SPEAKER_03: Our daughter's head is dropped because the Our doctors she felt the head and she was like, yeah, it's it's hey Chamath whose head has gotten bigger
SPEAKER_04: Yours or your daughter's?
SPEAKER_01: What do you mean quit your day job sex that didn't quite land
SPEAKER_00: Total flow we are not in rhythm, you know why it's mercury retrograde our 50th episode is gonna suck
SPEAKER_03: Because here we go three two
SPEAKER_02: All right the Facebook whistleblower hearings occurred and Facebook No, but where's your hey everybody? Hey everybody here Three two. Hey everybody. Welcome to another episode of the all in podcast episode 50. We made it to 50 Ching Kwan, nobody expected us to make it here. We are we've made it and everybody is thrilled To be here with you and thank you for the support over the first 50 episodes Episode closer to getting canceled one episode closer man. How great would it be to be canceled and never have to work again? Oh That'd be wonderful. Okay, so Francis Haugen revealed herself on Sunday night on
SPEAKER_02: 60 minutes and then appeared we don't we get our own personal interests or no
SPEAKER_03: Hey, you're unbelievable
SPEAKER_02: Retrograde mercury retrograde retrograde. I'm all fuck doesn't the audience know us by now after 50
SPEAKER_04: Everybody really in trouble three with us again this week is the rain man
SPEAKER_02: David Sacks and the queen of quinoa David Friedberg, I love the intro, of course the dictator Chamath Palihapitiya and I'm your boy J Cal sacks I gotta say I think I think your aum is positively correlated with the bags under your eyes
SPEAKER_04: If you mean it's getting bigger you're I mean
SPEAKER_01: Heavy dragging you down. That's where you're hiding all that Solana in your fucking under your eyes
SPEAKER_02: You better clear that Solana position. What's your lockup 24 months? Fuck? No, he's trying to sell it to me and text
SPEAKER_02: We're negotiating discounts, I just had the fact you're fucking the whole thing up bro, you know
SPEAKER_04: I'm Hoadley you think I buy Hundreds of millions of dollars of anything without a discount everything is a discount. Everything's discounted
SPEAKER_02: You want to clear that position in an LLC? Are you saying I got a billion dollars of Solana? No, bro
SPEAKER_03: I'm saying I have one but you know, I brought it a discount but you're holding correct
SPEAKER_04: ish
SPEAKER_02: If something appreciate at what point is the appreciation in an asset that you've invested in early something you need to You know at least clear a position of and walk in a win. I mean What's enough 100 X 500 X you got at some point bank a win, right?
SPEAKER_03: Well, I think you have to put things in a bucket of like is it an investment or is it something that? Represents an idea that you love so much if it's the latter you should never sell if it's the former Yeah, you got a man. Yeah, or rather, you know, is it a trade or is it something you want to own?
SPEAKER_00: by the way, let me just clean this up because
SPEAKER_04: It was Solana was not a direct investment for us. What we did is we invested in in a crypto Venture firm called multi coin capital. This is back in 2017 We realized like crypto was becoming like a full-time job for us It was a total rabbit hole and we were like we don't have time to figure out this like 24-7 trading stuff But we met Kyle and to shark who were these two young guys We met him through Vinnie Lingam actually and they were creating multi coin capital and we actually invested We gave him a million bucks at a 20 cap to help set up their firm and then we invested in their they had a both a venture fund and a hedge fund and They were like the first money into Solana. So that fund I mean, it's like a hundred X fund It's just like bonkers crazy. And so as a result of that we are indirect beneficiaries of this huge increase in Solana, it will end up being about you know, a billion dollars of I Think Solana for us in terms of returns, but but it's the multi coin guys to determine the trading decisions on that Yeah, and so people who don't know Solana is a programmable
SPEAKER_02: You know aetherium Competitor I guess and it's at 50 billion dollars or so market cap. It was trading at a dollar Not long ago and now it's at 164 It's an aetherium competitor basically for you know
SPEAKER_04: smart contract platform and there's a lot of people I'd say smart money in Silicon Valley who are betting on a Flippening where Solana could ultimately overtake aetherium as the preferred platform But even if it doesn't overtake aetherium and you know, it's the number eight cryptocurrency right now, you know It could go there's a lot of people betting it'll go to number three or you know, what have you
SPEAKER_02: additionally it is a fraction of a penny for a transaction And it can do many more traction actions than aetherium. So it's you know, technically Should be much cheaper if you're buying NFTs right now, you're probably spending You know tens of dollars, you know in fees on aetherium Whereas if you did those same what NFTs which some people are starting to do on Solana They would cost a fraction of a penny correct David or Shama? Yeah, I think the the platform is known for being a faster cheaper, you know blockchain really really congratulations
SPEAKER_02: and if Vinnie Lingams Instagram is any indication. He did pretty well because his Instagram suddenly turned into a world tour on private jets He's like which which which island should I buy and well like Vinnie was sort of like a I don't think he's full-time in
SPEAKER_04: multicoin But he was sort of a venture partner to Kyle and to Char and he helped set them up This is back in 2017. He helped bring us in as the first investors yeah, I mean for us it was sort of a founder bet combined with a Like a team like sort of a space bet like we knew the cryptocurrencies were starting to be traded 24-7 we knew it required more of like a hedge fund skill set than what we had and So we made you know, we made a bet on those guys and man One of the nice paid off strategies right sacks is if you are LP in new
SPEAKER_02: fund managers Which I've done a couple of times now you get to learn from them And basically dive into a data set of a new market, right? I mean It's like one of the nice things about being an LP in a fund is you can place a small bet whether it's 50k Or 500k or 5 million whatever it is you you get like this meta education of an entire sector, correct? Yeah, but I think you know, we didn't do it to learn from them
SPEAKER_04: Although we have it's more that we realized that crypto was like I said becoming such a rabbit hole like it We realized we would either need to do crypto full-time as a fund or we would need to like partner with people who actually did Yeah, and you see that with like a lot of easy firms now Is there creating like specialized crypto funds or at least they have specialized crypto partners? There's so much to know about the crypto world. It's a hard thing to invest in unless you're like totally focused on it I've struggled with that
SPEAKER_00: Like I've tried to go deep on a couple topics and like I realized holy shit I've been in this for like four to six hours Just trying to learn this stuff and I'm not like there and then I feel uncertain about making any decisions. I Totally get it. I mean you got to have folks like working on this and the pace is changing So rapidly you really need to kind of be up to date on what's next
SPEAKER_02: When you look at crypto people use the word crypto as if it's like that's all there is totally crypto is like That's like computing. Yeah, right e cash cryptography You know financial modeling or building new economic systems to moth. There's business model innovation
SPEAKER_00: There's technology innovation. There's economic innovation. It's computing innovation. Yeah infrastructure infrastructure hardware, I mean there's there's quite a lot of layers of activity to moth are you spending time in crypto yourself or do you have people doing it for you or how are you Kind of we have look we have we have a lot of it a lot of a lot of everything
SPEAKER_03: So, yeah, we have things but you go deep yourself to moth
SPEAKER_00: like how do you spend enough time to really get up to speed on all the goings-on I
SPEAKER_03: Cherry-pick and I snipe and Opportunities where I get intellectually curious and jump in but a lot of the credit goes to my team there's a couple folks that spend a lot of their time in it and You know, we've we've had a couple people Do extremely well For us, you know similar similar to David's story back in the day you know, I invested in Barry Silbert and DC market Barry Silbert. Yeah, and you know DCG is now I don't know. I'm guessing a 20 billion dollar company Maybe more. I don't know how does it mechanically work with your team? They they are investigating opportunities
SPEAKER_02: And then they come to you and bring you, you know Hey, we'll do a meeting and I'm gonna share for with you and then you say I'm you like a phone with that No, you basically go deep go deep when something shows up to mom
SPEAKER_00: No
SPEAKER_03: so so basically what happens is they have carte blanche to do whatever they want and what they're typically doing is they're working with entrepreneurs to seed projects and you know to to To get projects off the ground and then at some point when those when those projects become deep large enough Then they'll issue tokens and you know, we'll get a certain allocation of those tokens And so we've done that for you know, call it. I don't know Some number of projects that we think are valuable then along the way, you know, they'll have certain views on Bitcoin They'll have certain views on aetherium. They'll have certain views on Solana and will make capital allocation decisions they tend to have the ability to do whatever they want and then what I tend to do is just think about when it gets Above like it to me. I need to see the chance to make at least You know in the rough justice around, you know, five hundred to a billion dollars and then I'll get involved But otherwise, they just kind of run the whole thing. Let me ask you guys a question here
SPEAKER_02: you know when you look at the market caps of these projects, it seems like Things are changing Car Dona or kadana is number three now and Tether still remains number five XRP still number six, but Solana encourage people to not look at it like that
SPEAKER_03: I think looking at it as a rank list betrays what it is So, you know, I'll give you a simple example let's like that compare the fate of two projects or actually right now there's a distributed form of Discord that's being built Discord the chat app. Yeah popular amongst a completely distributed way with an integrated crypto wallet because if you look at discord
SPEAKER_03: It's really two cohorts of people. There's gaming and there's crypto right? So the two big ones. Yeah, so, you know That's an example of a really interesting Product that has some real potential then if you look at something like D so D so is a decentralized social Programming Framework then if you look at something like helium that's completely about building a large distributed, you know connection of Onramps to the Internet so internet connectivity So those are three completely different ideas with three completely different paths to success if to invest in those tokens You you have to believe in three totally different sets of things Yes, look at it on a rank list and just buy something because it's cheap is no no It's stupid. Don't know that wasn't really my question
SPEAKER_02: my question was you know, we we have an extraordinary number of the public who've invested in Bitcoin in aetherium as number one and number two and those projects Feel maybe stagnant when compared to the dynamism of what I'll call You know the projects launched in the last three or four years because there are two different number but you're talking about confusing again
SPEAKER_03: That's what I mean. Those are layer one protocols, right meaning they are at the core substrate of how all of crypto is going to work Then you have these other projects that build on top of these things in different ways or build around them so my point is if you don't have if you don't want to take the time to understand which layer twos you want to own and Which layer ones you want to own and why I think you're much better off. I Understand your point my point ETF or something else because there are there are ways to own these things So for example, David, David Solana is does not need aetherium to exist
SPEAKER_02: So my point is do we do we see a day when this you know? The past decade has been about Bitcoin in aetherium Do we see a day when maybe people stop buying those and start buying these new ones anything's possible
SPEAKER_04: But here's here's the evolution in our thinking. I mean the first step was realizing. Okay, we need to own Bitcoin why because You know, there's now enough evidence where what like a decade or more than a decade into this Nobody has been able to essentially counterfeit a Bitcoin it is You know new money it is it is better money So if you it's so I'm not gonna convince people right now of the argument for Bitcoin But if you believe in it That's sort of the first step is you realize you really need to have one to two percent of your portfolio in Bitcoin in the event that fiat money sort of becomes debased and eventually move to crypto then you realize well Wait a second Bitcoin is just one application of blockchains. There's a bunch of applications of blockchains So maybe we need to own not just sort of you know digital money But we also need to own the underlying blockchain platform and that leads you to aetherium Then you realize that there's a bunch of competitors to aetherium and it's still very early days And one of those guys might ultimately displace aetherium as a blockchain platform Then you realize that there's all these applications on top of all these blockchains And so, you know the conclusion I come to after all of that is I can't figure all this out And well, maybe I could if I was willing to go back to school and like make this a full-time job Which I just don't want to do. I mean, I'm lazy and that's why I focus on sass like that's what I know Yeah, like I'm not gonna reinvent myself. It's like you playing hold them versus PLO, right?
SPEAKER_04: Right, exactly. So but this is why we partner with multi coin capital So what I would just say is like the idea that you as an individual investor are gonna like, you know Pick off the one cryptocurrency here or there to invest in. I mean that's gonna be a lottery I would I would find a manager basically who is really good who has a track record who understands this stuff our approach is to hire very
SPEAKER_03: young Extremely technical computer scientists and mathematicians to basically do the work That's that's working Yeah
SPEAKER_04: and you know one of the things that I think these guys do and the reason why it is very helpful for the big computer scientists is these Are all open source projects. So they go look at the repos Just go look it go look at what you see the changes being and this is like she realizes only 12 people who are actively
SPEAKER_02: Working on Solana in the in the but you need to you need to look at all
SPEAKER_04: Seven of them work for Solana. You need to look at all the code check ins
SPEAKER_04: You need to look at the velocity of the code check in So you can see like how many projects are being created on these platforms The white papers are also really exceptional like if you if you read these white papers, they are there there
SPEAKER_03: they're really incredibly thoughtful and and well-written and you can really understand what their goals are and You can make some informed decisions there But again, if you're not going to be in the business of being in this ecosystem because I think David's right Everything is moving so fast What's successful today could be just a dog tomorrow and vice versa that I think speculating in this market will Not only will it be super volatile but more than likely you're gonna lose all your money So I would encourage people to not speculate in crypto I would encourage you to figure out an Elegant way of having an abstracted bet if to the extent you care about it And by the way in the UK, for example, there are ways where you can own publicly traded mutual funds That give you exposure to this. It's just like yes. Yes
SPEAKER_02: Yeah, but there are mutual funds of crew to work find these mutual funds
SPEAKER_03: Just own those things and let somebody else do the hard work because it is too it's too hard Some of the other investors we made back in 2017 2018 timeframe one was a company called bitwise
SPEAKER_04: which was creating an ETF for crypto so it's a Monthly rebalance portfolio of I think the top 10 crypto currencies and you could buy it They finally got approved by the SEC and you can buy it like it like with a ticker symbol from your e-trade account Exactly. So that was that was pretty incredible to see the progress they've made And then the other big bet we made was just institutional custody back in 2017 We invested in Biko actually Billy helped found that company Many years ago and then that became last year Galaxy announced a deal to acquire them for thing 1.2 billion largest crypto acquisition to date The thesis there was just that crypto would go more institutional and I think we're starting to see that now Where endowments and so on are realizing they need to have some portion maybe one or two percent of their portfolio in crypto And so, you know, it's unrealistic. Look we have to almost three trillion dollars of market cap in crypto
SPEAKER_03: It's unrealistic for folks to expect people to be able to be living in discord channels and doing all of this work I think what that means is that the SEC is going to be asked increasingly more often to approve Simpler on ramps for this stuff and now in the last week, by the way, we had a pretty important two things happen Both Jerome Powell and Gary Gensler basically said crypto is here to stay and you know We're not gonna ban this stuff. And so hopefully what it means is that you get some ETFs passed in the United States You know grayscale is one there could be more and I think that stuff makes it much easier for folks to Own this stuff well
SPEAKER_02: Clear regulation would be a great thing for the industry for people to buy into it and removing some of the let's call them. I Don't want to say bad actors, but people who are maybe Questionable like tether, you know, I don't know if you saw the Bloomberg story yesterday but you know a Bloomberg reporter basically found out that tether he got the list of what tether owns with their stablecoin and It looks like they're giving a lot of loans to other crypto projects and own a lot of Chinese paper In that they are basically making the float on 69 billion dollars sweeping it which then incentivizes them to take risky bets because They get paid on them and it's anything but a stablecoin if you think about it from that regard It's I don't know the details on tether
SPEAKER_04: I won't speak to that but I'll say that any stablecoin if it's not 100% backed By dollars if that's the currency that's going in and out or yeah other hard currency. That's not a stablecoin, right? You know a stablecoin is supposed to be a service. It's not supposed to be a a speculators currency It's basically just supposed to be a mechanism by at the on ramps and off ramps of the crypto ecosystem You can convert your dollars into a temporary again stablecoin that will hold a poker chip that you can use to then buy Bitcoin or a theorem or whatever. Yeah, USDC USD
SPEAKER_02: see Jeremy Allaire's circle competitor from circle just Said that he would switch to a hundred percent to what you're saying cash cash equivalents You know the guys this is this has always been a money market fund
SPEAKER_03: It should be right treated like a money market fund and it should be regulated and managed like money Which was tethers original vision and then they flipped the script because I think they got greedy and now they own I think
SPEAKER_02: Because they weren't regulated by the way, by the way, it speaks to the role of regulation
SPEAKER_00: Like, you know a lot of people have trust and faith because they make some claim But there's no regulator actually checking on their claims the only people that want regulation are two ends of the spectrum so young and so disruptive where they want rails to operate legally and
SPEAKER_03: So big and so over the top that they want to basically entrench themselves for the rest of their lives. That's it Everybody in the middle doesn't really want regulation What's a what's a way to create a company or if you're big tech you both want regulation?
SPEAKER_04: There are some narrow cases like again, you know If if if a stable coin is gonna say that we are just a money market fund where a hundred percent dollar reserve It is really nice to have a regulator somebody we trust to go in there and put the stamp of approval on it After we can trust it That is a valid role I think for a regulator in traditional financial markets you have these self regulating bodies
SPEAKER_00: I think it's thinner is a self regulating body, right? And so, you know, some of these self regulating bodies should be formed in the crypto Community, I don't know if they're doing this. I'm so naive in this space But certainly would make sense to have an SRO form that does self policing effectively within the community rather than try and bring in a government Regulator, here's the thing if you police yourself
SPEAKER_02: You can really define the execution and the ramifications of that policing if you have 30 call it
SPEAKER_00: Competitors and cooperators in the in the market space doing this together it can be a highly effective model for creating a system of trust and reliability and not having to You know bring in, you know, call it outside incompetence Overseeing the rules and rights. Yeah, another area we need standards is around the token cap tables for these projects, right?
SPEAKER_04: So how much how much of the token cap table goes to the founders? What are the rules around them selling? What are those investing periods and what are the disclosures around them selling in public markets? We have 10b5 So if you're an insider who runs these companies you have to disclose when you're selling there's no similar rule for crypto I think there probably should be right like if you own the if you own the token and you run this project as publicly traded And the public can buy it. You should really probably have to disclose your your sales and maybe
SPEAKER_02: You know these it's very strange because they're running foundations and I had a crypto person on from a music crypto Project and he said they had like three or four hundred million in this project in Panama I was like who's on the board of that and he's like, I can't say Why can't you say and he said security reasons? I was like, well anybody who's on a public board has to be public And of course they have secure, you know people who are on the board of GE or IBM or Amazon They have security issues like they deal with their security issues. That doesn't mean they don't disclose who they are It's like yeah, I'm not comfortable saying who they are and it's like, okay Well, they so three or four hundred million. I was like, how do they give that money out? I'm like, he's like, I'm not sure I'm not on it. I'm like what like there's some organization in Panama. That's It was really weird and I think that I'll say positively about about these crypto founders is that they
SPEAKER_03: Will never allow a single venture investor to clog up their cap table number one They do a great job of creating these large broad syndicates of participation when they seed their projects and then you know A lot of it goes into Treasury where then they issue coins as needed and I think that that strategy actually is very pro employee and pro ecosystem So, you know when we see these projects all these companies tend to raise, you know, three four five million bucks It all tends to be at like 30 million pre and it all tends to be distributed so like, you know, you know, it's us and recent Sequoia and it's like, you know We put in 200 grand each or 400 grand each, you know That's why you're forced then go into the market if you believe in a project and then spend hundreds of millions of dollars to buy Into it after the fact and I think that that's very Very powerful. It's a really important dynamic that if it comes back to Traditional venture could be really disruptive Why well, could you imagine a SAS founder that basically all of a sudden says, all right, you know what? I'm raising a six million dollar series a you know craft can take 500 K Sequoia. You can have 500 K You know blabber dee blah folks and then you raise six million bucks that way and you never allow anybody to have more than Call it, you know a few percent of a company. So the fact that it's like it's like a mini IPO
SPEAKER_02: It's like a private IPO on Sand Hill Road Yeah, and then your board construction looks entirely different and then as a result, you know founder protections probably go way up
SPEAKER_03: Employee protections probably go way up. It's a governance goes way down. I know I Actually think what will happen is you're less likely and around like that to be okay with some dork dingleberry joining your fucking board You're gonna actually point to some industry expert and say this person is joining my board She does XYZ job at such-and-such a startup and then the investors say wow Well, that's a pretty great advocate for the business. Go ahead and do that Another thing I learned about this whole token space was when I talked to Anatole from Solana when they sold their three or four hundred million
SPEAKER_02: tokens to fund The company because they consider them utility tokens not shares they paid taxes on it So the IRS is getting massive amounts of tax revenue. Well think about it. They're selling the token It's supposed to be for utility. Well, therefore it's a taxable event that actually was really smart that is showing
SPEAKER_04: I think some wisdom because there's a lot of founders who want to have their cake and eat it, too Which is to say they want to say that these are utility tokens and and they don't pay tax And then when they later get traded they want to say that they're not you know, they're not securities But so when does the tax get paid? I think it's really smart to pay the tax upfront to establish that this is a corporate sale They're basically paying the corporate tax, right? Yes That is what is because this is this is the problem is if if you wait until they're traded publicly and then say no No, no, their their utility of security tokens. The government's gonna ask you. Well, why didn't you pay? Corporate income tax when you sold them, right? So that is actually showing some perspicacity. I think could somebody look that word up for me?
SPEAKER_02: For sightedness J Cal. Okay, great. Awesome.
SPEAKER_04: It's so great that you have the two producers on either side of you right now feeding you vocabulary words. Well done.
SPEAKER_02: So here's it. Here's, you know, another question with this, if the majority of people sacks, put your legal hat on for a second. If the majority of people who bought a token in a project, we'll call it the ACME crypto project, they buy a token, right? They bought the you know, ACME crypto project, they buy ACME coins, if they're buying them, and they have absolutely no interest in using them for the utility. And they say, I bought these as a speculative device. And the founder says their utility tokens, but let's say 70% of the people who bought them said I didn't buy them for that reason. They just came out right and said, I bought this to speculate on the price. What should the government do? Should they deem them a security or should they deem them a utility token?
SPEAKER_04: I think that's a complicated question. But I think that there should be an opportunity for these cryptocurrencies to establish themselves as utility tokens, because they are, they do serve a purpose. They are designed to be part of a system, right? They're not just objects of speculation. And by the way, even if they were we don't, we don't treat baseball cards as, you know, as sort of as security. So it wouldn't necessarily make them a security just because they're speculated on, they actually do serve a function and a designed computer system. So I think what's important here is that there's a safe harbor, where these crypto companies know what the rules are. And if they, if they can basically meet the criteria, such as by paying corporate income tax when they sell the tokens and other things like that, that they won't later be deemed to be engaged in an unlawful sale of securities. I think the I think the important thing is just that entrepreneurs founders know what the rules are, so they can abide by them and not be right now. Well, it's they don't get surprised later, they don't get whammied. But with basically, you know, because they are building something legitimate here, you know, right.
SPEAKER_02: But it would seem to the sniff test if the people buying the tokens have no idea have never written a line of code have no use for them. I don't see why that's relevant. I don't see why that's relevant. Well, because they're profiting off of them as if their shares and unlike baseball cards, which you can't sell 1000 baseball cards for an increasingly, you know, in a very instantaneous way, you would have to put them in an auction.
SPEAKER_02: Yeah, it's because a lot of friction to be a lot of friction. You could sell it certainly like, yeah. freeburg. What do you think if the majority of people buying a token are doing it to speculate? Can the founder say it's a utility token? And then those people who are trading it like either baseball cards, minted coins, whatever analogy shares you want to use are in it for the increase in the value? Should it be a security and should they have to play by the rules we play at in the traditional venture startup game?
SPEAKER_00: I mean, the question is, what's the utility? So, I mean, if you can demonstrate some utility, then maybe that's the, the end, this will probably be litigated at some point, right? I'm sure there'll be enough capital sloshing around here that someone will say, you know what we believe strongly, we're seeing this happen with ripple already. But someone will litigate this and we'll get some clear definition on you know, what statutes are going to be referenced and what those statutes might say with respect to the how this ties to the definition of utility. And then that'll become hopefully a standard that people can kind of look to to guide them in the future. But it's definitely the Wild West right now. And the reason I bring it up is because Gensler was sort of floating this argument. Chamath, what do you think?
SPEAKER_02: I think that you can't wipe $3 trillion of value out of the world. And so, so pragmatically hard to do. Got it. So it's here to stay. And it's too institutionalized now. So, you know, there's just way too many organized pools of capital that are now speculating inside of this entire ecosystem.
SPEAKER_03: You know, I saw a tweet today, there was a there's a firm I think like called jump trading or something. It's like a high speed frequency trading organization. And they tweeted out some pictures where, you know, they're there. They hired a bunch of folks to start a jump. And they did a coding boot camp on Solana. That was their onboarding as an example. So when you have people in high finance, you know, really vested in this thing, and you have $3 trillion of value, that'll go to 6 trillion and then go to 10 trillion. This can't go away. So that's why I think Powell and Gensler had to say some version of that on the record, which is, you know, we're not going to ban this stuff because they know it's not possible. So I think David's right, you have to create some rules, make folks and let folks pay their taxes. You know, I remember, for example, like I did this Bitcoin transaction 2014 or something, I bought some land, I used bitpay, I transferred some Bitcoin, bought the land, blah, blah, blah. I was like, you know, whatever. But whatever. I mean, I left, I mean, I owned a lot of the time, so it wasn't that big of a deal. But my point is, finding a way for me to pay my taxes was a huge deal. I remember and, you know, we filed the tax return, and we tried to make sure that we paid our taxes. These are very complicated. Even if you want to be conformant to the government, it's impossible right now. So they just need to create some rules where folks can say, here's what I own, here's what it's worth. Tell me how much I owe you. And we're all willing to pay or not, maybe we're on I am. Because I just think it's like, make sure that we can we can trade around it, hedge it, structure it, do the things that we would normally do with any other risk assets. Right now. That's very hard. And when you own lots of this stuff, it sits in your balance sheet, and you just take these enormous swings. And you're just like, God, you can't do anything around this stuff. And that's not a viable financial market. That doesn't Yeah. To be specific about what Gensler said, I just looked it up here, you know, he compared utility tokens with, you know, laundromat tokens or tickets to the opera. And he said entrepreneurs are choosing to perceive their tokens as utility to sidestep regulation. And that here's the quote, they are highly speculative investment tokens for people who are trying to save or speculate for the future, their future. And that's why I think it's appropriate to bring them inside the investor protection perimeter. I agree with him, I
SPEAKER_02: also agree with you, chamath that this is a can of worms that I don't know how you put the G back in the bottle. He's, he's partially right. I mean, he is partially right on some tokens, but he's not completely accurate on some other tokens. I think it's on a case by case basis. And it depends. Listen, I think anybody who is buying these tokens right now knows that they're engaged and in financial speculation, this idea that people in middle middle America are going to blow their retirement savings on crypto. I don't I just don't
SPEAKER_04: know. But if they know if they're doing speculation, then it should be a security. No, no, no, David, I think you're totally wrong. I totally buy it. Look at the quarterly returns, the filings of earnings from companies like Robin Hood, and how much and square and how much money they make from crypto and look at their audience. That's totally not true. But don't you think that audience skews really young and they're getting their like COVID stimulus check and they're yellowing it into meme stocks or crypto? What does that have to do with? Well, because you're making it sound like they're gonna blow their retirement savings. Okay, well, if you're talking about
SPEAKER_04: a 25 year old, he's got $5,000 of retirement savings, maybe, but they still got, you know, they still got 40 years of work ahead of them on a second. Wait, no, they don't. This is going to be the least hard working generation of our lifetime. Why? No, no, not not because they're not hard working. Why? There's $70 trillion that boomers have that they were about to pass down to these folks on average between two and 3 trillion a year for the next 30 years. Also, they know how to do gig work. Like they're so smart,
SPEAKER_02: this generation projects for five grand and float themselves, you're going to take one entire turn of the world's GDP, and give it to 100 million people in America over the next 20 to 30 years. That is what is actually going to happen. So yeah, look, I think I think they're gonna keep you all owing this stuff. Yeah, look, I think I think we're getting off on like a little bit of a tangent here. My point my point is not that there shouldn't be investor protections, but rather that I think we also need to balance another important
SPEAKER_04: objective, which is to create a hospitable environment for innovation. And the fact of the matter is that you've got a lot of brilliant young entrepreneurs, computer scientists building this financial infrastructure of the future with crypto. It's not just speculation, there is a lot of code being written. It has functionality, there's a purpose to it. We don't we don't want to necessarily want to interfere with that to the every star has to do their securities though, David, all the other startups that are not in crypto are playing by the rules. So it's crypto people get a pass. It's unfair. I agree with Jake, how people make this claim. And I just think it's so species. Do you think that you would have made a single professional decision in your life? Based on tax rate? Have you ever made a single like, I'm going to start this company, I'm going to make this product, you know, I'm going to change this job. I just think that most people are not talking about paying taxes. I think it was smart for for example, Solano to pay corporate taxes.
SPEAKER_04: On their token sale. I think everyone should pay their taxes. That's not what we're talking about here. And I'm not saying that Gensler shouldn't prescribe regulations. I think that part of the process regulations should be to give entrepreneurs predictability to be able to give them a safe harbor so they can build what they want to build.
SPEAKER_03: Let me make one final point. I'm just saying from my perspective, I just think that if you have clear, sensible taxation, that's 90% of what this industry needs. And I don't think it will it will change anybody's real motivation to work inside this ecosystem. Just like just like entrepreneurship doesn't change when capital rates capital gains. Look, I paid I paid taxes at, you know, on on my crypto sales, like it was any other investments since the beginning. That's not the issue. The issue is when you're a company and you're raising money, should you be allowed to not follow securities law because you say it's a token
SPEAKER_02: freedom. When you look at this, an NFT company came out last this past week that was selling shadow shares in startups, and anyone in the world could buy a shadow share in a private company like stripe etc. In this fantasy Football League, they wound up shutting it down, or changing it because they didn't want to trade on other people's intellectual property. They were concerned about that. But just looking at it, the public in America, 96% of them who are not accredited cannot buy shares of stripe in the secondary market. But you can buy NFTs in it and speculate on the NFTs, which are accelerating from you know, $1,000 to $500,000 in these different clubs. How is it fair that crypto companies get to not obey basic securities laws? free work? Well, it's not a security. There's no underlying asset. Okay, it's a collectible and NFT is clearly a collectible J. Cal. Okay, and I don't have any legal, I don't have any legal ownership of them and have a marketplace for people to sell them and they're appreciating. I mean, I do agree with something different sounds like art to me. Yeah, you could go draw a piece of picture of stripe and put it on a piece of paper and go down to downtown wherever and stand in front of the burrito shop and try to sell it to be different than a security but they're acting as securities in relation to
SPEAKER_02: the fundraising of these projects. So I think that's the challenge. Everything is a security.
SPEAKER_04: Yeah, there's no secured interest. You don't have any secured interest. It's literally just a like an image a figure.
SPEAKER_00: I was just offered a Giacometti sculpture but I turned it down.
SPEAKER_00: How much 60 million? Isn't that what's gonna comment on the price? Yeah, I have to say was Stephen Cohen selling it? Not commenting on the seller. I bet Stephen Cohen was selling it. That
SPEAKER_00: was the record deal. Stephen Cohen bought that Giacometti sculpture a few years ago. It's like the highest price ever paid at auction for a piece of art in the US. Can I just tell you my problem
SPEAKER_03: with it? I took the price and I divided it by the height in centimeters and it just tilted me.
SPEAKER_04: Is price per square inch a metric? It is in my head.
SPEAKER_00: In 2015, Stephen Cohen paid 141 million dollars for the Giacometti sculpture L'homme auteur. It is pretty incredible and I think you're right it's about 12 inches tall or something.
SPEAKER_01: I just want to let you know if you look at the sculpture, it looks like it was done by a 12 year old.
SPEAKER_02: Oh my god, stop. JCal. JCal. You're gonna stop. Yeah, this is the billionaire equivalent of
SPEAKER_04: crypto and NFTs, right? Totally. I don't know what scam this guy's running but that looks like it.
SPEAKER_02: Anyone can raise their hand and say I have an independent objective assessment of the value
SPEAKER_00: of anything in the world and you can look at it from high to low and this is all effectively a subject. It looks like it was a beautiful sculpture that was in a giant fire and that
SPEAKER_02: somebody pulled out of the ashes. It's a beautiful piece. If you want to read a little bit of art
SPEAKER_00: history, yeah, you can understand a little bit about Giacometti's work but it's a 70 inch piece, not 12 inches. Sorry. And yeah, his work is all about kind of like how do you capture the essence of the form. Anyway, this is a super ridiculous. It looks like somebody made something out of mud.
SPEAKER_02: You should have bought it. I have a very funny Stevie Coen story. So this is like 10 years
SPEAKER_03: ago at Art Basel in Miami. And the day before the art fair opens, it's called the Furnessage. And so, you know, it's like a day where you can go and see the stuff the day in advance and you can, you know, kind of buy stuff or whatever. And it's very funny. It's kind of like, you know, like, when Walmart does like a Black Friday thing, like everybody lines up, and then they open the doors and we all run in and I was standing side by side, we were right at the front of the line. And I noticed that he had these, and this is my first time there and he had new balance running shoes.
SPEAKER_03: And I thought, what is he doing? But then when the doors went open, they just took off and started running. And I was walking wearing normal loafers. And then I realized I should have been wearing running shoes. She had her own normal loafers. She was wearing Italian loafers. I missed out on
SPEAKER_02: everything. I like the balloon dog guy. It's like the running of the bulls. It was the running of
SPEAKER_03: the bulls. I missed out on everything. Running of the billionaires. I got to the things after, and I was like, Oh, sorry, I sold it to Stevie Coen. I sold it to Stevie Coen. Jesus Christ.
SPEAKER_00: I had blisters on my feet. It was brutal. Do you guys know we haven't even started our agenda? No. I'm so 50 off. Who's the moderator? I'm fucking moderating this. Three, two,
SPEAKER_02: one. It's occurred. Everybody, everybody, welcome to the let's start our show. I'm sure everybody by now has seen Frances Haugen on 60 minutes and testifying. She seemed incredibly credible, well spoken and had very common sense non extreme views about what should be happen, what should happen with the research that Facebook has been funding that shows like other media forums, Instagram and Facebook have a really terrible effect on young people, specifically, young girls and body dysmorphia, which seems to be the one thing that is landing pretty well. Her suggestions were not to break up Facebook. Hers was to have a regulatory
SPEAKER_02: body and to do soft interventions. If you don't know soft questions, her her suggestions were
SPEAKER_03: worse than breaking up Facebook. Well, soft interventions, let's get to that include things
SPEAKER_02: like, hey, in order to retweet the story on Twitter, you probably should read it first. She thinks she wants to reform or she's an advocate for reforming section 230 in relation, I think to the algorithms. And the idea here would be that the algorithms are making an actual editorial decision, which is something that I remember the YouTube early days, they said, we will not feature your videos that you're making, but we will have the algorithm pick them because that keeps our safe harbor. Zuckerberg came back and wrote a spirited defense, basically saying, why would we do this research if we didn't care? The people at this company care a ton. Sachs and the entire Peter Thiel cobble of, you know, acolytes and friends are coming on strong as a pro Facebook, I'll have him talk about that. He thinks it's Facebook. It's laughable that people are addicted to Facebook, yada yada. So who wants to go first you to Martha or sacks? Well, look, let me let me say a couple things. I think that I think Zucks, the title of Zucks
SPEAKER_03: internal company post could have been titled Nah, which basically is what it's what he's saying. This is ridiculous, and I don't believe it. The thing that she asked for in substance is a little different than what the DOJ did with Microsoft in 2000. But inform is actually quite similar, which basically is like gumming up how the internal product development would work inside the company. And, you know, the most damaging thing you already saw, which is that they had a bunch of planned product releases, and then they put them on ice. And I think this is really where unfortunately, the most damage gets done, because engineers won't really tolerate that for some amount of time, right? They'll put up with it initially. But you know, you've had, I don't know, I think like a 20% reduction in stock price. So you had, you know, you lost $200 billion of market cap, there's probably going to be more turbulence in the company, you can sustain and get through all of it, as long as the engineers hold the line. But if you basically slow down and put a pin in their ability to generate code and to put out features on the margins enough people I think will get frustrated and leave. And I think the way that she, you know, what she is asking for was tantamount to that. And I think that's the really destructive part of, of what could go on here. So they need to get this pin down quickly, get in front of regulators, get some laws passed, whether it's section 230, or whatever. That's the path to salvation for Facebook. Sachs, what do you what do you think I see? You're basically saying this is like
SPEAKER_02: ridiculous and silly on Twitter. Mike Solana saying that, obviously, Peter Tills on the board of Facebook, and you're gonna have to you're gonna have to give me time to unpack this JK without
SPEAKER_04: getting hysterical because there is there's a lot to go over here. I want I'm literally throwing it to you in a non-hysterical way. You think that this is there's nothing to this. First of all,
SPEAKER_02: let's let's understand what this really was. Okay. You have this so called whistleblower who
SPEAKER_04: is working with the staff at the Senate Judiciary Committee giving documents to the Wall Street Journal and then appears on 60 minutes in this great unveiling. 36 hours later, she's testifying on Capitol Hill. That does not happen. The Senate committees do not operate that fast. This was coordinated. She's got a Democrat, a well-known Democratic operative named Bill Burton working for her. She's got a team of lawyers. She's got a PR team. This whole thing. This is a coordinated hit, okay, by anti-Facebook forces, starting with the Senate Judiciary Committee, who want to regulate who she's working with the staff, Jake. And stop. You're already interrupting.
SPEAKER_01: Jason, I'm asking you who you said. No, I'm working with somebody who is just let him
SPEAKER_03: make this argument and then just stop. Let I want to hear what he has to say.
SPEAKER_04: Okay, what is the purpose of this testimony? First of all, we can go over the details of what she said. I don't think there was anything new here. This was all the same arguments we've been hearing from these same sort of forces who want to regulate Facebook, whether it's the whether it's the senators on the committee who've hauled up Zuckerberg no fewer than four times to lecture him about the need for more censorship, or it's these forces of the media who basically want Facebook. It's all about, you know, having more censorship. But in any event, there was nothing really new there. What this really was was corroboration and of these same talking points we've been hearing for years. And what it's all leading up to is there's a very important part of her testimony, which is this is really the crux of it is that she proposed and what Blumenthal wants, he's the chairman of the Senate Judiciary Committee, is a dedicated oversight body. This is in this clip, okay, with a power to oversee social media platforms. So what we have here is the government is now going to have a new agency. They're saying like the FTC, then she said a regulatory home where somebody like me could do a tour of duty after working at a place like this. And Hagen said, right now, the only people in the world who are trained to analyze these experiments to understand what's happening inside of Facebook are people who grew up inside of Facebook, or Pinterest, or another social media company, basically people with her experience. I mean, I have to admire the chutzpah. I mean, she's basically proposing that she be made Zuckerberg's boss, okay, that a new oversight board be created by the government, which she would be appointed to, which she presumably would run, and this board is now going to prescribe regulations and rules for social networks in terms of how their newsfeed is going to run. That is what was proposed on Capitol Hill. That is what this operation is all about. So it's about her getting a job and being lording over Facebook is your claim?
SPEAKER_04: No, I think I think I think the purpose of all this is to create new regulatory oversight of social networks. I simply would note that she has proposed herself as somebody who would be on this board, which is pretty amazing. But what this is really about is that new oversight power. And is that a republican or a dem? Are you insinuating it's Democrats who want to regulate
SPEAKER_02: this or all politicians want to regulate this because they're scared of Facebook having too much power, which I think we all agree Facebook has too much power in the public. You've had the leaders, you've had the leaders on the Senate Judiciary Committee now for months,
SPEAKER_04: calling up Zuckerberg and Dorsey and other social media leaders and basically lecturing them on the need to censor more to take down more material. That is their objective. This is not a conspiracy theory on my part. This is expressly what they've said. Okay, now until now, Is it left or right or both? We come to that. I think the republicans are a little bit confused on this issue, but we get to that. So what you've heard until now is, is that is, is a tax on the supply side of the platform. So what they've advocated is deplatforming people with heterodox, heterodox views, dissenting voices, and they have been deplatformed in large numbers. Obviously, it started even before Trump, but certainly the sitting president of the United States was deplatformed. YouTube just took down a million COVID videos because they disagree with official position on COVID. So until now, the censorship has been on the supply side of the platform. What they're advocating for now is censorship on the demand side of the platform, which is, we're going to rewrite these newsfeed rules, okay? We're going to rewrite them because we can't give people what they want. They're making these algorithms sound like they're these incredibly evil, sinister things. All the algorithms do at the end of the day is give the user more of what they're looking for. Okay, hold on a second. That is not good enough for these politicians. They want to rewrite those rules. They want to rewrite these rules to determine what people see.
SPEAKER_02: No, no, what they said about the algorithms was that the algorithm had a multiplier on it, and that this multiplier of people resharing it re engaging the content would lead people and this was statistically proven in Facebook's own research that things that were either misinformation, or that were supercharged, you know, polarizing issues, they would rise quicker, which then gave people not what they wanted in their feed. They gave people what would increase the length of a stay on Facebook or on YouTube or on Twitter for that matter. And they think the antidote for this is to maybe not allow things in the algorithm to go viral, because what you're doing is saying, things that are either misinformation, or polarizing, or will make things go to the top of the list. And maybe we don't want that as a society. Let me intervene with a with a point of
SPEAKER_00: view on this, because I think you're headed down a path that to me, I don't think actually speaks to what's really going on. It sounds like there's some sinister, or, you know, architecture here that's driving this outcome. If you have never said that, yeah, well, I mean, it's implied because it's like, oh, well, they're they're multiplying sinister stuff. What I'm saying they're just care
SPEAKER_02: about length of stay on the site. My belief is they just want to care about revenue. Yes, that's my exactly my point. You're not they care about what consumers want to consume,
SPEAKER_00: and consumers demand what they want to consume. So think about media in the old days, right? We used to have books that an author would put out every year. And so the author would get feedback on the book. And so it would be one year on that feedback cycle, then magazines would come out magazines would come out every month. And so every month, the magazine would get feedback on what sales were, and they would make decisions, editorial decisions, and they would iterate. TV shows came out every week, newspapers came out every day, cable TV came out every hour, and they could adjust their content accordingly. In the internet age, the media is getting a much more kind of instantaneous feedback cycle. And the color publisher or editor or curator of that media ultimately ends up putting in front of the consumer more and more of what they want, as a function of what they're choosing to watch. And what we're calling kind of these algorithms, quote unquote, are really just the same thing that editors and publishers and others have done in the past, which is looking at what the consumer votes by what they choose, making decisions to put more of the things that they want in front of them. The consumer consumes more of that. And here's what's messed up. We're getting a very ugly look in the mirror, and what humanity and what citizens and what individuals actually want to consume and choose to consume and get turned on by. And that is what's making this also ugly. And when we see that, we don't like to accept the fact that maybe that is just what humans are attracted to and what humans want to consume at scale. And we end up wanting to blame someone. And I could argue, and I think others could argue that these algorithms that are effectively just recursive optimization functions, they're recursively trying to figure out what do people want to consume, and then giving them more of what they want, you keep solving for those very specific needs and use cases. And I don't think it's not one of them.
SPEAKER_02: Go ahead, your mouth. Why is it not want? I'm interested in that unpacking. No, the
SPEAKER_03: everything freeburg says is absolutely right. But it's not the word want. It's not what they want. It's what they will react to the most. And sometimes what they react to the most subconsciously want. I don't know. But my point is that there's there's a I guess I don't I don't use Facebook, but they went from thumbs up and thumbs down when I was there to like this nuance. Like there's likes, there's tears, there's angry shares, but there's also analytics data on engagement, right,
SPEAKER_00: like on how long someone's watching a video or what I saw in there was that there was an
SPEAKER_03: amplification of things that were more extreme emotional reactions right now. And the point is that I think everything you said is absolutely right. The algorithms are amplifying. I think all I would say is I would restate what you're saying is these algorithms tend to amplify the things that are the most extreme and elicit a reaction. Yeah, those reactions aren't necessarily the things that you want. Those are the things that you will react to the most and dive by the way algorithm wants to serve. That's why you see that the top 10 things that are reshared the most often tends to be very extreme. Right fundamental emotional responses are typically associated with
SPEAKER_00: things that I think we call hedonism. And the things that you can ignore your emotional responses and take another course of action we typically call altruism or what have you. This is a kind of a common reason why people would want to watch a comedy or watch a horror film because there's some emotional response. It's not a universal response. And people aren't rushing to the theater to watch documentaries. They're not rushing to the movie theater to be like, Oh, I want to be informed and educated on something that's factual and interesting. They want to go and have emotional experiences. And that's how humans are biologically wired. And the same is happening in these short forms of media, these little tweets, or understand that they won't show murders and porn on Facebook. So they're making an editorial
SPEAKER_02: decision to say, Hey, we're not gonna well every night on the local news, if it bleeds, it leads
SPEAKER_04: that how long has that been the motto in media. So I'm listening, I'm listening to hagen on 60 minutes, I'm hearing her describe a corporate profit making machine that tries to get more reach more ratings by fueling polarization division. And I'm thinking, is she talking about cable news? That's what she's talking about, isn't she? Is she talking about the New York Times? Is she talking about the traditional media? Because every single thing she said about how social media fuels polarization and division applies to the media. And yet those same voices in the traditional media are the first ones howling about Facebook and calling for its regulation. It is completely hypocritical, because the real purpose here is not to reduce divisiveness or polarization or society, the regulations on Facebook will not do that it is to seize control and influence over the machinery of social networking. Why? Because the news feed now controls the flow of information in our society. Don't you think the damage has been
SPEAKER_03: done though? Meaning in the sense that if you cripple Facebook's product velocity, and you shrink the surface area of the areas in which they can operate, isn't that more damaging than any regulation? No, people will just stop using it. And then they will find another place to get
SPEAKER_00: that emotional behavior. I've already stopped using Facebook. Okay, I don't find it compelling
SPEAKER_04: at all. And I'm not really on Instagram either. I do find Twitter rather compelling. And I'm probably more addicted to that than other things. Yeah, exactly. Addicted. Off the rails.
SPEAKER_04: Probably not very good for me. Okay. But here's the thing. I think all of us on this show right now, none of us find Facebook particularly addictive in our own behavior. Okay. I think we understand in our own behavior, that Facebook is sort of like a mildly diverting amusement that occasionally yields information. Sometimes it's useful. Okay. We understand that it's sort of like a newsfeed with a lot of noise, okay, in our own usage. But somehow we've bought into this larger narrative that in everybody else's usage, that somehow this is a brainwashing machine that is pumping people full of disinformation and warping their thinking. In other words, there's a sharp dichotomy between how we perceive our own usage and other people's usage. And what I would submit is our own usage is what we know and what we know to be true. And what we believe about other people's usage is simply a narrative that's been fed to us over and over again by the traditional media who hate Facebook because it's disremediating them. That is what's really going on here.
SPEAKER_03: You may be right. I'm saying something different, which is getting apart from all of that stuff, what's happening practically on the ground right now is that it's a company who has to now slow way down. And what I'm saying is that's not dissimilar to what Microsoft had to do, which was there was this 10-year period at Microsoft where they really couldn't innovate. And that's really how the government solved the Microsoft problem. Yeah, they made them less aggressive, right? They gummed up the internal machinery so that Microsoft couldn't really be there for the next few major. So for example, we just spent 40 minutes talking about crypto. What do you think the chances are that Facebook now can land a really compelling crypto project? Right. They got totally shut down with Libra, right? I mean, they went after it and the regulators stepped in. It's
SPEAKER_00: too bold for them to launch that after what happened. It's zero, you know, with their behavior
SPEAKER_02: and other arenas. I think that like Microsoft back in the late 90s, I think there are real and
SPEAKER_04: legitimate concerns about the power of these big tech companies, about how big and powerful they've become, about their ability to crush competitors. I think those are all legitimate. And in a weird way, if this government scrutiny slows those companies down, that's not an altogether bad thing. But I am concerned about that, I'd say separately, just because these companies do deserve to be scrutinized more, I do think that we have to see that the people who are engaged in this really coordinated hit campaign against Facebook, they have another agenda and that is to control the flow of information online. It is to control online discourse. It's already been happening over the past year with censorship on the supply side of the newsfeed. And now they're trying to control the demand side. I think we have to be extremely wary about this. Well, David isn't you you've been on the other side of this, because on previous podcasts,
SPEAKER_02: you've talked about Facebook being too influential, having too many users. And now you're saying, well, these tiny little news networks that get a couple of low millions, he has a he
SPEAKER_03: has an issue, Jason with the way in which they're going after Facebook. Okay, I get that he thinks
SPEAKER_02: it's a coordinated hit. Fine. But you also have had an issue with Facebook having too much power to take somebody off the platform or to promote certain ideas. Yeah. So which is it? It seems like you're a little bit both can be true. No, it's perfectly it's, it's, no, it's perfectly
SPEAKER_04: consistent. I've expressed concerns about the way in which Facebook is is de platforming people. It's some errors, summarily silencing them and ghosting them. It's engaged in censorship. I've expressed concern about that. But we should understand that the people in the Senate Judiciary Committee who hauled up who had this hearing who featured and spotlighted hogan and turned her into this great hero, their agenda is even more censorship. They they are complaining about the fact that Facebook is not censoring enough. And that is what their real agenda is. I do think it should have been disclosed that hogan does stand to gain financially from
SPEAKER_03: whatever happens. You know, I don't know that that's been confirmed that there is a whistleblower
SPEAKER_02: reward here. So we'll have to wait and see about that. I haven't heard there's no reward until
SPEAKER_04: there's a fine. But you're right is right that she qualified if she's a whistleblower, she qualifies for what a 30% portion of or some very large percentage of the fine be here that what would define be how would that be framed chamath? This whole thing is just getting started. They're going
SPEAKER_04: to be they're going to just get it started. And there will be settlements from those government actions. And the and Facebook, as you all know, will pay any kind of fine to put this behind. You're the one that says, Jason, they spent 5 billion just so that they wouldn't subpoena
SPEAKER_03: Zuck and Cheryl, right? That's what we said last week. We talked about that last week. Yeah. So I
SPEAKER_02: mean, I think there's a fine coming. Let's let's be honest, I do not think Lena Khan,
SPEAKER_03: or Gary Gensler or any of these other folks are going to be in the business of making a quick decision. Nor the DOJ nor any of these other folks, they're going to want to really take their time to figure this out. But what I'm saying is, it's not the ultimate result of it. Because I, again, I go back to like, if you look at what happened in 2000, and Microsoft, the substance of what Microsoft had to agree to was, was ultimately not as bad as the way in which it was implemented, which is that, you know, my understanding was like Microsoft had to submit feature reviews to lawyers at the DOJ, who would then approve, you know, updates and upgrades to their code base for things like Windows. That's what caused them to miss an entire wave of compute. And so this is the point, which is, I think, practically speaking, the beginning of what Microsoft went through, Facebook is going to have to navigate. And so the faster they can try to say, all right, folks, you're right, you caught us, let us tell us what to do, maybe actually the the better path, because it allows them to get past it. Because the longer this, this, this period of like, gray stretches out, I think is actually the worst outcome. Well, let's go through
SPEAKER_02: what we each think would be a possible solution here to allowing free speech to occur on Facebook, but maybe not having the things that, you know, fake news, you know, misinformation, you know, maybe lowering down the rhetoric, and the charge nature of the algorithm. freeburg, do you have any common sense solution here that might address both sides of the issue, freedom of speech, and maybe things being amplified to 100 million people that are fake, and just simply not true. We've talked a lot about this notion of like decentralized social networks. I mean, we haven't
SPEAKER_00: talked a lot. We talked a little bit about it. But if you end up putting a regulatory hammer down on Facebook and Twitter and telling them what consumers and remember, these guys aren't media creators, they're platforms effectively for search, discovery and access. So you as an individual can discover third party content on their platform. If they start putting the regulatory hammer down on these quote unquote platforms telling them what they can and cannot make available to their users, there will be another platform that will emerge and that platform may end up being in this kind of decentralized model. And in that decentralized model, you're not going to have the same degree of regulatory oversight. And that system will end up solving the same use case, eventually, consumers will get what they want, which is, you know, what Chumaf calls kind of this emotional response is eliciting this emotional reaction, they will consume it until they, you know, achieve one of their kind of seven deadly sins objective, which is what's driving the emotion underscoring their decisions on what to watch what to consume. And and there will be an alternative. So you know, go ahead and play whack a mole, you'll play whack a mole for a few years, maybe a few decades. But at the end of the day, digital technology in a connected world will drive consumers to exactly where they will naturally find themselves, which is consuming ever more of the things that create this emotional response in them. The consequences are unfortunate. You know, I don't know what the right solution is, you know, we've we've, to some degree, put a regulatory hammer down on things like smoking. And in some places, things like sugar, things that have kind of a, you know, an obvious effect on our physical health. These other things that we're seeing now are having an effect on our mental health. And I think that there may be kind of an emerging regulatory regime around mental health standards, and how much of things can be consumed. And I think what we're seeing is the leading indicator of this is what's gone on in China. Because China is the nation that I would say is probably at the forefront of research and understanding of what the consequences are of consuming more and more of media and content that causes an emotional response to you. And what happens down the road, isolation, loneliness, suicide rates go up, unhappiness, etc. It certainly is the consequence, but it's not a function of any individual company's misconveyance of content to consumers. It's just a function of where these systems end up going because of the way humans are biologically wired. And so I guess my first concern is maybe we end up in a decentralized system that ends up replacing all of these tools. And this just doesn't end or you end up it could be worse or you end up having these kind of regulatory regimes emerge. No, it'll be better. A decentralized solution is actually no better in one. No, it's better in one
SPEAKER_03: key way, which is that it's fundamentally harder to create the exact same network effect and density that you can have with one monolithic closed system. So you're much more likely to actually have a very fragmented ecosystem of hundreds of different solutions, depending on what of the sins you want to feed or, you know, what of the feelings you want to feel at any one time, I think it's a big assumption that it would be a fragmented network if you did replicate Facebook
SPEAKER_02: on a decentralized platform, and then some piece of misinformation came out, and it trended all the way to number one, like say, the January 6 insurrection, and there's not going to be a balance to that there's not one network, there's not one that but hold on, hold on, let me finish my point. If they if one network became so large, and there was nobody who could turn off something, what if people said, hey, there's a riot going on at the Capitol and more people showed up with more guns, right? You have nobody to sit there and say, hey, don't go to the Capitol, turn those trending posts off. Go ahead, sacks. Okay, so let's let's talk about this problem of misinformation. Okay,
SPEAKER_04: I think there's an old Mark Twain quote saying that the ally can travel around the world faster than the truth can put on its shoes. Okay. There is a problem of falsehood spreading online. I agree with you there. The question is what you do about it. And the problem we have right now is that is that truth is in that eye of the beholder. There is no truth API. And so at the end of the day, it's the people in power who get to decide what is true and what is false if you give them the power to censor misinformation. Example, we just saw we talked about in this program, the Rolling Stone ivermectin hoax, provably false story. And yet Rachel Maddow still had it up on her posts. She was not sanctioned by MSNBC. Twitter never told her to take it down. And she was not fact checked. However, the Hunter Biden laptop scandal or story, which came out in the New York Post a couple weeks before the election, turned out to be a provably true story. And yet it was taken down by Facebook and Twitter. At the end of the day, this term of misinformation is just another vector for partisan attack. And it will be used by whoever we give the power to, to decide what misinformation is. So what is the answer then to this point of falsehood spreading online? Well, at the end of the day, the answer to bad speeches, more speech, you try to create a free marketplace of ideas to let to let the good speech ultimately drive out the bad speech or prove that it's wrong. That's the best you can do. That's the best you can do in a free society. Yes, but we've this
SPEAKER_02: is the first time a free society has had social networks that can reach a billion people instantly in you know, an hour. So I think there's one differentiator there that we must think of, if somebody defames you on a social network, they are absolutely liable. I mean, you can sue them.
SPEAKER_04: Okay, but I think you should. And I think we can we've talked about cancel culture,
SPEAKER_02: people are destroyed before they even get their day in court.
SPEAKER_04: I think I think that's being destroyed for something different. I think if somebody it's because it trends if it didn't, if it couldn't trend to so many people, it wouldn't
SPEAKER_02: leave lead to the cancellation and destruction of somebody's life. You've talked about that many times yourself. If somebody labels you, I think they should be you should be able to
SPEAKER_04: sue them. And I think we could actually we could have a libel regime more like the UK, where it's easier to prove these cases in court and people are much more careful about defaming other people. I would be very much in favor of that, okay, because defamation is not free speech. But the question really is about really we're talking about non-defamatory statements that somebody in a position of power as a cited is not true. Many of these statements are subjective. Dave Portnoy got labeled for his subjective opinion about AOC stress. Why did that happen? And why is that kind of labeling only used to protect one side of the political spectrum? So I mean, that that's what's really going on here. Let's end with this. Has anybody
SPEAKER_03: watched Chappelle's The Closer? I did incredible. I watched it. Pretty incredible. I mean, fearless,
SPEAKER_02: fearless is a word I was really. I think that he slightly missed it. Because I think he could have
SPEAKER_03: really actually called out cancel culture and woke as a more. I think he kind of left it a little bit to me where I was like a little I don't know, I just I just didn't think they were as good as his other ones. And I felt like he didn't really make the point he wanted to make. It was a little convoluted somebody who can actually stand up and actually, you know, be more satirical and tell the story of why all this cancel culture and defamatory statements and judging people doesn't make sense. But then he seemed he didn't he didn't get the job done. I felt like well, let me ask you this
SPEAKER_02: about the performance. Did he seem qualitatively different than you in that the other times he seemed very light on his feet? You know, having a good time being a comedian and this time it felt like he was personally hurt. Or he was wasn't comedy. It was less it wasn't felt less comedic. I agree. It felt like he had an agenda. He was hurt. He wanted to get some stuff off his chest. And there were some jokes in between, which is very different. Like the percentage of jokes and this is like 20% and the like heavy on Max Max and then the other ones were 80% jokes 20% social commentary this felt like he he was actually really hurt and like I don't wanna say bitter, but just fed up maybe frustrated. He had a chip, which made it interesting to me,
SPEAKER_03: you know, in the in the early 2000s. Chappelle for me, was really important because he was an advocate for minorities. And I felt seen and protected by Chappelle. And I thought that was really important. And then his his comedy was just so sharp. Oh, yeah. And I said, I just think that it was a little bit of an opportunity lost. Yeah, I think if he had really actually taken the, you know, it to its conclusion, he would have actually there was just too many uncomfortable
SPEAKER_03: moments in that thing. It was super uncomfortable at times. And I, you know, I really would like to
SPEAKER_02: see it again. Because, you know, if you just think about his career, you know, him talking about police brutality, him talking about race in a very fearless, you know, entertaining but also informative way and just being a truth teller. Yeah, this was so uncomfortable at times, I agree with that. I need to watch it again. And I need to let it sit because I was taking it's on Netflix. It's the last for how long. Yeah, I mean, this could be I almost felt like he was trying to break Netflix, because he does seem to have a he does seem to have a streak in him where he's like, Okay, I'm gonna I'm walking away from Comedy Central. And he does seem to burn the boats. This felt like he was burning the boats with Netflix to me. I don't know if you got that vibe where he was like, this is the last one I'm being canceled after this. Fuck y'all. I'm out. And he has that. I mean, he torched it sacks. I mean, you're gonna watch this thing. Oh, now I'm
SPEAKER_04: definitely watching it. I have not seen it yet. But I'm definitely watching. I'll watch it tonight.
SPEAKER_02: I give it a 50% chance that Netflix takes it down. Well, let's watch it quickly. There are there.
SPEAKER_04: Everybody was screaming for him to be de platformed. Everybody was screaming. Well,
SPEAKER_04: then I like it even more. You know, one of the ironic things about these warning labels, I've noticed it started to become a badge of honor where, you know, if the if the hall monitors a Twitter or trying to label your tweet as as, you know, being incendiary, maybe it's just interesting, right? By bicycle. It's a Yeah, exactly. So you know, I was listening to Antonio Garcia Martinez interview Camille on on call in and they labeled that I mean, just the post about they were gonna have a conversation. You're saying the link to it was
SPEAKER_02: even flagged as like, Oh, my Lord. I think there needs to be a Netflix for a comedy where it's only subscription and it's owned by the comedians. Like if Dave Chappelle were to create his own Netflix, I think it gets 10 million paid subscribers. First two years overnight now overnight, overnight. Okay, so wait a second. How do we wet our beaks on this? If we go to Chappelle and we say, Hey, listen, here's $25 million. We'll set up the tech team. I'll ask I'll ask K heart. I'll ask him this
SPEAKER_03: weekend. I think that yeah, you get K heart, you get Chappelle, you get Seinfeld you get now do you
SPEAKER_02: get Louis Louis CK in there? Or CK? What's his name? I found that guy funny. That guy never did
SPEAKER_03: it for me. But I mean, anyway, you know, it's funny. Have you ever had this Asian guy Ronnie
SPEAKER_03: Chang? He's on. He there's a great Netflix special on him. He's fucking funny. And then Joe koi Joe koi is very funny. Yeah, I think Ronnie Chang taped his own special. That guy's very funny.
SPEAKER_02: He's great. He's legit. But I mean, I this would be a great way for them to just control their destiny and not have to worry about cancel culture. Because I think a lot of the folks who are on well, they are probably the last line of people that actually will be the defenders of free
SPEAKER_03: speech. Yeah, it's pretty scary. As much as I think Facebook should be more thoughtful about
SPEAKER_02: their algorithm, you know, back to you know, circling Netflix and censorship back to the Facebook issues. I just think Facebook should say, Hey, listen, we've throttled the algorithm so that any one piece of content can only reach this many people over this period of time. And yeah, sure, that's going to lower our time on site or whatever. But we want things to have a little bit of time to spread and get fact checked. Does anybody think that that's a good idea to say, just you know, if you're trying to cancel somebody, instead of it going to number one on trending topics before the person has a trial, that the algorithm would just take a little bit of time to propagate content? Here's what I can tell you conclusively, if Facebook wanted to solve
SPEAKER_03: these issues, in the ways that the government expects in their head for these problems to be solved. Facebook market cap would be $250 billion. And they'd have a million people working there at the company. So this is not an issue of whether it's possible. The question is, is it right? And does it actually get at the solution? Or does it just as freeberg said, create whack a mole someplace else? And so you know, I don't know what obliterating three quarters of a trillion dollars of market cap will do. But I suspect that the government is going to want to find out.
SPEAKER_02: Sax, you think that throttling the velocity of the algorithm, so that news doesn't spread as fast and violently, or which could be misinformation could be valid information? Do you think that's a possible solution? Look, I think that the end of the day, with we're just closing the algorithm,
SPEAKER_02: maybe, with both Facebook and Twitter, you only see stuff from people who you're following or
SPEAKER_04: you're friends with? It's actually not true. What do you mean? If things they will insert stuff into
SPEAKER_02: your Twitter algorithm now that's adjacent to you and Facebook will do that. Well, maybe maybe if
SPEAKER_04: people respond to someone who you're following, but I've never seen anything my Twitter feed, other than an ad that's not from somebody I follow. So you never want the trending topics? No, I mean, not my explore fee. Oh, okay. No, but you explore feeds right there. And they are
SPEAKER_02: surfacing things in your feed now that are not people you follow. But what they're really doing
SPEAKER_04: okay, is there's a universe of people who you're following or you're friends with. And you could just see all that content in a reverse chronological feed. But that would be too much. It'd be overwhelming originally worked. Yeah, exactly. And I get it. And that was fine. I didn't. I liked it. Okay. But as you're following 1000s of people now, there's too much content. And so they will simply surface the tweets that you're most likely to want to interact with. I don't believe, by the way, that those tweets are necessarily the ones that make you angry. I think for some people it is clearly, but it's certainly not the case in my case. What I would say is, it's more refined than that. It's the tweets that you think are interesting. It's the tweets that perhaps express a sense of outrage that agrees with your sense of outrage. It's a little different than anger. But it's basically the subset of content that you,
SPEAKER_04: through your reveal preferences, have shown Facebook or Twitter that you care about the most. And that's basically what they're doing. They're giving the consumer more of what they want. And I think that we've blown this thing so far out of proportion. I mean, yeah, there's an analogy that it's addictive, but I think that it's been blown so far out of proportion, we've exaggerated the fear beyond any reasonable recognition. By the way, I think the reason that that tweet was
SPEAKER_03: flagged, I'm guessing, is that in the tweet, Kamele says he's going to talk about critical race theory. And that may be why Twitter said this. Well, Twitter just said, conversations like this can be intense. That's all it says. I think because he says the gloves are coming off, it looks like to people fighting or whatever.
SPEAKER_04: I just think it's sort of ridiculous. You know, like, this is where like the warning.
SPEAKER_02: Yes, it's a little condescending. Like, patronizing, patronizing, I think.
SPEAKER_04: So patronizing. Yeah, I got the source up here. I'm not dumb.
SPEAKER_02: It's a very palindrome. It was my brother. I'm smart. Not like they say.
SPEAKER_03: Good boys. I love you. Happy 50th episode. And what's going on with you? Freeberg and
SPEAKER_02: sacks that you're you won't make the journey down to the poker game. Is this like some sort of David protests? What are you? What are you? I will come back. I will I will start playing again.
SPEAKER_04: If we get if we get the game going on like a regular time or is it what the fuck is on your talking about going? Okay, yeah, you have nothing going on sacks. All right. I'll start. You know,
SPEAKER_02: I'll start making I'll stop evading your family. Stay in the city. Come. See your fucking friends
SPEAKER_02: play some cards. Some money. We're not playing plo. No plo. I mean, we did at the end just to get Scott's money, but just to keep sky there for another 30 minutes, since he was flushing cash.
SPEAKER_02: Real good sexy poo. We beat him up with Skyfall. When you crumble, actually the new I'm really
SPEAKER_02: excited to see the new Daniel Craig. Double seven. I can't believe that. Can you still rent a
SPEAKER_03: mid-tier movie theater for like 50 bucks? Yeah. 300 bucks. So yeah, it's basically not it was 99
SPEAKER_02: during the pandemic. It was awesome. I did 300 now. And 300 done it the last two times I went
SPEAKER_02: with the girls because it was first run movies and the theaters were pretty empty. But it's like 300 if you get like 10 of your friends to come it's like basically five of your friends to come it's
SPEAKER_03: worth it. I mean, that's 60 bucks. And I mean, it's, or we just go to taxes theater. He's got
SPEAKER_02: the sexist theater is better because you have a chef there who will make food but yeah, and for
SPEAKER_02: those of you asking about the all in summit, Sax and I are leading the charge for a February or April. We got a couple of locations. Thank you to everybody who sent us location ideas two days. 250 people 200 paid tickets 50 by scholarship. And you can go to the all in website when we have information. We will post it there. But we're just in the planning phase right now. But we're thinking two days, right boys? Yeah. Two days rolling summit and then five hours of content, something like that a day. We each interview people. Yeah. And then we're done. Okay. And Miami is the host city and we'll draw a high card for who picks the next city. Chumath you said you're picking something in Italy. I'm gonna probably pick my own or Venice, Rome or Venice. I'm gonna probably pick New York for mine or Austin and then freeburg. Where would you pick Napa or something? Marin County? Oh, wow. What where everybody wants to go? Great. Go to anti vax or town. Fuck you freeburg. Marin County. Wow, what a destination. freeburg. Where would you pick? Where would you pick? Um, so who are we're doing Miami first? Is that right? Miami's first
SPEAKER_00: and we draw a high card for the next city. Who gets to pick next city? Each best he picks for
SPEAKER_02: four years each party picks when if we go twice a year even better. I mean, I'd probably split it
SPEAKER_00: between London and London and somewhere in Hawaii. Oh, why? Yeah. Hawaii's inspired choice. Can you
SPEAKER_02: imagine 250 degenerate London's great iconic classic but London would be we would take over over. Miami is freaking out run over Annabelle's boys. I bring you all to Annabelle. That's
SPEAKER_03: incredible. That that members club is I think the most over the top thing I've ever seen. You're referencing something that no one knows what you're talking about. Nobody knows what
SPEAKER_00: you're talking about. Is that a nightclub? It's a nightclub. It's a private Annabelle's. It's down on the in the West End. You have to have members clubs in London because because you can
SPEAKER_03: drink alcohol after like 9pm unless it's a private club. Yeah. All right. We'll see you all next time
SPEAKER_02: on the all in podcast. Here's to another 50 everybody. First 50 done. Love you guys. Let's get another 50 in the book. What your winners ride. Rain Man David Sasse. We open source it to
SPEAKER_04: MATOR free. And the Thank you George because they're all this useless, it's like this sexual tension but they just need to release them now. What? You're the B! What? You're the B! We need to get merch!
