Tech Earnings Breakdown: $UBER, $LYFT, $KIND with TechCrunch's Alex Wilhelm | E1845

0:00They didn't want to listen to the point that other people were being impacted by this. And so it felt like a criticism of capitalism or of the venture capital model. But I think it was more like a cry of like, oh my gosh, there were these people who were doing this thing and now they are being whole cloth uprooted and their life savings are being torn apart. And so that's what the pirate analogy I think is actually good because pirates don't apologize. This Week in Startups is brought to you by NetSuite. Once your business gets to a certain size, the cracks start to emerge. Things you used to do in a day take a week.

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1:25welcome to this week in startups everybody alex philhelm is with us again from tech crunch and previously that crunch base and before that tech crunch yes that was at the boomerang essentially pretty much yeah there was one more stop in there the year i went to uh to rehab but yeah that's more or less the trajectory so back at the mothership uh and oddly enough coming up on four years back at tech crunch time flies yeah but i didn't even know you went to rehab but you like me like to partake in a beverage once in a while well i like to partake in beverages all the time and that's why they're like you know the old amy winehouse chorus there they tried to make me go to rehab and i said yeah okay fair enough good idea fair enough yeah good call good call listen i'm with you i like to keep it straight and narrow no don't drinking for me it's it makes me too tired that's too tired that's the thing like in my life right now because you know our kids now 10 and a half months old and very active like if i was hung over oh i would get like life would just steamroll me.

2:16Like I have to wake up and go. Having to take care of a child, just all of a sudden everything changes. And I can tell you, I have been hung over and had to take care of kids and not like, or like you think you have help and then the nanny gets sick and, but you were out till 3am playing poker and then it's 6.30am and the baby's screaming and your head is like nothing in the world it's just literal torture well this week our our beautiful daughter got uh her second illness and so one night this week we were up like you know every half an hour all night long and i went to work the next day and i was like oh yeah this is what it felt like every single day when she was two months old right right it gets easier it gets easier yeah it does get easier the uh the sick kid is something you have to get used to it is as a father i found when my daughters were sick it was just this uh incredible feeling of like i have to do something to protect them and take care of them and sometimes they they have food poisoning and they're just going to puke every half hour and all you can do is rub their back and sit with them with a plastic bag i just literally had this last week and i said you ate something that disagree with your stomach we're going to do this for about three hours and then it's going to stink and but i'll get you some warm ginger ale and yeah you know we'll make the best of it we'll watch a movie watch some star wars so it's good for us but i will say new experiences like for example sitting with that plastic bag oh god you didn't do that 20 years ago you know it's no no no you were just you know uh over the side of a fence at a random neighbor's yard on the way home going oh my god never again we got a lot to get to here tech earnings with alex wilhelm i love when alex comes on the program because uh you know we we have a very similar career path uh both of us journalists both of us business journalists and you're just so good at the finance side of this, Alex.

4:05So there's just nobody better to go over the earnings. Really, it's a great week for me. I have been an investor in a taxi cab company for a long time. You have? What? I have noticed. Yeah. I was like maybe the third or fourth investor in this company and still friends with Travis. Got to spend some time with him recently and he's doing great with the new company, but he doesn't really like to talk about it all that much. He's heads down. But his last company, which they said would never get profitable, has now turned into a money printing machine. So Alex, take it away. What do you take out of this Uber quarter and the last, I guess, three of the last four, I think they were profitable and now they're set up for this S &P 500 situation?

4:47Yeah. So it took a while to the detractors credit to get here. I think Dara's done a great job as Uber CEO to take a company with a lot of potential and a lot of good bones and turn it into a cash flow generating machine. So to me, the question mark over Uber's viability has been answered very clearly in the last year. You can pick the starting point when you want to say it's been decided, but certainly now in Q3, we're looking at numbers. And the funny thing about this quarter is it was good, but it was boring because it was another quarter of solid growth, good cash flow generation. The net income number feels very solid for the company is.

5:23And so I almost read it and was like, nothing here is blowing my mind because the company is just healthy now. There's no longer like a, Ooh, what's going to happen. It's just, yes, there it goes. And I'm not surprised because whenever I use Uber eats, I somehow managed to pay an extra $9 in associated fees on top of delivery and then tip. And I know that that is why Uber is making so much money. So you are welcome, Jason, for all of my custom. And, uh, I'm just really happy to see the amount of implied consumer demand here implies a healthy American consumer, um, healthy global consumer. So not a lot of negatives, frankly, just feels pretty good.

5:56Yeah. Gross bookings,$35 billion. They obviously get a percentage of that. That's called the take rate. Take rates been very healthy. And that revenue, which, you know, is the percentage of the gross bookings that they actually get over 9 billion, 9.3. And that's broken up nicely between mobility, delivery and freight. Although freight's having a tough time. We saw that in the market with, i guess convoy going out of business yeah that seemed to be a mismanaged nightmare uh and then uh obviously flexport speaking original founders come back and yeah they've also had to deal with an absolute collapse in revenue yeah it's so tough on the uber front though that the chart that really made me pretty happy to look at was their adjusted ebda over time and also they're essentially adjusted ebda take rate so if you look at um their adjusted ebda margin as a fraction of gross bookings back to that point um it was just under 1.1 billion in q3 and that was 3.1 percent of gross bookings it was 2.7 in q2 it was 2.4 in q1 etc etc etc yeah so um not only is the number going up the fraction is going up so the company is just getting more and more profitable and i don't think that everyone thought it was going to work out this way now the true believers let's just yourself were right all along but it uh it did it congrats well done well i mean this is an important lesson I think for journalists, you and I coming at it from the business angle, there are journalists who come at stories from a culture angle as well.

7:22From a culture angle, you would think a cutthroat company that was dealing with regulations and maybe had a bit of a pirate mentality, which some people consider a feature, other people consider a bug. Here in Silicon Valley, when we have a group of pirates and they want to go win, we're like, let's go. Here's a couple of boats here's some provisions here's ammunition we that's what we bet on pirates um and so if you were is that true because i think people don't want to say it in today's politically correct era but i would say no jason i i don't actually agree with you and i love the pirate analogy because actually if you go back to the history of tech runs michael arrington uh wrote about how you know they were the kind of the pirates that people wanted to track but now when i look at venture capitalists talking about metrics they look for startups they're looking for it seems that like the early stage startup game has become so metricized that there's actually not that much room left for pirates it seems to be like venture has gotten risk averse because sass is so predictable and so now no one wants to take a flyer on something ridiculous i think it's a very good point you're making people always try to take venture capital and early stage investing and they try to moneyball it this i get pitched on moneyball for startups all the time i made my own money ball system.

8:37I don't share it too much publicly, but I have a database of the 20 ,000 applicants that come in and we rank them on 13 criteria of why we should invest forwards. And then we have 25 reasons why we shouldn't invest. So I took over the last 10 years, my betting strategy, and I just made some heuristics out of look for this. And then these are either pink or red flags. And that's the totality of my money ball system. But I think in SaaS, it was very predictable. So people like David Sachs, you know, who are quants in, you know, and come at it with that, you could find in their minds, hey, how much money did you deploy?

9:08How much money did you make? And then what's the leverage there, right? It took you$10 of invested capital to make$1. It took you$5 to make$2. Okay, that latter company's better. It would be the person's general thought. However, if you go to the Reid Hoffman blitzscaling, if you go to the Peter Thiel monopoly or Sequoia Capital, like we're going to invest in the top, top companies, and it's winner take most, we are still looking for pirates. And there was a very famous moment in the history of Sequoia, where Don Valentine said to a young partner, agreeableness, like, how easy is somebody to get along with?

9:44And then how like exceptional are they at their job? How competent are they? And make a four quarter box. I said, where do you know, which founders do you think we make the most money from? And it was extremely competent, obviously, and then difficult to get along with. I was gonna say yes. And then not agreeable. Yeah, not agreeable. And you know, I think that's where the pirate thing comes from. But you're right. People try to moneyball it. I don't try to moneyball it in my career. I just try to look for as many of the important variables and then place the bet. All right. Scaling a business is really hard when you're growing things that used to take a few hours.

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11:19That's netsuite.com slash twist to get your KPI checklist. Going back to this and looking at it, when you look at the press at that moment in time, what do you think they got right or wrong in terms of objectivity? Because obviously, there was a lot of social issues going around at that time. And Silicon Valley was getting very powerful. And then the antagonism between the tech press and the founders kind of peaked a bit during that time period, you had some bad behavior, like Theranos, you had the pirate behavior, like Uber and Travis, and you had everything in between and just a lot of wealth getting created.

11:51So it got a little weird there. But what did they miss in terms of this story specifically? Well, I don't think it's going to be a single answer to that question. Okay. If you had two or three things, they missed. If I had two or three things. Well, I almost wonder if Uber was overcapitalized and therefore that led to it just kind of burning through more cash than it needed to. Because if you go back to how Dara has trimmed expenses and headcounts and so forth, it seemed they could have done a bit more with a bit less. And so I think that the questions on their financials could have been answered earlier by the company itself.

12:19So while I do think that the press was in the middle era of Uber, a little bit too negative, I think the company also wasn't operating at its kind of peak efficiency. So I think that that kind of falls on both sides of the fence. I think that's a real, I didn't even think of that one, but you're right. And that does trigger people because they look at it and they see people shooting money out of a money cannon and you're losing$3 per ride or$4 per ride and ride shouldn't be this cheap. This doesn't make logical sense. What are you doing here? And Amazon did a similar thing. Like Amazon Prime, when we first all got it, did not make logical sense.

12:51We were all like, wait a second. I give you$60 a year and you give me unlimited two-day delivery. Okay. You sure? You sure? Because I'm going to use that five times a week. We're trying to cut back on our Amazon Prime usage just for the sake of limiting the edges of our carbon footprint. And it's so hard to get off of Amazon. That company has me by the neck, sadly. I mean, and when you have a kid, it's even more pernicious. Yeah. What I started doing was, because I too have this concern when I see all the boxes in my garage looks like a UPS. Yep. like depot and i have just i can wait till friday friday's my amazon day and i just put everything on friday and i've just said you know like on a stoic basis i'm not like a super weirdo like stoic like gonna make tiktok videos about it but i'm just like i can wait for my anchor charger station for friday yes it doesn't have to come tuesday at 9 p.m at night in like a little box you know with my little battery in a box with a gazillion puffed up that you know it's just gone and it's also the annoyance of opening six boxes versus opening one so i think it's good for it okay so i like that that did distract people so that's a good reason the other thing on the uber front is um pirates don't pay as much attention to collateral damage as people who are supposed to look at the broader economy and so when we're talking about uber going into the markets and shaking things up you called it a taxi cab company tongue in cheek earlier but who was its competition competition at the time it was taxis and just to be clear i was living in san francisco at the time um taxis were terrible i went to the uber launch party in chicago when i was in college like so i was around very early when it was only black cars and clearly it was a superior service but the company was able to raise money and subsidize rides and go after a business that was often run and managed and held on to by uh small business owners and so i think a lot of the complaints about people who are annoyed at the coverage of Uber was that they didn't want to listen to the point that other people were being impacted by this.

14:49And so it felt like a criticism of, of, of capitalism or of the venture capital model. But I think it was more like a cry of like, Oh my gosh, there were these people who were doing this thing and now they are being whole cloth uprooted and their life savings are being torn apart. And so that's what the pirate analogy I think is actually good because pirates don't apologize. And maybe in an economy and in a country with hundreds of millions of people and a very complex economic fabric and social fabric maybe if you rip it you're gonna get some some blowback now yeah uber is great you know when my parents visit i send them an uber from the airport to bring them to the house etc so i'm not a hater by any means but i think that some people think that any criticism is somehow a an attempt to say you can't do this versus someone saying hey maybe we should have thought this through a little bit differently um sure but at this point though you know we're looking at the rearview mirror uber's revenue of 9.3 billion last quarter i think shows where the world went yeah uh the other observation i'll have there is um every time uber had any kind of a crisis there was like an internal i don't know kind of wink and a nod um anytime there was a bit of a controversy and the press kind of fell for it and there were 100 uh news stories do you know what happened inside the company just to uber itself oh i mean probably things went up right downloads spiked yep so yep as we've seen with let's say twitter and x something happens with elon x traffic goes up more people go check out x and so that that was another new kind of wrinkle in the fabric of pr which is if there's a controversy as long as it's not so horrible that it turns into a boycott sure which it did for a moment in time and that was ng not good when there was a moment in time where it was like screw these guys i'm deleting uber and the delete uber movement happened and lyft that actually did have an impact in especially in places like san francisco like maybe 10 or 20 percent of people switch that was a not good moment uh and that was like the the backstop against this press strategy if it was a strategy it really wasn't like an explicit strategy but it was uh something that was notable the thing i always looked at uh and um i always try to think from first principles uh is you know especially as an investor you have to be dispassionate about these things i just looked at the total number of rides and the total number of losses and i watched like okay we did 100 million rides we lost 300 million okay it's three dollars per ride okay and then it was like oh we did a billion rides we lost two billion it's two dollars per ride and right then i was like okay all of a sudden it was like we're losing 50 cents a ride 25 cents a ride i was like well why don't we just flip that by 50 cents and be profitable and it was like yeah we're doing that but we don't want to impact that top line growth and i was like does that really impact the top line growth 50 cents like oh yeah it could like change it two percent and i was like why don't we just flip that dial and it's like well uber was able to raise i think over 20 billion dollars as a private company and so the question now is as they make this money when does that paid in return capital go back to shareholders and then it's all profit from there which is called the j curve as you know yeah um where you're have all the money that's been paid into the company and then slowly you pay it back and then it's free cash flow and all that money is just going to shareholders uh that happened with tesla recently um and it happened with amazon in the second decade and here we are it will happen with uber as well so on that point though just pull the numbers up if you look at um uber's positive operating cash flow uh quarters one through three of last year 886 million uber's q3 operating cash flow in q3 of this year alone was uh 966 million so the pace of cash generation by uber has accelerated dramatically and to the point now when i'm kind of sitting around going like okay so are they going to start announcing buybacks like how is this going to be returned to investors because clearly the company has an excess cash compared to its investing needs and i think that that's kind of a that's when i really feels like a company has hit its maturity point when it just is so cash generative that it's kind of like oh crap what are we going to do with this but i will say today cash has a five percent yield and makes you look brilliant so holding on to that cash i mean doesn't hurt at all it's super efficient you're right i want to go back though to the the uber's trajectory press media and who got it right and wrong here's a question i have if dara had taken over three or four years earlier and the company could have avoided some of the travis related headlines let's just say that yeah yeah do you think the company would be healthier or less healthy today it's a great question um i think if you didn't have the pirate there when there were battles to be fought like are we going to be allowed to exist in london are we going to be right are we going to be a standalone company for the first time in china that doesn't have a local partner and are we going to try to compete for china like those kind of decisions would just never have happened under, let's just say, quote unquote, professional management.

19:48It would have been like, that makes no logical sense. There's no way we can compete in China. Now, Travis went into China and was like, we're going to win. We're here to win. And the Chinese government and the, you know, people were like, okay. And of course, when I talked to him, I was like, are we going to actually win? He's like, we're going for the gold. But the silver we get when we own 25 % of Didi, that's a pretty good silver medal. So we're going Home for gold, we'll accept silver. We're not taking bronze. We're out of here if we have to get bronze. And that's the kind of thing that, you know, I think a professional CEO, a Tim Cook, Sundar, whoever, Satya, like they're just not going to think in that pirate mentality.

20:25They're going to think, is the juice worth the squeeze? Do I want to get fired because I went with such an audacious strategy? Only founder authority can do audacious strategies like that. All right. Founders always ask me for pitch deck punch-ups. And you know what? I got some great news for you. We worked with the team at Miro, the awesome whiteboarding software I've been talking about, to create an amazing pitch deck template for founders, which you can see if you're watching the video right now. This is going to help bring your pitch deck from zero to hero, from zero to VC ready. And our founder university participants love this template.

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21:33And faster inputs equals faster outcomes. And we all know product velocity and startup velocity is how your company is going to win. So to access our new Miroverse template and thousands of others, sign up today for a free Miro account at miro.com slash startups. M-I-R-O dot com slash startups. That's miro.com slash startups to sign up for free. Okay, well, I agree with you on Sundar for sure, but I want to disagree on the Satya point. I think it takes big founder energy to drop 10 billion into open AI and essentially cement their position to top the AI market for the foreseeable future. like that's i don't know it's a rare moment of big founder energy i agree that's bfe yes well you know if you don't get that joke you're not online enough but i think it's possible i just think it takes a leader that has so much built-in trust inside the organization that people will trust them to lead them close to the edge and satya i think just given his cloud background could pull it off most people couldn't but i will say they went into china uber did they spent a lot of money they ended up with a stake in dd that then later got whacked by its own government and so i wonder if that was actually a net positive it did wind up being positive yeah at the end of the day i think they made a couple billion um and so i think of the 20 billion that was poured into the company something close to 10 billion came back in their ownership and other entities yes yes atg and and so forth yeah so that was it was super creative but uh if if you're right though that that dar couldn't have joined the company a couple years earlier as ceo because it was still fighting the pirate battles, then I think that the media coverage at the time that was skeptical was actually relatively reasonable because the company was still a question.

23:10Yeah, I would say it was reasonable. Yeah, I think they went a little bit too far. Yes. Yeah, it got personal, which, you know, it can get personal. It's a certain climate. But, you know, our job as, I think, financial journalists is to kind of get to the truth of the matter and understanding that there is a playbook that in a Zerp environment, you will be allowed to leverage. Oh, yeah. whether it's Amazon, Tesla, or Uber, where you're going to be allowed to do a decade of losses in order to own a very important market is, it's allowed sometimes. And I think just getting good at identifying who gets permission to do that.

23:46Like, maybe OpenAI has permission to do that right now, right? They've been just given ungodly resources, a$90 billion valuation with a billion in revenue. I don't, you know, it's 90 times top line revenue. It's a little bit rich, right? And they've been given 10, 20 billion dollars in cash. I don't know what the number is now, what they're up to in terms of investment. But yeah, I mean, feels like if you were going to give somebody a lot of rope, it would be Sam. Oh yeah, no, for sure. I mean, I mean, I've only met him once or twice. It seems like a perfectly lovely guy. But what I think he is, is a big old nerd.

24:21And you know what Satya is? A big old nerd. And nerds love to nerd it up. And that's why you saw Satya at their developer day. He didn't have to go there. They were flying without him. He probably wanted to be there. he probably wanted to be associated with it yeah he asked yeah i mean he wants that nerd cred you're 100 correct uh just quickly looking at lyft gross bookings 3.6 billion revenue 1.2 billion net loss 12 million actor writers 22.4 they got a billion seven in cash uh guess what what happens here now guess what it's guess what it's worth six billion 4.1 according to google finance yeah it was worth more than a hundy and lyft's worth four so here's the thing about you know about founders and doing crazy things lift does one thing in one country uber does many things in many countries and unsurprisingly they're doing better now because they're more diversified on their product and geographic sense and they got permission via zirp and capital and so forth but i mean lift also raised a lot of money for a long time lift was not a poor company and they were able to lose money for a long time too and they've ended up silver in a market you know i think they got a participation trophy if we're being honest um yeah they participated in this this chart is incredibly telling i mean if you look at the revenue chart between uber and lyft and i'm guessing that this is going to be a case study at harvard and stanford at some point is just the divergence of the revenue yeah pretty spectacular look at how if you're looking at watching the video of this look at how long it took lyft to recover to its pre-covid revenue number and then look at the different curve you see with Uber and then the acceleration points.

25:55So Uber definitely also got dinged. I mean, we all stopped taking, I mean, I think I actually deleted the Uber rides app from my phone because I didn't need it for two years. Uh, but then if you, if you look at the continuing performance, once people went back outside, I mean, it's night and day does not seem like an unfair way to put this. There was a lobby of people saying, don't do eats. It's a low margin business. Only do ride hailing be, just be good at one thing. right have excellence in one vertical is a lot of times the typical advice but then it turned out you know if you have the resources you know sometimes having a counterbalance where if monday tuesday and wednesday i'm staying home and okay i'm gonna cook monday tuesday wednesday thursday but i'm going out the other three nights of the week well uber has something for you each night you could order uber eats or you could order groceries now and if you forgot your lemons or whatever because you're making you know soul or something you need some capers and lemons you can get that too so you could literally use it seven days a week you're gonna run out of money real quick uh it's a pretty expensive habit but yeah that that was i think a master stroke of genius and i gotta i think there's another third i don't think by the way the um i mean all due respect to leor and shipping i think shipping's great i think that i think there's going to be a third leg to this stool or it could be a four leg stool but they are uh experimenting with uh like a task rabbit like service there was a news story about it and i think that this could be the ultimate uber one which is you open your app up and you say i need an assistant i need a 35 an hour or 50 an hour yeah person to help me with stuff domestic office whatever it is and maybe there could be two or three categories so you say i need hourly help for four hours and it says what do you need it for and it's like i need somebody who can work the register i need somebody who can come to my business and be a receptionist or do some research or i need somebody to help domestically.

27:45So maybe it's like executive domestic retail. Sure. And you pick one of those three, and it just gives you an hourly rate and an Uber person comes for 50 bucks an hour and saves your ass, you know, in a city because somebody missed their shift. I think that's going to come. And I think that could be the third layer of the stool. I'm excited about that. But I think we don't talk about any more is labor availability. And there's an interesting tension between a tight labor market and consumers having enough cash to spend on Uber Eats and the markups and stuff that it comes with and the economy being relatively weak and having lots of possibility on the supply side for labor so right now i can afford to use uber eats every day if i would like but i can yes that's fine um but i'm cheap and sometimes i get peevish and i stop my order because i'm like i'm not paying 37 dollars to have someone bring me a burrito right now i will i will get off my butt and walk and i wonder as the the consumer around the world gets stressed and we've seen the rising debt levels of household and so forth i wonder if there's a point in which the prices have to come back down the margins compressed a little bit for for uber across its its different products i'm not sure it's just something that i'm thinking about as we watch the gdp numbers and overall health of uh of us i put this into the category of starbucks which is i thought for a long time people would stop getting starbucks because it makes no logical sense to pay 450 for a cup of coffee with milk and that they would just austerity measures would kick in like i make a pot of coffee every day cost me buck 52 bucks to use high quality grounds and we make it every day and sometimes the housekeeper says oh you know it's like we're wasting half a pot i'm like nope four people get to have coffee and we didn't go to starbucks everybody we saved about 15 bucks a day so don't worry about pouring out the last third of the pot um and i always thought people would you know get a a nice contigo or something and make their coffee at home and it's like nope this is a luxury i want uh like i'll call it the avocado toast theory and i think if something like ordering your burrito brings you extra joy you get to work a little bit longer i think yeah maybe on the margins people will you know the the people who are stretching for that will take stuff out but i think for people who are busy executives middle class and above it's just a luxury they don't want to deal but not deal with and i you know listen i see it sometimes my housekeeper was showing up with a starbucks and i just told her you know don't order starbucks for 450 like you can have drink the coffee at the house it's a drink the coffee it's like it's a higher thing and then i showed her how to use the espresso machine and i was like froth the milk pour this in this is better coffee than starbucks coffee i'm paying for blue bottle beans or you know red cat these are these are better beans than that and now she drinks our coffee and i'm like great i feel so much better than her spending 100 bucks a month on starbucks how often does your housekeeper come uh it's full-time we have full-time housekeeper yeah full-time housekeeper nanny yeah i mean it's like as a as a kid from brooklyn who we had chores and we had to do everything it's like the ultimate luxury to have a full-time housekeeper and nanny so but those are two different people right same we have a full she can do a little bit of nanny stuff okay we have a big house so you have to there's no way to have the size of house i have right now and not have a full-time housekeeper if you're listening to the next one minute of conversation and you're like these guys are assholes it's true um we have a full-time nanny and we have a housekeeper comes once a week our nanny is amazing she does she tidies she sweeps but like you know myra comes over and really blasted the house and i'm not gonna lie i will on my deathbed i will give that up because i also i grew up in a family of four kids one income like Like it was, you're scrubbing the floors, you know.

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32:10Arisingventures.com slash twist today to learn more and connect with the team. That's A-R-I-S-I-N-G ventures.com slash twist. Arisingventures.com slash twist. If you go to other countries, it's pretty astounding. I spent some time in the Middle East and the immigration policies are very loose in other countries. so you know for example if you're in dubai you know in the uae there's a ton of indians filipinos etc and people get paid a different salary scale they're happy to have the work um and people have drivers housekeepers chefs whatever there's just a lot more labor available as opposed to the united states because we have this housing problem and we've got this dysfunctional immigration system the reason why americans are doing so good and can afford uber eats and can afford amazon and all this stuff and doordash is because we've because we've locked down immigration so tightly even though people would have you believe the border is like insane and sure i'm like i'm sure it is insane but we have the record low unemployment right now like 3.5 or whatever like this is the lowest of our lifetime in 50 years it has not been this low that's why wages are going up and uber is in a dogfight with nannies housekeepers uh apple starbucks pick the retail walmart target they're all in a dogfight to for who can pay five times minimum wage federal minimum wage which is admittedly like 750 or something yes seven and change yeah yeah so admittedly it's insane but you know even in the city is 15 an hour it's two or three times that you know is is the going rate for for you know blue collar work and so we we've really driven up i think salaries in this country and so people are really upset about the biden administration because he's old or whatever not to make this political but if you just look at the state of americans record low unemployment salaries going up yep and people aren't able to hire in this country so i don't understand why immigration is such an issue we just need to maybe make it fair you know like dare i say build a wall and control it, but let people come in fairly and in an orderly fashion.

34:16But we need more people in this country. Absolutely. I mean, not to bring up Matthew Iglesias by accident, but his book One Billion Americans actually got me thinking about this point. If you, like, okay, you fly a lot. My favorite thing to do is whenever I get stuck in a window seat because I'm too cheap to pay more for a better seat because, I don't know, I grew up lower middle class. I look out the window and there's nothing. America is empty. There's nothing. if you just call it by over for a reason yeah yes and so like let's let's let's get another 100 million americans like people who are like worried about china's government and hate immigration in the u.s i'm like look you need to get your head out of your nether regions like let's let some folks in and i think well i have a lot of thoughts about this i don't want to get too far away from earnings but i think that uh you know just if we sit down with a piece of paper in 30 minutes we could hash out an immigration plan that would be much better than what we have the problem is i think certain people in politics have painted themselves into an ideological corner about immigration and so they can't step back from the extremes and it's very simple if you look at any country that's doing really well they have a point-based system and now even me saying point-based system will have some group of people say you're racist or you're whatever and it's like no it's logic if somebody is a phd who speaks english perfectly and we need that phd in whatever chemistry they should go to the front of list and then if somebody has a master's and they're a nurse and we need nurses they should be next up and then if somebody doesn't speak the language and you know they've got a criminal record maybe we should have them come in less or not at all and we could have a thoughtful process and so i've been saying on all in and everywhere people listen to me point-based system then a certain amount of compassionate from people who actually come from a place where they will be murdered if they go back like afghanistan like yeah refugee status of an acute mess not faking it because people know how to fake it now at the border they've been watching youtube videos of like just say these things and then you qualify for this you know and then you you have the the lottery you know hey i want to come i'm not super qualified can i get in line take a number yeah and that would be just totally fair at what do you think of this so i think about that i think that's very reasonable what about temporary uh worker permits for people who work on farms and such because there's a lot of that labor and of course of course okay so basically republicans were in favor of an open southern border during the reagan to bush era and the nafta era and people forget this but david actually pulled up the the a story from the wall street journal during that time period people were in favor of this, Alex, because they said, hey, what's the difference if people from Mexico come work in California and then go back for Christmas?

37:01It's no big deal. We need somebody to pick the strawberries. Americans don't want to pick strawberries. Hard labor. So, you know, migrant workers come in, they pick the strawberries, they go home, everybody wins. So why even have a Southern border? Just let them come and go, let them have a driver's license, let them have a decent quality of life, pay them minimum wage, or, you know, hey, we're Republicans, maybe we'll pay them cash and pay them half a minimum wage. That was kind of what people were doing and my dad had a business in the 80s and the entire economy was driven by being able to pay a mexican dishwasher or a shorter cook half of what an american got paid they got paid five bucks an hour when everybody else was getting paid 750 or something like that and that that's kind of how the economy worked in the you know the off the books economy so well it's a good thing we no longer have an off the books economy and everything's above board in this country yeah well i mean it's interesting you say that because now with gambling and legalizing gambling uh and using you know draft kings or whatever that's actually happened and so if you uh and then if you have cannabis be legal that was a big part of the underground economy and then if you let migrant workers get driver's license and then get w-2'd or whatever 1099 then they become part of So there's actually something to getting things out of the gray market, which helps the economy.

38:18The bigger your unofficial economy is, the less efficient your state is. Like in general, like if you go to, if you go look at, I'm going to be very gentle on how I say this. Countries in Latin America that have less high functioning economies, you tend to see greater concentrations of gray market activity, things that are off the books and so forth. And that is not the best way to run an economy. No. Blasting on this, on labor, and then we'll talk about Clavio. but i keep hearing people talk about ai is going to replace labor we're not going to work or there won't be any jobs or robots will rule us i was thinking about concern because i think people ask me like okay alex you write for a living are you worried not really uh unemployment is currently three and a half percent 3.6 whatever it is and we are like what how many technological revolutions deep since the industrial revolution and we're still using every single person nothing has change.

39:07So that's my broad take on labor in general. I think we're going to stay low unemployment for a really long time. I'm not worried about it. I have to agree. And that would mean immigration is a good idea. I don't know if you saw this, a bunch of tech executives in Silicon Valley have a project called California forever. It's like a utopia project, about 70 minutes outside of San Francisco. Solana County exists. S-O-L-A-N-O. If you want to look it up on your Google maps. It's before you get to Sacramento, which is like the ride to Tahoe. There's just, like you said, just huge swaths of land. They bought, you know, like hundreds of thousands of acres there, and they want to build a new town there.

39:46And then east of San Francisco and Oakland, in the East Bay, you have all these planned communities that are starting to happen. So there is a distinct lack of creativity in this country for building new cities. I think the greatest pitch for a president. And I dare I don't want to say this because I think Trump will probably pick it up because he's so savvy. If and when I run for president, I'm going to say 10 new cities. In my administration, we're building 10 new cities. And these 10 new cities are being built from the bottom up and will be the greatest place you could ever live. And here's what they're going to be like.

40:16Housing is going to be amazing. Commuting is going to be amazing. Bike paths everywhere. And your kids are going to be able to live near you. There'll be community pools you'll be able to go to a pool or a rec center everything is going to be like cul-de-sac or any other plant community in austin they have the dominion i think yeah we're going to build 10 million new homes a million in each of these 10 cities and high density housing i presume given that you're talking about the highest of density with you know it'll be high density in the center and then you bike out for you know the five miles outside of it and it's uh townhomes and then it becomes homes.

40:53So apartments, townhomes, and then homes. And you can pick what you want. You want the backyard. You know, it's half hour commute to the city. You want the townhomes, 15 minute commute. And if you want to live right there, you come downstairs. It's a five second commute to be in the middle of the city. We're America. We can't build a f***ing city. No, we're - Give me a f***ing break. Elon's landing two rockets at the same f***ing time. Yes, but on both - Why the f*** can't we build a city? In the ocean. It's easier to - I'm kidding. I know. I mean, that's literally - It's a great point, Alex. This country is so f***ing dysfunctional.

41:24Yes. That people have to f***ing think that the best way to build a city is in the middle of the Pacific Ocean. Have you not watched any disaster f***ing film? It's going to get flipped over. By a large lizard thing. A lizard wave. It could be any of that. A nuclear lizard. It's going to be f***ed. It's going to flip over at some point. Everything's going to be hanging upside down. People are going to die. There's the middle of America. There's a f***ing, between California and San Francisco. the middle of california is completely empty and it's coastline it's a city or or a few a bunch of bleeps in there please no you're fine no i mean or not i mean people aren't aren't children but i'm a big believer in this country in in the united states for all of our warts and flaws for all of our starts and stops we've been consistently making more opportunity available to more folks over time and i i love that and i stand behind the project the thing that actually gets me worried isn't current federal deficits or you know infighting them in congress whatever it's whenever i see a headline that's like new york city is going to build 1.2 miles of subway it's going to cost 37 billion dollars like why can't we build things and i i've seen this in microcosm in providence where i live and they want to build um i think it's a five-story building down the street from me a little bit just to keep my location slightly generic and the neighborhood's up in arms like ah density and i was like oh my god i saw this in san francisco i know this story build it you guys always complain that people graduate from brown university and risd and all these other colleges and leave and then you won't build cheaper housing yeah it's it's like i'm talking like these are smart people who care but then there's one argument you can get them on hit me this is the argument i use all right do you want your children and your nannies or teachers and the firefighters and the ambulance drivers to live near you or do you want them to commute an hour and a half in and hate you and for some rich people they will actually that argument will get into their brains now you saw mark andreason and his wife write this nimble letter in atherton i don't know if you saw that letter oh i saw oh my god and they're just like and they were building like a three-story you know in the place of one parking garage they were going to have like eight people living there and i know this makes a billionaire and his wife who owned 20 homes probably have to write a letter this is what compels them to write a letter here's an idea write a letter why why isn't el camino real the north and south boulevard you know in the bay area the artery before they had the highways the 101 and the 280 why don't we just say on that artery you can build six stories up and down the entire peninsula six how about 60 let's go i mean And I'm just, yeah, okay, sure.

44:07I'm just trying to make it so these NIMBY people don't write letters. Like six stories, the whole way, the whole corridor. Yeah, yeah, yeah. If you let people do that, then you'd have this incredible corridor where people could get on and off of it and go into their apartment complex. And then your nanny or your teacher would not hate you because they have to drive three hours a day and commute. And then you can't get teachers for your school or a nanny to take care of your kids. Yes, absolutely. In fact, you know what we need? We need someone with a lot of clout in the local economy. someone with a lot of capital and someone who has a proven uh extra amount of time to write long manifestos in public to push this forward and there's no one better than mark andreason himself exactly get a shovel and a cement mixer and get to work he says let's build yes well then why don't we build yes this is what mark andreason should be if he wants to stand on the high horse and say it's time to build how about saying it's time to build dot dot dot on el camino real oh no I'm sorry.