$FB's major pullback, Rogan/Spotify mess, Xi/Putin meetup and understanding supply chain issues with Bestie Guestie Ryan Petersen (Flexport CEO)

The episode opens on a photo of Sacks celebrating, arms raised, after beating Peter Thiel at chess. The hosts rib him mercilessly, joking that he has never looked happier and that the moment eclipsed the birth of his children. Sacks explains the photo was taken on the day of PayPal's IPO, at a modest cake party in the parking lot.

Sacks says Thiel played a ten-board simultaneous exhibition, moving from board to board, and that Sacks was the only one of the ten to win, having foolishly put about $20 on the game against someone he calls a chess master. The hosts dwell on Thiel's furious expression, with one quipping that moments later Thiel swept the pieces off the board, which they say he always does when he loses, citing his line that a good loser is still a loser.

The banter drifts into mockery of Sacks's pleated high-waisted pants, a cell-phone holster and other nineties details in the old photo, plus praise for a colleague's thick hair, before the host runs the usual mock introductions of the group.

The host says the state of the supply chain has been confounding and that nobody seems to know what is going on, so they invited a "bestie guestie": Ryan Petersen of Flexport, whom they describe as an expert they know from Twitter and a prior appearance. They welcome him to the show.

A running joke follows about Petersen not telling his wife Olivia, described as a huge fan who is wearing a show-branded hoodie in the next room, that he is on this particular podcast, with the plan that they will listen together that night.

Asked whether the supply chain is getting better or worse heading into 2022, Petersen says it depends on the industry and spans everything from sourcing subcomponents like semiconductors through logistics to final delivery. He describes Flexport's role in picking up goods worldwide and delivering them to fulfillment centers, what he calls the global mile.

He traces the disruption to the pandemic shift in consumer behavior: unable to dine out or travel, people bought more goods, pushing imported container volumes up nearly 20%. The problem, he says, is that infrastructure, the number of ships, port throughput, trucks, and the chassis that carry containers, could not handle a 20% increase.

Petersen cites a statistic he finds appalling: US ports operate at lower throughput and productivity than the port of Mombasa, Kenya, and lack modern infrastructure, whereas Rotterdam has been fully automated for 20 years and can run around the clock with self-driving trucks. He attributes this figure to something he recently learned.

Asked whether the bottleneck is technology or a labor and regulatory issue, Petersen says the technology has existed for a long time and the real obstacle is labor and management negotiating to allow it. He describes US port labor as treated like a fungible commodity: terminal operators request a number of workers and the union provisions them, but different people run complex heavy machinery each day.

He argues productivity cannot improve with a new team every day, since the core of business is learning and improving with the same team. The hosts clarify that workers are union members staffed by the hour under annual contracts, with the union deciding each day who gets shifts and at which of the roughly 15 terminals, comparing it to the film "On the Waterfront."

Friedberg asks about labor shortages upstream at manufacturing centers as workers fall sick with COVID, noting that losing 10% of a workforce for ten days can cut a facility's output sharply, and whether the Omicron wave's effects have yet hit the system.

Petersen says China's zero-tolerance policy kept COVID out for 18 months, so manufacturing, the majority of which is in China, kept running. With Omicron, the policy is being tested; there have not yet been major waves of shutdowns, but he notes cases where a single infected port worker led to a port closing for about three weeks.

He contrasts this with US ports, which keep operating at lower productivity despite workers constantly catching COVID, and says the shutdowns hit Yantian, which he calls China's largest or second-largest port, and Ningbo, the third-largest, as well as airports there. He says he will watch this closely over the coming weeks and months.

Asked whether the backlog is from over-ordering or still clearing pandemic orders, Petersen says volumes are high but flat year over year, though much higher than pre-pandemic. The worrying sign, he says, is that delays keep growing even though the inputs are the same.

He likens it to a technology system where the same number of bits going in takes longer and longer to process, which would be an alarming signal worth sending your best engineers to debug. A host adds that capital equipment is typically assembled at the last minute from components, so delays cascade.

The host, citing lab and hardware businesses he is involved with, says capital equipment that once took four to six weeks now takes a year to a year and a half because the makers face delays from their own component suppliers, leaving Silicon Valley hardware companies unable to ship and burning money monthly.

A host says his biggest concern is that revenue shortfalls will hit companies dependent on these supply chains only a couple of quarters after the problems bite. He points to Ingredion, which he describes as the third-largest US producer of starch, reporting supply-chain effects a day earlier with the stock down about 10-11%, noting even a stable, mature company got hammered after a lag. The figures are the host's recollection of the report.

Petersen says the most concerning data point is that across Flexport's customer base it now takes an average of 115 days from when a factory says goods are ready for pickup to when they are delivered to a US warehouse, versus 50 days before the pandemic. He notes 50 was already high given the ocean voyage is only about 15 days, blaming inefficiency, customs processing and trouble finding trucks, and says at 115 days companies become far less agile.

A host worries that because demand is hard to forecast and companies are now ordering inventory to cover much longer lead times, they may be badly over-ordering. If demand falls, the goods are already bought, so he fears that in six months or so it will emerge that companies expected booming demand to persist and ordered far too much.

Petersen agrees: once consumers return to restaurants and travel and revert to pre-COVID patterns, companies could be stuck with too much inventory that cost too much to ship and cannot be sold. He flags middle-market retail and direct-to-consumer e-commerce, businesses he calls less sophisticated at demand planning, as most at risk.

Chamath argues the supply-chain pain is unevenly distributed, citing recent earnings: Apple and Tesla described it as reasonably managed, especially on chips, and expected easing by Q4 or Q1; Amazon acknowledged toughness but said it was past it. The bigger, more influential companies managed through it, while smaller firms dependent on many actors were thrown around and may not know where demand really is.