E139: Recapping Chamath's wedding, VC surplus, unions vs Hollywood, room-temp superconductors & more

25:47Look I think that the weird thing that has happened is that it became like this kind of one thing to be able to say you were doing a lot of people used to moonlight and do it on the side then there were all these services that will allow you to basically like abstract the job. But the only thing that I would just qualify your statement, because I think what you're saying is like 90 % right, but I don't think that's where the craziest outcome returns have come from, because if you look at the two people that are really or the three people that are really generated, just gargantuan home round returns on a consistent basis, one of them, for example, like Mike Moritz really didn't have those bonafides operationally.

26:28But I think that what Mike probably has, and I'm saying this not knowing him, is a pre -derneur girl, like, judge of psychology, I think. I think he's an incredibly qualified people, judge her. And there are people like that. Now he's an outlier in order to do that, but the rest of us have to kind of, to your point, do with what we have, which is like, here's our experience and our maturity and, and we're telling you what we think. So I'm really excited actually for this wave to kind of crash on shore because the number of founders that are gonna get screwed over by folks that don't know what they're talking about, it's very high.

27:03Yeah. And that needs to come to an end as quickly as possible. Freeberg, yeah. Yeah, I don't think it's just like Moritz. I think that there's a class of successful venture capitalists. Bill Gurley's a great example. Like he was an analyst, Danny Rimerd, index ventures was an investment analyst. Fred Wilson. and Fred Wilson, a lifetime VC. And more it's John Dore. I mean, John Dore had some. Dore worked at Intel. He worked at Intel. But there are folks who have an incredible analytical capacity and that analytical capacity translates into incredible selection capability. That selection doesn't necessarily mean that they are going to necessarily be the best advisors.

27:41And I'm not saying that any of those folks are bad advisors. But there are some venture investors. Founders fund is very vocal about this and very public about this, that their objective is not to be your partner in helping you make decisions around your company and recruit people and all the other sort of rigour moral that many VCs go out and tout. They are there to pick the best founders and the best founders don't need the VC to be successful. And their job then is to have incredible selection capacity. So if they can select the best founders and get out of their way, they've made a lot of money and their returns are unbelievable.

28:14And then there are some VCs who are really incredible partners to their founders. And they're objective. Josh Copeland at first round built an entire firm around this practice, which is to partner very closely with founders and to build support and capabilities. And recent Horowitz was built on the same sort of concept that they would roll all of their fees into building operating support and capacity to support founders and support companies. Both firms have obviously done well on their own right. And so I don't know if there's necessarily one breed that predicts success when it comes to successful venture capital.

28:45I will say for my own personal experience, I worked as an investment banker for my first two years out of undergrad. I, you know, worked, I had a science background. I worked in a short spin private equity. I worked at Google. I did corp dev and M &A there. I started a company, ran it, sold it, did that with another business where I was on the board. So, you know, I've, I've been on a couple of different places around the table that, you know, I think have given me the ability to provide advice. I don't know if I necessarily have the same skill set that the team at Founders Fund and Mike Moritz and others might have at this astute extraordinary ability to spot Founders and bring them in.

29:22So I think everyone needs to kind of recognize what they do bring to the table, be very clear about what that is. And I think to your point, there have just been an incredible bull market over the last 15 years. Since 2008, more money has, I heard an incredible statistic, by the way. I don't want to get it wrong, so maybe we should fact check me after this from someone at your wedding who I was talking to for a long time. And he was like, basically the top 1 % of VCs didn't beat what would have happened if you just bought the top five public tech companies and effectively did a rebalance over the past 15 years.

29:55The bull market and the aggregation of value and technology has largely been 50 -50 to public in private. So you could have just bought a few stocks and held onto them and beat all of the VCs over the last 15 years Even though a bunch of VCs have made good money and their IRR looks like 12 % But you have to beat the risk of just returns on venture and this is not to Throw shade at even all of those people that you mentioned are fucking terrible Like you should not have invested in any of those right because there's no way to ton it in any of those funds because you get a small Allocation one fund as well three funds to crap.

30:29Over the past 10 years, or 15 years, I forgot the number, we've seen the public market cap of these top tech companies grow from one trillion to 10 trillion. That's a 10X. So all you had to do was buy those and you would have made 10X and that works out to north of 25 % IRR. And there's very few VC's that have been able to be 25 % IRR. They assume now he was telling me his model shows that over the next 10 years, it'll be roughly 70 -30. So it'll be about 30 % will grow. So, and vaping over the next 10 years, it's gonna go from 10 trillion to 25 trillion. Which is still a great return. Just to build on this.

31:01But it shows how much of a hurdle there is in venture to be successful. I started the business in 2011. So now this is the 12th or 13th year. Just how hard this game is. I had about a 31, 32 % gross IRR going into last year. And then my IRR fell off a cliff because I couldn't get into, obviously, there's like, there's no monthly distribute. We're just nothing to distribute. So my IRR started to decay. And then I had this really, really fucked up choice. I have to start selling stuff earlier than I would have otherwise to get the money back out. So to your point, right? Now it tastes courage. Then it's a really tough game over one here at the time.

31:38A really tough game. I think there's also something going on in the United States and society where there are some idealized jobs. We talked about SACs, elites, surplus elites. And I wanted to tell this with what's happening in Hollywood, the writer's strike. And the actor strike, and I was looking at it, there's some unbelievable number of actors in SAG, some unbelievable number of writers. They all make just incredibly small amounts of money on average, and obviously there's some big fish who do well. But it does seem like there's too many people who want too many of these idealized jobs. And Venture is one of those.

32:17And I just would like young people to understand also, be careful what you wish for. This job has seemed easy just like it might seem easy for Tom Cruise or Christopher Nolan when you see them or Tarantino What you don't see is all of the people who tried to become Tarantino who tried to become you know Tom Cruise and there are far To 10 to 15 years before they realized that they're not and they did not actually have the fundamental skills or The work ethic that is required to become Tarantino I listen to Tarantino's podcast he does a, have you heard the video archives podcast yet? You have to get on this.

32:52It's him and his the co -writer of, who did you write Pulp Fiction with? Roger Avery. So him and Roger Avery, my favorite podcast right now, they just talk about films. Their knowledge of films is so unbelievable. And the detail in which they talk about that is so crisp. They finish each other sentences. In the way with maybe you listen to this podcast, I asked, you know, we all go, oh, John Doar. Oh, no, he worked at Intel. Oh, this person, yeah, Meritz, he was a journalist. We have a deep, deep understanding of this business that comes from 30 years within it, or 20 years. And I think you have to, I know it sounds corny, but you have to pay your dues.

33:32You have to put 60, 70 hours in a week to get that elite job. And the problem today, I feel, is, and for people who are listening or young people coming out of schools, If you're not willing to sacrifice 60, 70, 80 hours a week for a decade or two, you're just not going to be successful in that By the way, and young people push back on this and I think the simplest way to reframe it is in the following Do you really think for example, let's pick NBA basketball? Do you think you would be really interested or find credible that the best player in the NBA only practiced three hours a week? Is that happened?

34:10And, Pasha, where do you think they're practicing three hours in the morning and then also three hours in the afternoon and they give up their lives? The most incredible thing that I saw in the NBA was all of these men literally gave up their life to play that game to perfect it. And that's true for anything. And so I don't understand how, whether if you're a filmmaker, whether you want to be an investor, whether you want to be an athlete, whether you want to be an actor, a surgeon, it's just an immutable law of physics. So just get over it, which is you need to put in tens of thousands of hours And if you cannot or won't You should not expect the success and you should not complain and also because it's not free Yeah, these these guys are you agree with that enough?

34:53Yeah, look. I mean LeBron 20 what was it 2016 when they came back and won in game seven 2016? Yeah, I don't I don't know That's got issues. Yeah, right, but um the next day They were you know his teammates go out and celebrate you know LeBron did on Instagram the next day posted a photo at 7 a .m. of in the room. Yeah. Yeah. Working out. Um, but look, one thing I'll say, LeBron knows what his skill is and he knows what his game is. I think every individual needs to figure out what their skill is and what their game is and not to find glory in what others have found to be their skill and their game.

35:25That there is something that comes from mastering any craft that gives an individual joy and purpose in life. And you see this in basketball. You see it when these athletes really find what they love and they do it. and they commit to it. And there are things that we each have realized we are good at and there are things that we've all certainly realized we are not good at. And identifying that and mastering one's craft is the key to any person being successful and happy I believe. I just just assume that there's a thing out there that everyone makes money out here. Distraction alert, all of our wives are about to go swimming.

35:55Oh my lord. They're so hot. My lord, look at my wife. Woo. Jesus. God almighty, I have the jackpot. It's beauty in the beast. You can relate. Come on. What was the way I, where I look at it? We were joking at breakfast today. We were like, my wife must have low self esteem because she's married to me. Sax had the best slide. He's like, if you Google, Natalie don't pay, you find this picture of her holding a tiger by lying by the tail. Yeah, lying by the tail, which is a lot more exciting than holding a Sri Lankan by the Sri Lankan. It's a great line. Hey, oh, oh, oh, oh, oh, oh. I was playing Epic Man for Sax when he did the rose last night.

36:33I was just like laughing guy every time he hit it. I just would back the devil you didn't get help me off the cliff I was waiting for that No, I'm not how I'm you hell me off the cliff. I mean, I mean, I think he knows how you know what happened cat told me what happened So the backstory is Phil Hamuth is a narcissist and no, no if you know Phil Hamos you know that yeah That's implied and he just cannot give a speech and so that's friend. We owe he's not my best friend Uh, but he's he gives horrible speeches. He you're being here. Best friends. I every every speech. Well, Phil, every speech he gives at every event.

37:09It's all about himself. That's all about himself. That's why we say seven seconds to fail. But it's incredible because it could be it could be a wedding. A parmits, but in our chat. So when when Chema said, okay, Phil's going to give a speech, It feels like of course I'm gonna give a speech every buddy I give is amazing. I tell every time. Every $70 billion. Then he goes the last event I gave a speech. It brought the house down everyone was laughing. I killed it. It was oilbrunson's funeral. Oh my god, no dude. What? What? You killed that a funeral? So I asked, I asked how I used to do this toast and I was like, okay, well, we'll do four of them.

37:49But I thought if we start with how I use, it'll just be so bad. Yeah, you bottom out early. Yeah, you bottom out early and the rest of you guys set the bar. Yeah, but sex crushed it. Saks, I just nailed it. Saks crossed it. Do you stay? Do you stay deep? Stay crushed. I think we're all still amazed at the stairs. You know, it was, it was all like it. I was 400 steps to that. Yeah. It looks good. It looks pretty impressive. Yeah, this has been a great episode of the only part. Did anybody see Oppenheimer yet? I'm so excited. I'm not we see it. It's gonna be a barbenheimer double feature I'm not I'm not barbenheimer I know no one had no one's like so about 70 millimeter parentheses like you have to watch it And you know the metronon and metronon in the city is it so we should just rent the theater and invite some fans or just go Yeah, I mean we should do that.

38:42No, we should just rent it. Let's rent it this week. I've rented it for it's I think it's sold out into I'm a very limited time. Oh, the theater is we just have to call them and say, Hey, can we rent the thing? They'll do a show here's 20 times. I once went to a showing of Interstellar there in Christopher Nolan came and spoke and got to meet him and speak to him afterwards He's a very soft spoken guy and he's not very sociable He doesn't you know sort of like sex. He doesn't want to make eye contact and actually talk with you But you know, we challenge you're making fun of people with asperers But he was great.

39:11I mean, I know pot. It's kettle calling

39:16I will say he's what cop three filmmakers of our time cop four. There was a great for me. It's Ridley Scott Tarantino Nolan. There was a very funny moment. Where's your last sex right now? You got to put Scorsese on that list. Oh right. Of course. Peter Anderson. No. No. No. Peter Anderson. Dennis Millen wave. Hit or miss. What do you all? Can we mention that name? I mean I can't say that. Please. It's hard to watch now. It's hard to watch. The I like it makes it to hard. I like a a a a a a a a a a a a a a a No, Nick, Nick, believe those on. There was a very funny moment on the first dinner. Yeah.

39:59You know, we did this great thing. You can, Nick, peep out the names when it's sat down. Everybody's like, and I was waiting for David to sit. Yeah. And he just keep talking and talking. Yeah, talking and talking. And finally, that went to the, like, sit the fuck down right now and have to get this fucking thing going. So who do you got? You got Scorsese, of course. Yeah, I mean, you're talking about like currently a live filmmakers. I think that active filmmakers. Yeah, listen mentions pretty good I have to think about it for Miss Annie body Yeah, really Scott's up there for you. Yeah, yeah, really Scott.

40:33Yeah, I mean he's so making Christopher Nolan is pretty excellent. He's very productive That's a thing about every two years Michael Bay versatile it I met Michael Bay in Costa Rica Can you get that's the beginning? Yeah, that's the story. That's all I got. Can you get that stuff for the $30 back for Transformers? No, I mean, like I didn't particularly know he was. I cannot watch any of his films. I cannot watch any of those. Yeah, it's a very nice guy. I don't know he's great. So also on the dot. He's got Napoleon coming out. The trailer looks amazing. Amazing. Anything with Joaquin is making.

41:08Michael Bay is making. No, no, no, no, no, really Scott. Oh, Ridley Scott. Joaquin Phoenix playing Napoleon. It's kind of interesting. I hate to go deep into the, do you guys want to talk about dessert, bad behavior, or do you want to talk about the resolution of this Hollywood stuff and what it means writ large? Well, the Hollywood stuff. Look, I think it's fascinating. I appeared about this a couple weeks ago. My observations on this were twofold. One is that it's going to have the exact opposite effect that they want. If what they want is what the writers and the actors guild want is to show the owners of the studios, how valuable they are.

41:41The problem is that this moves the owners and the studios one step closer into the hands of tools that will disintermediate the actors and the writers. They'll embrace that technology. They'll embrace the AI tools that you guys have talked about. You are showing something around even like yesterday or whatever. So the point is, I don't see it as very effective. And then my second thought is, I just think unions in general are probably not a very effective way to get these concessions anymore versus the tax that the union members pay. And you can just see that in terms of like the number of people in unions are just kind of decaying pretty quickly.

42:21The wage gains are pretty diminimous. It's just not an effective mechanism of negotiation. Sacks, the unions are a way for average performers to fight to get a little bit more, but it's the antithesis of having a meritocracy and people fighting for their best possible pay. And so the conundrum I have is I'm seeing all these marvel actors, superhero actors getting dropped off at the protests. And they're complaining about Bob Iger making 25 million when Tom Cruz or Robert Downey Jr. picked the person. I'm not singling anybody out, but those people who got to the top of the heap after 20, 30, 40 years in the business are getting paid 50 million a picture, 100 million a picture of back ends.

43:04And so what's your take on what's going on here because there it seems I don't want to say hypocritical, but it feels like they're talking at a both sides of their mouth. They want to have an auction to the highest bidder for these incredibly talented writers, directors, producers as it should be. But then they also want to fight for the average. Right. Well, some of the union demands, I think, are reasonable and I understand why they want them. So for example, I think they're arguing for more residuals for like you said, the kind of lower level performers so that they can get health care. Yeah, average ones.

43:39Yeah. So I can understand that at the same time, they're demanding that writers rooms not use AI software, which they're already doing. Yeah, which is just crazy because AI is going to be incorporated into all software. So to not be able to use the latest features of whatever word or Google docs or whatever screenwriting software. Yes, that's like the king of order to the tides to stop, you know Yeah, this is the march of technology. It's not gonna work. So I think that's like really off base So I can sympathize with some of the demands other ones I think are hard to see in terms of your point about the economics I mean look that the basic problem about with Hollywood is it's a winner take all business I mean you've got a few actors who become big stars This is true actually with all the creative industries is their power law businesses You know jk rallying makes a billion dollars as an author or the 10 ,000 author or whatever, make some almost nothing.

44:31Yeah, the thousand fantasy person makes a living. Yeah, exactly. They're living months in a month. Yeah, can't even make a living. And the reason for that, by the way, is because there's a lot of people who are going to do it for free. Humans are fundamentally creative. There's a lot of people willing to be actors for free or honest subsistence or right, or whatever creatively, because they're willing to do their art for free. Podcasters. Right, and so the reality is, the reason Hollywood doesn't have to pay these sort of the entry level actors very much, is there's a lot of people willing to do that job.

45:00There's too many people willing to do that job. And it doesn't need to be in a structured production system anymore. I, if you guys saw the latest Disney earnings release and Iger said, we are going to consider selling that geo and a bunch of other channels. There may actually be a spin off because content creation for that mid -tier or that tail no longer makes sense. Not viable. because there's so much content being generated by this very long tail that's accruing a lot of the eyeballs and a lot of the hours of consumers mindset and time. I think that there's a big difference. Can I connect that idea?

45:34So we were talking earlier about career choices. So first of all, I agree with what you guys said about the time can we have to make. But it's not really about time per se. It's about your obsession level. Can you be obsessed with something so that 60, 70 hours a week feels like nothing to you because you're so immersed or so obsessed with it. the way that Tarantino and Avery are obsessed with, classic films out of the whole database in their head. So if you want to pursue one of these careers in a winner take all space, like writing, like acting, or whatever, you better just be completely obsessed.

46:04Yeah, you gotta be all in. Yeah, you gotta be all in. I'd say furthermore, MPU, what makes you novel? Yeah, I mean, Even if you are all in, you still have to have luck and scale. And furthermore, you have to know where the bar is. So I think a lot of people, this is one of the things I noticed when I was producing a movie is a lot of people look at like the worst actor or the worst screenwriter and say I'm better than that person. So I'm going to make it. But your bar is not the worst person who's made it. Your bar is the best person who hasn't made it. That's the person you're really competing.

46:36Next up. It's the next step. It's the person you're going on auditions and you're competing against someone who hasn't made it yet, but they're amazing. And you don't necessarily know where that bar is because much harder to see. Yeah. But that's where the bar really is. Right. Look, I think there's also a big disruption. As we well said, yeah, totally. And as we extend the long tail of consumer content creation into what is effectively now the infinite tail of AI generation, AI generated content creation, it is going to totally disrupt and change the game of media of content generally speaking.

47:08We're getting to a point now where you can effectively tie together rendering engines with scripting, with scene definition, with directorial lines, all the stuff that goes into pre -production and production can be generated through AI, through scripting, and then tuned and tweaked by a human, but ultimately it increases the scale, like all technologies do, it increases leverage for humans. And we could see 100 times more films come out, each of which costs one 100th the cost. You know, one of the best production companies in LA is Blumhouse. They make a $2 million stream of dollars. They make it for 2 million to make.

47:45And if any one of them hits, they make 180 million bucks or 200 million bucks in the box office. It's a fantastic business model. It's very much a unique model in Hollywood. And it's really changed the game quite a bit. And I think we're going to see something similar emerged because of generative AI and the tooling. And then people start to question what does it call? What does it call? What does it call? But look, one thing I do want to say, I do think that there's also a change in Hollywood that's going to be driven as we talked about before by the ability to generate personalized film, personalized content rather than one piece of content for everyone where you have to make blockbusters and everyone watches it.

48:20There is a question however of culture and culture is shared experience stories and beliefs. Shared experience stories and beliefs can still be realized through personalized media, through personalized content generation. Think about an old narrative, an old tale that was told via people speaking to each other around a campfire. The ethics and the morals of the story are still there, but everyone tells it a little bit differently. I think that's what we may end up seeing Hollywood production or AI generated production. You guys see this, which is everyone tweaks their content in their own personal way.

48:52They consume it in their own way. But the Hollywood studios, how much of a role do they ultimately end up playing? And does this start to go 10 times more what we've seen in YouTube? Content consumption goes way up and the number of folks that are contributing to it goes way up by 10 or 100 X. I think this is one of the fundamental things that the unions and Hollywood have not yet groked completely, which is they're not fighting each other. They're fighting TikTok, YouTube, podcasts, and people making their own content. They're fighting Jimmy Donaldson. They're fighting Mr. Beast. They're fighting each other over the last scraps of the dark model.

49:28Exactly. They're fighting the people that spend two hours a week listening to us rant on about stuff. They're fighting the protests. That's too less hours. It's the one thing it's two less hours of broadcast TV and then a mr. Beast these kids watch his videos five times They watch the minute of the time he's probably the only person in recent memory that has rebuilt Event -based viewership because people know Saturday mornings at noon Eastern time is when these videos drop hundreds of millions of disappointment television as appointment television now back by the way When you hear you know the story about mr.

50:02Beast That's a guy that's been doing it since he was 13 years old studying. He's 24 years old So that's 11 years where he's literally only lived and breath In the lab in the lab down to the very pixel right like when he for example like the cuts Remember it's cuts on his videos. Remember he told us about like thumbnails. Yeah, he has an entire PhD thesis that he's earned just on thumbnails Yeah, and that's a lot of commitment I think what Holly would needs to do just to put it out there is is the leadership in Hollywood gets compensated on a corporate level and then they come up with this, you know, pay and sometimes residual, sometimes not and scraps for the talent.

50:42I would encourage them to read something like an autobiography by Kurosawa and study the Toho system where everybody was aligned inside the company. If I'm running Disney, I'm hiring the top two or 300 riders, putting them full -time on staff, giving them equity and getting everybody rowing in the right direction. They do not have time to fuck around. They need to be in alignment making great content. But then the incentive structure matters. If Bob Eiger is getting compensated by stock options, the actors, Robert Downey Jr., who's the guy, the incredible director of swingers and the Fabro. I was talking to Fabro at an event and I was like, how much equity in Disney did you get for doing Mandalorian and launching Disney Plus for them?

51:25And he's like zero. Zero. And I'm like, why do they not? If you look back up 100 million dollars in equity. And this is what's crazy. If you look at the biggest content producers of that older generation, they locked up the equity. You know, Spielberg owns equity in the movies that he made. George Lucas owns equity in the movies. He owned part of the studio. The deal of Christopher Nolan cut on Oppenheimer. No, I think he gets 20 % of the gross off the first dollar. That's absurd. And he got a hundred million dollar budget and a hundred million marketing commit on the deal. Joker was Todd Phillips.

51:59Well, this is a perfect example. I was talking to Todd Phillips actually. I got to have dinner with him last summer. Great guy. Yeah. Great guy. And he waived his fee on Joker to take a big chunk of the equity. Because he took that on the hangover and he owned the IP of the hangover. He owned the sequels and hangover one and two amazing hangover three. You can miss it. Yeah. Yeah. But he made more I think on hangover three. Yeah. And he got all those guys, Gallifinakis, et cetera. They got their biggest payday at number three. You have to craft, and you know, we have equity. The other crazy, yeah.

52:32The studio was less bullish than he was on both Hangover and Joker, because they're both. We show you how in top of it, though. On usual movies. So they allowed him to take equity in exchange for giving back. They're like, you only want to spend 50 million on a superhero film. That's never going to work. And then he's like, yeah, it made a billion. Joker made a billion. Right. But they thought it was too dark. Underestimating audiences, as always, in Hollywood. I'll tell you a very funny poker story. Sorry, Phil, I'm here. Your Disney stock? Right now, I'm going to ride it out. I think their IP collection is amazing.

53:01I think there's a chance that, you know, depending on how the FTC winds up being run over the long term, that Disney could be selling pieces of that business. And I think that it could become an acquisition target itself at some point. You want to hear Todd Phillips poker story? I play a poker with him. He's a father. Todd Phillips is a very, very disciplined poker player. Yeah, you know, he's got like a stop loss. He hits the stop loss. He's done and he's very funny and jokes around You know bus balls whatever and there was a while where he would play in the big game in LA with us and you didn't say much He was very focused and tight as right and then he did this deal and then hang over three comes out and all of a sudden You know, he's got chirping chips This was in the pot.

53:46I bust Phillips in a pot And he looks at me and he called me slumdog billionaire. That's the guy's at the table thought it was so funny because that movie slumdog billionaire had just come. So then they all started calling me slummy. Slumdog it took me a year for them to get. Stop calling me that. Yeah, yeah, pretty great. On the union thing, I'll tell you a story. So recently it just announced that anchor steam shut down. Anchor steam was this beer, this native beer in San Francisco that's been around forever. Japanese brewery bought them right? It was bought by Sapporo several years ago. Anchor seems shut down.

54:21Anchor seems shut down. Yeah. I used to go there all the time for work events. You do an offsite there and go to the brewery. It's it. It was one of the original marker brews. Yeah, fantastic. Award winning beer, iconic. Well, it's out of business now. And the reason is, what was losing money, and you want to know why is because three years ago, the workers all voted to unionize. They were only suddenly 60 workers, 62 workers. and three years ago they voted unionized and they voted themselves big pay increases. Yeah. And so I guess the poor had to go along with it. Three years later it's part of it's like, yeah, shut the whole thing down.

54:54Um, I think that's the thing is you gotta be careful what you wish for. This is all the player. I really think the thing with unions that they get wrong is union's fight for exactly this, which is this short term increase in current compensation. And I think what unions do very poorly is actually understanding the long term equity that the employees and members of that union actually create. I tweeted this a few weeks ago as well, but the single biggest reason that motivated me when I sold my piece of the Warriors was obviously just a crazy increase in the valuation, right? I bought it for, you know, 300, 300 and it was worth 5 .2 billion at the time of the year.

55:35But the second biggest reason was my huge fear was that I as an owner, I just wanted to cash in the chips because I think the most right thing to do for the union, like the NBA Players Association, is to fight for equity. Yeah. Like Michael Jordan single handedly has created $15 billion of equity in the NBA. Yep. How much has he captured? One or two billion, but not from the league. He captured it accidentally from shoes, right? How much money is LeBron James actually created for the NBA. It's enormous. How much is he? He made capture. They're not trying to get the right piece of the outside. They're not trying to get the right piece of the outside.

56:14Also, when the business doesn't do well, then the labor contracts become a source of huge inflexibility. Huge inflexibility. You can't make the Nestory business change. So it's your point. The businesses get shut down. Don't do your point. Like when you, when what happens now is there's these huge luxury taxes in professional sports. And so folks bloat the payroll. They try to get all these players. But if you don't win and get to the playoffs, you're not selling more merch, you're not getting incremental share of TV revenues, you're not getting ticket revenues. And all of a sudden you have these massive luxury taxes you have to pay and not enough revenue to pay for it.

56:47And so these teams, all of a sudden now start to gush money, have to make capital calls because these things that sound incredible up front start to become real weights on these businesses. The real thing all unions in all industries I would tell you all to do is figure out how to get the equity upside in the business in which your members are working in and are creating value it. Right. In an exchange for that, I'd have more forgiveness on the downside. The business is actually persevere. Whether the storm is supposed to have to shut down. Exactly. Alignment. Alignment of a sensitive, just so critical.

57:20I was talking to the head of one of the giant publishers, I wouldn't say which one, Ibnis Binsider, I don't know which one it was, but they were being unionized. And I said, wow, it's just a disaster for your business. He said, oh, Jacob, greatest thing ever. I said, why? He's like, now when people come to us and they want to get paid more, we just take out the chart. How many years have you been here? Oh, five. Okay, yeah, one, two, three, four, five, 72 ,000. And I said, well, no, but I bring more pages. And we're like, yeah, okay, I paid you, multiplier, point one, five. Okay, so you're 78, okay.

57:53And then just basically - That's what happens at business inside of? Yeah, but that's kind of - Who knows? That's why they're a clickbait business. And then that drives perverse incentives. And it's like, why not align it with, what is the profitability of the business? What is the growth of the business? A bonus pool, a base level of pay. And if the unions are coming in, they are literally rearranging the chairs on the Titanic. And it's that simple. You, you, you, you, Well, both the beer industry and Hollywood are both the shrinking industries. And so when you got unions demanding more, more, more of a shrinking pie, something's gonna break.

58:26Now look, just to be clear, I'm in favor of unions demanding things like better working conditions and healthcare and just like the basics. But when they try to go for things like I don't know, banning AI and proposals that distort the cost structure of the business to the point where it's just not feasible, it's not profitable, that doesn't work. Also, the question is, why color workers who can move so freely between jobs, so elite, Why would any white collar worker who is learning and sharpening their blade and increasing their value year after year? Why would they even want to join a union?

59:03There was a podcast union that started in Spotify and Gimlett Media, all of this stuff. And one of the podcasts, I think it was reply all, they didn't want to join the union. Of course, we're all over compensated. We're a hit show. And then they all claim that they were - Look at what's happening in the school. But can we steal that? You can't get rid of a bad teacher. because they're in the union. So it's like a huge proceeding. So they put them in a building where the incompetent teachers can we have cross -references? The deal man, the pro case of joining a union in 2023. I mean, if you could get benefits, like some basic level of benefits.

59:39Pripri? Look, I think that the pitch and Jake, this is why I asked you this a few episodes ago, tell us your experience having grown up in a family that I think unions are pretty proliferent in these. um, cops firemen. Yeah, I mean, if you are, the pitch is your part of a membership, you have a voice. Yeah. And that voice always is your advocate. And that advocate looks out for benefits, comp, time off, whether or not and how you get fired, all the things that you feel you may be unfairly treated by management. There's nothing novel here. I don't know. It's a strong appealing point. Yeah. So I don't know if that's the best steel man for it because, because, look, employ,

1:00:20it's So you should be able to negotiate for a lot of these things yourself. I think the steel man case for unions, and the reason why they formed in the first place is because American industry was basically owned by an oligopoly. They were themselves monopolies. So if you have a monopoly of industries, like US steel or stand -up oil, then there's not a competitive labor market. They just set the prices. They set the conditions. That's why the unions got started is you needed a basically monopoly of labor to face off against a monopoly of business. That's how it got started. And I think in those conditions, we're talking about the early 1900s, people are losing limbs in factories.

1:00:58Yeah, of course. It was very different working conditions. Different working conditions. But now you're talking about much more competitive industries. But look, there was a right deal of like manual labor needed to get productivity out of businesses and enterprise. So, you know, so much of industry changed where things became automated, where where there became specialization and differentiation amongst the workforce. And it wasn't everyone is just using their arms to do things. And this is obviously now measurable. And the idea that you can basically capture management or do a hostile takeover of the corporation or the equity, I think is effectively what's happened with a lot of these meetings.

1:01:32And I'll be honest, knowing what I know about unions, if you were to do a deep dive into the police unions or the firefighter unions or the sanitation unions or the teacher unions and you look at their pensions and their overtime, you would see some pretty significant abuse that the unions have built up over years to where people can make three or four hundred thousand dollars a year in the last two or three years. They goose that up because then they base their pension on the average of the last three years. And what basically happens is all the senior guys say, listen, all over time goes to these three guys who are retiring in three years.

1:02:08And none of the junior guys can take any overtime. And when it's your turn. Right, you get all that and then we're gonna go share pay. So what that does unreasonably? Yeah, is the pension Calculation the pay into the pension is based on some assumption of today as that starts to happen the pensions become underfunded Because they no longer have enough capital to make all the disbursements that are supposed to happen And there's a big argument now that there's probably over a trillion dollars of underfunded pension liabilities in the United States many of which are based on the fact that these payout principles were defined by some negotiation or the union.

1:02:43And they're games and there's a large difference between somebody writing a listicle or rewriting a Washington Post -Hurian business, a listicle. A listicle? A listicle? Yeah, somebody rewriting a listicle in Buzzfeed or somebody rewriting a Wall Street Journal paywall story and business insider. So somebody running into a burning building or you know, right having a target on their back as a cop in San Francisco These are very different jobs and the white collar knowledge workers are lasting what what's the average tenure right now? 36 months 30 months I mean you're obviously moving from place to place.

1:03:20What's the point of the union? It's a competitive labor market and at your point It's true that in some cases the unions do get a better deal for their members. However, there is a dead weight loss for the union itself because the unions representing its own interests. One and a half percent. So they're taking something. They got a skim. They're skimming. They got to put that score. Saisy movie. Was it the Irishman? Yeah. You really get a taste of the corruption that was. There was some skimming going on. Everybody gets a little skim. All of a sudden, one and a half times. But then also the pension fund starts getting rolled into mob projects or or whatever.

1:03:53I mean, that's like a while ago, but there were some significant downsides. My view of it is we lived in a decade of surplus elites, you know, having these luxury jobs, and I'll put in the luxury jobs being a journalist, being a venture capitalist, you know, these elitist luxury jobs. And in some of them, they became so wildly overcompensated. I think they wanted to feel oppressed. They wanted to feel like they needed representation. and I think they were larping to use the term again, live action role playing, that they were gonna be in a union. Like they wanted - They're larping as being victims.

1:04:29Right, they wanted to, like, literally the business insider people were putting up pictures of Henry Blodget and his - They were larping grievances. Yes, and they're on the street holding a picket sign up. And I'm like, what's the matter? Is your keyboard not ergonomic enough at home? You haven't been to an office in three fucking years. They didn't get the latest flavor of kind bars or whatever? Yeah, no, they can get the cherry. the cranberry, the cranberry, Walnut, QU, I mean, like leave the unions for the people who are actually on the front lines. It's a loose assignment. So I think, well, we could wrap.

1:05:02Good, should we wrap? It's probably wrap time. Would you want to do a quick science corner update? I got a lot of text. Room temp superconductor. Yeah, you see that. There is a, actually, it's a very interesting. You may remember a few episodes ago. If you don't remember, you can go back and watch it. where I talked a little bit about the effort to try and identify a material that can be superconducting at room temperature, which means no resistance. Electrons can flow through the material with no resistance, perfect electricity transfer across distance and also enables the Mivesner effect where magnetic waves can reflect off of the material, which can allow things like levitating trains, which is very low friction transportation.

1:05:40All these benefits of superconducting materials, quantum computing, etc. So yesterday, and I've gotten literally dozens of emails and notes about this in the last 12 hours. There was a paper published by a team in South Korea who seemed like a very legit team. There's no reason why they would kind of make a fraudulent claim that there is a material that they've identified and measured to show has superconducting properties at room temperature and ambient pressure where a lot of these efforts historically have been made at room temperature, but they use 200 times atmospheric pressure to compress it.

1:06:14And it turns out that this material that they're using is a lead appetite, which is a hexagonal crystal that uses calcium phosphate and lead, and that some of the lead gets replaced with copper, and the copper causes the hexagon, the crystal structure to compress a little bit. That compressed crystal allows the electrons to flow through. This is their theoretical explanation on what's going on. It will be replicated. people will try and do what they are now claiming they did to demonstrate this. There was some condensed matter, physics people that sent me an email and said they don't think that this is real.

1:06:48They have great deal of skepticism. Let me, but sorry, let me just say two things about this. You could read the paper. You could read the paper. It's on the internet. The camera men are really. It's exactly what it's glasses on. He's sleeping behind here. He's just horsely. Let me say two things. Firstly, I think it's unlikely that these guys are going to make a fraudulent. Oh, if they did make a fraudulent claim, it would be the end of their careers. The reputation would be damaged. So that may happen if they did not make a fraudulent. Like the president of Stanford. If they did not make a fraudulent claim and it is and it does turn out to be real, then I do think it'll end up being the most important discovery in physics of this century.

1:07:29Okay. So I'm a complete out of fraud. No, no, no, no. Or it changes the universe. I'm not saying anything serious. I don't think I know you guys are joking about it, but we talked about the importance of this material in technology and in everyday life and energy. I want to build on top while you're saying. The thing that you're saying, the more generalized concept is, we have such a poor understanding of the periodic table, just broadly speaking. Of condensed matter, of physics. There's so much about physics and quantum mechanics. And just still, we are just literally poking around. Poking around, trying to figure out what's going on.

1:07:59And that's what led to this discovery, suppose a discovery. I've made this analogy before, but if you take the periodic table and it actually kind of looks like the United States of America, we have like a really good sense of like the upper Northwest and like the East Coast and otherwise we don't know anything. And I think it was about two and a half years ago at the beginning of the pandemic there were these three guys in eye that started with this idea of just building some machine learning to experiment in silica around different materials, right? And can you guess physical properties and if you think these properties are better at a certain thing, can we then go and actually make samples and figure it out?

1:08:34And we pointed it at batteries. And we said, let's just take the cheapest form of batteries, LFP, lithium, right, that's used in the Model 3, and let's make better LFP. And what we're finding is holy shit, like we don't know anything. And there are these like really big breakthroughs, one which will probably announce in like the next few weeks, because we just raised a bunch of money around this idea. But it's all just people experimenting better and smarter. And really what you find is that there just aren't enough of those people doing it. And so the cycle time is just too long. Well, and this is where AI can actually have some, it's incredible gain.

1:09:09Transformational. As AI gets smarter, transformation, you put in the inputs, you give it the data set, we don't know what it's gonna come up with, and it could profoundly. The better version of, the increase our understanding of this. This Korean team did is they had a separate paper that they published talking about the demonstration of using AI to try and be predictive around quantum mechanics, which is something that people said we can't really do quantum modeling until we get quantum computers. And so there has been this belief that once we get quantum computers, we'll be able to understand the physics of the quantum skill and be able to do modeling that will allow us to do more discovery.

1:09:46But we are still very much just poking around and theorizing. And every cycle by the way in superconductor research, there's a different theory on what causes super conductivity and it shows how little we do actually. So these guys basically when we were trying to build, so if you look at like a Tesla Model S, right, or Model X, these are NMC or NCA batteries, right? Very, very, very energy rich, but also very expensive and very complicated batteries. That won't scale to the average everyday car. And what was crazy in our attempt to take LFP, which is the cheap version, and make it as, keep the cheapness, but as energy denses, NMC and NCA, we ended up doping it with all kinds of random stuff that you would have never guessed in a million years.

1:10:31Given billions of dollars, you needed computers to go off and actually make these guesses. So this idea that we're going to find all this stuff at the periodic table, bumbling around I think is such an interesting part of the physical sciences. And again, this will lead to infinite energy storage in batteries. Yeah. You can put electricity into a battery if you had a superconducting battery. And it would cycle forever. No resistance. And then you could just plug in and get the energy back out. So imagine infinite storage on batteries. And that's a real loss of risk. That's a very circuitry. Completely.

1:11:00So you can, there are already superconducting circuits that are used in quantum computers and other high end applications. But because they're so expensive to cool and so expensive to operate, they're not ubiquitous. But the power of having them be ubiquitous would be extraordinary. Right. computing for discovery for AI for modeling the applications will end up discovering because of the modeling we can now do it and where you pick it is where he's going to be incredible. There's a very profound moments when they do and if they do happen we should be excited, optimistic, but obviously very very cautious about where and when this may happen.

1:11:33Yeah, I really love you. What an incredible. So thankful that you guys came and showed up. It really means a lot to me. Thank you. Fantastic. Yeah. Incredible. I really love you guys. Thank you very, very much for that. All right, we'll see everybody at the all in summit. Oh my gosh. Yum yum. It's in like in this is like six weeks More a little more you have a new party plan and going you have a new person you have a new person to announce I will announce it and then we'll take it out if it's not okay But we did confirm Ray Dalio so we'll add him to the speaker list We've got a few other guests that were not going to announce that will be last minute fun surprises for everyone Some fun surprises at the end.

1:12:06I'm really excited to have Ray Dalio We're closing in on the yeah, how the party's going for the summit. We are we have narrowed down to three things We think are gonna be a lot of fun opening night Sunday night the day before the event starts September 10th I think that is you have locations yet. We are negotiating the final contracts with the locations We got about a dozen of them and we're gonna narrow it down to the three that give us the best flexibility We'll have the floor plans which is the last step You know you got like six weeks right? Yeah, no, no, it's we have more than enough options now So Sunday night I will be a cow handling the parties on me.

1:12:38I'm doing the party. She's you want to hear a great all -in -summit story Yeah, but let me just go through the three the three party themes so opening night is gonna be bestie Royale The best you love me a James Bond game. So what is that? Texito white tuxedos white tuxedos or you could go as a bond girl or you could go as Austin powers Anything in that theme casino games, but no black tuxedo you can go black tuxedo you can go white tuxedo You could go Daniel Craig you could go Sean Connery Roger Moore you pick I'm going Sean Connery you go whatever you like I like the black tux. I've tried the white tux it doesn't you can do it.

1:13:07Yeah, you go for you for me I look like a waiter and so be like I like the y 'all of Spine Cisco and then Monday night we have a good to wear as a bucket hat Monday night is gonna be Bestie Club a breakfast club big 80s the location is incredible I wouldn't say it but not to be confused with fight club or Jake Hill and I get an array not a fight that's not each other to be that wouldn't last very long bestie we worked everything out of the board meeting yeah do we work everything out pretty good to you it's good board many straight we're gonna say you're embracing afterwards I I saw the two of you embracing.

1:13:38Of course we hugged it. I tried to give him a hug. It was awkward. You didn't fully let me in. It was like, you ever see three PO trying to give hands to a little hug? It does like this. Oh, there's a 472 to one chance that you're my bestie. Oh, and then the last night will be Bestie Runner. A Blade Runner send up a cyberpunk theme to where your best cyberpunk. Oh, you must have a good punch up person for this kind of stuff. Like you have a person that can be a part of the story. He's got a art director. He's got one. I'm gonna start with the costume department costume department in the in the most Yeah, that's no that's level two in the basement sub level two in the basement is the costumes I Is how you haven't been to that level in your elevator.

1:14:16Yeah, you go down level two is costumes the cost you have level three is sets Okay, I'll tell you a quick story all in summit. I'm walking in the streets of Milan me not and We're what we're walking just on via Montenepeau on in Milan and And I hear it. Chema and I turn around. It's Damian Bertrand, the CEO of Laura Piana. And so he comes. He's like, we're so excited to be a part of the all in summit. And I'm like, oh my god, this is. I didn't tell you this. Oh, oh, it's not happening. No, no, it is. I know. They're cushioning every seat with I don't know I don't know don't ruin it. I'm not gonna run it But my team's been working really hard on it anyways.

1:14:53I saw Damian. They they're excited. He's coming Yes, yes Well, he's coming to see him partner. Yeah, you have Monclerc We did we you had every opportunity these last three days to do everything you needed to get a sponsorship I'm on clear is listening What are you guys right there on the beach on the beach? You were just There and the person you see the yacht right there. That's his boat. This is his restaurant. I can't I can't do enough I can't do any more than literally get on the dinghy go to his boat you can off your phone You're sitting right there to pay attention. Yeah, get Playing Go walk you stop playing chess And you go, yeah, I know you know the funny Beep it out.

1:15:41We'll leave it out. Here's what happens the guy freeberg comes up. He's in a panic Oh, we've got a problem Jake. How the production is got a problem We they're gonna kick us out of the restaurant the guy goes I don't think it's gonna be a problem I'm gonna fix it and freeberg's like how you gonna fix this like well I own the restaurant and so I last Yeah, we bought it to not to kick you out and Not gonna be a problem I'm not gonna be a problem. And he sat beside for a whole day. Who is on the board? And I said David, she's on the board. So if you, this is your moment. You sold out their hats. And this is David, cut to David.

1:16:18Leave up the name. Hold on. Oh, I hold on. I'm gonna let her stop. Peter Tiel and I are at level four of my basement. I'm in a game of blitz with Peter Tiel. Hold on. Blitz. Playing blitz chess, my rating is I'm gonna have a terrible hangover. Let's get everybody live from Portofino Four hungover Thank you guys. Thank you everybody

1:17:02No, only you! What? What? You're one of us, Ryan. Oh, no, Ryan. Besties are gone. That's my dog taking a wish to drive away. So, wait a minute, I'll take it. Oh, man, my ham is a dash or a meaty ass. We should all just get a room and just have one big hug or something. It's like this sexual tension that we just need to release that out. What? You're the big. What? You're the beer of beef. We need to get mercy. I'm doing all this!