Did Stripe miss its window? Plus: VC market update, AI comes for SaaS, Trump's savvy move
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本篇目录9 章节
§01Bestie intro: Jason's Japan trip!§02Stripe's precarious situation: Did it miss its window? Breaking down its $4B tax bill, slowing growth curve, enterprise vs SMB customers, sc§03Lessons for founders: How ZIRP can skew CAC and LTV calculations, burn multiple§04VC market update: ZIRP mistakes, VC as a "must-have" asset class for LPs, how the 2021 vintage can be saved§05AI's outsized impact on SaaS and real-world businesses§06Advice from Steve Jobs on customer-first product development, Section 230 update§07Trump's savvy visit to East Palestine and 2024 strategy, Biden's visit to Ukraine, China's position§08Tinfoil hat corner§09Bestie wrap up!§01Bestie intro: Jason's Japan trip!
Check out what what time is it in over there?
Well, we started at 8 AM, so now it's
8:28.
It's 8:28. I'm gonna be out on the slopes at 11. Yep. So I'll be out there skiing. I'm in Naseko
--
In Japan.
--
and to take a quick flight to Sapporo. And then you drive 2 hours into the mountains. Yesterday, Katzied. There's an abandoned Seismarck too.
By the way, in honor of you, I grabbed a Saporo from the fridge today.
Oh, very nice. Yeah. Just a week's episode brought to you by. So they drive the CAT ski up, and then you ski down, and it's all fresh track. So it's at literally an abandoned ski resort.
during the financial crisis here.
I I
just asked you what time it was. That's all I asked you.
cold small talk. It's called banter. I thought you might be interested in your bestie's life. But probably not. What Witter's ride.
Rainman, David Saffens. Let's get to the show. Everybody wants to hear the show. lot of news going on. And I you know, in our industry, there has been a big discussion about RSUs and stock options.
§02Stripe's precarious situation: Did it miss its window? Breaking down its $4B tax bill, slowing growth curve, enterprise vs SMB customers, sc
both the cost of these things. And then there's another issue of people staying private for too long.
If you remember, for
folks listening, Airbnb Uber famously took over 10 years to go public. People like Bill Girly wrote about this, hey. You should get public. When the window is open, obviously, the window is closed right now or largely closed, Stripe. Now people are speculating they missed their window, they have a $4,000,000,000 tax bill due to cover expiring employee RSUs.
Those are restricted stock, units, and at the same time, 4square a company from the web 2.0 era. This is, you know, 10, 15 years ago when they were very popular check-in software at mobile location. app. They are going to let their previous employees stock option grants expire according to the information They issued these options in 2016, 7 year window before expiration. More than a 100 form employees will be impacted.
And some of them are the very early team members And this employee stock option problem is becoming acute because, hey, you people waited to go public.
Basically, what happens is you grant an RSU, which is effectively w 2 income when it's realized with an expiration date, But that expiration date forces you to be public so that that RSU can be exchanged for value, then that's like a 10 year window. then these guys have to go in and modify that date and push it out by another 4, 5, 6 years or whatever. That is a deemed event by the IRS that then creates withholding tax issues. Right. So you then have to you then have to withhold tax on behalf of the employees, and so of number is the 4,000,000,000 that Stripe is trying to raise.
According to a leaked pitch deck, Stripe implied they needed 2,300,000,000 in capital by the end of Q1 2023. working with Goldman Sachs to raise a few 1,000,000,000 at a $55,000,000,000 valuation. That's down 42% from the peak of 95,000,000,000 in
20 21.
One wonders if they had gone public what their valuation would be right now.
Can we just say real quick why this matters, Jake? Like
yes. So, anyway, why does it matter, Shamont?
Yeah. Why does this why does this all Like, why do we care?
Thank you. That's where we're getting to.
I posted a link. This is a 2013 interview that Zuck did with Michael Arrington of TechCrunch. And if you go all the way back, the apprehension to go public was one thing that we really anchored to a lot at Facebook in the early days. And at the time, I don't know if you guys remember, but there is these arcane laws around the number of shareholders that you could have And I think the issue specifically was that after 500 shareholders, you have to publicly release your financials. And so we did all kinds of things to make sure we never hit the 500 cap, and we tried to push the IPO data as far out as possible because we thought that it would keep people more focused.
And then In 2010 or 11 and I told this story a couple times, one of the things that I was advocating for pretty aggressively was trying to launch a mobile operating system to compete with Ios and Android. And we had put together all this work and brought in Intel and AT and T and all these people in it came down to the fact that we needed a couple $1,000,000,000 to float this thing, and we didn't have that money. So the only solution to that would have been to go public, but it wasn't the right moment in time, and Zach wasn't comfortable with it. A year after going public, one of the things that he said publicly in this TechCrunch thing was, wow, I should have just gone public sooner. It it wasn't nearly the bad thing that I thought it was gonna be.
And when you look subsequently at how much money they've spent in AR and VR, Spending half a quarters of that cash could have given them the chance to disrupt Android and iOS in 201011, which in hindsight is obviously a no brainer bet. Right? So even though I think we at Facebook were the ones to really put this in the water table, about not going public? I think a lot of startups should have gone back to 1st principles to really question whether waiting as long as possible actually makes sense. So I was curious about the strike situation, so I asked my team to do a little bit of work on how would you value this thing if it were going public And the interesting thing about Stripe is that it operates in a really transparent middle man business.
So what's interesting about Stripe is that so many of the people in the ecosystem are public. And so what that means is you can build a pretty accurate mosaic of how well or not well that business is doing by interpolating all the other data from all of these other companies that are public and are forced to report. And so there's like a couple of really interesting things that jump off this page. And so the first thing that we did was we looked at what does the future profitability look like ex of growth. And what's interesting is that you look at companies like Visa and Mastercard that are doing quite well and have done really well for a long time.
But you look at this outlier in Adyen. And Adyen is probably the most obvious competitor to Stripe. And the thing that is demonstrated here is how incredibly profitable this business is. And how much operating leverage they have which means that their OpEx is relatively constrained. Because it turns
out in the x and y axis here just so people who are listening can understand the chart?
Sure. So if you if you take the market cap on the x axis and divide it by their sales estimate, you get a multiple of the enterprise value to their sales.
Got it.
And if you look at the 2024 estimated EBITDA margin, that they're forecasting. X up their long term sales CAGR, what you start to get a sense of is the operating leverage that this business has. And so all of this basically nets out to 3 interesting takeaways. When Stripe got underwritten at $96,000,000,000, it's this data point right here where, you know, you see your Stripe previous round. 5
x enterprise value to divided by 2024 -- Divided over their
their long term their long term EBITDA exactly by their sales estimate. And then if you look at the $55,000,000,000 valuation, it's down. So what it looks like it's happening is appropriately so people are doing the right thing which is they're rerating the stock, right, by approximately 50%, 60%. But what's interesting is not where they are in terms of where they used to be, but The interesting thing is where they are relative to their most obvious competitor Ajin. So Nick, please bring up the next one.
So this is where things get really interesting because we looked at what was Adient and what was Stripe's GMV per employee a couple of years ago before all hell broke loose in the private funding markets. And what you see is they were pretty equivalent businesses and they had roughly the same amount of employees But this crazy thing happened, which is that if you look at the gray bar, this is the number of employees that Stripe has. It went crazy. from a little over 2000 to almost 8000. So a 4 xing of employees 2
years. x in 24 months. They had its 6000 people just pause for a second on that. 6000 people in 24 months 700 days or so. Right.
Three people a day. And
if you do the same calculation for Adjian, it shows that they a little bit less than grew by about 75%. And then if you look at the growth of GMV and you impute how productive is each employee. Basically, this is the the story of what's happened to Stripe in Ajin, which is that Ajin has found operating leverage Sprite. So they've found and maintained incredible profitability. And Stripe has added an enormous number of employees.
Now the question is why. Right? So it turns out that these guys at the top line are growing roughly the same except Adian actually takes meaningfully less on a per transaction basis than Stripe does. And the reason is that Adian services these large head customers. Think big, bulky folks that have huge amounts of transactions and so as a result have pricing power.
And Stripe has some of those customers as well. In fact, they just announced that they're gonna process a large portion of Amazon's payment volume, But what's happened at the same time is that those kinds of deals aren't necessarily that profitable. And so you have to hire a lot more people to build a lot more features so that you can generate revenue from the long tail of customers, all of these SMBs. And this is the tale of these 2 companies, which is that Stripe has some head customers, but many, many, many tail customers. Adjian has mostly head customers fewer tail customers.
And so the leverage in the businesses that Agen has most of these employees in your where the cost of these folks is much, much cheaper and they have less than half the number. And so as both of these companies continue to grow, You have one that has maintained and frankly raised their long term profit projections because they see it in the business even at lower transaction costs and Stripe, which is having a little bit more trouble. So I thought it was a really interesting exposate The the takeaway for me is that if you were sitting inside the company and obviously hindsight is 2020 The most profitable thing they could have done from an enterprise value perspective would probably have been to go public in 2018, 2019. because they could have raised max value at max valuation, cleaned out all these options issues, and have a huge balance sheet of cash with which to do stuff. whether it's acquisitions or other things.
because the thing that I struggle with is, is there going to be long term profitability in all of these tail products? Because if you look in the SaaS ecosystem and Saks and the ball to you. There's companies building all this other stuff, and these point products are probably pretty good too.
Sach, what do you think about Agen going after the fat part of the long tail and then Stripe going after the long tail having many more customers?
Well, I think they're both viable strategies. And, I mean, I've actually written about this. I wrote a blog some time ago called Enterprises versus SMBs. Who's the better customer for b to b SaaS Companies. And I think the sort of old school traditional view is that enterprises were always the best customers because they have the biggest budgets.
that translates into the biggest annual contract values or ACVs. This provides the highest ROI on sales efforts. So now you can make a sales driven distribution strategy pencil in the first place. The prospects are easy to identify it, you know, after all if you're going after the Fortune 500, you can just make a list of the 500 companies. So I think the traditional gold standard was sort of the head, like you're saying, Jason, the enterprises.
However, I think in recent years, it's become more popular to pursue the Stripe strategy of this sort of more SMB.
Why is that more popular?
Well, because first of all, Sharps are the S and P's are more early adopters. So when you're a startup, it's way easier to satisfy their standards to satisfy their needs their needs are less complicated. You don't have to have SOC 2 compliance and everything else. If you
solve -- -- risk taking. Right? Yeah. Yeah.
If you solve an immediate pain for point for them, they'll just buy it. Okay? Whereas enterprises are more late adopters. They tend to be more skeptical. of new software categories.
Yeah. I think in addition to that, the SMB sales cycle is really quick. I mean, I'd say typically 1 to 2 months, you can close a deal the sale itself is simpler. Like I said, the the product requirements are simpler, and the low end of the market tends to be the most underserved part. So it's great to play where the incumbents are not.
That's a traditional strategy as you go after the low end of the market that's been kind of overlooked or ignored. And that's kind of what Stripe has done here too as no one was really surveying these these developers. So I tend to think it's a it's a good strategy too. And and the truth is it's not one or the other. I think you just have to pick, you know, which of your battles that you wanna fight.
And some starts to go after enterprises, and some will go after SMBs. And it really comes down, I think, founder market fit. I think founders who are better at sales probably skew more towards an enterprise.
Got it.
strategy, whereas if you're more of a product founder, you go after SMBs.
Brilliant summary. Over time, Saxx, for a company to thrive over long periods of time. Do you have to service both, or do you think you can stay in one of those things and grow indefinitely?
Well, what I've seen is that if you start the low end of the get with SMBs over time you can move upmarket. Because what happens is that as your product gets more and more sophisticated and your company and your ability to execute and deliver gets more sophisticated, You can start satisfying the needs of bigger and bigger companies. So you start SMB, then you go to mid market, then you eventually get to enterprises. I think if you start with enterprises, it's very hard to go down market because it's a lot easier to add requirements to your product than to actually strip complexity of a product that's actually surprisingly difficult to do. So I've I think it's I think either strategy can work, either you start the low end and move up market, that's a classic Clay Christensen Innovators dilemma type thing, or you you just start at the top and you stay at the top.
That
makes sense. It's just I mean, adding 10 people a day over 2 years, that's a large number of people to add to a company.
Well, in fairness to Stripe, they were very honest about this, and they were like, we overestimated, got confident and we overhired. And they found that all the coordination costs, the Sakses point, became too high. That's exactly what the call has been said in their memo. So I think that they're trying to course correct and get back to this. I think the point that I'm making, unemotionally, I don't own Stripe nor Adjuan.
I don't have a horse in this race is more that In this market specifically in these middle men, highly transparent middle men markets, it's very difficult to hide the cheese, meaning the ability to get to an extremely precise valuation model is pretty easy. You know, this was half a day's work that we did, and the point all this data is out there. And so it means that if you're going to go public as a company like this, you have to be quite thoughtful about how outside in folks will value you because the terminal buyer is very, very sophisticated and pretty smart about how to think about spaces like this?
Friedberg, when you look at this, it kinda dovetails with the get fit, Brad Gersner, Elon, Twitter, doing more with less employees. Zuckerberg again says he is getting rid of managers. He's asking managers to Saks's discussion about you know, the layers of management that got added and added where high performers would be would have 5 people put under them, 10 people put under them. Is it going to be are are you impressed with how quickly the industry is responding to this new environment or are they not responding fast enough? in terms of headcount revenue because now we're looking at revenue per employee.
This has never looked at that. It's been a decade since we looked at that.
this is a little bit of a different situation where it's about the scalability of a business. Like, when I look at, like, the value that a business has created, you start first with, like, can you make a product? Can you sell the product? Do people wanna buy the product? and then, you know, can you make money selling it?
And then there's this metric that a lot of people use, which is LTV to CAC, which is the lifetime value of acquiring a new customer divided by the cost to acquire that customer. But I think you can generalize that ratio to talk about business performance more broadly, which is, you know, capital deployed, which is typically what CAC has used in terms of growth, on the denominator, and then capital returned over time, which can be the numerator. And so, you know, you can kind of think about that LTV to cap ratio being something more broadly defined as something like ROIC or what have you. The the question for the scalability of any business is, Does that ratio, whether it's LTV to CAC or ROIC return on invested capital, does it get bigger or smaller? Does it increase or decrease?
Does that ratio increase or decrease as you get bigger, as you spend more money, as you deploy more money? If it's getting smaller, then mathematically, you can resolve pretty quickly to the asymptotic valuation that that business will achieve or the asymptotic revenue that that business will achieve. And that's a very scary kind of circumstance when a business that's tracking that metric starts to see that metric shrink. If that metric is growing, then you have an you know, a a hyperbolic kind of moment, and you can build platforms and add products and invest very heavily and take lots of risk and take lots of bets. When it's going the wrong way, you have 2 options.
Number 1, if you have to make a change or a pivot in the business, to get it to go the other way. Or number 2, is you have to take advantage of that moment before the market finds out about that moment. Because as soon as the market realizes that that ratio is going the wrong way, your valuation multiple, what you're worth as a multiple of revenue or profit, shrinks dramatically because then the market can also see that asymptote and outcome. So I think it's very often the case that one should you know, as a board member as an investor, urge entrepreneurs, CEOs, founders, managers to think really clearly about that metric. What's the right way to define the denominator and define the numerator in our business?
and define that ratio over time. And as soon as it starts tracking the wrong way, you have a moment. You can either fix it, or you gotta go sell the business or go public and raise capital before the market catches on and your valuation shrinks. So I think what -- Just that in another
way. Yeah.
So when I see what Shamat's showing in this data and talking about this the shrinking valuation issue for scribe, it really, I think, highlights this important point, this broad point which is did they miss the window? Did they miss the moment where suddenly, you know, the shrinkage is causing, you know, an asymptotic outcome for this business that that it makes investors a little bit like, well, I'm not as excited about that because it's not there's no there's no longer as much upside, and it might be time to kind of devalue the company did they miss the moment to go public raise a bunch of capital, you know, to to to go and try new things and and hopefully pivot into a way? So I I don't know enough about the business, but That's my broad kind of assessment of this this market.
Yeah. -- thing about that space, we talked to one of our friends at our poker game who runs a large consumer facing business. And I don't know if you were there for that conversation or Friedberg, but --
I was.
-- you were there. Yeah. And one of the interesting things he said is we are at a level of scale where we just bid these guys against each other and these things tend to now be loss leaders for them. which is to say effectively that cost structure becomes really important, so your CAC becomes very important because your LTVs are capped Right? And the LTVs are capped because these companies have enough negotiating leverage to say, well, if you want my business, here's the cost of doing this business, which makes a ton of sense if you're any large purveyor of services that require payment processing infrastructure.
So one of the interesting dynamic I think we're learning in this market is how it's really not a market. Right? There are segments and there's embedded profitability in each segment. So to your point of view, This is the sum of at least 3 or 4 different LTV to CAC ratios. Right?
The tail looks very different, which is why you have to build a ton of features. and the head just wants pure play and it's all about cost first because all of these guys want wanna pick up every nickel and dime that's on the floor because for them, on billions of transactions is meaningful to them. It's an it's an EPS miss or or beat, right, for them which has huge implications to their this is a market that I think is gonna be really fascinating to uncover and peel back the layers of over the next few years.
By the
way, we haven't even talked about what Stripe does as a business. I know we have a diverse audience that doesn't all come from tech.
So Stripe is will process your transactions, but they were the first people to make it as simple as putting a snippet of code into your app to process a payment. They compete with Visa, Mastercard, and those other places. They charge you a percentage of each transaction. So to Tremont's point, these larger enter dev's developers 5, 10 years ago love this because they instantly have payments. Right?
It sort of abstracted the whole thing just the same way cloud computing does. Right? Storage at s 3 better. So you can kinda think about it that way. But a large whale in the system, Jamath, which you said Adrienne has a lot of whales, not a lot of long tail.
Stripe because it's developer friendly and a snippet of code, they have this huge long tail anybody can do Stripe. In fact, people who are using things like Substack or Patreon, I believe, They can just drop in their Stripe account. So people now, businesses of 1, have a Stripe account. They just drop it in there. So for me, that seems like a huge potential in the future.
because some of those could be out
of the
rails in the system.
And the long tail gives Stripe a lot of pricing power because there's there's no way for any one of those entities to have enough leverage to tell Stripe, I don't want to pay 2.9 percent plus 20 or $0.30 a transaction. Right. Whereas if you go to the head, I think Adian is charging, like, 1.3 or 4%. So -- Yeah. -- it's a wholly different market.
And the pricing as a result is totally different.
Yeah. It's interesting to me, Saks, that we now are getting down to you know, brass tax here. We're we're analyzing these money printing businesses and saying, what is the ultimate value of this 10, 20 years from now? Chamath and I got a front row seat to that because there's a natural audience to every single service. For AOL, it was 30,000,000 paid subs a month.
at I think the peak was 30 bucks a month people were paying Kamath.
So at the top -- 24.99. Yeah.
So, you know, you start looking at those numbers, you know, a $1,000,000,000 a month almost and just and it was a fixed cost business. But then, boom. We just hit a ceiling, and competition emerged emerged in the in the case of broadband. And then that business just slowly deprecated over time. So, Zach, what what does this moment tell you for founders?
§03Lessons for founders: How ZIRP can skew CAC and LTV calculations, burn multiple
lot of the listeners here and capital allocators. In terms of assessing businesses for the last, and this will pivot into our next story, the last couple of years, you know, if you were a first time fund manager, you were investing in
19 2019
to 2021, high valuations, those those funds are they ever going to be able to throw a profit and then People were investing in those based on momentum, logo chasing. This is now back to, you know, sharpening your pencils, Bill Girly style in investing
I mean, we've talked about it before. There's nothing new here when you're in a boom. The only three things that matter are growth, growth, and growth. And when you're in a downturn, the three things that matter are growth, burn, and margins. It's not that growth stops mattering.
It's just that people also care about burn and margins. And, you know, the companies that fear the worst are the ones that have inefficient growth that that basically have burned a lot of money to grow. They have, you know, lower negative gross margins. They are burning way too much money. The burn multiple doesn't make sense.
Basically, the ratio of money burnt to net new ARR that they're adding. those companies get called out when all of a sudden you have a regime change like we're seeing now.
CAC is one of the early signs of this at Chamath, you and I saw that. Remember AOL was sending DVDs everywhere, and CAC became $2 or $300 for every AOL subscriber And then they were playing this funny accounting game. I don't know if you remember this Tremont where they were saying, hey. The LTV is, like, 5 years for an AOL. They were looking back at that number, not forward with broadband coming.
And so, like, we could totally spend $300 on TV ads to get a dial up customer at
24
a month and voided that whips on them. So I I listening to everybody talk here, I'm just like, wow. Keep your eye on the CAC folks. The customer acquisition cost, how much you get you spend to get a new AOL, Netflix, or SaaS product or a Stripe customer is critically important.
We look really closely at CAC Payback. You know, how many months does it take to to pay back the cost of acquiring a customer. We don't look at that explicitly though because, you know, what expenses go into CAC is highly dependent on your accounting.
Unpack that for a second because there's the money you spend on a Facebook ad or a LinkedIn ad or any other great platform for driving, you know, customers to sign up for it. But explain yeah. The nuance
for money. -- on an ad or you spend money on a salesperson, obviously, that goes into CAC. But then what about sales operation headcount. Does that go in? Is that ops head count or is that sales head count?
Is that customer acquisition or is it something else? So there's a lot of, like, subtle accounting decisions that have a big impact on
-- --
with numbers.
--
that number. Well, this is why this is why I've always recommended just looking at Byrne Multiple I really wanna know is is how much money is the start up burning in relation to how much revenue it's adding. Just like the ratio of those
2
things because there's nowhere to hide.
--
burned a 100 Yeah. So this month, we spent
$300,000,
and we burned a $100,000 And then we added a
$100,000
in new customers ARR. So that's 1x so that you have on your chart here, burn multiple of 1 to 1.5 or under 1 is amazing or great. But if you burn
200,000
and add a 100,000 -- Yeah.
I warned founders going into this year do not have a burn multiple greater than 2 because there's just so many headwinds right now that what happens is if you end up missing your revenue forecast, your burn multiple is gonna look terrible. They could shoot up to 3, 4, 5, and up. So it's better to have some cushion by going into the year being super efficient.
On the Converse side, Friedberg, if you're lifetime value of a customer is incorrect, which we're seeing now with people canceling SaaS products or reducing the number of seats Or in cloud computing, people are now saying, hey. Maybe I should take myself out of the cloud and host my own servers or some of my own servers and reducing their cloud bill. cloud growth is slowing at Azure across the board. Amazon Web Services, etcetera. The the it's still growing, but it's slowing the growth.
So that LTV, if you get that wrong, that can whips all you as well. Yeah?
Yeah. I mean, LTV, which is, like, what do you make over time from a customer or however you wanna assess it, a a market deployment, it should be on kinda net cash. meaning, like, how much profit do I pull back into my bank accounts at the end of the day after paying third parties and internal people. And where a lot of people I think in models I've seen on, you know, what's the lifetime value of a customer, they kinda take either revenue or just the simplified gross profit number. But the reality is if you're scaling the number of engineers you need because you have many more customers and you got customer service calls, and, you know, you've gotta do custom deployments with your customers.
All of that kind of adds up to additional cost. And some of these businesses you see that, the the SaaS companies, for example, that all have gotten their multiples hammered, it's because the kind of microscope has come out at this point to to some degree, set aside general macroeconomic factors that are driving some of the multiple compression. But as the microscope has come out, it turns out that the efficiency of the business is not what everyone hoped and dreamed a SaaS business might be, that the efficiency of the business maybe looks a little bit more like either a services business or there's a big kind of scaling hardware component that the margin that you actually make for every dollar of revenue generate fundamentally is smaller than, you know, what you think it is. you have to add people to support and ops and new servers and all the stuff you're highlighting, and a lot of that's excluded. And then, it doesn't take Like, you don't realize all that when you're small or when you're medium and growing.
You realize that when you're bigger. And when you're bigger, you're like, oh, wow. How do we get these costs out? Well, if we cut these costs, customer quality would decline. Customers would churn.
All this bad stuff would happen. So, yeah, that LTV number is generally not right. And that's why I say it's much more about kind of a true ROIC calculation, which is how much capital am I deploying. And it's not just being deployed in marketing dollars, it's being deployed in other ways, and then how much capital am I making back net profit over time? And I think that's the right way to always analyze a business generally, but, like, particularly in businesses where it's easy to obfuscate either of those numbers, and they could seem like it's an extraordinary business.
you can get hurt when you get bigger or when you're scaling. And in a market like this where you're trying to go public, it's like, woah, That really hurt. You know? So I think that's a lot of what we're seeing.
§04VC market update: ZIRP mistakes, VC as a "must-have" asset class for LPs, how the 2021 vintage can be saved
Let's talk about the other side of the table, Jamov. We've been living through a 0 interest rate hallucination. Basically, people were growth growth growth, logo, logo, logo, whatever. When they're making these Palihapitiya allocators now. We're back to Breastx.
Okay. What's the margin? What's the lifetime value? And is this actually real? Is there a real business here, or is this just a grand hallucination That hallucination exists not only on the founder side, but on the capital allocator side.
This week, we had a interesting semi viral thread on Twitter, somebody named Tyler Tringes. He's an early stage investor. Don't know who that is. but he did a thread predicting a 16z just to pick out one firm was a 0 interest rate phenomenon and an incredible machine to accumulate AUM assets under management. And so what were your thoughts just writ large on the capital alloy cater side of this grand hallucination of 0 interest rates.
I mean, I think it's a little unfair. I think this is written more just to try to generate views and clicks because --
Okay.
-- you have to see the underlying return data to really have a sense of knowing. Is it I think it's fair to say a couple of things that there is probably two and a half or three years of capital raised in the industry that's gonna get really put under pressure. And the reason is that there is not a lot of time diversity in that money, meaning people got it and they put it into the ground right away. And one of the principles of having a more predictable return set of returns over time is that you leverage time. Right?
So if you had a $100 and you wanted to have a diversified stream of returns, you're much better off spending a dollar a month for a 100 months. versus $10 a month for 10 months. So just that thing will cause a lot of impact and headwinds for a lot of the capital in 20212022. Then the other thing you have to keep in mind is that over many cycles where we've had high rates and low rates and medium rates Our industry typically returns a dollar 60 for every dollar it raises. and that's over many cycles.
And so if you believe that we're gonna revert to the mean, out of the $1,000,000,000,000 we've raised, maybe we'll return 1,600,000,000,000. Now that sounds good except the problem is that 1,600,000,000,000 is marked at 5 and a half truly. So you're gonna have to give back So there's a lot of pain. You're gonna have to give back a lot of paper profits in order to get to that 1.6 and be okay with it? And the question is, what has happened in decision making in the meantime?
Meaning, how many people did you hire? How many deals did you do that you regret? And then how does it change your psychology and how you treat the next investment that comes over the desk? Can you separate yourself from these bad losses and not be on tilt and make a good decision?
So you had a terrible 2 day session like Phil Helmyth did last week losing $350,000. Can you play the next week and not beyond TELT and start to build back your stack and make
30,000
a night for 10 nights or 10 of the next 20 set
15
sessions or whatever it is. Saks you had a rebuttal or something you wanted to add to this? No.
Not really a rebuttal. I mean, look. I think if you're gonna be intellectually honest about it, I think that 2021 Scan and be is gonna likely be not a great vintage for VC. Why? Because the valuations were just yeah.
The valuations were just really high. they've come down by, what, at least 50% on average, maybe more. More. Maybe more.
50%
now but you still have more medicine to take, I think, when you look at some of the businesses here.
A lot of these companies are growing into their valuation. Look. I think For any given set of companies, for any portfolio, the most important thing is what's in the portfolio. So if in 2021, you had the founding of the next Google or whatever, that effect is gonna swamp the effect of price levels in that year because of the power again, the number one most important thing is just what's in that portfolio, what's in that basket. The second most important thing is the entry prices.
And obviously, if the entry prices are twice as high in a given year, then they are in every other year and twice as high as what the exit multiples are gonna be in 10 years. when that portfolio becomes liquid, that's gonna hurt the returns. But we won't know which of these effects predominates until 5 years from now when we see, you know
I mean, when I saw that tweet thread, I thought maybe this is an issue for some venture firms, but we're not gonna see even the inklings of it for another 5 or 7 years.
Takes a while. Yeah.
That's a problem that may manifest itself in year 10. And between now and then, Any firm that it has a good track record of returning capital or frankly has a good brand and good marks will still raise an inordinate amount of money because this is an asset class that I still think on the margins is a more of a must have asset allocation than a on the margins, I'd just rather ignore it because, you know, it is the future of of how GDP will get created. And so everybody kinda has to pay attention.
imagine if in 2021, the, you know, the next great mega outcomes in AI were created right, because those founders were just slightly ahead of the curve. You know, they were, like, a couple years ahead of the curve. If those create, you know, the next whatever $1,000,000,000,000 companies
--
Google, Apple
--
Then the fact that price levels were 2x what they should have been won't matter. Yeah. What'll really matters is the distribution. There'll be a a bunch of bad affiliations, there'll be some really incredible ones. And that's the way it always is with Venture.
The thing to keep in mind is in 202120 2, rates were still effectively too low. And I think we did this analysis, Nick, you can throw up that thing, but it's not correlated with big outcomes. Those vintage years 2023 is the first vintage year where we're actually starting to see high enough rates that have historically generated that kind of return. And so I do agree with you, David. I just think it's shifted out by a couple years, 23, 24, 25.
Those can be some real power law years, I think, because we're gonna have just based on what the Fed is saying, 5.5 percent interest rates for the foreseeable future, which is It's a huge it's a huge number. The risk that's a huge I'll tell
you what that is. You know what it is though to come off, I think, to build on your point, and Friedberg, I'll bring you in on after this. It creates an environment in which discipline on all sides of the table, boards, management teams, investors, rank and file. Everybody has to be focused. Everybody has to have sharpen swords.
And that little bit of headwind is and the the ability to raise cash while being harder is building more reserve and more resilience and grit in this set of founders. It's kinda like parenting in a way, like if you are too permissive, you give too many options. Kids aren't disciplined. And now this group of entrepreneurs I'm seeing who haven't given up My lord, are they becoming animals in terms of, like, pure samurai in terms of how they're running these businesses? Anything that's not efficient, projects that were the 3rd or 4th most important project, cut, cut, cut.
Now it's taking them 18 months, Friedberg to maybe get discipline. But maybe you could speak to the next 3 years in the opportunity for investing in this cohort because, man, that last cohort is gonna be really, really challenged. And they'll probably do
6%
returns just like your money market account can do right now 5 or 6 or what bonds can do. But this next group, man, we're seeing dogged entrepreneurs who are focused on reality, and there is no hallucination now. that this is gonna be easy. There is no grand illusion here. What are you seeing in the market side?
If if the market average return in venture in in early stage investing is gonna be
6%.
Remember, it's it's not evenly distributed. So, you know,
80%
of funds could end up having net negative real returns and 20% make money and then those there'll be a very few that will make real money. And, you know, that's the the the nature of having, you know, a very kind of low average return on the industry is there may be a lot of wipeouts on on the investor class, folks that have only had 1 or 2 funds and then just got blown up in the cycle. I think there there's 2 groups of companies out there. 1 is companies that obviously have been funded and are doing stuff and are active businesses. and they've raised money in the past, and that's where there's gonna be really ugly times.
I've mentioned this in the past, but I do think that there's a significant number of these companies that if they were to be truly valued on 1st principles in private markets today, they'll get valued as had a value that's less than their preferred equity, which means that there's a difficult restructuring needed in the company, and not everyone's gonna be willing to embrace that. So that's what's gonna trigger a lot of the wipeouts in the market. It's not like the businesses are valueless. It's that the capital structure makes it difficult to refund them to fund them and continue their their operations. Now, for all the new businesses, as you highlight, man, there's so much extraordinary leverage out there.
You know, left and right, think we talked about this maybe a year ago that there was a big bubble coming in AI. But, I mean, left and right, nearly every market, every segment you won't see a pitch deck that doesn't have those two letters in it. Right. I mean, I'm sure you you guys find me a
§05AI's outsized impact on SaaS and real-world businesses
pitch deck.
It it does feel the it is It is hard not to feel like you're a little bit of a lemming if you buy into the AI stuff, but I will say that the use cases seeing are really -- Oh, unbelievable. Totally. I didn't feel this way with the last couple of waves. Like, the whole web 3 thing never totally made sense. And crypto always felt a little bit speculative, like, kind of unsure.
But the AI thing seems like it's gonna deliver real value. And I'm seeing, like, already 3 major enterprise use cases. Number 1 is just auto summaries. Like, being able to summarize very quickly a 1000 articles or a meeting, you know, spinning out a, like, a summary of what just happened in a meeting, and it could break it down between a recap and action items. It just does all the work for you.
Second thing is, like, in app customer service, kinda like a copilot, but there's no reason contact customer support anymore. because you can just ask the AI inside the app. And, like, why don't
you look at that customer? -- right, and they'll be faster. Right? That that sounds like a power. So narrow sacks.
Yeah. They'll get it right.
It's like a power user who's sitting next to you. It's your copilot and is making you much more effective in the app. And then the third thing we're already seeing is autocomplete for everything. I mean, it is like bonkers how you know how you get like a little type of suggestions in the email, but it's like 2 or 3 words. the AI is gonna be able to do type ahead for any content type, paragraphs of times, to do list tables.
And so
It's bonkers. You see it in Google you see it in Google Sheets now. Like, if you type, you know, equal sum, it's like, oh, here's what the 7 most likely things to happen next are. In which case, it's kinda like you use the chess dot com app. I don't know if you've used it with, like, the heads up display where it's showing you the different moves and this is a book move versus this is not a book move.
Go ahead.
Let me make a prediction. All of the things that you guys said, I think our incredible consumer surplus business opportunities, which means that the ultimate winner is us. And we're gonna become -- The consumer? -- said -- For the VC. -- consumer.
No. The consumer. incredibly, incredibly productive and more leveraged in how we spend our time, which will allow us to do all kinds of other interesting things with all the time that we save. that I think is almost now a certainty. The problem with consumer surplus businesses is oftentimes there is no money made in the funding of them.
And really where the money is made isn't enabling it. So for example, so far what I would say is there's very little money that has been made in AI there's been an enormous amount of money that's been made by NVIDIA, and the reason is because they are the pick and shovel provider into the industry. And so that's an example. AMD, I think can also benefit. So the silicon players seem pretty obvious here.
maybe some of the cloud players the problem is the cloud players are trapped inside of other big companies with many other business models. But I just want to put out there that I think David, you're right that the consumer a 100% wins, but economically, it's not clear to me that there is a winner that is venture fundable. Well Hold on a second.
Yeah.
The Levi Strauss's of the world, right, in the Goldrush? The the people that made the picks and shovels and the jeans are sure to make money. Yeah. And the people that pan for gold is much more speculative and harder to see right now.
Yeah. A couple points on that. So well, I think so so I think you have a point that so I mentioned 3 use cases, I think, are killer use cases that we're already seeing demos of today. And when you look at them, you're like, okay. This has real applicability.
I mean, the AI is gonna be it's gonna powerfully change our work lives. I'm just focused on enterprise. So Now I don't know who benefits economically from that. That functionality that I mentioned, yeah, I think is likely to be pretty commoditized pretty soon. But it's gonna be incorporated into lots of different apps in ways that are hard to predict right now.
I think that this AI revolution is gonna do for SaaS what mobile did for, you know, a lot of the web 1.0 companies. where, like, for a lot of these web 1 companies, they were either disrupted by mobile or they are turbocharged by mobile. So you think about Facebook, it successfully made the transition. And mobile made this business so much better because people are just using it a lot more on their mobile devices. There are a lot of other businesses that just kinda fell by the wayside because they just couldn't make the adaptation from desktop to mobile computing.
I think AI is gonna be like that for SaaS where there's gonna be a SaaS products or
just -- I think you're a 100% right. Like, you're a 100% right. If
you can incorporate the AI into your SaaS product, put in a copilot, put in auto complete and all sorts of other forms of value that we're just scratching the surface of, you're gonna be able to deliver so much more business value But if you're not able to do that and somebody else can, then you're gonna get disrupted.
Look at some of these enterprise spaces like take something like APM, right, like application performance management. That's an entire ecosystem of enterprise companies. It's probably 10, 15,000,000, $20,000,000,000 of collective market cap. And I'm just gonna say something not to not defend anybody, but, like, that can mostly be automated by AI. Those are simple heuristics that can be embedded in a way completely novel where this code library just gets dropped in and all of this stuff happens relatively automatically now.
So there are all kinds of other sectors to your point that get crushed. Then the question is, who provides that layer now for free in their existing SaaS toolkit or their product that now all of a sudden captures more value as a result. And they can sell it for pennies because It's incremental to them in terms of their margin and revenue.
I think you're right. Hardware wins. I think cloud wins big because if you keep adding to these you know, models. And once 10, 20% better, people are gonna be willing to pay for that. But then when you think about consumers, whether they're enterprise or actual consumers, I believe Chemo, this stuff is gonna provide so much value that people are gonna take their wallets out and be more than willing to spend for it.
It's more valuable than Netflix subscription.
I disagree. Okay.
I'm gonna take this side. But imagine you take your videos of you learning to ski and you put it into an AI coach, and it's like, here's how to and it just draws on it. Here's how to be a better steer. This is going to blow people's minds, and you'll be more than willing to spend 25 bucks a month on it.
I disagree with And the reason is because we've spent now 2 decades and that's a lot of muscle memory to unwind of people that have been consistently given more for less And I think that we shouldn't underestimate the expectations we've all collectively created by building software tools that have that inherent deflationary aspect to them. And so I just think that it's gonna it's a very high, high bar. I still think there are services to be built. I don't disagree with you there, Jason. I just think that in general though, the de facto business model that we've created in tech is more for less.
And we've used technology to give us operating leverage to create margin structures that other companies couldn't copy. And I still don't and I think that AI accelerates that not changes it?
I think it's gonna be the opposite. If you look at Netflix, if you look at Disney, they've been raising prices providing more value think that this is going to provide so much value that the incremental 10 bucks a month, 5 bucks a month per employee is going to pay off so much that this could be if Slack or like some presentation software, there are a lot of people who are making PowerPoint, AI PowerPoints where it makes you a new deck. or a Figma with AI. These things are gonna be so powerful. People are like, it's totally worth an extra hundred bucks a month because I can get rid of another employee.
This one employee can now do the work of 3, Fuck it, man. I'll give you a
$1000
a month if you need a really good a model.
If you just added the LTV of that company -- The software company is
gonna make more money.
I'm just saying it's deflationary. That's deflationary.
Okay. It's deflationary on the entire economy, but that's software company that figures out how you can fire 2 accountants and keep 1 and make them as good as, you know, 3? Yeah. You're that comes on. -- to be able to charge more from the software.
Right. You're selling consumer surplus. Okay.
I think we're in agreement. Friedberg, sold in assignments. You wanna chime in on this? You still with us? Still gonna sound?
The technology drives prices down.
Well, technology is about doing more with less. Right? It's about doing more with less, and the AI helps you do so much more with the same amount of time. or less time?
I think your whole point about Disney and Netflix, etcetera, is because they aren't, you know, innovating on either sides. And so in order to drive earnings growth, they're having to prices, but that doesn't speak to the benefit of technology.
They're innovating massively. They're adding massive features to their products and massive new shows. I mean, I think there's pricing power in this AI. That that's just my belief. I could be wrong.
--
about leverage. Yeah. I mean, look. I think I think your point like, so my general rule of thumb on technology is the technology creator, the technology company, should generally be capturing about 1 third of the value that they deliver to the customer.
Unpack that. Why? Where do you come up with that number?
So mean, it just kind of where And
give an example. Yeah.
Yeah. So, like, let's say that you as a food delivery company, you have to pay a human ten bucks to deliver food from you. Now, let's say I run a robot, my amortized cost of running that robot is two bucks. So it's 8 bucks cheaper or call it $1. So it's it's $9 cheaper.
I should charge you four bucks you know, because 4 bucks is super competitive with the existing market, and it'll keep me competitive against the other automation companies that are gonna start to emerge It's just kind of how market dynamics end up working out. If you charge too much, you're gonna invite people to come in and compete with you. If you're technology commoditizes. Remember, all technology commoditizes over time. And if you don't charge enough, you're not gonna make enough money to be able to reinvest in scaling your business and and doing more kind of interesting things as a platform.
So, you know, generally, AI provides more leverage to Saks's point, if I can build an application I don't know if you guys have seen these incredible UI apps that are built in AI now, where I can say, with a prompt. Hey. Make me -- Yeah.
We talked about it 2 weeks ago. Yeah.
Right. It made me a dog walking app interface, and it builds, like, the three steps of the dog walking app and gives you a bunch of options, and you can pick the one you want. I would typically have to pay a design firm $50,000 to do that work for me. So if the AI is doing it automatically, you know, I should be paying, let's say,
$15,000
for that product for that capability, the margin on that is a
100%, try 50 more.
Right. Whatever it is, very low. And the margin on that's a
100%,
whereas the margin on paying people to do design work as a design firm is very you know, not not a great margin. You're you're having to pay
--
I figured it out.
You know why we're having the we're working it out in our heads right now. One group of us just talking about comparing AI software and AI services to the existing software stack. And then on the other side of the discussion, we're comparing it to the humans who are currently doing that work. Imagine the 6% that 2 brokers get, you know, doing a the sale of a $1,000,000 home in that 60,000. An AI could negotiate that and find you a better home and sell your home for the optimal price for less than that 60,000 would you be willing to pay for that?
Right? And the same thing with the designer of the logo.
I don't think that's how it's gonna play out exactly, Jake. Because to completely eliminate a job function, you have to to, you know, a 100% of it. And you have to do it, you know, a 100% of the job function as as well as are better than the human. Whereas I think as opposed to a model where you still have the human in the loop, but they're much more productive because they're working with an
AI. They're augmented.
They're more of the iron man. Force the iron man -- Yes.
--
like model. So I I
think that -- -- more effective.
Yeah. Yeah. So I think if there's a job reduction, it would be more the case where they've got a team of 5 accountants, and they go to 2 or 3 because now they're just much more productive. I don't think they go to 0. That's my sense anyway.
I look at outsourcing as a possible corollary to this. You remember when you moved the accountants to Manila, where their knowledge workers there and it knocked out half the price, 2 thirds of the price, whatever it was. This just feels like that on steroids to me.
If you have a business model like, you know, infosys or Tata or one of these things that's levered to utilization rate, this is the most obvious way to basically add many potentially percentage points, if not tens of percentage points of utilization to your business. That's all money free money
for you.
Right? Because now you'll have fewer people. They'll be more utilized and they'll have more leverage because they'll be using a bot or some AI agent to help them write code, write unit tests, all that typical stuff that right now you outsource, and even if you pay a marginal cost, you add the labor arbitrage technology arbitrage now that some of these businesses look really, really interesting.
Yeah. I think
customer support definitely gets revolutionized. Right? Because the initial -- That's a no brainer. You know, the first line of defense is gonna be the AI using you know, text to voice. And it can choose what language it wants to output to, what accent.
So you'll never know that you're you'll think you're talking to someone locally.
Literally, you'll be in 50 languages with the right answer, and you don't need to build up that entire group I mean, this I think we're underestimating in some ways
--
Yeah. But my
-- --
gonna happen here.
But my point is I think that a lot of that custom support inquiries just go away because the help the assistant gets built into the tool directly. So you never really get to the point of -- -- go. Yeah. Like, why'd you you know, if you can just ask it,
People do that right now on YouTube. If you just type the question into YouTube and you find the video, that takes 5 minutes. But you're saying this is gonna take 15 seconds,acks because it's gonna be right there.
I think what Saks said before is hugely important when you think about how AI touches non technology businesses. What he said is the boundary condition, which I think is right, I think he nailed this, which is The boundary condition for AI to replace a human is where the threshold error rate of that AI is the same or less than the human. Right? If you look at very complicated markets, where does regulatory capture rear its ugly head? It's in allowing humans to be error prone and you can't do anything about it.
Take healthcare. If you go into a hospital, there's a certain error rate in every surgery. Right? There's a certain error rate in the things that happen. But there's probably a whole bunch of ways in which that entire infrastructure can be made much, much better with AI.
Right? A robot that does laser guided precision surgery, characterizing tumors with a 100% accuracy, so you always get a 100% of the cancer out when you go surgeries done. All these things are possible now. And all of a sudden, you take these error rates that can be high as as high as 20 or 30%. So for example, breast cancer surgeries, the dirty secret of our healthcare industries that has a 30% error rate.
You know? That can and should go to 0. And now all of a sudden, so these highly regulated markets I think can become much, much more efficient and and leveraged and at pass that consumer surplus onto people. In that case, it's healthfulness, which I think is a is a big deal. I did my -- -- for new -- -- interest.
I did my -- Oh, for Novo Scan. Yeah. Incredible. I mean, it I got all the videos. I got all the loops.
I went to the 1 down on El Camino Real. It was like going to a spa in and out. No big deal. But I got the results, and it's like, oh, here. Here's a tiny of little things that are not worth cutting your body open to look at.
But just so you know, your knee, your shoulder, your kidney, there's a little polypier, there's a little polypier, whatever. There's a little growth here. But let's see in 2 or 3 years, just monitor it. And I'm like, oh my god. I am so grateful.
If this thing gets down to, like, 500 bucks, which it obviously will or a thousand bucks and everybody's doing it and all that data's in there. And then the AI is looking at it like you're saying. I mean, the the AI early detection
was the AI able to tell the doctor how full of shit you are?
No. You know, you're not supposed to eat for 4 hours. So they they didn't get an accurate reading on behalf of BSI on Bodooch. There's your called oven, everybody. Yeah.
I here's a really important clip for founders. Play the Steve Jobs clip. This is super important when looking at Web 3 versus AI to Saks's point. You've gotta start with
§06Advice from Steve Jobs on customer-first product development, Section 230 update
the customer experience and work backwards to the technology. You can't start with the technology and try to figure out where you're gonna try to sell it. And I've made this mistake probably more than anybody else in this room, and I've got the scar tissue to prove it. And I know that it's the case, And as we have tried to come up with a strategy and a vision for Apple, It started with what incredible benefits can we give to the customer? Where can we take the customer?
Not not starting with let's sit down with the engineers and and figure out what awesome technology we have, and then how are we gonna market that. And I think that's the right path to take.
Can I ask you guys a question? I sometimes get going on these rabbit holes. I'll watch hours and hours of Steve Jobs. What do you think makes him so calm. Doesn't he just strike you as incredibly just like calm and like, comfortable with himself and just aware.
I know what it is. What is it was so much better an aesthetically building product than anybody else. He when you think of that PC era of no taste, beige boxes, and everybody having no style and just no swagger. He was studying, you know, German design, Buddhism, tripping on acid and, like, just understanding the universe at a level that Gates and the other contemporaries weren't. They just weren't as transcendent in understanding product design as he was.
So it was like when you were saying you were playing poker with a bunch of four year olds or something, that's the analogy. He's just on a such a different level that he's watching people make, you know, a s
400
and you know, IBM, PS, whatever, like, just garbage computers, garbage operating systems, and it's just
like -- The
thing is, like, if you look at any era just the way that he communicates. There's just a level of pump.
I don't know how to describe it, Sam. Do you
understand what I'm trying to say? Like, he he just seems like he just sees through all the noise. Like, he's seen through the matrix. Like, he's unplugged himself.
Sacks is unimpressed. Okay. There you have it.
No. I'm very impressed with Steve Jobs. I think he understood product development better than anybody else.
Yeah. Clearly, that's it.
I mean, my favorite is Steve Jobs. Passage is the one where he describes the John Sculley disease. Do you guys remember this? Yeah.
No. Oh, here it is. You know one of the things that really hurt Apple was after I left, John Sculley got a very serious disease. It's the disease of thinking that a really great idea is 90% of the work. And if you just tell all these other people, here's this great idea then, of course, you can go off and make it happen.
And the problem with that is that there is just a tremendous amount of craftsmanship in between a great idea and a great product. Yeah. So true.
Yeah. I mean, I tell people it's like a rugby scrum. You go, you know, you gotta get a whole team to get the ball down the field. It's not, like, one person put the ball down the field. And, you know, they kinda maybe suggested a play, but once you're on the field, everything changes.
and everyone's involved in getting it down the field.
That quote's where the name for Craft Ventures comes from.
Oh, really? Oh, a little known fact.
Yeah. I
didn't know that.
Yeah. Section 2:30 we talked about last week, the Gonzales versus Google case, the justices heard oral arguments and plaintiffs seem too fair poorly, quote, from Scotis blog justice Elena Hagen suggests that it even if section 230 is not well suited to address the current needs of today's Internet such as such a task was best left as we predicted. Last week, I think Saxu did. best left to Congress rather than the Supreme Court. Quote, these are not like the 9 greatest experts on the Internet Hagan Observe Sachs?
Yeah. I mean, this is just, I think, really a quick update to what we talked about last week. The justices heard oral arguments, they seem to be very skeptical of the plaintiff's arguments. Even justice Thomas, who has written the most scapically in recent years about the broad immunity that tech companies enjoy under section 230 seem surprisingly sympathetic to the theory that the 9th Circuit Court ruled on, which is that section 230 protects recommendations as well as the provider's algorithm treats content on its website similarly. So even the justice, so I think, was most likely to rein in 2:30 seem to be more comfortable with what the defendant, which was Google was saying.
So it looks to me like Google and Big Tex are gonna win this
1. Any thoughts from that? No. Not really. I think I wanna know what you guys think Trump showing up with Big Macs And Water in East Palestine.
§07Trump's savvy visit to East Palestine and 2024 strategy, Biden's visit to Ukraine, China's position
I mean, he's a he's a media genius. He beat Buttigieg to East Palestine.
Yeah. That was -- Unbelievable.
--
pull up my tweet. I think this is the power. We are we because Trump has been out of the public
discourse for 2 years? He's a media salon.
He is a media salon. Literally Biden is in Ukraine, saber rattling over air sirens that may or may not be true
--
They were fake.
--
who cares? Well, who cares anyway.
Well, no. No. It doesn't matter. No. It does matter.
No. We don't know. We do. We do. We do.
Actually,
we address that.
Okay. Because Let's look at what
I currently need. I don't need
to be hold on a second. I don't need to be there because Jake Sullivan participated in a press conference. And he was asked by CBS News reporter if the US gave the Russians any kind of heads up that the president was gonna be in Kief. And what Sullivan said, and I quote is we did notify the Russians that president Biden will be travelling to Kyiv. We did so some hours before his departure for deflection purposes.
You know
what def confliction is? Right. It's when the US tries to avoid an accidental conflict. And, you know, Putin's not crazy enough to try and assassinate Biden. So the Russians were not attacking Kyiv that day.
In fact, they haven't attacked Kyiv as far as I know for weeks. So these aerate sirens were basically just pure theater. But the amazing thing was that if you
--
If you don't know if you don't know that Biden orchestrated is my point. People just -- -- it.
Come on, Jason.
Don't wake that goal. -- mean Biden fresh the button. So don't don't also
take it
to the
other extreme that was theater. Who knows who went who who why the sign went off? But put it aside,
This was a joint event between the Biden administration and the Zelensky team. They organized it. The whole thing was choreographed
How
do you how did that red carpet get there, Jason? Was that an accident too?
Okay. So let's put that aside.
You're acting like this is accidental. mean, how how long
are you? -- your GOP. Let me give you your GOP win. Donald Trump is a Savant, and he went to America, to the place that we were porting on the underreported story. People in East Palestine are being ignored, and he comes there to help the people of America.
I give you all credit, your guy, Saxx, did the most amazing media move in history. He went to Middle America where people are suffering as opposed to a war that nobody wants to be in. and spend all that money on. We won't spend money.
People will
have to use Palestine, but we will go spend billions in Ukraine. Go.
Alright. Go ahead. You wanna know what this reminded me of, and you may think this is a weird connection. But it reminded me of the ending to the movie, boys in the hood. Do you remember what happens at the end of that movie?
No. I haven't seen it in years. Go.
Okay. Well, thirty years old. But Ice Cube, you know, plays this character Doughboy, and his brother gets killed.
Yep.
And
at the very end of the movie, he gives this speech to Cuba Gooding Junior where he says, you know, I turned on the TV And there was all this shit about violence in a foreign land, and there was nothing on my brother getting killed. All this stuff about what's happening in foreign countries nothing about what's happening here. And then I think the most memorable line was either they don't know, don't show, or they don't care what's going on in the hood. Right. So what's going on here is the people of East Palestine, Ohio are being engulfed in a plume of carcinogens and toxins.
And Biden is off -- Right.
--
pursuing this crusade in Eastern Ukraine, and it's not just him. I'll I'll dish out to Mitch McConnell as well. Mitch McConnell was
on TV. Those are the neo cons of or neo cons. Yeah.
McConnell was on TV saying that the number one priority of the United States right now is defeating Russia in Ukraine. It's not helping the people of of Ohio. It is not securing the border. It is not solving crime in our cities. It is not making our schools better.
It's running off and basically supporting this war in Ukraine. So both these oxygenarians Biden and McConnell both, they either don't know, don't show, or they don't care what is happening in United States or America.
He's a genius
but it's not even genius. I mean, it's so obvious that you go there.
It is so obvious. Nobody wants to be in a terrible world.
didn't go there and Biden didn't go there. It's not it's not genius.
It's obvious.
--
didn't go there. Where's DeSantis? He shouldn't -- Well, he's not he hasn't declared yet.
He hasn't declared yet. No.
Make a trip. Make a trip.
-- the most senior democrat person that went over there was Josh Shapiro, who's the governor of Pennsylvania. He got there before Buttigieg.
What is going on? I mean and this it's it's a never ending war. And so, you know, this is nobody wants to fight a never ending war. This is this is what got bush in trouble. Right?
Like, this was the big critique. It's like, we're spending all this money over in the Middle East on these conflicts.
Well, you're talking about Bush Senior. Yeah. So so let's let's contrast with Bush Senior. I think, actually, it's a good analogy. So the with Bush Senior, Bush actually this is 1991.
He won the Iraq war. That was actually a stunning foreign policy success because he actually didn't go too far. He didn't go all the way on the road to Baghdad the way that his son, George Oey Bushwood creating an epic disaster. So Bush 41 delivered a victory there, and he still lost election. Why?
Because he seemed out of touch, he wasn't focused on domestic problems. The American people want an American president to focus on American problems. And even if Biden delivers some sort of victory in Ukraine, If he ignores these festering problems at home, then he is, I think, vulnerable for this reelection. But I think the truth of the matter is that this war is gonna turn out much worse than the Iraq war did in 1991. Because in 91, we showed restraint, and we knew what our vital interest was And we kept our objectives limited, and we kept the timetable very short.
What is Biden doing here? Biden won't tell us what the objective is. It's just whatever the Ukrainians want. He won't tell us what the timetable is. It's basically for as long as it takes.
And then meanwhile, this week, you had Kamala Harris go to the Munich summit declaring that the Russians are guilty of crimes against humanity, which that's something that we could have assessed after the war. Think about the incentives you're now giving the Russian leadership before we said that we just want them to leave. When you accuse them of war crimes, it implies that we're gonna go chasing them all the way to Moscow. They're not gonna wanna end this war. We can they can be put on trial at the Hague.
I mean, this is highly inflammatory. So you know, this thing is not going in the right direction.
Yeah. And that was the thing I didn't like about Biden's speech over there. It's just he's escalating escalating escalating, escalating, hey. That we have stop Putin I mean, which you do. He did invade another country.
He didn't cause 3 or 400,000 Russians have died according to reports. Over a 100,000 Ukrainians have died according to births. Neither side is given the accurate number because they don't want to demoralize their constituents. But The amount of suffering going on here is extraordinary. And I think it should be the West who is going, the San Macron send somebody from Germany, send some, you know, group of people to then go to Ukraine and work this out.
But you don't need to have vinyl on your saber rattling. It was too much saber rattling for me.
It is not enough
de escalation. We need de escalation in these situations, not Sabrina. Well, I agree with you.
I agree with Jason, but but Biden is really painted himself into a corner here because before the war, he refused to take NATO expansion off the table He refused to recognize the Russian interest in Crimea. And we gave no support to the Miska courts, which would have given some limited autonomy to the Russian speakers in the Don area. If we had just done those three things, there would have been no war. Biden refused to do that. He refuses to take brain expansion off the table even today.
So he has nothing to compromise with. He is dug in. And the problem we have now is that it's a loose, loose scenario. If the Ukrainians keep doing poorly because right now it looks like they're on the back foot. What is the United States gonna do?
We're gonna let them lose this war, or are we gonna keep giving them more aid and step in? It looks to me like Biden now has invested his whole presidency in this, and he can't just let them lose, which means more escalation from us.
Huge mistake.
And on the Russian side, if the Russians lose, then they have an incentive to use nuclear weapons to rescue the situation. So it seems to me that both scenarios here are really bad, and we don't really have a good way out of this. We're looking for some sort of magical Goldilocks scenario where the Russians sorta lose, but not enough to use nukes. You know, the administration has not given us a clear picture of what victory looks like here. That's actually reasonably achievable in a reasonable time frame at a reasonable cost.
What do we think, a framework of Xi Jinping, making overtures and, hey. Maybe we should work towards peace if you follow the money. He wants cheap oil. He wants this thing to end, and he wants the west to be buying goods from China. The west wants to sell a bunch of armaments.
The military industrial com complex is absolutely in delight of replenishing all of these weapons. Perhaps a little cynical to follow the money concept, but what was your take on the chessboard of Xi Jinping is gonna visit Putin before Biden does. And he wants to build bridges and we want to saber at all. What are your thoughts? Fantasticity.
Isn't he getting,
like I mean, China buys energy from Russia today. They buy oil that is -- On sale.
Yeah. -- at a
very cheap price. So If I'm China, I want this to last longer. Don't I? Like, why would I wanna end this and then have Russia's markets open up? because if their markets open up, then markets normalize.
to market prices. Right now, they're getting a discount. So I think -- Yeah.
--
rather than they they certainly don't want things to escalate. The question is how quickly do they want them to de escalate? So if I'm China, I'm kind of probably playing a little bit of a, you know, middle line here, I I just I obviously don't wanna see a big hot war. China's got its own domestic problems right now that seem pretty significant and existential. And having access to cheap energy seems like a benefit Obviously, if there was significant conflict and escalation, a conflict, that would be very bad from an economic perspective from China.
So they they they're probably somewhere in the middle, like a slow resolution, let's say. I don't know. I mean, this is pure speculation. It's just me.
But Europe, Saks, Richmondov, Europe isn't gonna buy Putin's oil anytime soon. Right? They're now gonna buy -- But
he's able to sell it to China, and he's able to sell it to India and the rest of the world. There was actually an article in today's New York Times about how the west may be unified about Ukraine, but the rest of the world is not. The article was saying something that creates the worst set for a while, which is we actually don't have the whole world with us at all. The Bricks Countries are not with us, the emerging world, the whole southern hemisphere basically is not with us. They would like the US to play a more constructive role in finding a peace deal not like you said, Jason saber rattling or escalating.
So the rest of the world is not happy with us. And this is why the Russian sanctions have not been effective. I think the Russian economies had like a 3 to 4% hit. It is not the collapse that was predicted because there are enough other countries willing to do business with them.
Would this have happened, Shamont, if Trump was president? And how would Trump have handled it? Do you think? Just game theory here. I'm just curious.
because Trump almost won. Right? And if Trump had won, what would this look like? Would Putin have gone in there if Trump was president? And how would Trump have handled it?
because Trump seems to think, I would have just told them don't do this, and they wouldn't have done it.
I mean, this is the most obvious compliment I can give him. I think that he is exceptionally pragmatic on being anti war. And I think that that is one of the most positive characteristics that he showed. He was really the only president think in modern history. Right?
Saxi Pu that hasn't gotten us embroiled in a new war.
New wars. Yeah.
It is the best part of him. Yeah.
He's been incredibly, incredibly consistent. So I fact that there would have been some kind of a deal. I know that sounds so ridiculous to say, but there would have been a deal. Tell me about a deal. a
dealmaker. I actually agree.
He's a dealmaker. And Jason, he
gave a statement this week. -- North Korea. He went to North Korea and met with
He'll shake hands with anybody.
Exactly.
He would have fired all of the the deep state blob that started to position anything towards a conflict. So I think he would have shut the doors so ferociously on Ukraine and NATO. And anybody that crossed that line, he would have tarred and feathered publicly. And I think the end result would have been that Putin could have found an off ramp well before he invaded. Totally.
Yes. I I agree. I grew that entry top.
--
Germany for all this. Right? He called it.
Well, Trump very early ask the question, why are we spending all this money to defend Germany when Germany has this big pipeline deal with Russia. It doesn't seem like they need our protection, they should just pay for it themselves. But I think there was a separate point that Shamontheus made that is a really good point, which is Trump's instinctual resistance to what the deep state wants. And he actually said it this week. He gave a a 2 minute televised statement that was all over Twitter.
where he basically made the argument that, listen, the reason why we're in this war is because of the military industrial complex and the foreign policy establishment they basically courted this conflict, and they are working at odds with the interest of the American people. It's actually a fairly radical critique. I don't think a major presidential candidate has run against the military industrial complex the way that he is now positioning himself. And let me tell you this. You know, I've said it before.
He's not my preferred candidate. But if this war spirals out of control, either, you know, it turns into a even bigger conflict that draws us in or it turns into a big recession because I don't think we've seen the last of the supply shocks from this war. If we get a recession that Trump can, I think, lay at the feet of this war. He's positioning himself to take advantage of this. This could be a silver bullet for him.
I don't think he has any other way of winning. But, you know, if this turns into a big mess, Trump is positioning himself.
--
hot sacks. You have your tinfoil hat there? Put it on for a second. I wanna talk to tinfoil Saxx. tinfoil hat sax.
§08Tinfoil hat corner
Let's put them the tinfoil hats on here. Do you think Putin is escalating this as a way to position Trump to where Putin says he could say this during the election. Like, listen, you know, I would love to talk to Trump. And what if Trump goes and talks to Putin, or does a phone call with him? because I know
that's against the rule. Right?
--
theory. So wait. So so your theory is that
Putin says -- -- facts theory.
Okay. So so your theory is that Putin's escalating this into potentially a nuclear war to get Trump reelected. That's your theory. And I'm the Tim -- Trump
is favorable, Tim. I I'm just Tinfoil hiding it. The reason why
Now that
this has occurred no. No. Now that this has occurred, not that he did the he did
the elections that he watched for tonight.
--
friends. You're the one that's in foil hat territory.
10
foil hat corner at the end.
Putin, the reason why
can't -- -- started the war for it that he would end the war to give Trump a win.
How's he gonna end the war for Trump? What are you talking about?
During the election, he's he does a call with Trump and he says, you know, I talked to Trump about this, and I'd love to do some negotiations with Trump. I always had appreciation for his ability to help negotiate things. I would love I would feel better about negotiating with Trump who hasn't saber rattled and told everybody in the world that I have to be that that there is a regime change. So
--
It is really interesting how you come up with these conspiracy theories and then attribute them to me and called me the Tinfoilahack guy. But listen. That's how that's a joke. know -- But you just
said this
is a silver bullet.
No. It's a silver bullet.
You said it's a silver bullet.
--
off the rails. Yeah. If this war goes off the rails and the economy goes off the rails, because of this war, Trump right now is positioning himself to take advantage of that fact. And DeSantis is too But he's
right into his hands. DeSantis has
some critical things about the war skeptical, I would say. things about the war this week. So it's not just Trump. But look, the thing you have to understand about this war is it's existential for Putin. It's existential at this point.
Yes. he cannot back off.
And it's extra and it's extra curricular for us.
Yeah. Yeah. And that's why that's why Obama said back in 2014, that the Russians have escalatory dominance. They will always climb the escalatory ladder all the way up to nukes if they have to. And the sooner we recognize that fact, the better off we're gonna be.
I think the good news is that we are -- --
speech that he didn't? Were you kind of highlighted?
I didn't
see the speech. Was it good?
We already -- We just talked about it.
It was
it was 2 minutes. It was fabulous. Sachs just mentioned it.
The the crazy thing is it sounded a lot like when we were talking on this podcast, which is he talked about all these generals that retire
Victoria Newland.
He called -- He's not a Victorian Newland by name.
By name by name. He he he really did explain to the lies
because I didn't see this because I'm I'm on a different time zone, and it what it must have broken when I was asleep or ski.
Well, it's a 2 minute video in which he I like I said, he attacked the military industrial complex and foreign policy establishment creating this war. And you mentioned Victoria Newland by name. Let me tell you something. Newland is gonna be
It's gonna be a very popular message, but
you put
out that.
It is very popular. Newland is the of this situation. Okay? The same way that Fauci was supposed to be protecting us from viruses and then funding data function research. Victoria Newland.
We got a label.
So I just gotta label COVID 19 misinformation.
Victoria Newland was supposed to be our chief diplomat with respect to Russia in Eastern Europe. And what did she do instead? She ginned up this conflict.
How -- Gined up. We
backed in insurrection in Ukraine in
2014.
Jason, if you didn't like the interaction of January 6th, let me tell you you aren't gonna like the insurrection that she staged in Ukraine. because they brought in these Ukrainian far right nationalists as the muscle. And that is what created all these problems.
Did he bring Big Max? Did he bring Big Max with him? Did you say he brought Big Max to his power plant? He brought fast food to them? Yeah.
He didn't
even know what you're
talking about.
But you're ignoring what Saks said, but No.
No. I got it. I I am not disagreeing with him. I think
--
If you wanna revolution, you wanna say the roof of this conflict. Here's what you don't stand.
Nobody wants to be in a forever war. Yeah.
But just let me explain why he mentioned Victoria Newland. He mentioned her because she was the state department official who was responsible for backing this insurrection of a democratically elected leader in Ukraine in 2014 named Yanikovich. Okay? Yanikovich was trying to was doing a a balancing act between Ukrainian nationalists and Russia, and it was a very delicate balancing act. And we basically toppled him And ever since then, the relations with the Russians over Ukraine event headed south.
If you're wondering why Putin sees Crimea, it was in direct retaliation for the coup that we backed in Ukraine in 2014. This is the origin of the conflict. And, you know, if you wanna understand where this comes from, you have to go back to this. And the fact that Trump's willing to talk about is pretty incredible.
I think that the good news for us is I think that heading into June and the debt fiasco, that's looming. I think we're going to and I think this will help a lot. get distracted with domestic issues in the sense that it'll take some heat off of escalating all of this foreign adventurism. You know this it's it's such a scene like this is such a scene from wag the dog. Every time there's something inside the United States that we should really focus on, we have this wag the dog moment where we could distract by some adventures abroad.
And we forget and we lose sight. So we have this East Palestine thing right now. June, we're gonna have to come back to terms with this debt ceiling issue, which is a huge one. How how we're gonna resolve it. It's not clear.
Just this week the Federal Reserve basically said hey folks we're taking rates to 5 and a half plus and they're going to stay there. That seems like no news. People just seem to digest it and move on. It's really incredible how we just find we're we are like What is it, Jason, the dog that chased the bumper and caught the car or whatever?
Yeah. You you the you you caught the bumper, and
you caught --
We've got plenty of big problems here in the United States. Plenty of big problems. And I don't know that wag the dog works anymore because I think the American people want like I said, they want an American president to focus 1st and foremost on American problems. even remember Bush Senior 91 won that warrant still lost reelection.
Still lost.
So I don't think wagon the dog works anymore. It works for some short period time, especially while the media are portraying this
-- At your point, by the way. --
the air raid theater. That's Eventually, the people smartened
up. You're so right. So that issue, think about bush. Bush came off of the Persian Gulf War with like a 91 or 2% approval rating. I mean, we've never seen anything like it but he violated a simple tenet of his domestic policy which is read my lips no new taxes, boom lost.
And it was not even close. in in the end. So I think you're right. I think people really care about the economy. Go, Nikki Haley.
And do how much do -- How much
debt do we wanna go into over foreign wars? I the only thing I ever liked about Trump was his policy of not starting wars and not getting into them. And Americans wanna focus -- Yeah.
And -- -- on our
--
I'm a balance sheet voter right now. I'm voting based on who is gonna be fiscally responsible. Me and Friedberg are in the same boat here, I think.
We better be real careful on how we handle China because you had Lincoln on all the Sunday shows, basically denouncing them, expressing outrage
--
Mhmm. -- that they might support the Russians, acting shock shock that they could do that. We don't even have the ability anymore to understand that other countries do things in their own interest. And we can't accept that. And instead, we act as if foreign policy should be conducted according to this morality play that we've created And if you don't do what we think is right, then we're gonna express all this outrage and condemnation at you.
And somehow, that's gonna get you to violate your own interests. That's not the way the world works. And what we're doing right now what we're doing right now is pushing China and Russia together into a new axis block This is very foolish, very foolish. Even during the Cold War, okay, we work to keep Russia and China apart. And and the whatever you think of those regimes today, they were much worse back then.
Remember, the Soviets, you had to stall this regime. The Chinese had mal. Those were the 2 of the 3 biggest mass murderers in the 20th century. And Nixon and Kissinger still went to China and shook Mel's hand and toasted him, because it's important to keep China and the Soviet Union divided. And what are we doing today?
We are basically pushing them together with all of this condemnation and outrage. It is not a smart strategy.
Can't disagree. We need to be building bridges with India. That's a key, key relationship in China. I don't know why we're not figuring out what we have
in India. This is poisoning our relationship with India. India is the biggest democracy in the world. And our relations with them have gone south since the war because they have a friendship with Russia that goes back to Iraq.
--
see Biden go to India and start building some bridges there. Yeah. agree. I I can disagree.
§09Bestie wrap up!
Jake, how's your fundraising going for lunch on
4?
Oh, thanks for asking. It's a great question. You know, we're doing that public. 5060 public fundraising thing. And so I did a bunch of webinars.
And without doing a single in person meeting, $51,000,000 in request came in just, you know, to a type form. Basically, a form online. And now we're gonna be starting in the next month after I get back from Japan, actually meeting with the, you know, big LPs in the world, and I wanna make a trip to the Middle East and just go all around the world and meet all the big fun. So thanks for asking. Yeah.
I think it's gonna change everything. Yeah.
Good for you. -- there.
That's awesome. Can you imagine
$52,000,000
in commitments before actually doing the actual tour.
That's awesome.
Just out of the gate, and my last one was 44. And so I think this 506 c, like, I can be public about the fact that we're raising a fund. And so it's just absolutely amazing.
Well, congrats, and I have one question for you.
Yes. Go ahead. Can
you be replaced with an AI?
The world's greatest moderator? I mean, not gonna make great jokes. Not for not for now. And oh, you know what? I had an interesting point about management fees and these funds just to circle back.
Did you know this is what I heard that benchmark during that worst vintage, you know, after, I think, the great financial crisis where maybe it was the dot com, it was either of those they took their management fees because that fund was so, you know, challenged. They deployed the management fees into primary investing or I'm sorry, into follow on investing on their winners to regain the results. Can you imagine in this market a VC who deploy capital in
2020, 2021,
saying, you know what? We've got these management fees, 1,000,000 of dollars in the future. to pay for managing these instead of taking that money, I'm gonna put that into your into the companies for my launch fund for each month I had a couple of opportunities. And I was like, you know what? I'm going to take some of the management fees and invest in some of those existing companies to try to goose the returns for my LPs.
And so we're at a 104 percent or 103 percent invested in the capital just by just taking a couple of $100 off of the management fees, and I'm like, well, this is a really interesting track of you. Like, what am I playing for the management fees, or am I playing for the Moik? I'm paying for the Moik. Right?
I mean, you should be.
Jason, by the way, it's not true that the AI can't tell jokes. Our friend Bill Lee tweeted how the AI told a joke in the the style of Jerry Seinfeld, then he asked it to tell a joke and the style of Dave Chappellan refused. So the AI can tell a joke if it wants to.
It's racist?
But no. Only clean jokes.
Oh, I see. It it doesn't work blue.
I guess, but I I don't think every I don't think Dave Chappell has to be blue, but it would not tell a joke about Dave Chappell.
--
blah blah. Wow. I mean, we gotta get Sam. He's an iconic plastic. Like, he would be at Sam would be in the are all in
52?
Well, by the way, actually
--
He's got a shot there.
--
after our last episode in which we were raising concerns about the AI bias. They published a blog post saying that -- Yes.
The day after.
If bias has occurred, it is a bug not a feature, and they are trying to be even handed. So I'm glad they have
--
That's smart.
--
pronounced that, and that's their standard, and we're gonna hold them to that standard. But I'm glad
Well, they have to be public about it. Like, this Yeah. I mean, I I read the blog post. It seemed reasonable. It's great they're addressing it.
And I also think they're now doing embedded citations. So somebody tweeted at me the whole discussion about credit. And when they were doing facts, they're now saying and they haven't made a announcement about this yet, but they were saying, according to this source, the following, according to this source. So they're starting to source in the copy that's being written. So that's a big step.
And then I was talking to Adam DeAngelo about Po, which is an amazing app. You should try it. I think it's the best one out there right now of all the chats. PO is an app based on the core dataset. And I asked a questions about the trip to Japan and Naseko and this
and that. And it was extraordinary how well
done the answer was with bullets And then I asked him online, hey. What about citations back to the original Quora questions? And he said, yes. We're gonna be adding that. So and then I was thinking, wow.
If you add to the Quora corpus, and then they link back to your answer. That's awesome for me as a person who's answered hundreds of questions on court to build my reputation. So I think Quora is for me, I think Quora is the could be the Google. I think Quora's got a better dataset. And if they play that right, think they could be better than chatgbt.
And they said you have
to propose. based on the Quora dataset? dataset. Poat, it will answer questions like the best answers on Quora. Is that what you're is that what you're saying?
Yeah. That's kinda interesting.
--
is using Quora as the primary dataset. I don't I'm sure it's using the rest of the web too and Wikipedia and everything. I think I don't know why they're calling a Po. I think they should just do Quora. chatbot or whatever.
Yeah.
But just try it. It's called Po. Download it. You can use it today.
You you wanna know why I'm excited about that? because you
got a little tasty plate. You got a little slice? We got
a little slice of cora.
Oh, good for you. Well, I mean, core was always like, are they ever gonna make money, or are they just gonna build this incredible data set and do nothing with it? Yeah?
What did I say? I said I said AI is gonna be to the to basically SaaS what mobile was to web 1.0. You'll either get disruptive or get turbocharged by it.
It's gonna be I I think Quora is the number one player in AI going forward. I know that sounds crazy, but the fact that and I think Reddit also has this same potential. If Reddit had a chat because think about how many times people do a search and YouTube is the other one where they say, what's the best sci fi movie of the year or which directors make the best screenplays or whatever, and then they put the word Reddit at the end, or they put the word core at the end, or they put the word YouTube at the end to just narrow down the corpus of where find the answer. Go ahead, Jamal.
I've worked with I've known DeAngelo for 17 years now. Smart Count. He was the CTO of Facebook when I worked there. the single smartest and best single smartest person I work with. And then separately, one of the most absolute genuinely best human beings in the world.
Can we get him out? He does he doesn't is he not a good public speaker or something? because I never hear him talk. I'd like to get him at law And Summit.
Tangel is just so superb on every dimension.
We should get him on, actually. Just because I didn't know he was
working in
the AI. He has a lot of interesting thoughts about you know, social networking platforms and
Annie's on the board of opening it in. Oh, okay.
That's interesting.
Oh, get him on the podcast or maybe you own Summit. 2023. Alright, everybody.
He'll definitely make the anti establishment list.
Definitely anti establishment. Yeah. Okay. So for the sultan of sneaking out, He left and the dictator. And what do you wanna be referred to now?
Passages,
The peacemaker. Passatist.
PeaceMaker. There you are. And the sex offender. I'm the world's undisputed. greatest moderator on the number one podcast in the world.
For now, until the AI replaces you.
Yeah. I I I train the AI to replace your sax. Ukraine, UK, and Ukraine, Biden, Biden, Biden, no Nikki hailey. No one should stop making Nikki haole happen, Dian. The dataset has been done.
We'll let your winners ride. Rainman David Saxon. We open source it
to the fans, and they've just gone
crazy lately. Love you.
besties are
my dog taking it. I wish you your drive. Oh, man.
I have a casual week They should all just get a room and just have one big huge, George, because they're all just useless. It's like this, like, sexual tension that they just need to release. You're a thief.
What? What?
Where did you get Murphy's