0:00

All right, everybody, welcome back to your

0:02

favorite podcast, the all in podcast. It's

0:04

episode 164. I'm down

0:06

here in Miami with

0:08

me again. Of course,

0:10

the dictator chairman himself, Pauli

0:13

Appetitio and the rain man.

0:16

Yeah, burn baby David Sachs.

0:18

Unfortunately, we had

0:20

a little bit of a chat once this week. We don't know

0:23

where Friedberg is. He somewhere lost in his Apple

0:25

Vision Pros, but he'll be back next week. As

0:27

you guys know, I'm incredibly

0:29

generous with my friends. So I sent all

0:32

the besties the Apple Pro goggles.

0:35

And so these Apple Pro goggles are

0:37

amazing. But you

0:39

bought me a pair of the Apple Pro. Yeah,

0:42

we talked about this. Yeah, guys, you guys actually

0:44

you were using them. You just forgot. But Friedberg's

0:46

been using them. Nobody can find Friedberg right now.

0:49

Because apparently, he went

0:51

to Uranus. I recorded in all of these

0:54

sacks. What's happening inside?

0:57

Each of our Apple goggles, a

1:00

vision. Yeah. And so but here

1:02

they are. We actually took a picture. I had not

1:04

take a picture of you wearing them. Do you

1:06

want to actually want to see what Chamorro was

1:08

doing in his goggles? Yeah, let's see. I recorded

1:10

it. Oh, yeah, look

1:12

at that. See, he imagined that

1:15

he did leg day. Look at that. He's

1:20

still reveling in that thirst trap that he posted

1:22

in the I know, but you see those legs.

1:25

The Apple Vision Pro, Jim

1:28

Cook. Can I say something funny about

1:30

this, which is that my legs

1:32

are actually darker than

1:34

my torso and my upper body. It's the weirdest

1:36

thing. And so you have it in reverse. But

1:39

it is true that my legs are a different

1:41

shade than my trunk and my arms and my

1:43

body. Okay, well here's Sax. By the way, Sax,

1:46

you know, he loves his goggles. Yeah, Chabad, do you have

1:48

any interest in seeing what Sax was doing with his goggles?

1:50

Oh my god, I can't imagine. There

1:52

it is. Sax was speedrunning. He

1:54

was doing the speedrun on DJ.

1:58

Absolutely getting in there. That's a serious question. private

2:00

run, right? Yeah, that's you. You were speed

2:02

running, saving private run. Oh, I

2:05

got them too, yes. But I didn't record

2:07

myself. I didn't record myself. I maybe nicked

2:09

it. Oh, I once in there. Oh, look,

2:11

what am I doing? Oh, I was waiting

2:13

to come. You arrived off. Well, you're

2:16

telling me that they

2:19

didn't have the third or

2:21

fourth investor in

2:23

Uber, but

2:36

ringing the bell with them at the original moment. I

2:38

could tell you the backstory. I was invited

2:40

by TK to come to the

2:43

ringing of the bell. TK

2:46

was disinvited. So he was there on the

2:48

floor. It was very awkward. And

2:51

then they didn't have him go up and ring

2:53

the bell or be even there when Dara rang

2:55

the bell. It was because it was controversial. They

2:57

didn't they banned him. No,

3:00

it was really, it was really sad.

3:02

It was super sad. But anyway, everybody,

3:05

I hope you're enjoying your three hours there

3:07

or not. I didn't go

3:09

because okay, he was like, we're gonna have a

3:11

party. But we're not going

3:13

to be able to ring the bell. And it was just all

3:15

like very did you go to the party? I

3:18

didn't I should have regret not going but it was unclear if

3:20

there was even going to be a party or TK was going

3:22

to go because of all the drama. And I don't know if

3:24

you remember on CNBC, they were like, TK

3:26

is in the building, but he's not on the thing. And that

3:28

would became a big bruja. But

3:31

yes, I missed my window. I mean, if you

3:33

hadn't known that this was going to be the

3:36

big exit in your life, really the only one,

3:38

then you would have made every

3:40

effort to attend everything, right? Absolutely.

3:42

Absolutely. Yeah. I mean, you're still

3:45

riding on that. Yeah. PayPal. No,

3:48

he got it. I was I was talking

3:50

to somebody about this the other day, most

3:52

feels careers you have, like, you

3:55

know, it's not like a smooth up to upward

3:57

trajectory. There's like maybe a few pops that you

3:59

get your lucky. actually, if

4:01

you get a few, because most people only have

4:03

one or maybe two. Yes. It's like a power

4:05

law. It's like anything else in venture, right? Absolutely.

4:07

Like I'm sure if you think back on like

4:09

the big outcomes in your life, it's not like

4:11

there's one every year and like some sort of

4:13

smooth gradient. It's basically

4:15

there's like one, two, or three

4:17

over the course of your entire career that you

4:19

remember. Right. Yeah, absolutely. Yeah. I

4:22

mean, it's, it's good. It's

4:24

good to consider that. Uh, because you have

4:26

to enjoy every sandwich. You

4:28

have to enjoy every day what you're doing because

4:30

those pops are out of your control. You don't

4:33

know when they're going to happen, how they're going

4:35

to manifest. So, but you

4:37

guys didn't get these, you didn't

4:39

get the goggles, but these goggles came out this week. I don't

4:41

know if you saw it. What I will say is that the

4:43

poker game, three of the guys, talking

4:45

about these goggles, Sammy

4:48

woke up at five in the morning on the

4:50

first day. He was, he got

4:52

them. And then Kuhn and Robl were telling me

4:54

that they just bought them randomly in

4:56

the next couple of days. And

4:58

it was easy. So those are civilians. There was no

5:01

like waiting in line. They were able to just order

5:03

them as what they do. Yes. But they're civilians. So

5:05

just to be clear, like in Silicon Valley, we're kind

5:07

of like, eh, whatever,

5:10

you know, we've, we've played with Oculus for so long, but

5:12

now these are out and there's a bunch of demos going

5:14

around. This one I thought was interesting. I don't know if

5:16

you saw this, but watching a basketball game, it actually is

5:18

quite compelling to have all the stats on the screen with

5:20

you. And you can kind of move them around. I

5:23

maybe could see myself doing this. I don't

5:26

know. Do you think you would do this watching a

5:28

game? Maybe. So are you actually watching

5:30

the TV through the goggles? Like what

5:32

part is real world and what part

5:35

is augmented? Obviously all the stats are

5:37

augmented reality. Yeah. This is all

5:39

self is, is that that's a stream.

5:41

That's a stream coming into the goggles. Yeah. It's not

5:43

your TV. So, you know, I

5:45

think he's just putting it on the TV there, but

5:47

you could literally be outside on your

5:50

deck. You could be on an airplane and do this. So

5:52

that's what you can see through the goggles, right?

5:54

Is that the idea? It's you can, you want

5:56

to, I think you can sell through to the

5:58

goggles. Yeah. You know,

6:01

you can see the fact that you

6:03

live in a tattered apartment without a

6:05

girlfriend dressed poorly. You

6:07

can see the dishes in your sink. You can see

6:10

the cupboard being bare. You can

6:12

see the spoiled milk in your refrigerator. You're

6:14

a half-used bong that you use to soothe

6:16

yourself to sleep at night. Whatever all of

6:18

these 20 and 30 year olds do to

6:20

cope, you'll see all of that while

6:22

still being in an immersive environment. It's amazing.

6:24

Yes. I mean, it is so

6:27

dystopian. I just think like if

6:30

you take out your phone, your spouse is like, what are you

6:32

doing on your phone? Can you

6:34

imagine the audacity of being with your spouse or your family

6:36

and be like, hey guys, I'll be right back. And you

6:38

put the goggles on to watch the Knicks game or the

6:40

Warriors? I mean, I think that's

6:42

a snap divorce. I don't know. You said it very

6:46

well about the Oculus

6:48

one, which is you had to turn a phrase, which

6:50

I really like. But basically, it's like you

6:52

were very quick to try it and then

6:54

there was like a period and then you

6:56

lost interest. I think that's just going to be the

6:58

key thing with this. And

7:00

the fact that it costs $3,500, they have

7:02

to get the price down fast enough for

7:04

average folks to want and be able to

7:07

buy it. Right. Yeah. I

7:09

call this experience the try. Oh,

7:11

my. Goodbye. You try it. You're

7:13

like, oh, my God, this is incredible. And then you're like,

7:15

we put it in your drawer. You never use it again

7:17

because there's not an application. It's really a

7:19

proof of concept. Look, I think it's a

7:21

great thing for innovation that they're starting with

7:23

this, you know, like you said, expensive headset

7:26

that maybe is not that ergonomic, but

7:28

eventually it'll come down and the form

7:30

factor will be glasses or sunglasses. Facebook,

7:33

I don't know if the product's out yet, but

7:35

do you see their product where the Ray-Ban? Yeah,

7:38

it has the AI built into it and

7:40

you can ask it questions and it will do

7:42

computer vision and give you answers based on

7:44

what it's seeing. It was a

7:46

phenomenal demo. I don't know if that's actually

7:49

real yet, but do you see that

7:51

demo? Yeah, these are the Facebook

7:53

Ray-Ban glasses. And I do think these

7:56

are met as smart glasses. They work particularly well

7:58

taking pictures and sharing them. on Instagram,

8:00

so they're kind of single function. How

8:02

Zuckerberg is, he cribbed what

8:04

Evan Spiegel did a couple years ago

8:07

with Snapchat. Right, but he put out a demo

8:09

that was a little different. The demo was like

8:11

he was in his closet, he was wearing this,

8:13

and he had picked out a shirt or something

8:15

that said, give me, tell

8:18

me what I should match this with. Yeah,

8:20

what goes with a gray shirt that I've

8:22

worn for 14 years? Did you

8:25

guys see this thing where they all had to

8:27

testify in front of the Senate? Yeah. So

8:29

I guess I'll just jump right to that. It was like a

8:31

public vlog. Yeah. Once

8:33

again, a public vlog. And we'll just jump to it

8:35

real quick since we didn't want to go too deep

8:37

on that one. But Josh Hawley made Zuck turn

8:40

around and apologize to people

8:42

in the audience. It was brilliant. Yeah, so

8:44

this is, the name of this

8:47

hearing was Big Tech and Online Child Sexual

8:49

Exploitation Crisis. Zuckerberg, he was questioned, along

8:51

with the CEO of TikTok, Discord X,

8:53

and Snap. But obviously,

8:56

this is all around kids'

9:00

online safety and also section 230, which

9:03

I think these senators are, this is one

9:05

of the few bipartisan moments, I think. They're

9:07

honing in on it. Yeah, they

9:10

realize this is kind of like a winning- They're gonna

9:12

take a run at this. They're taking a run at

9:14

it, for sure. They realize it's a winning ticket. Let's

9:17

just play the clip and then I'll get your thoughts,

9:19

Sax and Jamal. Let me ask you this. There's families

9:21

of victims here today. Have you apologized to the victims?

9:25

Would you like to do so now? Well, they're

9:27

here. You're on national television. Would you like now

9:30

to apologize to the victims who have been harmed

9:32

by your problems? Show them the pictures. Would

9:35

you like to apologize for what you've done to these

9:37

good people? Because

9:42

everything that you've all gone through is

9:44

horrible and no one should have to

9:46

go through the things that your families

9:48

have suffered. And this is

9:50

why we invest so much and are going

9:52

to continue doing industry-leading effort to

9:55

make sure that no

9:57

one has to go through the types of things that your families

9:59

have- to suffer. Thanks. This

10:02

is a powerful moment. And for

10:04

Zuckerberg to get up and actually face the parents,

10:06

he turned around, he faces the president, very dramatic

10:08

moment. And he apologized. Ned,

10:11

you respect him for doing

10:13

that? And you think that was like a powerful

10:16

moment as well? And where does this

10:18

all end up? This was a kangaroo

10:20

court. I mean, this was basically all

10:22

theatrics. This is basically a bipartisan moral

10:24

panic where all these senators are basically

10:26

grandstanding. And these are the same

10:28

types of accusations that we've been hearing for years. Remember,

10:30

this goes back to the whole Frances Hagen claims where

10:33

she says that Facebook wasn't doing enough to

10:35

prevent various kinds of online harms. And

10:39

I think that we're going to regret

10:41

where this all leads, because where it's going to lead

10:43

if they do repeal Section 230 is

10:45

towards greater censorship. All these companies

10:47

are going to spend even more resources

10:50

restricting what we

10:52

can say and hear online, which is

10:54

not the right direction. Do

10:57

some harms occur online? Yes. Do

10:59

I believe that Facebook is taking

11:02

substantial measures to stop them? Yes. I mean,

11:04

but edge cases are always going to get

11:06

through. When you're

11:08

operating at that kind of scale, there are going to be

11:10

these edge cases of kids who

11:13

got harassed or content that

11:15

shouldn't have getting through. It's just

11:18

part of the fact that the internet operates

11:20

at gigantic scale. And these harms

11:22

have always been out there. I think that these companies

11:24

do their best to try and stop them, but

11:26

they're always going to get through. And you

11:28

can't make every aspect of our

11:30

society perfectly safe

11:33

and harm free. Somehow we have this expectation that

11:35

we can eliminate 100% of every harm that occurs.

11:39

And I do think that these online companies have been

11:41

unfairly picked on in a sense. I mean, if you're

11:43

going to talk about these types of

11:46

harms, why aren't you targeting the music

11:48

industry for all their incendiary lyrics that

11:50

basically encourage all sorts of violent

11:53

or sexist behavior? Why don't you target

11:56

the advertising industry for creating unrealistic body

11:59

image expectations? expectations. Why don't you

12:01

target the Kardashians for setting

12:04

unrealistic expectations around image?

12:08

And you could go on down the list. I mean,

12:10

why don't you target Hollywood for releasing a show like

12:12

Euphoria, which is a hit? It seems

12:14

to me that the problem in our culture is not

12:16

coming from the edge cases. It's coming from the

12:19

mainstream entertainment that

12:22

is fully allowed and is popular and is

12:24

our hit shows and hit records and hit

12:26

products. I mean, that's where the

12:28

toxic pollution is coming from in our

12:30

culture. So to turn around and

12:33

now blame the online companies for creating all

12:35

of this, I think is just anything basically

12:37

they're being scapegoated. I mean, again, this is

12:39

a moral panic. Jim, I think it's a

12:41

moral panic or, you know, there have been

12:43

statistics and studies done about

12:46

what is viral on social media, the

12:48

algorithms targeting users, the addictive nature of

12:50

it. You spoke earlier about the addictive

12:52

nature of just gamification on watches. Social

12:55

media is a little bit different than music and

12:58

some of these other things because they have

13:00

these algorithms to increase watch time and

13:02

engagement. So I think that's what the other side

13:04

would say. What do you say? What do you say, Chamath? Where do

13:06

you stand on this? Let me just give a coda to a couple

13:08

of things that Saks said. It

13:10

is true that we've taken turns attacking

13:13

other forms of media when they were ascending

13:15

in their popularity. So in the 1990s, if

13:17

you guys remember, politicians

13:20

and their censorship attempts around

13:22

gangster rap and NWA

13:25

and Two Life Crew and certain songs.

13:27

Al Gore's wife, right? What was her

13:29

name? Tipper Gore. Tipper Gore, right.

13:31

Tipper Gore, a whole tirade against rap lyrics. What

13:33

was the NWA song? You know, **** the Police.

13:36

That whole thing just sent off a huge

13:38

fear about people potentially, David,

13:41

being motivated to kill cops or something, right?

13:43

In the 80s, there was a trial. Judas

13:45

Priest went on trial. Because

13:47

if you played one of their records backwards, supposedly

13:49

it promoted devil worshiping. Suppose it was exactly devil

13:51

worshiping. I don't know if it was playing records

13:54

backwards, but if you did, then it promoted devil

13:56

worship. I think a kid committed suicide and so

13:58

they basically prosecuted you. Judas Priest for

14:00

it. So that's comment number one, which is

14:03

this is not new. And the

14:06

reason why social media is in the crosshairs is

14:08

because instead of having this really

14:12

diverse ecosystem of

14:14

many small players, you have three or four folks.

14:17

And so it's easier to bring

14:19

them up on stage and sort of pillory them. Second

14:21

is I actually thought that Zuck had a lot of moral

14:23

clarity, because it's like, that's a tough position

14:26

to be in. And the fact that he had the courage

14:28

to turn around and actually apologize to those people shows

14:31

he's trying to do the right thing. But the reality

14:33

is, and Saks is right, if

14:35

you apply a very, very small error rate

14:38

to an incredibly large number, so they have a

14:40

network of three and a half billion people monthly,

14:42

right, or daily or whatever the thing is, even

14:45

if you say that there's one tenth of 1% of

14:50

an error rate, meaning things that are unintended,

14:52

well, that's three million unintended consequences,

14:55

right? That's a lot of unintended

14:57

consequences. And so there's

14:59

this massive law of large numbers at

15:01

play. So what do we do, I

15:03

guess, is the question. And

15:06

I think that there is enough knowledge

15:10

that we have to know

15:12

that the ability for a 35-year-old

15:17

to use certain products today is very

15:20

different than the ability for a 12-year-old

15:22

to use that same product because of

15:24

where they are physiologically, right?

15:26

I think we all know that to be scientifically

15:28

true on the dimension of many products.

15:30

And I think what we need to decide as a

15:32

society is whether software

15:34

and electronic products fall into that

15:36

categorization. And if so, what

15:38

does it mean? So in the case of China, they

15:41

mandate top-down what products

15:43

can be used and how many hours

15:47

you can use them for. Specific way of video games you're

15:49

referring to. Yeah, and David's right, which is that

15:51

if we go there and we rewrite

15:53

the law, then there's gonna be

15:56

a different set of unintended consequences. That's gonna

15:58

create, I think... A

16:01

much. Poorer business landscape

16:03

frankly to innovate and a bunch of

16:05

other things. And building on your comments

16:07

it there's clearly an age at which.

16:10

She. Adds pan he shouldn't be on these

16:12

systems. and an age where. He. A

16:14

may be with some guidance. they can. Yeah.

16:17

He wants Smh mafia and then I think

16:19

the third thing is around the section two

16:21

thirty thing itself. I. Think

16:23

that sucks, I'll give you a slightly different

16:26

take. I don't think that the

16:28

section Two Thirty rewrite. He's.

16:30

Gonna be brought and sweeping. What?

16:32

I noticed from a bipartisan

16:34

perspective. By. Both democrats and

16:37

republicans is that. The. One

16:39

single narrow issue that they all

16:41

seem to a line on. Is

16:44

not necessarily. About.

16:48

All. Of the different rules around censorship.

16:50

But. That the lack of

16:52

liability. For. These folks

16:54

should be released. And.

16:56

I think that if you were to write

16:58

a narrow amendment to Section Two Thirty That

17:01

said, That. The social media companies

17:03

are other organizations that at certain characteristics.

17:06

Were. More liable where today they have

17:08

no liability. I'm not saying that it's right. But.

17:11

My read of the temperature in that room

17:13

was a bad as the. Very.

17:15

Narrow change in section Two thirty that I

17:18

think they all seem to want to make.

17:20

And. So that seems like a very. Likely.

17:23

Thing that will happen in the next two or three

17:25

years on package for the audience. who who might not

17:27

know how they would I do that section to their

17:29

he says. If you're a publisher, your

17:31

common carrier. You're. Not responsible for

17:33

people post on your your system blog,

17:36

web host, or social media companies but

17:38

where the social media companies move from

17:40

being. Just. A common carrier. You

17:43

know, like paper might be or or a

17:45

website hosting company like Wordpress? Or

17:48

square space. Is. when they flip

17:50

over and they have an algorithm and then

17:52

they start picking and choosing so once you

17:54

start doing editorial like the new york times

17:56

and you have editors then you're liable if

17:58

you're cnn you're liable if you're Fox, as we

18:00

saw in the Dominion case, that's where the liability comes in.

18:02

So I guess the question to you, Sax, is,

18:05

you know, at the end of the day,

18:07

now that we've seen these things at scale,

18:09

is there not an argument that when you

18:12

start editorializing through an algorithm and you start

18:14

promoting certain content, that you have some level

18:16

of responsibility like Fox News, CNN, or the

18:18

New York Times has, where would you

18:20

stand on that issue? Some liability if you're picking

18:23

winners and losers in terms of what gets promoted

18:25

in the system. Well, apparently, I'm

18:28

the last person in America who thinks

18:30

that Section 230 was a good idea

18:32

and a visionary piece of legislation that

18:34

actually enabled the creation of user-generated content

18:36

platforms. Just to kind of slightly modify

18:38

your description of how it works, I

18:41

would analogize it to a newsstand where

18:43

there's magazines on the newsstand, there are publishers, and

18:46

then there's the newsstand itself, which is a distributor.

18:49

If a magazine

18:52

engages in defamation, they're liable

18:54

for it, but the newsstand is

18:56

not. The newsstand can't be sued. So

18:58

the question is, when you have these

19:00

massive user-generated content platforms, are they operating

19:02

as a publisher or as a distributor?

19:05

And I think what Section 230 made clear is, look,

19:07

if you don't write the content, if

19:10

the content is generated by users, you're

19:12

a distributor. And that is, I believe,

19:14

the better analogy to make

19:16

for these huge UGC platforms. Now, at

19:18

the same time, what Section 230 said

19:22

is that if you take good Samaritan

19:24

actions to reduce things like

19:26

sex and violence on your platforms, then

19:29

we won't make you liable. Because what happens in a

19:31

lot of cases is that you

19:33

can waive your protection legally

19:35

by basically getting involved. And

19:38

so the legislation didn't want to deter these

19:41

platforms for taking, again, good Samaritan

19:43

steps. I think it's a

19:45

pretty good combination of legislation. And that's what

19:47

you see right now, is that Zuckberg

19:49

doesn't want to let these edge cases

19:52

through. I actually believe that they are

19:54

taking huge efforts at scale. They have

19:56

40,000 people, to give him some credit.

19:58

There's 40,000 people moderating stuff.. Image or

20:00

Edge cases I get through. And by the way,

20:02

you have to wonder where where the parents when

20:04

all this stuff happened. I mean, they're acting like

20:06

they're victims in the audience and I'm sorry for

20:08

their particular cases, But at the end of the

20:10

day. We. Do need the Paris step up here.

20:13

Every want to have social media skill and all the

20:15

parents have to play more active role. But are you

20:17

going to go back to such and to thirty? I

20:19

just think that. Republicans. In

20:21

particular are gonna work really regret.

20:24

Getting. Rid of such and to thirty because

20:26

as only a lead to more censorship I think

20:28

what they're going to do if I had to

20:30

bed is that they are going to. Write.

20:33

A very narrow. Amendment.

20:35

To that law and. During

20:37

some budget process or some other thing where

20:39

you have a big Christmas tree build this

20:41

will get in there. And

20:43

I think you will have bipartisan support

20:45

that effectively. Remove. The Liability.

20:48

Protection. That these companies have I

20:51

i had a small change does the entirety

20:53

of such and to thirty I think like

20:55

these companies will not be able to use

20:57

that does a massive change. Listen there are

20:59

plaintiffs' lawyers. The. The plaintiffs'

21:01

lawyers bar. Year. The

21:04

Trial Lawyers bar is salivating.

21:06

Over the possibility that what happened. That's why

21:09

this is gonna happen you know? Wait, this

21:11

is how America were so injury all of

21:13

their personal injury lawsuits. I am corps lawsuits

21:15

lined up in every jurisdiction I states. And

21:18

here's the thing is because Facebook in all

21:20

these other sites operate. Your

21:22

across the entire nation than across

21:24

the entire world. They can be

21:27

sued in every single jurisdiction. If.

21:29

You allow these types of lawsuits skate to mop

21:31

you doubt that are going to get my position

21:34

and more of a move on. feminist. it is

21:36

in as an opinionated as away as possible whether

21:38

we like it or not. There.

21:40

Is an element of American capitalism.

21:43

That. Takes Companies two

21:45

seasons. And. There are

21:47

seasons where you're growing. And. Then there

21:49

are seasons where you're over earning. And.

21:51

Then there are seasons. Where is it

21:53

is possible? The machinery. If

21:56

you see that you are being you are over earning.

21:58

For. a long time the machinery of the

22:01

economy comes and kind of pulls you back

22:03

down to earth. You've won too much

22:05

and you're perceived as too powerful. Yeah. And

22:07

I'm not saying this whether

22:10

or not it's right. I'm just saying if you look back

22:12

in history, these chapters

22:14

have been written umpteen times. And

22:17

I think, David, what you said is

22:20

the absolute single most important thing if

22:22

you had to figure out where this

22:24

was going to go is exactly that.

22:27

The plaintiffs' lawyers, the

22:29

class action lawsuits, the amount of

22:32

money that they think they

22:34

can extract and

22:36

they compare it to the amount of money that

22:38

they were able to extract in two different kinds

22:40

of cases. One was

22:43

tobacco and then the second was

22:45

pharma. And I think that they

22:47

look at this class of app and

22:50

the lack of empathy or the

22:53

lack of popularity that the leaders

22:55

of these companies have in

22:57

Washington as a reason why they will probably

22:59

be able to get this done to create

23:02

this. Again, I'm not saying I think that's

23:04

good. I'm saying that I think it's

23:06

likely. And I think when that does

23:08

happen, you will see a replay. Again, it'll

23:10

be slightly different in terms of how it

23:12

plays out, but exactly the kinds

23:14

of plaintiffs' lawsuits that we saw in pharma

23:17

and in tobacco. And I think it's going to play

23:19

out here. And, David, you are right. That hearing

23:22

to me was a setup for that.

23:25

Yeah. And if you look at this through

23:27

that lens, there will be

23:29

some sort of negotiation and it might be

23:31

age. Because when you look at

23:33

this, really what Americans are upset about is

23:35

the impact this is having on kids. We

23:38

have a limit for the age of smoking, vaping, et

23:40

cetera. And when these things happen, I think an

23:43

easy concession that Zuckerberg and others will make is, hey,

23:45

these products will be for 16 years old and up.

23:48

That's the age I think it's appropriate. 15

23:50

or 16 seems to be. Well, he also

23:52

said, by the way, Jason, to your point,

23:54

Lindsey Graham was the one that brought this

23:56

up. And Lindsey Graham made the connection to

23:58

tobacco and also to fire. firms. And

24:01

then Mark at some point in there basically said,

24:03

well, listen, like, let's look at Apple and

24:05

Google. We should expect them

24:07

to do the actual age verification, not us.

24:10

Right. Because they have the devices and they have

24:12

the credit cards, etc. That's actually a very reasonable

24:15

thing for Americans to come to. You know, and

24:17

that breaks down a little bit, Saxon, your argument,

24:19

and listen, there's no perfect analogies here. But

24:22

if there was a repeated offense of a

24:24

magazine on a newsstand, for example, if

24:27

there was some magazine that had underage, you

24:29

know, an adult magazine that had underage kids

24:31

in it, and people knew

24:33

that and a newsstand continued to publish

24:35

it, they would have liability for trafficking

24:37

in child pornography or whatever it happens

24:39

to be. And so the newsstand

24:41

does get some liability. So there's, again, no

24:44

perfect analogies here. But I think...

24:46

But Facebook and all these other sites are trying to remove the

24:48

child porn or whatever. I don't think much of that gets through

24:50

at all. You know,

24:52

I think maybe you have a better argument and

24:54

there is the argument that people make is that because

24:56

of the feed, they're making editorial judgments and that's

24:58

obviously not disturbing. However, my counterarguments to that is

25:01

that the feed just gives you more of what

25:03

you want. I mean, it just looks at what

25:05

you're clicking on, what you're viewing, the time you're

25:07

spending, and they just give you more of that.

25:09

I don't think it's editorializing. Now back

25:11

to Chamath's point about this is the way things are

25:13

headed, that may well be right, but I think we're

25:15

going to regret it. I mean, first of all, the

25:18

Democrats' interest, one of their biggest donors

25:20

is the trial lawyers bar, and they

25:22

generally will support any legislation

25:25

that opens up the causes of actions, and that's

25:27

where this is headed. And what's going

25:29

to happen is, if they get rid of Section 230,

25:31

is that every time there's an

25:33

alleged harm that occurs, every time a

25:36

kid gets bullied or beat up in

25:38

school, every time something goes wrong

25:41

in their life, they're going to try and pin it

25:43

on social media and try and show that

25:46

they imbibe something on social media that led

25:48

them down this dark path. And

25:50

these types of companies are going

25:53

to get sued in every jurisdiction in America.

25:55

Recently, we've seen huge

25:57

judgments related to defamation. where

26:01

if you have say a

26:03

politically red defendant in a

26:05

blue jurisdiction, huge awards, I

26:07

think we could probably see the opposite as

26:09

well, that basically you'll start seeing blue defendants taken

26:12

on in red jurisdictions. We've

26:14

seen completely disproportionate judgments and

26:16

again around defamation, disproportionate relative

26:19

to the harm that actually took place.

26:21

You're going to see that on steroids if we get rid of Section 230.

26:24

Now historically was the job of

26:27

Republicans to oppose Democrats on this stuff

26:29

because they knew that Democrats were shilling

26:31

for the plaintiff's part. Republicans

26:35

have not done that because they're so mad at

26:37

these social media companies for censorship. So remember when

26:40

I talked about Good Samaritan liability, these

26:42

companies created content moderation

26:45

to basically try and remove

26:47

the violent material, the pornographic

26:49

material, the sexual material, the

26:52

harassing material. But

26:54

in the process of doing that,

26:56

they started making political judgments and

26:58

they started engaging in political censorship.

27:00

And that has made the Republicans so angry that

27:03

they have now turned against these companies and they

27:05

are willing to remove Section 230. My

27:08

point is, I think Republicans at the end of the day

27:10

are going to regret that because if you remove Section 230,

27:12

it's going to open up this flood of

27:14

litigation. It's going to be a free-for-all. It will be a

27:16

free-for-all. And what's going to happen is

27:18

that these companies, just

27:21

driven by simple corporate risk aversion are

27:24

going to clamp down even more. I mean,

27:26

the content moderation is going to be even

27:28

stricter. And because the content

27:30

moderators in these companies basically are liberals, if

27:32

you empower them to take down even more

27:35

content, they're going to take down

27:37

Republican stuff even more. It

27:39

will be very easy for the plaintiffs

27:41

to target that type of content. They'll

27:43

say that, oh, that, you

27:46

know, all of that Republican or conservative

27:48

content that influenced people in a very

27:50

negative direction, that created all of these

27:52

harms, there'll be lawsuits targeting that

27:54

sort of content, and Facebook and others

27:56

will respond in the economically rational way,

27:58

which is to shutter. down completely. So I

28:01

think senators like Josh Hawley are not going to

28:03

get what they want. They're not thinking

28:05

straight. Yeah, Chamath is going to backfire. Chamath. The

28:07

reason why this is going to happen, if it

28:10

does happen, and you wanted

28:12

to try to be probabilistic about it, is

28:15

because when you look back at the tobacco settlement, the

28:17

original settlement in today's dollars is about $370 billion. If

28:19

you were the trial lawyers and you're

28:24

looking at a combination of Facebook

28:27

and TikTok and all

28:29

of that money, I suspect that

28:32

they probably think that the potential

28:35

that they can extract from these companies is

28:38

going to be multiples of that number. And

28:41

then as a result, their fees will

28:43

be between 20 and 50 percent of that. So

28:46

you're talking about hundreds of billions of

28:48

dollars of

28:52

revenue potential that

28:55

will motivate, I think, these folks to

28:58

get the law

29:02

changed, and then the

29:04

byproduct will not be framed in terms

29:06

of dollars. These are highly

29:08

kinetic issues when you're talking about sexual

29:11

exploitation and young people and mental

29:13

health and suicide and

29:15

bullying. These are very kinetic issues, right?

29:17

And so bringing these to jury trials

29:19

all across the United States, I

29:22

think that they probably think that

29:24

they're on the right side of history in

29:26

winning those things. So, you know, again, I'm

29:28

not saying it's right. They're highly emotional. I'm

29:30

not saying it's right. They're highly emotional. I mean,

29:32

listen. It's going to win. But if people's kids... The stuff

29:35

is going to win. They're going to bring a case

29:37

of, say, teen suicide, okay? Horrible

29:40

that it happens, but

29:43

every time something like that happens, there's going to

29:45

be a huge temptation. I'm sure there'll be trial

29:47

lawyers who specialize in this, to bring

29:49

a case against Facebook or some other

29:51

social media company, and they're going to

29:53

scour through these accounts

29:55

and try to point to examples

29:59

that could have led to... to this result. And

30:01

the truth of the matter is that maybe

30:03

social media contributed a little, but what about

30:05

popular culture and popular entertainment? What about all

30:07

the messages? I'm not debating any of that.

30:09

I know, I'm just I'm pointing out what's

30:11

gonna happen. What about all the messages they

30:13

received? Not through

30:16

the edge cases I got through on social media, but

30:18

through the mainstream entertainment. I mean, all the shows are

30:20

watching on television, all the music they're listening to, the

30:22

things that happened in their schools and day to day

30:24

conversations with other kids. But you can't

30:27

really sue any of those other things, but

30:29

you can sue social media. The

30:31

crazy thing about all of this is that all

30:33

of these lawsuits are funded in part

30:35

by these hedge funds who will do

30:38

litigation finance. And part of putting

30:40

together a well

30:42

performing litigation finance fund is underwriting

30:44

the probability of success. And

30:46

I think when you flow through the probabilities,

30:49

and you apply it to these companies, largely

30:51

because of their profitability and their

30:54

ability to over earn and

30:56

generate profits, I suspect

30:58

that Wall Street is

31:00

probably already involved. If not, they'll

31:02

probably get involved in due course.

31:06

But it's an unfortunate thing, David, I agree, because

31:08

this is sort of like, hey, the rules on

31:11

the field were x and folks operated

31:13

by those and they are clear, they are

31:15

trying to do their best. But again, this

31:17

is where capitalism, the part of capitalism that

31:20

can be awkward and uncomfortable is when industries

31:23

over earn for long periods of time, other folks

31:25

say, I'm going to compete away those returns somehow,

31:27

and I want a share of those profits. And

31:29

I think that that's going to be the large

31:31

motivator. And it's just going to

31:33

result in, I think, these things changing and a

31:35

plethora of lawsuits. And at the end

31:37

of the day, this is about children

31:39

and protecting children. So the obvious solution here

31:42

is society has to come up with a

31:44

number. Sadly, I think that could be a

31:46

veneer case. You know what I mean? Hold

31:48

on, let me finish my thought here. The key thing

31:50

is there's some age in which we all agree it's

31:52

reasonable for kids to be using social media. And there's

31:54

a certain age when we think it's not reasonable. And

31:57

back to capitalism, I think a very good point you made,

31:59

Chamath. These companies are going to

32:01

have to say, well, if we lose the 12 to 15-year-olds, is

32:05

that better for society and

32:07

better for our business? And we just all agree

32:09

that social media should start at 15 or

32:11

16, and then the handset manufacturers and

32:14

the social sites all have to get

32:16

permission from your parents to use them, period, full

32:18

stop. And that's it. And that may

32:20

be where this all winds up, I think. And then

32:22

also explaining the algorithms, I think, is the next thing that's

32:24

going to happen. People are going to

32:26

have to disclose how these algorithms work. I think you're making

32:29

a very good point, which is that is the right conversation

32:31

to have. My point was that

32:33

instead of having that conversation, which is more societal,

32:35

it involves David's right parental responsibility.

32:38

What is our role? Absolutely. By

32:41

being actively involved. And by the way, the trends around

32:43

family formation and the fact that there's way

32:46

more single-parent families make this problem even harder

32:48

because now there's only one person to check

32:50

in and not two people to check in.

32:53

So all these things societally build on itself. And

32:55

for that reason, that is the absolute right

32:58

conversation to have. My point is that's not going

33:00

to be why the rules

33:02

need to get rewritten. The rules will get

33:04

rewritten because there's an economic argument by a

33:06

different sector of the economy, in this case,

33:08

the trial lawyers and other folks, that say

33:10

there's a trillion dollars to be had if

33:12

we get this law changed. They are motivated

33:14

enough to do that. Yeah. A

33:17

parasitic sector. So there is a bill

33:19

right now working its way through the

33:21

California Assembly that would go to Gavin

33:23

Newsom that would prohibit the use of

33:26

social media by under 16-year-olds. So that

33:28

is actually happening. Yeah. I

33:30

agree with you. That's a better debate to have than changing

33:32

Section 230 in a way that's going to lead to more

33:34

censorship. By the way, just on that point, I

33:37

think Republicans need to understand this in particular

33:39

is that the anger

33:41

towards these companies is bipartisan. The

33:44

outrage is bipartisan. The moral panic is

33:46

bipartisan. You saw in that

33:48

hearing, you couldn't really tell the difference between

33:50

Republicans and Democrats. Okay. Full

33:53

display. I wouldn't be surprised if

33:55

they agreed, like Jamal said, on

33:57

some sort of change to Section is

34:01

that Republicans and Democrats have fundamentally

34:03

different objectives. Fundamentally, Democrats

34:05

want there to be more censorship. They say

34:07

this all the time. We want you taking

34:09

down more content, not less. Republicans want there

34:12

to be less censorship, okay? So if they

34:14

agree on the same piece of legislation, only

34:17

one of them can be right, okay? And

34:19

the question is, who's gonna be right? My

34:22

guess is that if Democrats and Republicans agree

34:24

on a Section 230 modification, the Democrats know

34:26

what they're doing, and the Republicans generally

34:28

being the stupid party who get outsmarted all the

34:30

time by Democrats, are going to agree to something

34:33

that they later regret. So at the end of

34:35

the day, I don't think that bipartisan

34:37

legislation should be possible. The

34:39

anger is bipartisan, but the objectives are

34:41

not, and if something gets through, it's

34:43

going to be because Republicans make a huge mistake. And

34:46

just to give a tangible example of this, okay, take

34:49

the Second Amendment, okay? Do

34:51

you think that in this world where there's no

34:53

Section 230, that Republicans are

34:55

stoking me out of conversations online

34:58

about, say, gun enthusiasm? No

35:00

way, because every time some harm

35:02

happens, every time there's a shooting

35:04

of some kind, a plaintiff's lawyer

35:08

is gonna ask to, not the person who

35:10

posted the content, talking about how

35:12

much they love their guns, and you

35:14

know, look, it could be totally innocuous, okay?

35:16

It could be a forum on

35:19

Facebook or Reddit where people are just

35:21

having conversations about gun reviews,

35:23

or gun reviews. Yeah, it could

35:26

be totally innocuous conversations, okay? People

35:28

having the right kind of conversations about guns,

35:30

okay? But you know

35:32

that every one of those

35:35

websites that hosts those conversations

35:37

will be targeted in relation to any

35:39

harm that occurs in the real

35:42

world. And very soon, Reddit and

35:44

Facebook and all the rest will

35:46

feel compelled to ban any conversation

35:48

related to even Second Amendment rights. Okay,

35:51

this is where it will lead if Republicans get rid of

35:54

Section 230. You will be

35:56

the ones targeted, not liberals.

35:58

All right, great discussion. you

36:00

know, it's important to have the right discussion. This

36:02

reminds me of the abortion discussion where nobody would

36:04

ever talk about the number of weeks. Like,

36:07

that's at the core of the issue. If we could agree

36:09

on the number of weeks, we can agree on the age

36:11

here, you know, for kids to use these things, maybe we

36:14

can move forward. Let's move forward on the

36:16

docket here. We got so much to talk about. And

36:18

I think the number one story of the

36:20

week was Elon's pay

36:23

package and this ruling that occurred in

36:25

Delaware. Let me just tee this up here.

36:27

Many of you probably know about this

36:29

already, but in 2018, Tesla's board approved

36:32

a performance-based compensation package for

36:34

Elon. It was approved by 73% of

36:36

shareholders. Elon

36:39

and his brother, Kimball, would have put that at

36:41

80%, but they were excluded, obviously.

36:43

This is lower than maybe some other

36:46

support levels. According to Reuters, you

36:49

typically see 95% for

36:51

a executive compensation package. But

36:53

this one was very unique. It was all stock. There's no

36:55

cash bonus, no salary. 12 tranches of

36:58

stock was very creative in how this

37:00

was put together because Elon got nothing if

37:02

he doubled the value of Tesla, but then if he

37:06

increased the value of the top line

37:08

revenue and the market cap increased

37:11

by $50 billion, he

37:13

got 1% more of the outstanding shares, which

37:15

is an amazing help for shareholders, obviously, because

37:17

the market cap on the company went up

37:20

50 billion. The initial plan

37:22

was only worth about 2.6 billion,

37:24

but since Tesla crushed it from 2018 to 2023, we'll

37:27

throw up a chart here. It's one of the great runs

37:29

in the history of capitalism, how

37:31

revenue and sales grew at this company. So

37:35

it made it the largest comp package in the history of

37:37

public markets. And if you compare Tesla

37:39

to Apple, the second highest increasing stock price

37:41

during that same time period, Apple went up

37:43

345%. Tesla

37:45

went up 800%. In 2018, a

37:48

Tesla shareholder sued Elon and Tesla's board,

37:50

claiming the pay package was unfair. The guy had

37:53

nine shares, a full nine shares, not 10,

37:55

nine, worth $2,500. His

37:57

stake went 10X in those six years. So he made a-

38:00

fortunate on that bet. And

38:02

then on Tuesday, a Delaware judge voided Elon's pay

38:04

package siding with the investor. Elon

38:07

can appeal it to

38:09

the Delaware Supreme Court. Sacks, your thoughts on

38:12

this ruling? I teated up. I think I

38:14

got all the details in there. If I

38:16

missed any, please add them. Well,

38:19

I think in order to reach

38:21

this ruling, the judge had to find three

38:23

things and all of them had to be

38:25

the case in her opinion. Number one, that

38:27

the pay package was excessive. Number two, that

38:30

the process by which they came up with

38:32

the pay package was not

38:34

fair, meaning it was not sufficiently adversarial

38:36

enough that the directors in

38:38

her opinion had too many ties to

38:40

Elon and didn't again take

38:43

enough of a antagonistic

38:47

role in negotiating that package. And

38:49

number three, and I think most importantly, that

38:52

the shareholder vote was invalid because even if

38:54

the first two had been true, the shareholders

38:56

approved it. And that would have been good

38:58

enough, but she says that the shareholders weren't

39:01

sufficiently informed. And

39:03

specifically, I think this argument hung on a

39:05

few internal emails where people said that they

39:07

thought that they could hit the numbers. I

39:10

think that of the three legs of

39:12

this, well, all three have been challenged

39:14

by opponents of this verdict. I mean, number

39:17

one, yes, the pay package ended up being

39:19

a gargantuan amount, but you have to look

39:21

at an ex ante, not ex post. Nobody

39:23

thought Elon could hit all these numbers. Back

39:26

at the time, this package was negotiated. Let's

39:28

be frank. It was absurd. The

39:30

idea that he would 10 X, it was great.

39:33

A great clip with Andrew Ross Sorkin, where they're all

39:35

laughing at the idea that he's going to hit these

39:37

numbers. Remember, this is at a time when Elon was

39:39

going through what was called production hell, where he was

39:41

sleeping on the floor of the factory. Yeah, with their...

39:43

The model three hadn't come out yet, and nobody, nobody

39:45

believed that the model three was going to

39:47

be the hit that it was. In fact, all

39:49

the stories were poo-pooing that idea and basically saying

39:51

that Tesla is basically screwed because they can't get

39:53

the production line working correctly. Yeah.

39:56

You want to play this? Tesla now announcing a

39:59

radical new company. It could be

40:01

perhaps the most radical compensation plan in

40:04

history. The executive will receive no

40:06

guaranteed compensation of any kind at

40:08

all. He gets a salary,

40:10

he gets bonus equity, he only

40:12

gets equity that vests over time, but

40:14

only if he reaches these

40:16

hurdle rates which are, dare I say,

40:18

crazy. The only part of it that

40:21

I think is really relevant is where

40:23

Sorkin says that the milestones are crazy,

40:25

meaning that everyone thought it

40:27

was a pipe dream that the

40:29

company would ever hit these numbers. Okay, so that's

40:32

point number one on magnitude. On

40:34

the second part of the ruling about the

40:36

process, it is true that

40:40

like in most venture backed startups, there's

40:42

a long standing relationship between the founder

40:44

and the investor because they work collaboratively

40:47

to try and make the company a

40:49

success. There were emails that

40:51

came out where Elon shows that, I'm

40:54

not trying to go for the maximum here. Did

40:56

the investors go in with a hostile antagonistic attitude that

40:58

we're going to try and pay you the lease? No.

41:02

But did Elon go in with the attitude that I'm going to try and take

41:04

the most? No. The email showed that.

41:06

What they tried to do was come up

41:08

with something that they thought was fair, that

41:11

would fairly reward him for

41:13

outsized performance. And if

41:15

he had merely increased the value of Tesla

41:18

from 59 billion to 100 billion, he would

41:21

have gotten nothing. Let's just keep that in

41:23

mind. So they tried to come up with

41:25

something that would reward him for outsized performance and

41:27

give him absolutely nothing for merely decent

41:30

or good performance. The

41:32

third point about the

41:34

shareholder vote. I don't think

41:36

that there was anything about

41:38

the shareholder vote that the shareholders didn't know. I

41:40

don't think that the company didn't release. Elon

41:43

always said, yeah, we're going to do this. We're

41:45

going to be one of the most valuable companies

41:47

in the world. He's always been super optimistic about

41:49

their ability to reach these targets. But if you

41:51

looked at all the Wall Street analysts, including Sorkin

41:53

there, they thought

41:55

that these targets were unreachable.

41:58

Well, also to add to that, Sam, you're going to be a very good person. This

42:01

had the largest short position, I believe, at

42:03

that time of any company ever. People

42:06

were betting with their dollars that this company was going

42:08

to zero. There were a ton of

42:10

people who the narrative was, they'll never deliver the

42:12

Model 3. It was two years late, right, or

42:14

something in that range. They

42:16

kept trying to get the Model 3 out. It was taking forever. So,

42:19

yeah, it's absurd. Also in that case,

42:21

Sorkin said in that same clip, there's been a lot

42:24

of speculation of Elon stepping down after the Model 3

42:27

is in production in the judge's ruling. He said the

42:29

exact opposite. There is no reason to leave Elon on

42:31

leave, except that he was running like

42:33

two or three other companies. It was actually quite

42:35

possible that he would leave. He never wanted to

42:38

be CEO of Tesla. People forget that, too. He

42:40

had tried three CEOs of Tesla, and

42:42

he only took over Tesla. I remember it

42:44

was because he said, Jason, this

42:46

thing's going to fail if I don't take it over. He

42:49

tried three different CEOs in the beginning. People

42:51

forget that fact. And

42:53

there was Scuttlebutt that he would hire somebody. I

42:55

remember there was rumors about Sheryl Sandberg maybe getting

42:57

off of the job or something like

42:59

that. I remember he was going through production

43:02

hell. He was sleeping on the factory floor. And

43:04

he was talking in interviews about how miserable his

43:06

life was at that time. I mean, pan confirm.

43:09

Yeah, exactly. So, look, did he have leverage to

43:11

basically say, you know what, let's hire a CEO?

43:13

Yeah, absolutely. Okay, Shamath, any

43:15

steelmen you can do of the other

43:18

side here, like as an investor, public

43:20

market investor sometimes? When

43:22

you saw that pay package, what did you think? I

43:25

don't know if you were a shareholder of Tesla at the time

43:27

or not. In the mid teens,

43:30

I started investing in

43:32

public stocks as well

43:34

as private tech companies. And

43:37

I got invited to give a presentation

43:39

at the Irisone conference, which is like

43:41

the most prestigious conference

43:43

of public market investors. In May, you show

43:45

up at the Lincoln Center,

43:48

and everybody in the audience is paying like $10,000

43:50

a ticket or something. And all the proceeds go

43:52

to a foundation

43:55

in support of this gentleman Irisone who passed away.

43:58

But in any event, it's like, Ackman. and

44:04

I picked Tesla. And I was a very big

44:06

supporter in many ways and still

44:08

am. And

44:11

I think that I knew the company, frankly, better

44:13

than most people, except for him,

44:16

obviously. But I think that I studied

44:18

this company quite deeply. When I and

44:20

I'm just setting the context, when I saw the

44:22

pay package, I thought, he's

44:25

making a mistake. This is unachievable.

44:29

I thought the probabilities were in the

44:31

low single digits. And

44:34

then he did it, which just

44:36

kind of shows how incredibly adept

44:38

he is as a CEO

44:41

and a manager and an executor.

44:46

So then, you know, to go back five or six

44:48

years later, after he actually

44:50

does something that

44:53

so massively disproportionately

44:56

positively impacted investors, and

44:59

then to just rescind it and unwind it,

45:02

I think is really un-American and unfair.

45:05

And I think it sets a very poor

45:07

standard for why anybody

45:09

should actually build a company governed in

45:11

Delaware. It makes no sense anymore. And

45:14

just to give you that example, he and

45:16

I have both now done this, but like these

45:18

incremental companies that I've started are

45:21

in Nevada. They're in different places

45:23

because I find the Delaware court

45:25

slightly and increasingly unpredictable

45:29

and acting with other mandates that they

45:31

weren't ever given. So what

45:33

do you think that mandate is? You had

45:35

a place where there

45:37

was highly predictable governance, and

45:40

they had very narrow ways in which

45:42

they would act and opine.

45:46

And I think in a situation like this, where

45:48

you had every opportunity to

45:51

actually vote this thing down, and

45:54

what little of the documentation that I saw

45:56

about the communication back and forth Doesn't

45:59

seem to support. For his theory that

46:01

he rammed through, nobody rams anything

46:03

through over nine months where he

46:05

takes months, long breaks and. He

46:08

tells the Gc this is actually more than

46:10

I wanted. Nobody does. Yeah, if you're needs

46:12

the opposite of ravaged something through. Bread.

46:15

Was A and and I suspect if you really

46:17

asked him and I haven't but I would. She.

46:20

Probably thought it was like

46:22

largely crazy. And. So I think

46:24

a lot of people thought that week that we

46:26

were as shareholders and I'll tell you that I

46:28

felt this way. Getting. His

46:30

hard work. And. That he may

46:32

have just mathematically big mistake it. So yes,

46:35

he got fifty five or. That.

46:37

Packages or a fifty five point eight billion.

46:39

But. You're missing the point where every

46:42

other investor made five hundred billion dollars.

46:45

Friday. And investors as little as there's

46:47

did approve it. It will have a chilling

46:49

effect I think. and how people think about

46:52

compensation it will cause companies. To

46:54

be even more constipated and

46:56

sclerotic. An unimaginative.

46:59

As a result of this, Because.

47:01

The most talented individual

47:03

entrepreneurs. Now. I've even

47:05

more of an incentive. For. Incorporating

47:08

in other places and also

47:10

staying private. And I

47:12

think what that deprives. Is

47:15

the broader shareholders including this gentleman? Look,

47:17

we live in America. He had the

47:19

right to sue. He. Had nine

47:21

shares and he was able to

47:23

bring this lawsuit. Nine Shares. Image.

47:26

David and Goliath. yeah I made the idea that

47:28

are ninety trashy ten x their money but what

47:31

you desert but the you know? unimaginable at night.

47:33

or I don't know if he remained a shareholder

47:35

to this or period. But even those nine shares.

47:38

Text. In value. As

47:40

as. But he would now

47:42

be deprived of that in this next

47:44

the duration of the Lawn Mosques Because

47:46

why would they ever go through this

47:48

to put that much. Work.

47:51

Into something to be so at risk

47:53

personally, your own mental and physical health.

47:55

We saw him in those periods. And

47:59

then to have taken. way I think is

48:01

deeply deeply unfair. Sacks. You're

48:03

right. This deal was a win-win.

48:05

I mean, if Elon could achieve these numbers,

48:07

it was good for him and it was

48:09

great for shareholders and that's why I think

48:11

the key point is that 73 or

48:15

80 percent, depending on how you want to count it,

48:17

approved this deal. I think they knew

48:19

everything relevant that they needed to know when they

48:21

approved it. This is

48:23

the deal that most shareholders and most

48:25

companies would want for the CEO.

48:28

The deal is you get nothing unless

48:31

you deliver an outsized return for shareholders.

48:34

Most CEOs won't sign up for this deal. Most

48:37

CEOs work their way up through the corporate ladder.

48:39

They get into the CEO chair and then they

48:41

pay themselves huge amounts of money in regards to

48:43

whether the company succeeds or fails. That's

48:46

the deal they want because they don't really have confidence

48:49

in themselves to deliver what

48:51

Sorkin called the crazy outcome.

48:54

Elon had the confidence in himself to deliver the

48:56

crazy outcome and nobody was really complaining.

48:58

They were complaining about this until, like you said, this

49:01

small shareholder who's really basically

49:03

just a name

49:05

planer for the trial lawyer's bar or somebody

49:08

who wants to get Elon to bring this

49:10

suit. Six

49:12

percent to create 600 billion

49:15

in value. I mean, it's quite a bargain,

49:17

folks. I think if you went to Ford

49:19

or GM and said, hey, would you like Elon to be

49:21

your CEO? I think they'd offer them

49:23

half the company. Mary Bear doesn't want this deal.

49:26

Yeah, no, J. Cal Sacks said something really important

49:28

that you just mentioned as well, which is that

49:30

if you actually look at the average compensation plan

49:32

of most public company CEOs,

49:35

it actually is very much counter

49:37

to shareholder value. I'll give you

49:39

one simple example. If

49:41

you look at the number of CEO comp packages

49:43

that are tied to earnings per share growth, but

49:47

then if you actually look at how these

49:49

CEOs achieve their EPS targets, they

49:52

do it by raising debt. So in

49:54

debting the company, increasing the enterprise value

49:56

by loading the company up with

49:58

debt and then driving repress. purchase plans. And

50:02

what do those do? I mean, look, if you look at

50:04

Disney, where do their repurchases come from? From debt. So

50:06

does debt help an equity shareholder?

50:09

It categorically does not. Under no world

50:11

does it do that. However,

50:13

for the CEO and for the handful

50:16

of investors that can hold on for

50:18

long periods of time, or to have you, they

50:20

benefit from a lower share count, they benefit from

50:23

increased EPS, and then the CEO gets compensated. And

50:26

so to say that tacitly, what

50:28

you disapprove of are

50:30

performance incentives, and what you

50:32

are actually approving of are

50:35

mechanics that saddle a

50:37

company with debt and allow

50:40

basically gaming of numbers is

50:43

what you've implicitly also set.

50:46

And this is where I think the Delaware

50:48

court used to be

50:50

known for a level of

50:52

intellectual clarity that would have prevented that

50:54

implicit assumption. But that's now what's left

50:56

on the table. And I think it will have

50:58

a ripple effect across how

51:01

so many other companies design their

51:03

compensation plans, how CEOs think about

51:05

risk. No CEO, as

51:07

Zach said, will ever want

51:10

an incentive-laden plan like this, ever. They will want to

51:12

get- Right, because 10 years later, you could do all

51:14

the work and then it gets canceled. Canceled.

51:17

So why would you completely do it? Because it's

51:19

not something that is totally gameable, right,

51:22

where you'll have 90 plus percent

51:24

support and approval because

51:26

of how vanilla and benign it is

51:28

on the surface, but

51:31

it will actually be quite a terrible

51:33

plan underneath the surface. And what I

51:35

mean specifically are these EPS targets for

51:37

CEOs. So Elon did the one

51:39

thing that was crazy, which was I'm just going

51:41

to do it based on pure profitability and performance,

51:45

and he gets punished. And all these

51:47

CEOs in this other class were like, let

51:49

me saddle these companies with debt that actually

51:52

undermine shareholders have been rewarded.

51:54

There is already a mechanism for somebody who disagrees

51:56

with the compaction. This person who owned the mad

51:58

shares could have sold the- their shares, it's a

52:00

liquid market. At any point in time, that person can

52:02

say, I don't agree with this. I'm taking my nine shares

52:05

and $2,500, I'm going to put it in Apple. I'm

52:07

going to put it into, I like Tim Cook's

52:09

pay package better, I like Betteoff's package better and

52:12

I'll make my best share. The person had choice,

52:14

yes, Max? This

52:16

person was not a victim. He's not victim

52:18

because he could have sold the shares and bought

52:20

other shares, and he's not a victim because he

52:22

10Xed his shares and beat the market. Yeah. I

52:24

mean, look, I don't place the blame on the

52:27

shareholder per se because

52:29

this is really about a judge's interpretation of Delaware

52:31

law and what companies are allowed to do. So

52:35

whether the shareholder was harmed or not

52:37

or had one share or a million shares,

52:39

that's just the way that this

52:41

case gets into court. The question is the interpretation

52:43

of Delaware law. And again, the part of

52:46

this that I would go back to that I

52:48

think was the mistake is that I think the

52:50

shareholder vote was valid. I

52:52

think the process was valid as well. I don't

52:54

know that the process has to

52:56

be this extremely adversarial process where one side's

52:58

pulling for the most and one side's pulling

53:00

for the least. I don't think either side

53:02

operated that way. But again, I think shareholders

53:04

knew what they needed to know. And the

53:06

evidence of that is in all

53:08

of the public coverage at that time, nobody

53:11

thought Elon was getting a good deal, right?

53:14

No one thought he was getting successfully good. They thought he was

53:16

getting a delusional

53:19

deal, meaning delusional for him. And

53:22

everybody seemed to be okay with the

53:24

idea that if somehow Elon

53:26

could pull off this miracle, that he would

53:28

be entitled to this compensation, and he would

53:30

get nothing if he did it. Now

53:33

again, I would go back to, do you

53:35

think Mary Barrow would have wanted

53:37

this deal? While Elon was

53:39

spending the last five, six years

53:42

making Tesla go 10x, let's look at GM.

53:45

GM stock price was trading more or less

53:48

in a flat range. I

53:51

don't even think the share price doubled. Yeah,

53:54

compare it to you see the compare to button there,

53:56

but compare to and then put Tesla in there. Right.

53:58

So if Mary Barrow GM had signed for that

54:00

comp package, you would have gotten absolutely nothing,

54:02

which is why I'm sure that the thought

54:04

in everyone crossed their mind of having an

54:07

all incentive-based comp package that doesn't

54:09

even start until you at least double the

54:11

value of the company. By the way, on those

54:13

milestones, it wasn't just

54:16

the share price. It was share price

54:18

and revenue or profit targets being met.

54:21

So in other words, if the stock

54:23

just rallied because of macroeconomic conditions, like

54:26

for example, interest rates go down and then all

54:28

of a sudden the whole stock market goes up,

54:30

that was not good enough. It was also tied

54:32

to the combination of stock

54:35

value increases with revenue

54:38

and profit targets being met. It was a compact

54:40

because that couldn't be gamed. I mean, you

54:43

have to hit the numbers in order to get the

54:45

comp package. That's what she got. And I don't want

54:47

to pick too much on Mary Berry here. I guess

54:49

I'm picking her out because Joe Biden said that she

54:52

created the EV revolution. Well

54:54

done. They sold 17 cars. They

54:57

canceled the car. Congratulations.

54:59

Yeah. I mean, by the way,

55:01

there was a remarkable article in the Wall Street Journal

55:03

just in December where they

55:06

finally admitted that this whole idea

55:08

that GM had been leading any kind

55:10

of revolution or had been a transformational company

55:12

was revealed as basically a ruse. But

55:16

look, you have to wonder how much

55:18

of this is political. I mean, Delaware

55:20

is Joe Biden's state. He's the senator.

55:23

There were articles describing

55:26

how this judge was connected to

55:28

a law firm that had helped

55:30

Joe Biden get elected. And you

55:32

just kind of wonder whether Biden's

55:34

directive from the White House podium that we got

55:37

to get this guy or we got to look

55:39

into this guy, that he's an enemy, which

55:42

has been reflected through all of

55:44

these different administrative agencies' sudden actions

55:46

against Elon's companies for the Glass

55:49

House. Starlink and the FCC.

55:52

Yeah. There's been a whole bunch of these

55:54

issues. And you just wonder, is this another

55:56

manifestation of that? Yeah.

55:58

I mean, the... The conspiracy

56:01

theories are quickly coming

56:04

closer to reality. And we definitely need

56:06

to investigate that for sure, because the

56:08

FCC thinks it's crazy spending

56:11

$15,000 putting fiber into people's homes

56:13

when you could spend $1,500 giving them Starlink

56:15

makes no sense. And those are the same people who

56:18

have to wait for fiber, which I read this in a previous

56:20

episode. It doesn't make Starlink anyway.

56:22

They're going to buy Starlink while they're waiting for

56:24

the government fiber for 10 years. It's absurd. I

56:26

do want to uplevel this just back to what

56:29

I was saying. And I'll try to make the

56:31

point better. I think it's

56:33

really, really unfair what's

56:35

happening to Elon. But I

56:37

want to take a step back

56:39

and think about just the bigger picture. If

56:43

we want an

56:45

economy of vibrant companies that do

56:47

great things, we're going

56:49

to need to reward people to work at those companies.

56:53

In order for the United

56:55

States to continue to exert some

56:59

amount of dominance in the areas that we think are

57:01

important, we need to be economically

57:03

vibrant. And fair. And

57:05

fair. And the problem is that this

57:07

really perverts incentives. And it's going to exacerbate a

57:10

trend that I think has actually held a bunch

57:12

of our companies back. The first

57:14

thing I just wanted to show you guys was just this little

57:17

thing that it's just a pie

57:19

chart that shows, OK, how do CEOs

57:21

get paid? So

57:23

we want CEOs to go and

57:25

run really important companies. Right?

57:28

We want those companies to do great things in

57:31

the world. We want these CEOs to be deeply

57:33

motivated to go and push the boundaries of what's

57:35

possible. Right? We want all that. And

57:38

so we want to compensate them to do those things. This

57:40

is just a representation of how CEOs have

57:42

structured their pay packages. And you'd

57:45

say, wow, all of these numbers seem reasonable.

57:48

Return on capital, total shareholder return, earnings

57:50

per share. So what you

57:52

need to do then is double click into this. Right?

57:55

So this is how CEO pay packages

57:57

are made. and

58:00

this is my problem with a bunch of these

58:02

companies, all the returns,

58:04

all that shareholder return that you saw,

58:06

the return, it's all driven by share

58:08

buybacks. This is an

58:11

artificial gamesmanship of performance. This is

58:13

not companies pushing the boundaries,

58:15

you know? This is not Disney

58:17

figuring out. It's not innovation. This

58:20

is Disney creating foot faults and

58:22

falling into potholes of their own

58:24

making. But you can drive

58:26

great compensation just because you can game the

58:28

way that you are paid. This

58:31

doesn't make America great.

58:34

It doesn't create American exceptionalism. In fact,

58:36

it just creates a bunch of financial

58:40

engineering that results in

58:42

marginal companies. And David just gave an example

58:44

of one that could be considered that. So

58:48

the point is that when you have one person

58:50

that tries to buck this trend, I

58:53

just think it has a huge impact

58:56

by basically saying, hey, play the game

58:59

like everybody else. Just game

59:01

it. Just dial it in from your country

59:03

club. Make sure that you become

59:05

a member of Augusta. That's more important

59:07

to us than actually sleeping on the factory

59:09

floor. And don't take risk. I mean,

59:11

if you think about what do you do if you're Apple,

59:14

you're Google, you're Microsoft, you're sitting on tons of cash.

59:17

The safe thing to do, you see what they do. You

59:20

just buy back the shares. You

59:22

can't do M&A. You issue debt. Yes,

59:24

and then you buy back the shoes. You

59:27

encumber the shareholders with

59:30

debt, and then you

59:32

artificially inflate total shareholder return and

59:34

earnings per share and the return on invested capital

59:37

because of how we can play these games in

59:39

America. So right now what we

59:42

are doing is we are not motivating CEOs

59:45

to run great companies. We're motivating

59:47

CEOs to understand financial arbitrage.

59:49

The result will be crappier

59:52

companies that diminish American

59:55

exceptionalism. That is the only outcome.

59:57

Perfect, we said. And there really are two caveats there.

1:00:00

number one. We have to let M&A occur as

1:00:02

well because that's a better thing to do in some

1:00:04

cases with this excess capital

1:00:06

profits people have sitting there. And the

1:00:08

only time really to buy shares back is when you

1:00:10

think they're undervalued. You would agree. Well, to your point,

1:00:12

I actually think you're absolutely right. If you have a

1:00:15

bunch of CEOs that don't know what they're doing, which

1:00:17

is what these charts kind of show, let them buy

1:00:19

whatever they want, because they're going to screw it up.

1:00:21

And that's fine for us anyways. Yeah, it's great. So

1:00:23

we refer fluid marketplace. The CEO

1:00:25

that you don't want to have be

1:00:27

able to buy companies is the actually

1:00:29

motivated one to get paid

1:00:31

when things go really well and to be more

1:00:33

profitable. So that would be the

1:00:36

CEO where you would be scared. Oh my gosh,

1:00:38

more M&A for that person may be bad. Yes.

1:00:40

But more M&A for these CEOs is who cares?

1:00:42

Yeah, Microsoft starts buying a bunch of stuff. Google

1:00:44

starts buying stuff at their primes. Man, that's scary,

1:00:46

right? When Bill Gates went on a heater, he

1:00:48

bought, I think he bought PowerPoint,

1:00:52

a bunch of these suite was bought, not created.

1:00:54

And then Google and Facebook, man, they went on

1:00:56

heaters, YouTube, Instagram, WhatsApp. And that was the golden

1:00:58

age of M&A. All right, we got a couple

1:01:00

more things on the docket. I just found that's

1:01:04

good sex. Great conversation. So just while

1:01:06

we were talking, I just looked up

1:01:08

what Mary Barra's compensation was over

1:01:10

the last several years. And

1:01:13

according to this source, she

1:01:15

was paid $167 million for

1:01:18

four years. So while Elon got zero,

1:01:20

thanks to the judge's decision, Mary

1:01:22

Barra, basically, if you add in probably the fifth year,

1:01:24

let's call it roughly $200 million of compensation

1:01:28

over the last five years. Now look at

1:01:30

the stock chart of GM. Literally,

1:01:32

it is the same

1:01:34

price today as it was five years ago.

1:01:37

It's $38 a share today. It was $38 a share five years ago.

1:01:41

No, but it's worse. It's probably worse

1:01:43

because they've issued options in sense. So

1:01:45

there's dilution you have to take in.

1:01:47

So it's worse than that, actually. But

1:01:49

at best, the stock price is flat.

1:01:52

And the stock basically fluctuated in line

1:01:54

with market trends when there was an

1:01:56

asset bubble in 2021. The

1:01:58

share price went up about 50%. and

1:02:01

she got even more stock and options

1:02:03

during that time, but it was

1:02:06

a no-lose proposition, basically. She got paid regardless

1:02:08

of how the stock did. And

1:02:10

then when there was simply market volatility, she did

1:02:12

even better. One of the nice things

1:02:14

about Elon's package is that unless

1:02:16

Tesla at least doubled in value, he

1:02:18

would get nothing. And it

1:02:20

was tied to milestones around revenue and

1:02:23

profit. So he couldn't just ride market

1:02:25

volatility to getting more comp.

1:02:27

If you gave this executive the same deal

1:02:30

as Elon, she would have had to double 38. So

1:02:33

she would have had to get to $76. About

1:02:36

80, all around, 80 bucks a share. Yeah, she'd have to

1:02:38

get to 80 bucks a share before she got anything. I

1:02:41

bet you if she got zero, if she got paid $1

1:02:43

in her healthcare and she had to get to $80 a

1:02:45

share, I bet you that would be an $80 stock price.

1:02:48

Well, I don't know if she has the

1:02:50

ability to engineer that

1:02:52

outcome, but I doubt- Oh,

1:02:54

so she's saying she's unqualified. No,

1:02:57

well, the Wall Street Journal said it. The Wall Street Journal just

1:02:59

had this 10 euro- No, that's my

1:03:01

point. Where they said that she failed. They're

1:03:04

hiding the importance then. Well,

1:03:06

look, I mean, I don't want to say she's in conflict. I

1:03:09

just want to say that the stock price is the same. The

1:03:11

Wall Street Journal had an article talking about all- She swept 200

1:03:13

million. All of her transformation initiatives have failed.

1:03:15

She swept roughly 200 million over just the last five

1:03:17

years. I think she's been there 10. So

1:03:20

how is she in charge? She's probably made

1:03:22

several hundred million dollars and

1:03:24

the company hasn't created any value for shareholders. So how

1:03:27

is she still in charge? But just Jason, this is

1:03:29

the way the Fortune 500 works. It's

1:03:31

a country club, okay? Who

1:03:33

gets appointed to these companies? These companies

1:03:36

are not run by founders. They're not

1:03:38

even run by VCs or serious skin

1:03:40

of the game. The kind of directors

1:03:42

that this judge didn't like, okay? It's

1:03:45

run by people who play the game.

1:03:47

They basically are on other boards and

1:03:50

it's basically a back-scratching club. And

1:03:53

they choose the CEO. They choose someone who's

1:03:55

politically savvy, who's worked their way up through

1:03:57

the system, who donates to the right people.

1:04:00

who can get Joe Biden to come to a

1:04:02

factory and talk about how great they are and

1:04:04

hold an E.B. summit at the White House and

1:04:06

invent this fiction that

1:04:09

they were responsible for this innovation. This

1:04:11

is basically how the system works. So, crap.

1:04:13

I'm glad that women have been admitted to

1:04:16

this country club. It is still a

1:04:18

country club. It is still a back scratching club.

1:04:20

It is basically a collection of people who don't

1:04:23

create any value, but pay themselves enormous amounts of

1:04:25

money, hob not with the right people, and work

1:04:27

their way in with the powers that be at

1:04:29

the White House, who then talk about how great

1:04:31

they are, while actually

1:04:33

accomplishing nothing. Nothing. Zero

1:04:36

point zero. I think the common through

1:04:38

line in these two conversations we've had

1:04:40

this morning is

1:04:42

about just how capitalism

1:04:44

can be perverted, if

1:04:46

you will, by a small group

1:04:48

of actors. In the

1:04:51

first example, I think what we were

1:04:53

talking about is the trial lawyers' association

1:04:55

and their ability to impact

1:04:57

and influence what is going to happen

1:04:59

around Section 230. In this example, I

1:05:02

think what it speaks to is the influence that

1:05:04

a small group of consultants can

1:05:07

have in having built a very

1:05:09

thriving business in designing these compensation

1:05:11

plans for CEOs. It reminds me of

1:05:13

a clip of

1:05:15

Buffett and Munger and

1:05:18

Nick, if you just want to play it. I

1:05:20

think they say it in very clear plain English.

1:05:22

Not to debate their opinion, just to state it,

1:05:24

but Nick, if you want to play it. Do

1:05:26

not bring in compensation consultants. We don't have a

1:05:28

human relations department. We don't have a... The

1:05:30

headquarters, as you could see, we don't have any human

1:05:32

relations department. We don't have a legal department. We don't

1:05:34

have a public relations department. We don't have an investor

1:05:37

relations department. We don't have those things, because

1:05:40

they make life way more complicated, and everybody

1:05:42

gets a vested interest in going to conferences

1:05:44

and calling in other consultants, and it

1:05:46

takes on a life of its own. Well, I

1:05:49

would rather throw a viper down

1:05:51

my shirt front than hire a

1:05:53

compensation consultant. Tell

1:06:00

me which kind of consultants you actually like, Charlie.

1:06:03

Oh, man. Waldorf

1:06:05

and Stadler, you know, from the

1:06:07

Mumpet Sachs. They remind me of Stadler

1:06:10

and Waldorf. Well,

1:06:13

you mentioned... Grumpy. You mentioned

1:06:15

this is a problem in capitalism. I think

1:06:17

there's two kinds of capitalism, broadly speaking. There's

1:06:19

crony capitalism and there's risk capitalism. Risk

1:06:22

capitalism is the founder who starts with

1:06:24

nothing but an idea along

1:06:27

with the investors who are

1:06:29

willing to write a check knowing

1:06:31

that nine times out of ten, it's going to

1:06:33

be a zero. But maybe in

1:06:35

that one out of ten chance, it's going to be

1:06:37

an outsized return. That is true risk

1:06:39

capitalism. Everyone has skin in the game. They work together,

1:06:42

entrepreneur, board members to try and create

1:06:44

a great outcome and they

1:06:46

work out an arrangement where

1:06:49

everyone benefits. It's a win-win situation.

1:06:51

Okay. That is risk capitalism. That's

1:06:54

the part of our economy that drives all

1:06:56

the innovation, all the progress, all of the

1:06:58

job creation. Then you got crony capitalism.

1:07:00

You got these companies that have been around for

1:07:02

100 years. The value was

1:07:04

created by people long dead. And

1:07:06

it is now managed by both

1:07:09

directors and professional managers who work their

1:07:11

way up through they go to the

1:07:13

right business schools and they join the

1:07:15

right organizations and they donate the right

1:07:17

politicians. And they somehow

1:07:20

engineer a situation where they get in

1:07:22

control and then they pay themselves as

1:07:24

much comp as they can possibly justify

1:07:27

whether or not they create any value for the shareholder.

1:07:30

That's what we saw at GM.

1:07:32

And that's crony capitalism. And

1:07:34

while they're doing it, the president's

1:07:36

son is probably going to figure out a way to take a nice

1:07:38

big chunk out of it too. Okay. That's

1:07:41

the system that we have. And Cohen's the great. Here

1:07:44

we go. Now, which

1:07:47

of these two systems receives the

1:07:49

brunt of the criticism by the

1:07:51

mainstream media? Who is attacked

1:07:54

and who is celebrated? Okay.

1:07:57

Here we go. There's your rest. I've

1:08:00

seen a zillion attacks on Elon

1:08:02

Musk. I saw one article pointing

1:08:04

out that all of Mary Bear's transformation in

1:08:07

General Motors was a failure, created no value

1:08:09

for shareholders, and the whole thing was basically

1:08:11

a bot. Well, how's the union doing and

1:08:13

how did the union go? One article. And

1:08:15

I'm frankly shocked that the Wall Street

1:08:17

Journal even ran that article. Yeah, okay.

1:08:20

Yeah. And how did the union do?

1:08:22

And who did the union get behind and vote for? Yeah, let's

1:08:24

maybe double click on a couple items there. We'll see. All

1:08:26

right, let's see. I want to go over one more thing. I'm going to

1:08:29

go over the last few years and I just wanted to talk a

1:08:31

little bit about IPOs possibly coming back.

1:08:33

I just interviewed Alexis Ohani and the

1:08:35

founder of Reddit, which according to Bloomberg,

1:08:37

they've been advised by potential

1:08:40

IPO investors to target a $5 billion

1:08:42

valuation. They're going to go public possibly

1:08:44

in March, which is wild. That's only a

1:08:46

couple weeks away. In peak, ZURP,

1:08:48

Reddit had raised at a $10 billion valuation. That

1:08:50

was back in 2021. They

1:08:53

were valued in $15 billion in the secondary market.

1:08:55

That's where people like previous employees,

1:08:58

angel investors, et cetera might trade their shares.

1:09:02

And so if it goes out of five, it's

1:09:04

going to be between a 50% to their tear cut and it

1:09:08

is trading at $4.5 billion. Chamath,

1:09:10

we talked about this a bunch, the

1:09:13

downrun IPOs, Instacrat, I think being

1:09:15

the best example they got out, but they've

1:09:18

been hovering at a

1:09:20

really low number for a long time and

1:09:22

people have been talking about them possibly being

1:09:24

a takeout candidate by DoorDash or Amazon or

1:09:27

Uber. So your thoughts on the Reddit IPO

1:09:29

news? I think that if I

1:09:31

had to price the IPO, I would

1:09:35

be modeling two important

1:09:37

levers in the business. The first is, what

1:09:40

is the actual attainable

1:09:42

revenue from my

1:09:44

audience? And so what

1:09:47

is the ARPU of the average Reddit

1:09:50

user? And you can

1:09:52

model it as a distribution and I think Facebook

1:09:54

has the best data because they've been publishing it

1:09:57

in their quarterly returns for a very long time now.

1:10:00

for over a decade, which is there

1:10:02

is a distribution of value of a

1:10:04

Facebook user economically, right? At

1:10:06

the upper end, you have the folks that are

1:10:08

on Facebook proper in America,

1:10:12

in a certain age band, in certain states that are probably

1:10:14

like 30, 40, 50 dollar

1:10:16

ARPUs, all the way down to, in

1:10:19

developing countries, those users are worth

1:10:22

low single digit dollars economically. And

1:10:26

I think that people will have to very much

1:10:28

understand what is the average Reddit user and

1:10:31

what is the distribution of economic value that they represent. That's

1:10:35

the first thing. And I think that that's really the thing that will

1:10:37

determine whether it's worth 5 billion or 10 billion or frankly 2 billion.

1:10:42

And then the second key lever, it

1:10:44

will be the risk factors in

1:10:47

the IPO because where the shareholder lawsuits

1:10:50

will come from, which

1:10:52

will really dictate if the how the

1:10:55

hedge fund community buys this thing, is

1:10:58

going to be the potential for

1:11:00

my ad ran against content that

1:11:02

is deeply offensive to me, that

1:11:05

whole construct. And

1:11:07

I think that they are going to have

1:11:09

to very carefully ring sense that liability to

1:11:12

get this IPO to be successful, but

1:11:14

also for them to execute a scaled

1:11:18

ad revenue business. And

1:11:20

not spending enough time on Reddit,

1:11:23

I don't know how bad of a problem this

1:11:25

is. I don't think it's 4chan

1:11:27

or 8chan as an example. But

1:11:29

I also don't think it's Facebook and Instagram. And

1:11:32

so it's kind of somewhere in the middle. And

1:11:34

I think that those risks are really what's going

1:11:36

to determine its terminal valuation. You know that they

1:11:38

they've always been under monetized, 800

1:11:42

million dollars in revenue reportedly, and 400

1:11:44

million monthly active users. So two bucks

1:11:46

a user compared

1:11:48

to 2030, 40

1:11:50

for the prime users

1:11:52

on Facebook's

1:11:54

network. So it's totally underutilized. Part of it is it's

1:11:57

a little bit of spicy content. Part of it is

1:11:59

that that's the number of including all the

1:12:01

international users. Of course,

1:12:03

SACS, there is a concept that Reddit

1:12:05

has the greatest pool

1:12:08

of data for large language

1:12:10

models. And something

1:12:12

like say Quora, maybe YouTube, amongst

1:12:14

the great pools of data. So

1:12:16

you think there's a play here with that? They have talked

1:12:19

about they want to get paid for licensing and that if

1:12:21

you want to use their data for your language money, you

1:12:23

gotta get permission to your thoughts, SACS. Sure,

1:12:25

I mean, that's gonna be an incremental revenue source

1:12:27

for sure. It's hard to know exactly how valuable

1:12:29

that is because we're still in the early innings,

1:12:31

but I mean, they can definitely do something with

1:12:33

that data. Brock's whole competitive advantage is having exclusive

1:12:35

access to Twitter's data, which is

1:12:38

updated in real time, basically, by

1:12:40

hundreds of millions of users. So yeah,

1:12:42

look, that data is valuable. We don't know

1:12:44

how much. I guess the numbers I saw

1:12:46

were that they're doing about 800 million

1:12:48

of revenue, growing about 20% a year. The

1:12:52

$5 billion valuation seems, I think, pretty good.

1:12:54

I mean, is it down from 10 at

1:12:57

the peak in 2021? Sure,

1:12:59

but everything's down since that peak.

1:13:01

I mean, that was definitely a bubble. I mean, I

1:13:03

can tell you, we bought some shares as

1:13:05

a late stage investment, I think, in 2018 at

1:13:08

a $2 billion valuation. Okay.

1:13:11

So, you know, a two and a half X in five years. I mean, it's

1:13:13

not setting the world on fire, but it's not a bad outcome.

1:13:16

Yeah. And you know, the

1:13:18

investment bankers will know how to price

1:13:20

this to take it out and make it successful.

1:13:22

Yeah, and if it becomes a billion dollars in

1:13:24

revenue and have a 20% profit margin, 200 million,

1:13:29

you can start doing your back of the envelope math there for

1:13:31

a 25 EBITDA, you know, 20 times price

1:13:34

earnings ratio. So it doesn't

1:13:36

seem outrageous. It does seem like

1:13:38

such valuable and under-monetized asset.

1:13:42

Do you think there's a likely acquirer here, if you were

1:13:44

to think about somebody who might want to own this? Do

1:13:46

you think it's a Microsoft for the data, Google for

1:13:49

the data? Yeah, I think there's probably people who would

1:13:51

like to own this, but the problem is that, well,

1:13:53

two problems. One is they just can't get it through.

1:13:56

We've talked about this before. The M&A window is

1:13:58

even more. closed than

1:14:00

the IPO window, I would say. And

1:14:03

the other thing is just because of

1:14:05

the raunchy content and all

1:14:07

of the brand issues that come with that,

1:14:10

it's not clear to me that let's say Microsoft

1:14:12

would want to own that headache. You know, they

1:14:14

might not want to be hauled up in front of these

1:14:16

congressional hearings that we talked about, these

1:14:18

kangaroo courts where it's very easy

1:14:20

to go on Reddit and pick out, well,

1:14:22

what about this post? What about that post?

1:14:24

Why'd you let that one through? Why'd you

1:14:27

let that one through? Well, because it's a

1:14:29

platform of user-generated content where hundreds of millions

1:14:31

of people post what, billions of items, and

1:14:33

you can have the best content moderation policy in the world.

1:14:37

I think that Reddit is the honeypot of edge

1:14:39

cases. It is the place you go when

1:14:42

you're just so disaffected that you can just

1:14:44

let loose anonymously. It's not. Right.

1:14:47

I mean, at a certain point, you have to realize that when people

1:14:50

cherry-pick those edge cases, what they're really

1:14:52

saying is a platform like this shouldn't

1:14:54

exist. Yeah. Right. Because

1:14:58

there's no way to eliminate every

1:15:00

single one. Which is basically like saying, if

1:15:02

you just take platform, you just take conversation,

1:15:04

you're saying this conversation shouldn't be allowed to

1:15:06

exist. They don't want user-generated content to exist.

1:15:08

They don't want what, remember, within your time,

1:15:10

it's called unfettered conversations. Unfettered

1:15:13

conversations. They want controlled conversations.

1:15:15

Yeah. Yeah. Pretty

1:15:17

dangerous. It just reminds me

1:15:19

of, remember, Bob Iger for

1:15:21

like 10 seconds was actually considering Disney

1:15:24

buying Twitter. Can

1:15:26

you imagine if they actually bought it, what would

1:15:28

have happened? I mean,

1:15:30

it would have been chaos. Well,

1:15:32

it would have been content moderation on

1:15:34

steroids where they would

1:15:37

have massively empowered and scaled up content

1:15:39

moderation even more than what Jack Dorsey's Twitter

1:15:41

was doing. I think Jack actually,

1:15:43

he was unable to operationalize his principles, but he

1:15:45

did have principles in favor of free speech. Absolutely.

1:15:49

Whereas Disney, I don't even think

1:15:51

has those principles. So... No,

1:15:54

they would have censored everything. Yeah.

1:15:56

You know, it's paradoxically the most censored.

1:16:00

social media platform is TikTok. Like my

1:16:02

TikTok is bulldogs and sandwiches like

1:16:04

duch a moth and then Sopranos

1:16:06

clips. And every time there's Sopranos clips,

1:16:09

when somebody gets whacked, they have to blur

1:16:11

it out or the person who's uploading it takes

1:16:13

that clip and cuts out the actual person

1:16:15

being whacked. It's crazy. All right, I got to

1:16:17

give Sax his red meat. We're going

1:16:19

to now go to our war correspondent, David Sax.

1:16:22

But in all seriousness, tragically,

1:16:24

we had a terrorist attack. And

1:16:28

the response from some

1:16:31

of our Republican senators

1:16:33

was absolutely insane. They want

1:16:35

to bomb Tehran and go after Iran

1:16:37

and start World War Three. Sax, I

1:16:39

know you have some strong feelings on

1:16:41

this and you're always about diplomacy and

1:16:44

pursuing peace. What's your reaction to Lindsey

1:16:46

Graham and the neocons? Well,

1:16:49

you had several Republican senators try

1:16:51

to go Biden into striking Iran

1:16:53

immediately. It was, you know, not

1:16:55

just Lindsey Graham is in favor

1:16:57

of every war, but it was

1:16:59

Mitch McConnell, Senator, Republican leader, John

1:17:02

Cornyn. And there are some other

1:17:04

ones who are, you know, demanding

1:17:06

immediate retaliatory strikes. It's very unfortunate

1:17:08

that we had three of

1:17:10

our troops get killed and another

1:17:12

dozen or so get injured. This

1:17:15

was at a base on

1:17:17

the border between Syria and

1:17:19

Jordan. Some of us have

1:17:21

been saying that we have no business being in Syria.

1:17:23

I mean, I tweeted 10 months ago that

1:17:25

all we were doing was putting our

1:17:28

troops in harm's way and

1:17:31

risking getting drawn into a

1:17:33

larger conflagration. And that's exactly where

1:17:35

we are right now. I mean, you

1:17:38

had to know and many commentators pointed

1:17:40

out that these bases are very exposed.

1:17:42

They're very vulnerable. They don't have good

1:17:44

enough air defense against they don't really

1:17:46

have a good answer to

1:17:49

the swarms of drones that

1:17:51

these local militias have.

1:17:53

And based on the intelligence we

1:17:55

have right now, are

1:17:57

the space is tower 22 is attacked. by

1:18:00

an Iraqi militia that's operating

1:18:02

there. Why

1:18:05

did they get attacked? Well, these militias

1:18:07

want the United States out of their countries.

1:18:09

They want them out of Iraq. The

1:18:11

government of Iraq has said we want the US

1:18:13

out of Iraq. The government of Syria says we

1:18:15

want you out of Syria. We

1:18:18

are there without a congressional authorization for

1:18:22

military force. I mean, what are we doing

1:18:24

in Syria? We're just occupying

1:18:26

that country without,

1:18:29

again, without a war being ever declared

1:18:31

against the Assad regime. So

1:18:34

some of us have been saying we need to get

1:18:36

out there for some time, and if we don't, it's

1:18:38

inevitable that something like this is going to happen. And

1:18:40

sure enough, it did. And when it does happen, you

1:18:42

get this lunatic fringe who unfortunately are some of the

1:18:44

leaders of the Republican Party calling for

1:18:47

a larger war against Iran. And I think

1:18:49

Biden, to his credit, has so far

1:18:51

held back. And he has

1:18:53

not... A lot of restraint. He's done some restraint.

1:18:56

However, they've been actively talking about this,

1:18:58

and all the reports are they're gaming

1:19:00

this out, and there is going

1:19:02

to be some sort of retaliatory strike. It

1:19:05

might be focused on these militias

1:19:07

in Syria and Iraq. It could

1:19:09

be attacking Iranian assets. We

1:19:12

don't know. If they do

1:19:14

attack Iranian assets, Iran has promised a response.

1:19:16

So I think the Biden presidency is at

1:19:18

a little bit of a crossroads here. Depending

1:19:20

on the action they choose, we could very

1:19:22

rapidly find ourselves engaged in

1:19:24

a wide wider regional war on five

1:19:27

different fronts. I mean, a war with

1:19:30

Iran would involve us in

1:19:32

Iran, Iraq, Syria, Lebanon, and

1:19:34

Yemen, where we're already bombing.

1:19:37

So this could turn into a

1:19:39

huge conflagration in the Middle East.

1:19:42

I don't think Biden should be drawn into this. Yeah,

1:19:45

no good answers here. The

1:19:48

craziness to me, Shabop, is like, these people

1:19:50

want to go bomb Tehran because

1:19:53

you have

1:19:55

some militias doing these activities. I

1:19:57

mean, this would be some terror.

1:20:00

who's French, we're going to just blow up Paris, and

1:20:02

a bunch of civilians are going to die. There's

1:20:05

no proportionality here, and there's no

1:20:07

direct relationship here. It's like two

1:20:09

or three steps removed. What do you think, Stu?

1:20:12

I think the thing that we've lost

1:20:14

in this whole issue is, how

1:20:17

is it possible that a multi-deca-billion

1:20:20

dollar drone system was

1:20:24

designed by the military industrial complex

1:20:26

in a way where when

1:20:28

one of our drones is coming back and there's an

1:20:30

inbound drone, that doesn't seem like a

1:20:32

weird edge case, where we couldn't

1:20:34

handle it. Because at the root cause

1:20:36

of what happened was a pretty

1:20:39

faulty way in which we were dealing

1:20:41

with confusion about

1:20:43

what was our drone and what was the

1:20:46

enemy drone. And

1:20:48

I think that that's also worth talking about before we

1:20:50

talk about bombing in other countries is, we're

1:20:53

the most sophisticated technological country in the world.

1:20:55

Our weapons systems are the most sophisticated weapons

1:20:58

systems in the world. Am

1:21:00

I supposed to believe that if Palmer,

1:21:02

Lockie, and Andoril were building this system,

1:21:04

that this is what would have happened? Absolutely

1:21:06

not, yeah. That there's no beaconing system

1:21:08

on these drones that you could turn on remotely,

1:21:10

that there's no way when you see

1:21:12

the number of drones in an aerospace that are

1:21:15

yours so that you can quickly triangulate which ones

1:21:17

are not yours. All

1:21:19

of this to me, I think is also worth exploring

1:21:21

because if it's really again,

1:21:23

faulty engineering

1:21:26

because of this monopoly

1:21:29

oligopoly in certain sectors of our economy,

1:21:31

that then cause us to go and

1:21:33

make a foreign relations decision about going

1:21:35

to war. And we don't even

1:21:37

talk about this thing as a root cause, it's worth

1:21:39

talking about. A different example on the

1:21:42

same vein of this is like, it turned out that

1:21:44

in that Alaska Airlines issue, they

1:21:47

actually shipped the plane without the door plugs.

1:21:52

We are the most sophisticated country in the

1:21:54

world, guys. Our

1:21:57

most sophisticated industries. are

1:22:01

not showing their best in this movement. And

1:22:03

I think that this is yet another example of

1:22:06

before we make totally separate decisions about war and

1:22:09

implicating our children's safety, we

1:22:12

can also just ask, wait, we spent billions of

1:22:14

dollars on this thing. How is it

1:22:16

possible that this, like

1:22:19

honestly, like this is exception handling. This

1:22:21

is like CS101

1:22:23

type stuff, guys. Door

1:22:26

plugs, put the plugs in the door.

1:22:29

Regulatory captures the answer. This is

1:22:32

crazy. There's no competition and they're

1:22:34

charging costs plus, they're not innovating

1:22:36

anymore. And they need competition, right?

1:22:38

Just like SpaceX was massive competition

1:22:42

for all of the governmental agencies around,

1:22:44

we have to re-need that for what we need. We

1:22:46

need execution in our industrial complex.

1:22:50

And now the way to answer that turns out

1:22:52

to be a foreign policy decision

1:22:54

to go to war. And I think that

1:22:56

those two things need to be decoupled for

1:22:58

a second so that we can deescalate and say,

1:23:00

hold on a second, this thing happened, but

1:23:03

why did it happen? Meaning, of course people

1:23:05

are gonna attack us. We are

1:23:07

the bright shining beacon on a hill. People

1:23:09

should hate us and want to attack us. That's

1:23:12

just the nature of being a winner. To be

1:23:14

fair, they're not attacking us because we're the shining

1:23:16

city on a hill over here just minding our

1:23:18

own business. They're attacking us because we're, No, I

1:23:20

know that I hate it, but I'm saying, but

1:23:22

I think the minute we're there, we

1:23:25

should expect that these things work. We should expect

1:23:27

it. So there's a few

1:23:29

things happening here with our military industrial complex.

1:23:31

So the first one is that drones have

1:23:33

been a huge game changer. We've seen this

1:23:35

in the Ukraine war. The one

1:23:37

really new technological element has been

1:23:39

drones has completely changed the

1:23:42

face of war. And one of the

1:23:44

things it does, it's a huge leveler because

1:23:46

these cheap drones give

1:23:48

these militias in Syria and Iraq, where it

1:23:50

gives the Houthis and Yemen a

1:23:53

capability to strike at us that they didn't

1:23:55

have before. And we saw that

1:23:57

our air defenses are just not. really

1:24:00

cut out to deal with this. There was an

1:24:02

article describing how it was costing

1:24:04

us $2 million to use an

1:24:06

air defense missile to shoot down

1:24:08

the drone or a cheap rocket that

1:24:10

costs just a few thousand dollars. So

1:24:14

you have this asymmetric warfare now where

1:24:16

we simply cannot afford

1:24:18

over a sustained period to

1:24:21

shoot down all these drones. But wait,

1:24:23

sorry, can I ask a question? Yeah.

1:24:25

One of the most important partners

1:24:27

in that region is Israel. Israel

1:24:30

has what we have fought to

1:24:32

up until now, an impregnable

1:24:34

system, the Iron Dome, which

1:24:37

is meant to deal with all of these edge

1:24:39

cases, projectiles of all

1:24:41

sorts, shapes and sizes coming in

1:24:43

every direction. I've never heard of

1:24:46

when the Iron Dome has failed. And

1:24:48

we are sending Israel billions of dollars. Why couldn't

1:24:50

we actually just buy the Iron Dome system for

1:24:52

them and say, you know what, we're going to

1:24:54

secure our bases in Syria and in

1:24:57

all of these other places? Yeah. Well,

1:24:59

I'll tell you. So there's a military analyst named Stephen

1:25:01

Bryan, who I followed as a former undersecretary

1:25:04

of defense. And he talked about this. He

1:25:06

has been calling now for before

1:25:08

this attack happened to send two

1:25:11

Iron Dome systems to Syria, to Iraq, to

1:25:13

basically the Middle East to protect our troops.

1:25:15

He says, he said in his article, the

1:25:17

reason why the US Army hasn't done that

1:25:19

is because they didn't want to buy the

1:25:21

Israeli system. They've been favoring some homegrown system

1:25:24

that has improved. There's

1:25:27

a big problem there that we should be deploying

1:25:29

Iron Dome there. Look, I would just get out

1:25:31

of that area. I don't think we should be

1:25:33

there, but at a minimum, if we are going

1:25:35

to stay there, we have to protect our troops.

1:25:37

So yes, we should be deploying Iron Dome. But

1:25:39

the problem is that, again, just these drones are

1:25:41

a game changer and they

1:25:43

can overwhelm a system. Even

1:25:46

Iron Dome can be overwhelmed. If

1:25:49

Israel gets in a war with

1:25:51

Hezbollah, which supposedly has one drone,

1:25:53

it's N equals one. We were

1:25:55

overwhelmed by N equals one. Well,

1:25:58

I mean, I'm saying like it's true, right?

1:26:00

We were overwhelmed when n equals one.

1:26:02

There was a report just the other

1:26:05

day that one of our ships in

1:26:07

the Red Sea, it

1:26:10

was fired on by a missile

1:26:12

from Yemen. And it

1:26:14

made it through the Aegis system and they

1:26:16

took it down with their last line of

1:26:18

defense, these like close in guns. That

1:26:21

was kind of scary because the Hooties have

1:26:23

missiles that are capable of making it through

1:26:26

our main air defense system for ships. So

1:26:29

I'm just saying like these what's happening with

1:26:31

these cheap rockets and these drones is giving

1:26:34

our opponents capabilities that level the playing field

1:26:36

a little bit. But this is what I'm

1:26:38

saying. I understand that concept, but I also

1:26:40

understand that we have people on the ground

1:26:42

that work for Team America. Again,

1:26:44

I'll just take Palmer Lucky as an

1:26:46

example, who frankly, I would bet on 1000 times

1:26:49

over a Hootie Rebel, heal out smart

1:26:51

now power these guys. Why aren't our

1:26:53

best and brightest people in a position

1:26:55

to make these things? Well, you're right.

1:26:57

The defense industry is dominated by five

1:26:59

of these prime defense contractors who

1:27:01

work on cost plus are basically an

1:27:03

oligopoly. They're not particularly innovative, but they

1:27:05

just keep charging more every year for

1:27:08

the same product. So we're getting less

1:27:10

for more money. And they're led by

1:27:12

leadership who are motivated in a

1:27:14

way where the returns that

1:27:16

they generate and the success and the progress

1:27:18

they make is not really coupled to progress,

1:27:21

right? It's not really coupled to building an

1:27:23

even better version of Iron Dome. It's about,

1:27:25

as you said, having

1:27:27

a job that you've earned over many

1:27:29

years of fealty and

1:27:31

then getting paid an enormous amount of money to

1:27:33

just keep it going in the

1:27:35

same direction, even if that direction means you've

1:27:38

been adrift for decades. That's the shame of

1:27:40

it. And then you're seeing every day. Like,

1:27:42

isn't it incredible? Lindsey Graham is saying hit

1:27:45

Iran. And I bet you Lindsey Graham is

1:27:47

to getting donations from those five companies. I

1:27:49

don't know. Look, there's no question that we

1:27:52

need to shake up the military industrial complex.

1:27:54

We need to get a lot more startups

1:27:56

in there. There's a lot of VCs now

1:27:58

who are funding. defense startups.

1:28:00

So it is a big area. Andra obviously is

1:28:02

kind of the leader of the pack, but there's

1:28:04

a bunch of others getting funded. I saw that

1:28:07

Eric Schmidt even created a drone company. So

1:28:09

this is going to be a huge area

1:28:11

of innovation. And I think

1:28:13

that because of the Ukraine war, the

1:28:16

Pentagon must now realize the

1:28:18

urgency of being able

1:28:20

to mass produce effective drones as

1:28:23

well as create effective drone

1:28:26

air to counter measures. Yeah, counter measures. Yeah, just

1:28:28

to give you a sense of this, like we

1:28:32

love the series eight a company called sale drone

1:28:34

about seven years ago. And

1:28:36

they make drones for the seas, right.

1:28:39

And what we did was we put these massive

1:28:41

sensor arrays in these drones.

1:28:44

And because of because of the sensors,

1:28:46

it has perfect

1:28:48

visibility into what's going on in

1:28:51

any condition of weather, right? Day night,

1:28:53

it doesn't matter. And so these drones

1:28:55

in the Middle East, all

1:28:57

over the waterways allows us to have perfect

1:29:00

understanding of what's going on. But

1:29:02

despite that, it has taken years for us to

1:29:04

be in a position to generate

1:29:06

enough revenue. And now we're finally at that

1:29:08

scale with the Navy and whatnot. But

1:29:11

David, to your point, it is incredibly

1:29:14

hard for startups, no matter

1:29:16

how innovative we've been to break through

1:29:18

this log jam. And it's and

1:29:20

the reason is because what we are good at is

1:29:22

not what's rewarded, we are good at engineering

1:29:25

and execution. But what is rewarded, to

1:29:27

your point is this very

1:29:29

lobbying, specific form of

1:29:31

relationship management, right? And

1:29:34

cultivating certain pockets of

1:29:36

influence. It's a very difficult game to

1:29:38

play. If what we come as bright

1:29:41

eyed bushy tail from California with a

1:29:43

product that we think is superior that

1:29:45

actually helps advance American exceptionalism, it

1:29:48

still doesn't always land. It takes a lot

1:29:50

longer than it needs to in some cases.

1:29:52

Yeah. So the Pentagon and the military

1:29:55

industrial complexers can be a lot more

1:29:57

permeable to this type of innovation. I

1:30:00

think that they're gonna be incentivized to do it now because

1:30:02

they have to see what's happening in

1:30:04

Ukraine, what's happening in the Middle East, and

1:30:06

they realize that the gap is closed. And

1:30:08

we had three innocent people that were killed. These

1:30:11

people didn't deserve to die. They

1:30:13

didn't deserve to die in an N of one, it's

1:30:15

not an edge case, N of one, there was a

1:30:17

drone. Come on

1:30:19

guys, we're better than that. And so what do

1:30:21

you think's gonna happen if we get into a

1:30:24

war with Iran? Every single one of our bases

1:30:26

in Syria and Iraq, and we have a lot,

1:30:28

are gonna be sitting ducks. To your point, you're

1:30:30

forecasting, you're orchestrating a game plan for them because

1:30:32

it's like, if you were going to enter a

1:30:35

war, does it take a brilliant strategist to

1:30:37

sit in a room and say, wait a minute, if they

1:30:39

can't defend against one, what happens when we send 12? What

1:30:42

happens when we send 12 to every single place?

1:30:44

And to your point, Jason, this

1:30:46

is like the unnecessary escalation

1:30:48

that then happens because then we have

1:30:50

to respond with more force

1:30:52

and with more kinetic energy. It was

1:30:55

a certainty. Look, I've been talking on

1:30:57

the show about how our bases in

1:30:59

Syria and Iraq have been under attack

1:31:01

by these militias for months. I think

1:31:03

the last time we talked about it,

1:31:05

there had been something like 80 attacks.

1:31:07

And it was just a matter of time

1:31:09

before Americans servicemen were

1:31:12

killed, unfortunately. And so,

1:31:14

like you said, Jamal, this was predictable. What's

1:31:16

also predictable is that if we get in

1:31:18

a war with Iran, every single one of

1:31:20

our bases will be attacked. If we strike

1:31:22

on their soil, they will strike back. And

1:31:25

they have hypersonic missiles, they have precision

1:31:28

missiles. They can destroy

1:31:30

every one of these bases, unless those bases

1:31:32

have the top-of-the-line air defense, which most of

1:31:34

them don't. But if you go

1:31:36

to someone like Lindsey Graham and say,

1:31:38

listen, our troops are vulnerable, we need

1:31:40

to basically either pull out of

1:31:43

Syria and Iraq, or we need to consolidate down

1:31:45

to a few bases that have iron dome or the

1:31:48

best systems, these neocons will say,

1:31:50

absolutely not. We're not conceding anything. They

1:31:53

would never pick up a gun. They'd never wear a

1:31:56

uniform. Right, but they want us to strike Iran. So

1:31:59

these... strategies don't line

1:32:01

up. If you wanted

1:32:03

to attack Iran, the first thing you would

1:32:05

do is basically get all of our troops

1:32:08

out of harm's way who are currently sitting

1:32:10

ducks for Iranian retaliation. By the way, I

1:32:12

think it'd be a terrible idea, but that's what

1:32:14

you would do. So they have these strategies that

1:32:16

don't make any sense. John Greenewald All right, everybody.

1:32:18

It's been an amazing show for the

1:32:21

dictator chairman himself, Shamath Palihapitiya,

1:32:24

the rain man, yeah, David

1:32:26

Sacks. I am the world's greatest

1:32:28

moderator. We missed you. Sultan of Science,

1:32:30

David Freiburg couldn't make the show. And

1:32:33

we'll see. He's still in the... If anybody gets into the

1:32:36

Apple Pro Vision, Vision Pro, and

1:32:39

is somewhere out in the universe by Uranus and

1:32:41

you see him, bring him back for next week.

1:32:43

So I'm gonna go find him. We've got to

1:32:45

send out a search party to Uranus. Love you,

1:32:47

boys. David Sacks Bye-bye. John Greenewald Bye-bye. David

1:32:50

Sacks We will be needed

1:32:52

to let your winter ride. Weab

1:32:55

Lords Weab

1:33:02

Lords My

1:33:14

dog. We should drive with you. We should

1:33:17

drive with you. Oh

1:33:20

man. We need to

1:33:22

meet up with you. We should all just get a room and have

1:33:24

one big huge audience. We should all just have this

1:33:26

sexual tension that you just need to release somehow.

1:33:28

What? You're

1:33:31

a baby. You're a baby.

1:33:34

We need to get mercy on you.

1:33:37

I'm going now! We

1:33:45

need to get mercy on you.