Hurricane fallout, AlphaFold, Google breakup, Trump surge, VC giveback, TikTok survey
Full transcript · Read the full conversation in order, with its original context.
Contents9 chapters
§01Bestie intros!§02The science behind Hurricanes Helene and Milton§03The economics of intensifying natural disasters§04AlphaFold creators win Nobel Prize in Chemistry§05The Jayter's Ball§06Google antitrust update: DOJ is going for a breakup§07VC giveback: CRV will return ~$275M of a $500M fund to LPs§08New TikTok survey shows increased usage as a news source§09Election update: Are polling problems causing a strategy shift for Kamala Harris?§01Bestie intros!
All right, everybody. Welcome back to the number one science, politics, technology and business podcast in the world for 5 years running. We're about to hit our 4th anniversary here. Episode 200 is coming up and a bunch of Lunatic fans are getting together. You can join them.
Allin.com/meetups. Holy cow. We got the domain name, all in? Fantastic. Go to allin.com/meetups and, hey, Subscribe to our YouTube channel.
We're gonna do some sort of crazy event for the million subscriber party. We're like 300,000 away, gentlemen. This is nuts. Can you imagine this thing made it to 200 episodes?
Wow. We have all in.com. How much did we spend on this?
This is great, guys. I negotiated it. I got it. It took me 2 years, and I got a sick deal on it. I don't even wanna say because I, you know, I don't wanna jinx it, but, about Don't say.
Don't say. I'll just say you bleep it out. I got it for or so. And that's a $1,000,000 domain, just so we all know. Five letters in the dictionary.
So good for branding.
Good job, Jaycom.
Thank
you, my friend.
Yeah. Now we have all in.com/tequila.
Oh, I love it. Exactly. Exactly. And you can yum yum. Yeah.
I got you sax.com, didn't I? You have the domain name sax.com. Yeah. Yeah. Yeah.
That for you.
Wow. We have all the way back to episode 1. This is incredible.
Oh, the new website? Yeah. This is great. Oh, can I tell you I if I may? Website?
Allin.com. Allin.com? That's our website?
It's like this thing is real.
Yeah. It's like a real thing.
After 4 years, we got our together. This looks great.
Here we go. And I wanna give a shout out to Podcast AI, one of our, remember those fake all in episodes? That became a startup, Podcast AI, and they built our website for us. So shout out to the team over there. All right, ladies, let's move on.
And, I am of course your executive producer for life and the moderator of the All In podcast. And if I may, just a tiny plug, if you're a founder, we are having our 9th cohort of Foundry University. It's a 12 week course I teach on starting companies. What are you doing to spend? Stop.
It stops.
I'm just
giving a quick plug for found university. I I I need to get a plug in because I wanna be found 1. Go to
1 and buy Super Gut Bars 3.99.
You can
pick them up this afternoon.
It. Love you guys, Heidi.
Queen of quinoa. I'm going all in. Speaking of that, your people use me in an ad, Freeburg. So don't talk about plugs.
A few weeks ago when I shouted out that Glue AI was hiring engineers, we had, like, a 100 applications just from that.
From Glue AI looking for engineers?
Plug on the show. Yeah.
For Glue AI? Yeah.
Right. That's awesome for Glue AI. And if you haven't tried Supergut, FreeBird's team literally made an advertisement with me talking about Supergut and didn't tell me.
And we're still hiring. So
Okay. Well, there you have it. So go to founder dot university to apply for my 12 week program.
Go check out Groff.
I'm running a GoFundMe. A GoFundMe? New yeah. Go to GoFundMe slash Freyberg.
For what? More Xanax to deal with your panic attacks? Alright. Let's get started everybody. Enough of the shenanigans.
§02The science behind Hurricanes Helene and Milton
Hurricane season is upon us as Freeberg have predicted. Hurricane Milton made landfall on Wednesday evening along the West coast of Florida. As many of you know, it's been downgraded. It started as a category 5 potentially then a category 3 and then it looks like it's a category 1 now. So I guess these things are quite random.
Leading up to Milton, though, 6,000,000 Floridians across 15 counties were ordered to evacuate. That's a lot of people moving out. And it was a pretty powerful storm. It ripped off the roof of the Tropicana field in Tampa. So far, the death toll is at 4, but it's expected to rise sadly.
And, just 2 weeks ago, Hurricane Helene swept through 6 southern states, killing over 220 people tragically, devastating Western North Carolina, and, entire towns were wiped out. These are, also, beyond the tragic human losses, are economically staggering in terms of the losses. AccuWeather estimating the total economic damage could be between 145 and 160,000,000,000 from Helen. And Moody estimates the property damage alone could be as high as 26,000,000,000. Tons to get into here.
FEMA, Starlink, saving the day, tons of stuff. But Freeberg, back on episode 182, you predicted this would happen. What's causing all this? And let's just start with the science angle, I guess, before we get into the other political and insurance issues.
Well, I think if you'll remember when we talked about this a couple months ago, the sea surface temperature was at kind of a record high in the Atlantic. And warm ocean temperatures drive, moist air up that evaporates. The warmer the air, the faster the evaporation, and that starts to cause the movement of the air, which drives ultimately the hurricane, and then the hurricane sucks up more warm moist air from the ocean, and it creates a feedback loop. So the more energy you have in the ocean, the more likely you are to accelerate wind forces in storms. And that's why you get these massive hurricanes that suddenly form seemingly overnight and go like in the case of Helene, that hurricane went from a cap 2 to a cap 4 or cap 5 in, like, 48 hours because of the energy that's stored up.
And 90%. Here's an interesting stat. 90% of the energy that we get from the sun is absorbed and stored in our oceans. The other kind of fact that's playing into this, if you pull up that sign that Nature article, and this is something that I think you guys may remember we talked about. So this was an article that came out, a paper, a science paper that came out a couple of months ago.
And in this paper, the scientists identified that removing sulfur dioxide from cargo ships that travel across the oceans is actually causing accelerated warming in the oceans. And the reason is that the sulfur dioxide forms cloud formations, and those as they travel across the oceans. And those cloud formations reflect sunlight. And in the absence of those cloud formations, that sunlight makes its way into the ocean, and you get more ocean warming. And by their estimation, removing sulfur dioxide, which causes acid rain, and that's the reason it's been pushed to be removed, and they started removing it in 2020, 2021 from cargo vessels.
By removing sulfur dioxide, we are now gonna see a doubling of the rate of warming of the oceans in the 20 twenties and going forward.
Let me pause it there for a second just to make sure people understand what you're saying. Emissions from cargo ships block sunlight, which then of course reduces the heat absorbed by the oceans. And so we're now choosing between pollution of the air or overheating of the oceans. Am I correct in summarizing that?
That's roughly it. And,
that's just the again? Sorry. I just so I understand.
Dioxide Sulfur dioxide. Yeah. That goes into the fuel of cargo vessels. And a couple of years ago, they started to implement these mandates that sulfur dioxide no longer be used in the fuel. As a result, when sulfur dioxide is emitted from these vessels, it goes into the atmosphere, and it actually triggers cloud formation.
So now you have these clouds that are forming. And Nick's gonna pull up this image right now. Yeah. Here you can see that. So all of these cracks are these cargo vessels moving across the ocean.
And as they move across the ocean, they create cloud cover. That cloud cover actually reduces the warming in the ocean because it reflects sunlight. So now that sunlight energy gets absorbed into the ocean. So this is another driving force that some people are now speculating, maybe accelerating the warming of the oceans that we're seeing, which drives this extreme storm and and hurricane events. And so this becomes a more frequent event.
Now a lot of people are coming
from the question? Does that mean that we're mean reverting? Meaning, if we improve the quality of the fuel source that are used in shipping, doesn't that then mean that we're reverting back to what would have happened in the absence of these dirty fuel sources?
Yeah. So in addition
No. No. No. I'm asking I'm asking you the question. Is that true or not?
So, yes, we are no longer reflecting as much sunlight. And so for several decades
We had bad fuel sources.
We had artificial we had artificial cooling. We had Effectively.
An artificial cooling, and now we take but that's counter to the narrative of what we all think is happening.
Oh, well, the argument is that we've actually been warming the atmosphere, which we have been. We can see the data that shows that everywhere all over the Earth, not just about sunlight coming in on the oceans and not just ocean warming, but the the atmosphere is warming. The planet is warming. Mhmm. And so this is, by by blocking the sunlight above the oceans, we were artificially dampening that effect, and we were reducing the amount of heat energy that was getting into the oceans.
So now by taking that away, we're seeing the heat energy in the oceans accelerate, and now the oceans are getting much, much warmer. Right.
Much of that. Was good?
Turns out it was good. Paradox here is that it was creating a blocker for sunlight. And to your point, Chamath, exactly. Like, shouldn't we just be going back to what was normal? But at the same time, in the same system, we had heated things up.
So this is a multi factored system, that we're dealing with, Friedberg. And I guess the takeaway from all of this is that we gotta be really careful with what we do with the environment. Right?
Well, I mean, let's talk about economics. Right? So what how much real estate do you guys think is on the Florida coastline? What's the real estate value?
Sorry. Freeburg, can you just anchor this? Like, was it that it was supposed to be a category 5 and now it's a category 3 when it hit land?
Right. So what happens typically when storms hit land is they no longer have that hot ocean pumping energy back into the storm that keeps the feedback loop going.
Mhmm.
So the storm cycle starts to break down. All hurricanes, when they hit land, they start to break apart. And so the category which measures the wind speed actually reduces. This is just a natural thing that happens. But this was a category 5 hurricane.
When it made landfall, I believe it was category 4. So, you know, it was a massive hurricane that had an approach.
We should not dismiss it because my understanding was Helen was cat 4 when it, like, hit North Carolina. But I read yesterday that
What happened yeah. What happened with Helene was it was Cat 4.
Is Cat 3 when it hit Tampa or something. Is that not right?
Yeah. So that's right. But what happened when Helene hit North Carolina, it was not a Cat 4. What happened is as that storm moved inland, it hit the the mountains. And the first mountains it hit are on western North Carolina.
That area is elevated. There's mountains there. So when a heavy hot storm runs into cold mountains, all the moisture dumps out. It's like it runs into it, and suddenly everything precipitates out of that storm. And that's why some parts of Western North Carolina got, like, 18.
Some high some people measured as high as 30 inches of rainfall in a couple of hours. So this insane dumping happens when that hot air hits cold hits a cold region, and suddenly everything all that warm moisture precipitates out and dumps to the ground. So it ran into a mountain. It's effectively why everything fell out of North Carolina.
Wait. Wait. So you're saying that it wasn't, Democrats who basically,
Right. Who do
you think? Who do you think? Who do you think?
Who did it?
Who did it? Who did it?
Who did it? Who did it? Sachs.
I thought Nancy Pelosi cast a spell or something. And Yeah.
Well, isn't there a lot of geoengineering conspiracy theories, going on in your cohort? I mean, what's your plan?
Think so. But Vinod wants us to be very clear that we need to we need to stop all this disinformation that somehow democrats are behind that storm.
Well, there are
So we can assure everyone that there was just precipitation.
Online that there's a ton of, laser engineering being run by government agencies to drive these
People aren't taking that seriously.
Well, I mean, the the origin of this, though, Friberg, is people have done experiments for decades on trying to control the weather or, you know, alter the weather. And and they're doing that in the Middle East by seeding clouds and creating more rain. We saw that with the Dubai floods. They said that that might have been caused by over seeding of clouds, which they're doing there. And then there have been experiments just to, you know, for the crazy laser people conspiracy, they're at they're at SunX.
There actually have been experiments with lasers, you know, being shot into hurricanes and storms. Correct?
Are you Alex Jones? Is that what we're doing?
Well, no. I'm not
saying Alex Jones about storms.
I'm just saying that's the origin of where people are kind of building on this. There have been The amount.
Okay. So so let's just talk about the the hurricane, the amount I'm teeing it up
for you to debunk it is what I'm doing here.
Yeah. Putting particulates in clouds to accelerate precipitation is I mean, we've done that for a 100 years. You know, you can do you can increase the precipitation rate when there's already clouds that have formed, but that has nothing to do with creating 200 mile an hour wind speed. That requires an extraordinary amount of energy. All of this energy, the the oceans are like giant batteries.
And when a hurricane gets going, that battery is accelerating the hurricane, and the hurricane sucks up more power from the battery, and it creates this incredibly dynamical system. There is no human created energy system that can force form a hurricane. A hurricane is an extraordinarily powerful natural phenomenon that arises from the amount of energy that can come out of very, very, very hot oceans, relatively speaking. So, you know, that's really where these hurricanes are coming from. Now they're gonna be more frequent if the ocean temperatures remain elevated as they seem to be and continue to be elevated.
And this can be a function of, generally, the temperatures warming on Earth, generally the removal of sulfur dioxide, generally these El Nino, La Nina cycles. There's a lot of factors, but it seems to be the case that we are having a very significant trend of continuously warmer oceans, and those continuously warmer oceans means that we're gonna have what used to be called a 1 in 500 year storm, which is what Asheville is being termed at, 1 in 500 year. These sorts of storm events can happen every couple years, and we're now looking at 1 in 100 year events happening every 2 to 3 years in the United States with the, the hurricane activity that we've been seeing.
I think a lot of the conspiracy theories are built on actual experiments that happened. This one, Project Storm Fury, I'm sure you know about, was to try to modify hurricanes by putting in some chemicals that would, freeze them and dull them. So they're they're kind of dulling
on this. Break it apart.
Yeah. Break it apart. So, you know, there there there have been experiments here with altering weather, altering hurricanes, but that doesn't mean it's Putin, Pelosi, or, you know, the aluminum.
So let's get let's get back to brass tacks. So Yeah.
We'll let's talk about the economics. So there's there's 500,000,000,000 to a $1,000,000,000,000 of real estate value on the Florida coastline. And what used to be a 1 in a 100 year event, the average Florida homeowner historically has been paying about 1% of the real estate value in insurance. So now if your real estate is likely to be wiped out one out of every 20 years instead of one out of every 500 years, the cost of insurance gets to the point that it is untenable for most people to pay for their insurance. Florida has a state backed reinsurance provider called the Florida hurricane catastrophe front fund.
§03The economics of intensifying natural disasters
And this fund issues debt to meet its coverage demands because it reinsures insurance companies in order to incentivize them to come into the state and underwrite homeowners insurance.
You should explain the loop here, which is you go and get a mortgage. The bank says you need to get insurance if I'm gonna lend you the money to buy the home. So then a bunch of insurers need to decide that they're willing to underwrite that area. And then when they give you that insurance, they then wanna lay that risk off and go to reinsure. Is that the cycle?
That's right. And what's happening is they would normally underwrite that risk. They would say this is gonna cost you're gonna lose the value of your home every 100 years or every 200 years. But now, the models are showing because of the frequency of these sorts of hurricane events and the severity of the hurricane events, that maybe you'll lose the value of your home once every 20 years or once every 30 years. And no consumer is going to be willing or able to pay that much for the insurance on their home.
So the state, over the last several years, has had to step in and effectively subsidize the insurance. And now the state reinsurance vehicle only has statutory liability maximum of $17,000,000,000 in a single hurricane season. Now I think they got lucky with Milton today, but some were estimating that the Milton losses were gonna be in excess of a 100,000,000,000 bigger than Katrina. It's likely, as of this morning, the reinsurance, websites are all saying it's probably a 40 to $50,000,000,000 loss event, which still exceeds the state's reinsurance capacity. So you can kinda think about Florida state's reinsurance thing being effectively bankrupt.
It doesn't really have the capacity to underwrite the insurance anymore. So the real question for everyone is, is the federal government gonna have to step in and start to support the price of homes? Because if they don't
Well, it's a terrible precedent to set because if you do it for Florida, then you'll have to do it in Texas and Louisiana and Mississippi. With wildfire fires. Arizona. There's there and Texas. There's gonna be no way to create a clear demarcation of who gets a bailout and who doesn't, which which will mean that everybody will get a bailout or nobody gets a bailout.
That's right.
And if everybody gets a bailout, and if you think about how systematically unpredictable, at least in the southern states the weather is, you're gonna be talking 100 of 1,000,000,000 of dollars a year probably.
The total value of all mortgages in home homeowner mortgages in Florida is $454,000,000,000 And those people typically have, you know, a debt to equity ratio probably on the 50 to 80% range. So if the value of your home dips by 25% because everyone starts selling their homes, leaving Florida, or they can't get insurance, then the people that live in Florida, most of them have their net worth tied up in their home, are gonna see their personal net worth wiped out or cut in half. So it's not just an economic problem. It's a social problem that now there are so many people that have put their entire net worth into their home. The value of their home is written to a point that it no longer makes sense given the frequency at which homes are gonna get destroyed in
That's probably the reason why they'll have to do it because
they'll Exactly.
But then that calculation will have to happen for every single homeowner in every single state at where this is a this is an issue.
Yeah. Wait. Freebair, are you saying the entire Florida coastline is no longer economically viable?
No. It's totally viable. It's just the question is what are you willing to At price. At what price? Will you pay 5% of your home value for insurance every year?
You know, will you pay 2%, 3%?
If the expected life of a house is 20 years, then no that's not that's not viable.
It becomes very, very untenable.
Well, it used to be 1 in 500. You're now 1 in 15. Right?
This apply to the entire coastline or just parts of it?
Well, I mean, you saw that the range at which these events can happen is all over the place. And the and the challenge is the events are getting more significant because of this warm ocean weather that we see, this warm ocean temperature.
So we're
good to see more of
this is that now people are building the first couple of floors in high rises in Miami and homes on stilts with concrete and with resistant you know, saltwater resistant material. So there is a counter to this. So we might be looking at
Investment in climate resilience. That's right.
Yeah. So it might actually be an opportunity to upgrade all these homes to resistant ones, using another set of technologies. But the bailout is really interesting too, Sachs, because Florida's got a lot of electoral, college votes, doesn't it? Like, I I I hate to bring this back to politics, but, you know, promising people bailouts is how these politicians seem to be getting votes these days. Yeah.
But is anyone talking about a federal bailout? I mean, is that this is something you're predicting.
Freebruck is saying is that there's a there's a pretty obvious parade of parables here where the question will have to be answered one way or the other. Because if you only have a $17,000,000,000 reinsurance fund and there's 50,000,000,000 of damage, somebody's gonna have to come in and cover the gap. And if it's the insurance companies, expect your insurance premiums to double or triple.
That's right. And that's what happened in California. And by the way, state state farm left a lot of California most
of the
This is
what I was gonna say. Most of these big insurance companies have already done the calculus to realize that these regions are no longer profitable enough to justify the downside risk. That's the bigger problem. So then the the ones that are left are insolvent reinsurers or insurers that are just funding short term ARBs because they know that the odds are they're gonna get wiped out, so they'll price gouge effectively. So, you know, a different example is that here where I live in Menlo Park, we're not in a flood plain.
We're not in a fire region. None of that stuff. But in order for us to get home insurance, you have to now go through a risk assessment. And in our specific case, we were like, hey. What should we do with our roof?
And they were like, you gotta take the roof off if you want home insurance. We're like, well, home insurance is probably a good thing to have.
Was it a wood shake roof on your home? It was
a beaut you saw our house. It's a beautiful wood shake roof, and we had to remove it. And the two choices were a $350,000, like, iron Composite materials. Yeah. Or or, like, 70 k for composite.
And it's like, this is insane.
Yes.
And Yeah. The cost of insurance was just egregious in the absence of going in one anyways, we ended up getting the
For most homeowners, when the cost of insurance gets to a certain threshold, you don't have budget for it. You can't afford it. And so that's a lot of why the insurers leave. They'll underwrite anything at any price, but they just know that most consumers can't afford it. Here's some other interesting statistics, related but unrelated.
In the early 1900, the city of Phoenix, Arizona averaged 5 days a year of temperatures of a 110 degrees or warmer. By the 20 tens, Phoenix averaged during the 20 tens, 27 days a year where the temperature was 1 10 or higher. Since 2021, Phoenix averaged
100 plus days.
42 days. And in 2024, it's been 70 days so far this year that the temperature is over a 110. So this is affecting and so there's there's increased risks in California with wildfires, increased risk with hurricane. There are a lot of these factors, and I have friends that work in reinsurance and in the insurance markets. Even even
if you don't get affected by a wildfire or disaster, when that that article was in The Wall Street Journal. It I think it said that the number of average days above a 100 was, like, a 100 something.
Yes.
And That's right. And the profile they profiled this retired woman who's an insurance adjuster or something. And the whole point of the article was not that her her house was destroyed or at risk, but the cost of electricity has gone just absolutely sky high.
Yeah.
Even with solar panels, even with storage, you need to basically lean on the grid. And the grid now just charges you an exorbitant amount of money. And so these these folks were paying 1,000 of dollars a year. So if you imagine the the trifecta, you have all of this climate risk that could destroy your home. You're paying an enormous premium for home insurance, and then you're paying an enormous premium for electricity from the mainline power utilities.
It's it's not sustainable.
Yeah. Yeah. Well, this for background, FEMA manages something called the NFIP, National Flood Insurance Plan, and it's historically about 50% cheaper than private flood insurance. They have 4,700,000 active policies providing 1,300,000,000 in coverage, but they instituted a new risk assessment system and that caused rates to increase and, yeah, it's, because of all this, the policies have decreased over the last couple of years, meaning less people have flood insurance at the same time that these things are getting worse. And so, yeah, this is a really tough issue.
I wonder if this is an opportunity, Chamath. If you think about historically how insurance worked, it worked in communities where people would help each other out and do barn raising kind of events when somebody had a problem. So if we just put on our entrepreneurial hats here, if you look at the cost of insurance, if a 100 different people bundle the cost of their homes together, put money into some sort of platform like an Uber Airbnb marketplace, and there was some management structure here of self insurance, because I know some people are doing self insurance for health care at their companies for this kind of thing. Do you think there's gonna be a new business opportunity here?
Well, that's called Jarvis is, Jason. It's called a mutual. And those are like, a a good chunk of the industry are mutuals where it's, the shareholders are the members, and they all share the risk and the ownership. The problem is
Those things work because you have broad geographic coverage. If you have to go just into Malibu and self insure, the rates would literally be the greater than the value of the homes. Right.
No one would pay into it. So you actually if you do proper underwriting, what's happened in the last couple of years is all the reinsurance companies and all the insurance companies have had to re underwrite the rates that they charge for insurance because the frequency of a disaster has gone up. And the new price that they should be charging is so high. It doesn't matter how the capital structure is set up. It's simply there's there's one big event that's gonna cause a big wipeout for a large number.
My personal belief is I think that the the real estate markets in some of these places are, meaningfully mispriced. And, specifically, what I mean is that they're massively overpriced.
That's right.
Because I think when you actually account for the climate damage and the long term financial stability of the insurers and the reinsurers, I don't think that many of the markets that have seen these crazy sky high prices. I'll name 2 to be specific, West Palm Beach and Malibu. So both ends of the coasts. These things just don't make sense. And I think people view these things as investments, but on the West Coast, when you deal with things like soil erosion and other things, I think it's a there's a it's a calamity waiting to happen.
And I think on the East Coast, when you factor in the extreme weather conditions, even Jason, your comment about rebuilding these homes in a more foolproof way doesn't solve it because it you won't be able to rebuild the entire state. There's a lot of people that just can't afford it. There's a lot of folks that will not have adequate coverage. So I just think these are disasters waiting to happen, unfortunately.
Yeah. It it's, and Sacks, there's a movement right now. A lot of people even of means are renting their homes. And so in the real estate market, what are your thoughts on that? Just renting versus buying now becoming like something that, you know, people in the in the top half of homeowners or potential homeowners are now electing to not own their home and rent.
Have you been monitoring that? Say I
hadn't heard that. I mean, the the trend that I thought was happening was, say, you had these big funds like BlackRock or whatever buying up huge numbers of homes and then running them to
Low end homes. Yeah.
Low end or medium Yeah. You know, to families. I felt that's what was going on. I hadn't heard that at the high end of the range that people were Yeah.
I mean, well, if you think about it, like, there's there seems to be a cap when you have a $10,000,000 home of what you can possibly rent it for. And it's it's the the the prices are now making more sense to keep more sense to keep your money in the market or in other places and then rent. I'm just hearing
from you. Oregon.
Are you long real estate in Florida or Coastal California if you could, or do you treat them differently?
I think they're different, but Florida is like I mean, I don't know how you do the math on I I just don't know what you do on a $1,000,000,000,000 of real estate value with half a trillion of mortgages when you have real exposure on loss more frequently than 1 in a 100 years. They're to your point, they need to be repriced. And how do you reprice those homes in the significant level that they need to be repriced without causing massive economic and social consequence? That's what's that's what's kind of, I think, challenging me in thinking about what's the path here.
So it was a it was a good thing that I sold my Miami place when I started
Once again, Sax makes a great trade. Pretty awesome. Well done, Saxx. You've talked to it again. Well done.
Saxx, you've been through. Just like
I really love I love that house.
Oh.
It's on the And
you love that house. Where do you think I stayed when I was in town? Yeah. You're so selfish. Who lost the who lost the place to stay?
I mean, the yacht access alone, being able to get out on the bay and get on a boat, the the skidoos, all this great stuff. Alright. Let's, let's keep the Freebird train going here. Huge news. AlphaFold creators just won a Nobel Prize in chemistry.
§04AlphaFold creators win Nobel Prize in Chemistry
2 members of Google's DeepMind AI research team, Demis Hassabis and John Jumper, received this year's Nobel Prize in chemistry. They both work for Google's DeepMind, as you know. And Freeberg, again, all in getting there first, explained what AlphaFold was back on episode 14 in December of 2020. That was almost 4 years ago. Freeberg, maybe, you could explain
Did we did we predict that they would win the Nobel Prize at the time?
Believe you did. And we'll go check the receipts using Well, hold on. But but but
it was it became it became much more likely that they would win the Nobel after they won the breakthrough prize. I mean, just to just to point this out.
But Yeah. Yeah.
Shout out Yuri Milman.
Shout out Yuri and Julia.
And Julia.
Because when those guys won that award for 2023 and you you heard the extent of what they've done, it was almost, like, obvious that they were gonna win Nobel after the fact. So I think the really interesting thing is actually in this community, I think the breakthrough prize is actually meaningfully more relevant and a positive directional indicator to breakthrough science.
Well, it's kinda like winning Sundance or Cannes. You win the Palme d'Or. You become a favorite to win at the Oscars, right, in the Academy Awards. So that's actually interesting. The regional or more industry centric award could lead to the next one.
So, Friberg, just explain to us why this is so important for the whole time.
I just think it's much more rigorous than the Nobel. I think the Nobel can be a little bit gained, I think.
Oh, interesting. Okay. What do you think, Friberg? Explain to the audience why this is important and and what's transpired since we talked about it 4 years ago.
There's been a long challenge in biochemistry on understanding or predicting or visualizing the three-dimensional structure of of proteins. Because remember, proteins are produced by long chains of amino acids, and those amino acids are kind of create like a bead beaded necklace, and then the the whole necklace collapses on itself in a very specific way. And that three-dimensional molecule, that big chunky protein does something structurally, physically. And so trying to understand the shape of a protein is really hard. I mean, we've used kind of X-ray imaging systems to try and identify it and tried to build models to identify how does that, quote, protein folding work?
How do those amino acids collapse on each other to create that three-dimensional construct? And if I don't know if you guys remember in the early 2000, there was a Stanford Folding at Home distributed computing project. Do you guys remember this?
Yeah. It would use people's machines and extra CPU like the SETI at home project to
Precisely. Yeah. Do this thing. Right. Yeah.
So it's like it ran on the background of your computer. It used your CPU cycles when you weren't using your computer, and it tried to model protein folding. And so this has been a a problem that folks have tried to tackle with compute for decades to figure out the 3 d structure. This is so important because if we can identify the 3 d structure of proteins and we can predict them from the amino acid sequence, we can print out a sequence of amino acids to make a protein that does a specific thing for us. And that unlocks this ability for humans to create biomolecules that can do everything from binding cancer to breaking apart pollutants and plastics to, you know, creating entirely new molecules to running, in some cases, like what David Baker did at University of Washington, he shared the Nobel Prize, creating micromotors, mini motors from proteins that he designed on a computer.
And so this becomes, I think, this great, like, big holy grail in biochemistry. And the AlphaFold project at at DeepMind inside of Google solved this problem. And and, by the way, since since then, they've come out with AlphaFold 3.
Yep.
They've launched a drug discovery company called Isomorphic Labs, where they're basically predicting molecules that will do specific things for a target indication, and then they use the AlphaFold models to actually design and develop those molecules. And there have been literally dozens of companies that have been started since DeepMind was published and probably several $1,000,000,000 of capital that's gone into companies that are creating new drugs, creating new industrial biotech applications using this protein modeling capability that was unleashed with DeepMind a number of years ago. So it really has transformed the industry. It'll be a couple years before we see it transform the world, but, it's it's it's an exciting kinda thing. Yeah.
Not to, virtue signal here, but those are plus size proteins now, FreeBird. They don't like being called chunky. They're called plus size proteins.
Plus size proteins. Yes.
One one really difficult technical question for you, FreeBird. Is there any way for you to take this amazing breakthrough, and make Sacks interested in it? Is there any possible vector here for it to relate to Sacks and get him off his Blackberry right now. Blackberry. I think he's playing chess with Theo, and JD Vance is watching them play chess.
I think that's what's going on right now. It's really hard. I mean, the poor audience here is watching Sax looking down. Alright. Let's keep this train moving here.
Enough of the shenanigans.
Anyway, congrats to the teams. The very Congrats
to the that
won the the jump up. Yeah. Yeah. I mean,
it's just great. And
and David Baker at the Baker Lab at University of Washington, David. They share
also a breakthrough prize winner. Yeah. What's interesting to me is, like, these 2 Nobels, these guys, but also Jeffrey Hinton's, you know, you're really seeing now the convergence of the hard sciences and computer science
Totally.
In a really meaningful way. And I think that that's so interesting and cool.
I think in the group chat, Chamath, you had an interesting, hey. Maybe there should be a computer science award for, you know, a Nobel computer science award. And,
I actually think it's the opposite now, which is that it's amazing to see folks using computers to improve our understanding of the natural sciences. And I think that that's a really great place to be. So what Dennis and John and David are doing in the life science is amazing. What Geoffrey Hinton, you know, did, you know, 30 40 years ago and 20 years ago in terms of training deep neural nets also really amazing.
In related news computer based. Yeah. All computer based. And in related news, Benioff just nominated himself for excellence in CRM management. So congratulations to Benioff on nominating himself for a new What is that called?
§05The Jayter's Ball
Just a string.
Why are you attacking Benioff?
That was
just a string. Dude.
The only thing he
loves What did he do wrong?
Yeah. It's just a joke. It's a joke. The end of time. They're just jokes.
Have you not learned anything from a public defender?
It's the people that attacked you.
It's not an attack. It's a joke. You're kidding. Benioff has done so much for philanthropy. Just ask him.
If you. Dude, he's doing the best he can. He's doing
a great job.
That's how I got in trouble with the podcast.
What are you doing?
Exactly. Yeah. I know. Do people have a sense of humor about yourselves?
No, but it's not even it's not even funny if you had said something else.
I mean, okay. Give me a give me a funnier Nobel. Go ahead.
Go go
ahead. Runs a 300,000,000,000 market cap. Go ahead, Shane.
He's he's chomping a bit to come back on the pod and explain why AI is not gonna disrupt SaaS. Really?
Oh, we see.
He wants to be back on the pod.
Me. Wants to come on.
We'll check-in we'll check-in in a $100,000,000,000 share.
I mean,
he had his chance. That chance is closed.
He shot a shot, and it did not land. That door
was closed when he insulted our guests about not being able to afford
the dishwasher. People, Boris. Oh my god. Now you're piling on. Anybody coming to Dreamforce 2025?
Okay. Let's move on.
Sorry. Anyways, leave Benny off alone, Jean.
Leave it's like leave Britney alone, that famous meme. Leave Benny off alone.
So how many new enemies do you wanna create?
I'm just it's just jokes, people. Just jokes.
Just when you thought he was running out of feuds. You know?
I'm not
in theory with anybody. I'm making stupid jokes. The reason people tune in is because you laugh and learn.
Did you guys see that that tweet that, somebody suggested throwing a conference with all of JKAL's haters?
Jason Khan? Jkal? Jkal's jader's convention.
What is it called? Jaters? Jaters. Yeah.
J haters. Yeah.
J haters. Jators. Yeah. I'd like to shout out my jaders. They're just jokes, folks.
I I love you, Mark. I'm penny off. Come on the pod, Zach.
I think somebody could launch a successful summit just doing that. It's like a it's like a ready made audience, and they're clearly passionate. They're clearly passionate.
All the YC founders will be there.
Keynote day 1, Palmer Lucky. Keynote day 2, David Sachs.
David Sachs.
I think it would rival the All In Summit in terms of the passion of the fans.
All 3 of us would show up. Jake, I would be so devastated. Yeah. Kino was
Are you kidding
me? Re earning. It's hilarious. I'd
have to keynote Graham.
Oh. Benny Hop. I I like Benny Hop. What? I don't wanna try to make any of you through Benny Hop.
He's just
gotta have a sense of humor. Oh my god. Megan Kelly. Work. Oh, yeah.
Megan. Jack, Megan Kelly, and farmer Lucky.
Wait. Does that keep you too? Why does that
keep you? Oh my god. J. Cal was just
so I was brutal to Zach in the early days.
Brutal. Yeah.
Why? Well, he just anyway, we'll get to it in a little bit.
But you're right. Like, you know, throwing a conference for j haters would just be
j haters, like, a ready made
J haters.
J haters.
That is an underserved and passionate demographic.
It would be bigger than 10. Demographic. Just just look at Saxe's replies. Community with shared values. Hey man, if I can
get 25% of those ticket sales, I'm in. Let's go. All right. Let's keep the train moving here. We have an update on the DOJ's antitrust suit with Google.
§06Google antitrust update: DOJ is going for a breakup
Looks like they're going for the breakup as Chamath predicted. You remember the Bloomberg report back in August. We covered it in episode 192. Google was found liable for maintaining a monopoly in search and digital ads. Now the DOJ is working on the remedy.
Right? Okay. They're guilty. So now comes time for the remedy. And the DOJ is quote, this is from Bloomberg, considering asking a federal judge to force Google to sell off parts of its business.
And according to this filing, the DOJ is specifically considering structural remedies that would prevent Google from using products such as Chrome, Google Play, that's the app store on Android, and Android itself to advantage Google search. 32 page document released by the DOJ lays out several options and, we'll go through them and talk about them here. The obvious one terminating Google's exclusive agreements with hardware companies like Apple. They're the default search engine there for 30 or 40,000,000,000 a year. Samsung, that's a layup.
Separating Chrome and Android. My God, that would be drastic ripping that out of the Google ecosystem, prohibiting certain kinds of data tracking. That's a layup as well. Or other behavioral and structural changes for the company. I'm going to pause there Friedberg and get your thoughts on this as a former Googler and you interviewed Sergei at the summit, but I don't think we talked to Sergei about this because obviously he would not be able to talk about it.
So what are your thoughts here on a potential remedy?
I think we've talked about this. I I mean, look, I've shared in the past my belief that companies that are big, that have excess capital, that then invest that excess capital in r and d can be a net benefit for all of us. Look at Bell Labs. Bell Labs had a monopoly on through their association with AT and T, with developing radar, microwave, the transistor, integrated circuitry, information theory, everything that is the basis of the Internet, computing, even nuclear technology, and so on. It's because they had this extraordinary capital flow from the scale of the business, and they were able to invest in r and d.
Similarly, Google acquired and invested for many, many years in DeepMind. And we just talked about how Demos and team won the, the Nobel Prize for the work that they did. And they, by the way, published the protein structure for 200,000,000 proteins for free out of that service. I just wanna zoom out for a minute and talk about the fact that this isn't about, you know, whether Google has a monopoly in search that prohibits competition or in ads that prohibits competition. But are do is it really worth penalizing any company that's big?
Particularly, do we lose the benefit of those big companies investing in technology that pushes us forward? Google also invested in Waymo for years years years, which arguably spurned and drove investment from any other companies in self driving technology. And if Google hadn't done that, would self driving have taken off the way it did? I don't know. Same with Kitty Hawk and Larry's investment in eVTOLs, and that that spawned a lot of eVTOL investing.
And, similarly, if you think about Amazon and their investment in AWS where they were burning cash for many years, that turned out to spawn arguably a lot of interest and investment in cloud. And so I I don't think that these big companies are bad just because they're big. I think we should take apart the monopolistic antitrust actions and behaviors that they take and then identify ways to remedy those behaviors versus just saying anyone or anything that's big should be taken apart because there is a tremendous benefit to be gained from the r and d dollars that they all put into things that, you know, move the whole industry forward. And I think that leadership's important to need it. Otherwise, if you got a bunch of start ups that are trying to get $10,000,000 checks from VCs, I'm not sure they're gonna build a Waymo, and I'm not sure they're gonna build, Amazon Cloud, and I'm not sure they're gonna build a DeepMind, you know, protein folding company and publish it for free.
So I don't know. That's just my point of view on
Chamath, what's the, likely outcome here? Just tell us.
Think about this stuff.
Chamath, you kinda know this one. Pretty good with these predictions. Tell us, we'll be sitting here 5 years from now. What will have occurred?
Unfortunately, not what Freeberg just said. It'll be the opposite. There'll be some form of forced remedy. I'm sympathetic to Freeberg's argument. I don't think that it's really a good thing in the end because I do think there are some incredible examples of Google specifically reinvesting in a way that's really added value in the world.
I think the problem though is that the technology innovation cycle has gotten too elongated. So you're not seeing creative destruction be the natural force that keeps all of these companies in their own swim lanes. And so they are allowed to become too amorphous and too profitable, and I think it becomes an obvious target for politicians.
I think that's a really good observation there about the timeline of this. Because if you look at this, I have started now, and I know many people are starting their search journey on Claude and ChatGPT every day. I'm doing 30, 40, 50 queries and follow ups per day. I force my entire team to do that as well. And so just as there's an actual viable competitor to Google, this action has reached, I don't know, the halfway mark.
This is gonna wind up being completely meaningless, Saxx, if ChatGPT does build a viable competitor coexister that siphons off search. Am I wrong here?
Well, it is ironic that frequently the government takes actions on these monopolies at precisely the moment they're subject to the greatest disruption. Totally. The same thing happened with Microsoft in a way, but it was still a good thing that government acted when it did because there was a risk of Microsoft porting over its desktop monopoly into this new era of the Internet. I think it's still a good thing to be looking at breaking up Google. I actually think that would be good.
At the end of the day, it might be good for shareholders. This thing should be probably 3 separate companies like we've talked about in our previous show. But it is true that Google is facing the most existential threat to its search monopoly, and it is a monopoly, in the form of OpenAI at this point in time.
I have one final thought here and piece of advice for Sergei and the team over there. And I and I told Sergei directly, they have to get good at making apps. To go use ChatJPT, you take out the app, and it's a wonderful, beautiful experience. When you go try to figure out how to use Gemini, it's like shoehorned into search results, and then it's like some subdomain. That's why people aren't using it.
Go buy the domain name chat.com and make a dedicated app just for Gemini. You're a 100% right. Kick ass.
You're a 100% right.
Suck at apps.
We said this when when you asked about the bear case of OpenAI. If the DOJ is gonna go after Google and by the way, the interesting thing, Jason, and I mentioned this to you is that in the same article that floated the trial balloon about this remedy of a Google breakup, the headline in the Wall Street Journal, which I think was very purposeful, said Google and Meta. Mhmm. So I think that they if given their druthers, they being the powers that be at Washington, will probably wanna take a run at both of these companies. They'll start with the one that they think they can disassemble the quickest, and then they'll go to Meta afterwards.
My strong advice to Meta and Google is if this is gonna happen, you gotta go out kicking and punching and fighting and scratching. And I think the most obvious thing is what you just said, Jason, which is you are the front door to the Internet. And there is this completely new emergent technology. And where is the same response to chat gpt that you had to x or that you had to Snapchat or that you had to TikTok. Because if it's gonna happen, it's gonna happen, and then you might as well just go for it.
Yeah. Build the apps, make them kick ass, make the chat gpt alternative, and get it to billions of people yesterday. That would be the most logical game theory thing to do to build up a pool of users that you will rely on when the DOJ tries to come with some consent decree or whatnot. So this is the time to build up the assets now as aggressively as possible.
Yeah. And, selling YouTube would be the ultimate. I know that the ad networks you pointed out, Freebird, are connected. But if they distributed
if they spun
out I'll give you I'll give you
something about the ad thing.
Can you imagine $500,000,000,000 going into Google Squawfers in YouTube shares? They have 500,000,000,000 in cash, Chama.
I had a I talked to a company. He the CEO of a of a public consumer facing company, and this was in the context of some 80, 90 stuff. And he said that he and and 2 other CEOs, the 3 of them you guys would all know, these are very big companies. The 3 of them combined are particularly large. And they said they've had multiyear road maps to try to build a reasonable set of tools in advertising and it's been impossible.
And partly why is that the the tools that the big folks offer are so good that they just cannibalize and run over the entire market. And so what they hear from CMOs is we would love to advertise on your company, your site, but, a, your tools are substandard, and, b, even though your inventory is cheaper, you just don't give us the same scale and breadth that we get in these other big places. I'm not saying that that's either right or wrong, but through the lens of probably what the DOJ sees is when a lot of these folks write letters to them talking about what they're going through, this is what they're saying. And I suspect that if you could actually have a more fragmented market in some of these key markets, it's gonna be a little bit easier for these smaller companies to have a business.
Yeah.
Now you could say, well, tough luck. You tried and you couldn't build it. I get that argument. And I think that that at some point that is legitimate, but the problem is if you're public and you're trying to make your company profitable, what do your engineers wanna work on? They wanna work on consumer facing forward features.
And so what always falls off the list? It's the stuff at the end.
The ad tech. Yeah.
And so anyways, it's this recursive negative loop that a lot of these other companies are in in the shadow of these big companies that I think is gonna cause the DOJ to try to do something.
You know, this is a great setup for m and a. It's a great setup for IPOs, starting to look like. And this is a multi administration case that's been going. Right? I think this started under Trump, went into Biden, and is now gonna continue on to Trump or or Harris.
So what are your thoughts here, Sacks?
Well, in terms of the political environment for m and a next year?
Yeah.
Yeah. I mean so, obviously, it depends which administration's in power. A lot of Democrats, you know, prominent Democrats in tech like Mark Hubert or Reid Hoffman have been making the case that if Kamala is president, she's gonna be much more hospitable and friendly towards m and a, and they've been saying explicitly that they want Lena Khan fired. Well, in response to that, AOC just came out and said, we're gonna have a throw down if you do that. So I don't Let's go.
I would not expect a substantial difference or improvement in the in the regulatory permissiveness, towards m and a if, if we have a democratic administration. If that if you have Trump in office next year, I think that there there will be an opening up of of m and a. I think the Republicans have their own issues with big tech, but those issues tend to revolve around censorship and bias and search results and LLMs, things like that as opposed to bigness per se. So I think it will be easier to get m and a done next year if you have a republican administration.
Absolutely. I am going to be printing money in a Trump administration. It is going to be obscene how many m and a deals and IPO's are gonna occur. There is such a huge backlog. But I do think the I do think the Democrats wanna get this moving as well.
And I I was talking to Reid Hoffman, and you and Peter Thiel in the Illuminati meeting, and, they voted 190 to 2 to replace Lina Khan in the Illuminati meeting. Chhamak, why didn't you make the Illuminati meeting last week? I'm shocked that you weren't there.
I'm not I'm not invited to that.
People don't know that you're being facetious, Jason.
Oh, really? They don't understand that I'm joking about the Illuminati?
They often don't.
They often don't. Well, I'm sorry to the low IQ listeners who don't know that the Illuminati is not real.
Oh, now now you're insulting the audience? No.
I'm insulting the ones who believe there's an Illuminati.
He's trying to sell tickets to the Jators.
Sell tickets to the Jators Mall. But Buck Nasty, Zuck Nasty. Jay Cloud is the biggest hater in the tech industry. You ever see the Haters ball, Zach?
I have not seen that.
Chapelsha? No. Chamath, it looks like between the time we mentioned it on the pod, it's it's actually happening. Here it is. The Jader's ball is happening.
There it is. Lena Khan, David Sachs.
Why am I there?
Go ahead. Because you're a headliner. You're you were organizing. I think you're the host. I'm gonna
be a keynote.
You're the MC.
I'm the I'm okay. Wow. I'm the MC.
There look. There's there's Zuck Nasty, and there's Parmar Lucky. You guys don't know this bit from Chappelle? The haters ball from Chappelle. Oh my god.
It's the funniest bit on Chappelle's Show. It's literally I
mean, I saw a lot of Chappelle's Show. I don't remember that one.
Just show the real picture, Nick. On the Chappelle's Show, they have all of these pimps who have a yearly convention, which is their player haters all.
Oh, I've seen this. I've seen it
play a game. And all they do is sit there with like a toothpick in and they hate on each other and make
fun of each other. I've seen this.
It is the funniest bit in the history of The Chappelle Show. All right. Let's keep the train moving here. CRV is giving back or maybe not calling down 275,000,000 from their LPs. Charles River Venture, shout out to my pal, George Zachary, and Greek Brother from CRV.
§07VC giveback: CRV will return ~$275M of a $500M fund to LPs
Historically, they invest in early stage startups. They did DoorDash, Airtable, Twitter back in the day. They had 2 funds that they raised back in 2022, $1,000,000,000 early stage fund and a 500,000,000 growth fund. Sometimes people call that an opportunity fund or a select fund. The New York Times reported CRV is going to give back about half of that 275,000,000 to investors or technically probably not call it down.
The 4 partners at CRV gave an exclusive to The New York Times. So either getting ahead of this story or, maybe, you know, who knows what the motivation here is. But the reason they gave is that the market conditions for late stage have worsened dramatically and that the valuations are still too high. Yes, the rent is too high and that there aren't any exit options as we just talked about with the administration, no IPOs, no M and A, and that VC map doesn't work in the late stage. So I'll just stop there.
There's a bunch of other notes here. Obviously this isn't the first time this has happened. I think founders fund cut the size of its 8th fund in half from 1,800,000,000 to 900,000,000. They didn't actually give the capital back to VCs like they're saying CRV did here. Again, I'm not certain if that's what's happened or not.
They put the extra 900,000,000 into its 9th fund if they decide to raise that, which I'm assuming Founders Fund will. Chamath, do you have any thoughts on
this I I guess trend?
We we have 2 stories here.
So I don't know if Peter Thiel or Peter Thiel did this, and he gave back quite a large piece of his fund a couple years ago, and then CRV just did it. I I wanna make sure I get the citation right. I think it was Thomas Lafont at COTU who said this. It was really powerful. It made a huge impression on me, which is that the Nasdaq creates about $800,000,000,000 of enterprise value a year.
And he brought that up in the context of private markets have to exceed that in order for it to be a real viable alternative to just owning public indices. And so if you factor in illiquidity risk and the duration, you have to probably generate, I don't know, a trillion, $1,200,000,000,000 of enterprise value in private tech every year. That just seems like it's really hard to do. Where is all of that value getting created? So I think that venture needs to go through a phase where it rerationalizes.
You know, this is sort of what I said at David's LP Day, which is I think that LPs have made a couple of very big mistakes. And I think the biggest mistake that they've made is by smearing too much money across too many general partners. And I think if you had to redo it, a, it's probably a lot less money in total, but, b, and the example I gave there is instead of giving $50,000,000 to Kraft and $10,000,000 to somebody else, you're better off giving $60,000,000 to Kraft and not even having that other GP because that GP makes everybody's life complicated. They overpay. They mispay.
They're probably not supposed to be a GP in the first place, and so they force returns down. And then when you contrast that again to a public market that is systematically creating $800,000,000,000 of enterprise value a year,
this
is an incredibly tough game and it's getting much, much harder. Mhmm. So I think that if you just take a step back, these are the right things to do because you're much better off having a smaller pool of capital that you can concentrate into the things that matter. You're probably better off having smaller teams versus bigger teams. And you're probably better off trying to forge LP relationships where they're not doing 50 fund investments because it just makes the entire industry lag public liquid alternatives.
And I think that that's just not good.
Peanut butter getting spread a little bit than there. Any thoughts, Friberg, on this trend, if we can call it that? Or is this like maybe they're reacting right as the market is changing and valuations are getting more reasonable and the exit opportunities are getting more reasonable? It seems like this was the right reaction 2 years ago, but maybe it's the wrong reaction now. What do you think, Friberg?
For a venture firm to return capital, they need to have at least 1 or 2 big winners. And so if that winner needs to be a 10 x or 20 x or 30 x of the fund, because most of the investments in the fund are not going to work, you need to be able to enter at a reasonable price, and there needs to be enough opportunity relative to the capital trying to invest in that opportunity out there for it to make sense. So in a market where there is excess venture capital, where valuations are at a premium, and where you don't see the exit path, the m and a or the IPO events that make sense that you can actually realize that model, you should take less capital and make fewer, surer investments. And I think that that's what some folks have realized. They don't wanna be chasing, you know, highly valued inflated opportunities, and they don't wanna be putting capital into tier b or tier c opportunities just for the sake of deploying capital.
This is a really interesting moment where you can kind of see who are the the right folks in terms of thinking long term in Silicon Valley, long term in terms of building an investment practice in private venture, And maybe who are folks that are trying to build their AUM stack. And folks who have done reasonably well, like Founders Fund has probably the most exceptional track record in Silicon Valley as a venture firm. They are very cognizant of the market conditions, and I think that they're being very smart. By the way, the other thing I've heard from LPs is they're similarly trying to find more concentrated capital themselves. So they're trying to put more capital to work in fewer managers.
And so there's a a real wheat from the chaff moment happening in Silicon Valley Venture right now. What I think a couple years ago was, hey, everyone's gonna go do a startup. A few years ago became everyone's gonna go do a venture fund. And now I think the froth that has occurred because of that is being cleared out.
And to just explain this math before I get Sacks' thoughts on this, if this was a $500,000,000 fund, let's say they were putting $25,000,000 into each. We'll take management fees out of it. $25,000,000 into each opportunity at a $1,000,000,000 valuation, they would own 2.5 percent, obviously, of those firms. They need to get probably a $30,000,000,000 power law exit, a 30x ax in order to just return the fund. There'll be some dilution obviously along the way.
That's why it's not 20x. And the number of companies that go from a 1000000000 to 30,000,000,000 per cycle is incredibly low. Uber, Coinbase, Airbnb. I it's a really short list, Sachs, in recent history?
Probably not. I mean look. Just just go back to the CRB thing. You said at the outset of the conversation that this was either a growth fund or an opportunities fund. That makes a really big difference.
Explain, please.
Because well, an opportunities fund typically exists to back up your winners. In other words, if the venture fund is producing some big winners, the opportunities fund exists to deploy more capital into those into those companies as opposed to a growth fund, which is you'd be underwriting brand new companies from scratch. Typically, an opportunities fund is limited to companies that you're already an investor in through your venture fund. So that makes a big difference. I mean, if CRB has a $1,000,000,000 venture fund and only a $500,000,000 opportunities fund, it may just be the case that they don't need all of that capital to back up the winners.
They can do their pro rata's out of the main fund. So I I suspect that that might be what's going on. I actually think this is a pretty good time to have a growth fund. A lot of the Why? Yeah.
Well, because a lot of the, crossover capital has left the ecosystem
k.
A few years ago.
And that sort of cohort SoftBank, Bossy Yoshi Son.
Yeah. Well, tiger and and, SoftBank are still around, but there are other very large investors, hedge funds, and so on who had come into the ecosystem with 1,000,000,000 of dollars a few years ago, and now they've left. And some of those funds that you're talking about, like Tiger used to be $10,000,000,000 funds. Now they're $2,000,000,000 funds. Right.
They didn't right size. They're not violently doing I mean, the the Tiger deals, my understanding was they weren't joining the board in a lot of the cases, and they were outsourcing the diligence. And that was a pretty violent pace. I don't know what we do now.
The best time in probably 5 years to have a growth fund.
Interesting.
But to to your point about the size of the venture fund, the bigger the venture fund, the bigger the winner that you need to make that pay off, obviously.
Yes.
And so because of the power law, so to take an example, I don't know. Let's say you've got a $1,000,000,000 venture fund. Let's say that at IPO, you own 10% of whatever that that winner is. And because of the power law, your your fund performance is really determined by your best outcome. Right?
Yep.
So in order to take a $1,000,000,000 venture fund and say, deliver a 3 x, you know, so 3,000,000,000 of returns and your best company, you own 10% of that implies you have a $30,000,000,000 winner in that fund. And there are precious few outcomes where you have a $30,000,000,000 IPO. Right?
Yeah. I mean
This doesn't happen very often.
Count them on 2 hands the last cycle.
Right.
Like I just did. You got you got Uber, you got Robinhood, you got Coinbase. Strike will eventually come out. You got SpaceX. Well, that was 2 cycles ago.
So I mean Yeah.
You're gonna need to have a meaningful ownership position in a massive company in order to make a fund that big payoff. The the data that I think LPs look at shows that smaller venture funds tend to perform better for this reason, dollars 500,000,000 funds. So, yeah, I personally wouldn't want the pressure of a $1,000,000,000 venture fund. That would be really hard as a 5 or $600,000,000,000 venture fund. You kinda need to have or or wanna have like a decacorn outcome to make that a great fund, but to have to have a $30,000,000,000 plus outcome, it's it's even more difficult.
§08New TikTok survey shows increased usage as a news source
Moving on, Pew just published, some really interesting research on TikTok. If you don't know the Pew study, they've been doing it for decades. It's very well respected, and, bipartisan or nonpartisan. 4 in 10 US adults aged 18 to 29 are now regularly getting their news from TikTok. Here's some charts for you to take a look at.
As you can see, the younger generation is really spending a lot of time on TikTok and getting a lot of their news there. I know this because, yeah, I've I've I've talked to a bunch of kids about this. And people that use TikTok, 52% are regularly getting their news from the platform, and that number has skyrocketed compared to other social platforms. Take a look at this chart. Here's x.
59% of people say they get their news at x. It's really a news platform, so that makes total sense. You look at Facebook, it's, you know, 48% right now. Reddit, 33%. YouTube, 37% in 2024.
Instagram, 40%. But TikTok, 52, up from 22%. So it's no longer just dancing. And this is the reason I think many people in the government were concerned about the attack vector that the CCP would have in the United States since they still control the company For services like Snapchat, LinkedIn, and WhatsApp, and Nextdoor, it's below 20 below 30% get their news from there. They're sure truth social there, Sachs, 57% of people get news there in Rumble, 48%.
So what's your takeaway from from this, just Sacks? Looking at it and this impact that TikTok has, is this concerning on a national security level since the algorithm's a black box and you could tweak it if you really wanted to, to really change sentiment. And, young people are obviously very impressionable on this platform, and they're big users of it.
Well, I thought there was other data in this study that should calm people's fears that TikTok would somehow be used as a political weapon. So in the same survey you're talking about, 95% of adults that use TikTok say they use it because it's entertaining. So that's the main reason people use it, and only 10% of accounts followed by US adults post content related to political or social issues.
K. That's posting and the main reason. Right?
Yeah. But so so, basically, you're 90% of the accounts that get followed aren't even posting political or social issues. They're there for entertainment as people watching dance videos, as people Yeah. That's definitely I I mean, I the main thing I use it for is to watch wrestling highlights. So, you're a wrestling guy?
Yeah. I'm a wrestling fan.
What? Yeah. You're into this Kabuki theater of wrestling? This is new information. I'm going
to for 20 Yeah. I get my WWE on, on TikTok
because I
don't have
to watch
the whole yeah.
I'm watching. Are you a Hulk Hogan guy? Are you an Undertaker guy? Vince McMahon? I mean, he's Jimmy
Jimmy Superfly snooker.
Who are you? Andre the Giant?
Because I know all those names, but
I like I also love the Road Warriors.
Yeah.
Ultimate Warrior, I loved. I I was a huge wrestling fan. That was the one thing that my dad and I bonded over. We would watch wrestling every Saturday. Saks, did you ever watch the the specials on Saturday night?
Like, the
Oh, yeah.
Oh, those are so great.
That was the era of Hulk Hogan, for sure. Saturday night's main event.
Randy Buttersen, Savage.
He's great.
Savage is great. Savage is great.
I mean, look. My my all time favorite was Stone Cold Steve Austin.
Stone Cold is great.
I I marked out the hardest for Austin.
He was he was anti woke before anti woke became a thing.
Totally.
This is crazy. You guys are into wrestling.
That's fair enough. For us. I'd say Flairick
is number 2 for me.
Wait. Wait. Hold on. Have you gone
to a wrestling act? Did you in person like the WWF at the time, or did you like the NWA as well?
There are moments. When when Hogan turned heel and joined the the, was it the NWO? That was, like, a big moment.
I'm a big, Andy Kaufman wrestling fan. That was my only interest is when when Andy Kaufman came in there and, trolled them. But have you
been Kaufman. Yeah. That well, that was, like, in the 19 seventies, wasn't it?
Or It was the late his eighties. Remember he was on David Letterman with Jerry Waller? And he he comes to a wrestling match, Saks, in the south. And he gets in where and
I grew up in my hometown of Memphis.
Right. So he goes there, and he gets in the ring. And he says, all of you rednecks, I wanna show you some new inventions. This is called soap, and this is called a washcloth. And you use it to clean yourself.
And he's like just mocking the southern accent and Jerry Lawler. I remember Jerry Lawler smacks him and on Letterman. Oh, it's the greatest.
It was a huge deal. I mean, where I grew up because that this was like on the local news. Yes. When I grew up in Memphis, there was no professional sports teams. Okay.
All we had was the Memphis state basketball and, and, wrestling every Monday night at the south Coliseum. That was it. That was like professional sports
in Memphis. You also had probably like some state fairs or, you know, like best goats, best sheep, or something.
Lawler was so popular that he could have been elected mayor. In fact, I think there was talk at one point of him becoming mayor.
Wow. I
mean, the intergender champion, Andy Kaufman. Did you, did
you guys like mouth of the south?
Jimmy Hart. Oh, yeah. Jimmy Hart. Yeah. He was amazing.
He was like the main heel manager for a while. Yeah.
Okay. This is
before the WWE took over. I guess it was called WWF back then, but there were all these little fiefdoms and kingdoms, and mid south wrestling was, like, one of those kingdoms, and Lawler was, like, the king of it. And then you had all these guys come in and out and wrestle.
Freeberg, you ever watch wrestling? And what do you think of this TikTok survey?
I don't watch wrestling.
Okay. Very good. And TikTok survey, anything where are you now? Any thoughts?
Looks like they gathered some reasonable data.
Okay. There you go. There's there's
your targeting My point my point was that it's mostly an entertainment app where people go to watch dance videos, wrestling clips, style influencers, and so on. And I think that this idea that it's somehow a propaganda tool around, you know, programming our youth, I think that's a moral panic that's been exaggerated.
What do you think the odds are that TikTok is hacked to allow you to passively listen even when the app is not being used?
0.
You think I'm not feeling it? 0?
No. They're like 5%. Funny that's very unlikely. Yeah. Because so someone said that that was that was, there was some code that enabled that in the early version of the app, and then some other people audited it, and they said they did not find evidence that there was any technology.
And Apple's got a very good audit system for this.
Did those same people audit WhatsApp? And then it turned out that it was Call it the
hacking passively listen? Yeah. Does WhatsApp passively listen? Yeah.
It's one of the it's one of the most well known breaches.
Or maybe they do. Maybe it's maybe
it's a different percent certain that the CCP is using it because they these people have tracked already journalists using it. So if they've already done it, it's a 100%. And I don't know about the passive listening, but any thoughts on 50% plus of young people getting their news here? Chamath, any news on that? I mean, obviously, we don't have evidence that it's being used currently to manipulate people, but it's over 50% of young people are now getting their news there or say they're getting their news there.
So I bet more than 50% of young people are getting their news from podcasts, and those podcasts get chopped up and clipped, and then people watch them on TikTok.
Yeah. For sure.
I bet that's how it's happening.
There are
a lot of people who think this show is a TikTok show, and they don't know it's a big show.
Yeah. We'll have to prepare for a brave new world in the following way. There was an article, I think it was in the Wall Street Journal that said that Russia and Iran were paying low level street criminals to create chaos. Okay. And I and I read that article and I thought, okay.
Well, what does this mean if you actually extrapolate this, which is that the hot wars are very complicated, not worth doing. These disruptive fissures are the better way to sow chaos. And it occurred to me then that tying this back to something that we saw before, it does make sense for a lot of folks to sponsor a lot of long tail content that say a lot of different things. I think that that just is pretty obvious. And so I think that if you put these two ideas together, it stands to reason that a lot of people will be paying influencers a lot of money to create all kinds of content that is specific to a perspective that they have.
And then on top of that, if you can algorithmically amplify one over the other, you know, you're you're going to have issues. Is it the biggest issue in the world? Probably not.
That is probably the biggest issue.
Swing an election, but it would cause chaos. And we just had the the Southern District of New York target that Russian Russia Today was giving $10,000,000 to 4 podcasters. They didn't even know they were getting paid by the Russians. They just them because they liked their opinions, and they gave them a 100,000 an episode to to promote pro Russian positions.
If the Russians were actually doing it, it's the stupidest use of $10,000,000 ever because
Great insight.
Those podcasters already have their own channels. They're already putting out lots of content and this other content is a drop in the bucket. I think Jamathe, the issue with what you're saying is just there is so much content out there already. People create it for free. People create it, you know, because they're they have a career in it.
There's a whole long tail of influencers. There is so much content out there already through podcasts, through websites. It's all being chopped up. That trying to do it as some sort of disinformation strategy, I think, is very hard to do because it's just when there's 1,000,000,000 and 1,000,000,000 of of impressions, any effort that you try to engineer ends up just being a drop in the bucket.
I agree
with that.
Yeah. It's
definitely the drop
in the bucket.
It makes sense in theory, but,
yeah. It makes
sense in theory. It's very hard to do in practice.
Yeah. The goal is not to win any specific argument. It's to create mistrust in the entire news ecosystem, in the information system so that people give up trying to figure out what the truth is. And that's what the
Russian media media is doing that on their own. The mainstream media lies to argue that that was creating the distrust.
As are the Russians paying off podcasters. Okay. Let's How is $10,000,000
gonna accomplish anything if that story's even true? It makes no sense.
Great question. May I answer it?
You're looking at a conspiracy theory.
Not a conspiracy theory at all. These were very low level, mid, like, you know, tier b, CD podcasters. If you give them a $100,000 per episode, they can spend more money buying cameras, promoting their shows, hiring people. So you're just finding people and dropping money on their heads so they can do more of the same. So it's a very smart strategy, in fact, I think.
I think it's the stupidest thing I've ever heard. They they took podcasters who are already successful and paid them to release content through a less watched channel. That's the question.
It was it was just more about getting the money to produce more content. And then they in
the These guys are already these guys are already live streaming, like, 247.
Oh, there's your puppy. Here he goes. Freebird trying to win more people over with this puppy love. Unbelievable. This guy is absolutely ridiculous.
Unbelievable. Alright. Listen. Let me give Sachs some red meat here. He got he got his little steak tartare with my Russia Today story.
He got your little amuse bouj. And now I give you your tomahawk. You ready, Sachs? You want your tomahawk? You want it rare?
Here it comes. 2024 election update. The betting markets and polling indicate a really tight race, but maybe Trump is surging this week. Poly market, which is a betting market, has Trump 55 to 45 versus Kamala. Kalshi, another betting market.
§09Election update: Are polling problems causing a strategy shift for Kamala Harris?
52, 48, Trump. Lovato and PointsBet, those are offshore booking and Poly Market is also offshore. 52, 48, Trump. Nate Silver, friend of the pod, his algorithm has it 5347. Kamala, real clear polling.
That's an algorithm has Kamala with a 2 point lead. New York Times Sienna, Kamala with a 3 point lead. Reuters, Ipsos, pretty well trusted, 3 point lead for Kamala. NPR PBS Maris Poll has Kamala with a 2 point lead. So sportbooks and betting markets are favoring Trump slightly while the polls are slightly favoring Kamala.
Sachs, I sliced it up nice for you. You got nice 10 slices of meat here. Which slice you going for?
Well, I think your recitation of the polls there kinda mixes up a couple of things. There's popular vote polls, and then there's electoral college, which goes through by state. If you look at pretty much now all the main pollsters, you look at Tony Fabrizio, you look at RealClearPolitics, they're now showing that Trump is winning the electoral college right now. He is up in almost every swing state, including, I think, Michigan, which is pretty surprising. Clearly, there's been a huge swing towards Trump over the last week or 2.
And look, there's still 25 days to go, so anything can happen. I don't wanna overstate this, but, yeah, this is a good example right here showing
that Trump now the lead in every system.
College is is 296 to 242. What is Fabrizio?
He's just a Republican pollster, but his
accuracy is
pretty high.
I've never heard of Fabrizio.
Well, another guy who I think is more neutral is Mark Halperin, who is a pundit, who has been very accurate this election cycle. Remember, he's the one who broke the scoop that Biden would be replaced by Harris. And he even said exactly when it would happen. And, he predicted it down to the day he was exactly right about that. And if you follow his account, he is now saying that both Republican and Democrat insiders that he talks to are both saying the same thing, which is their internals are now showing Trump ahead in every swing state or almost every swing state.
And, things seem to be breaking Trump's way right now. Again, there's 25 days left, but if you're wondering why is Harris all of a sudden doing interviews, it's because their internal started showing that she was in trouble. So they decided to get her out more. And,
or is it
the other way? Is it that the her Howard Stern interviews or whatever are causing her to lose votes?
Well, yeah, exactly. Well, so, you
know, which one is it, do you think? Because I don't know when you, I don't have the dates of all these polls versus that.
No. I think it's, I, it's, it's what I predicted a couple of months ago. It's the doom loop. So what I said 2 months ago is that if Harris gets behind, she's gonna have to abandon this sort of basement strategy of not doing interviews. She's gonna have to start doing interviews.
The problem is she's not good at interviews. And if she does more interviews, she's gonna fall further behind the polls and it could cause a doom loop. So that's where we appear to be right now. I said that on August 30th.
Okay. Chamath, you know that?
I think that Donald Trump has basically stuck to his strategy, which is he is a generational retail politician. I just heard parts of what he did with Andrew Schultz, another great sort of, you know, podcast. I think David's right that the editing and the massaging of the Kamala Harris talking points are galvanizing the people that have already decided and turning off the people that have already decided to vote for Trump, and she's losing the folks in the middle. And so this is what's causing her to have to be out there. And on and she's gonna have to deliver a very crisp message.
And I and I think that right now, it's been a little bit lacking, which is why you're seeing the polls, at least the electoral college, which is really what matters at this point, turn Trump. So she's gonna have a bit of an uphill fight between here and November. The other thing I'll say is that if you've seen what's happening in the appellate court, it's not clear whether the the Trump case is gonna get overturned before the election. But if that does, that could be very meaningful momentum for him. And then I think the third thing is that we should now buckle in because if the last two elections are any guide, there are going to be a bunch of spanners in the works between now November
the first. Say spanners?
Spanners in the works. Yeah.
What does it mean?
Rent what what do you call it? Wrench in the system?
You mean, like, an October surprise? You mean, like, some crazy turn of events? Okay. Friberg, any thoughts here? Would you like to Rorschach test this and see what you want in the numbers, Or do you have some objective thoughts here?
What's your take?
You know, there's some On the polling data?
Yeah. Where we're at in the election, pretty open ended here. You can look at the you can make a note on overall what you see between the betting markets and the polls and that disparity. You could just talk generally about where you think we are. You could talk about Kamala on Howard Stern and doing a bunch of interviews with friendlies.
What were where are you at right now?
I didn't see her interviews. Okay. I saw some excerpts on Twitter.
Oh, boy. Yeah. Let me just follow-up on a point Chamath made. Chamath said that she had to be crisp. If you look at any of these interviews, they're the opposite of crisp.
She's asked softball questions by by, like, Stephen Colbert saying, why are you running for president? How are you different than Joe Biden? Yeah. And she doesn't have good answers. She starts free associating.
She gives these very long winded answers that don't go anywhere. She says she can't think of a single way she's different than Joe Biden when when pushed on that. It's very strange.
These are questions that most favorite shows. I wish she would do some challenging shows. I think she's gotta do Joe Rogan, all in, and, what would be another good podcast for her Dujima if she really wanted to, like, do the adversarial thing or something more do
an adversarial interview.
Do an adversarial, just come to All In. Come and have a conversation.
Come and have a normal conversation here. Yeah. No. I'm just thinking, like, it seems like,
Sacks, if she comes and has a has a conversation, you'll be respectful.
Yeah. This whole idea that I didn't treat Cuban respectfully as nonsense. Just wash the tape.
I don't even keep all that.
No. I know, but somebody somebody asserted that.
No. I mean, I the all if you look back on every single presidential related one we did here, they were all respectful, and they were all conversations. I think the Cuba one dipped because of both of you into a bit more of a debate, and it was a lot more crossover than
the other ones. Wanted that. That's what the guys were
doing for. That's why. Yeah. Yeah. No.
He like, I agree. He's boring back to him as a smile. He likes to come out.
He likes to do his thing. Yeah. Yeah.
That's exactly what I wanted.
If you look
at all the other ones, I'm
trying to think
of a moment where
it if you look at
the other D and B Phillips, Chris Christie, Vivek.
Boring. Gotta go. Love you guys.
All interested. We'll see
you later.
This has been another amazing
episode of
the All In podcast. Episode 199. Make sure you go to allin.com/meetups. Make sure if you're starting a company, you go to founder.university. If you're an engineer What do you do?
Please go to I'm doing whatever the I please. David Sachs. Make sure you go to, Super. Glue AI if you're an engineer. And if you like potatoes, go to ahollow.com and order your potatoes, pre order a subscription.
I mean, if we're doing less, sell some let's sell
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Go to 809890. Out of control.
We'll see everybody next time on the All in
Love you, boys. Bye bye.
Bye bye. Catch you. We'll let your winners ride.
Rain man David.
And it
said We open sourced
We should all just get a room and just have one big huge orgy because they're all just useless. It's like this, like, sexual tension and they just need to release them out.
Wet your feet.