congress. They will in the eleventh hour be able to pass a budget that works. The implications of that though is that now you will not get consensus.
Speaker 1 And whatever's happening in that moment, you'll see more of. So if you have a spending president, they'll just continue to spend and if you have an austerity president, they'll continue to cut, and that'll have implications on either side.
Speaker 0 Sac you think this is over ratio of 14 amendment or do you think It's a valid use of.
Speaker 2 No. I... It's not gonna fly. I mean, it's true that the fourteenth amendment has some language about the full faith credit the Us. Shall not compromised.
Speaker 2 However, it's never been tested or or tried. So no 1 exactly knows what it means. Progressive are now saying that the language means that biden could just keep spending without the debt limit of being raised, but bind himself through cold water on this, he said that he didn't think he had that authority and even Lawrence Donald, the other night who's a big progressive on the media, he was saying that the Devs were gonna take this tact, they need to do it months ago before they started negotiating on a debt limit increase. So it's too late now. In other words, if you're gonna take that position, why would you have negotiated that you're...
Speaker 2 You you the president effectively con, So you don't have that authority when you start negotiating. So I think it's too late to invoke the fourteenth of amendment. They're gonna have to raise the debt ceiling. That being said, I think they're gonna be able to. Reuters had a report this morning that there only 70 72000000000 apart now in their positions, which is a relatively small amount.
Speaker 2 So My guess is they're gonna they're gonna work this out? Now, what should the fate of the debt limit be moving forward? I mean, the the thing that's so stupid about our budget processes is we spend the money and then argue about whether we're gonna pay the credit card bill. The way that the debt limit should work is you raise the debt before you spend it, spend Congress should have to vote first on whether they want deficit or debt spend. Then you decide how much you're gonna spend.
Speaker 2 So this thing this vote needs to be moved up before they spend it. And I think if you did that, it'd be a lot harder for the politicians to spend money because you know, if you had an up or down vote very early on saying, should we even be in deficit. I think a lot of people would say, well no we're not. And we're not in a war. So why why would you deficit spend?
Speaker 0 If we bring any thoughts in the debt ceiling, if not we'll go on to the government accountability vis a vis the defense spending?
Speaker 3 I mean, look, we're running a 2000000000000 dollar year deficit and it's forecast to continue to be at that level for several years and it's gonna take pretty radical changes and how we tax and spend to make up that gap, So, you know, this is a problem that is gonna continue and repeat and it does beg the question. You know, would you want to by bonds from an entity that's generating 4000000000000 dollars in revenue and spending 6000000000000 and has a plan to do that for the foreseeable future and it's only you know, seeing its economy or it's underlying revenue base grow by 2 percent a year. It seems like, you know, that would be a very hard start up to fund. And it would be a very difficult growth investment to make, particularly in an environment like this. So I'm just pointing out that this is a becoming a more kind of systemically risky situation for the Us that, you know, we spend the way we do and we have to keep coming back to having these debates about it as appropriate or not.
Speaker 3 And now they've narrowed down the way that the Republicans seem to be kind of going about getting this done. The deal done is they're only focusing on the you know, roughly 15 percent of the overall federal budget and they're saying well we'll comment make some tweets in in that in that little range there and save some save some pennies, save some nickel. But we've got a much more fundamental problem to deal with, which is how do we stop running these deficits and running the data up. But I mean, Sound like
Speaker 2 there's is a...
Speaker 3 I'm gonna sound like a freaking...
Speaker 2 No. I think you're
Speaker 0 clock at some. I'm just like...
Speaker 3 I... Yeah.
Speaker 2 The inflation is here and the crowding out of private investment and private borrowing is now occurring because the government borrowing is so big. I mean, art, our treasury our government debt of what 3 2000000000000, private that has to financed somehow. And all that money is going finance government instead of being put to other uses. So I think that the downsides already here, you can't run 2000000000000 dollar debt every year that's unsustainable. Now I think that you guys referenced what happened in 2011.
Speaker 2 I... That's worth just discussing for a second because it's I actually think that what was agreed to in 02:11 was excellent. Obama and the Republicans of Congress agreed to a thing called the S sequoia. Where they agree that they would freeze both defense and non defense discretionary spending until they could get their act together and agree on what the budget should look like. And so the theory was the Republicans agreed to the pain of freezing defense, Democrats agreed to the pain should of freezing non entitlement, social spending, and that's how the deal was cut.
Speaker 2 I actually think that made a lot of sense. And I think we should have kept operating under the semester until we got to a balanced budget. But the reason that broke quite frankly is because of the lobbying power of the military industrial complex is so great in both They're republican and democratic parties that they basically wanted the arrests. The defense budget.
Speaker 3 I think it's just that there's never been a degree of accountability for this... Spending that's being done because of this assumption that we'll always be able to pay our debt and we'll always be able to take on more debt. And I think that you see The other conversation, the other topic that we were gonna talk about was this lack of accountability and defense spending that know, we should play the John Stewart clip, you know, where... I think it... Who does he interview the under secretary of defense or something.
Speaker 3 What is Her Title?
Speaker 0 Deputy Secretary of Defense Kathleen Hicks Was Discussing The Defense Budget.
Speaker 4 When I see a State Department Get... A certain amount of money and a military budget be 10 times that. And I see a struggle within government to get people like more basic services. I mean, we got out of 20 years of war and the Pentagon got a 50000000000 dollar raise. Like that's shocking to me.
Speaker 4 Now, I may not understand exactly the ins and outs and and the incredible magic of an audit. But I'm a human being who lives on the earth and can't figure out how 8 50000000000 dollars to a department means that the rank and file still have to be on food stamps. Like to me, that's fucking corruption. I'm sorry.
Speaker 0 And then there was a story that came out this week, according to Bloomberg, the government accountability office disclosed that the pentagon is currently unable to account for hundreds of thousands of spare parts for the F 35 jets.
Speaker 2 Pentagon on never past.
Speaker 3 Pentagon never passed an audit it, and it's accepted. Currently and it's acceptable in the same way that it's acceptable to never balance the budget to always spend and give everyone what they want. And to find ourselves in you this kind of late stage problem where we've gotten away with it for so long that both of those factors, whether it's the downgrade on the rating, whether it's the fact that we end up in these battles over whether to raise the debt, sealing every couple of years or whether we can't pass an audit. All of these factors are symptoms of the same underlying problem, which is that there is no accountability for, you know, how we operate the, you know, the kind of fiscal condition of the the federal government.
Speaker 2 You know, the other thing it leads to is all these optional wars. So let me give you an example. So all of these wars are always off
Speaker 3 they're they're all free.
Speaker 2 Yeah. They're all off book. Sorry take you Ukraine. We've appropriated what, a hundred and 30000000000. That's not...
Speaker 2 Part of the defense budget. We have 8 or a billion in the defense budget, but then we just stack the 100000000000 or so for ukraine on top of that. And it's off book, Now if we said, the reason we're funding Ukraine is because it improves the national defense the United States, why wouldn't that just come out of the defense budget? If you force people to make actual choices, actual decisions, and they could say, okay, we could spend a hundred billion on Ukraine or we could spend a hundred billion on stock, tanks or f 30 fives or whatever for the United States, now you actually force some prioritization decisions. But because the wars are always off book, They're just additive.
Speaker 2 You just tack them on. And we did that with in Afghanistan, We did that in iraq. We spent something like 8000000000000 dollars, and that was just added to the national debt.
Speaker 0 Yeah. We can't afford these anymore. It's becoming clear to everybody that there has to be some accountability. And Cha, I guess is... Seems like there's a couple of unpopular stance to take when you're running for office.
Speaker 0 1 of them is social security, retirement age as we saw in other countries like France where people are arguing over 62, 64 years old, whatever it is. Yeah. And so these entitlements, job requirements, if you wanna get unemployment, then, of course, defense spending, you seem uni american. If you don't wanna take care of old people, you seem uni american and, you know, week if you don't wanna support, the government is there a path towards celebrating an administrator as Ceo, an executive who tells honest truth to the American people, which is, hey, we've been on a binge. We've been going on vacation.
Speaker 0 Nobody's is looking at the bills And we need to have a stay occasion. We need to cut costs. We need some austerity here. Is there a path for somebody, Ron des, Chris Christie, Rf whoever it is to win over the American public to win over moderates with an austerity and balance the budget message or is it just too unpopular to even bring that up?
Speaker 1 I just think that you guys don't psychologically understand how to get what you want. I think the best way to get what you want, which I would want to, which is a healthy economy where there's accountability for spending is to not look at expenses, and all of this talk is always about expenses, but to look at revenue and limit revenue more drastically And I think the best way to limit revenue dramatically at the federal and state level is to just minimize taxation as much as possible. And I think that is something that Democrats and Republicans have a hard time fighting. Nobody wants to raise their hand and say, I want new taxes. Nobody says them.
Speaker 1 Right? And I think that if you attach that to some sort of spending guidelines, like what David says with the sensible foreign policy, You just end up spending a lot less. You wanna fight a foreign war. Okay. Great.
Speaker 1 Well, you know what, It's part of the existing budget. Let's go figure out why we wanna do it. We want to have more accountability in defense spending. Okay, Well, look, the defense budget is a half of what it used to be because we just have half the revenue. I think that if you start to go and talk about austerity and cutting social security and healthcare care benefits, it's literally a non starter, people close their eyes, they plug their ears and you get nowhere.
Speaker 1 Now, separately, I think the step even 4 you look at taxation, so minimizing government revenue is to figure out how to refinance. So if you're are a homeowner or and you got a mortgage in the eighties, you were paying 12 percent 14 percent, 15, 16 percent. If when rates kept going down, you were the people around you didn't have the common sense to refinance that. That was negligence. Similarly, we're in a position today to refinance our debt wall and push out these mat past the hundred plus years.
Speaker 1 We are the only country that has a viable, stable economy that looks like it can still continue to thrive at scale. Take advantage of that, you lose nothing by giving us the optional, generating some hundred year debt, ref financing a bunch of this short term stuff. And then second, inflation helps us. And it helps us because it allows us to inflate the value of these dollars that allows us to pay off our short term maturity. So...
Speaker 1 These are 2 practical, simple things that are un that should happen today. And then separately, I think you need to look at minimizing revenue, and then you can cut expenses. But if you flip them around, I'm just telling you, It's not like I want any of this to happen, but I'm telling you nothing will change and you guys will still be crying wolf. In 5 years, it'll still be the same. It'll just be a different debt to Gdp number that gives you anxiety.
Speaker 0 Speaking of anxiety, free about your response.
Speaker 3 I don't agree. I think we need to balance the budget. And I think that if we don't, we you
Speaker 1 agree with? Financing, pushing out hundred here?
Speaker 3 No No. I don't have... Reducing revenue solves the problem. I think that. And by the way, 1 of the problems with the democracy Chu up is that you speak about it as if everyone, Benefits from a tax cut.
Speaker 3 Generally, there's some disproportionate benefit to a tax cut, and that's why it's less likely to happen because the majority will benefit by keeping taxes high for a minority, whether that's some corporate minority or whether it's wealthy individual minority. And that's why I think the opposite is more likely to happen, which is we're more likely to see taxes go up, in order to bridge the gap to continue to fund programs that everyone wants to... Everyone wants an am, they don't want an or. And as a result, they'll kind of continue to seek revenue because there are other places to get revenue that don't affect me, meaning it doesn't affect the majority. And I don't mean me personally, I'm just speaking about a voter, and a voter would say, if there's a way to tax other people don't for me to get the things I want.
Speaker 3 They will vote yes for that. And that's ultimately what the system ends up finding. And I think that's what's more likely to end up happening.
Speaker 1 That's all facts.
Speaker 2 Yeah. Look, I mean, I I agree with part of both what you're saying, which is... I agree with That we need to balance the budget. There's no excuse for running peace time deaf just this large, we're really gonna regret this 1 day. On the other hand, I agree with Mouth that if you just try to solve the problem by raising taxes the politicians will just keep spending.
Speaker 2 I mean, you have to starve with the beast, I think in order to control it. But at least that's been a view, I think for a long time.
Speaker 3 The you you're agree to math on that point.
Speaker 2 Here's the thing. You cannot solve this problem by raising up to 70 percent tax rates like we had in the seventies and I can prove it. Pull up this chart.
Speaker 3 France is a good example of this too.
Speaker 2 So what you see in this chart here is this is federal c percentage of Gdp. What I see when I eyeball this is if you were to put a regression line on that, it'd be at around 17 percent with a plus or minus of 2 percent. And the times when you get up to 19 percent. Or a little bit close to 20 percent or where we have great economic conditions or money printing. So the Clinton era from was a 92 to 2000 was an economic boom.
Speaker 2 And we got up to almost 20 percent. But we've never ever been able to get more than 20 percent of Gdp and federal tax seats even during the 19 seventies when the top marginal rate was 70 percent.
Speaker 3 What happens?
Speaker 0 Yeah. Why is that? People
Speaker 1 doing economic activity It curtail investment and economic activity. This is that's
Speaker 0 what I that was hundreds of years. Taxation doesn't solve this problem.
Speaker 3 I don't disagree. The disagree degree. I just I
Speaker 2 only get so much blood from a stone and the reality is is that when you try to... Tax rich people in a way. They spend a lot more on lawyers and accountants to figure out how to structure their ignorant in the way that Yeah Or they you.
Speaker 0 Or they tap out? You know, like, if you're paying 50 60 percent taxes like, what's the incentive to go to work? And if you're sitting on a big nut, you can just be like, no know. I'll just... Just enjoy my life a little bit more because each incremental dollar 50 60 percent going to taxes, and then I have to pay my team and you just sort of
Speaker 3 get through returns. I I asked a question on Twitter, you know, could we all talked in our group chat about the the concept of passing a balance budget amendment, which would be an amendment to the Us constitution that says, the Congress has an obligation and the the executive branch has an obligation to generate a a budget surplus. You you know, every every year. And you could have a balanced budget amendment that provides certain exemptions to this like in a year of of war for example, where Congress declares an emergency or declare the war. And in those cases theoretically, like, if there's some sort of emergency that we have to address and and and over fund.
Speaker 3 You can kinda resolve to this. But man, I'd so mike...
Speaker 2 But we know we've been we've been at war. To for something like 2 out of every 3 years since the cold war ended.
Speaker 0 How many of those war Sachs were voted on by Congress is the other issue? You know?
Speaker 2 Well, what happened is we did... The the authorization for the use of force, I think it goes all the way back to... Was it like 2001? Whereas basically, we declare a war on tourism in response to 09:11, and they use that authorization to go into Afghanistan which I think was understandable. Then they use that same juan to go into Iraq, then they used it to go into Syria.
Speaker 2 And only recently, only a few months ago do they actually rep reveal that use of force As a way to keep authorizing new wars. So they really should go back to Congress for every new war. But the problem is, you know, free I agree with you that we need to have a balanced budget amendment, but it's gonna contain a caveat or exception for war And Sure. We're just in at war all the time now.
Speaker 3 Sure. But I think that there's ways to create a mechanism that forces that issue to actually come from and center as opposed to being what you're arguing, which is, hey, it's always on the back burner. Therefore, it's always bubbling over and maybe you drafted it in that way. But what was surprising to me was just the incredible negative sentiment I got from so many people who were so deep have this deeply held belief that the only way to support growth in our economies through federal spending and that that has become the driver that has become the handicap of our country. It has become the handicap of our economy.
Speaker 3 It has become the handicap of our people. And that's a resides
Speaker 1 and a
Speaker 3 handicap because it means that we now have this... Instead of having an incentive to drive productivity through private commercial and economic activity through innovation, through productivity gains, through business building, it's now dependent on what we have now identified is a highly una unacceptable system of spending. And that una unacceptable system of spending ends up putting a lot of dollars into the pockets of Cro and the the pockets of folks that aren't actually driving job growth or aren't driving productivity, There are certainly programs that work, But overall, there's no level or degree of accountability that asks the question, did that program work, Did we spend a dollar and get more than a dollar back for what we spent. There's no assessment of that whether it's a war or whether it's defense spending, There's always some kind of intellectual argument that that's...
Speaker 0 Is that true? I don't
Speaker 1 think that's true. I think that... O b releases report after report saying that all of this stuff sucks and doesn't do anything. Just nobody actions.
Speaker 3 No 1 cares.
Speaker 1 Right. Yeah.
Speaker 2 You're right. You're I don't care.
Speaker 1 I think what you're saying is enact This is my point
Speaker 0 I think it's important to
Speaker 1 get the facts right. What you are saying is not true. They do do an accounting. That accounting sucks, it shows that there's tons of waste through nothing changes. So now what do you wanna do, David?
Speaker 1 Is the real question? What do you wanna do knowing that?
Speaker 3 We shouldn't spend on things that don't have a positive return. This is my point. That's why we're now in this very difficult situation.
Speaker 1 That's not happening. Now what would you like to do?
Speaker 2 Well, the reason doesn't happen is because the way that... Politics decides things. Has nothing to do with the merits of. And it has to do a
Speaker 1 special that. I agree I'm just saying. Wanna do now. Just for
Speaker 3 a second
Speaker 2 because our education system is like fundamentally betrayed the country because we just keep teaching people that's somehow the government's gonna solve all these problems. Just when really it's just a product of special interest lobbying for things. And that's why we perpetuate these programs that don't work.
Speaker 1 I think the best way to think about government spending is that in every dollar probably 15 or 20 cents that actually does some good. There's probably 15 to 20 cents, that's like on the margins breakeven. It's and then the rest of it which is half of it is wasted. That's probably roughly accurate. Right?
Speaker 1 You get things like arp which turned out to be pretty decent program. There were things like the Doe loans that, you know, got things like Tesla into the marketplace. Right? There things like the... I are right today that'll del lever ourselves and create a piece dividend because we won't need to fight over resources and oil from other countries.
Speaker 1 But the problem is that that represents a minority of the dollars. Okay, now that we know that that's true and we've known that that's true for decades. I guess, again, I'm just asking a practical question. What do you guys wanna do now? Play the ball where it lies.
Speaker 1 What do we do to today?
Speaker 3 There's are a couple things you could do First of all, 1 of the points I'd make is I think you you're probably right in your assessment that 50 cents that's what you're calling wasted that money does end up somewhere. It ends up in someone's pockets. Probably the pockets of the shareholders of some contractor or the owners. Of individuals or employee
Speaker 0 class.
Speaker 3 Well, there's also also individuals that that benefit, but functionally what's going on is it's a system of wealth transfer, and that's not necessarily bad. The question is is that there's transfer of wealth happening to the right groups that we intend to support with these social programs? Or is it not? And I think Sa point, I think we can all probably align on. It's it's not.
Speaker 3 And I think that's probably a set of standards for accountability that we should probably try and create
Speaker 0 a far. But where where
Speaker 1 does that? Where does that money end up? It ends up buying homes, feeding people, they're going to restaurants you're buying cars. Not like, there's like, a fleet of mega yachts in America. Well, I...
Speaker 1 I guess what I'm asking is, where where even that leakage of 50 percent. Doesn't that just end up in the normal economy?
Speaker 3 Yeah. It ends up supporting individuals and maybe trickle damage?
Speaker 0 Yes. And why is that so? Here is what Else?
Speaker 3 But that's what I'm saying. Is a wealth transfer. It's a system of wealth where it ends up in people's pockets. And that that system ultimately benefits a lot of people in need and a lot of people that we as a society intros!(3 to support here in the Us.
Speaker 2 I don't think it just goes to. Poor people. But that might go there's
Speaker 3 but welfare. Yes.
Speaker 2 There's a lot of much corporate welfare. I mean, come on, It... It's not all just going to needy people. It's coming to your special insurance.
Speaker 0 On some level, we can accept the inefficiency of government. I like your idea of containing, how much of the canvas they have to paint with and how how how much revenue they bring in, And I think what we have to accept is that the reason this country gets bailed out is because we have tremendous entrepreneurs. An amazing capital allocation system a very fluid market for building corporate corporations and capitalism is so vibrant here that no matter what happens, We always seem to make The Next Google Uber Nvidia, Whatever it is, Airbnb, And I can Tell you you know spending a lot time traveling, meeting with people in Japan, in Uae, etcetera. They're all looking At the massive entrepreneurial drive that we have in the United States to build global companies and how we do it over and over and over again And the only countries that seem to be able to do this at scale, you know, maybe Sweden and and some of the Nordic, obviously, China. But other countries have not figured out how to build globe corporations.
Speaker 0 And and that is what ba us out every time is.
Speaker 2 Check, the Deficit is getting so big that we can't bail off that way. Think about it. We have 2000000000000 in deficit every year. That is 2 Google's.
Speaker 0 Yeah. It's an apple
Speaker 2 spending an apple every year.
Speaker 0 We have to we have to address, but The point is that's how we have bailed ourselves out historically Is massive capital allocation and entrepreneurship.
Speaker 1 I wanna to remind you guys what happened at the end of the seventies. We had all these inflationary problems. We had all of these taxation problems where people thought all of a sudden, 70 percent tax rates were gonna solve the problem, what you guys talked about. And instead the exact opposite thing happened, which was the guy that got elected. Ronald Reagan, and I just wanna to remind you what the electoral college was between Image and jimmy Carter.
Speaker 1 4 89 to 49. Like a bigger just s, I don't think we've seen in modern Us politics to the guy that basically said enough with this, we're gonna tone it all down and we're gonna cut revenues. So I do think that people have an appetite for them. And I think...
Speaker 2 You know, the debt to Gdp in 19 80 was only 30 percent. So we just have a lot less drive.
Speaker 0 To work to do. Got a lot of work through.
Speaker 2 But let me say that this, look, Cha, I... Actually agree with what you're saying in this sense. Okay? If you look at my simple chart of federal tax receipts as percent of Gdp. Okay?
Speaker 2 The highest it's ever been. In the history of the United States is 19.75 percent in 2000 we had the dot com bubble. Okay? That's the highest it's ever been and we had periods of high tax rates and low tax rates, it never went above 20 percent. So the simple math here is you do a forecast of what do you think Gdp can be over the next year, you get independent economist to do it.
Speaker 2 And you say the federal government can't spend more than 20 percent of Gdp. Because we've never extracted that we've never figured out a way to...
Speaker 0 It's perfect.
Speaker 2 More than 20 percent.
Speaker 0 Your logic is perfect.
Speaker 2 Out of the economy.
Speaker 0 Logic is perfect there.
Speaker 1 Your aggression is so it's it's very important because what your aggression says is, we're actually spending a lot of energy, fighting over 2 to 300 basis points at any given time. Right.
Speaker 2 Yeah.
Speaker 0 And what we should be focusing on is more important.
Speaker 1 Why we doing that? Why are we spending so much time getting our panties in a bunch over 2 to
Speaker 0 300 basis points. And we need to stop wars increase our education system. Stop the wars. By the way, and inspire people to start companies and make it easy to start companies.
Speaker 1 The Bi, the Ira and the Chipset act, all 3, the biggest components in all 3 bills this is Biden signature legislation is creating energy independence for America, which will have have an enormous piece dividend, you will not fight these stupid endless wars.
Speaker 0 Every single 1 of them goes back to oil. Right? Like With the exception of...
Speaker 1 It's always about Resources.
Speaker 0 Yeah.
Speaker 1 Exactly Never Been about resources in Modern history.
Speaker 0 Well and now it's gonna be Chips Is The modern resource. Nvidia shares jumped as much as 30 after reporting good revenue guidance due to Ai demand, q1 1 revenue, 7.2 bill sent up 19 percent quarter over quarter, not year over year. Quarter over quarter. Revenue beat analyst assessments by more than 600000000 For people don't know. Nvidia is working on Gpus as opposed to Cpus, the graphic processing units, that are being leveraged in Ai And there is a massive cycle going on.
Speaker 0 There's a line out the door to buy these when you see Twitter going into Ai, Facebook, Google and obviously, Microsoft. All the cloud infrastructure is moving from Cpu to Gpu. Yes, F,
Speaker 3 Well, I mean, I was talking with the Ceo and Cfo of a major dataset Reit and they shared with me... That they're seeing more demand in the last couple of months than they've seen in the prior 10 years almost all of that data center build out demand, so they'll build data centers for software companies for internet companies, it's coming from, you know Gpu racks. And these Gpu racks are much more energy intensive, much more costly, but it's a pretty kind of significant shift underway that businesses that historically didn't even operate their own. Data centers are now building out their own data centers have their own training systems to have their own infrastructure. To be able to run Ai applications and tools.
Speaker 3 So it's it's a pretty significant shift underway all of the growth that Nvidia is projecting and highlighted in this earnings report yesterday is coming from their their data center line of products and it's a pretty significant. I mean, I know people have said they've never seen a beat like this or never seen an a guidance update like this
Speaker 0 of
Speaker 3 the scale where I think the the street was looking for maybe a 7000000000 dollar guide and on revenue for this and they they they came out and said they're gonna guide to 11000000000 dollars next quarter, which is just an insane bump. For a 90 day outlook.
Speaker 0 I was told for 1 of their major customers that they had to beg. Like ease and bag for thousands of Gpus and like, the lobbying effort. You said there's a line around the corner to buy these. And you need only use chat Or any stable diffusion, etcetera. And you see how long it takes to do generative Ai to use these products.
Speaker 0 It's like we're back to dial up modem. We're literally, we're waiting for a computer to give us an answer. When's the last time that happened that we had to sit there and wait for it to do its job. And and I think this is the great renewal for America, another amazing American company only 3 decades old. It's it's best years.
Speaker 0 It's best decades are in front of it obviously. This is gonna be a massive boom for Yeah. Not only Nvidia but for America or as I say America.
Speaker 2 Yeah. Nvidia has basically joined the trillion dollar. Club now in terms of market cap companies. It's really amazing. I mean, I'm kinda kicking myself because this was the easiest buy ever.
Speaker 2 Chad Gb launched on November t, we all saw that that immediately ushered in a whole new air in Silicon Valley. There's a ton of Vc funding that's poured into Ai startups. They all need to train models and those models need to use Gpus. So we all saw this coming and yeah I'm kind of annoyed with myself at it.
Speaker 3 Exactly Me ask... Let me ask you a question. So you say that you hate yourself obviously the general statement that, you know, Ai is coming and Nvidia gonna be a beneficiary or Nvidia products are gonna see a boom. Makes sense. Hate But when you look at the valuation of the business, they are currently trading at 70 times the next 12 months Eb.
Speaker 3 So how do you think about valuation even at a trillion dollar market cap? At a trillion dollar market, they're trading at 70 times next 12 months Eb. You know, this seems like
Speaker 0 they're doubling revenue every 6 months though, dude. They're double revenue.
Speaker 2 I I here.
Speaker 3 How high does it go? Because at a trillion dollars. What's the right Eb level for a business to be worth a trillion dollars. Is it a hundred? Right.
Speaker 3 Is it a hundred... But I mean, what's the number? And then the question is if it's a hundred billion, how many years does it take them to grow into that? And, you know, are you really paying the right price are you're paying a premium to get? You know It's it's
Speaker 1 a momentum business today? And
Speaker 0 will be determined if they have competition. So is is there a competition for this company? Come off, you'd think there's a competitor that will emerge that
Speaker 1 know I mean, it's important to understand what a Gpu is maybe. So... Sure. Intel had the run of the place for the first 40 years of compute. You Because it turned out that most of the things that we used it for Excel, Microsoft word, a browser.
Speaker 1 Operated well on a Cpu, which essentially think about it as like the factory that takes in the first order and then puts it up. First and first out. And the great thing about Gpus is that it can take multiple streams of work at the same time and work on the month the same time. Right? So it's very parallel.
Speaker 1 And it has this level of parallel. That makes it very well suited for Ai applications. I think the thing to keep in mind is that it is a byproduct of a Gpu that tries to also do other things. And so as a result of that, you're now seeing a lot of companies building their own silicon. And most importantly, all the big tech companies now have some pretty well evolved.
Speaker 1 Efforts underway. So a lot of these companies have figured out how to do custom asics that can do this massively parallel processing. And what you're now seeing is chips that are designed against specific models that are optimized for them. The other thing that you're also seeing is that some people are saying, well, you know what? For these massive models, actually, you should just run it all in memory.
Speaker 1 And so you're having folks that are doing it in in massive arrays of Fpga. That was Microsoft. First the attempt at all of this. So what is the point of me telling you this? I think that again, we talked about this last week, the biggest cheerleader leaders of this first point of value creation has really been Wall Street and family offices that wanted to front run where the value creation was gonna initially go, and they've been right, which is around chips, but there was a tweet and Nick I posted, maybe you can throw it up here that shows that if you compare this to the mobile Internet, there's always this phased approach in terms of value creation where, let's just say initially in a new market, mobile a decade ago in Ai today.
Speaker 1 The first dollar of profits tends to go to the chip companies. That makes a lot of sense. Right? Because they're are the ones that are in the bowel of making the elemental capabilities possible. And then you transition that value and what Free says is people realize, hey, hold on the profit dollars are not point to accrue there, because again, this beautiful principle of capitalism is that you can only over earn going for a certain amount of time because then competitors emerge and say, hold on, I wanna steal those profit dollars from you and take them for myself.
Speaker 1 So margins compress. Right? So In the end, Nvidia gains today will be then spread across Nvidia, Facebook will have their own Chip, Amazon will have their own Chip. Google already does. Pap will have their own chip, all the memory companies will be in this space.
Speaker 1 Right? So then the profits gets smeared their multiples compress. Then where does the value grow to the device companies in the mobile Internet? Here, I think we still have to debate what is a device company in the world of Ai? But the most important thing I think to remember is that where the real value gets accrued is 567 years later when the software and services companies show up and create a huge moat.
Speaker 1 And those are the Google in the Facebook's and the apples of the world. And so it's a really dynamic moment. I think it's wonderful for Nvidia. It's an amazing story for Jen who's been really at this game for a very long time. By the way, there's a Jensen has a law of his own that is a sort of companion to Moore's law called Wang law named after himself, which you can read about.
Speaker 1 Which just talks about the variability of the compute capabilities of Gpus versus Cpus. So if you wanna know that, he should get some credit for that. But I think it's great. I think we're in the... 1.
Speaker 0 Apple is also making their own Gpus. That's what when you hear the M 2, that has Gpus in it. So Yeah. You're absolutely correct Anyone.
Speaker 1 So we're gonna a few have a few quarters for sure of this height. Mh. And then the smart money will probably figure out where the next Lily pad is, and then they'll go to the next send.
Speaker 0 Usually send. Any other thoughts free break we wrap the up on that. I wanna just show this Ai demo from Adobe Photoshop, you know every week or so. We see something that's incredible. And this 1 was we shared in the group chat, but for those
Speaker 1 keep put this out.
Speaker 0 Yeah. So what we see here if you're listening is, you know, taking a photoshop, creating an area. And then instead of, like, cutting and paces, pasting it or refining it, you're putting in a text prompt and saying, oh, put expand the... And make this widescreen screen or let me grab this deer out of a forest and then put it on a wet alley at night. And then, you know, let me highlight this wall over here and put a sign and put a red arrow sign and It just generates it And it's doing this, they made specific note when they launch this that all of this is done with stock photography they have the complete license to.
Speaker 0 So they can monetize this without getting sued like Microsoft is currently being sued and Microsoft actually in addition to the Github lawsuit. This turns out Twitter sent a a letter. Over to Microsoft as well. So incredible demo. The producers here at all in as our production team grows Producer O'brien made a little video here.
Speaker 0 Here's chi off in before the Laura po.
Speaker 1 That's that's Tom Ford. Yeah.
Speaker 0 That's it's Tom Ford. This is When bad.
Speaker 1 But. Terrible.
Speaker 0 The hair terrible, you look tired. The watch
Speaker 1 is great. I had a that night. My god, I played Poker. Literally, I walked into that into that Cnbc
Speaker 0 straight from the poker table
Speaker 1 to that brutal
Speaker 0 to squat. Brutal. We'll Can wait. No tie. But he's wearing a title.
Speaker 1 Tom Ford. Yeah. Yeah He said that he said Mouth, try this without the without a ties. Is it, okay.
Speaker 0 Oh, yeah. You were talking to Tom Ford. Great. What a flex?
Speaker 1 You know Tom Ford Twice in my life. I can tell stories. Okay.
Speaker 0 Well, hold on a second. He... Oh so would did General Ai add make... A yellow sweater. Is the prompt here.
Speaker 0 Let's see if he goes to bert from ernie to bert. There he is. Sri lanka and Bert, As we call him in the Group.
Speaker 1 Not that.
Speaker 0 And these
Speaker 2 is quite get the borders right?
Speaker 0 Terrible. It looks like a worries, Jersey.
Speaker 2 Oh, there you go. Right
Speaker 0 Pretty bad. Yeah. Look the real cup.
Speaker 3 Yeah. Change memo was.
Speaker 0 Changed my...
Speaker 3 I think the demo was bullshit.
Speaker 0 Change his hair? Can we can we have the hair be left in sync? Less Hassan Mano and more...
Speaker 2 Given... I understand why they call you a az z's I'm sorry. I think the... You had that... Here going there.
Speaker 0 The hair. Yeah. It's a lot of lift. And what was that? But putt?
Speaker 0 What is that?
Speaker 1 Is it putt? This is like 8 years ago...
Speaker 0 What are you using Clay or Putt? What do you Yeah.
Speaker 1 It's like it's like a stiff it's like a stiff hair wax? I think it's hard of
Speaker 0 a hair wax wax. Oh got it.
Speaker 1 Yeah. I've come such a long way since now.
Speaker 0 Much more much more stylish. I mean, look at Sa as crazy hair as we had we probably didn't the cold open.
Speaker 1 My thought on the Adobe thing for what it's worth is like, I mean, do they want a mu again on this 20000000000 dollar f thing or... Do they get to see the ongoing... Revenues that Fig was generating either on you
Speaker 0 sure there Con all kinds of stuff.
Speaker 3 It's a different product though. I mean, the Ai stuff. Certainly has had an impact, but I mean, so much of the benefit of Fig, it's web based, it's collaborative. It's like, people kind of use it online to make stuff together. A little different than the other tools that they offer today.
Speaker 1 So you don't you don't think it from September to now like, it's nothing changes. They should just close this thing a 20000000000 or...
Speaker 3 Or they're half they're half baked.
Speaker 1 You think that they should pay a billion break it up and then we do the deal at 10, and then it comes on 11 v 9.
Speaker 3 Remember, not all breakup fees mean that you can break up for any reason. So there's only... There's limited outs on what you can pay a breakup fee to get out of. 1 of which could be antitrust or regulatory. But otherwise, you made...
Speaker 3 Be forced to close in court if you don't have a valid reason for terminating the deal.
Speaker 1 Their only hope is to get lean content.
Speaker 0 Yeah. So makes sense.
Speaker 2 Is your argument more that they bought Fig top of market pricing, which no longer makes sense. Or is your argument that they're innovating so well they don't need it?
Speaker 1 I think it's a little bit of both, but it's it's more that... I think this generative Ai stuff allows you to refresh. I tweeted this out So Nick, maybe you can put it up there. But I think the first and thing is that... Your feature set can catch up pretty quickly.
Speaker 1 So even if you set out a team and said just copy exactly what Fig has with a c pilot. Enabling 50 engineers, that's like 500 engineers cranking on something, I would be surprised if they couldn't just replicate the product end end. That's the first thing. Then the second thing is, I think that you've seen Vc funding basically crawl to a halt and so the question there is how many of those companies are just gonna stop spending because they're just not gonna exist. And then the third thing is if we're sort of hashtag austerity, people are going look at everything they're spending money on and try to be really...
Speaker 1 Disciplined about it. If you roll all those things together Sacks, my thought is, maybe the deal still makes sense, but does it make sense at 20000000000 and does it then just create a whole suite of shareholder lawsuits after the fact that are just gonna say these 3 things and reg the med nausea. That's a curiosity I had.
Speaker 0 Well, so we're here, let's talk a little bit about the state of Silicon Valley Sa. We were talking offline after the show last week. You've slowed down investment, at your firm craft. You're being thoughtful. You're working on the existing portfolios.
Speaker 0 How would you describe your activity so far in the first half of 20 23 as a firm if if you're so willing to Share that.
Speaker 2 My take on what's happening is silicon valley right now or tech more generally is this a tale of 2 cities. It's the best of time for Ai startups and the worst of time show everybody else. The Ai startups there's a lot of interesting things happening there and money's is being pushed at them by Vcs. It's very frothy, arguably bubbly. But then at the same time, if you're a free Ai company, maybe the 1 that raised a lot of money in a big valuation in 20 20 or 20 21, It's a pretty tough time.
Speaker 2 I don't know of any startup, especially like later stage startups ups who are hitting their numbers. Everyone is ref forecasting down. Everyone's missing. I think that speaks to the larger economy is not doing that well. I think the economists a year from now may say that their recession had already begun.
Speaker 0 Certainly feels like that. Yeah.
Speaker 2 That's what Dr said at the zone conference. And I think that star are... Absolutely seeing that in their sales right now. Sales are slipping. It's taking longer, buyers are sharpening their pencils, it's a really tough environment.
Speaker 2 I think for software startups that are actually trying to make sales. Ai starts are a little bit exempt for that because people are still investing based on the dream. Not based on the metrics. And I would say that we're very interested in Ai and we're starting to make some investments, but we also like to invest based on metrics, not just on a dream and so we're being somewhat cautious about how we approach it.
Speaker 0 So you make a... Small seat bat in somebody who has a dream if I can translate here. But if you're gonna make a bigger bad Series a Series B. You you're want see some numbers on the board. You want see some product in market
Speaker 2 It's a really good way of putting it because I think standards change at each round. And in at the seat stage, you can absolutely just make of that based on the dream or just based on a founder, Sure. Great founder going after the Ai space. Idea still a little bit to be flushed out. You can make that bet.
Speaker 2 But...
Speaker 0 500 k 07:50.
Speaker 2 Or even even like, 3000000 we'll do as a big. But But then when you get to Series a and you want us write a 10:12, 50000000 dollar check, we kinda wanna see some revenue. Yeah. And certainly by the time you get to Series B or series c, we wanna see like all the standard metrics. You wanna see net dollar retention expansion, all that kind of stuff.
Speaker 0 Yeah. It's it's Really Hard for the Later Stage Startups because They Raised And This is The Lesson If you're Raising At 345 hundred million Sacks Correct if I'm wrong Here. You're not... You have to build into that valuation. And let's face it that valuation a was never realistic.
Speaker 0 It was overpriced, and then b, You got the headwind and your customers are saying, oh, you want 40000 a year for the Saas product, we'll give you 12. And what position are you in to turn down the 12? You gotta take the 12? And because you got 3 competitors who are gonna roll up and take the 12. So it...
Speaker 0 It's hard.
Speaker 2 So can I give you an update, please Mentioned there was a start of in my portfolio? Actually my my Angel portfolio. Yes. That made a play around the gram down. And I think it's absolutely tragic because of what I learned, which is the founders got crammed down to because a year ago, they brought in a professional Ceo
Speaker 1 Yeah. Around
Speaker 2 And I think as a result of this, they're probably gonna get nothing for 10 years at work, whereas if they just cut costs,
Speaker 0 Damn.
Speaker 2 And, you know, that the company has 32000000 dollars of Arr. So imagine if they cut their op to a million a month, they could run 20000000 dollars of Eb, pivot to pay private equity model, sell that company for a hundred and 50000000. Half would have gone to pay off the investors and the other half would have gone a lot of would have gone to the they probably would have made 10000000 dollars each. And now they're gonna get 0 because they burned too much money. Didn't wanna cut costs.
Speaker 2 They bought into the dream of bringing in the Professional Ceo is gonna re growth.
Speaker 0 Comedy never done out.
Speaker 2 Never does. And so it's like so frustrated to meek. I like feel so bad for these founders. I wish they had called me a year ago. And I would have been 1 of the guys pounding on the table, just cut costs
Speaker 0 and then control your desk
Speaker 2 Listen. Yes. And here's the thing is if you're only growing 10:15, 20 percent or you have 50 percent of a year, you're not a Vc back startup. You are a private equity play. So you got to pivot to that model of making your business work as a cash positive business.
Speaker 2 That's how you're gonna get an exit. And, you know, if you're growing a hundred percent plus year, you can continue to be Vc back. So it's so important for founders to understand whether they're even... Eligible for venture capital anymore. And if not, you have to make a different kind of model work if you wanna see a return.
Speaker 0 Yeah. And when this happens a crime down round. Those founders, if They want a refresh. They have to Prove their worth. They're not just going to get a refresh to keep the relationship.
Speaker 0 Going. This is 30000000 dollars in revenue. They don't need the founders anymore.
Speaker 2 Look, these guys working for 10 years, So even if they got a refresh that to put in 4 more years of. Oh. And the other thing is this gram down round, I think it was way too big. There is 25000000 with A3X lick graph. 3 slick prep.
Speaker 0 75000000 off the top.
Speaker 2 Off the top. Then you gotta restate.
Speaker 1 Vic is triple? Yep.
Speaker 0 Oh, my god. Who this is where board governance is so important Sham jamaica? Like, I mean, who is on the board of these companies we?
Speaker 2 I was not... I was board
Speaker 1 are all boards of these companies. These are people never off to build a company. And they may be educated. Or they may have been an exec at a company and then some Vc who was fever virtually raising funds, just hired some dope, put them on the board of this company and then just the stupidity compounds and trickle down.
Speaker 2 It's so frustrating.
Speaker 0 Compounding stupidity.
Speaker 1 This is the beginning of the beginning. All of these people who have 0 judgment are gonna... Fuck so many companies up. It is the beginning of the beginning.
Speaker 2 And, Your, it's it's not just the the bad war members. It's... Fuck the view for so many years that who you put on your board didn't matter. Remember, there was all these Vcs who had a model, where it's like, well, we don't take a board seat, and they were selling that to founders as a positive.
Speaker 0 As a feature.
Speaker 2 As a feature, not a bug. And the reality is for a lot of Vcs actually not being on the board probably is the best they can offer. But, you know, that that model works. That that model works when everything is up into the right where... Like this model of abort seats don't matter.
Speaker 0 Governance doesn't matter.
Speaker 2 That is a model in a boom where everything just keeps going happen to the. But when you edit a tough time, that is when you need a board member who's seen this movie before. Who knows what a crammed down round is, who knows What's gonna happen to you a year hence. Yep. When you get screwed into taking a 3?
Speaker 0 You off the Gray haired pilot, you know, in the right team to say, hey, listen, we're gonna you. You want hair. You want this sex here. Alright. Free Burke, you are always candid about your own journey.
Speaker 0 You've had huge wins, climate dot com from billy. Raising funds. But, you know, sometimes things don't work out? What do you what's your take on some of these hard lessons of great ideas, you know, spun up during this really hard market.
Speaker 3 I mean, I think just to echo the point you guys are making in the last 15 years, we've been in a call it structurally inflated environment because of the 0 interest rate policy since the 8 flow crisis. And everything's been up into the right So much, it's been so easy to kind of inflate things fill powder our balloons and go up into the right. And unfortunately, most folks who are working In the investor community that are sitting on boards weren't around for the Dot com crash the last time this happened. And I think, you know just kinda echo your point why, it's so challenging, I think right now to figure out a way out. There are there's a lot of failure going on.
Speaker 3 That in in Silicon Valley right now. You know Sa you talk a little bit about having pads for exit and options for Saas companies, but there are many sectors in startup land that don't have those sorts of options in biotech, in s bio and Fintech and direct to consumer, e commerce, there's a lot of markets that and a lot of types of businesses that feel like there isn't a great way out. And it's having a deep psychological poll on entrepreneurs on founders on Ceos. And everyone is experiencing some degree of failure in this environment. There are very few folks who aren't feeling this acute pressure in this acute pain.
Speaker 3 You know, I heard some pretty horrific stories this week from a friend of mine and failure someone who ended up in the hospital because of the pressure he was under. And it's really trying. And you know, even within our friend group, I mean, not not our direct friend group with within our broader community of investor friends. There are very few people who aren't feeling this extraordinary pressure that they've got a book... That is declining in value and they don't know how to get out of the hole.
Speaker 3 And, you know, that pressure is like generates deep questions about one's ability and generates deep existential thought for entrepreneurs and investors about what the hell am I good at. And no one's really talking about this out loud, but it is a happening across the valley. We all have these thoughts. We all have these dialogues as the failure begins to set in in the slow motion train wreck of a market that we've all been talking about for weeks and months. How do you deal with it?
Speaker 3 Look, I mean, I just think that number 1, it's worth acknowledging and it's worth having the conversation that no 1 is alone going through this pain. It is not a 1 off that these companies are failing. It is that we are and all dealing with failure right now. And we are all trying to figure out what is the best path forward? And it is the kind of thing that you just have to work your way through and you have to persist through this pain, but this existential question of am I good enough?
Speaker 3 Do I have the skill set I thought I had? Am I just an idiot, did I blow it up? Emperor has no clothes all the kind of interfere and turmoil that everyone's dealing with, you're not alone going through it. A lot of entrepreneurs, a lot of investors are in the exact same place. Now, with respect to going forward, I think having integrity with respect to how you handle these situations and having thoughtful about.
Speaker 3 You know, your reputation because this is not a 1 and done environment here in Silicon Valley. Failure is part of the process. And how you deal your deal deal with people, deal with investors, deal with entrepreneur, deal with each, deal with your employees. During these difficult times says a lot about your character and your ability that when you do this the next time, it will set you up for success. And you know, as any great athlete will tell you you build muscle during the times that you're failing, and then you're ready to go and execute the next time around.
Speaker 3 So, you know, let's save it for the next quarter, but let's play well as best we can right now through this quarter.
Speaker 0 Cha off clearly, you wanna jump in here. What are your thoughts on separating your identity from your startup from your work and having a more balanced view of yourself? So that when things go wrong? Maybe you're not as devastated, you don't wind up
Speaker 1 in a hospital bed. When things go wrong, they go wrong in bunches. Just like when things go right, they tend to go right in bunches? I called Free bird last week and I was telling him a story.
Speaker 3 About 2
Speaker 1 or 3 of my businesses, just all just pounding eating dirt. And what I said to him was and then we have a mutual investment that's doing pretty well. And I needed to use the 1 that was doing well to make myself feel better about the truth ever eating dirt. And I sat to something new effect of. It's just like nothing is working.
Speaker 1 I feel like mh literally nothing is working and a tough place to be. The only thing that you can do in those moments is just realized it would be so much worse to just be on the sidelines. Oh, I like it. And I think that's all you can do, then you go ahead hang out with your friends. Go hang out with your family.
Speaker 1 Kiss your wife, have as good of a time as possible outside the context of work, and then you just start the grind again. But... Yeah. We are in a moment where in most companies, there is something pretty wrong. It's either your burn, product
Speaker 0 of your contract customers team.
Speaker 3 Cap structure
Speaker 0 and r cap table yet.
Speaker 1 And, by the way, that's always the problem, but it tends to be... Balanced by a few things in your portfolio that are always going well, so that as an investor, you can maintain some e through the whole process. But free is right when there aren't enough of these positives and there's just the parade of terrible. You're just like, wow, this whole portfolio. Is it all about to fail?
Speaker 1 And then I get a massive wave of impostor syndrome of, like, what am I doing here? And then I have to recognize holy shit, this is my 20 fourth year take a deep breath, and it's great that it's that exhilarating where I think it's back to 2000 I just immigrated here. That's a
Speaker 3 com the conversation And I have. Is Beautiful. We're talking about, like, a string of difficult things we're all dealing with. You know a couple weeks ago we announced. That we returned all the money to all our customers at can, which was this molecular beverage printer company I've been working on for a few years, I plowed north of 30000000 dollars of our capital into building this business.
Speaker 3 We had 2 term sheets last year, both of which vaporized. As the markets that degraded. It was really a brutal experience for me and these were at very high valuations and we were we needed funding to get the production line stood up to manufacture that device. So we were that close.
Speaker 0 Hi, ma'am.
Speaker 3 And as the the market went up, pre revenue hardware companies became less fungi and despite our care reputation and a great working product and and a manufacturing ready prototype. We couldn't get it done. It was a really kind of brutal experience to go through the nose, even after you've had a lot of success in your life, believe it or not, you still get a lot of freaking notes. And you get a lot of... I don't believe you.
Speaker 3 Then to just have to get to a point with this 1 was really difficult and there's, you know, been other kind of frustrating experiences of late. And then, you know, you kinda have a call 1 day with another investment, you're like, oh, my god. This thing could be a home run. And that just comes out of nowhere. And, you know, as long as we kinda stay in it and as an investor and you keep, you know, as a builder and you kinda keep building, you don't know when that good knock on the door is gonna come.
Speaker 0 Yep. You gotta stay in the game.
Speaker 3 You're building a business. And 1 day, you just nail a sale that you just weren't expecting or a partnership. Or an M and A inbound or something that happens that you weren't expecting, it pays for all the pain and all the loss and all the turmoil and all the downside. I always used to tell people For every, you know, 4 days, I'd be failing on have 1 day of success, but that 1 day of success will get me slightly ahead of where I was at the start of the week. But 80 percent of it was failing.
Speaker 3 I mean, right now, it's like 19 days of failure and 1 day of success, but that 1 day of success, the goal is used to have a couple of those pun moments. That are big enough that make up for all this stuff. If you your. Yeah. If you just keep grinding.
Speaker 3 And if you just keep grinding as an entrepreneur, keep grinding as an investor and stay in the game
Speaker 0 with the power etcetera. You're describing living with the power law. Yeah.
Speaker 1 There's a very relatable poker analogy in this. There's a there's a guy that makes Poker content. His name is Jonathan Little.
Speaker 0 He's great. He'll be at the Angel Simon who.
Speaker 1 He's wonderful. I've been thinking about hopping into 1 tournament at the w sop this year. Poker it's 1 of
Speaker 0 the big buying tournaments. So I'm like,
Speaker 1 let me just take a little tournament refresher. And I was just looking for any content and I found his, and he had this beautiful slide which he said, If you are a mid level poker player, you should expect to final table, 1 in a hundred tournaments roughly. And I thought about that for a second and I was like that's a 1 percent success Now, if that is your 90 ninth tournament, you have to be pretty resilient to go through 98 losses for you don't cash, you don't make the money. And you're just putting money out, you're deep in a J curve and you're like is this ever gonna work out for me. And so it's a really, really good reminder that it is the grind.
Speaker 1 Yep. And I thought that was really interesting.
Speaker 0 You you had a a single or double, I guess with call in. You could talk a little bit about that experience and and what decision you made there, We were obviously investors. So were. But I'd love to hear your candid thoughts on why you decided to sell.
Speaker 2 Yeah. We put together a great team and they built an amazing product. I think it's by far the best sort of social audio product. And actually they added video to it as well. And podcasting features.
Speaker 2 So it's kind of the synthesis of video and audio podcasting with social audio. We got acquired by Rumble. It's sort of like a base hit type acquisition. It's it's a small deal relatively speaking. But the team wanted to do it and then the main reason is because we got to hundreds of thousands of users, but in the consumer space, you really need to get to millions.
Speaker 2 And frankly, tens of millions is what it takes to have a successful consumer product. Rumble does have tens of millions of... Of users. So the team wanted to find a home and there's a lot of synergy with Rumble, both companies of have a mission that's aligned around free speech. Rumble sort of the...
Speaker 2 Call it free speech alternative to Youtube. It's a video platform. And what calling will do is give Rumble studio capability capabilities. So it'll be very synergistic for all their creators to be able to create content in call and and then post it in rumble. So it's not you know, a huge outcome for anyone, sort of push for the investors, depending on where rumble stock ends up.
Speaker 2 But look, it's just... You can build a really great product and a great team, but unless you hit that lighting a bottle of distribution, you know, you won't get to the next level. So I'm I'm happy about the deal. I think the team's happy about the deal. And it's a good outcome for for everybody involved, but it's not, you know, it's not a home run.
Speaker 2 It's just... It's more of a base head, and that's what most these things are.
Speaker 0 Yeah. Getting used to a high failure rate and living inside the power law where 1 investment out of 30 or 40 or 50, results in 90 percent of your funds, returns for that specific fund or so or maybe 2 wins represent 95 percent that's a hard thing for the human brain to handle as is the J curve as Cha off you know, points out correctly. Man you invest for 2, 3 years and then you watch. All those things go down in value for 2 or 3 years or the value I'm sorry of the portfolio go down for 2, 3 years before it actually rebound and goes back up. I remember, Man I had a run where everything I touched turned to gold, and then Mahal hit 10000000 dollars of revenue and then boom, panda update.
Speaker 0 And it just goes up and smoking, and you're like, What what has happened? I I sold web blogs 18 months after starting it. I, you know, had the silicon report. I just Uber investment. Everything I touched, went to the
Speaker 1 moon working. Yeah.
Speaker 0 Yeah. And then it's just a very frustrating experience where you can't make something work and you know like, I should be able to make this work.
Speaker 3 Why isn't working? There's a very heavy blanket of humility setting over Silicon Valley right now. And I think all of us who have had strings of successes and repeat successes and, you know, there's things that we touch have worked, and we do all the same things and we do the right things and we do them the same way in the right way, and it doesn't work, and then it doesn't work again, and then it doesn't work again. It creates a very different psyche, whether you're an entrepreneur building a business or an investor investing in businesses that what used to be the case isn't the case anymore as the tides have shifted. It's it's a daunting challenge to work your way psychologically through this moment they've But, you know, progress doesn't change.
Speaker 3 Innovation isn't gonna stop. Technology isn't gonna keep shifting forward. And the opportunities to continue to build and innovate are not going away. So I for 1 them deeply optimistic and excited about what the future holds, But, man, you gotta put your freaking game face on right now to get through this. Yeah.
Speaker 2 For sure. Well, yeah. And I I would say there... There's 1 other exogenous variable here, which is I don't think Any of us realized, how much our sentiment was affected by 1 guy's decision at the Fed, Yep. Like, what interest rates are gonna visible the Because you know what?
Speaker 2 When there's a lot of money in the system, everyone feels free. And all the portfolios look great. And when the money is being sucked out of the
Speaker 3 The buyers are buying and
Speaker 2 oh, my God. Like, when the money being sucked out of the system, everyone's results look terrible.
Speaker 0 Yep. It's... You know what it's like. Before a tsunami, the... The big wave gets pulled out,
Speaker 1 and then the tsunami comes in.
Speaker 2 Yeah. It's a money getting
Speaker 0 pulled out.
Speaker 2 The money is being sucked out of the system like the tie before tsunami and the tsunami is gonna be all the failures and bankruptcies. But what I would say is, just in the same way, that things weren't as good as they appear to be during the asset bubble, they're probably not as bad they appear to be now. However, you have to give yourself time to get through this. Yeah. Certainly the recession cycle.
Speaker 2 And it's so frustrating to me when founders don't wanna cut, their. The burn is the 1 thing they totally control, and they have all these excuses for why they can't cut to an earlier level of spending that they were... The company was working fine at. And we can't get him to go back to cut back to some earlier data being.
Speaker 0 Zuckerberg like Zuckerberg can do it, they can do it.
Speaker 2 And, you know, after seeing what Elon at Twitter where he reduced the staff by 80 percent. I'm like, I realize there's no good excuse anymore. Yep. For not giving yourself The Maximum Chance Survival.
Speaker 0 And If you Over Caught, Like He Admits He Probably Did. He'd Literally In The The Day Far, Great Interview He Did with Him. He said, you know, like, we probably cut. We we cut people who were great and we hopefully can welcome them back to Twitter as we get this thing on unstable footing, but we're gonna make mistakes we had an existential crisis. Elon Musk cut too many people admits it and says he's gonna bring them back.
Speaker 0 It's no fault of theirs. And he said he's going back into growth mode. So, you know, like, sometimes you cut you you might cut too deep is the point. And and, you know, that set you up for growth in the future, you had something you wanted to add.
Speaker 1 I have 2 shout outs.
Speaker 0 Okay. Here we go. The first is to
Speaker 1 1 of our best days. Got a text from Jason K. He bin the main event at the Triton for and a half million.
Speaker 0 Yeah. Pink Incredible. Oh.
Speaker 1 I mean, he's so surprised he's the guy's a beast. So guy.
Speaker 0 It's so great to have a great professional poker player in our circle family. Like, somebody who's growing guy. He insists only over time.
Speaker 1 Can learn from.
Speaker 0 Yeah. Like... But he's so open and he teaches us but just to be around him, you know, rationally stable, rational, and humble humble professional poker player.
Speaker 1 Like, happens to basically be the best poker
Speaker 0 player in the world, but you could you would never know it. You never know he'd never bring it up. Like he is literally the race and he won the Triton 2.5 Mill.
Speaker 1 Yeah. The second the second shout out is... Okay.
Speaker 0 Here we go up
Speaker 1 to the model y team at Tesla. I have been a die model x user from the beginning. Right?
Speaker 3 I think
Speaker 1 I have... Here we go. Number 13. So I've been I've been... I've had 3 or for these things.
Speaker 1 And I was like, wait a minute. Maybe this white is really all is cracked up to be. And I'm a bit of a and I have my expectations, but I just wanna say 4 That car kicks absolute ass. It
Speaker 0 is perfect.
Speaker 1 In Cr, it is incredible. That model y, it's gonna be the best selling car. Yeah. It's gonna be the best selling car in America. If you get the base level, it's actually cheaper than the average car in America now with incentives.
Speaker 0 Yep.
Speaker 1 It's so so good. So huge shout at
Speaker 0 300 miles range which
Speaker 1 huge huge. Huge shout out to the Model y team at Tessa. You guys. Nailed it. Yeah.
Speaker 1 So it's dr product.
Speaker 0 And we I love it. I don't wanna diminish the ax. I don't as far.
Speaker 1 It's so the I is why
Speaker 0 is so happy. It looks the best car Made.
Speaker 2 It is is the best. Yeah.
Speaker 0 A great car. It's a great great car. I can't wait for the cyber truck. That thing looks like a beast. Can't, wait Pick that up Top a roadster.
Speaker 1 Now love the roadster.
Speaker 0 You know, try. 12 year old roadster out, and my kids love going for ice cream in the the original roadster to 1. So I've been taking it out every weekend or 2. You have number 1. You have number 16 of the roadster, sir, which somebody offered me 40000000 dollars for.
Speaker 0 I paid a hundred and 60 for it. I have number 1 of the model s signature series. So I have signature 16 of roadster that they did a hundred signatures and they did a thousand signatures of the Model less, and I have number 1 of that and somebody offered me a million dollars for that.
Speaker 1 I have number of edition number 13
Speaker 0 of the x. Yeah. That's pretty special. Yeah. I'd hold on to that.
Speaker 0 Yeah. There... It's a special vehicle. Alright Listen to everybody under All in Summit is basically so
Speaker 3 what are
Speaker 1 we doing? How's the all in summit doing, guys?
Speaker 3 We're starting to do our outreach reach and... To figure a speaker hers. Yes. Yeah. So it's exciting.
Speaker 0 Alright, everybody. For the sultan of science, the dictator. And Steve Bannon in 2, David Sa, the architect.
Speaker 1 The architect. The architect, I like that.
Speaker 0 I remain Even after Sa is triumphant spaces. I remained the world's greatest moderator.
Speaker 1 So excited for this weekend, boys. See you tomorrow at the tar back
Speaker 0 on the tar. Bye.
Speaker 1 Love you then.
Speaker 0