E130: DeSantis's Twitter Spaces, debt ceiling, Nvidia rips, state of VC, startup failure & more

25:32And they called him death -Santis. So the media has had it in and for this guy since the beginning, because he refuses to go along with their narratives on things. This is the same reason that Elon is Elon is defying their narrative control. So you put these two guys together, okay, hold on. Even before the technical difficulties, let's be clear, the media's heads were exploding. That DeSantis and Elon were gonna be in the room together. Look at the vanity fair article. The headline was DeSantis announcing with Elon because David Duke wasn't available, okay. The Atlantic was saying that this whole Twitter space was a hate group, I mean, literally.

26:08So these people were losing their minds before we even got into the technical difficulties and then they pounced on that. That there was a 20 -minute delay. They pounced on that as some sort of fiasco, which it wasn't. Will DeSantis cut spending and cut our taxes? We cut spending. We didn't get into that. Have you ever had a conversation with him about balancing the budget and federal debt? Do you know his position on cutting like long -term capital gains and taxes? I don't know his position on that. I can't speak about it. Let me give you the elevator pitch. I mean, the nutshell for DeSantis is he calls it the Florida blueprint.

26:42He's saying, look at what we've done in Florida. Look at what we achieved at Florida. Let's take Florida nationwide. Florida has had a great economy. Florida has had a big amount of budget. Zero taxes. Zero taxes. No, because I don't, that's a state tax. If you have zero taxes, you have my book. No. Are they real? Okay. The dictator has spoken. If people want to look up this issue, there's a book called Gender Queer and there's a story about it in the New York Times. and it's a graphic novel about coming of age for a non -binary person, which is fine. Great, but it's very graphic. It's a graphic graphic novel.

27:17It has explicit scenes. And these kind of books, most parents would say, I would like to wait for my graphic novel on cutting my taxes to zero. Okay, there you go. It's called The Decatural Disastered. I'm just gonna write it. Come on, guys. Overall, great job. And yeah, get them on the pod here and we'll have a great discussion with him. Yes, that's actually good. Great job. Please invite him to our pod. I think you know, we each have our own issues We'd love to or else we're just gonna go with the other Republican candidates Nikki I don't know. I mean, all right. Well, thanks guys Yeah, I think maybe great to get Nikki Haley.

27:54That's a no that's a no just say no I'm gonna put in the ass to the Sanctus for sure. All right. Well, that's great. Yeah, it would be great people want to hear for more folks So, a lot of other news going on. I think a good place for us to go to next. Maybe do we want to do the debt ceiling, defense spending or Nvidia? Let's go together. In my opinion. Okay, great. We'll go with the assault on of science. US debt ceiling is at 31 .4 trillion currently. Treasury Department recently warned the federal government could be unable to pay its bills as soon as June 1st, Fitch put the US credit rating, which is the highest rank of triple A on negative watch.

28:35So negative watch means it's trending towards bad and that it's imminent that they might lower it. Due to this debt limit deadline, it seems like we're not making much progress every couple of days. We seem to swing one way or the other, the stock market has kind of shrugged it off. And the last time the US credit was downgraded was in 2011, but we avoided that. Schemoth, what's going on here? What do you think the eventual outcome in? Is there a chance that these knuckleheads who represent us are going to default and cause chaos? Or do you think this is all Kubuki theater and we're going to wind up in the same place, which is they raise it and make some modest concessions?

29:16August 5th, 2011, the S &P downgraded the United States from AAA to AA+. You know what happened? Absolutely fucking nothing. Okay. So I do think that this is another opportunity for the little red riding goods to get their panties in a bunch. But these downgrades don't mean much of it. You're referring to there. You talking about free birds? Yeah, what are you talking about? Talk about all that. Wait a second, is that Biden? Talk about the media. I think that these third party credit rating agencies are not particularly that accurate and sophisticated. They don't know anything that you don't know.

30:01They're not getting access to... Moody's gave SVBNA a rating the week before it went into receivership. This is my out of point. Well done, none of this is my exact point. None of these companies know what they're doing. these companies are in the business of putting a letter on a document and then selling access to that document. So if you're going to trust these guys to know what they're saying, either right or wrong, independent of what side you are outsourcing your decision making to the wrong body. So whether it's S &P, Fittermoodies, I would tell you to ignore it and come to your own conclusion.

30:36I think that But this budget ceiling thing is happening now every couple of years. And it seems like the real thing we should be talking about is whether Biden is going to use the 14th Amendment and just ram a budget through. Explain that. Yeah. So under the 14th Amendment, the president of the United States has in their discretion the ability to make sure that the United States can pay their debts. And that wasn't necessarily thought of as a way to work around the debt ceiling impasse. But because Congress refuses to pass any structural laws that allow the budget to ebb and flow with tax receipts, we get caught in this situation.

31:16Again, roughly every handful of years. So what Biden could do is he could say the 14th Amendment gives me the right. I'm going to pass a budget via executive order. From a game theory perspective, what that does is it forces Republicans to sue Biden, take him to the Supreme Court and say this is unconstitutional. The problem with that is that that probably really does tank the economy in the way that it creates enough uncertainty where capital markets freeze up and liquidity just absolutely goes away. And again, liquidity has been shrinking for the last 18 months anyways, so it gets even worse.

31:52So I think the brinksmanship right now between McCarthy and Biden is basically that veiled threat. But if Biden effectively isn't going to get something done, I think he's going to test the 14th Amendment now. If the 14th Amendment turns out to be a reasonable way in order to pass a budget, the good news is not just for Biden, but for any future president, including Republican presidents, will not have to be held hostage by Congress. They will in the 11th hour be able to pass a budget that works. The implications of that, though, is that now you will not get consensus. this and whatever's happening in that moment, you'll see more of.

32:27So if you have a spending president, they'll just continue to spend. And if you have an austerity president, they'll continue to cut. And that'll have implications on either side. So actually think this is over a year, is a 14th amendment or do you think it's a valid use of it? No, it's not going to fly. I mean, it's true that the 14th amendment has some language about the full faith think credit of the US shall not be compromised. However, it's never been tested or tried. No one exactly knows what it means. Progressors are now saying that the language means that Biden could just keep spending without the debt limit being raised, but find himself through cold water on this.

33:04He said that he didn't think he had that authority and even learned so Donald the other night who's a big progressive on the media. He was saying that the Dems were going to take this tack. They need to do it months ago before they started negotiating on a debt limit increase. So it's too late now. In other words, if you're going to take that position, why would you have negotiated that you, you, the president are effectively conceiting, you don't have that authority when you start negotiating. So I think it's too late to invoke the 14th amendment. They're going to have to raise the debt ceiling.

33:33That being said, I think they're going to be able to, Reuters had to report this morning that there are only 72 billion apart now in their positions, which is a relatively small amount. So my guess is they're going to, they're going to work this out. Now, what should the fate of the debt limit be moving forward? I mean, the thing that's so stupid about our budget process is we spend the money and then argue about whether we're going to pay the credit card bill. The way that the debt limit should work is you raise the debt before you spend it. Congress should have to vote first on whether they want to deficit or debt spend.

34:07Then you decide how much you're going to spend. So this thing, this vote needs to be moved up before they spend it. And I think if you did that, it'd be a lot harder for the politicians to spend money because you know, if you had an up or down vote very early on saying, should we even be in deficit? I think a lot of people would say, no, we're not in a war. So why would you deficit spend? If we break any thoughts on the debt ceiling, if not, we'll go on to the government accountability vis -a -vis the defense spending. I mean, look, we're running a $2 trillion dollar of your deficit and it's forecast to continue to be at that level for several years and it's going to take pretty radical changes in how we tax and spend to make up that gap.

34:52So you know this is a problem that is going to continue and repeat and it does beg the question, you know, you want to buy bonds from an entity that's generating four trillion in revenue and spending six trillion and has a plan to do that for the foreseeable future and it's only, you know, seeing its economy or its underlying revenue -based grow by 2 % a year. It seems like, you know, that would be a very hard start -up to fund and it would be a very difficult growth investment to make, particularly in an environment like this. So I'm just pointing out that this is becoming a more kind of systemically risky situation and for the US, that we spend the way we do, and we have to keep coming back to having these debates about it as appropriate or not.

35:42And now they've narrowed down the way that the Republicans seem to be going about getting this done. The deal done is they're only focusing on the roughly 15 % of the overall federal budget. And they're saying we'll make some tweaks in that little range there and save some pennies, save some nickels. But we've got a much more fundamental problem to deal with, which is how do we stop running these deficits and running the debt up. But I mean, I don't sound like a friggin. No, I think you're right. I mean, the inflation is here and the crowding out of private investment and private borrowing is now occurring because the government borrowing is so big.

36:21I mean, our treasury, our government debt of what, three to trillion, that has to be financed somehow. And all that money is going to finance government instead of being put to other uses. So I think that the downsides already here, you can't run two trillion dollar deficits every year, that's unsustainable. Now, I think that you guys referenced what happened in 2011. That's worth discussing for a second, because I actually think that what was agreed to in 2011 was excellent. Obama and the Republicans in Congress agreed to a thing called the sequester, where they agreed that they would freeze both defense and non -defense discretionary spending until they could get their act together and agree on what the budget should look like.

37:01And so the theory was the Republicans agreed to the pain of freezing defense, Democrats agreed to the pain of freezing non -entitlement social spending, and that's how the deal was cut. I actually think that made a lot of sense. And I think we should have kept operating under the sequester until we got to a balanced budget. But the reason that broke, quite frankly, is because of the lobbying power of the military industrial complex is so great in both the Republican and Democratic parties that they basically wanted this request or oversight to be raising the defense budget. I think it's just that there's never been a degree of accountability for the spending that's being done because of this assumption that we'll always be able to pay our debt and we'll always be able to take on more debt.

37:43And I think that you see the other conversation, the other topic that we were going to talk about was this lack of accountability and defense spending that, You know, we should play the John Stewart clip You know, where I think who does he interview the under secretary of defense or something? What is her title? Deptary secretary of defense Kathleen Hicks was discussing the defense budget When I see a state department get a certain amount of money and a military budget be ten times that and I see a struggle within government To get people like more basic services. I mean we got out of 20 years of war and the Pentagon got a $50 billion dollar raise.

38:21Like that's shocking to me. Now I may not understand exactly the ins and outs and the incredible magic of an audit, but I'm a human being who lives on the earth and can't figure out how $850 billion to a department means that the rank and file still have to be on food stamps. Like to me, that's fucking corruption. I'm sorry. And then there was a story that came out this week, according to Bloomberg, the government accountability office disclosed that the Pentagon is currently unable to account for hundreds of thousands of spare parts for the F -35 jets. The Pentagon has never passed an audit. The Pentagon has never passed an audit, and it's accepted.

39:01And it's acceptable in the same way that it's acceptable to never balance the budget, to always spend and give everyone what they want. and to find ourselves in this kind of late stage problem where we've gotten away with it for so long, that both of those factors, whether it's the downgrade on the rating, whether it's the fact that we end up in these battles over whether to raise the debt ceiling every couple of years, or whether we can't pass an audit, all of these factors are symptoms of the same underlying problem, which is that there is no accountability for how we operate the kind of fiscal condition of the federal government.

39:43You know, the other thing it leads to is all these optional wars. So let me give you an example. So all of these wars are always... They're all free. Yeah, they're all off -book. So it take Ukraine. We've appropriated what, 130 billion. That's not part of the defense budget. We have 80 billion in the defense budget, but then we just stack 100 billion or so for you to create on top of that and it's off -book. Now, if we said the reason we're funding Ukrainians because it improves the national defense of the United States, why wouldn't that just come out of the defense budget? If you force people to make actual choices, actual decisions, and they could say, okay, we could spend 100 billion on Ukraine or we could spend 100 billion on stockpiling tanks or F -35s or whatever for the United States, now you actually force some prioritization decisions.

40:27But because the wars are always off -book, they're just additive. You just tack them on and we did that with an Afghanistan. We did that in Iraq. We spent something like $8 trillion and that was just added to the national debt. Yeah, we can't afford these anymore. It's becoming clear to everybody that there has to be some accountability. And Chema, I guess, is seems like there's a couple of unpopular stances to take when you're running for office. One of them is social security, retirement age, as we saw in other countries like France where people arguing over 62, 64 years old, whatever it is.

40:59Yeah. And so these entitlements, job requirements, if you want to get unemployment, and then of course, defense spending, you seem un -American. If you don't want to take care of old people, you seem un -American. And you know, weak if you don't want to support the government, is there a path towards celebrating an administrator as CEO and executive who tells honest truth to the American people, which is, hey, we've been on a binge, we've been going on vacation, nobody's looking at the bills and we need to have a staycation, we need to cut costs, we need some austerity here. Is there a path for somebody, Ron Desantis, Chris Christie, RFK, whoever it is, to win over the American public, to win over moderates with an austerity, and a balanced the budget message, or is it just too unpopular to even bring that up?

41:49I just think that you guys don't psychologically understand how to get what you want. I think the best way to get what you want, which I would want to, which is a healthy economy where there's accountability for spending, is to not look at expenses. And all of this talk is always about expenses, but to look at revenue and limit revenue you more drastically. And I think the best way to limit revenue dramatically at the federal and state level is to just minimize taxation as much as possible. And I think that is something that Democrats and Republicans have a hard time fighting. Nobody wants to raise their hand and say, I want new taxes.

42:33Nobody says that, right? And I think that if you attach that to some sort of spending guidelines, like what David it says with a sensible foreign policy, you just end up spending a lot less. You want to fight a foreign war? Okay, great. Well, you know what? It's part of the existing budget. Let's go figure out why we want to do it. We want to have more accountability and defense spending. Okay. Well, look, the defense budget is a half of what it used to be because we just have half the revenue. I think that if you start to go and talk about austerity and cutting social security and healthcare benefits, it's literally a non starter.

43:06People close their eyes. They plug their ears and you get nowhere. Now, separately, I think the step even before you look at taxation, so minimizing government revenue, is to figure out how to refinance. So if you're a homeowner and you got a mortgage in the 80s, you were paying 12, 14, 15, 16%. If when rates kept going down, you were the people around you, didn't have the common sense to refinance that, that was negligence. Similarly, we're in a position today to refinance our debt wall and push out these maturities past 100 plus years. We are the only country that has a viable, stable economy that looks like it can still continue to thrive at scale.

43:52Take advantage of that. You lose nothing by giving us the optionality, generating some 100 -year debt, refinancing a bunch of this short -term stuff, and then, second, inflation helps us. And it helps us because it allows us to inflate the value of these dollars that allows us to pay off our short -term maturities. So these are two practical simple things that are uncontroversial that should happen today. And then separately, I think you need to look at minimizing revenue. And then you can cut expenses. But if you flip them around, I'm just telling you, I just want any of this to happen, but I'm telling you, nothing will change and you guys will still be crying wolf in five years it'll still be the same It'll just be a different debt to GDP number that gives you anxiety speaking of anxiety freeback your response I don't agree.

44:39I think we need to balance the budget and I think that if we don't we can agree with Financing pushing out 100 year. No, no, I don't think reducing revenue solves the problem I think that and by the way one of the problems with The democracy to mop is that You speak about it as if everyone benefits from a tax cut. Generally, there is some disproportionate benefit to a tax cut. And that's why it's less likely to happen because the majority will benefit by keeping taxes high for a minority, whether that's some corporate minority or whether it's some wealthy individual minority. And that's why I think the opposite is more likely to happen, which is we're more likely to see taxes go up in order to bridge the gap to continue to fund programs that everyone wants Everyone wants an am, they don't want an or, and as a result, they'll kind of continue to seek revenue because there are other places to get revenue that don't affect me, meaning it doesn't affect the majority.

45:37And I don't mean me personally, I'm just speaking about a voter, and a voter would say, if there's a way to tax other people for me to get the things I want, they will vote yes for that. And that's ultimately what the system ends up finding. And I think that's what's more likely to end up happening. That's all. That's all. Yeah, look, I mean, I agree with part of both of what you're saying, which is, I'm not is I agree with Freeberg that we need to balance the budget. There's no excuse for running peacetime deficits this large. We're really going to regret this one day. On the other hand, I agree with Jamal that if you just try to solve the problem by raising taxes, the politicians will just keep spending.

46:11I mean, you have to starve to the beast, I think, in order to control it. At least that's been a view, I think, for a long time. Do you agree with Jamal on that point? Here's the thing. You cannot solve this problem by raising up to 70 % tax rates like we had in the 1970s and I can prove it, pull up this chart. France is a good example of this too. So what you see in this chart here is this is Federal C -Suppersence of GDP. What I see when I eyeball this is if you were to put a regression line on that, it'd be at around 17 % with a plus or minus of 2%. And the times when you get up to 19%, are a little bit close to 20%, or we have great economic conditions or money printing.

46:50So the Clinton era from was a 92 to 2000 was an economic boom and we got up to almost 20 % but we've never ever been able to get more than 20 % of GDP and federal tax receipts even during the 1970s when the top marginal rate was 70%. What happened, sex? Yeah, why is that? The people start doing economic activity? No, it curtills in the bestment and economic activity. This is the last one I have to say. for hundreds of years, taxation doesn't solve this problem. I don't disagree. I don't disagree. I just, I don't agree. You can only get so much blood from a stone. And the reality is, is that when you try to tax rich people on a confiscatory way, they spend a lot more on lawyers and accountants to figure out how to structure their income in a way that, or they leave.

47:37Where they tap out, you know, like if you're paying 50, 60 % tax, it's like, what's the incentive to go to work? And if you're sitting on a big nut, you can just be like, You know, and I'll just I'll just enjoy my life a little bit more because each incremental dollar 50 60 % going to taxes And then I have to pay my team and you just sort of get to the I asked a question on Twitter, you know, because we all talked in our group chat about the concept of passing a balanced budget amendment Which would be an amendment to the US Constitution that says you know the Congress has an obligation and the executive branch has an obligation To generate a budget surplus You know every every year And you could have a balanced budget amendment that provides certain exemptions to this, like in a year of war, for example, where Congress declares an emergency or declares a war.

48:27And in those cases, theoretically, like if there's some sort of emergency that we have to address and overfund, you can kind of resolve to this. But man, I'd so might... But you know, we've been a war for something like two out of every three years since the Cold War ended. How many of those wars sacks were voted on by Congress as the other issue? You know? Well, what happened is we did the authorization for the use of force I think goes all the way back to was it like 2001 where it's basically we declare a war on terrorism in response to 9 -11 And they use that authorization to go into Afghanistan, which I think was understandable Then they use that same one to go into Iraq then they use it to go into Syria and only recently only a few months ago do they actually repeal that use of force as a way to keep authorizing new wars?

49:15So they really should go back to Congress for every new war. But the problem is, you know, Freeberg, I agree with you that we need to have a balanced budget amendment, but it's going to contain a caveat or exception for war. Sure. We're just in war all the time now. Sure, but I think that there's ways to create some mechanism that forces that issue to actually come front and center as opposed to being what you're arguing, which is, hey, it's always on the back burner. and therefore it's always bubbling over and maybe you draft it in that way. But what was surprising to me was just the incredible negative sentiment I got from so many people who have this deeply held belief that the only way to support growth in our economy is through federal spending and that that has become the driver that has become the handicap of our country.

49:55It has become the handicap of our economy. It has become the handicap of our people and as a result. It has been a handicap. Because it means that we now have this instead of having an incentive to drive productivity through private commercial and economic activity, through innovation, through productivity gains, through business building, it's now dependent on what we have now identified as a highly unaccountable system of spending. And that unaccountable system of spending ends up putting a lot of dollars into the pockets of cronies and the pockets of folks that aren't actually driving job growth or aren't driving productivity.

50:27There are certainly programs that work, but overall there's no level or degree of accountability that asks the question, did that program work? Did we spend a dollar and get more than a dollar back for what we spent? There's no assessment of that, whether it's a war or whether it's defense spending. There's always some kind of intellectual argument that says. Is that true? I don't think that's true. I think the OMB releases a report after report saying that all of this stuff sucks and doesn't do anything. Just nobody actions. No one cares. You're right. You're right. I don't care. I think what you're saying is inaccurate.

50:56This is my point. I think it's important to get the facts right. What you are saying is not true. They do do an accounting. That accounting sucks. it shows that there's tons of waste, nothing changes. So now what do you want to do, David? Is the real question, what do you want to do knowing that? We shouldn't spend on things that don't have a positive return. This is my point. That's why we're now in this very difficult situation. That's not happening. Now what would you like to do? Well, the reason it doesn't happen is because the way that politics decides things has nothing to do with the merits of it.

51:24It has to do with someone for some lobbying. I'm not debating that. I agree. I'm just saying what do you guys want to do now? Just reality for a second. Because this is why our education system is like fundamentally betrayed the country because we just keep teaching people that somehow the government can solve all these problems when really it's just a product of special interest lobbying for things. And that's why we perpetuate these programs that don't work. I think the best way to think about government spending is that in every dollar there's probably 15 or 20 cents that actually does some good.

51:51There's probably 15 to 20 cents that's like on the margins break even. And then the rest of it, which is half of it, is wasted. That's probably roughly accurate, right? You get things like ARP, which turned out to be a pretty decent program. There were things like the DOE loans that got things like Tesla into the marketplace, right? There's things like the IRA today that'll de -lever ourselves and create a piece dividend because we won't need to fight over resources and oil from other countries. But the problem is that that represents a minority of the dollars. Okay, now that we know that that's true and we've known that that's true for decades, I guess again, I'm just asking a practical question.

52:29What do you guys want to do now? Play the ball where it lies. What do we do today? There are a couple things you can do. First of all, one of the points I'd make is I think you're probably right in your assessment that 50 cents that's what you're calling wasted, that money does end up somewhere. It ends up in someone's pockets, probably the pockets of the shareholders of some contractor or the donors of individuals or employees. Donors class. Well, there's also individuals that benefit, but functionally what's going on is it's a system of wealth transfer, and that's not necessarily bad. The question is, is the transfer of wealth happening to the right groups that we intend to support with these social programs?

53:06Or is it not? And I think Saxx's point, which I think we could all probably align on, is it's not. And I think that's probably a set of standards for accountability that we should probably try and create in the course. But where does that where does that money end up? It ends up buying homes feeding people they're going to restaurants You're buying cars and I like there's like a fleet of megayots in America Well, I guess what I'm asking is where even that leakage of 50 % doesn't that just end up in the normal economy? Yeah, it ends up supporting individuals and maybe Why is that so bad here is what else?

53:37But that's what I'm saying. It is a wealth transfer It is a system of wealth where it ends up in people's pockets and that that system ultimately benefits a lot of people in need and a lot of people that that we as a society intend to support here in the US. I don't think it just goes to poor people. But that's my other point. There's this plenty of, but it's not just, it's not just, yes. There's so much corporate welfare. I mean, come on, it's not all just going to needy people. It's going to your poor interests. On some level, we can accept the inefficiency of government. I like your idea of constraining how much of a canvas they have to paint with and how much revenue they bring in.

54:13And I think what we have to accept is that the reason this country gets bailed out is because we have tremendous entrepreneurs an amazing capital allocation system of very fluid market for building corporate corporations and capitalism is so vibrant here that no matter what happens We always seem to make the next Google Uber Nvidia whatever it is Airbnb and I can tell you you know spending a lot of time traveling, meeting with people in Japan, in UAE, etc. They're all looking at the massive entrepreneurial drive that we have in the United States to build global companies and how we do it over and over and over again.

54:52And the only countries that seem to be able to do this at scale, you know, maybe Sweden and some of the Nordics, obviously China. But other countries have not figured out how to build global corporations. And that is what bells us out every time is entrepreneur. Yeah, I check out the account. The deficit's getting so big that we can't bail out that way. Think about it. We have two trillion in deficit every year. That is two Googles. Yeah, it's an Apple. It's running in Apple every year. We have to, we have to address it. But the point is that's how we have bailed ourselves out historically. Is massive capital education and entrepreneurship?

55:27I want to remind you guys what happened at the end of the 70s. We had all these inflationary problems. We had all of these taxation problems where people thought all of a sudden 70 % tax rates were going to solve the problem, what you guys talked about. And instead the exact opposite thing happened, which was the guy that got elected, Ronald Reagan. And I just want to remind you what the Electoral College was between Image and Jimmy Carter, 489 to 49. Like a bigger just shalacking. I don't think we've seen in modern US politics, to the guy that basically said enough with this, we're going to tone it all down, and we're going to cut revenues.

56:03So I do think that people have an appetite for them. And I think that people, the debt to GDP in 1988 was only 30%. So we just have a lot less drive out of it. I have a lot to work to do. We've got a lot of work to do. But let me say this. Look, Tomoth, I actually agree with what you're saying in this sense. If you look at my simple chart of federal tax receipts as percent of GDP, the highest it's ever been in the history of the United States is 19 .75 % in 2000 we had the Dockham bubble. Okay, that's the highest it's ever been and we had periods of high tax rates and low tax rates It never went above 20 percent so the simple math here is you do a forecast of what do you think GDP is gonna be over the next year You get independent economists to do it and you say the federal government can't spend more than 20 % of GDP because we've never Extracted that we've never figured out a way to extract it's perfect More than 20 % your logic is perfect out of the economy the logic is perfect there your aggression is so it's very important because what your your aggression says is we're actually spending a lot of energy fighting over two to three hundred basis points at any given time.

57:05Right. And what we should be focusing on is more important. Why are we doing that? Why are we spending so much time getting our panties in a bunch over two to three hundred basis points? And we need to stop wars, increase our education system, stop the wars. By the way, and inspire people to start companies and make it easy to start companies. The BIL, the IRA, and the CHIPSAC, all three, the biggest components in all three bills. this is Biden's signature legislation is creating energy independence for America, which will have an enormous piece to defend. You will not fight these stupid endless wars.

57:38Every single one of them goes back to oil, right? With the exception of... It's always about resources. What has it never been about resources in modern history? Well, and now it's going to be chips is the modern resource. In video shares, jumped as much as 30 % after reporting huge revenue guidance due to AI demand, Q1 revenue, 7 .2 bill, up 19%. Quarter over quarter, not year over year. Quarter over quarter. Revenue beat analysts estimates by more than 600 million for people. No, Nvidia is working on GPUs as opposed to CPUs, the graphic processing units. That are being leveraged in AI. And there is a massive cycle going on.

58:19There's a line out the door to buy these when you see Twitter going into AI, Facebook, Google, and obviously Microsoft. All the cloud infrastructure is moving from CPU to GPU. Yes, Priber? Well, I mean, I was talking with the CEO and CFO of a major data center rate and they shared with me that they were seeing more demand in the last couple of months than they've seen in the prior 10 years, almost all of that data center build app demand. and so they'll build data centers for software companies, for internet companies, is coming from GPU racks. And these GPU racks are much more energy -intensive, much more costly, but it's a pretty kind of significant shift underway that businesses that historically didn't even operate their own data centers are now building out their own data centers, have their own training systems to have their own infrastructure to be able to run AI applications and tools.

59:18So it's a pretty significant shift underway. All of the growth that Nvidia is projecting and highlighted in this earnings report yesterday is coming from their data center line of products. And it's a pretty significant, I mean, I don't know. People have said they've never seen a beat like this or never seen an up a guidance update like this of the scale where I think the street was looking for maybe a $7 billion guide and on revenue for this, they came out and said, they're gonna guide to $11 billion next quarter, which is just an insane bump for a 90 -day outlook. I was told from one of their major customers that they had to beg.

59:56He's in beg for thousands of GPUs and the lobbying effort. He said there's a line around the corner to buy these. And you need only use chat, GPT or any stable diffusion, etc. And you see how long it takes to do a generative AI to use these products. It's like we're back to dial -up modem, SAC. We're literally, we're waiting for a computer to give us an answer. Once the last time that happened, that we had to sit there and wait for it to do its job. And I think this is the great renewal for America, another amazing American company. It's only three decades old. It's best years, it's best decades are in front of it, obviously.

1:00:35This is going to be a massive boon for not only Nvidia, but for America, or I say, say America. Yeah. Nvidia has basically joined the trillion dollar club now in terms of market cap companies. is really amazing. I mean, I'm kind of kicking myself because this was the easiest by ever. Chad Gbt launched on November 30th. We all saw that that immediately ushered in a whole new error in Silicon Valley. There's a ton of VC funding that's poured into AI startups. They all need to train models and those models need to use GPUs. So we all saw this coming and I'm kind of annoying with myself. Let me ask you a question.

1:01:11So you say that you kicked yourself Obviously, the general statement that AI is coming and Nvidia is going to be a beneficiary or Nvidia's products are going to see a boon make sense. But when you look at the valuation of the business, they are currently trading at 70 times the next 12 months evita. So how do you think about valuation? Even at a trillion dollar market cap, at a trillion dollar market cap, they're trading at 70 times next 12 months evita. This seems like they're doubling revenue every six months though, dude. They're doubling revenue. I guess it's a bit much. How high does it go?

1:01:44Because at a trillion dollars, what's the right EBITDA level for a business to be worth a trillion dollars? Is it a hundred percent? It's a hundred percent. But I mean, what's the number? And then the question is, if it's a hundred billion, how many years does it take them to grow into that? And, you know, are you really paying the right price? Are you paying a premium to get? It's a momentum stop now. And we'll be determined if they have competition. So is there competition for this company? Chim off, do you think there's a competitor that will emerge? I mean, it's important to understand what a GPU is maybe.

1:02:13So, Intel had the run of the place for the first 40 years of compute because it turned out that most of the things that we used it for, Excel, Microsoft Word, a browser, operated well on a CPU, which essentially think about it as like a factory that takes in the first order and then puts it up first and first up. And the great thing about GPUs is that it can take multiple streams of work at the same time and work on them at the same time. So it's very parallel. And it has this level of parallelism that makes it very well suited for AI applications. I think the thing to keep in mind is that it is a byproduct of a GPU that tries to also do other things.

1:02:57And so as a result of that, you're now seeing a lot of companies building their own silicon. and most importantly, all the big tech companies now have some pretty well -evolved efforts underway. So a lot of these companies have figured out how to do custom ASICs that can do this massively parallel processing. And what you're now seeing is chips that are designed against specific models that are optimized for them. The other thing that you're also seeing is that some people are saying, well, you know what, for these massive models, actually, you should just run it all in memory. And so you're having folks that are doing it in in massive arrays of FPGA's that was Microsoft first attempted all of this.

1:03:35So what is the point of me telling you this? I think that again, we talked about this last week. The biggest cheerleaders of this first point of value creation has really been Wall Street and Family offices that wanted to front run where the value creation was going to initially go. And they've been right, which is around chips. But there was a tweet and Nick I posted it maybe you can throw it up here that shows that if you compare this to the mobile internet There's always this phased approach in terms of value creation where let's just say initially in a new market mobile a decade ago and AI today The first dollar of profits tends to go to the chip companies that makes a lot of sense right because they're the ones that are in the bowels of making the Elemental capabilities possible And then you transition that value and what free bricks as is people realize, hey, hold on the profit dollars are not going to accrue there because again, this beautiful principle of capitalism is that you can only over earn for a certain amount of time because then competitors emerge and say, hold on, I want to steal those profit dollars from you and take them for myself.

1:04:43So margins compress, right? So in the end, Nvidia's gains today will be then spread across Nvidia, Facebook will have their own chip, Amazon will have their own chip, Google already does, Apple will have their own chip, all the memory companies will be in this space. So then the profits get smeared there, multiples compressed. Then where does the value grow to the device companies in the mobile internet? Here, I think we still have to debate what is a device company in the world of AI. But the most important thing I think to remember is that where the real value gets accrued is five, six, seven years later, when the software and services companies show up and create a huge moat.

1:05:24And those are the Googles and the Facebooks and the apples of the world. And so it's a really dynamic moment. I think it's wonderful for Nvidia. It's an amazing story for Jensen who's been really at this game for a very long time. By the way, there's a, Jensen has a law of his own that is a sort of companion to Moore's Law called Wang's Law, named after himself, which you can read about, which just talks about the variability of the compute capabilities of GPUs versus CPUs. So if you want to know that, he should get some credit for that. But I think it's great. I think we're in the, in any way, Apple is also making their own GPUs.

1:05:59That's why when you hear the M2, that has GPUs in it. So you're absolutely correct. We're in anyone. So we're going to have a few quarters for sure of this hype. And then the smart money will probably figure out where the next Lily pad is, and then they'll go to the next. Beautifully said. Beautifully said. Any other thoughts? Freebergues, we're up on that. I wanted to show this AI demo from Adobe Photoshop. Every week or so, we see something that's insane. This is incredible. And this one was we shared in the group chat, but for those ... Scott, I'll keep put this out. You can chat about this game.

1:06:32So what we see here, if you're listening, is taking a Photoshop, creating an area, and then instead of cutting it, and pasting it or refining it, you're putting in a text prompt and saying, oh, expand the, and make this widescreen or let me grab this deer out of a forest and then put it on a wet alley at night. And then, you know, let me highlight this wall over here and put a sign and put a red arrow sign. And it just generates it. And it's doing this. They made specific note when they launched this that all of this is done with stock photography they have the complete license to so they can monetize this without getting sued like Microsoft is currently being sued.

1:07:17And Microsoft actually in addition to the GitHub lawsuit, it turns out Twitter sent a letter over to Microsoft as well. So incredible demo. The producers here at all in as our production team grows, producer Brian made a little video here. Here's Chimoffin before the Lora Pianodais. That's Tom Ford. Yeah, that's Tom Ford. This is my bad hair. Look at that. The hair's terrible. You look tired. The watch is right there. You watch the watch. No, I don't know. I did that night. My God, I played poker. Literally I walked into that, to that CMPC. Oh my God, really? You went straight from the poker table to the, Oh, brutal.

1:08:00To the squat. Hugs neck. Now I understand. I was like, wait, no tie. But he's wearing a tie. Yeah, that's a Tom Ford. Yeah, he said to you he said Chimath try this without the without a tie. Is it okay? Oh, you know you were talking to Tom Ford great What a flex you know Tom Ford is not be twice in my life. I can tell you both stories Okay, hold on a second. He so with degenerative I add make a yellow sweater is the prompt here. Let's see if he goes to Bert From Ernie to Bert there he is Sri Lankan Bert as we call him in the Not thank you. Yeah, it doesn't quite get the borders right now and looks like a worries Jersey.

1:08:33Oh, there you go right now. Pretty bad. Yeah. Yeah. Yeah. Yeah. Change my hair. Change my hair. I think the demo is bullshit. Can we change his hair? Can we have the hair be less in sync, less Hassan Manage and more? Give him a little higher. I understand why they call you a ZZ on sorry. I think the you had the hair go in there. The hair. Yeah. It's a lot of lift. And what was that day? But it's funny. What is that? Is it putty? This is like eight years ago. Is that what are you using clay or putty? What do you, yeah, yeah, yeah, it's like a stiff, it's like a stiff hair wax. I think it's more of a hair wax.

1:09:08I've got it. Yeah. I've come such a long way since now. Much more stylish. Much more stylish. I mean, look at Sacks as crazy hair as we probably did in the cold open. My thought on the Adobe thing for what it's worth is like, I mean, do they want a Mulligan on this $20 billion fake -mething or do they get to see the ongoing revenues that that Figma's generating either on the PC or the movie. To Lena Khan, all kinds of stuff. It's a different product though. I mean, the AI stuff certainly has had an impact, but I mean, so much of the benefit of Figma is it's web based, it's collaborative. It's like people kind of use it online to make stuff together.

1:09:44It's a little different than the other tools that they offer today. So you don't think it from September to now, nothing changes, they should just close this thing at 20 billion or... They're half baked. Do you think that they should pay a billion, break it up and then redo the deal at 10 and then it costs about 11, they say nine. Remember not all breakup fees mean that you can break up for any reason. So there's only, there's limited outs on what you can pay a breakup fee to get out of one of which could be antitrust or regulatory. But otherwise you may be forced to close in court if you don't have a valid reason for terminating the deal.

1:10:21Their only hope is to get Lena content. it. Bucket up. Yeah, some leaks coming up. Sure. Is your argument more that they bought Figma top of market pricing, which no longer makes sense? Or is your argument that they're innovating so well that they don't need it? I think it's a little bit of both, but it's more that I think this generative AI stuff allows you to refresh. I tweeted this out so Nick, maybe you can put it up there. But I think the first thing is that your feature set can catch up pretty quickly. So even if If you set out a team and said just copy exactly what Figma has with a copilot enabling 50 engineers, that's like 500 engineers cranking on something.

1:11:01I would be surprised if they couldn't just replicate the product end to end. That's the first thing. Then the second thing is, I think that you've seen VC funding basically crawl to a halt. And so the question there is, how many of those companies are just going to stop spending because they're just not going to exist? And then the third thing is if we're sort of hashtag austerity, people are going to look at everything they're spending money on and try to be really disciplined about it. If you roll all those things together, SACs, my thought is maybe the deal still makes sense, but does it make sense at 20 billion and does it then just create a whole suite of shareholder lawsuits after the fact that are just going to say these three things and regurgitate them at Nazim.

1:11:42That's the curiosity I had. Well, so we're here. Let's talk a little bit about the state of Silicon Valley sacks. We were talking offline after the show last week. You've slowed down investment at your firm craft. You're being thoughtful. You're working on the existing portfolios. How would you describe your activity so far in the first half of 2023 as a firm if you're so willing to share them? My take on what's happening in Silicon Valley right now or tech more generally is a tale of two cities. It's the best of times for AI startups and the worst of times for everybody else. The AI startups, there's a lot of interesting things happening in there and money is being pushed out them by VCs.

1:12:21It's very frothy, arguably bubbly. But then at the same time, if you're a pre -AI company, maybe the one that raised a lot of money at a big valuation in 2020 or 2021, it's a pretty tough time. I don't know of any startup, especially like later stage startups who were hitting their numbers. Everyone is reforcasting down. Everyone's missing. I think that speaks to the larger economy is not doing that well. I think the economists a year from now may say that their recession had already begun. Certainly feels like that. That's what Druck said at the zone conference. And I think that startups are absolutely seeing that in their sales right now.

1:12:58Sales are slipping. It's taking longer. Buyers are sharpening their pencils. It's a really tough environment, I think, for software startups that are actually trying to make sales. AI startups are a little bit exempt for that because people are still investing based on the dream, not based on the metrics. And I would say that we're very interested in AI and we're starting to make some investments, but we also like to invest based on metrics, not just on a dream. And so we're being somewhat cautious about how we approach it. So you make a small seed bat and somebody who has a dream, if I can translate here, but if you're going to make a bigger bat, a series A, series B, you're going to want to see some numbers on the board.

1:13:35You're going to want to see some product and money. I think it's a really good way of putting it because I think the standards change at each round and at the seed stage you can absolutely just make a bet based on the dream or just based on a founder. Sure. Great founder going after the I space idea still a little bit to be flushed out. You can make that bet. 500K, 750. Yeah. Or even like 3 million will do as a big side round. But then when you get to Series A and you want to write a 10, 12, $15 million check, we kind of want to see some revenue. Yeah. And certainly by the time you get to Series B or Series C, we want to see like all the standard metrics.

1:14:10We want to see net dollar retention, expansion, all that kind of stuff. Yeah, it's really hard for the later stage startups because they raised, and this is the lesson if you're raising a 3, 4, 500 million sacks, curriculum if I'm wrong here, you're not, you have to build into that valuation. And let's face it, that valuation A was never realistic. think it was overpriced and then B, you got the headwinds and your customers are saying, oh, you want 40 ,000 a year for this SaaS product, we'll give you 12. And what position are you in to turn down the 12? You got to take the 12. You got three competitors who are going to roll up and take the 12.

1:14:44So it's hard. Actually, can I give you an update? Please. Remember I mentioned there was a start of my portfolio, actually my angel portfolio that was going to play around, the cram down. And I think it's absolutely tragic because of what I learned which is the founders got crammed down to because a year ago They brought in a professional CEO and I think as a result of this They're probably going to get nothing for 10 years at work whereas if they had just cut costs Damn it and you know that the company has 32 million of ARR So imagine if they cut their off backs to a million a month they could have run 20 million dollars of EBIDA Pivot to the private equity model sell that company for 150 million Half would have gone to pay off the investors, and the other half would have gone, a lot of would have gone to the common, they probably would have made $10 million each.

1:15:30And now they're gonna get zero, because they burnt too much money, didn't want to cut costs. They bought into the dream of bringing the professional CEO who's gonna re -excelerate growth. Never done that. Never done that. Never done that. So it's like so frustrating to me, because I feel so bad for these founders. I wish they had called me a year ago, and I would have been one of the guys pounding on the table, just cut costs. And then control your destiny. Because listen, yes, and here's the thing, is if you're only growing 10, 15, 20%, even 50 % a year, you're not a VC backable startup. You're a private equity play.

1:16:01You got to pivot to that model of making your business work as a casual positive business. That's how you're going to get an exit. If you're growing 100 % plus a year, you can continue to be VC back. It's so important for founders to understand whether they're even eligible for venture capital anymore. If they're not, you have to make a different kind of model work if you want to see your return. Yeah, and when this happens a cram down round Those founders if they want a refresh they have to prove their worth They're not just gonna get a refresh to keep the relationship going. This is 30 million dollars in revenue They don't need the founders anymore.

1:16:36Look these guys been working for 10 years So even if they got a refresh they have to put in four more years of work and the other thing is this cram down round I think was way too big they raised 25 million with a 3x lick breath So, it's like press. 75 million off the top. Off the top. Then you gotta repay back. The big is triple. Yep. Oh my God. Who, this is where board governance is so important, Chimapa, like, I mean, who is on the board of these companies? We told you I was on board. I was on the board. I was on the board of these companies. These are people who have never had to build a company.

1:17:12And they may be educated, or they may have been an executive company and then some VC who was feverishly raising funds just hired some dope put them on the board of this company and then just the stupidity compounds and trickles down It's so frustrating. Compounding stupidity. This is the beginning of the beginning all of these people who have zero judgment are gonna fuck so many companies up It is the beginning of the beginning. Well, it's a month. It's not just the the bad board members It's the view for so many years that who you put on your board didn't matter And remember there was all these VCs who had a model where it's like well We don't take a board seat and they were selling that to founders as a positive as a feature as a feature Not a bug and the reality is for a lot of VCs actually not be on the board probably is the best they can offer but You know that that model works That model works when everything is up into the right where like this model of board sees don't matter governance doesn't matter.

1:18:10That is a model in a boom where everything just keeps going up into the right But when you had a tough time that is when you need a board member who's seen this movie before Who knows what a cram down round is who knows? What's gonna happen to you a year hence? Yep when you get You screwed into taking a three -way you want the gray hair pilot, you know in the right state to say hey listen We're gonna you want this here you want that hair you want that sex here? All right freeberg you are always candid about your own journey. You've had huge wins, climate .com, for a belly racing funds, but sometimes things don't work out.

1:18:44What do you, what's your take on some of these hard lessons of great ideas, you know, spun up during this really hard market? I mean, I think just to echo the point you guys are making in the last 15 years, we've been in a call it structurally inflated environment because of the zero interest rate policy since the 08 financial crisis and everything's been up into the right or so much. It's been so easy to kind of inflate things, fill up hot air balloons and go up into the right. And unfortunately most folks who are working in the investor community that are sitting on boards weren't around for the dot -con crash the last time this happened.

1:19:22And I think just to kind of echo your point, white, so challenging, I think right now, is to figure out a way out. There's a lot of failure going on in Silicon Valley right now. you know, SACs, you talk a little bit about having pads for exit and options for SaaS companies, but there are many sectors in startup land that don't have those sorts of options in biotech, in SIN bio, in FIN tech, in direct to consumer e -commerce. There's a lot of markets that, and a lot of types of businesses that feel like there isn't a great way out. And it's having a deep psychological poll on entrepreneurs, on founders, on CEOs, and everyone is experiencing some degree of failure in this environment.

1:20:03There are very few folks who aren't feeling the secute pressure and the secute pain. You know, I heard some pretty horrific stories this week from a friend of mine and someone who ended up in the hospital because of the pressure he was under. And it's really trying. And you know, even within our friend group, I mean, not our direct friend group within our broader community of investor friends, there are very few people who aren't feeling the extraordinary pressure that they've got a book that is declining in value and they don't know how to get out of the hole. And you know, that pressure is like, is generates deep questions about one's ability and generates deep existential thought for entrepreneurs and investors about what the hell am I good at?

1:20:46And no one's really talking about this out loud, but it is happening across the valley. We all have these thoughts. We all have these dialogues as the failure begins to set in the slow motion train wreck of a market that we've all been talking about for weeks and months. How do you deal with it? Look, I just think that number one, it's worth acknowledging and it's worth having the conversation that no one is alone going through this pain. It is not a one off that these companies are failing. It is that we are all dealing with failure right now and we are all trying to figure out what is the best path forward.

1:21:19And it is a kind of thing that you just have to work your way through and you have to persist through this pain But this existential question of am I good enough? Do I have the skill set I thought I had? Am I just an idiot? Did I blow it up? Emperor has no clothes all the kind of interfere and turmoil that everyone's dealing with you're not alone going through it a Lot of entrepreneurs a lot of investors are in the exact same place now With respect to going forward I think having integrity with respect to how you handle these situations and having thoughtfulness about You know your reputation because this is not a one -and -done environment here in Silicon Valley Failure is part of the process and how you deal your deal deal with people deal with investors deal with entrepreneurs deal with each other deal with your employees During these difficult times says a lot about your character and your ability that when you do this the next time It will set you up for success And, you know, as any great athlete will tell you, you build muscle during the times that you're failing, and then you're ready to go and execute the next time around.

1:22:21So, you know, let's save it for the next quarter, but let's play well as best we can right now through this quarter. Trimoth, clearly you want to jump in here. What are your thoughts on separating your identity from your startup, from your work and having a more balanced view of yourself? So that when things go wrong, maybe you're not as devastated and don't wind up in a hospital bed. When things go wrong, they go wrong in bunches. Just like when things go right, they tend to go right in bunches. I called Freeberg last week and I was telling him a story about two or three of my businesses just all just pounding eating dirt.

1:23:05And what I said to him was, and then we have a mutual investment that's doing pretty well. And I needed to use the one that was doing well to make myself feel better about the three that were eating dirt. And I said to him something to the effect of it's just like nothing is working. I feel like literally nothing is working. It's tough place to be. The only thing that you can do in those moments is just realize it would be so much worse to just be on the sidelines. Oh, I like it. And I think that's all you can do. Then you go and hang out with your friends, go hang out with your family, kiss your wife, have as good of a time as possible outside the context of work and then you just start the grind again.

1:23:52But yeah, we are in a moment where in most companies there is something pretty wrong. It's either your burn, product, your customers team, capture, and riff, captable, yeah. And by the way, that's always the problem, but it tends to be balanced by a few things in your portfolio that are always going well so that as an investor, you can maintain some equanimity through the whole process. But Freeberg is right, when there aren't enough of these positives and there's just a of parade of terrible, you're just like, wow, this whole portfolio, is it all about to fail? And then I get a massive wave of imposter syndrome of like, what am I doing here?

1:24:33And then I have to recognize, holy shit, this is my 24th year. Take a deep breath. And it's great that it's that that exhilarating where I think it's back to 2000. And I just immigrated here. That's the conversation to Martha and I had beautiful talking about like a string of difficult things we're all dealing with, you know, a couple of weeks ago, we announced that we returned all the money to all our customers at Canada, which was this molecular beverage printer company I've been working on for a few years. I plowed north of $30 million of our capital into building this business. We had two term sheets last year, both of which vaporized as the markets degraded.

1:25:10It was really a brutal experience for me and these were very high valuations and we needed funding to get the production line stood up to manufacture that device. So we were that close. And as the market went south, pre -revenue hardware companies became less fundable and despite our reputation and a great working product and a manufacturing ready prototype, we couldn't get it done. It was a really kind of brutal experience to go through the nose. Even after you've had a lot of success in your life, believe it or not, you still get a lot of friggin' nose and you get a lot of, I don't believe you.

1:25:41And then to just have to get to a point with this one was really difficult and there's, you know, been other kind of frustrating experiences of late. And then, you know, you kind of have a call one day with another investment and you're like, oh my god, this thing could be a home run. And that just comes out of nowhere. And, you know, as long as we kind of stay in it as an investor and you keep, you know, as a builder and you kind of keep building, you don't know when that good knock on the door is gonna come. Yep. You gotta stay in the game. You gotta stay in the game. You're building a business and one day you just nail a sale that you just weren't expecting or a partnership or an M &A inbound or something that happens that you weren't expecting.

1:26:19It pays for all the pain and all the loss and all the turmoil and all the downside. I always used to tell people for every four days I'd be failing. I'd have one day of success, but that one day of success would get me slightly ahead of where I was at the start of the week, but 80 % of it was failing. I mean right now it's like 19 days of failure and one day of success, but that one day of success, the goal is you just have a couple of those punctuated moments that are big enough that make up for all this stuff. If you just keep grinding, and if you just keep grinding as an entrepreneur, you keep grinding as an investor and stay in the game.

1:26:49Living with the power, etc. You're describing living with the power law. There's a very relatable poker analogy in this. There's a there's a guy that makes poker content. His name is Jonathan Little. He's great. He'll be up to Angel Simon. He's wonderful. I've been thinking about hopping into one tournament at the WSOP this year. It's one of the big buy in tournaments. So I'm like, let me just take a little tournament refresher. And I was just looking for any content and I found his and he had this beautiful slide which he said If you are a mid -level poker player You should expect to final table Every one in a hundred tournaments roughly and I thought about that for a second and I was like that's a 1 % success rate Now, if that is your 99th tournament, you have to be pretty resilient to go through 98 losses where you don't cash, you don't make the money, and you're just putting money out, you're deep in a J curve and you're like, is this ever going to work out for me?

1:27:48And so it's a really, really good reminder that it is the grind. And I thought that was really interesting. Thanks. You had a single or double, I guess, with call in. Maybe you could talk a little bit about that experience and what decision you made there. We were obviously investors, so we're elected. But I'd love to hear your candid thoughts on why you decided to sell. Yeah, we put together a great team and they built an amazing product. I think it's by far the best sort of social audio product. And then actually they added video to it as well and podcasting features. So it's kind of the synthesis of video and audio podcasting with social audio.

1:28:24We got acquired by Rumble. It's sort of like a base hit type acquisition. It's it's a small deal relatively speaking, but the team wanted to do it. And the main reason is because we got to hundreds of thousands of users, but in the consumer space, you really need to get to millions. And frankly, tens of millions is what it takes to have a successful consumer product. Rumble does have tens of millions of users. So the team wanted to find a home and there's a lot of synergy with Rumble, both companies have a mission that's aligned around free speech. Rumble is sort of the free speech alternative to YouTube.

1:28:59So video platform and what Colin will do is give Rumble Studio capabilities. So it'll be very synergistic for all the creators to be able to create content in Colin and then post it in Rumble. So it's not a huge outcome for anyone, it's sort of a push for the investors, depending on where Rumble stock ends up. But look, it's just you can build a really great product and a great team, but unless you hit that lighting in a bottle of distribution, you won't get to the next level. So I'm happy about the I think the team's happy about the deal. It's a good outcome for everybody involved, but it's not a home run.

1:29:35It's more of a base head and that's what most things are. Yeah. Getting used to a high failure rate and living inside the power law, where one investment out of 30 or 40 or 50 results in 90 percent of your funds returns for that specific fund or so, or maybe two wins represent 95 percent. That's a hard thing for the human brain to handle. the Lases, the J -curve, S -Tremoth, points out correctly. Man, you invest for two, three years, and then you watch all those things go down in value for two or three years. Or the value I'm sure of the portfolio go down for two, three years before it actually rebounds and goes back up.

1:30:10I remember, man, I had a run where everything I touch turned to gold, and then Mahalo hit 10 million in revenue, and then, boom, Panned Update, and it just goes up and smoking. You're like, what just happened? I sold Weblogs 18 months after starting it. I had the Silicon I report. I just uber investment everything I touched went to the moon working. Yeah, and then it's just a very frustrating experience where you can't make something work and you know like I should be able to make this work. Why isn't it working? There's a very heavy blanket of humility setting over Silicon Valley right now. And I think all of us who have had strings of successes and repeat successes and you know things that we touch have worked and we do all the same things and we do the right things and we do them the same way in the right way and it doesn't work and then it doesn't work again and it doesn't work again.

1:30:55It creates a very different psyche, whether you're an entrepreneur building a business or an investor investing in businesses that what used to be the case isn't the case anymore as the tides have shifted. It's a daunting challenge to work your way psychologically through this moment. But progress doesn't change. Innovation isn't gonna stop. Technology isn't gonna keep shifting forward. And the opportunities to continue to build and innovate are not going away. So I for one am deeply optimistic and excited about what the future holds. But man, you got to put your freaking game face on right now to get through this.

1:31:32Yeah, for sure. Well, yeah, and I would say there's one other exogenous variable here, which is I don't think any of us realized how much our sentiment was affected by one guy's decision at the Fed. What interests are going to be? Visible hands. because you know what when there's a lot of money in the system everyone feels great totally and all the portfolios look great and when the money is being sucked out of the the buyers are buying and you know oh my god like when the money is being sucked out of the system everyone's results look terrible yep it's you know what it's like before a tsunami a big wave gets pulled out and then the tsunami comes in yeah the money we're getting pulled out the money is being sucked out of the system like the tie before a tsunami and tsunami is going to be all the failures and bankruptcies but But what I would say is, just in the same way, that things weren't as good as they appear to be during the asset bubble, they're probably not as bad as they appear to be.

1:32:25Now, however, you have to give yourself time to get through this call it recessionary cycle. And it's so frustrating to me when founders don't want to cut their burn. The burn is the one thing they totally control. And they have all these excuses for why they can't cut to an earlier level spending that the company was working fine at. And we can't get him to go back to cut back to some earlier state of being Zuckerberg if Zuckerberg can do it they can do it and You know after seeing what Elon did at Twitter where he reduced the staff by 80 % I'm like I realize there's no good excuse anymore. Yep.

1:33:00We're not giving yourself the maximum chance of survival And if you over cut like he admits he probably did he literally in the day Farber a great interview. He did with him He said, you know like we probably over cut We cut people who were great and we hopefully can welcome them back to Twitter as we get this thing unstable footing But we're gonna make mistakes because we had an existential crisis Elon Musk cut too many people admits it and says he's gonna bring them back It's no fault of theirs and he said he's going back into growth mode So you know like sometimes you cut You you might cut too deep is the point and you know that's set you up for growth in the future.

1:33:34Tremop you had something you went ahead I have two shout outs. Okay. Here we go The first is to one of our besties got a text from Jason Kuhn. He binked the main event at the triton for two and a half million. Yeah. Being proud of who I mean he's so sure he's the guys of beast so I like that. Kuhn it's so great to have a professional poker player in our circle finally like somebody who's great guy. He's just only over time. We can learn from him. Yeah, but he's so open and he teaches us to be around him, you know, rationally stable, rational, humble, humble, professional poker player. Like happens to basically be the best poker player in the world, but you could you would never know it.

1:34:10You never know he never bring it up. Like he is literally the greatest and he won the Triton 2 .5 Millie. Yeah, the second the second shout out is here we go to the model Y team at Tesla. I have been a diehard Model X user from the beginning. Right. I think I have here we go number 13. So I've been I've been I've had three or four of these things. And I was like, wait a minute, maybe this Y is really all as cracked up to be. And I'm a bit of a curmudgeon and I have high expectations, but I just want to say that car kicks absolute ass. It is. Perfect. No, it is incredible. That model Y is going to be the best selling car.

1:34:51It's going to be the best selling car in America. If you get the base level, it's actually cheaper than the average car in America now with incentives. It's so, so good. So huge. We out 300 miles range, which is huge huge huge shout out to the model Y team at Tessa you guys nailed it Product and we I don't want to diminish the X But the Y is why it's so sad It's the best car ever made it is is the best. Yeah, it's a great car. It's a great great car I can't wait for the cyber truck that thing looks like a beast. I can't wait to take that up a lot of roadster I love the roadster. You know I've been taking my 12 year old roadster out and my kids love going for ice cream in the the original roads to 1 .07 taking it out every weekend or two.

1:35:41Number one, number one. You have number 16 of the roadster, which somebody offered me a quarter million dollars for IP and 164 it. I have number one of the Model S signature series. So I have signature 16 of roadster. They did 100 signatures and they did a thousand signatures of the Model S and I have number one of that and somebody offered me a million dollars for that. I have number of the founders edition number 13 of the X. Yeah, that's pretty special. Yeah, I'd hold on to that. Yeah, it's a special vehicle. All right, listen everybody, all in summit is basically so. How are we doing? How is the all in summit doing, guys?

1:36:14We're starting to do our outreach and figure out speakers. Yes, yes, so it's exciting. All right, everybody, four, the Sultan of science, the dictator, and Steve Bannon 2 .0, David Sacks, the architect. The architect the architect I like that I remain Even after sex is triumphant spaces. I remain the world's greatest moderator so excited for this weekend boys See you tomorrow at the tarmac on the tarmac. I love you. Bye

1:36:57I'm going on a leave What? What?

1:37:04Besties are gone That's my dog Take it away Wish you're driving Sit down Oh man My ham is the actual meat We should all just get a room and just have one big hug because they're all just It's like this like sexual tension that we just need to release that out What? Your beef What? Your beer of beef I'm going to be a birdie. I'm going to get my cheese arina. I'm going to leave.

1:37:37I'm going to leave.