Break up Google, Starbucks CEO out, Kamala’s price controls, Boeing disaster, Kursk offensive AI transcript and summary - episode of podcast All-In with Chamath, Jason, Sacks & Friedberg
Go to PodExtra AI's episode page (Break up Google, Starbucks CEO out, Kamala’s price controls, Boeing disaster, Kursk offensive) to play and view complete AI-processed content: summary, mindmap, topics, takeaways, transcript, keywords and highlights.
Go to PodExtra AI's podcast page (All-In with Chamath, Jason, Sacks & Friedberg) to view the AI-processed content of all episodes of this podcast.
View full AI transcripts and summaries of all podcast episodes on the blog: All-In with Chamath, Jason, Sacks & Friedberg
Episode: Break up Google, Starbucks CEO out, Kamala’s price controls, Boeing disaster, Kursk offensive
Author: All-In Podcast, LLC
Duration: 01:46:02
Episode Shownotes
(0:00) Bestie intros: Jason gets a dish named after him! (5:27) DOJ considers breaking up Google after last week's antitrust ruling (28:10) Starbucks replaces CEO with Chipotle chief (45:37) Work culture, WFH's damage to informal mentorship (59:20) Election update: Harris flips the polls despite unclear policy; reports of price control
focus (1:21:27) Boeing's Starliner disaster strands two astronauts in space (1:33:54) Russia/Ukraine update: Ukraine wins land in Kursk, Nordstream report Follow the besties: https://twitter.com/chamath https://twitter.com/Jason https://twitter.com/DavidSacks https://twitter.com/friedberg Follow on X: https://twitter.com/theallinpod Follow on Instagram: https://www.instagram.com/theallinpod Follow on TikTok: https://www.tiktok.com/@theallinpod Follow on LinkedIn: https://www.linkedin.com/company/allinpod Intro Music Credit: https://rb.gy/tppkzl https://twitter.com/yung_spielburg Intro Video Credit: https://twitter.com/TheZachEffect Referenced in the show: https://x.com/harry_schuh/status/1822030518038491400 https://www.bloomberg.com/news/articles/2024-08-13/doj-considers-seeking-google-goog-breakup-after-major-antitrust-win https://www.wsj.com/business/starbucks-replaces-ceo-as-activist-investors-push-for-changes-43c33bff https://s203.q4cdn.com/326826266/files/doc_financials/2024/q3/Q3-FY24-Earnings-at-a-Glance.pdf https://fortune.com/2024/08/13/starbucks-shares-jump-20-after-company-poaches-chipotle-ceo-brian-niccol-chipotle-falls-9 https://www.cafexapp.com https://www.google.com/finance/quote/CMG:NYSE https://www.wsj.com/articles/low-wage-workers-climb-the-earnings-ladder-20acd8af https://www.youtube.com/watch?v=mzLCpmRad5o https://finance.yahoo.com/news/nearly-half-dell-full-time-215348261.html https://x.com/Jason/status/1823826884112867609 https://www.natesilver.net/p/nate-silver-2024-president-election-polls-model https://x.com/JStein_WaPo/status/1823913395986305342 https://www.npr.org/2024/08/08/nx-s1-5068668/vance-walz-stolen-valor-military-record https://abcnews.go.com/Politics/walzs-military-record-vances-accusations-stolen-valor/story?id=112618991 https://www.washingtonpost.com/business/2024/08/15/kamala-harris-economic-policy-2024 https://www.bloomberg.com/news/articles/2024-08-15/harris-will-propose-price-gouging-ban-on-food-and-groceries https://en.wikipedia.org/wiki/Whip_Inflation_Now https://www.google.com/finance/quote/WMT:NYSE https://www.wsj.com/politics/elections/kamala-harriss-economic-team-and-agenda-start-to-take-shape-7682e539 https://time.com/7009317/reintroduction-of-kamala-harris https://x.com/TIME/status/1822951410956218385 https://www.axios.com/2024/08/11/kamala-harris-trump-taxes-tips-service-workers https://www.bloomberg.com/news/articles/2024-08-15/harris-will-propose-price-gouging-ban-on-food-and-groceries https://www.socialcapital.com/ideas/2019-annual-letter https://www.google.com/finance/quote/BA:NYSE https://www.azquotes.com/quote/1413855 https://www.washingtonpost.com/business/2024/07/26/boeing-starliner-astronauts-stuck-orbit-space-station https://spacenews.com/41891nasa-selects-boeing-and-spacex-for-commercial-crew-contracts https://newatlas.com/space/first-manned-crew-dragon-flight-date https://qph.cf2.quoracdn.net/main-qimg-26d9f1dddb4d24469b593b28f40d277b-lq https://spaceflightnow.com/2016/08/02/boeing-nears-fix-for-cst-100-starliner-design-hitch https://spacenews.com/crewed-starliner-test-flight-could-slip-to-2019 https://spaceflightnow.com/2020/02/28/boeing-says-thorough-testing-would-have-caught-starliner-software-problems https://spaceflightnow.com/2021/08/19/boeings-starliner-spacecraft-returns-to-processing-facility-for-valve-work https://www.boeing.com/space/starliner/launch/archive.html https://boeing.mediaroom.com/2024-06-05-Boeing-Starliner-Spacecraft-Completes-Successful-Launch https://boeing.mediaroom.com/2024-06-05-Boeing-Starliner-Spacecraft-Completes-Successful-Launch https://www.washingtonpost.com/world/2022/09/27/nord-stream-gas-pipelines-damage-russia https://www.wsj.com/world/europe/nord-stream-pipeline-explosion-real-story-da24839c https://www.washingtonpost.com/national-security/2023/04/03/nord-stream-bombing-yacht-andromeda https://seymourhersh.substack.com/p/how-america-took-out-the-nord-stream https://www.youtube.com/watch?v=OS4O8rGRLf8 https://www.youtube.com/watch?v=ild-PsPD_Uw
Full Transcript
00:00:00 Speaker_03
All right, everybody, welcome to the number one podcast in the world. I am your boy, Jake, how the world's greatest moderator, executive producer for life with me again on the all in podcast is the rain man, David Sachs.
00:00:14 Speaker_03
Yeah, looking healthy, looking good, looking trim. The hair is great. How you feeling, brother?
00:00:19 Speaker_06
Good, good. Yeah, good. Good haircut.
00:00:22 Speaker_03
Looks good. Now, do you go to the barber, the stylist? They come to you. Everybody wants to know.
00:00:26 Speaker_06
They come to me.
00:00:30 Speaker_03
And then with us, of course, your sultan of science. He loves those vegetables. His name is David Friedberg from Berkeley to the bay. Our boy. How are you doing there, brother? Are you living the lake lifestyle? You have a nice restful August.
00:00:45 Speaker_03
Love and love in the outdoors. Good for you. You look so healthy.
00:00:49 Speaker_04
Speaking of looking healthy, celebrated birthday with Jason Kuhn yesterday. Happy 39th, Jason Kuhn.
00:00:55 Speaker_12
Happy 39th, Chase Coon.
00:00:58 Speaker_04
We did a long mountain bike ride with our other buddy Z and had a little family barbecue last night. Everyone had a good time.
00:01:06 Speaker_03
What'd you do, a little portobello mushrooms? What did you do? You put a little zucchini on the grill?
00:01:10 Speaker_04
Let's just say I show up with my own food to a barbecue.
00:01:12 Speaker_03
Absolutely, you do. All right. And everybody's favorite, the chairman dictator, Chamath Palihapitiya, you love him, you hate him, but you can't ignore him. Look at the number of buttons here.
00:01:26 Speaker_03
You got the mouth collar on, and I don't think any of those buttons are buttons.
00:01:30 Speaker_11
None of them are buttons. None of them are buttons.
00:01:32 Speaker_03
You became a meme once again. Once again, the All-In Podcast, creating memes. You were swirling. You were swirling a little white wand last week. You were in the arena. And I'm putting up all the numbers, going macro, and you're swirling wine.
00:01:45 Speaker_03
The audience loved it. What's going on today?
00:01:47 Speaker_12
Do you have a bottle? That was a 2019 Cadel Bosco.
00:01:52 Speaker_03
Can you tell us the flavor profile, the notes? What did you get as you were swirling?
00:01:58 Speaker_12
There was some plum, there's a little truffle there, some boysenberries. Little boys and very fantastic moths.
00:02:05 Speaker_06
It was a touch of inflation with a hint of unemployment.
00:02:09 Speaker_00
I don't want to be political. Let your winners ride. Rain man, David Sack.
00:02:27 Speaker_03
Well, you know, boys, I had a big week. I had a big week this week. You know, I'm at the lake still, but I made a little trip to Silicon Valley. I was hanging out with Ruloff at Sequoia. And as I'm prone to do, I love to go to Bucks.
00:02:41 Speaker_03
You guys been to Bucks before in Woodside?
00:02:44 Speaker_12
Yeah, I went one couple years and I, and I've never been back since. Okay.
00:02:48 Speaker_03
Well, it's my favorite place to get breakfast or get my little tuna melt. I've been going there for ages.
00:02:52 Speaker_03
It's a little bit of a legendary place where Steve Jervison made the Hotmail investment, the Tesla investment, all kinds of famous stuff happens at bucks.
00:03:00 Speaker_06
Well, it's where PayPal got its first funding round where John Malloy from Nokia Ventures beamed the money to Peter and Max at bucks on a Palm pilot on Palm pilot way back in 1999.
00:03:13 Speaker_03
Yeah, for those people who don't know, Palm Pilot was the most innovative and poorly designed product of the last century.
00:03:18 Speaker_12
That was J-PAL's nickname in college.
00:03:21 Speaker_04
Oh my god, well done. So good.
00:03:25 Speaker_03
So good. But you know, I'm wearing my Bucks hat and I got my Bucks menu here. Boys, it was like a pinnacle of my career. I've been waiting for this. If you go to Bucks and you look at the sides, you can get your crispy Brussels sprouts there, Freeberg.
00:03:40 Speaker_03
Get your sweet potato fries. But there it is. J. Cow's onion rings are now on the menu at Bucks. I have hit the big leagues, folks. Wait, is that real? Did you really get that? I did. I'm the first person.
00:03:53 Speaker_02
But do you like onion rings? I love onion rings.
00:03:55 Speaker_03
I love a good tuna melt. It's a weird sandwich, but they do it so great there. And I keep asking for onion rings for like a decade. And then we don't do onion rings. Tuna melts are good. Tuna melts are good. Yeah.
00:04:05 Speaker_03
And so suddenly, you know, the team there comes out, they say, Jake, we have two different types of onion rings. Please pick which one you like best. I went with the panko crusted Freeburg. These are for you. Delicious panko crusted.
00:04:16 Speaker_03
And they put them on the menu. So I was so touched.
00:04:19 Speaker_12
Can I just say, while we're on sandwiches, Sure. You know what I love? What do you love? A Reuben made with turkey breast instead of pastrami. Have you guys ever had a turkey Reuben? Wonderful. Oh, I haven't.
00:04:32 Speaker_11
Oh, it's incredible.
00:04:34 Speaker_12
Because I think a pastrami Reuben is a little too much. It just feels too sclerotic. Too fatty, like your arteries are. Yeah, it's terrible. But like you get a good Thousand Island sauce and like the sauerkraut and some cheese. It's amazing.
00:04:48 Speaker_03
I took my, I took, when I was in New York a couple of weeks ago, I took my daughter to Katz's Deli. I took her on a little tour of the Lower East Side and we made a stop at Katz's. What's your favorite, Sammy, there?
00:04:57 Speaker_12
Max's Deli, by the way, has a turkey. Max's Deli.
00:05:00 Speaker_04
Why did you do a paid promo for Bucks at Woodside? I don't, they gave you a hat.
00:05:04 Speaker_03
Every time they sell one of those onion rings that I get $1 on my account. I don't get to sell onion rings. Perfect. Okay. I mean, you're selling potatoes and schmatzes.
00:05:19 Speaker_04
to sell onion rings.
00:05:21 Speaker_03
Onion rings and Laura Piano. We go high, we go low. They go high, we go low. They go low, we go high. All right, listen, Tramont's Big O outcome is on the table, but DOJ is looking at breaking up Google. This is huge news in our industry.
00:05:34 Speaker_03
Last week, we talked about ruling that Google had an illegal monopoly in search and advertising. The case was brought by Trump's DOJ back in 2020.
00:05:43 Speaker_03
Schmott said, two outcomes are possible, little O, big O. Little O, consent decree, like Microsoft did back in 2000 with the Internet Explorer decision. The big O, We didn't think that was a major possibility, but here we are. Google getting broken up.
00:06:00 Speaker_03
DOJ is going big O. On Wednesday, Bloomberg reported the DOJ is considering a breakup. According to the article, most likely breakup targets are Android OS, Google Chrome, and Android TV. words. Okay.
00:06:11 Speaker_03
Last time the government tried to break up a monopoly was 20 years ago, when they tried and failed to dismantle Microsoft. We know how that's gone. The company's doing great. So let's talk about it.
00:06:21 Speaker_03
Aside from search and advertising, there's kind of five pillars at Google, and you're a former Googler, so we'll go to you first, Freeberg, I think.
00:06:27 Speaker_03
Cloud 40 billion in revenue growing 30% YouTube 34 billion growing 15% little volatile because it's advertising that doesn't include like premium YouTube TV and that stuff.
00:06:37 Speaker_03
But oh my lord, YouTube is up to 2.7 billion monthly active users, world populations 8.2. So quite significant. Netflix has 38 billion in revenue, they're worth almost 300 billion. So that's an interesting corollary.
00:06:50 Speaker_03
You got Waymo doing 50,000 paid trips a week now. 2.5 million a year, and that's growing quite nicely. You got Android, right? They don't disclose revenue. You got the G Suite.
00:07:02 Speaker_03
So let's start with you, Freeberg, and then I'll go to you, Chamath, because you made the prediction.
00:07:07 Speaker_03
What do you think would be accretive or generally increase the market cap and be something that Google would be happy with and the government would be happy with if you had to maybe shed one or two properties? What's a possible outcome here?
00:07:22 Speaker_04
and your thoughts broadly on this. I'll just start by commenting, I'm not really sure what the improvement to consumer pricing or competition would be. in different breakup scenarios. I'd really like to understand the DOJ's analysis on that.
00:07:41 Speaker_04
How does breaking up one of these things improve the consumer experience? I could see the case for Android, because Android defaults to Google Search. But again, Android's an open source operating system.
00:07:55 Speaker_04
And so everyone has their own fork or a lot of the handset manufacturers will have their own fork of Android. Obviously, the Google fork defaults to Google search. So it benefits Google services quite well.
00:08:05 Speaker_04
I think that would be an analysis that the DOJ would really have to kind of prove out that there is real anti competition associated with Google's influence over the open source Android operating system fork that they manage and license out.
00:08:18 Speaker_04
I think understanding that would be good. I do think that there's a lot of value unlock in YouTube. So if Google were to just generally spin out YouTube,
00:08:27 Speaker_04
That is probably a business that on its own would attract an investor base that might otherwise not want to get into the conglomerate. And you know, there's always this notion of what's called a conglomerate discount.
00:08:40 Speaker_04
When you put a lot of different businesses together,
00:08:43 Speaker_04
the businesses in aggregate get valued less than the individual parts which would be valued on their own because different investors interested in a business investment thesis would like to bet on cloud would like to bet on YouTube would like to bet on AI.
00:08:58 Speaker_04
And so and and so each one of these kind of like segments if they can be unlocked can actually be value creating in terms of overall market cap.
00:09:06 Speaker_04
The challenge is the way YouTube's infrastructure operates, it operates on shared infrastructure with the rest of Google services. So does cloud, so does search, so does AdWords. So there's one common a cloud infrastructure that everything runs on.
00:09:20 Speaker_04
And then there's one common advertiser pool. There are dedicated advertising salespeople within YouTube, but there's also dedicated shared infrastructure on advertising between YouTube and search and AdSense and so on.
00:09:33 Speaker_04
And there's ad sales teams that actually can sell across search. and third party publisher sites, and YouTube. And so you know, breaking up those shared teams becomes a little more technically difficult. But YouTube certainly seems like an unlock.
00:09:47 Speaker_04
The question is, what happens with all the infrastructure layer? Does that go with cloud? And if it does, then YouTube, AdWords and search all become customers of cloud. So that might be one way that this could work.
00:09:58 Speaker_04
But I think net net, if this were to happen, there could be a lot of upside in the market cap. I'll also say it just feels like the tenor of all of this is anti success. and not anti competition.
00:10:13 Speaker_04
And anything that's kind of successful or big is automatically deemed to be a monopoly. And I think we really have to kind of understand how our consumers and the market for competition being affected by having all these things together.
00:10:26 Speaker_04
And that's what should really be focused on and studied, not just the fact that something is big and successful. We'll see how that all plays out.
00:10:33 Speaker_03
All right, Chamath, you predicted the possibility of a big Oh, here we are, your thoughts on what this might look like, chances of it happening, and then just maybe if you're interested in the anti success approach here, do you think this is more, you know, valid criticism of Google's massive search monopoly?
00:10:56 Speaker_12
Well, when I painted that series of outcomes, just kind of like looking forward, I really didn't think that this big O outcomes was a very large probability. I was like, you know, I would have handicapped that at single digit percentages.
00:11:13 Speaker_12
And I think the reason why DOJ leaked this thing and floated this trial balloon, essentially, is in part, I didn't weigh enough what Sachs was talking about, which is that there really is a massive bipartisan amount of support against Google.
00:11:35 Speaker_12
Now, it cuts on two different dimensions. I think that there is one dimension which is more Republican oriented, which is just about freedom of speech and putting your thumb on the scale.
00:11:46 Speaker_12
But if you take the Democratic point of view, it's more the anti-successful vein that Freeberg just mentioned. The thing is, though, that it'll make strange bedfellows because it unites both sides against pushing for a big outcome.
00:12:03 Speaker_12
If you go back to the last Big O outcome that we had in antitrust law, which was AT&T in the seventies and eighties, that lawsuit was a decade long, right?
00:12:19 Speaker_12
And essentially what happened was when it looked like AT&T was going to lose the case, they were the ones that proposed splitting itself up.
00:12:31 Speaker_12
And so I think that this is going to start this really interesting chess game here, where obviously Google has to appeal and fight this.
00:12:40 Speaker_12
But if it looks like the political pressure is going to build and the courts aren't going to let them off the hook and have a little O outcome,
00:12:50 Speaker_12
probably the best thing to do is for Google to initiate it themselves, because they can answer a lot of the questions that Friedberg just raised.
00:12:57 Speaker_12
And they'll do it in a way where going back to the people that matter, along with the customers and the employees are the shareholders, you can do it in a way where the sum of the parts will be greater than the value today of Google.
00:13:14 Speaker_12
So I think that there's a shareholder win. It needs to be offered by Google and then negotiated. But to be really honest with you, Jason, when I when I kind of was thinking about it last week, I really thought this was a single digit probability.
00:13:28 Speaker_12
I still think it's a single digit probability. And if it grows, it's the most meaningful thing that's happened in technology, quite honestly. All right, sacks from a business perspective.
00:13:41 Speaker_06
I agree with Chamath that Google has the opportunity to do something really interesting here, which is get ahead of the curve and break itself up before the political system forces that onto it.
00:13:53 Speaker_06
And the advantage of doing that is that it could partition the company in ways that are economically smart. The big categories would be search, advertising, and YouTube. I think that would have two big economic benefits for shareholders.
00:14:06 Speaker_06
One is, you unlock value by deconglomerating, like Freeberg was saying. Second, once you break up the company into these pieces, there's less places for employees who aren't doing anything to hide, for all this bureaucracy to hide.
00:14:21 Speaker_06
I mean, look, Google is famous for employees who don't do anything, right? The guys sitting on the roof, sunning themselves all day.
00:14:28 Speaker_06
If you break up the company into three or four smaller companies, right, there's just way less room for people to hide. And I think that they could all be leaner, more efficient operations, and that would accrue to the benefit of shareholders.
00:14:40 Speaker_06
So I think that would make a lot of sense. And then furthermore, I guess a third point is that you forestall the possibility of the government doing something that could actually be very harmful. And, you know, the piece here
00:14:53 Speaker_06
is that I guess the DOJ is talking about spinning up Android and Chrome. And I think it's worth pointing out that those aren't really businesses in and of themselves.
00:15:04 Speaker_06
The reason why Google developed Android and Chrome was to prevent anybody from getting upstream of them, right?
00:15:11 Speaker_06
They saw what Microsoft did in terms of capturing the operating system and then capturing the browser, and they didn't want to potentially allow Microsoft or anyone else to essentially
00:15:22 Speaker_06
win the high ground, capture the high ground upstream of them, and be able to divert traffic away from search to their own search engine or someone else's search engine.
00:15:30 Speaker_06
So they began this strategy of commoditizing those layers of the stack, and it worked brilliantly. I mean, Android and Chrome have become very popular, and it guarantees that nobody else can get upstream of them and then disintermediate them.
00:15:45 Speaker_06
But the problem is, if those things get spun out, and have to become businesses on their own, how would they function as businesses? It's not clear to me that there's an obvious strategy there. I would like to ask Freeberg.
00:15:56 Speaker_06
Freeberg, do you see a way that Chrome and Android could be spun out and become viable businesses on their own?
00:16:06 Speaker_06
Or do you agree that they were essentially created to commoditize layers of the stack rather than become profitable businesses on their own?
00:16:13 Speaker_04
Yeah, so they were both created to avoid third parties blocking access to Google search. That's why they were both started.
00:16:22 Speaker_04
And remember, Sundar was the product manager on Chrome originally, that was his big kind of product that he ran for quite some time.
00:16:29 Speaker_04
So Android was all about making sure that the handset manufacturers didn't basically default consumers to do search and use the internet in a way that would disadvantage Google.
00:16:39 Speaker_04
So Google said, you know what, just like Zuck is doing currently with llama, Google said, let's make an open source mobile operating system that's better than any other mobile operating system.
00:16:50 Speaker_04
And we'll make sure that consumers have choice and they have the ability to go where they want to go. And it's not just defaulted by the telcos or the handset manufacturers. So that was the reason.
00:16:59 Speaker_04
And obviously, they ended up making their own fork of Android, which is the most popular fork of Android that has Google as a default search engine. So yeah, and they get license fees from that.
00:17:07 Speaker_04
But fundamentally, it's really just in service of making sure that people go to Google search. So where that ends up sitting in a split up company, I have no idea.
00:17:18 Speaker_04
And Chrome, similarly, you know, Google originally supported Firefox and gave a lot of money to Firefox. And then Firefox just wasn't moving fast enough.
00:17:26 Speaker_04
So Google started hiring Firefox engineers and built Chrome in house as a way to keep Netscape and Internet Explorer from blocking access to Google search and defaulting. And they built a default to Google search, obviously. What do you think, Jacob?
00:17:40 Speaker_03
You know, I have a long relationship with Google as a content creator, and they do have a massive monopoly in search. That's absolutely true. And the Justice Department, I think, is well within their rights to take a deep dive on that.
00:17:53 Speaker_03
They don't have it in ads.
00:17:55 Speaker_03
If you look at the competition for Google in advertising, you got Meta, TikTok, and Amazon, which have very, very significant advertising businesses, and then like a bunch of new players, which are referred to basically as the shopping cart ad networks.
00:18:08 Speaker_03
That's Uber, Instacart, DoorDash, etc. When you look at this, it's kind of paradoxical that it really does rhyme with what happened with Microsoft. They're two decades late on this.
00:18:19 Speaker_03
The search monopoly has been squeezed for every dollar and to build every subcomponent of Google's monopoly.
00:18:30 Speaker_03
Flights, shopping, all of these things put into Google search and put at the top, above organic search, has basically killed hundreds of startups over the decades. I actually don't think this is going to do much if they do a breakup.
00:18:45 Speaker_03
The easy solution for Google, and I agree with I think people who said that here, is to just spin out YouTube and Waymo. Those two are perfect standalone businesses.
00:18:54 Speaker_03
Yeah, there's some back end stuff, but like you said, Freeberg, they could become customers of the ad network of the cloud for some number of years.
00:19:02 Speaker_03
But YouTube and Waymo, those should be like a $400 billion company, a $50 billion company, and those are right in the zeitgeist of the future and what advertisers want. So I think offering those two up would unlock massive shareholder value.
00:19:15 Speaker_03
The most damaging one would be Android. If they force them to sell Android, that is going to be massively damaging because an independent Android company could then, you know, give their search default to Bing. And Microsoft would happily bid for that.
00:19:29 Speaker_03
No, no, no.
00:19:29 Speaker_12
Not could. Not could. They must, in order to capture maximum economic value.
00:19:33 Speaker_03
Sure, they would auction it. Yeah, you're right. They would auction it. They would auction it, right. And so, I mean, losing every... On Google's fork of Android, right? Correct. And so that is the dominant player. And then they have handsets.
00:19:43 Speaker_03
So how much is that worth?
00:19:44 Speaker_06
How much is that worth? Because maybe that does make Android a viable business on its own.
00:19:49 Speaker_02
You know, it would be probably 30 billion a revenue a year.
00:19:52 Speaker_06
OK, great. So let's do it. I take back what I said. It can survive as an independent business. Chrome can't, right? Chrome can't. But maybe Android and Chrome go together.
00:20:00 Speaker_03
That would be incredibly damaging to Google. That's the most damaging. The easiest is YouTube and Waymo in this whole mix.
00:20:08 Speaker_04
But I'll give you the wild card in all of this about the math. Sorry, just real quick on think about the math on that. So let's say it spins out and it generates 30 billion in revenue a year, and Google owns the majority of it.
00:20:18 Speaker_04
And eventually they'll sell it down. But that business will be valued on the money that Google's paying. So Google will make that equity value back because they own the shares.
00:20:25 Speaker_03
and they will lose one third of their revenue to that new company. Now, of course, they'll get it back in the equity, but then they don't have it because about a third of searches are mobile now, and that's increasing.
00:20:35 Speaker_03
The big wild card in all this is Apple. When I was doing Mahalo, which was a human-powered search over 10 years ago, that's Sequoia back, I emailed it to Steve Jobs. He opened it, he played with it a bunch.
00:20:47 Speaker_03
I won't talk about anything else in that regard. But they had a search project in the works when Steve Jobs was in charge over there.
00:20:55 Speaker_03
They were looking at search because he had such an axe to grind with Eric Schmidt because they launched Android and he kicked Eric Schmidt off the board. And there was a lot of hand-wringing there.
00:21:06 Speaker_03
I think Apple is, and I've heard this from folks around Apple, that they're looking at search again. And there's DuckDuckGo and there's a company called Brave that has their own search engine and search API that's gotten very popular.
00:21:18 Speaker_03
I believe Apple is going to launch their own search engine and compete heads up with Google. And so I think that's going to be the very interesting thing that happens in this market.
00:21:27 Speaker_03
The question then becomes, Chamath, does this distract management to a level like it did Microsoft and you have a lost decade and it takes their eyes off the prize of AI?
00:21:40 Speaker_12
No. And the reason I say no is that I think that people's reaction to these things become more sophisticated in time because folks go back and actually study what happened in the Ma Bell situation, AT&T in the R box, what happened in Microsoft.
00:22:01 Speaker_12
And so I suspect that they know how to shield the rank and file employee from whatever's going to happen. So I think that that's less likely.
00:22:11 Speaker_03
I think- I was referring to management, you know? Like, do you think it distracts management from running the business, Shama?
00:22:20 Speaker_12
I don't think so either, because I think that these things get put into a very, Type group of people, mostly lawyers who then go and deal with this issue.
00:22:30 Speaker_12
I think that there's an acute moment where if they think that they're going to lose an appeal or that appeal is not going to get heard. then yeah, I do think management and the board are brought together.
00:22:42 Speaker_12
And again, if history is a guide, they should want to propose the terms on which they break their own company up. Because I think if the government tries to decide, there's going to be so much imprecision that they'll break the company.
00:22:59 Speaker_12
And I think that would be a shame because I mean, look, take a step back. The breaking up of Google is great for competition and for startups.
00:23:09 Speaker_12
But let's not forget, Google is an incredible company that has created enormous amounts of good, they have done way more good than bad way more like three, four or five orders of magnitude more good than bad.
00:23:23 Speaker_12
And to break a company like that, I think would be a really bad outcome. From a competitive dynamics perspective and game theory, it's pretty reasonable to hobble them.
00:23:36 Speaker_12
That's why I think the small O outcome is much more palatable and seems more fair to me. A breakup is a really draconian action. And I'm not sure that when you look at Google versus AT&T and the Babybels, I don't think it's anywhere near the same.
00:23:54 Speaker_12
But if there's the political will, they'll be able to craft and change some of the laws that allow these folks to just keep going after them.
00:24:04 Speaker_12
And if that happens, I think it's going to be really important for Google to define the terms of their own breakup.
00:24:09 Speaker_04
I want to just underline what Shamoff said real quick, being big,
00:24:13 Speaker_04
can be very good, in the sense that it can drive an ability to invest in innovation that is not possible without the scale and the significant cash flow that's being generated by being that big. And at&t is a great example bell labs
00:24:29 Speaker_04
So the way AT&T was set up is there was all the local telephone companies under the spell system that AT&T owned. And then Western Electric was the company that manufactured all the telephone equipment that was put into the telephone system.
00:24:42 Speaker_04
And then Bell Labs was the third entity, it was the research arm. And all that they did at Bell Labs was do research. And they were fully funded, they had all this cash flow pouring into them.
00:24:52 Speaker_04
So they could discover and work on and invent whatever they wanted. With that capital, Bell Labs is so insane. If you go if you guys haven't read any of the books on Bell Labs and what was discovered there and how it operated.
00:25:03 Speaker_04
It truly is like the most innovative center ever in human history.
00:25:08 Speaker_04
But they invented like antenna arrays, they invented microwaves, they invented radar, they invented the transistor, they invented information theory, which was the basis for everything in the internet.
00:25:19 Speaker_04
There was even some efforts to try and invent a nuclear bomb before the Manhattan Project started, they invented integrated circuits, and on and on and on and on.
00:25:28 Speaker_04
And that's because they could invest all this money in doing this research that would have been very difficult for a small startup, or a company that's trying to grow and is barely profitable to be able to do.
00:25:37 Speaker_04
At Google, they've invested billions of dollars in Waymo.
00:25:40 Speaker_04
And I think as we all know, Waymo really was if not the leader, but the inspiration for a whole generation of autonomous driving that ultimately will come to market and will really transform our lives in a meaningful way.
00:25:51 Speaker_04
In the same way Amazon and Microsoft and Meta have all invested 10s of billions of dollars in innovation. Look at what Zuck is doing at Meta with the open sourcing of the llama models. It's incredible that
00:26:02 Speaker_04
would have never been possible if you had a small company that was trying to get profitable. So I just want to highlight like these businesses, just because they're big and successful, doesn't necessarily mean that they're stifling innovation.
00:26:14 Speaker_04
In fact, they may be accelerating innovation and enabling progress. I'm just pointing out that the cash flows that are being generated in the way they're investing those cash flows is pretty, pretty impressive.
00:26:23 Speaker_04
And we lose that if we end up going after every big company, just because they're big, and saying, Hey, we should take away their ability to do this.
00:26:30 Speaker_03
I'm going to take the other side of that. I think that what they can do with their massive amount of power is destructive to competition in the marketplace. If you look at self-driving, we have had tens of billions of dollars invested.
00:26:44 Speaker_03
Without Waymo, it would have been just fine. There have been so much money, Tesla, Uber. you know, a cruise GM, there's plenty of people out there, there's plenty of capital out there from around the world.
00:26:56 Speaker_03
And I think when these companies and Facebook's one, I think proves my point, what you're saying here is
00:27:02 Speaker_03
I think it would be better that you didn't have these companies that could put $20 billion into something, and you had 50 startups go after it, rather than these giant companies just steal it and overpower them, flooding them with capital.
00:27:13 Speaker_03
It makes the world less dynamic, and Google can keep taking the next category from the marketplace.
00:27:22 Speaker_06
If you break Google up from a conglomerate of let's call it four monopolies, or duopolies, or companies with extraordinary market power into four separate companies, they're still going to be generating extraordinary profits, and those could still be invested in Waymo.
00:27:36 Speaker_06
So I don't know that it stops the innovation.
00:27:38 Speaker_06
Our workshopping this issue has pretty much convinced me that it should be four companies, search, advertising, YouTube, and Android, because I think Android could be a standalone business because of the value of the
00:27:51 Speaker_05
Where does cloud go? Cloud is in search or advertising? That's got to be figured out. I don't know the answer to that.
00:27:58 Speaker_03
Yeah. So, I mean, I guess it's a negotiation now. Maybe they put up one or two to be spun out, and then the negotiation happens. Who knows? You could have regime change in Washington. Okay, let's keep moving through this incredibly juicy docket.
00:28:10 Speaker_03
Starbucks CEO is out after a year and a half of underperformance. Starbee's CEO, Laxman Narasim, stepped down after just 16 months on the job. I'll break down what went wrong and get your reaction to all this. I know you have some strong feelings on it.
00:28:25 Speaker_03
Freiburg as well. Earlier this week, Starbucks shares were down 20% year-to-date compared to the S&P, up 12%. Companies are two straight quarters of declining revenue, the definition of a recession, in fact.
00:28:35 Speaker_03
They've had to raise prices massively due to inflation that has annoyed customers, and customers have been irate about the wait. which has been caused by two things. One, they have a broken staffing algorithm. That's led to massive understaffing.
00:28:49 Speaker_03
And then the app has become, the StarBees app is incredibly complex and you can order ridiculous drinks.
00:28:56 Speaker_12
That's causing a massive- Why do you keep saying StarBees? It's what the kids call it. It's what the kids call it. Starbies. Oh, that's part of the problem.
00:29:05 Speaker_03
Okay. That's what it is. Yeah. And they've added like all these like fruity drinks and stuff that would be like along the boba lines that have made and become incredibly popular with millennials and Gen Z.
00:29:18 Speaker_03
So anyway, Laxman was the handpicked successor by Howard Schultz, and Schultz helped prep and train Laxman, but he's been super critical of him recently, kind of like the Bob Iger, Bob Chapek relationship we saw play out in 2022 over at Disney.
00:29:32 Speaker_03
Brian Nichol, the current CEO of Chipotle, is going to take over at the end of August. Investors love this move. Shares jumped 25% on Tuesday.
00:29:40 Speaker_12
Sorry, what did you call it? It's called Chipotle. Normal people call it Chipotle.
00:29:44 Speaker_03
Sorry, Brian Nichol, the current CEO of Chipotle.
00:29:48 Speaker_05
Chipotle.
00:29:49 Speaker_02
CEO of Chipotle. No, Chipotle. Chipotle. Chipotle.
00:29:54 Speaker_04
CEO of Chipotle. Chipotle. Who knows? I don't eat at this place.
00:29:59 Speaker_03
Anyway, Starbucks jumped 25% on Tuesday, largest day increase, yada, yada. Meanwhile, Chipotle dropped 8%. Nickel is on a heater. When he switches teams, the odds go with him.
00:30:10 Speaker_03
And Starbucks has a bunch of activist investors who are winning massively as part of putting pressure on this freeberg. Starbucks and Nike, both iconic global brands, both have faltered. What's your take?
00:30:23 Speaker_04
Well, the one argument is there's a founder led problem here, which is when the founder steps out and professional management takes over and you have the same expectations that you had when the founder was leading things go sideways. But
00:30:38 Speaker_04
Starbucks faces many more kind of macroeconomic challenges. Nick, if you pull up Starbucks financial report. So here you can see that their net revenue growth was only a 1% year over year, but their operating margins been on the decline.
00:30:53 Speaker_04
So they have not really been able to boost their operating margin very much in the past five years. So while they've raised prices. they've had a really hard time making more money.
00:31:03 Speaker_04
And that's because the cost of food and the cost of labor and the cost of rent, and the capital expenditures needed to upgrade stores has far exceeded the ability for them to grow revenue and compete.
00:31:15 Speaker_04
And now revenue is flatlining because consumers are getting tapped out with respect to how much they can spend. And there's only so much innovation you can really do to charge more get people to come in the store more. and drive up revenue.
00:31:29 Speaker_04
Brian Nickel has an incredible reputation. Prior to Chipotle, he ran Taco Bell. And he ran Taco Bell for several years and made it one of the most profitable QSR or quick serve restaurants in the world. He did this by focusing on every nickel.
00:31:45 Speaker_04
He is notorious for being a cost cutter, for being an efficiency driver, for being a productivity hound.
00:31:52 Speaker_04
He goes into the business and he figures out every step in the supply chain, every step of the operating activities of the employees in the stores, and figures out ways to make sure
00:32:01 Speaker_06
Did you say that Brian Nichol focuses on every nickel? Was that? Don't interrupt him. He doesn't like to be interrupted. No, no, it's okay. Sorry. Keep going.
00:32:14 Speaker_04
That was good. And, um, And so he was recruited heavily. I don't know if you guys remember Chipotle's founder was running Chipotle.
00:32:20 Speaker_04
And at the time, there was a lot of investor activism around Chipotle, because they were wasting money like no one's business. The guy had a private jet, he was flying his management team back and forth between Denver and New York.
00:32:32 Speaker_04
They were spending money on crazy projects. And the board fired the CEO founder of Chipotle brought in nickel, nickel came in and made Chipotle an incredibly profitable growing business.
00:32:42 Speaker_04
And the expectation is he'll come in and do the same here that maybe over the years,
00:32:45 Speaker_04
Starbucks's success has bred laziness Starbucks's success has bred fat slowness, productivity decline, and that this guy is the right guy to come in and find all the nickels.
00:32:59 Speaker_04
And Brian Nichols is probably the right guy, which is why you're seeing the stock kind of rally as hard as it has.
00:33:03 Speaker_03
Sachs or Chamath, anybody have strong feelings here?
00:33:06 Speaker_06
Yeah, I would just add something here, which is I do think that macroeconomic forces played a huge role here. We've seen that we have had tremendous amount of inflation over the last few years, and Starbucks has gotten more expensive.
00:33:17 Speaker_06
And if you're a worker whose wages have not kept up with inflation, do you really want to spend 10, 15 bucks on a cup of coffee? That I mean, it's a pretty fancy cup of coffee. I'm not saying it's not.
00:33:29 Speaker_06
But when you could just go to your commissary at work and pour yourself a cup of coffee for free, Do you really want to work roughly an hour every day to pay for your coffee fix?
00:33:40 Speaker_06
And I think more and more consumers are just saying that this is a luxury good. I'm looking to cut costs. When I go to the grocery store and buy groceries, they're 30% more expensive than they were a few years ago. I got to cut somewhere.
00:33:54 Speaker_06
And a luxury cup of coffee just seems like a really easy place to cut. So I think that's a huge part of this. And I don't know how Brian Nichols is going to fix that. It's a macroeconomic force.
00:34:04 Speaker_12
I have a couple. The first is that I think Starbucks is actually an incredible brand and it's actually a really good business. And the mistakes here have nothing to do with the product per se, meaning Chipotle.
00:34:19 Speaker_12
If you remember someone got poisoned there, there was like botulism, the chicken was bad. So there was a core product problem, but that's not the case here. If you unpack what Starbucks is,
00:34:34 Speaker_12
I think that they are a premium product and that's reinforced by what Sachs said, which is they price in such a way because they believe that they are a premium product. The problem is they are not a premium brand.
00:34:49 Speaker_12
And the difference is Hermes, as an example, is a premium brand. They can charge whatever they want under all weather conditions. They have pricing power.
00:34:59 Speaker_12
So if their inputs go up, they can make sure they maintain margin by changing the final price that the customer paid. Starbucks doesn't have that power. So they charge like a premium product. But they're not a premium brand that has pricing power.
00:35:13 Speaker_12
And that's why you've seen this compression.
00:35:16 Speaker_12
So very specifically, when the new CEO came in, he, I think, made one important mistake, which is he came in on the heels of a very rosy set of projections that Howard Schultz and the board put out to the street.
00:35:33 Speaker_12
And I think that he had an opportunity then and there to just cut it because they saw inflation, they saw what it was doing. And if you just looked around the corner, you would have seen that there would have been this compression in the product.
00:35:48 Speaker_12
And I think what he should have done is just cut the analyst projections and the forecast to give him room and time. He didn't do that. And by the way, when you bring in somebody who ran Taco Bell,
00:36:02 Speaker_12
That is proving that this is neither a premium product nor a premium brand anymore. It is a mass market product that will ebb and flow cyclically with the vicissitudes of inflation. That doesn't mean it's a bad business.
00:36:15 Speaker_12
I'm just saying it's just an observation. I expect that Brian Nickel, if he is smart, will look at this forecast and shred it to give himself time. So that's the sort of the short term thing.
00:36:30 Speaker_12
The long term thing, though, is in the following image, which I just sent to Nick. I think there's a real question mark on this company over the medium to long term. And I think it's best represented in this graphic. Starbucks is a sugar company.
00:36:46 Speaker_12
So for example, a caramel macchiato, 32 grams of sugar, a mocha frappuccino, 60 grams of sugar. This is three times what you're supposed to have as a human in a day.
00:36:58 Speaker_12
A frappuccino, 53 grams of sugar, a caramel ribbon crunch frappuccino, 62 grams of sugar. And these products also average four to 500 calories per drink.
00:37:11 Speaker_12
So the real issue is that more consumers, as they question the repercussions of consuming a lot of sugar, what will they do? As more consumers get on GLP-1s, what will they do? As more people think about the fact that Fat was never an enemy.
00:37:30 Speaker_12
In fact, fats are actually really good for you. The problem was that the sugar lobby convinced us that fat was bad and sugar was okay. What will consumers do?
00:37:40 Speaker_12
And I think that's a really big strategic question mark because the company has to embrace where the world is going. The world is going away from sugar. And I think as consumers become smarter, they're gonna have to really figure out what to do.
00:37:56 Speaker_06
Could Starbucks introduce a line of low-calorie drinks that use sugar substitutes to achieve the same flavor?
00:38:03 Speaker_03
They've already got that, yeah. When you open the app, every single syrup comes in sugar-free and regular. So when I go there, now that I'm on GLPs and I've lost all this weight and I drink less, I just get the Nitro Cold Brew.
00:38:17 Speaker_03
It's got zero calories or five calories. I may throw a little cold foam on it. And then my kids, I do kids want, that's not what the kids with the kids is critical. What I do with my kids is I do low sweet or like one third sweet.
00:38:29 Speaker_03
I ordered one giant one. I pour it into three glasses at home with ice and I cut it with water because it is like drinking an unbelievable amount of sugar. It is nuts. It's like a milkshake basically.
00:38:43 Speaker_04
I'm going to go get an espresso after this. This is making me want an espresso.
00:38:46 Speaker_03
No, I mean, that's the thing about coffee. Coffee's supposed to have zero calories and you put a little half and half in it and you get the fat and you're good.
00:38:51 Speaker_04
No, but I mean, here's what happened. The thing about Starbucks, I study Starbucks and I've spent some time with Howard Schultz actually a couple of years ago. Well, you did retail, right? Maybe you could talk about your eat sense.
00:38:59 Speaker_03
I did a little retail. You did a little retail side quest.
00:39:02 Speaker_04
But the thing about Starbucks is they realized early on that when you can customize a consumer experience, the consumer comes back more frequently.
00:39:10 Speaker_04
So when you see your name written on that cup, you feel like you're getting your product, you're not buying an off the shelf product, you're getting a custom personalized experience. What that led to is people customizing their drinks.
00:39:21 Speaker_04
And what did they find that they like when they customize their drinks, sugary sweet add ons. And then that became more and more of the standard menu. And then that just kept evolving.
00:39:29 Speaker_04
And that's just the consumer feedback mechanism working, which is to Chamath's point, led to 60 gram sugar drinks that are now the standard product at Starbucks, not an espresso or a cappuccino, which is how they started. And it's really unfortunate.
00:39:44 Speaker_04
I don't think that Brian Nichols is going to focus on that, to be honest, given his background with Taco Bell and Chipotle, that that was never anything.
00:39:50 Speaker_12
To your point, he'll be able to plug the leaks. My question is just more, what does a company that's selling a product that people are learning is worse and worse for them? What do they do?
00:40:02 Speaker_12
They have to embrace a different alternative, but I think it can be very hard because it may be so disruptive to the core product that they sell.
00:40:11 Speaker_04
Jake, what do you think? What do you think about Starbucks?
00:40:15 Speaker_03
My kids love Starbucks. We are regular consumers. The app is extraordinary. I think the key issue here is obviously the inputs and inflation. That's a major driver. But wage inflation is a critical piece of this.
00:40:30 Speaker_03
Here's a chart for you just in terms of weekly earnings of full-time workers since Q4 2019. Starbucks started having a lot of labor movements, a lot of unionization, a lot of complaints from the Green Aprons, and they have massively raised salaries.
00:40:45 Speaker_03
They were at $15, $16, $17. A lot of people were going into gig work, door dashing, Uber. This competition for entry rung employees forced Starbucks, and I know this from the Uber experience, and then DoorDash.
00:41:01 Speaker_03
People wanted to set their own schedules, not be in a shift work.
00:41:06 Speaker_03
you could make 20 bucks working for Uber and DoorDash, you're making 15 and you have to drag your ass into Starbucks at 5, 6, 7 AM and work a shift and not be able to pick up your kids.
00:41:16 Speaker_03
That led them to go to like $20, $22 per hour for these baristas. And they continue to raise those rates. They've been very generous with employees. And so I think that's a key piece of it. I think the big story here is going to be automation.
00:41:32 Speaker_03
I think you're going to see a lot more robotics in these. If you look at... I just had the CEO of... What's the salad company? Sweetgrains. I just had the CEO of Sweetgrains on This Week in Startups, and he is all in on automation.
00:41:47 Speaker_03
They are making salad robots, and they've already got two or three stores with them. His whole concept is it's going to take $3 out of every salad We have an investment in a company called Cafe X. Nick, you can play a clip of it.
00:41:58 Speaker_03
These two machines in FSO have broke a million dollars a year in revenue. They are serving a massive number of them, and they've sold a dozen of these to other people. So I think automation is what's going to come to this.
00:42:08 Speaker_03
I don't think you can sustain it. And the money has to come out of somewhere. And the two big costs it can come out of is the real estate and the employees. And I think that's what we're going to see in the very near future is Dunkin.
00:42:21 Speaker_04
I will predict Yeah, no, you were doing it at EATSA, right?
00:42:24 Speaker_03
Were you doing?
00:42:25 Speaker_04
We had automation. I actually worked on an automation project with Jonathan at Sweetgreen and Starbucks and Chipotle. So I knew them all. Yeah. And then the Chipotle CEO got fired. We were going to roll out automation with Chipotle.
00:42:36 Speaker_04
And he got fired and nickel came in and our deal blew up. it killed the deal.
00:42:41 Speaker_03
So explain how that might work and impact a business like that. Unpack it.
00:42:45 Speaker_04
Oh my god. So it was going to take out basically these businesses today are running a call at 30% EBITDA margins at peak performance.
00:42:53 Speaker_04
That's like Chipotle is best class by taking out labor, you could probably take out another 20 points of cost, which could translate into lower prices for consumers, higher throughput, lower wait times, all of these kind of experiential differentiators are going to be significant.
00:43:08 Speaker_04
Certainly true for Starbucks, certainly true for Sweetgreen. I would expect that with Nickel coming in, you'll see some experimental stores, as you point out, J. Cal, that'll be more highly automated.
00:43:18 Speaker_04
But we'll also, I think one of the first things you're going to see from Nickel within the first year at Starbucks is a reduction in the complexity of the menu. This is something he's done historically.
00:43:28 Speaker_04
And he focuses, like he did at Taco Bell, he creates a couple of key highlight products. and creates these innovative product ideas. And then those become the banners that bring people into the store.
00:43:37 Speaker_04
But it's a simpler menu with kind of more attractive, interesting products that bring people in. And then if you couple automation to reduce some of the cost, you can bring that labor cost down.
00:43:46 Speaker_03
So yeah, and this is a key point, you know, the order complexity is what's killing the the baristas, there's four quintillion
00:43:54 Speaker_04
ordering options at Starbucks today. And so the expectation has always been that that is what brings people coming back to the store.
00:44:02 Speaker_04
But what nickel has shown in the past with Chipotle and with Taco Bell is you can actually have a simpler menu with a few points of customization, you don't need to have infinite customization around everything.
00:44:12 Speaker_03
And my guess is Steve Jobs did right with his four quadrants when he took back over. He was like, Listen, what's business? What's consumer? What's high end? What's low? What's portable? What's desktop? I forgot what the four quadrants were. But he did.
00:44:24 Speaker_03
And if you look, Freeberg, to your point of the cost savings, right now, the majority of orders in Starbucks, I believe, are coming in through the app. And what I was told, you know, and some of the buzz I heard from baristas,
00:44:35 Speaker_03
was that they are prioritizing mobile orders to punish the people online to get them to download the app, because that gets rid of cashiers. And McDonald's has no cashiers in a lot of restaurants right now, you just order at a giant touchscreen.
00:44:49 Speaker_03
So the cashiers will be gone, the cooks will be gone, and eventually the baristas will be gone, and it'll just be a couple of people.
00:44:55 Speaker_04
The cashier problem also creates a wait time problem, because it's a serial ordering process. Everyone stands in line, they order one at a time, and there's only one, and so the barista's just taking-
00:45:04 Speaker_12
All of these are really good points. I just think that the CEO would not have gotten fired had he just moved the forecast down by 20% when he came in as CEO.
00:45:12 Speaker_03
Also, did you see this incredible clip of him saying he doesn't want anybody working past 6pm? Play this clip. This is like the previous Starbucks CEO.
00:45:22 Speaker_04
I mean, this clip is so brutal. We should talk about this in the context of Eric Schmidt's interview as well. J Cal, let's show the clip. And then let's talk. Let's show Eric Schmidt and talk about like, work culture in America.
00:45:33 Speaker_04
I think this is a really important point.
00:45:35 Speaker_03
Yeah, fantastic side quest. Let's do it. All right. So now there's a big culture thing going on here. Freeberg of hard work in corporations. I don't know if you saw Eric Schmidt at Stanford, they took this talk down.
00:45:46 Speaker_03
And Eric Schmidt is walking the comments back. But here we go, folks. This is the money clip from Eric Schmidt.
00:45:51 Speaker_10
Google decided that work-life balance and going home early and working from home was more important than winning. And the startups, the reason startups work is because the people work like hell.
00:46:07 Speaker_10
And I'm sorry to be so blunt, but the fact of the matter is if you all leave the university and go found a company, You're not going to let people work from home and only come in one day a week. Oh, your reaction bucks clip.
00:46:22 Speaker_06
Can you show the Starbucks? Well, it's a self evidently true. I mean, he's basically making a point similar to what I said about Google so large that employees can hide. and not do very much.
00:46:31 Speaker_06
And, you know, they can kind of, it's not just, it's not just Google.
00:46:36 Speaker_02
It's pervasive. Yeah, let's pull up the, um, the Starbucks CEA. I'm very disciplined about balance.
00:46:43 Speaker_07
If there's anything after 6pm, and if I'm in town, it's got to be a pretty high bar to keep me away from the family. Anybody who gets a minute of time off of that better be sure that it's important. Because if not, it'll just wait for another day.
00:46:56 Speaker_04
This makes me so uncomfortable. Just hearing that I feel. Holy I mean, retire, bro. Just retire. What does America value is the real question. Does America value success, performance, or does America value comfort?
00:47:10 Speaker_04
And the problem is American American work culture has shifted to valuing comfort. And that is the inevitable outcome of decades of extraordinary success. And now the performance culture is losing to the comfort culture.
00:47:26 Speaker_12
And I think you guys are putting a lot of things together. The problem is that I don't think that that's his truth, actually. I think that this guy's clip sounds very inauthentic.
00:47:36 Speaker_12
I think what probably happened is the PR and policy group of Starbucks says, hey, listen, here's the average age of your employee and here's what they value. And he probably spouted some politically correct nonsense to try to inspire the troops.
00:47:51 Speaker_12
I think a lot of CEOs do this. Like, I think we're seeing in modern media today that a lot of CEOs have actually become the least version of their authentic self. They are being packaged by people to dress and act and say things in a certain way.
00:48:10 Speaker_12
And I think what happens as a result of that is that you have a wayward culture where nobody knows what people stand for. That's when the corrosiveness of folks not working at all or having
00:48:24 Speaker_12
jobs at two different companies comes in, like that's a total moral and ethical breach that happens because people think it's acceptable.
00:48:33 Speaker_12
And I think people think it's acceptable, because it's not in the talking points of how the CEOs are trying to package themselves to 10s of 1000s of employees.
00:48:44 Speaker_03
So you think this was a PR design genuflect? I like that insight. Saks, your thoughts overall?
00:48:51 Speaker_06
Well, it could be a genuflect. I don't know. Look, I would say that there are a lot of Americans who do feel that way about work, but I think it's not appropriate in two cases.
00:49:03 Speaker_06
Number one is, if you're ambitious and you really want to rise in your organization, then you gotta have more of the J-Cal attitude, which is I'm gonna be the first to work and the last one to leave, and I'm gonna show my boss, I'm gonna get promoted.
00:49:16 Speaker_06
So if you wanna be ambitious in your career, that's not a good attitude to have. And then on the other extreme, if you're the CEO of the company, your attitude has got to be, I'm 24 seven with this shit. You know, it's like, I'm always online.
00:49:28 Speaker_06
I'm always reachable. The buck stops with me. Now, obviously you're going to cut out time to be protected that you can spend with your family, but your attitude's always got to be that I'm available. You know, I don't turn off my phone.
00:49:41 Speaker_06
I don't do any of that stuff. I just think that if you're running an organization, you can't take this attitude that, oh, it's 6 p.m., I'm switched off. You know, it just doesn't work that way. Yeah, especially if you're running one.
00:49:53 Speaker_06
I don't think that's yeah.
00:49:55 Speaker_03
Yeah.
00:49:56 Speaker_06
I mean, it's an appropriate thing for someone like that to say when he's the CEO of a multinational corporation.
00:50:01 Speaker_03
Yeah, I think that is the key insight. Saxon with you on this, which is leadership starts at the top. If the leader says, Hey, listen, don't bother me after six. I'll talk to you at 9am. then that's just going to go through the entire organization.
00:50:14 Speaker_03
And it's already hard enough to run these organizations. Now, if you run a lifestyle business as your local cafe, and you want to do that, and you're running it at a break-even, that's fine.
00:50:23 Speaker_03
This is a publicly traded company with shareholders with massive competition. Who could get taken out by all these other brands that are trying to compete with it? You have to have This is a war. We are at war. We have to figure out how to lower prices.
00:50:36 Speaker_03
We need to grind every nickel from the supply chain, rent. We have to renegotiate contracts. Just to speak on the work ethic issue, this country is in a very significant war about going back to work and work ethic.
00:50:52 Speaker_03
You mentioned over-employed and the ethics around that, Chamath. Then there's a group of Americans, and I've been studying this a bit, that are opting out of capitalism or hacking capitalism.
00:51:03 Speaker_03
There's a very interesting movement, it's called FIRE, Financial Independence Retire Early. And if you look at the two subreddits, Overemployed and the FIRE subreddit, young people are saying, capitalism is there to be hacked.
00:51:16 Speaker_03
And my way of hacking it is, I'm going to have two jobs. And I had a startup come to me and say, we've got this great engineer, literally from Google, who wants to work from us, and he's making 400k, we can get him for a buck 50.
00:51:27 Speaker_03
And I said, Oh, wow, that's great. Why would he do that? Is he independently wealthy? They said, no, he's keeping his job at Google. He says it takes 10, 20 hours a week, and he's going to work 60 hours a week for us. And I said, is that ethical or legal?
00:51:38 Speaker_03
And they're like, I don't know. That's why we're asking you. These are 20 year old founders we had backed. And I was like, this is incredibly unethical. And you're going to get us in a lawsuit. Don't do it. But that is what's the give and take.
00:51:49 Speaker_03
And if you look at what happened with Dell this past six months... Have you been following that, Freeberg, the Dell story?
00:51:54 Speaker_04
No.
00:51:54 Speaker_03
It's pretty incredible. They told everybody, we're coming back to office. People were like, yeah, I don't want to come back to office. Okay, reasonable. I think you'd do a better job at home. I get it.
00:52:02 Speaker_03
What they said was, if you want to be work from home, you can't get a promotion and you can't get a salary increase. And you know what employees said? Okay, I don't want an increase.
00:52:12 Speaker_03
I don't if my choice is stay at home and have no salary because I don't care about a raise. I don't care about a promotion. Then they said, you know what, we're cutting 12,000 people. You have to come back to office.
00:52:23 Speaker_03
Jay Penske and his company told everybody have to come back to office. So
00:52:27 Speaker_03
Now that you have this era of being fit, and you don't need as many people from AI, I think everybody's coming back to the office, unless you are part of the 20% of truly elite workers. Thanks for coming to my TED Talk.
00:52:40 Speaker_12
Even then, though, I struggle to understand why anybody
00:52:45 Speaker_12
who has any ambition would think that they're going to achieve the same amount of stuff working by themselves than they will by working with a group of colleagues that you respect in a physical space together.
00:52:59 Speaker_04
Will influence our culture.
00:53:00 Speaker_12
I don't know, but I'm saying like, when you look at the great thing that the world needs, that we are building and should be building, I don't see many good examples where those things are done in a remote way.
00:53:14 Speaker_12
I see the necessity of people to be together, whether it's to design something together, to talk about something together, to debate something together, to learn from each other, to grow as a person. And you're robbing yourself of all of that.
00:53:32 Speaker_12
And so I just think that it is a short-term optimization that a lot of people will regret, not necessarily in the moment, but when their career doesn't go where they want to, or the company they work at doesn't go where it should go to, or is capable of going to, they'll start to look for a scapegoat.
00:53:50 Speaker_12
But the real reason is that they've abandoned the idea that they need to be together. And I just think that that's, that's a tragedy.
00:53:59 Speaker_12
And it's, it turns out the best of our companies, like when I rank my portfolio, the ones that are doing the best are in total different industries, but the single consistent theme is we are all back together in person. Isn't that interesting?
00:54:16 Speaker_12
It makes total sense.
00:54:17 Speaker_06
It's much more productive because I think innovation happens as a team. You need collaboration, and it's way easier to do that when everyone is together in the same place. There's more room for spontaneity, more spontaneous interactions.
00:54:33 Speaker_06
The reason why Steve Jobs designed the spaceship campus in that famous circle was because it maximized the opportunity for serendipity, right?
00:54:43 Speaker_04
The labs did the same thing. The labs had a quad that you had to walk through to go from meeting to meeting. So everyone interacted.
00:54:50 Speaker_03
The technical term for that is collisions. And there's been a lot of research on random collisions. And I agree wholeheartedly with that.
00:54:58 Speaker_06
Yeah. And look, I just want to underscore this point. I think there's nothing wrong. If somebody says, look, my family's most important thing in my life, I only want to work 40 hours a week. I'm going to do a nine to six job with an hour lunch break.
00:55:10 Speaker_06
That's 40 hours. Don't call me after 6pm. You can design your career that way, but that is not a career that's going to enable you to either run a company as a CEO, or be a founder of a startup, or be on a track to one day being a founder or a CEO.
00:55:28 Speaker_06
It's just not compatible.
00:55:30 Speaker_12
Or even just a senior executive.
00:55:33 Speaker_06
Right, exactly.
00:55:34 Speaker_06
So you have to decide what track you're going to be on, and I think there's a lot of millennial Gen Z types who are confused about this, and they have the entitlement of saying, well, I want to just do the 40-hour-a-week thing, but then I also expect to rise rapidly and be an executive and be a founder or be a CEO one day.
00:55:50 Speaker_03
That's not going to work.
00:55:51 Speaker_06
Yeah, it's not going to work.
00:55:54 Speaker_03
In fairness, I think a lot of young people have not been mentored because they came up in the COVID generation. We're now four years later, and they just haven't had the chance to be mentored or be in an office.
00:56:05 Speaker_03
A lot of senior executives and CEOs are not coming to the office. A part of my move to Austin is I'm building a theater to record the podcast in and I'm building an incubator space and we're moving back to in person.
00:56:19 Speaker_03
I grant for the existing employees and I'm only hiring people in person now because I feel something very big has been lost in terms of meeting with founders in person and young people seeing me interact and my other senior team members with those founders in person during a pitch meeting during a product jam session during a fundraising review.
00:56:38 Speaker_12
Can I just say something about mentoring? I also think mentoring can be described as capital M mentoring and small m mentoring.
00:56:47 Speaker_12
Capital M is where some person is assigned to you and they're going to imbue some magical phrase or saying or thing and all of a sudden everything is going to work out for you.
00:57:01 Speaker_12
That form of capital M mentoring doesn't exist and has never worked for those that have tried it. The thing that's really productive is small M mentoring.
00:57:12 Speaker_12
And that happens when you model behaviors of really smart people and really capable people, really ethical people. And again, that happens because you're seeing them on a day-to-day basis, not just in a meeting, but in the gaps between meeting.
00:57:28 Speaker_12
And they'll include you in certain things, or you'll have lunch with them.
00:57:31 Speaker_12
And this is what I mean by all of these people that are looking for an accelerant in their career, they've robbed themselves of the most powerful accelerant possible, which is capable people to surround themselves with. I think it's so well said.
00:57:49 Speaker_12
They're going to look back on these decisions and they're going to regret them.
00:57:54 Speaker_03
I agree a hundred percent. And my one of my first jobs working at land systems, my mentor, Mike Savino was always working late. He was trying to move up in the organization and I wouldn't leave before he left.
00:58:04 Speaker_03
And then he would walk by and he'd say it was in New York City. Hey, what are you working on? I'm so I'm reading these Novell networking books. I'm trying to get my certification. I'm trying to learn more.
00:58:12 Speaker_03
I want to get out of hardware and get into software. And he'd say, oh, I'm going to get some dinner. You want to come? Now he was four levels above me in the organization. I was the lowest. He was second to the highest.
00:58:22 Speaker_03
And then I got to go to dinner with him. And then I got to hear about all the big clients. I got to hear how, you know, they were doing the pitches. And then he started including me in pitches.
00:58:31 Speaker_03
And all of a sudden I went from four degrees from him to reporting into him. And that's how I learned, you know, look at the person on the left, look at the person on the right.
00:58:41 Speaker_03
I was, I don't think I, yeah, I was actually, I was a certified network engineer.
00:58:45 Speaker_12
I was a certified Novell engineer as well. I got, I did it when I was like 16. Shout out to Eric Schmidt. Yeah.
00:58:52 Speaker_12
I mean, if you had that in the nineties, you could make, you know, 50, 75, a hundred K. Well, the person that helped me little and mentored me, he's like, listen, man, I'm not going to,
00:59:04 Speaker_12
tell you how to do pitches or whatever, but I'm going to teach you how to install this. I'm going to teach you how to manage it. And that was mentoring. And that was really valuable. And I sat beside this guy.
00:59:17 Speaker_03
Absolutely. And if you want to be a freelancer, be a freelancer. Okay, let's go to our little election update and some news about Kamala. and a little bit of socialism coming. So here's how I set it up today. We'll see how this goes.
00:59:31 Speaker_03
2024 election update is here. I'm going to do two things, gentlemen. I'm going to just tee up the latest polls.
00:59:37 Speaker_03
And then I asked our crackball in research team to just give me the top, you know, couple of issues in the principles own words, the principles being, you know, the press on either side and four people who are running for office.
00:59:52 Speaker_03
So let's just go through the numbers here. Nate Silver, a friend of the pod, now has Kamala Harris at 57% favorite to win the Electoral College. There's your first chart. You can compare this to what happened with Biden before the hot swap.
01:00:06 Speaker_03
Trump had a 73% probability to win the Electoral College. So that is the swing of all swings. And obviously, a lot has happened since then, as well as the assassination attempt on Trump. Massive swing for Harris, as you can see in Nate Silver's chart.
01:00:20 Speaker_03
He's doing something called Silver Bulletin. He's not a 538 anymore, but this is the most telling chart. You can see Biden-Trump there, and it's almost a clean sweep in red. Then you go to Harris-Trump, and the shift has been 100% blue. Pretty dramatic.
01:00:37 Speaker_03
Harris has flipped, according to Silver, Pennsylvania, Wisconsin, Arizona, Michigan, Nevada, and Virginia. Here's a couple of quotes, and then we'll get into it. The big critique from Republicans this past week is that Harris won't do interviews.
01:00:49 Speaker_03
God, it's just ridiculous that they have not sat for interviews. And meanwhile, Trump is doing every podcast and Twitter spaces on the planet. But the big news is that this might have changed by the time you listen to this podcast.
01:01:02 Speaker_03
Everybody knows we tape on Thursdays for the world's number one podcast, and it comes out on Fridays.
01:01:07 Speaker_03
Washington Post, Jeff Stein reported that Kamala Harris will propose the first ever federal ban on corporate price gouging for food and groceries on Friday. I'm going to hand that off to you, Freeberg, to detail. I'm going to throw up. Take it easy.
01:01:23 Speaker_03
We're going to get there. You're going to get your rare vegetables in a second. So, the other... I'm going to get your... I'm going to get your veggie sashimi soon. All right. From the JD Vance corner, he is questioning Tim Walz's service.
01:01:44 Speaker_03
Here's the quote. Well, I wonder Tim Walz, when were you ever in war?
01:01:48 Speaker_03
When was this Paris campaign in responding in his 24 years of service, the governor carried fired and trained others to use weapons in war in new boom, innumerable times, yada, yada, yada, a lot of back and forth there about that issue.
01:02:04 Speaker_03
But let's get to and there was an incredible two hour spaces. Audio was a little rough. the content was great. Elon had a conversation with Trump and they talked about nuclear power. Elon offered his services two or three times to Trump.
01:02:19 Speaker_03
He asked to do efficiency in the government and maybe cut some costs. But that's what happened notably in the last week. Freeberg, what's your take on this reported by the Washington Post, and I think confirmed by Politico, moved by Kamala Harris.
01:02:39 Speaker_03
Thank you for asking. Do you have any feelings on it?
01:02:42 Speaker_04
Yes. I unequivocally hate socialism. Socialism destroys innovation, destroys productivity, and destroys individual liberties.
01:02:56 Speaker_04
Agriculture and food markets have insanely competitive dynamics because there are commodity markets, there are tons of competitors, there is no monopoly in making food, there is no monopoly in making CPG products, there is no monopoly in retail, there is no monopoly in grocery stores.
01:03:11 Speaker_04
It is a small margin, highly competitive, highly fragmented, free market. And the free market works in that everyone is always competing with each other, creating new productivity improvements.
01:03:22 Speaker_04
And as a result, over time, prices come down, except when the government intervenes and gets involved. So I would argue
01:03:32 Speaker_04
that the real cause of price inflation in food is not the supposed price gouging by corporate players in the ag and food industry, all of whom are deeply competitive with one another, but rather is the result of the inflation associated with government spending and stimulus coming out of COVID.
01:03:49 Speaker_04
Nick, exhibit one. Fed balance sheet from COVID to today, the Fed balance sheet grew from 4.2 trillion to $7.2 trillion, a growth of 70%.
01:04:01 Speaker_04
The Federal Reserve went out and they bought assets, and they issued debt to banks and introduced liquidity into the system.
01:04:09 Speaker_04
If you go to the next slide, as a result, the M2 money supply increased from 15 trillion to 20 21 trillion since COVID a 40% increase. Okay, so now there is more money in the system.
01:04:21 Speaker_04
So the cost of everything should go up, which is exactly what we've seen, we can walk through a couple of the other commodity price charts from the St. Louis Fed. Here is the price of electricity.
01:04:31 Speaker_04
As an example, the price of electricity has gone up a little bit less than the M2 money supply. But the truth is, when you start to actually look at ag commodity prices over time, what's happened is there was certainly a boost coming from COVID.
01:04:43 Speaker_04
But the competition and the challenges in overproduction in the ag markets has started to hit. and started to bring prices back down. So here's the price of strawberries. Strawberries today are selling for less than they were pre COVID.
01:04:55 Speaker_04
Potatoes are now back to where they were pre COVID. Now, let me give you some statistics on some of the supposed price gouging companies in the industry. Kraft Heinz stock pre COVID was 29 bucks a share. Today, Kraft Heinz stock is 34 bucks a share.
01:05:12 Speaker_04
2019 revenue of 25 billion 2023 revenue of 26 billion EBITDA on 2019 of 6.1 billion EBITDA on 2023 of 6.3 billion. There's not a lot of profit gouging. In fact, Kraft Heinz has not been able to keep up with the inflation.
01:05:28 Speaker_04
Starbucks, which we just talked about their stock was at $90 pre COVID and today 93 bucks. 2019 revenue of 26 billion operating income of 4.1 billion 2023 revenue of 36 billion but operating income only 5.9 margins have come down in Starbucks.
01:05:45 Speaker_04
Nick if you pull up the McKinsey chart This is a study of the grocery industry, the state of grocery in North America, 2023, by McKinsey, accelerating pressures on profitability to cope with the pandemic's upheaval.
01:05:58 Speaker_04
grocers have had to dramatically increase capex increase supplies. As a result, they've seen a significant impact on margins. Here's the margin profile pre pandemic. And today, gross margin has declined by two points from 47.6 to 45.6.
01:06:12 Speaker_04
EBITDA margin has declined by one and a half points. And now let's just go to the final chart, which is CPG companies, the companies that make food and sell it to consumers.
01:06:23 Speaker_04
As you can see, during the COVID era, the three year rolling TSR has declined since COVID across the board. So food companies are seeing food prices come down.
01:06:34 Speaker_04
So farmers are really suffering labor costs have tripled since the pandemic, but they're still having to sell products at the same price. CPG companies have lower margins and supermarkets have lower margins.
01:06:46 Speaker_04
So there is nowhere in the ag or food supply chain that we are seeing fundamentally price gouging or profit taking happening.
01:06:52 Speaker_04
What has happened is the cost of labor, the cost of moving stuff around, the cost of fuel, the cost of electricity, the cost of goods has all risen with inflation because of the increase in the money supply and federal spending and the stimulus associated with the Federal Reserve buying assets onto their balance sheet.
01:07:09 Speaker_04
So arguably, I would say that trying to step in and cap prices will reduce competition, and as a result will reduce investment in improving productivity.
01:07:18 Speaker_04
And we have seen this countless times with every socialist experiment in human history has started with caps on food. And it has resulted in bread lines like you see in the image behind me today, as we can see in Soviet Russia. This is a mistake.
01:07:31 Speaker_04
It is a problem and it's anti American. It is anti free market. It is anti innovation. It's anti productivity. And ultimately, it's anti liberty. And I cannot stand it. That's my rant.
01:07:42 Speaker_03
Okay, thanks for coming to freebergs. Ted talk. So you're nodding strongly in agreement. This is just dumb and pandering. Am I correct?
01:07:50 Speaker_12
There is no sustainable solution to inflation. If you cap what a company can charge, because what they'll do is they'll just stop producing. They'll manage to the margin that they'll just stop.
01:08:06 Speaker_12
And the reason they can stop is that they would rather contract and maintain their profitability than lose money. And then what happens is there's less products in the market. And so the prices go up.
01:08:18 Speaker_12
So I think it stands to reason that the Harris campaign has access to some reasonably smart people. They also have access to really smart people like Larry Summers.
01:08:30 Speaker_12
And so I think if they just make a few phone calls, they'll figure out that this is a really terrible idea.
01:08:36 Speaker_03
Saks, any thoughts? Overall election and this specific issue. You take it either way you like.
01:08:41 Speaker_06
Yeah. So this story was reported by the Washington Post and by Bloomberg and others. So it appears to be more than just a rumor or conjecture. I mean, these are publications that are apparently well-sourced within the Harris campaign.
01:08:56 Speaker_06
So I think it is fair game for us to comment on this policy proposal that she apparently will be coming out with. Look, I think Freeberg is right about the policy. The idea of price controls is widely discredited across the political spectrum.
01:09:14 Speaker_06
I mean, I think virtually all economists agree on this. This was pried extensively in the 1970s, not just under Jimmy Carter, but Nixon tried wage and price controls.
01:09:26 Speaker_06
Gerald Ford had this whole program called Whip Inflation Now, where they printed out these buttons called these wind buttons, and then Carter extended it.
01:09:35 Speaker_06
That's why we had huge lines to the gas pumps is because we had price controls on gas, and those lines to the pump went away almost overnight when Ronald Reagan came in and removed the price caps on gas. So we've tried price controls before.
01:09:50 Speaker_06
It didn't work, and it is remarkable that she would be proposing here potentially as her first major policy proposal on the economy to go back to this 1970s-era failed policy.
01:10:06 Speaker_06
I think it's really tipping her hand in terms of where her economic proposals are going to come from and what she really thinks. Keep in mind that
01:10:15 Speaker_06
throughout the Biden presidency, he rhetorically would blame corporate greed for the rise in inflation we saw as like a scapegoat because he didn't want to blame himself for all the spending.
01:10:27 Speaker_06
But she's going further now and actually instituting this as policy.
01:10:31 Speaker_03
Yeah, and so just to be clear with everybody, we don't have the actual policy here, but it's been reported. Seems like it's true, maybe it's not, maybe they step it back.
01:10:39 Speaker_03
We don't know the details of this at all, but we do know it's just been tried before. What we do know is there are times when you could, like in an economic emergency, like during, what was the giant hurricane or wars?
01:10:54 Speaker_03
You know, you can keep your eye on this, but the truth is, as we just talked about with Starbucks, you know, Saks is like, I got a free cup of coffee or close to free. I make my own cold brew.
01:11:06 Speaker_03
Shout out Cafe Du Monde, because I don't want to pay $8 for it. The market responds. And when you put your thumb on capitalism, when you put 12 thumbs on capitalism and on the scale, all kinds of weird behaviors occur. It does not work.
01:11:19 Speaker_03
And consumers can just simply opt out. They can make breakfast at home. They can brown bag their lunch. And it's a great point. Then companies are going to be like, holy shit, People are not buying $8 coffees, let's make a cheaper Happy Meal.
01:11:33 Speaker_04
To support your point and what Chamath was messaging on our on our chat, look at Walmart stocks up 7% today, because they offer lower priced solutions to consumers and Dollar General and Dollar Tree are rallying as well.
01:11:46 Speaker_04
When the market competes, consumers benefit and there are companies that will win. And the companies that try to price gouge and the companies that try to charge too much will lose. Starbucks has been trying to charge too much for sugar water.
01:12:00 Speaker_04
They have a real problem they are now tackling. Walmart is trying to bring value to consumers. They are winning. That is how free markets work. When the government steps in and says here's how much margin you can make or here's how much prices should be.
01:12:12 Speaker_04
It ruins everything. And the entire incentive structure goes away. And you end up with bread lines. Saxy poo. What do you got?
01:12:19 Speaker_06
Well, there was a really interesting story in the Wall Street Journal this week called Kamala Harris's economic team and agenda start to take shape.
01:12:28 Speaker_06
And it was interesting because it said here in the first paragraph that the challenge of her economics team is, quote, differentiating the candidate, which is Harris, from her unpopular boss, which is Biden, without abandoning his policies.
01:12:44 Speaker_06
And the problem that they have is that for the last three and a half years, there has been no daylight between Harris and Biden. And in fact, Corinne Jean-Pierre said exactly that in the article. There's been no daylight. They've been highly aligned.
01:12:57 Speaker_06
Now, in response to that, what the campaign has been trying to do is, A, not say anything about policy, just try to redefine the candidate based on biography. She's done no interviews with the media.
01:13:09 Speaker_06
She's done no sort of unscripted speaking appearances. And the media has cooperated with this so far.
01:13:15 Speaker_06
The most egregious example was that Time Magazine cover story, which was this really gauzy profile that was a hagiography, even though she refused to even do an interview with Time Magazine in that story.
01:13:27 Speaker_06
So strategy number one has been just to kind of hide from the media in terms of what she would really do. Strategy number two was adopting some of Donald Trump's most popular policies. So she just announced no tax on tips.
01:13:41 Speaker_06
She was, I think, widely kind of criticized for being a copycat on that.
01:13:45 Speaker_06
And now we finally have strategy number three, which is to tiptoe into the campaign with her own original proposal on price controls, which I think is being roundly criticized, but it shows where her policy instincts are coming from.
01:13:58 Speaker_06
I mean, this is somebody who has always been on the progressive left. When she was a member of the Senate, GovTrack rated her as the most liberal member of the Senate, even to the left of Bernie Sanders and Elizabeth Warren.
01:14:11 Speaker_06
And you're now seeing this come out in her policy proposals. So, look, I think she's definitely gotten a bounce in the polls over the last few weeks because of this
01:14:20 Speaker_06
favorable media coverage, but it's a sugar high based on something that's not substantive. I mean, she didn't put forward any proposals.
01:14:27 Speaker_06
And I think that now that she finally is putting out policy proposals that can be questioned and analyzed and criticized, I think this is going to be the beginning of, I would say, a big correction in her campaign.
01:14:40 Speaker_04
Jake, do you agree? Do you think her strategy is off at this point? Is it starting to hurt her to put out these proposals?
01:14:47 Speaker_03
I remain undecided, moderate, left-leaning moderate, have voted Republican 35% of the time, Democrat 65% of the time. And I've been studying the strategy here. Her strategy is crushing Trump. So obviously, it's working. Now, I don't like it.
01:15:03 Speaker_03
I think everybody should be doing debates. I was really upset that there wasn't a debate or a speedrun primary. I don't like the fact that Trump and Biden skipped out on the primary debates.
01:15:12 Speaker_03
I think they should be forced to do debates, forced to do interviews. And so I, you know, on that front, I hate what this is doing to democracy. Now, pragmatically,
01:15:24 Speaker_03
running at the clock as a strategy and not defining your positions too much and just, you know, selling the vibes is a brilliant strategy and it's working. And, you know, as Trump said, the VPs don't matter. What she did as VP doesn't really matter.
01:15:41 Speaker_03
What JD Vance thinks as VP doesn't matter. VPs don't matter. You're voting for the president. The VPs get in line. Trump's positions, JD Vance flipped a bunch of his positions to align with Trump.
01:15:52 Speaker_03
And I think Kamala did the same when she worked with Biden. That's your job is to align with the president. Now that she's her own, and Waltz is going to flip to her. So I think they're putting out moderate vibes. I think they're kind of socialists.
01:16:04 Speaker_03
I think they're not as socialist as Bernie and Elizabeth Warren, but they're not moderates, but they're pretending to be moderates. And that is working as a strategy. They are demolishing Trump.
01:16:15 Speaker_03
And then Trump is, you know, getting bad advice around him. I think, you know, if I was to handicap this and I'll wrap up it with just one more minute, I think Trump was so good on all in. He was so good at the RNC for the first half of his speech.
01:16:27 Speaker_03
When he is presidential, when he has a big open tent, I love him. I think he's great. And I think he's like, we're all positive. When he goes into grievance
01:16:37 Speaker_03
culture, when he goes after the race stuff like he did with the black journalists, when he goes after gender or JD does the gender stuff and the cat stuff, I hate that stuff. Moderates hates that stuff. Women hate that stuff.
01:16:48 Speaker_03
And the moderates and the women in the swing states will decide the election. And Trump's campaign is floundering right now.
01:16:55 Speaker_03
They have to flip it back to that Trump 2.0 I described many times, where he's serious, presidential, not bullying people, not doing the incel comic thing, just going after waltz, going after cat ladies. It's just gross and not necessary.
01:17:08 Speaker_03
So I think, you know, maybe Trump after the DNC will go back to Trump 2.0. That would be much better. And I think Trump has a chance of winning if he does that. If Kamala goes moderate, I think she's going to win. So that's my strategic take.
01:17:22 Speaker_03
I remain undecided as a voter.
01:17:25 Speaker_06
But you just said she's a socialist, not a moderate.
01:17:28 Speaker_03
I think in her heart, she's between like, if you had Clinton and a great question, if you had Clinton and you had a, you know, Bernie Sanders, I think she kind of falls between the two. But I think she's pretending to be a moderate to get votes.
01:17:39 Speaker_05
Right.
01:17:39 Speaker_03
You know, just like Trump will pretend to be super right wing to get the, you know, or packed it up. But he's kind of a moderate to socially.
01:17:46 Speaker_06
I think Trump is a moderate in this race. She's much more moderate than she is. I think that actually is true. Look, I think that she's pretending to be a lot of things.
01:17:56 Speaker_06
She's pretending to be a moderate when really she was the most liberal member of the Senate. She's pretending to be a change agent when really she's the incumbent.
01:18:03 Speaker_06
Keep in mind that she has been in office now for three and a half years as part of the Biden-Harris administration. And she was perceived within that administration as their emissary to the left wing of the party.
01:18:13 Speaker_06
I mean, remember that when she was put on the ticket, Biden was perceived as the moderate and she was perceived as the person on the left and she was gonna basically help consolidate those votes.
01:18:23 Speaker_06
So she's pretending to be a lot of things that she isn't. And the reason why it's working is because the press is fully cooperated in letting her run a campaign without doing press interviews, without doing unscripted appearances.
01:18:37 Speaker_06
And the press, frankly, is embarrassing itself by revealing themselves to be effectively DNC operatives. And that Time Magazine cover story was just the latest example of that. I do think that this strategy can only work for so long.
01:18:51 Speaker_06
I think that the media is starting to feel a little bit embarrassed. They're starting to get a little bit shamed about the fact they're letting her
01:18:59 Speaker_06
just give them the Heisman, and I don't think she can run off the clock for three months without doing interviews. I think she can do this for another week or so.
01:19:07 Speaker_06
I think that they're going to run this playbook through the convention, but eventually, she's going to have to start doing interviews, and she's going to have to start putting out more substantive policy proposals.
01:19:17 Speaker_06
And I think the fact that this price control proposal is their very first one that they've put out, I think this shows that this is not going to be easy for her.
01:19:27 Speaker_05
It certainly jolted me awake, Sax. I'll tell you that.
01:19:30 Speaker_06
Yeah, I mean, this idea that she can pretend to be a moderate and just run on vibes with no interviews and no substantive proposals, I don't think it's going to work for three months. I think she's going to reveal herself.
01:19:40 Speaker_04
I think an educated voter base is going to wake up to that. And particularly in that independent segment, there's going to be a lot of acknowledgement that maybe these are not going to be the right policies.
01:19:49 Speaker_03
I think they're preparing their policies, and they're going to drop them after the DNC. Chamath, what's your take on strategy? And then we'll move on to Science Corner.
01:19:57 Speaker_12
And in the middle of the relief rally, that Biden isn't in the race. I think that we had a different version of a relief rally when everybody realized that President Trump hadn't been assassinated. So
01:20:12 Speaker_12
These are the pendulum swings, I think, of an electorate that still hasn't been given a clear definition of A or B. In this case, I think what's happening is there's a lot of testing of language and ideas and concepts that both sides are doing.
01:20:31 Speaker_12
And I think we will not know where this election is going to go until after September the 10th and that first presidential debate, because I think that these big issues will be put to the test.
01:20:42 Speaker_12
The journalists asking the questions will corner both candidates. Both of them will have points of view. And then I think they'll have to go into these five states that matter on these five issues that matter.
01:20:53 Speaker_12
And I do think that this will be one of those issues because this is a very aggressive proposal that has a lot of implications. and that has a lot of historical context of never having worked, literally never.
01:21:08 Speaker_03
It's dumb. We haven't seen it, but it seems dumb on its face. And just to be clear, there is no proposal. We're just commenting on reports of a proposal. The proposal will probably come out on Friday this weekend, so you can read it for yourselves.
01:21:22 Speaker_03
And we'll talk about the actual proposal, if there is one, who knows? It could be bad reporting, could all be capped. Freeberg, you wanted to talk about Boeing.
01:21:30 Speaker_04
Well, I wanted to just highlight the Starliner project and the issues.
01:21:36 Speaker_12
Unbelievable.
01:21:37 Speaker_04
Give us an overview and then let's chop it up as we wrap. Two NASA astronauts flew on the Boeing Starliner capsule.
01:21:45 Speaker_04
June 5, and they dock with the ISS, and they're now stuck on the ISS, and they might be stuck there until February, because the Starliner has a number of technical issues, the astronauts cannot get back in the Starliner and just fly back to Earth.
01:22:00 Speaker_04
NASA is kind of evaluating the options here on what to do, and whether to put them on a SpaceX Crew Dragon capsule in February to get them back. So I just want to talk a little bit about the history of this project.
01:22:12 Speaker_04
and provide a little context before we highlight the particularly acute story of two astronauts being stuck in space right now, which is an incredible story.
01:22:22 Speaker_04
So this is a next gen space capsule that was designed to take people to and from low Earth orbit basically to the ISS.
01:22:29 Speaker_04
And NASA, if you guys remember, in the 2000s, decided to stop making their own vessels, and they're going to start using third party contractors. So they went out and had a competitive bidding process. And ultimately, in 2010, they gave both SpaceX
01:22:44 Speaker_04
and Boeing, the winning contracts to develop these commercial crew transportation capabilities. SpaceX obviously developed the Crew Dragon capsule. So it was unveiled in 2010 as the CST 100, Boeing's first commercially developed space capsule.
01:22:59 Speaker_04
The company would take on all the financial risk for developing it with a fixed price contract from NASA of $4.2 billion. To date, by the way, Boeing has taken a $1.6 billion financial hit on the development of this program.
01:23:13 Speaker_04
SpaceX, by the way, won a $2.6 billion contract to develop the Crew Dragon capsule. And just to give you guys a sense, the Crew Dragon capsule has flown 13 missions thus far to the ISS. And this was the first
01:23:27 Speaker_04
crude mission flown by Boeing, both of which got contracts at the same time. So originally, it was going to be a 2017 launch timeline. And I just want to hit on some of the history of the Starliner problems.
01:23:39 Speaker_03
2016, it was delayed, just to confirm, you said it was $4.2 billion that contract.
01:23:43 Speaker_04
that contract with Boeing to develop a Starliner capsule. So the first issues arose in 2016, when there were design problems. The first crude flight was then pushed back to be scheduled for 2019.
01:23:53 Speaker_04
In 2018, they found issues with propellant leaks, which led to more delays. 2019, a test flight parachute failed. December of 2019, they had their first uncrewed test flight.
01:24:06 Speaker_04
And there were software errors that would have caused destruction of the spacecraft. This led to NASA and Boeing submitting 80 different changes that needed to happen before they did their next uncrewed test flight.
01:24:18 Speaker_04
So they then pushed that all the way out to 2021. Boeing ended up saying it cost us half a billion dollars to do that. Then in August of 2021, 13 propulsion system valve issues were discovered on the launch pad.
01:24:31 Speaker_04
The flight was aborted, and the capsule was returned. They eventually got it up again in space in May of 2022, and it docked with the ISS.
01:24:40 Speaker_04
and it returned back to Earth, even though one of the parachutes failed, when it returned to Earth, it still made it down. This again, led to the 2023 first crewed launch, which means people are in the capsule.
01:24:53 Speaker_04
This was originally supposed to be in 2017. And they kept pushing it back because of more issues with the parachute system. And then they finally got it launched in June 5 of 2024, with two astronauts on board to go to ISS and come back.
01:25:09 Speaker_04
On the way, they discovered that five out of the 28 maneuvering thrusters, which is how they can move this capsule through space to get it to dock with the ISS and ultimately make its way back to Earth, were malfunctioning.
01:25:20 Speaker_04
They have now discovered five helium leaks. Helium is stored in a pressurized system to actually control those thrusters and make it move through space. And now they may not even be able to get this capsule to fly off of the ISS.
01:25:33 Speaker_04
So on June 28, NASA announced that while the Starliner is theoretically capable of returning the astronauts to Earth, in an emergency on the ISS, the capsule is not approved to fly until these thruster issues and the leaking helium are figured out, or better understood, and they have now pushed the decision to the end of August.
01:25:52 Speaker_04
It would be massively embarrassing for Boeing, if these two astronauts had to be rescued by SpaceX, it's a Crew Dragon capsule had to find its way up to the ISS, they hopped on and they came back to Earth, clearly a massive problem.
01:26:06 Speaker_04
But it's a certainly a personal and a human story now, with these two astronauts struck stuck on the ISS. And you've had a lot of comments on Boeing in the past. But I mean, does this feel like, like a continued underscoring of the issues at Boeing?
01:26:19 Speaker_03
And just to be clear, Chamath, the statistics are three for Starliner, two unmanned, one manned. And then for SpaceX with the Dragon, they did 11, eight with NASA, three commercially with other passengers. Yeah.
01:26:35 Speaker_04
Yeah, so the NASA cargo dragon, which only has a cargo on it, not people has completed nine successful missions to and from the ISS, there are six more planned. And they've obviously done 13 missions with the Crew Dragon.
01:26:47 Speaker_04
And by the way, I don't know if you guys know this, this is a surprise, but exciting to share that we are going to have a Crew Dragon capsule from SpaceX at the Olin summit in LA parked on the launch, you can actually go inside and check it out and take a little tour.
01:26:59 Speaker_04
It's gonna be amazing. So thank you to the SpaceX team for bringing the Crew Dragon capsule to my
01:27:05 Speaker_12
My gosh, I mean, where do I begin? Look, Boeing is these three very complicated businesses that try to live as one. So you have a commercial airline business, you have a defense business, and you have the space business.
01:27:20 Speaker_12
I'll be the first one to say that I think it's extremely difficult to be good at any one of those three things. And the probability of getting all of those three things right is basically next to impossible. That's just a general comment.
01:27:33 Speaker_12
And I think that specialization is better. The second thing that I'll say is that I observed this company about five years ago, and I wrote about it in my annual letter.
01:27:45 Speaker_12
And part of the reason why I wrote about it was there was a quote, I'll never be able to judge what motivated Dennis Mullenberger, whether it was a stock price that was going to continue to go up and up, or whether it was just beating the other guy to the next rate increase.
01:27:59 Speaker_12
He said, he added later, if anybody ran over the rainbow for a pot of gold on stock, it would have been his. Who do you think said this? It was the incoming CEO of Boeing. And I was so flabbergasted because I had never seen something like this.
01:28:14 Speaker_12
So in a company where safety has to be the number one priority. To have an individual that's characterized by the incoming CEO as solely focused on their compensation plan sort of explains why there's all these fissures in this company.
01:28:30 Speaker_12
Because again, back to that famous Charlie Munger quote, show me the incentive and I'll show you the outcome. If the incentive is safety and world-class engineering, that's what you'll get. But if the incentive is earnings per share growth,
01:28:46 Speaker_12
then that's what you will also get. And Boeing was a darling of the stock market for a very long time. And now what happens is underneath, the other things that actually should matter, i.e.
01:28:57 Speaker_12
safety, are slightly deprioritized, and then you have these issues. I really hope these two people get back safe.
01:29:07 Speaker_12
It seems like they're doing a lot of experiments and they love being up there, but it's a little bit unacceptable that they have to be there until February.
01:29:15 Speaker_12
But I do trust that if Elon has to go and get them, SpaceX will do a great job and they'll be home soon.
01:29:21 Speaker_03
SAC's one of the great things about this. Thank God NASA gave two contracts out of they had given one.
01:29:27 Speaker_12
Oh my God, could you imagine if that was lobbied?
01:29:30 Speaker_03
You would be asking the Russians to go get them. And then like, you know, we're in a little, I don't know if you've been watching this. This is what I thought we could discuss. It's like, you know, is there a benefit in having two?
01:29:39 Speaker_03
Being dependent on Putin, at this moment in time when Ukraine is making massive gains into Russian territory. I know this hasn't come up all that much, but that would be really dangerous.
01:29:49 Speaker_12
By the way, just back to what Friedberg said before, sorry to interrupt you before you go, Saks, but Why is this even possible? It's exactly as you said, Jekyll, we have competition. But why is competition possible?
01:29:59 Speaker_12
It's because of what Freeberg talked about before. We didn't have a set price. The government didn't come and say, you will build it for X and I'm only doing it one time. The free market was able to solve this problem.
01:30:12 Speaker_12
And it turned out the more capable solution was 40% cheaper than the one that they thought was going to work. And the one that was 40% cheaper was also on time. And the other one was unreliable. And this other one, 7, 8, 9, 10 years delayed.
01:30:29 Speaker_04
It's 100% Chamath. That's a perfect example.
01:30:32 Speaker_12
Every day of the fact that these other ideas just don't work.
01:30:38 Speaker_03
Yeah, I think we've pretty much beaten that capitalism is the greatest force for innovation and lowering prices. Sax, your thoughts on this situation? And helping humanity.
01:30:47 Speaker_03
Yeah, God forbid people will get air conditioning at a lower price, you know, and smartphones, etc. Sax, your thoughts here?
01:30:57 Speaker_06
Yeah, I mean, look, if we're talking about capitalism, I think about what the Austrian economist Joseph Schumpeter said, which is capitalism is a process of creative destruction.
01:31:06 Speaker_06
And the creativity happens in the early days when you've got a founder who's creating a startup, and the business gets big. But then it gets older, and the founder goes away. And the company can drift and become bureaucratic.
01:31:20 Speaker_06
And sometimes it can renew itself. And maybe you get a Brian Nicholson maybe to save it. And sometimes it doesn't. And the companies that get old and don't renew themselves eventually fade away. And they get destroyed and replaced by other startups.
01:31:36 Speaker_06
It's a system that has worked incredibly well in America. And that's the basis. for all of our prosperity and innovation. When you compare that to the political process, it's very different.
01:31:46 Speaker_06
I mean, the political process kind of has this knee-jerk resistance to change and innovation, and it has an impulse to control things. It wants to control prices.
01:31:57 Speaker_06
It thinks it can solve problems with just top-down mandates, and it doesn't reform itself. creates new bureaucracies and never gets rid of them. I mean, we create new departments. They never go away. They just keep getting bigger and bigger.
01:32:10 Speaker_06
There's never any creative destruction. It's just like a blob. It's a one-way ratchet of bureaucratic growth. So it's really clear what creates prosperity. And I do think we have now reached a point where the government has gotten so big
01:32:24 Speaker_06
and so out of control and so expensive that it actually is threatening this engine of creative destruction.
01:32:31 Speaker_06
And at some point, I think voters are gonna have to make a choice about whether they're gonna try and rein in the government and create more room for capitalism innovation, or they're gonna allow it to get overtaken.
01:32:44 Speaker_03
I love your capitalism quote and reminds me of the Winston Churchill one, which I'm sure you've heard. The inherent vice of capitalism is the unequal sharing of blessings. The inherent virtue of socialism is the equal sharing of miseries.
01:32:56 Speaker_11
It's uh, that's a great quote. Churchill is strong, man.
01:33:00 Speaker_03
Strong.
01:33:01 Speaker_11
I'd like to hang with that dude.
01:33:03 Speaker_03
That's a guy I would like to hang out with.
01:33:05 Speaker_11
Teddy Roosevelt. Oh my gosh. Drinking, cigars.
01:33:08 Speaker_03
I would love to go drinking with Teddy and cigars, guns.
01:33:12 Speaker_04
Wow. I like to go hunting. Churchill took a bath every day.
01:33:15 Speaker_03
Freeberg, please don't bring up this whole thing about baths, because then you're going to make me pull out of my phone the three or four times you called me from the bath, and I took a screenshot.
01:33:25 Speaker_03
Literally, Freeberg's in the bath, he lights candles, he takes a picture of his pale stems, and he sends it to me and calls me from the bath, Chamath. You can't see me, there's always bubbles. I have PTSD.
01:33:38 Speaker_12
He's called me from the bath. I know he's in the bath because you hear this kind of like echoey kind of, you know, so it does. And it's like, Oh my God, you're in the bathtub. Yeah. It's clear that he's in the bathroom.
01:33:50 Speaker_04
I'll call you later.
01:33:52 Speaker_06
It's so disturbing. that invasion of Russia that you're talking about is not what you think it is.
01:33:59 Speaker_04
We haven't had a general facts update in a while. I actually want to hear your take on the facts. Like what is the real story? Yeah, what is the real story with the Ukraine counter invasion into Russia?
01:34:11 Speaker_06
I think you're falling for a lot of hype. I mean, what's happening is that the stage of the war is that the fighting is in the Donbass and along a 1,200-kilometer front in Ukraine, where the Russians have just been pounding the Ukrainians.
01:34:27 Speaker_06
The Russians have more soldiers, they have more artillery, they have more airpower, and they have air superiority, and they've just been annihilating the Ukrainians.
01:34:36 Speaker_06
I mean, Ukrainian casualties, according to some sources, are somewhere between 30,000 and 60,000 a month. It's massive and unsustainable.
01:34:44 Speaker_06
So what Zelensky did is he basically threw this Hail Mary, where he took some of their best forces, their best reserves, and had them attack this undefended part of Russia, Kursk,
01:34:55 Speaker_06
And yeah, they took a few hundred miles of undefended territory, but there's nothing strategically important there.
01:35:01 Speaker_06
And now, Russian air power is basically creating significant casualties among those forces, and the Ukrainian forces are now trying to figure out what to do.
01:35:10 Speaker_06
I mean, they're basically running around this part of Russia like headless chickens, trying to figure out where they can dig in and find some defensive fortifications. I don't know what Zelensky's trying to accomplish.
01:35:20 Speaker_06
I guess it's kind of a PR offensive. A lot of people have been fooled into thinking that this is somehow a game changer in the war. It's not.
01:35:27 Speaker_06
All Zelensky has really done is take some of his best troops away from where the strategically important fighting is, have them attack this part of Russia, and over time, Russia's just going to mop them up.
01:35:39 Speaker_06
Did the Russians get caught with their pants down? Yeah, I guess they did. Is that an embarrassment to Putin? I guess it can be spun that way. Does it change the outcome of this war in any way? No, it's not.
01:35:49 Speaker_06
And what we're on track for is, at some point, probably next year, Ukraine is going to collapse. I mean, their position in this war is unsustainable.
01:35:59 Speaker_06
And taking some of their top troops, feeding them into Kursk, where they can be easily picked off by the Russians, is only going to accelerate that process.
01:36:08 Speaker_12
And then, Sax, what about Nord Stream?
01:36:10 Speaker_11
What we just found out about Nord Stream?
01:36:13 Speaker_06
Well, the Nord Stream story is very strange because we're on our third or fourth explanation here of what happened. I mean, it was pretty clear that somehow the U.S. was behind it.
01:36:24 Speaker_06
And they've been blaming, you know, first they said that the Russians did it, right? Which makes no sense. That'd be like the Russians shooting their own legs off. that was the first cover story.
01:36:36 Speaker_06
Then they kind of went with, I guess, illusion he did it from a yacht. I guess that's the story they're on now.
01:36:43 Speaker_03
Yeah, the Wall Street Journal report, just to give people the background of why we're talking about this, the Wall Street Journal reported that Germans investigation into this, you know, the people who were impacted by it, here's the quote, the whole thing was born out of a night of heavy boosting, and the iron determination of a handful of people who had the guts to risk their lives for the country, the Ukraine operation costs around 300,000, according to people who participated in
01:37:03 Speaker_03
Bob, the small rented yacht with a six-member crew, including trained civilian divers. One was a woman whose presence helped create the illusion they were a group of friends on a pleasure cruise. So you're saying you don't believe that German report?
01:37:19 Speaker_06
Well, no. So this report about that yacht being used and how it was illusiony was like the mastermind of this? Yeah. That support is not anything new. This has been out for, I don't know, at least six months. I've always been skeptical about this.
01:37:32 Speaker_06
The thing to understand about the North Stream Pipeline is that it was a massive structure surrounded by huge amounts of concrete on the ocean floor. And blowing this thing up required some significant expertise in underwater demolition.
01:37:50 Speaker_06
I'm just very skeptical that could be accomplished by six guys on a yacht under Zaluzhny. I mean, the Ukrainians have never had a navy. This just doesn't seem like something that's in their wheelhouse of capabilities at all.
01:38:04 Speaker_06
It always made more sense to me that the US was involved somehow.
01:38:07 Speaker_12
But how do you how do you think an article this detail that points to the Dutch
01:38:14 Speaker_12
intelligence community, the German intelligence community, American intelligence, how does an article like this with this much detail, then get written and put into the Wall Street Journal? How does that happen?
01:38:26 Speaker_06
I think intelligence sources want it to happen. I mean, they have to get their sources from somewhere, right? And I'm just saying that this story about Zaluzhan and the yacht has, this is not new. This has been out there for many months.
01:38:36 Speaker_06
Look, I mean, it could be true. I mean, I guess I don't know for sure, but I guess I'm also just saying that I'm a little bit skeptical about this. I mean, Seymour Hersh had other reporting from different sources who claimed that the U.S. was behind it.
01:38:51 Speaker_06
And President Biden himself at a press conference said, that if Russia invades Ukraine, we will bring an end to the Nord Stream 2 pipeline. And when a reporter asked him, how will you do that? He said, we have ways, we'll get it done.
01:39:04 Speaker_06
And similarly, Victoria Nuland warned at a press conference that Nord Stream 2 will not move forward if Russia invades, and then lo and behold, the pipeline gets blown up.
01:39:13 Speaker_06
And if you're comparing which of these two forces has the capability to do something like this, I know for sure that the US does. Ukraine, I'm just a little more skeptical of.
01:39:23 Speaker_03
Just to give you some facts, introduce some facts here. It was only 260 feet or so down where they blew it up. I've dove to 130, 140 feet many times. You can easily dive three, four, 500 feet. This is not difficult.
01:39:39 Speaker_03
I could dive to 260 feet with one day of training, and I've done half of that. And I've only dived 25 times in my life. So this is easily accomplished, Sax. And so this sounds like it's dead on. I mean, I know you don't dive in.
01:39:54 Speaker_06
What about the explosives?
01:39:55 Speaker_03
Yeah, it's very simple. I mean, you're literally attaching it to a pipe and you hit boom. I mean, these people are the Ukraine people.
01:40:03 Speaker_06
Are they required a massive amount of explosives to do something like this?
01:40:06 Speaker_03
No, it does not. In the face of Ukraine defending itself against Russia, one of the greatest militaries on the planet,
01:40:15 Speaker_03
This idea that that same group of people who have held Russian at bay for two years plus can't go down 260 feet and blow it up is ridiculous. They could easily do this. This is not a difficult task. Super easy for the Ukrainian army to do this.
01:40:29 Speaker_06
I don't think you're in a position to know.
01:40:30 Speaker_03
I don't think you're in a position to know. I am because I have facts. 260 feet down. I've dove to 130. It's very easy to go 260. The end. That's your facts. I mean, it's just called reality, Chamath. I'm sorry.
01:40:41 Speaker_03
Sax is the most biased person in the world when it comes to this.
01:40:43 Speaker_12
It's hysterical to hear him. Jason, what you just said was, here are the facts. It's 260 feet down. I've gone to half that. So it's possible. So they did it.
01:40:58 Speaker_03
He's saying it's too deep. Sachs' premise is this is too, this is beyond the capability of the Ukraine army. That's ridiculous, Sachs. It's easily. Well, a lot of people are dumb then. It is the stupidest concept.
01:41:14 Speaker_06
You're also an explosive expert as well as a professional diver.
01:41:20 Speaker_12
He wants to watch some firecrackers, so he knows what he's talking about there as well.
01:41:24 Speaker_03
Dude, I bought pineapples. That's a quarter stick of dynamite when I was in Brooklyn.
01:41:27 Speaker_05
You think six guys on a yacht did this?
01:41:29 Speaker_03
Easily. Easily. Six Ukrainians. These are hardcore mofos. You think these Ukrainians are not hardcore? They probably did it drunk. They did it drunk. I bet you they were half in the bag when they blew that shit up.
01:41:44 Speaker_06
That's why Russia can't beat them. I've also read the Seymour Hersh story and it just makes a lot more sense to me. That's all I'm going to say is it just makes a lot more sense to me.
01:41:52 Speaker_06
And by the way, I've never taken away anything from the Ukrainians as a fighting force. I mean, clearly they are fighting bravely and they are hardcore. I've never taken that away from them.
01:42:02 Speaker_06
And I've certainly not saying that they're incompetent or anything like that. And they've definitely been massively plussed up by American weapons.
01:42:09 Speaker_03
And you'd like to see them win versus Russia and get Russia out of their country, right?
01:42:13 Speaker_06
I would like to see America stay out of other people's wars, and I would have liked to have seen them agree to a peace deal that would have avoided this war.
01:42:22 Speaker_03
Who would you rather wins the war, Russia or Ukraine? If you had to pick, who would you rather see win?
01:42:25 Speaker_06
It's not my war. I don't think America should take sides in other people's wars. I think we should stay out of them, and I think we should agree to peace deals when we can, and not sabotage those peace deals.
01:42:34 Speaker_03
Yeah, I'm for peace deals too. I'm also I'm also for democracies beating autocracies. Okay, everybody. This has been another amazing episode of canceled elections. This is been another amazing episode of the all in podcast for the rain man.
01:42:48 Speaker_03
Yeah, David Sachs, the one and only Sultan of science, David Friedberg getting ready for the all in summit sold out. Great speakers, lots of surprises for y'all. and our chairman dictator, so rested, so tan, working 15 hours a day in Italy.
01:43:08 Speaker_03
And we'll talk about wine.
01:43:10 Speaker_12
I have something that I have something for around 8090 that I'll be able to talk about, hopefully soon.
01:43:18 Speaker_03
Oh, yum, yum. I slid a little Betsky in there. All right, everybody. I am world's greatest moderator and the executive producer for life. Love you boys. See you next time, everybody. Bye bye.
01:43:39 Speaker_01
and they've just gone crazy with it. Love you, Westies. I'm the queen of quinoa. What are winners like? What are winners like? Besties are gone.
01:43:56 Speaker_08
That's my dog taking a notice in your driveway. We should all just get a room and just have one big huge orgy, because they're all just useless. It's like this sexual tension, but they just need to release somehow.
01:44:10 Speaker_05
I'm going all in!
01:44:26 Speaker_03
And now the plugs the all in summit is taking place in Los Angeles, September 8, ninth and 10th. You can apply for tickets summit.all in podcast.co and you can subscribe to this show on YouTube.
01:44:41 Speaker_03
Yes, watch all the videos our YouTube channel has passed 500,000 subscribers. Shout out to Donnie from Queens. Follow the show, x.com slash theallinpod. TikTok, theallinpod. Instagram, theallinpod. LinkedIn, search for allinpodcast.
01:44:55 Speaker_03
And to follow Chamath, he's x.com slash chamath. Sign up for his weekly email. What I read this week at chamath.substack.com and sign up for a developer account at console.grok.com and see what all the excitement is about.
01:45:10 Speaker_03
follow sacks at x.com slash David Sachs and sign up for glue at glue.ai follow Friedberg x.com slash Friedberg and Ohalo is hiring click on the careers page at Ohalo genetics.com I am the world's greatest moderator Jason Calacanis if you are a founder and you want to come
01:45:27 Speaker_03
to my accelerators and my programs founder.universitylunch.co slash apply to apply for funding from your boy J Cal for your startup and check out Athena wow.com.
01:45:36 Speaker_03
This is the company I am most excited about at the moment Athena wow.com to get a virtual assistant for about $3,000 a month. I have two of them. Thanks for tuning in to the world's number one podcast. You can help by telling just two friends.
01:45:50 Speaker_03
That's all I asked for it. This podcast to two friends and say this is the world's greatest podcast. You got to check it out It'll make you smarter and make you laugh laugh while learning. We'll see you all next time. Bye. Bye