SPEAKER_02: The fact that sacks his greatest moment in life was beating Peter Teal in a multi game chess. You ever see that picture of Yeah, of him with his arms raised? I can't believe he beat me. I mean, tell us about that moment. Nick, show that picture of sacks.
SPEAKER_01: I mean, listen, here's what I say when I when I saw that picture. I had a couple thoughts. Number one. I've seen this picture somewhere else. And then number two is Oh my god, it was on NBC's to catch a predator. I mean, I have never seen sacks happier. I like the birth of his
SPEAKER_02: children. Oh my god. This moment, I'll tell you, that was
SPEAKER_00: the day of PayPal IPO. And so we did a party in the it was like a keg party in the parking lot. That was the extent of the celebration. And Peter did a 10 rule off. He did a 10 game simultaneous, which means he's playing as people at the same time, and he goes board to board makes his move. And I was the only one out of the 10 that beat him. And somebody I guess I actually left, I put money down, I put like 20 bucks down or something on the game, which is a foolish thing to do against Peter because he's like a chess master. And, and I somehow I won and you can see I've got the money in my hands. raised up look at the look on Peter Tills face it's losing. Look at the
SPEAKER_02: look on p I mean, he's so angry. He and he but he sees the joy in your face and he can't process it. And look at Max Max is to my
SPEAKER_00: right and roll off your joy and there are some pure joy. Yeah.
SPEAKER_00: But this was a few seconds before Peter smashed all the pieces off the board. And what you flip the board. He always does that when he loses and his motto is when you call him a sore loser. He says show me a good loser and I'll show you a loser.
SPEAKER_02: Wow, such a great line. But I just want to also comment on the pleats on Sax's pants and how high that waist and the cell phone host. Is that a black shirt? It just
SPEAKER_04: phone guys. This is like I mean, this is like 90s. The keeps on
SPEAKER_01: giving. I do have to say Rulof's hair game. I mean, strong hair.
SPEAKER_01: Roloff's always had incredible hair. His hair is incredibly great hair to this incredible thick. Yeah, it's still thick like never noticed.
SPEAKER_03: Rain Man David Sacks.
SPEAKER_02: All right, everybody, welcome to another episode of the all in podcast. With us again today the dictator, Tromat Palihapitiya, Rain Man, David Sacks, and the Sultan of Science, formerly known as the Queen of quinoa. He's out of that business. David Friedberg, we got a lot on the agenda. However, one thing that we've had a hard time figuring out is the state of the supply chain. And it's confounding. It seems like nobody knows what the hell they're doing. But there's one guy who's been on Twitter, and we happen to know him. He's been on my pod and Friedberg knows him. And his name is Ryan Peterson. And he's a bit of an expert on this. And we thought we'd have a bestie guestie come on. We don't do this too often. Maybe it's a third or fourth bestie guestie. And welcome to the pod. Ryan Peterson from Flexport. What's up, guys? Thanks for having me on. What's
SPEAKER_03: up, Brian? Ryan, did you tell Olivia you're doing the show
SPEAKER_04: today? No, I didn't tell her. So she's gonna she's a huge fan.
SPEAKER_03: Don't tell her she right now. Is she like not there? She was in
SPEAKER_03: the room next door. But I told her leave me alone. I'm doing a podcast. She doesn't know the podcast shows knows one. Fantastic. She's a super fan. She's a very big fan. She's literally wearing the wet your beaks hoodie right now. It's awesome. Fantastic coincidence. She doesn't know him on the show. Fantastic. So what you're not going to tell her, right?
SPEAKER_04: She's just gonna watch my next show and you're gonna be on it. You will listen to it. Yeah, we'll probably listen to it
SPEAKER_03: together tonight whenever it comes out. Ryan, what is the state now? Should we be worried about the
SPEAKER_02: supply chain? Is it getting better? Is it getting worse? What's 2022 gonna look like? Yeah, I mean, I think the supply chain means a lot of things and
SPEAKER_03: it'll depend what your industry is, what's really happening. But you know, it goes for everything from manufacturing products, which means sourcing all the subcomponents like semiconductors through logistics and final delivery all the way to a customer store. And we're flexible, we're focused on it as sort of picking goods up from factories around the world and delivering them into fulfillment centers all over the world. So kind of that global mile, is what we sometimes call it. There you're seeing real disruption. And it starts really with the pandemic shift in consumer behavior where people started buying more goods because they couldn't go to restaurants and travel and things. And so a lot of spend shifted onto goods and imports are up almost 20% imported container volumes. So that's the start of it all. And then what we learned is our infrastructure is dilapidated and unable to handle a 20% increase. And by infrastructure, I mean, the number of ships in the world, the capacity of throughput of the ports, the number of trucks and availability of trucks and chassis, which is the trailers that haul containers around, we just didn't have enough of these things or the port capacity, you know, like, look at American ports operate this, I just learned the statistic pretty recently. And I keep saying it because it appalls me our ports operate with a lower throughput and productivity level than Mombasa, Kenya. And you know, we just do not have modern port infrastructure. Roger, you know, Roger dams been fully automated for 20 years. So if they want to run 24 seven, and keep containers flowing through the port, they can do that with self driving trucks and everything. Is that a technology issue? Or do you think that's a regulatory
SPEAKER_01: capture and union issue? Like a labor issue like a labor, the
SPEAKER_03: tech is there, you know, it's existed for a long, long time. It's really about labor, getting together with management, negotiating these things and allowing it to happen. And the way that our ports are run is, it's pretty crazy. When you look at it, they treat labor as a fungible commodity, is in the the port terminal operators will say I need this many workers tomorrow. And the union provisions that many workers, but there's different people every day, doing operating complex, you know, heavy machinery, that you can't like the number one thing in business is like, what did we learn today and how are we going to do better tomorrow every day with your team. But if it's a new team every day, like that's not even possible. So I don't know how you can drive a productivity improvement when it's different workers every single day of the week. Right? So wait, they're not full time employees. They're
SPEAKER_00: like staff by the hour. Their union workers are paid by you.
SPEAKER_03: They have annual contracts. They even decide who goes to work
SPEAKER_00: every day and who gets shifts. Yeah, and where. So they'll show
SPEAKER_03: up at different terminals. And there's like 15 different terminals. They just kind of move around the different jobs. Essentially, what we saw it on the waterfront, where like
SPEAKER_02: the union decides you get to work today. These other people didn't whatever. It's like literally movie. Yeah, it's
SPEAKER_04: literally like that. Even going further back in supply chains to manufacturing centers. How much are you hearing about and seeing kind of labor shortages because people are out for COVID and hey, someone's sick, they got to take 10 days off and when you know, 10% of the employees get sick and they lose 10 days of work, the facility sees a decline in productivity to you know, 70 80% of normal and then you know, all of the output of that facility goes way down. I mean, are you are you hearing about more of that stuff happening, particularly during this kind of omicron wave, where the real effect of that hasn't really hit the supply chain system yet. And we're still kind of seeing a buildup of, you know, of demand and we don't, you know, we haven't really kind of hit the problems. So for the
SPEAKER_03: last 18 months, China had this total zero tolerance policy and was very successful in keeping COVID out of out of their country. And so manufacturing just kept running as if not no problem in China, which is the majority of this manufacturing. With omicron, you're starting to see that it is still taking hold and a zero tolerance policy. We haven't yet seen like major shutdowns and waves of shutdowns. But a little bit you're seeing that here and there with the zero tolerance policy has shown up for example, at least twice where one launch one port worker in a Chinese port got COVID and they shut the whole port down for like three weeks. Yeah, that's crazy. That's really, really extreme. I mean, US workers have been getting COVID nonstop and the ports keep operating even at you know, we have lower level of productivity, but they'll shut the whole port down. That happened both at Yan Tian, which is the largest port in China or second largest, and Ningbo, which is the third largest. So it's been very, very
SPEAKER_03: disruptive. It's also happened at the airports over there. So that's something I'll definitely keep an eye on here over the next couple of months is or even next several weeks.
SPEAKER_02: Are we still having this like, we're ordering too many goods that were backed up? Or is it that we're backed up for six months just trying to fulfill all those pandemic orders? Like what's the state of the backlog today? If you could describe it?
SPEAKER_03: So volumes are high, but they're sort of flat. They're over year over year. They're flat now. They're much higher than pre pandemic, but they're pretty much flat year over year. And that's what has me so worried here is that you have increasing delays, even though the inputs the same and we have a complex system where the same amount of inputs coming in, but the delays getting longer and longer. That's a very worrisome sign. You're building a technology system, you're building this system and you're sending the same amount of bits in and performing the job is taking longer and longer. That should be like that it would be a very alarming sign that you're going to want to send some of your best engineers in here to debug today.
SPEAKER_04: But I think we're seeing that like because a lot of companies people don't realize like when they buy capital equipment, like machines that, you know, are either sold to end users or machines that are used in their own production systems. Capital equipment is typically assembled last minute, not like, you know, there are companies that own huge pieces of equipment, and then they ship them and they just get plugged in and turned on. There's usually components associated with them. And you know, in businesses I've been involved in over the last couple of years, we've got a lot of lab businesses and hardware businesses. And just getting capital equipment has been like delays like we've never seen. It's like, you know, a year to a year and a half or something that used to take four to six weeks to arrive. Because the company that makes that equipment is having delays with each of their component suppliers. And then all of this stuff backs up into the system and it plays out where the end users now stuck waiting a year, year and a half, and the business doesn't make progress. And a lot of hardware companies in Silicon Valley right now are facing these significant shortages, where they can't get the equipment they need to ship product to their customers. And they're sitting around burning money every month. And so the when the result will actually show up down the road, when all of a sudden they miss revenue three, four quarters down the road. And that's why I've been saying for you know, a couple of shows now, that the biggest thing I'm concerned about is when the revenue shortfalls start to hit the companies that are dependent on the supply chains, but you don't actually see their revenue shortfall for a couple of quarters after the supply chain problems hit them. And just this quarter with the quarterly earnings, we're now seeing that the company yesterday that reported called ingredient, their big food ingredients company, and they just reported how supply chain problems have now backed up to effect and the stock was down like 10 11% yesterday. And this is like a very stable, very mature, third largest producer of starch in the United States. And their business got totally hammered, but it took a while before that hit them. And so you know, it feels to me, Ryan, I mean, correct me if I'm wrong, but like, a lot of the business level and market level risk isn't going to show up for a while after the supply chain problems really persist within their organization. This is the thing that has to be most concerned is what's
SPEAKER_03: happened is it's now taking 115 days on average across our customer base, from when the factory says, Hey, these goods are ready, come pick them up to when they finally get delivered to a warehouse in the United States. It's 115 days before the pandemic, that was 50 and 50 even still high. Like the ship is only taking 15 days, like what the heck is going on? A lot of inefficiency, a lot of customs processing, hard to find a truck, et cetera, even in normal times. When you go to 115, all of a sudden these companies are so much less agile, like because you've placed the orders and you're expecting, forecasting demand is so hard. And now you're forecasting demand for twice as long of a time period. You've already placed all that inventory. If your demand goes down, guess what? You've already ordered the goods. So I'm really worried that we're going to find out in six months or in some time period in the future here, that people have ordered way too many goods, that these companies expected demand to stay high and keep booming. At some point, consumers start going to restaurants and start traveling a lot more. You get pre-COVID consumption patterns, and all these companies get stuck with way too much inventory, that they paid way too much to ship and get delivered and they can't sell it. So I'd be very worried for middle market retail, direct to consumer e-comm, these types of businesses that aren't very sophisticated in demand planning and end up with way too much inventory.
SPEAKER_01: I think that there's been this weird dispersion actually. I think that these supply chain issues are not broadly distributed. So if you bear with me for a second, if you watch the earnings reports, I don't know how closely you watched them rhyme this past couple weeks, but like, Apple and Tesla basically said, it's kind of reasonably well managed, particularly on the chip side, and we see the whole thing easing Q4, Q1 of next year. Amazon last night basically said, yeah, there's some, you know, toughness in the system, but we think it's sort of like, you know, reasonably achievable. And they're past it. And so it seems like the bigger companies who have influence were able to manage through it, these smaller companies, to your point, who really do rely on many actors in the supply chain have been really thrown left and right, they probably don't know where demand really is. So is that sort of the more nuanced actual the way that it's running out? Yeah. And it's sort of, it's very interesting to see this
SPEAKER_03: flip. So pre pandemic, the biggest companies paid the least for freight, because they buy the most freight, so they negotiate good rates. Now they're paying the most. And the biggest companies for a reason they have the best businesses, they either have the best margins, the best, you know, they just built something that people want at scale to be huge. Well, when times are tough, and you need to spend extra to prioritize your freight, to get loaded, to sign a contract and make sure that these ship owners and airlines honor their commitments and serve up step up. It's the big companies that can afford it. And so they're not paying extra for freight, but they're getting around these problems. And freight is a really interesting market, because it's pretty inelastic, like you either going to ship the thing or you're not, there's the whatever the price is, you're probably still shipping it. And so like, you haven't ever looked at an apple at this level. But I'm sure that if you did, you'd see that it's a the percent they spend on freight is just negligible. So if they doubled it, it wouldn't matter. But to Chamat's point, it seems like and I think we're seeing
SPEAKER_04: this a lot, the bigger companies can actually afford to integrate their supply chains, whereas before it didn't make sense to vertically integrate. Like I think Walmart announced that they've spent like 11 or $12 billion kind of rebuilding their supply chain themselves. Apple obviously has captive facilities all the way down to the fab, where they're driving the whole supply chain from fab to components. All these Foxconn facilities that are operated for them are captive facilities. But the and Tesla obviously, you know, has a very deeply integrated supply chain team, whereas GM probably relied on subs who relied on subs who relied on subs. And that's why GM delivered like no electric cars, but Tesla was able to keep volume up. The guys that are winning are the ones that are integrating supply chains. And do you think that that kind of becomes a persistent solution here where, you know, bigger companies, their competitive advantage becomes, hey, we're going to own our whole supply chain all the way through, we're going to own more of the infrastructure all the way through, like Amazon's done with delivery vans, and ultimately be able to kind of, you know, have a true competitive advantage because of this disruption that's going on right now?
SPEAKER_03: Yeah, potentially. I mean, I think, oh, my vision for Flexport is that we become that layer and we allow small businesses, medium sized businesses to get access to world class logistics services and get them, you know, sort of almost be a union that can represent them at the table is against these bigger guys. I think it's very interesting to see a company's like the biggest companies have gone out and chartered their own ships, totally wild experiment to watch from my sit here with popcorn.
SPEAKER_01: You're bringing up a really important effect of all of this, which is what happens now in six or nine months to your point, when the consumption of hard physical assets turns towards the consumption of services, which it typically does. Right, if you revert back to the mean here, you know, people aren't going to be buying as many pelotons and all of that stuff, because they bought them all right, they bought all the physical goods they need. And to your point, these companies have over ordered all this inventory, actually, Peloton is a perfect example, because they basically shut down their entire supply chain last at the end of this past quarter, and essentially said, our inventory turns will be more than enough to meet, you know, existing demand for the foreseeable future. That's an enormous capital problem that these companies now all of a sudden will face, right. So like, the next step beyond all of the supply chain issues could be, and I think Saks has been talking about this a lot like a pretty bad recession, if these companies have all this inventory, and they don't know how to get working capital.
SPEAKER_03: Yeah, it'd be real ugly. And the other factor is the price has gone crazy. So the price of shipping a container, long run, like I've been in this business and been a customer of this business for 20 years, and you're you can just rule of thumb, it costs you 2000 bucks to ship a container from China to the West Coast. During 2016, that price collapse, you have these boom and bust cycles of an asset market. 2016, it was 550 bucks. Last year was $20,000. So it's up 10x over normal to 40x over or more right over just a few years ago. And what what
SPEAKER_03: that's done is create a real barrier to entry. Like for a DXC ecom business used to be able to just go to China, find some product, put your slap your label on it and go sell it on Amazon and you were in business and there's like a huge number of people doing this. Right now you have to come up if you want to ship 10 containers, it used to be you needed 20 grand 90 to 200 grand. That's like that's a real barrier to entry. So actually, I've talked to some companies in this space. We're really happy. Like if you have an established business, you're like, great. Now it's much harder for Joe Schmoe to show up in China and start competing with me. So I was really surprised to hear that I thought that was a pretty sophisticated take.
SPEAKER_02: At what dollar point does air freight compete with containers? Because when we start hearing about chips, I was always wondering, and again, I'm no expert, but putting a bunch of chips on a plane versus putting them in a container, given how much those chips are valued by a Tesla, whoever's putting them into, you know, a car isn't what was the breaking point?
SPEAKER_03: Air freight prices just gone in line, and it's gone up five x as well. And one thing to remember is that 50% of all the world's air freight flies in the belly of passenger planes, which should kind of horrify you if you're ever flying on a passenger plane from from East Asia, but to the United States, there's probably a whole bunch of stuff down in that belly. And those are grounded. So the supply of air- Why are they grounded? Nobody's flying to China right now. Oh, I see. So because there's no-
SPEAKER_02: Now we're seeing kind of the backlog play into commodity
SPEAKER_04: cycles, right, Ryan? So we're seeing like a lot of these commodities because of these discontinuities in the supply chains. Suddenly commodity prices are spiking all over the place. And I mean, do we think that that settles down? Or do you think it kind of continues for, you know, the foreseeable future until this all works its way out?
SPEAKER_03: Yeah, I'm not the right person to ask about commodity prices. Maybe Chamath has a view on that. But I, you know, on the logistics market, I don't see it sorting itself out for the next year, the next couple of years. In fact, you've you've warned that it might get worse, right?
SPEAKER_00: You've I mean, I saw in Bloomberg, you said that there could be a union strike in maybe October. What are the prospects for that? And what happens if that takes place?
SPEAKER_03: So it's on July 1st of this year. July, okay. The West Coast Union, it's called the ILWU. That union extends from the southern border, so from Mexico all the way to Alaska, and it includes Canada. So the whole West Coast of the United States is run by this one union that deports in. They their contract expires on July 1st. And in years past, so the last time this happened was in 2015. This is a contract that was signed then and extended at some point. But in 2015, it had a three month period where nobody could import anything on the West Coast. And some major companies missed Christmas that year. So that's July 1st. Typically, these there's kind of slowdowns in the months leading up to that. And we've already had slowdowns for a couple of years with hundreds of ships are now waiting offshore. So yeah, I can't make a prediction. This is slow down, basically a negotiating tactic by the
SPEAKER_00: unions.
SPEAKER_03: In the past, it has been I'm not convinced that that's what we've seen over the last year versus you know, they are there are legitimate problems staffing, people getting COVID, etc. So is there a role for presidential leadership in
SPEAKER_00: sorting out these union issues or just sorting out the issues with the port more generally or avoiding a strike in July?
SPEAKER_03: I mean, it seems to me that if Biden wants to get reelected, this inflation supply chain issues are pretty top of mind and in the news and are going to be on people's, you know, you want to be seen doing things. And I do think there are things that can be done. So yeah, there's a role. And as far as union negotiations, Biden's probably pretty as equipped as any president's ever been to negotiate with the union and get them to play nice and not screw up his reelection with a strike. He's known as a union friendly president and go sit down and do a deal with them where Trump would probably never be able to do a deal with the union because they know that they're sort of natural adversaries. So there's something there. There's a lot more to be done. And I got some arguments with people that are like, you know, that's not in the president's power to do such and such. I'm like, yeah, but he's the president of the United States. Pick up the phone. Like you can do things that aren't legally in your power just by asking for favors and other people do them. And negotiating with unions is a good example. Convincing to change the zoning laws in L.A. so you can stack containers higher would be another. Yeah, that's not the president of the United States jurisdiction. But if he calls the mayor of L.A. or the city council. Can you explain that? So what
SPEAKER_01: does that mean? So in Southern California, you can't stack a
SPEAKER_03: container more than too high in a truck yard by law. Well, we had no place to put these containers. But is that a is
SPEAKER_01: that a danger issue or is that like a site issue? Site lines? Like what? I assume a little bit about. So I think there's
SPEAKER_03: some safety issues, although they're stacked six high all over the world. So that's not that legitimate to my in my view. And in California, it's what, four or something? Two,
SPEAKER_01: two high. It's too hot. Oh, wow. At the truck yards at the
SPEAKER_03: port, you see them stacked six high. But in the truck yards, two is the limit. Okay. And so it's it's it's also an eyesore,
SPEAKER_03: especially in California. Containers are a sign of free enterprise. And it's just the people in California can't stand to see them. Right. They really just object to the idea of capitalism in their neighborhood like that. But
SPEAKER_01: there could be like some kind of temporary waiver that we do just to get through all of this backlog, which is to say, okay, let's just ease all of these small little things that slow the process down just to get all these ships, you know, unloaded right off into the world where they need to be. And then we could revert back to what we are after things, you know, kind of normalize. Yeah, so we did that. So like, I wrote
SPEAKER_03: about this, this zoning law. And what's what's happening then is if you can't stack the container three high, there's nowhere to put that third container. So you leave it on the trailer. And now you have one less trailer in rotation servicing the port to unload. And that's that's true across Southern California right now there are 1000s of trailers with containers on them because they're not allowed to stack them, they'll get fined if they do. So I tweeted about this and the the city of Long Beach actually responded. I tweeted about it at 6am. By 3pm, the city of Long Beach had changed the zoning law to allow stacking up to five high I believe. I'm told the fastest response by any government to citizen action like ever. That's incredible. You must feel
SPEAKER_01: great about that. It was great. But unfortunately, only Long
SPEAKER_03: Beach did that LA never followed through other and there's not that many truck yards in Long Beach. A lot of them are in Los Angeles, Compton, Rancho Dominguez, etc. So I saw this kind of thing like yeah, Joe Biden could call these mayors and say, Hey, let's work on this, right? Yeah, but let's face it. He's super union Joe, right? Like I mean, he
SPEAKER_02: wouldn't even say the word Tesla over the number Jason isn't that
SPEAKER_01: more pro union because won't these folks be working more and getting paid more and it's I don't think there's a reluctance to pay. Right? Because clearly, like you're gonna have to put some money into the system. And where the money comes from, we can figure that out later. But the point is that there's a there should be a desire to actually get the people on the ground to be working. There wasn't even a third shift,
SPEAKER_02: shift, right? Like that was another thing you were working on on top of the stacking of these containers to get you know, more of these, you know, to alleviate the problem you were also talking about, they don't even have a third shift some nights, but they seem to have added a third shift. Did that become permanent or not? No, they do have a third shift,
SPEAKER_03: but nobody's showing up is the problem. So truck drivers don't work in the middle of the night warehouses aren't open in the middle of the night. But is that a compensation issue, right?
SPEAKER_01: Like if we paid more folks show up? Like, is that just a supply demand issue that you can never underestimate incentives?
SPEAKER_03: There's just a lot of factors and a lot of a lot of it is, it's so easy to point fingers with somebody else and blame someone in the chain, right? Supply chain, you've got all these different people. And it's everybody has their own opinion. You know, we at one point, I wanted to hear what the union's opinion was, what are they saying? Because everyone else is calling them lazy, and not working hard, what's really happening. So we, I sent a taco truck down to the port a couple of months ago, just because we figured we're getting free tacos, they'll talk to us and that works. That's a game changer right there. Yeah, that really works.
SPEAKER_02: So we, well, we got, they logged it, they said we're the
SPEAKER_03: only business ever to send tacos to the port. And then they told us all about what their viewpoint was, they viewed that the truckers are screwed up, that 50% of all the appointments where a truck is supposed to come and pick up a container, they're missing their appointments. Right. And because and then and then so that's what sent me investigating, wait, why are they missing the appointments? That's when I learned, oh, they don't have any trailers, these chassis, because they're stuck under containers and can't be unlocked. So a lot of it is going here, it's the supply chain, it's kind of like this, that metaphorical elephant in the dark room, right? And everybody sees their own aspect of it. But you got to synthesize all those perspectives and kind of take a systems view and see if you can get some real understanding. I'm not convinced I have it yet, by the way, I think it is more complex. And I'm really beware of simple narratives if someone even including me says, Oh, this is exactly what's happening. Like, there's really a lot of complexity in all of this, right? How much how much of this
SPEAKER_01: is sort of the the, the extreme end of the other spectrum, which is basically the US exceptionalism view that says, Okay, we just need to really in house more of the stuff that we need so that we don't actually have to rely on some of these arcane methods of just transporting goods for, you know, from point A to point B, in my view, that would be a shame if
SPEAKER_03: we we have the best companies in the world, who need to be able to source raw materials, components, finished goods, anywhere on planet Earth, and we should have a modern infrastructure that makes that possible instead of being like, Oh, we can't trade with the rest of the world. So we're going to become like, self sufficient. You know, we might as well go back to everybody being a farmer on subsistence farmer on our own land. Like, I think we should have global infrastructure that's really great and seamless and makes it really easy. But you're right, that might be an end result is people can't rely on the supply chains and start saying, Hey, let's manufacture at home or let's manufacture in Latin America. Let's manufacture closer to home. That to my perspective, that would be a shame. Well, I think the I think the prod the pendulum
SPEAKER_01: always starts from one extreme to the other. And I think the middle ground is probably that you need to have some heterogeneity, right? You have to have some amount of it that is not just singularly reliant on China, maybe it's maybe it's to Central or Latin America, right? Some that's domestic, but that domestic production probably has to be subsidized by something because we're never going to be able to run as efficiently and as cost effectively as, you know, cheaper international labor, you know, unless we invent something really, you know, incredible. So the balance is probably in the middle. But it's going to take us a long time to kind of get there. I think I saw Governor Abbott was pitching
SPEAKER_02: people on Hey, just send your containers to Texas, we're cheaper and more central in the country. Is that true? Is that a solution takes much longer cost much more. When if the union
SPEAKER_03: goes on strike on the west coast, it'll be one of your only options bringing stuff through the canal. What you'll very quickly see is that the canal is going to back up. Can't move that many more ships through the canal that are currently going to the west coast. So a lot and you've seen that a lot where the bottleneck just moves. For a while last summer, the for example, the trains that were going into Chicago, they were really having a hard time staffing the railroads out there. And it was taking them a long time to unload containers at the port at the terminals inland in Chicago. And drivers, a lot of the truck drivers are owner operators. So these are entrepreneurs who own their own truck, work for themselves. And they were able pre pandemic to do three loads per day at the Chicago railheads, go drop it off, come back at another one three times with the delays and the traffic jams that resulted, they were only able to do one a day. And so you opt out because you can go drive for UPS or FedEx or take your truck and do something else. So we had this huge reduction in drivers. And that's the kind of a feedback loop that we should all be really mindful of here, where a problem begets more problems and you get these positive feedback loops in the system, that really vicious cycles. And so you know, bottlenecks move and you'll see as soon as they, if everybody started to ship to Houston, guess what, Houston port won't be able to handle the volumes either. It's not like it's magically better just because it's a Republican state or something. Do we need more ports? Or do we just need to run them more
SPEAKER_02: efficiently? And then who determines who runs the port? Because I know that they I've seen some tweets of yours where they license the government, I guess owns supports, but they license it to people to have the franchise there. More ports, better run ports. And then what's the business model of ports? I'd say better run ports is the answer. I don't think we need
SPEAKER_03: more ports. You can't really create ports out of thin air like there's only a handful of geographic locations that actually make sense for a port. And we have great geography, like the San Francisco Bay, like is probably the best natural harbor in the world or one of them. And the Oakland port is perfectly fine. It's who owns it is the city of Oakland or the city of Long Beach, the city of LA. So the local cities own the ports in the United States. That is a difference between United States and Europe, for example, where they're sort of national strategic assets, they're still government owned, but it can be operated as a sort of public good for everybody instead of what are the odds, given what's going on in Oakland, that that's the big priority of the mayor of Oakland to like, run a better port, like she's got a lot of other things on her list. And so that's one problem with our system. And then second, they do rent it so that the government owns it and then rent it to a private company that operates it. And then but those as a condition of renting the port, you must agree to hire the ILWU. You can't run a non-union port in the United States. Should the government by the federal government buy the port
SPEAKER_02: from Oakland, buy the port from Long Beach, offer them some, you know, trillion dollars or billions of dollars and buy it out from them? It's not a terrible idea. I mean, as long as you're forcing
SPEAKER_03: everyone to use union labor, it's not really like a private sector endeavors. It's like you can't, especially with the way that the unions run, so you can't do that much. But like, here's an example where technology could, Flexport already made this technology, we could 10x the throughput of one of these ports overnight, which is today, a truck driver shows up looking for a specific container. He's like, I got this container number. So they have to make an appointment at that hour. And as I said, they're missing 50% of their appointments. Well, on the back end inside the port, they got to go find that container in this, in the needle in the haystack and make sure it's at the front during that one hour when the guy shows up for it. And you could, we already have this tech to make it what we call a free flow stack where you just have this, the truck pulls up and you give them the first, the first container off the line. And then the mobile app tells them where to take it. And he doesn't have to come for a specific container. And if you did that, you'd just be every 30 seconds coming out of here instead of every 10, 15 minutes, you'd easily 10x the throughput. And this is, we already have this tech. So it's a matter of implementation, deployment, and how do you get around a lot of people that don't really want to see better running ports. And it's pretty sad to sit where I sit. They don't benefit from better running ports, although
SPEAKER_01: it's the good point. Although at the back end, they suffer from higher prices and inefficiency and not getting the things they want on time. Well, if you listen to Elon talk about
SPEAKER_00: unions and why Tesla is not a union shop, it's got nothing to do with wages. He said, we'll pay you the union rate or better. And it's not about mistreatment because he said, listen, if someone mistreats you, we're going to have a no assholes rule and we'll get rid of them. The issue is inflexibility, right? He wants to drive continuous process improvement at Tesla. And he can't do that with a union shop because every change has to be negotiated. And then if there is a worker who's not living up to the performance bar, you can't get rid of them and they can't repurpose workers and have them work a different line. So that's why Elon has always resisted being a union shop, not the wages, not mistreatment, purely inflexibility. And it seems like that's what you're seeing in the ports as well is we can't drive changes and improvements because everything's so highly contractually negotiated. That's my editorial comment. Ryan, what do you think about that? No, I mean, it's worth studying a little history here is that
SPEAKER_03: like, you know, we went through the container revolution in the sixties and seventies and the union agreed to it. And that dramatically transformed the waterfront. These guys, like, you see the photographs from that era, they would put it on their back, like burlap sacks full of stuff, like hauling it on and off these ships and kind of load them by hand. It was a real art and it was a massive employment driver. And by the way, we've still barely recovered from this. Like the West Side Highway in New York is finally like a nice park, but it sat there for 50 years, like dilapidated piers and ugly ass buildings. And some of those are still there. San Francisco waterfront still mostly like that south of the Bay Bridge. It's still like these old dilapidated buildings. So it's kind of funny to see how long it takes that infrastructure to change. But there was, and I don't know, I'm not like the world's expert on this history, but somehow they convinced the union to adopt containerization, which is about, it's far more radical than anything we would be proposing now in how you would change their workflow or change their work. Like that was complete change where it's really these giant automated or these giant cranes that replace the worker.
SPEAKER_00: Couldn't Biden deploy his commerce secretary or I mean, isn't there some cabinet official he could deputize to say, go solve this problem, go bring the parties together? Yeah. And I think I suspect that'll happen over the coming
SPEAKER_03: months because July 1st is pretty bad timing for a midterm election if they were to go on strike. And I think he's got a lot of incentive to make sure that he does have the incentive. It just seems like, I mean, you've been tweeting
SPEAKER_00: about this for months, that no tension in the administration. I mean, we've all been reading your tweet storm saying like someone in Washington really should be paying attention to these over two administrations now, right, right? It's both
SPEAKER_02: administrations have been out to lunch on this.
SPEAKER_03: The union is a really big issue that's going to come up this summer. There's, in my view, an even bigger issue that's got even less attention, which is on January 1st of next year, January 1st, 2023, which is tomorrow in shipping terms, that all the ships in the world will have to reduce their carbon emissions by 13%. And these are internal combustion engine. There's not a right, right, right. Hold on a second. Wait,
SPEAKER_01: just explain what that means by who's mandating that and how is that enforceable? And why is that have to, it's the
SPEAKER_03: International Maritime Organization, it's part of the United Nations. And it's the group that is overseeing global ocean freight. It's the regulatory body for ocean freight in the world. And it's the United Nations group. So any member state of the United Nations must follow the rules of the IMO. And they've all said they will. And so the IMO has said, all existing ships in the world must reduce their carbon emissions by 13%. And again, it's an internal combustion engine, we don't know how to make it 13% more carbon efficient, or we would have done that already. Can you actually buy indirect offsets? Like, can you go and
SPEAKER_01: buy some Amazonian rainforest credits and offset the... No, you can't offset it. And it's not about the fleet either.
SPEAKER_03: So some of these fleets have LNG, liquid, natural gas. So the fleet might be more efficient, but it's down to the individual ship. So there is one way to reduce the emissions of the ship. And that's to go slower. And if you go 30% slower, then you can achieve a 13% reduction in carbon emissions. Well, if you look at it on a per container basis, by the way, it's the same amount of carbon emitted because the ship is still carrying the same number of containers just go slower. But it will reduce the supply of shipping capacity and slow everything down another 30%. That takes place January 1, 2023. It's getting very little attention, but to my view, it's going to be massively disruptive if we slow everything down, reduce the capacity of the network that much further, prices are going to go to the moon. And it's like really asinine law because it doesn't actually achieve any carbon reduction. The fuel type, correct me if I'm wrong, is this like MGO,
SPEAKER_02: MDO, like it's dirtier fuel? Is that correct? So the same group IMO actually passed a new law January 1,
SPEAKER_03: 2020. And it got totally, it was supposed to be a huge deal in our industry and then COVID hit and we all kind of ignored it. But that eliminated the worst kinds of fuel. Sulfur used to be you could have this bunker fuel that was up to 3% sulfur, which led to crazy amounts of sulfuric acid, which is like apparently like 15 times worse than carbon as a greenhouse gas. And so that was eliminated. And now it's still kind of ugly bunker fuel, but it's not like it used to be the reputation is probably still carried over from from pre 2020. Got it. If you could wave your magic wand as we wrap up here
SPEAKER_02: and change two or three things that to you seem like layups. And I think you kind of hinted at them in order. What would be the changes just based on your intuition and your knowledge of the supply chain? What two or three things are the layups we got to do right now? I think first off, it's got to start with some with metrics,
SPEAKER_03: like what if you care about something, measure it. The metric that the government's been using for ocean freight delays has been how many ships are waiting offshore at the Port of Long Beach. And this is like one of the most mischievous. I don't know if it was just like outright fraud or incompetence, but one of the worst things I've seen from government in terms of PR is they pass this rule that the ships have to wait 150 miles offshore so that the carbon so that the pollution wouldn't hit LA like reasonable good. But then they kept using the same metric for how many ships are waiting right outside the port. And it went way down and they started celebrating that success. So like, let's actually use the right metric, which is how long is it taking cargo to transport? You can't just hide the ships and celebrate that there's no ships there. If we get the government, you're
SPEAKER_01: saying that the government pushed the ships beyond the measurement window and then said they don't exist? Yes.
SPEAKER_03: Basically, the transportation secretary and the port of LA director got up there. That's like when I went to an XL
SPEAKER_02: sweater to hide my gut. And I was like, I'm thin. Yeah, look, not better to look at the scale. So if we at least get them
SPEAKER_03: focused on the right metric, which I think we have the best metric right now we call it the flexport ocean timeliness indicator. It's how long is it taking the cargo to from when the factory says it's ready to when it can be delivered. Now any solution that we create, we have a metric. We know okay, there's a KPI here door to door. Yeah, door to door. You
SPEAKER_00: mentioned the transportation secretary was part of that press conference where they're taking credit for changing the metric. So I assume that's Buttigieg who's in charge of dispersing the $1.2 trillion infrastructure bill. Is there any money in the infrastructure bill to solve this problem? There's, there's
SPEAKER_03: $17 billion allocated to ports. I went and read it and I couldn't find any money that was going to be spent on building ports. It was like, study here's the thing we just had this
SPEAKER_00: trillion dollar infrastructure bill that's supposed to modernize and update the infrastructure of the country. And it's doing nothing to solve the most pressing supply chain issue in the country, which the bottleneck at the ports, which is driving inflation, which is causing interest rate increases and wrecking the economy. There's a term in Washington,
SPEAKER_01: which is called the Christmas tree bill. And the infrastructure bill is an example of that, which is this is not a directed shot on goal. What this is is a random, you know, tree that you go and hang little things on top of and eventually the whole thing is covered. So it kind of looks beautiful from afar. But when you get really close to it, it's a little bit chaotic, and you don't understand what's going on. And so to your point, the fact that Ryan can say there's $17 billion allocated to something like ports, but it's unclear to him who's an expert in the space where that money goes and how it's spent, gives us zero chance of figuring this out. Yeah. I mean, it was like it's like things like, oh, each
SPEAKER_03: state must create our supply chain readiness report about it's like, what are you talking about? Like, Singapore put $20 billion to build a badass automated port. Like, that's like a reasonable thing to do. Like, let's spend $20 billion make the most automated, amazing port in the world. There'd be a good use of government money, but like to then create studies and consultants, I don't know that any of it's going to hit the ground and shovel. Right. So you're saying you're saying
SPEAKER_01: that $17 billion that goes to, you know, studies and consultants could actually get redirected, and we could pick a port where there's an amenable city and actually completely modernize it to set the example of what modern shipping should look like in the United States that at a minimum matches what's happening in the rest of the world. Yeah, I think that'd be
SPEAKER_03: pretty awesome. And doesn't seem to me like science fiction, like what government wants to build a port, who's going to stop the government that seems too logical and too obvious,
SPEAKER_01: right? Well, I can try something else, compete for who
SPEAKER_02: gets to get that 20 billion to be the modernized port like well, if you put the put the put the mayor's in competition and
SPEAKER_01: see which mayor wants us in their backyard. Does Greg Abbott
SPEAKER_02: want it? Does Long Beach want it? Does Oakland want it? Who wants to fight to be the most modern port that should be Santa's wants it. I'll tell you that. Descent, Miami. Yeah, exactly. I'm sure to Santa and Greg Abbott wanted I don't know that California is two incredible ports wanted and those are the two that are closest to China. By the way, spoiler alert. You guys remember when Google Fiber ran that
SPEAKER_03: competition and they got like mayor of Pittsburgh to swim in like a frozen lake and it was awesome. Government Yeah, please bring us stuff. So yeah, I think I don't have a lot of
SPEAKER_03: faith even if that came around, it would take five, six years, right? Even if it was done right, you don't get a port overnight. There are some very simple solutions like this changing the zoning law, adopting technology to go with a free metrics out of the port, put some metrics in here, like have someone focus on this. A key part of problem solving is make sure the problem doesn't get worse. So let's assign someone to go work with the union and the and the company terminal operators make sure that they don't go on strike, make sure and then somebody to go look at this IMO, un thing and figure out if the United States is really going to go through with that because it's pretty crazy. Well, listen,
SPEAKER_02: Ryan, you've been incredibly generous with your knowledge and credible your leadership watching you as you know, a CEO and a leader go out there on a boat and go visit and buy the frickin tacos and actually boots on the ground figure this out. Like the country owes you a debt the world owes you a debt to really keep this, you know, problem down to first principles and figure it out and our government should be taking notes and really the other leaders who are importing whether it's Apple or Tesla, you know, it'd be great for all of them to be supporting you. I don't know if they've reached out but maybe the you know, a half dozen of you can then sit with this administration and the next one and just tell them where to point the money cannon. Well, it doesn't seem like they know where to point it. We have a lot of people in
SPEAKER_01: Washington that listen to this pod, please. Yes. Just reach out to Ryan and just reach out to Ryan and have lunch. Please just
SPEAKER_02: sit there and just goes for these. Let Ryan buy you a taco
SPEAKER_01: guys. Ryan, bring your taco truck to Washington. One of the
SPEAKER_00: big common denominators of both business and politics is that leaders have to focus on the right problems. And when they're not focusing the right problems, like bad things happen. And you know, we know that inflation is a huge problem. The Fed now is raising rates or projecting raising rates very quickly, which is creating, it was created a huge market downturn. It's a very blunt instrument, it could cause a downturn or recession. So that's the big problem. And yet there are specific solutions and fixes to the inflation problem by updating or modernizing the ports that Ryan suggested, but who's focusing on it. And now they'd be more strategic, right sacks, it'd be a more strategic sniper shot as opposed to this
SPEAKER_02: blunt instrument. Right, exactly. So, you know, and so
SPEAKER_00: what have they been focusing in Washington on? Definitely not this, you know? Absolutely. And then I see Ryan posting suggestions on Twitter, and then all these people come in, they're all like fatalistic. Oh, well, the President can't do anything. You know, the President can emergency war time.
SPEAKER_02: If there was ever a time for presidential leadership, this
SPEAKER_00: would be it. What I worry about is that if you're the union leader, and you know that you've got Biden in the White House, who's always going to take their side, why wouldn't you make your demands more unreasonable? Yeah, they should
SPEAKER_02: be asking for triple time to keep it open overnight. Why
SPEAKER_00: wouldn't they do you really if you're the leader of that union do you believe Biden's gonna break your strike? No way. No
SPEAKER_02: way. Ask for quadruple time. Yeah, just make it painful. You should make the most of the crisis. egregious ask possible.
SPEAKER_01: I mean, this is your max leverage right now. Max leverage
SPEAKER_00: never waste a crisis. Yeah. This is your time. All right, man.
SPEAKER_02: Listen, right. Thanks a lot. Great. Thanks. My pleasure. I'm
SPEAKER_03: a big fan of the show. So being a bestie. Yes, he means a lot to me. So thanks. Yeah. And we'll continue the discussion perhaps
SPEAKER_02: at the all in summit in May. Exactly. See, Miami Facebook stock has dropped over 25% after reporting negative user growth for the first time and not only $10 billion or maybe even $12
SPEAKER_02: billion lost a year on their AR VR headsets and project, but also a $10 billion decrease in projected 2022 revenue thanks to Apple's privacy features. I guess we got to go to you first. PayPal drop 25% too. Yeah, we have to pay well, and then
SPEAKER_02: Snapchat had a whipsaw back and forth. But Chamath when you see this, you call this with your spread trade. Maybe you could walk us through what you saw, you know, whatever it was three, four, five months ago. And then what you're seeing now and at this level with $250 billion wiped off the market cap, what do you what do you think about the future of this as a trade and as a company? Well, I think the trade did what it was
SPEAKER_01: supposed to do, which is in a period of a lot of volatility. I saw an opportunity to, you know, just reduce my risk exposure. Look, I'm generally long, very risky assets, right? I mean, all of us are in the business of building companies that have huge volatility because all of our companies generate earnings very far in the future. And so, you know, in November of last year, I was trying to figure out what I could do to shield myself. And the reason I wanted to shield myself was because I saw Elon and Jeff in part selling, but also I saw that clearly we were going to go through a period where that high growth tech was going to trade down. So I sold some of that high growth tech. But then I also wanted to figure out a way where I could be less exposed to some of that volatility by continuing to hold what I had. And the best way that I figured out how to do that was to do the spread trade. And so, you know, what I saw at the time was that there is one business above all others that I think is immune amongst big tech from any sort of real long-term issues, and that's Microsoft. And I think David expressed the reason well is that it's an enterprise business now. You know, politicians generally don't tend to care about enterprise businesses. They have enormous longitudinal growth in front of them. And they're able to do things on the margins, specifically around M&A, to keep building their business with very little oversight. And we saw this because they had the courage to do this Activision deal, you know, just a few weeks ago. If you could imagine, again, no other company in big tech could even dare try to do a $70 billion acquisition because of the scrutiny. In this climate, it was a bold move. Yes.
SPEAKER_02: Yeah, I think it's not a bold move. I actually think it says
SPEAKER_01: the obvious, which is Microsoft is beyond the level of regulatory scrutiny that the rest of big tech actually has because they are consumer businesses. The second safest company is Google. And the reason is that Google has the best of both worlds. They're both a platform because of Android, but then where they are at risk of being an app, they have an incredible deal with Apple that blunts that effect. And so when Apple talks about all their push to privacy, you still have this very specific relationship. And Facebook called it out in their earnings release. They said, we believe that Google has preferential treatment relative to the rest of the internet in that Apple deal because they pay Apple 15 or $20 billion a year. And for people who don't know,
SPEAKER_02: that's for search, the default search on your iPhone goes to Google, Google pays $15 billion to Apple. And the accusation explain the accusation there of why that would give them preferential in case people don't get somebody 15 or $20
SPEAKER_01: billion a year, they're less likely to do bad things to you. They may do bad things to other people, but they're not going to do as many bad things to you. Did you believe that? Yeah, that
SPEAKER_02: allegation from Zuck? Yeah. Well, no, I don't believe the
SPEAKER_01: allegation. But I think that general character, that general thing is true. Like you're not going to screw over your partners, you're going to screw over other people before you screw over your partners. Got it. Whether this applies here, it'll have to be borne out in some kind of lawsuit or state AGs or blah, blah, blah. But anyways, the I think the point is that every other company has a lot more headwinds than Microsoft and Google and big tech. And then the third thing is was a market observation from Gavin Baker, which I thought was incredibly brilliant. And what he said was, when you see a drawdown, meaning when the markets go down, it'll affect high growth tech first. It ended up touching a bunch of other areas second, like biotech, but he said this key thing, which is big tech will be the last to crack, but when they do, they are going to get shot. And so I spent a bunch of time just trying to figure out when big tech gets cracked, who's going to get cracked the hardest. And I just kind of wanted to create a spread between those who were the most inoculated to those that were the most at risk. As it turned out, Netflix puked it up, Facebook puked it up. Amazon actually got really crushed, even though this past day, they had a pretty decent rally because of their earnings, but they really got crushed. So in any event, the trade is what the trade is. The bigger thing is what is going on at Facebook. And I think what you see are three really important headwinds that Facebook called out explicitly. One is that when they talked about usage, kind of flattening and starting to decay, what they're really talking about is TikTok. And I think what we learned is that TikTok is an enormous threat and a huge competitive force now in the consumer social app ecosystem. The second is that Facebook is fundamentally an app that sits inside of an ecosystem that is subject to the rules of the platform owner, and that's Apple and Google. And so this IDFA change, so the change in how you can track advertisers, Facebook said is going to have a $10 billion impact in 2022. And then the third thing, which was more implicit, is in order for them to grow, if you can't grow organically, the only other way to grow is inorganically and unfortunately, as we're seeing the regulatory focus on this company is really enormous. And so it was a, you know, it was a pretty watershed moment in I think that company's discussion of their future. And Mark actually kind of said that as much in the in the press in the sacks, you look at this
SPEAKER_02: business, you made a interesting observation, Facebook rebranding itself as meta before meta exists, it may be looked at as another sort of sign that maybe they got a little tilted, maybe what we should take on the sort of changing the name of the company before that business really is at scale or exists. Yeah, I mean, it's a bubble move. Because look, when you're
SPEAKER_00: in an up market, and the market is super frothy, we had in hindsight, last year was a giant asset bubble funded by all this liquidity coming out of the Fed and the federal government. So yeah, in a bubble like that all investors care about is the growth story. And so Facebook went all in on the story around metaverse. But in the cold light of day, you know, once the, once the, yeah, once the punchbowl has been taken away, and you're in the hangover, and you're in sort of a very volatile, DJ packed it in, yeah, bear market, investors go wait a
SPEAKER_00: second, you know, this VR division is losing 10 billion a year, it might even be 12, by the way, because they said it
SPEAKER_02: was a little higher. So they lost 6 billion last year, they
SPEAKER_00: lost 10 billion this year. So the losses are escalating. And so in that kind of market, investors are like, wait a second, do I do I want to invest in a company that whose future is that unclear? I mean, if you look at this at this market, we've seen that the growth stocks are down 60 days an update yesterday was a horrible day. So they're bouncing around 60 70% percent down off the highs in early November. Okay, but the things are only down like 14% or something like that, right. But Facebook basically took themselves out of the the sort of the market leader bucket and put themselves in the growth bucket. But they treat us like Peloton, we're speculative, why
SPEAKER_02: would why would they want to do that, you know, terrible strategic decision you're saying? Well, it was a it was a
SPEAKER_00: decision, it was the kind of decision where you look back with 2020 hindsight, and you say, look, that kind of decision could only be made in a bubbly, frothy market, you would never make that decision in the kind of down market you have today. And other decisions look stupid, as well. So PayPal was just down 25%. Okay, why was it down? Yeah, well, they just, well, no growth in users, it was mostly on the forecast. And yeah, they they revised their forecast down considerably. And of course, they tried to blame it on the economy. But other companies, you know, Amazon just had a huge beat, relative expectations. Yeah, they're up 15% today. So not everybody is blaming the macroeconomic picture of the way that PayPal did any event. My point is, you go back six months ago. And you know, what was PayPal doing? I wrote a story for Barry Weiss, for her sub stack about how PayPal was taking the lead in financial deplatforming. They were working with the ADL and the SPLC to kick to identify groups to kick off their platform. So that's what management was spending their cycles on figuring out how not to grow how to kick people off their platform and trying to figure out more people on it. Sounds familiar. Who else
SPEAKER_02: is trying to get the platform? It's the kind of thing you do
SPEAKER_00: when you're in a frothy market and your stock is up and you're just triumphant. You can waste your management cycles on stuff like that. Now their stock is down 25%. You have to wonder, gee, do we wish we had spent our time on other things? Okay, so freeburg, I have a question for you about the future. Obviously,
SPEAKER_02: Facebook has bet the farm on meta. They're betting on VR. And I guess eventually AR or what collectively is called XR. And then we have news that Apple has a seemingly brilliant goggles product coming out. Developers are getting into it and they are the masters of hardware. So now, Zuckerberg has decided he will be on a collision course with the company that just took $10 billion in revenue from them by doing the non tracking. And that is the masters of hardware. So we have this collision course coming. And then just two weeks ago, Google said, Hey, by the way, remember that Google glass thing? We're not giving up on VR AR either. And of course, Microsoft, we all know, has their HoloLens. So when we look at that four horse race, if you were to bet and rank who's going to win Apple goggles, Google glass, whatever they're going to call the new thing HoloLens and metas Oculus, who's going to win and what do you how do you look at that competition between the big four? I don't know if that's a race you want to be in. So I like that answer. Race to
SPEAKER_02: nowhere. Have you guys used the Oculus Quest device? Absolutely.
SPEAKER_04: I have two of them. Try Oh, my, have you played games where you
SPEAKER_02: like move continuously through space. And like when you do
SPEAKER_04: that, it's like you want to throw up, throw up. I mean, I'm not sure that this notion that that becomes the new computing modality is like a fair and true notion. And so, you know, there may it may end up becoming kind of a niche entertainment device almost like a Nintendo switch where there's a, you know, a mode when you're using it, but I'm not sure it replaces traditional static two dimensional computing in front of you. The jury's still out, I don't see like a computer sentiment that says these things will ultimately kind of prevail over the current mode. So, you know, if it does work, who would
SPEAKER_02: win? In your mind? Who's got the best chance? Well, let's assume we're all going to use it every day for two hours as our desktop, we're going to put it on, we're going to find workout apps to use whatever it's going to become. Let's let's assume you know that. I think you just answered your own question in in
SPEAKER_01: in all of these things. When you build hardware, I think you can take a lot of parallels from what happened in the PC space. If you have commoditized PC manufacturers, compact, Dell, IBM, right, they're innumerable number 1000s of companies that made PCs, the value created to the application layer to the operating system. And the people that can actually build ecosystems are typically the ones that win. And the people that already have an ecosystem and all they have to do is port somebody from, you know, platform A to platform B has a meaningful advantage over somebody that has to convince you to come to a new platform altogether. And so, you know, if you're a Microsoft and you have 1000s or 100s of 1000s of developers, or if you're Google, and you have 100s of 1000s of developers, or if you're Apple, and you have millions of developers, it's just a smaller bridge to cross in order to convince them to go for one extra endpoint iOS versus
SPEAKER_04: Android, you know, versus Microsoft. And by the way, it seems like the obvious transition where it's like Facebook is like, you got to go build all this stuff. And Apple made an incredibly important set of decisions a few years ago
SPEAKER_01: which I didn't think a lot of people talked about, but they had an OS tree that was branching far too widely, right? They had a different operating system for the phones, they had a different operating system for iPads, desktop for watches, and they've started to try to converge and shoehorn these things into a set of basic primitives so that it's more controllable. And I suspect the reason is because that gives them more optionality to go into a car, to go into a headset, without having to do an entire developer even better than that. Chamath is a great point you bring up because they
SPEAKER_02: also started investing in their own chipset. And I think all of that chipset innovation gives them a dramatic advantage in having smaller batteries and more processing power in a headset if it does work, which what chips does what chip asset does Facebook have none. So I don't want I don't think we
SPEAKER_01: should say that Facebook is down or not. But let's just qualify what we think can win. So that's one thing. The other thing to remember is when you look at the PC industry, how did Intel become so dominant part of what Intel was able to do to out compete AMD and everybody else was that program called Intel inside, which is effectively these co marketing pass through dollars that they would use to actually give an incentive for Dell and for Compaq and for all these other folks to basically build the spec and that was the wind tell monopoly, right Microsoft and Intel. If you play that out in VR, what you really need is just a bag full of cash. Because if you give developers a subsidized incentive to build for your platform, they'll do it. So then, again, if you rank the companies, you just need to look at how much cash do they have, because those are the most cash. So again, I think the best way to think about this is how many developers do you have today? How much cash do you have today? How much cash will you have in the future? And you can probably rank and just do a reasonable expected value to think about who has the best chance of winning, assuming the platform is roughly equal. Now, if the if the if the if the company on that list with the fewest developers and the least money has a superior device, if that
SPEAKER_01: device is superior enough, they can overcome those things, right? And Facebook has the least money and Facebook has the least if
SPEAKER_02: you have rough parity. I think the person with the most money
SPEAKER_01: and the most developers, I like sacks, Facebook has the least developers, they have no
SPEAKER_02: relationship develops. In fact, they kind of screwed them over with Facebook Connect a couple times they have the least money, but they do have the largest user base of profiles. So does that give them some advantage here? And how would you rank who's going to win who's going to lose? Well, I think it gives them an advantage and to Tomas framework of porting over their
SPEAKER_00: app onto whatever the you know, dominant platform is going to be but probably it's the operating system players who are going to be able to extend their operating system into this new, you know, VR AR world probably. What I wonder about is what Facebook have been better off if they're going to run a $10 billion a year money losing division, that's highly speculative, where they've been better off gambling that on building their own phone, or maybe their own like forked version of an Android phone with and the reason why I say that is project that I started, I was about to say we've now seen
SPEAKER_01: we've now seen we've now let's not redig that. Well, they're
SPEAKER_01: losing, they're losing 10 billion a year now because of
SPEAKER_00: this one permissions change that Apple has made, right? Because they're completely dependent on Apple's operating system for a big portion of their revenue. So what is their defense against that? I mean, they're really pretty helpless. If you look just to make a comparison, if you look at the strategic brilliance of Google, what was it, first of all, after they came up with this cash cow, the idea of search, and then they combined it with the sort of keyword auction they got from overture. They said that, listen, the next strategic move is we can't let anybody disintermediate us. So what did they do, they started moving upstream, the first, the first sort of upstream player was the portal, right? So they start competing against Yahoo, they gave away Gmail, then it was the browser. So it was Microsoft Explorer. So they gave away Chrome, then it was the operating system, they gave away Android, they said, we're not gonna let anybody else be upstream of us. And so they just started replacing all those layers of the stack, giving away free products with free, right? Yeah, sorry, and a good free product. Yeah, great. I mean,
SPEAKER_00: they all have billions of users. I'll also say a big part of the
SPEAKER_04: monetization lock in was Google then extended into the publishers very quickly with the acquisition of AdSense. And the publishers then allowed Google to offer the greatest CPM that those publishers could have over any other advertising network. And as a result, Google built their network and then built their advertiser base. And they effectively, you know, got this huge lock in the only disruptive threat to Google was what Facebook did, which is to create demographic profiles, where instead of targeting ads based on keyword, or search intent, you could now target ads based on demographic, and then Facebook took it a step further and did retargeting. So basically following you across multiple sites, but Facebook always knew. And as we just discovered, that was always going to be a weak point for them, because they were dependent upon hardware devices that we're going to let them do that tracking across apps and across sites. And that's why Google always had this kind of key, you know, lock in advantage that you know, will persist. And the network is just so big on both sides, you can't compete to Saks's thought bomb. If they
SPEAKER_02: had invested in a phone, let's say they made $1,000. Let's say they made a phone with a bomb of $800. By the way, just remember
SPEAKER_04: the fire TV, the fire, and he gave a bunch of great speeches, you can watch these and what happened with that. And just, you know, despite his extraordinarily large user base, his committed, loyal users, all these reasons, his magical, talented technical team, he hired the best people. He also tried to do the same with search, by the way, with a nine. And remember, Apple also tried to do the same with search, all these guys tried to kind of compete, it's not easy to execute, yeah, it's not easy to execute, and you get a lock in with the network value, but you also get a lock in with the talent. And you know, this was a really hard thing to pull off and you have to get it all right. So let me ask him off the
SPEAKER_02: question based on what Saks said, could they should they have deployed 10 billion into phones? If we go back two years, and they did deploy 10 billion into phones, they take an $800 bomb, which is probably what the best iPhone cost, I think it costs 700 for Apple to make and they sell it for 1500. They could basically give the phone away for half price, maybe give it away for four or $500. That's what fire phone was. And if they gave away for $400, and you had to be a Facebook user, you buy it, they get the credit card of the person, that would be they could put 25 million phones into the market every year. That's
SPEAKER_04: what Amazon thought. And I think that moves the needle. So
SPEAKER_04: you don't think it would work? Okay, you create a better user experience for users, users got a better experience with the iPhone. Okay. And then they got a better experience with Android. The window of time was in 2009 10 and 11, when there
SPEAKER_01: wasn't lock in. And, you know, I think that's, that's been well discussed about what we were doing and what we tried to do. So there's no point rehashing. But why did Facebook give that
SPEAKER_00: up? Because there wasn't an initiative, right? It was it
SPEAKER_01: wasn't that it was it came down to, you know, an ask that I made that we didn't get and it didn't happen. So it didn't happen. We'll leave it at that.
SPEAKER_00: I'm not saying that would have been successful. I'm just saying neither die. We didn't get to the starting line. So we'll
SPEAKER_01: never know. In fact, I think it's unlikely that it would have
SPEAKER_00: worked because I'm not sure exactly what Facebook's value prop would have been. My point is just if you're gonna lose 10 billion dollars a year on a division, wouldn't it be better for it to be something strategically vital, as opposed to something that feels a little bit optional, even if the
SPEAKER_02: majority chances you don't win? The question is, if you had a 20 30 35% chance of being a player in smartphones, would you take that chance? And I think you have no choice but to take that chance that it would be worth it the expected value. Yeah, one thing I'll say in defense of Facebook is I think
SPEAKER_01: that all of this like antitrust scrutiny is a little bit ridiculous today. And it looks pretty ridiculous. And let me just explain why like, it seems that capitalism is pretty much working as intended. Because if you looked at Google's results, if you looked at snaps results at Pinterest results at Amazon's results, there is a vibrant and growing advertising ecosystem. By no means could you claim that Facebook has any real monopoly on that number one. And when you fold in TikTok, it's absolutely true. And then if you think about the usage curve of TikTok, there's a check and balance there on usage. And so anybody that thinks that Facebook is a monopoly today, I think is a little misguided. So really, I think what politicians need to do today, you know, February 4, is be a little bit more honest about what they really care about, which is really around section 230. And the misinformation, disinformation fears that they have related to Facebook's distribution power, because now if you're going to try to legislate this company, it's really unfair, like especially going back 10 years to litigate an acquisition. You'd never do that to any other company that you know, is sort of maybe on the back half of their growth cycle. It just doesn't make any sense. It would be like going after Google now for the
SPEAKER_02: YouTube acquisition is like $31 billion of advertising
SPEAKER_01: revenue crazy. There is a vibrant, diverse advertising ecosystem. Facebook is not in control of that ecosystem. And so trying to legislate them as a monopoly in that ecosystem is insane today. What do you think, Sacks? Do you think this
SPEAKER_02: regulation is based on the fact that Facebook kicked off Trump and is scaring politicians over actual competitive reality? I think that politicians are using the threat of regulation
SPEAKER_00: to try and drive the speech policies they want on these social networks. That's what's really going on. I mean, the merits. So you agree with me, it's nothing to do with the
SPEAKER_01: business. Yeah, look, who should get regulated on antitrust
SPEAKER_00: grounds? Apple, you know, Apple is that maybe Google, I mean, the well, they're the big monopolists. I mean, they control the operating system. I mean, those guys are percent of search. And I would say Amazon with respect to the verticals where they're competing with their own basics with the basic exactly. So in other words, when you control an operating system, and then there's developers or other, you know, down to players on that ecosystem, you have to treat them fairly, you can't privilege your own policy to then dominate vertical after vertical. So yeah, there are real antitrust concerns with those three companies, the Facebook way less so. And yet they get the brunt of the attacks. Why? Because the people in Washington are trying to coerce Facebook into controlling what they call misinformation, which is really just speech they don't like. And that is highly inappropriate. Perfect segue. Last week, we didn't
SPEAKER_02:
SPEAKER_02: jump into the Rogan Spotify debate, maybe we should have. But we'll talk about it now with a lot more context, obviously, Neil Young and some other folks that were pulling our music off, Joni Mitchell, whatever some actual high profile blogger said they don't want to be on there. And then Joe Rogan and Daniel Ek both decided to talk about this. Joe Rogan said, Listen, I'm a comedian, I don't prepare for these interviews. And I just see where they go. But this show has gotten very influential. It's the number one podcast in the world's got a ridiculous listenership. So maybe I should write it right now, maybe I should have it labeled me and his and maybe I should have people on afterwards. And maybe I should do some extra fact checking. I thought it was the best non apology. You know, explain ology of an apology because he did say I'm sorry if you don't like it. But he did kind of say that he would do better and then Daniel Ek said, and then I'll let you guys comment. Daniel Ek said, Listen, we produce shows, and we approve guests for the ringer. And for gimlet, which we own those studios, we license Joe Rogan, we don't do any editing on his show. And we will remove ones after the fact, but it's a licensing they'll therefore we're not a publisher. I'm curious what you thought.
SPEAKER_02: Friedberg on the non apology, and culpability for someone like Joe Rogan having guests on who are anti vax, or, you know, maybe are debatable in terms of science, because yeah, he is a comedian. But as he says, like the show is kind of big now. So maybe I should do a little fact checking. What do you think he should do when he has scientists and people and people on I'll make two points. One is I don't think that journalism is
SPEAKER_04: regulated, in the sense that you know, we have freedom of speech. So anyone can stand up and they can say, I have this belief or I have discovered this fact. And you may not actually hold that belief. And that fact may not be true. But you're still allowed to stand up and say it. And you're still allowed to have someone come on and say it. And so I don't think that there's any disclosure obligation he's putting on a show. It's the same as any new show or entertainment show. I don't think that there's a clear line or boundary. I mean, what the heck do we do here? We've all got opinions, we try and talk about the news, we talk about our perspectives on the future. You know, what the heck is it that we're doing here? You know, there's no kind of clear line there. So I don't think that he has any obligations to do anything he doesn't want to do, except if and when his audience tells him, or the listeners that he cares about, tell him his customers tell him, this is what we expect and want from you. And then he responds to his customers. That's the way the market works. And that's the way the enterprise system should work. I think the separate bigger question here, that's really important and worth noting. You know, and I just want to speak about this for one second. All of the great internet companies started with this notion that they were creating democratization, that they were creating access to information that didn't exist, whether it's access to media, or access to search results, or access to content or whatever that may not have been available to you. And that was a driving force for the entrepreneurs and the founders that started all these businesses. And all of them had these very idealistic points of view, that we're not going to censor, we're not going to take a point of view, we're not going to put our foot down and say what is and isn't going to be displayed or shown or made available to our users, we're going to let users choose what they want to get access to and what they want to hear and listen to. And in all these cases, from Google to YouTube to Twitter, and now to Spotify, the idea of being just an access a platform for access is proving to be wrong. All of them are de facto publishers, they ultimately have to make decisions about what they do and don't like on the platform. And de facto, if you let something on the platform, you're giving it permission, you're giving it a voice, you're giving it amplification, and you're giving it access. And so all of them are now getting caught up in this problem that I don't think anyone from Larry or Sergei, or Jack Dorsey or Daniel Ek ever wanted to be in, they all want it to be these democratization platforms. And now they're finding that there is no way to avoid being treated like a publisher and a publisher has someone that's called an editor, and an editor decides what is and isn't put on that publishing platform, as has always been the case in old media. And now in new media, they're all kind of stumbling into this problem. And they're not set up for it. And it's creating issues where people on the right are saying you're censoring us. And people on the left are saying you're not giving us access to information we want. And it's, you know, it's just kind of the I think the transition that none of them expected, but we're all seeing happen. Chammoth if Daniel Ek is giving 100 million dollars to Joe
SPEAKER_02: Rogan, can he claim Listen, it's just we're a platform when you know, listen, we're on Spotify as well, but they don't pay us. Doesn't it change the relationship when they give him the 100 million? Or can Daniel say, you know, intellectually, honestly, like, Hey, listen, we're not responsible for this. I mean, they're backing up the brainstruck. And they're promoting it like heck. Are they a publisher or not in your mind? I read yesterday that Barack and Michelle Obama's deal with
SPEAKER_01: Spotify just expired, and they're going to shop it, I suspect that somebody will pay them 10s of millions of dollars to produce content. That's not illegal. And it's a sign of a free market that's working. Spotify has a business to run. And that business is to get content in front of the users that are paying them a lot of money on a monthly basis to get access to that stuff. And so who are we to say how Spotify should run their business? I think you have a choice. Neil Young expressed his choice. There was a person in The New York Times, she took her podcast off of Spotify. Yep. There are subscribers that probably left, but then there are also subscribers that probably joined. Yep. And paid. Yeah, and paid. And so the reality is, that's the free market, being allowed to choose and being allowed to vote with their feet. And I think that all sides of that are in the right. So I think Spotify should be allowed to run their business. I think Joe Rogan should be allowed to say what he wants. If Spotify chooses to put a disclaimer in front of that podcast, that's their right. And that's good, too. And if Joe Rogan decides that he wants to have, you know, point counterpoint across podcasts or within a podcast, that's laudable as well. And that should be his decision. But I don't think people should be forced to make these decisions by law, because I think we get into a very slippery slope. Because you don't totally understand the incentives of the lawmaker there. And we have a free market, as you're pointing out,
SPEAKER_02: Shama, the frame is working perfectly. And more people
SPEAKER_00: don't like this free market. More important than the free
SPEAKER_01: market. We have a founding document of principles that we all agree to. Yes, yeah. And unfortunately, there's a lot of
SPEAKER_00: people who don't agree to it, as we have a right. So here we go. Let's go to our constitutional attorney counselor. Take us
SPEAKER_02: there. If you're talking about the principle of free speech,
SPEAKER_00: there's a lot of people who don't believe in it. That's the problem. First of all, you have this geriatric hippie. Whoa, whoa, whoa. Can I finish my rant? Okay, rant away. We got this geriatric hit. I love Neil Young. No, you know what
SPEAKER_01: happened here? Wait, sorry, Sax. Just there. That was J. Cal seeing, oh, shit, he's gonna get a bell cluster clip. He had to
SPEAKER_01: interrupt you there. That's really brutal. J. Cal. That's not. I thought you were talking. I thought you were talking
SPEAKER_04: about Joe Biden. Can I explain? Go actually explain what
SPEAKER_00: happened. I think frankly, you guys are completely missing it. The wheel of censorship broke on Joe Rogan this week. They tried to Alex Jones him and it failed. Okay, first you have this geriatric hippie, Neil Young, who somehow has turned into a narc and he plants a flag and he tries to get all these people behind him and the very online crowd says, yes, we gotta cancel Rogan and then you got Jen Psaki from the White House weighing in, bringing in the coercive power of the administration on the side of censorship. Okay, and what happens? Rogan comes out with this non-apology like you said, and he seems so reasonable. He's a guy who's inquisitive. He's on the side of just asking questions. He's on the side of balance. He says, yeah, look, I wanna present both sides of the issue and everybody was like, there is no reason to be censoring this guy. Rogan is an every man and if they would censor him, they would censor every man and that is why there was an enormous backlash to it and everybody has opposed this and so I think this is the week that this ridiculous idea of censorship has broke. Now, it would be nice if everybody to Chamas' point did agree with this principle, but they don't. The fact of the matter is, Jay Cowell, that censorship is now the official position of the Democrat Party and you see it in the poll numbers. There was a great tweet that Glenn Greenwald. Glenn Greenwald posted where he showed the polling numbers on this. So, okay, you go back to the days of the Obama administration. Both Democrats and Republicans agreed that the US government and tech companies should not get involved in this type of censorship, but today, there's been a bifurcation. Democrats or lean Democrats versus Republicans who lean Republicans. It's 6528 in favor of government taking steps to restrict info online and it's 7637 Democrats versus Republicans on tech companies. So, the First Amendment is no longer a consensus and that is fundamentally the issue. But I gotta tell you, I think there is a backlash against this and I think that most of the country now and I think this is where they went too far is that Rogan is not Alex Jones. He's not Trump. He's not Milo Yiannopoulos. He seems like a reasonable guy. He is the biggest figure in independent journalism. He gets 11 million viewers every week and I think there's a lot of people, especially young people who are going, this has gone too far and by the way, I do not think, ever would have made this political blunder of effectively denouncing Rogan because Obama tried to appeal to young voters and I think Jen Psaki by putting the administration on the side of the censorship, they've made a huge mistake and the same week, we saw that Tucker Carlson now gets more young Democrats listening to his show than CNN and MSNBC and I'm telling you, this is the reason why. Okay, Henry, you can put in the roaring crowd of applause at
SPEAKER_02: this point. The best the best thing that I saw. I'm telling
SPEAKER_01: you, Jake. I'm an independent. Stop making me the Democratic
SPEAKER_00: Party. There are now more Tucker Democrats. Okay. Among among the key young demographic in your room or on Tucker's writer room, which one? I'm a Tucker Democrat. You're a
SPEAKER_02: Tucker. You are. You love you love Obama. You love Clinton. I think what's happening is that I mean and you've said this over and over again, chamath. I'm sorry, chamath. You had on one side, you know, the right when lost their mind and the all right now they've come a little bit more center. And then you may not have the the Democrats have lost their minds. The fact that anybody can't look at Joe Rogan and say he's a comedian. He worked on a show where they fed people shakes of
SPEAKER_02: blended insects feel factor and he's taking mushrooms and he's like, Why are you taking me so seriously? Well, wait, I think I understand. Hold on. I think you're being super dismissive
SPEAKER_01: of Joe Rogan. I think he's actually as sack said, a pretty reasonable, curious person. And then yeah, he does the stuff that everybody else prepare for the show. He literally said, I
SPEAKER_02: don't prepare for the show. I don't do it. Maybe he doesn't. Maybe he doesn't know explicitly. He doesn't any fact checks in real time. So you got to keep your expectation on a certain level with Joe Rogan. I think I think that that's a dig.
SPEAKER_01: I think that that's implausible to believe. I know that that's what he said. But, you know, 11 million people a week $100 million deal. I do suspect that he does some sort of preparation. I don't think he's a he's completely winging it. Okay. He literally said he wings it. But okay, I understand
SPEAKER_01: that. But I think that's not the point. Okay. Okay. The point is whether he prepares or not the excuses and sorry, the dog ate my homework. It's Hey, listen, I have a right to have this guy on my show. Just like I have the right to have this other guy on my show. You can listen to both and then you can decide for yourself. You could change the channel. Okay. That's the important point. So Jason, I would not like try to make this whole argument about whether he was prepared or unprepared as the excuse. It's whether you believe there's a fundamental right to free speech, or whether you believe that people who disagree can disavow people and get them canceled and get them get. I obviously don't agree. I don't agree. Anybody should be
SPEAKER_02: canceled. I think he should keep going. Whatever Rogan's level
SPEAKER_00: of preparation, which I think is actually pretty high, that people who are accusing him of putting out misinformation are far more guilty of it themselves. And I think one of the best points in Rogan's non apology, as you called it is, he said, Listen, a lot of the things that we used to consider misinformation are now the truth for example, on the show. Yeah, well, we've been ahead of the curve and calling all this stuff out. You know, we could have been accused of misinformation. So examples, the lab leak theory, used to be considered misinformation. The cloth mass not doing anything. Listen, Dan Bongino was kicked off YouTube two weeks before the CDs for saying that caught Dan Bongino. He's a pretty big conservative commentator. Okay, he's got an audience of millions. You can be dismissive, but a lot of people like him. J Cal. But look, my point is, he was kicked off YouTube for saying cloth masks don't work, then the CDC comes out two weeks later, and says the same thing. Right. That's a valid point. Well, it's the key point. I personally like, you know, for
SPEAKER_01: example, we've talked about this thing where like, if you look at like the top distributed links on Facebook, who do you see Ben Shapiro? Yeah, Dan Bongino. You know, bright Joe Rogan, right? Yeah. My takeaway with all of these things is there are people of those things, if I listened to, I'd probably find abhorrent. But there are people there that are probably I would be, you know, I would, I would, I would, they would appeal to me. In all cases, they should all exist, though, because the whole point is, let me spider my way through this stuff and figure out for myself. Yeah, what works and what doesn't work? More speech is the best counter. The summary of this that makes the most sense is, Elon tweeted this out, Nick, you can put this because I gave you the image, but it's a it's a meme of Neil Young, where it says, if you won't censor the guy I don't like, I won't let you listen to keep on rocking in a free world. And and it's and it's just so true, which is like, on the one hand, you know, you are a standard bearer. Now, maybe what we should really do is talk about what has happened to this boomer generation over the last 50 years where they were, you know, sex, drugs, rock and roll, no war in Vietnam, let's fight for our rights. Let's fight for equality, then punk rock, you know, no, I'm talking about just those those folks back then, who are now 50 years later, you know, sitting on $70 trillion of wealth, and who are basically like, you can't say this, you can't say that. Don't do this. Don't do that. Wear masks. Don't leave your house. You know,
SPEAKER_04: yeah. They're scared, because they're old, wear masks, don't or you're getting a pain. Yeah, you know, this is, I mean, that
SPEAKER_01: generation, I think we all have some soul searching to do about what happened to that generation. I think they're scared because they're old and they and they feel like they're
SPEAKER_02: going to die from COVID. Is it that generation or is it the
SPEAKER_04: fact that every generation rebels against the prior and ultimately becomes conservative? And you know, that's the maybe that's just how life goes. I don't think they become
SPEAKER_00: conservative. I think they've become authoritarian. What happened is they're now in power, the boomers are in power. They've been making the decisions for the last 20 years. I think there is enormous popular discontent with the way the country's been run over the last two decades, the futile pointless wars in the Middle East, the debt, the economy, the unfairness that it goes on and on. And what's in especially with COVID. I mean, this COVID policy over the last two years has been a fiasco. And the point of this censorship of misinformation is to suppress the debate. I mean, what ultimately is the point on take, for example, COVID of saying that people cannot take a point of view, it is to stifle the debate that's to prevent an honest debate on these issues. And the people have an interest in doing that are the people who are in charge and are failing. And if you gave people the information, they'd be voted out of office.
SPEAKER_02: If you look when I asked what are the specific claims that either Joe Rogan or his guests made that people are objecting to a lot of the people who are objecting and wanted him censored, really didn't know. And one of them was he said early on, I don't know for a young person who's in shape, if I would advise them to take the vaccine. I know a lot of people who have that position, which is like if you're young, and I think actually, freeburg, you might have said, mRNA, early on in this podcast is a very new technology. And I could see people wanting to wait and see. Did you not say that? I don't want to get you canceled here. But I think we did have that discussion. Have that conversation. That's a valid conversation. mRNA is a new technology, right? freeburg, you should think about it. And we should be cautious. Don't draw me into your cancel. That's why I said we I just changed it to we were talking about that. Don't you remember that discussion we had like when I asked you, I think, mRNA, what do you think of this versus the regular one, the j&j? I think
SPEAKER_04: generally, we've seen science being used as a way as a term to discredit what I think would arguably and typically be scientific principles, which is inquiry, challenging hypotheses, and having, you know, vigorous debate, to resolve to some sort of objective truth. Otherwise, you're having some sort of subjective belief. And more often than not, we've seen politicians and others grab on to the term science and saying, this is science, it says this, when in fact, the process of science is inquiry, and it is to challenge, you know, again, a hypothesis and what might be kind of a thesis. So, so yeah, I think generally, this has been a pretty scary time to watch, because it's almost like gaslighting, you know, it's like, hey, you know, you're using the term science to discredit the notion of science. It's been pretty brutal. I think that you guys this this cartoon link, by the way, it's so funny. Oh, I just got it old left versus the modern left. It's a
SPEAKER_02: Volkswagen bus with a bunch of hippie dippy flowers. And it says free speech free love 1971. No CIA screw the establishment resist authority. And then it shows like a modern SUV with 2021. It says masks up by heart the CDC obey the establishment, no free speech. Do what you're told obey basically, you have another poll you want to share sex? Well, yeah, this is a
SPEAKER_00: really interesting one. It says a majority of voters 55% say COVID should be treated as an endemic disease while a majority of Democrats say it should be continued to be treated as an emergency. And then there was a similar poll, the Monmouth poll just came out where 89% of Republicans 71% of independents say that it's time we accept the accept COVID is here to say we need to get on with our lives only 40 sharks are Democrats. So the reality is that the rest of the country I think has moved on. It's ready to move on. The split is not between Democrats and Republicans anymore. It's within the Democratic Party. The Democratic Party is now divided on this question of whether we should move on as a country past COVID. Half of the Democratic Party still believes that COVID should be treated as this emergency. Do you think that it's cut by age? Do you think there's a bias by for sure? For sure. I
SPEAKER_00: think yes, absolutely. People are more scared. But I think I
SPEAKER_00: think the media and the party they programmed their soldiers to be you know, to treat COVID as an emergency and they can't deprogram them. And this is why I think we're seeing Tucker's Tucker is now the biggest demographic among young Democrats. That's insane to me. It's insane. The idea that idea
SPEAKER_01: is insane. This does not bode well for the on top of
SPEAKER_00: everything else is happening in the country. This is not bode well for the Democrats in November. And then you had this crazy thing at the you know, the Magic Johnson party at that. I held my breath. I took a picture of Magic Johnson. I held
SPEAKER_02: my breath so I wouldn't get the virus with Garcetti and Newsom
SPEAKER_00: Newsom claimed the new I didn't inhale. Yeah, exactly. And then
SPEAKER_00: he says that he was only photographed at the exact moment where he took off his mask for two seconds. You know, you know what I if you go to the ski slopes, there is nobody with a
SPEAKER_02: mask on and nobody's enforcing it and no restaurants and this is in democratic country. Everybody has moved on at this point. Everybody's willing to. Why haven't they? Why haven't they? Why haven't why haven't the media and the politicians
SPEAKER_00: because they're virtual signaling and they want to keep
SPEAKER_02: power to I don't know you tell me that's that's that's the point. Well, I think they're dumb. They should be open. I think they're just taking the real but wouldn't take in the reopening position get you more voters at this point. People are tired of this. They want to move on. Doesn't make any sense. They're making a bad political decision. They're holding to their base. That's the point is I think I think the
SPEAKER_00: whole country has moved on even most Democrats have moved on but the democratic base has not moved on and that is why you know Newsome and and Garcetti have to pay lip service to this. Well, I mean, and these guys have been telling everybody got
SPEAKER_02: to wear a mask, got to wear a mask and they're not wearing masks and let's face it, they weren't wearing masks at the front French laundry. They have never worn masks. They've been throwing their own parties with no masks or a bunch of hypocrites. The whole lot of them. All right. In other news, Xi Jinping and Putin got together and they're apparently besties. Here's the quote some actors representing but the minority on the international scale. I think that's us continue to advocate unilateral approaches to addressing international issues and resort to force the interfere in the internal affairs of other states infringing their legitimate rights and interest and incite contradictions, differences and confrontation. The statement said, I am willing to work with President Vladimir Putin to plan a blueprint and guide the direction of Sino Russian relations under new historical conditions. Mr. Xi said he added that China and Russia should act like big countries as they intensify coordination on fighting the Coronavirus pandemic, yada yada. Any feedback from our squad? I mean, you could have rewritten that
SPEAKER_01: press release as you know, we will. We want to try to destroy us hegemony and replace it with ourselves. This is the beginning of the end of us cultural and economic influence
SPEAKER_04: globally, or dominance, rather influence it globally. And I think that it's, you know, something that we've talked about quite a lot. You know, I mentioned in the prediction episode that I thought that Putin was going to play a major role this year. And, and, you know, he's clearly not just, you know, out for his own interests, but he's going to play a really important role in China's rise to economic and cultural dominance. You agree, Chamath? Is this the sign that they're
SPEAKER_02: going to be running the show? Or does this look like something else to you? No, no, no, I don't think that there's a show to
SPEAKER_01: run. I think the point is that there was a first among equals for the last many decades in the world order where, you know, America was it was that first among equals. And I think what they're saying is that it's time for that to change. And, and they're going to tie that to their ability to influence foreign policy in countries the way that we have historically. So, you know, this is sort of basically putting a marker on the table that says, this is going to be about, you know, a
SPEAKER_01: different cohort of people that are also going to have an equal say. And if you think about where this all plays out, it's always in economics, right? And this is where again, you have to think about what China has done, which is they have while we were fighting wars, you know, putting trillions of dollars into the Middle East, they took their trillion dollars and bought resources all through Africa. Yep. Right. They built infrastructure, they bought infrastructure all through South America. They put infrastructure all through Southeast Asia, you know, that say, call it $15 trillion that we spent in one direction, they spent another that's a $30 trillion gap, that's going to create a resource imbalance that they will use to create even more influence in the future. And we have to figure out a way to counteract that.
SPEAKER_02: Sax, what do you think? Is this a changing moment in the world order? Should we be worried that these two dictators are going to act in unison? And then maybe one gets the Ukraine one gets Taiwan? Is this like really earth shattering news? Or do you think it's saber rattling and not that big of a deal?
SPEAKER_00: Well, I think it's a dramatic statement and photo that was was put out. It was a continuation of what we've seen where they have, you know, Xi and Putin have been getting in Russia and China, they've been getting friendlier and friendlier. What saddens me and sort of sickens me as really an American patriot who would like to see the American world order continue is the way that we have blundered and created this this type of situation. So to Jamal's point, first of all, we wasted 20 years trying to do nation building in the Middle East. Six, we wasted $6 trillion on that. How did China, you know, lose by not being part of that they benefited they were building Belt and Road while we were, you know, engaged in this foolish interventions in the Middle East. And now more recently with Putin, we've really driven Putin into Xi's arms because we keep threatening to add Ukraine to NATO, which is not something that's in America's interest. If we would just give up on that position or just reaffirm that Ukraine should not be a minute to NATO, it would enormously help defuse tensions with Russia. And by the way, your point that these are dictators or natural allies, that's not historically been true. So during the days of the Soviet Union, you know, you had Nixon and Kissinger make the great opening to Mao and China and we were able to cultivate a relationship there because China and Russia were natural antagonists. And it was a major move in the Cold War that we were able to cultivate Mao and we did so even though he was a dictator with blood on his hands. So now Russia and China are not natural allies. We should be doing a better job of not so thoroughly alienating Putin that he is rushing into Xi's arms. That's the blunder I see here. By the way, after this summit, they're going to
SPEAKER_01: meet with Iran. There's a tripartite think excessive dictators. This is like the Legion of Doom. We need to be
SPEAKER_00: playing our cards a lot in a much smarter way. Yeah, and to
SPEAKER_01: play our cards. What is the strategy? I mean, the strategy
SPEAKER_02: is look, we want the American led world order to continue, but
SPEAKER_00: we got to be much more selective about picking and choosing our battles. Yeah, Iraq, Afghanistan, Syria, Libya, they were huge mistakes. And now on top of it, what about Ukraine? What's that? Yeah, looking forward, like you keep bringing
SPEAKER_02: up the past. What's the look forward strategy in your mind? The look forward strategy I think is to diffuse and
SPEAKER_00: deescalate the situation in Ukraine exactly the way Obama did it, which is to recognize that America does not have a vital national interest the way that Russia does. To reaffirm that the nations of the caucuses that have border disputes with Russia, Ukraine, Moldova, Georgia, they are not eligible candidates for NATO at the present time. Kick that can down the road by 10 years. Okay, we talked about that last episode.
SPEAKER_02: Taiwan is a much more complicated situation. I do think
SPEAKER_00: we have a vital national interest there. Got it. Okay, so
SPEAKER_02: two very different situations. I agree with you. Yeah. Yeah. I
SPEAKER_02: think Taiwan we have to hold the line. Yeah. We have a
SPEAKER_01: responsibility in the United States and I think we're starting to do it. So I think there is good news where you know part of the strategic vital interest for Taiwan is because they have critical resources that we need and we depend on and specifically those are semiconductors. You know we have now I think allocated you know 50, 100 billion dollars of capital of capex across a bunch of companies that have committed to building domestic capability and so we have to make sure we follow through on that and that's successful and the reason is that it gives us optionality. It allows us to breathe. It allows us to actually make rational decisions and be patient in our decision making and I think that's going to be really important over the next 10 or 20 years and so we have to invest in the United States. So the solution to all of these things is we cannot be overly dependent on any one country. Any one shipping lane any one product any one natural resource. You just can't do that anymore. We have to be strong at home and we have to
SPEAKER_02: build strong relationships with other countries and yeah, I think I think we've got a an operating philosophy here. Alright. Listen, let's wrap there. We'll see everybody on the next episode for the dictator Chamath Palihapitiya the Sultan of Science David Friedberg and the Rain Man himself triumphant versus Peter Thiel in that PayPal match. Great moment. David Sachs. Love you boys. Love you besties. Bye bye.
SPEAKER_00: That's my dog taking a drive way. Oh man. We should all just get a room and just have one big you George because they're all just it's like it's like sexual tension but we just need to release that out. You're the bee. You're a bee. We need to get merges are back.
