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ladies, let's move on and uh I am, of

course, your executive producer for life

and the moderator of the all in a

And if I may, just a tiny plug, if

you're a founder, we are having our

ninth cohort at Founder University. It's

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companies.

And it's sponsored by Stop. Stop. I'm

just giving a plug for Founder

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and buy Supergut bars, $3.99.

You can pick them up this afternoon.

Speaking of that, your people used me in

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plugs.

A few weeks ago when I shouted out that

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From Glue AI looking for engineers?

Yeah, a plug on the show, yeah. For Glue

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Great. That's awesome for Glue AI.

And if you haven't tried Supergut,

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Supergut and didn't tell me. And we're

still hiring, so. Okay, well, there you

have it. So, go to founder.university to

apply for my 12-week program.

out Grok.

I'm running a GoFundMe.

A GoFundMe

a new Yeah, go to gofundme/freeberg. For

what, Freeberg? What's that next to deal

with your panic attacks?

All right, let's get started, everybody.

Enough of the shenanigans. Hurricane

season is

upon us as Freeberg had predicted.

Hurricane Milton made landfall on

Wednesday evening

along the west coast of Florida as many

of you know.

It's been downgraded. It It started as a

category five potentially, then a

category three, and then it looks like

it's a category one now. So, I guess

these things are quite random.

Leading up to Milton though, 6 million

Floridians across 15 counties were

ordered to evacuate. That's a lot of

people moving out.

And it was a pretty powerful storm. It

ripped off the roof of the Tropicana

field in Tampa.

So far the death toll is at four, but

it's expected to rise sadly. And uh just

two weeks ago Hurricane Helene swept

through six southern states killing over

220 people tragically.

Devastating western North Carolina and

uh entire towns were wiped out.

Woof. These are also beyond the tragic

human losses are economically staggering

in terms of the losses. AccuWeather

estimating total economic damage could

be between 145 and 160 billion from

Helene. And Moody's estimates the

property damage alone could be as high

as 26 billion. Tons to get into here.

FEMA, Starlink, saving the day, tons of

stuff. But Freiberg uh back on episode

182 you predicted this would happen.

What's causing all this? And let's just

start with the science angle I guess

before we get into the other

political and um

insurance issues.

Well, I think if you'll remember when we

talked about this a couple months ago,

the sea surface temperature was at kind

of a record high in the Atlantic.

And warm ocean temperatures

drive um moist air up that evaporates.

The warmer the air,

the faster the evaporation and that

starts to cause the movement of the air

which drives ultimately the hurricane.

And then the hurricane sucks up more

warm moist air from the ocean and it

creates a feedback loop. So the more

energy you have in the ocean,

the more likely you are to accelerate

wind forces in storms. And that's why

you get these massive hurricanes that

suddenly form seemingly overnight and go

like in the case of Helene, that

hurricane went from a cat two to a cat

four or a cat five in like 48 hours.

Because of the energy that's stored up.

And 90% Here's an interesting stat. 90%

of the energy that we get from the sun

is absorbed and stored in our oceans.

The other kind of fact that's playing

into this, if you pull up that sci- that

Nature article, and this is something

that I think you guys may remember we

talked about. So, this was an article

that came out uh a paper science paper

that came out a couple of months ago.

And in this paper

the scientists identified that removing

sulfur dioxide

from cargo ships that travel across the

oceans is actually causing accelerated

warming in the oceans.

And the reason is that the sulfur

dioxide forms cloud formations and those

clo- as they travel across the oceans.

And those cloud formations reflect

sunlight. And in the absence of those

cloud formations, that sunlight makes

its way into the ocean and you get more

ocean warming.

And by their estimation, removing sulfur

dioxide, which causes acid rain and

that's the reason it's been pushed to be

removed, and they started removing it in

2020 2021,

from cargo vessels, by removing sulfur

dioxide,

we are now going to see a doubling

of the rate of warming of the oceans in

the 2020s and going forward. Let me

pause there for a second just to make

sure people understand what you're

saying. Emissions from cargo ships block

sunlight, which then of course reduces

the heat absorbed by the oceans, and so

we're now choosing between pollution

of the air

or overheating of the oceans. Am I

correct in summarizing that?

That's roughly it. And

um

But then what is going to pollute the

air? Sorry, I just don't understand.

that goes in Yeah, that goes into the

fuel of cargo vessels.

And a couple of years ago they started

to implement these mandates that sulfur

dioxide no longer be used in the fuel.

As a result, when sulfur dioxide is

emitted from these vessels, it goes into

the atmosphere

and it actually triggers cloud

formation. So, now you have these clouds

that are forming and Nick's going to

pull up this image right now. Yeah, here

you can see that. So, all of these

tracks

are these cargo vessels moving across

the ocean. And as they move across the

ocean, they create cloud cover. That

cloud cover actually reduces the warming

in the ocean because it reflects

sunlight. So, now that sunlight energy

gets absorbed into the ocean. So, this

is another driving force that some

people are now speculating maybe

accelerating the warming of the oceans

that we're seeing, which drives these

extreme storm and and hurricane events.

And so, this becomes a more frequent

event. Now, a lot of people

I ask you a question? Does that mean

that we're mean reverting? Meaning if we

improve the quality of the fuel source

that are used in shipping,

doesn't that then mean that we're

reverting back to what would have

happened in the absence of these dirty

fuel sources?

Yeah, so in addition No, no, no. I'm

asking I'm asking you the question. Is

that true or not? Um so yes, we are no

longer reflecting as much sunlight. And

so, for several decades

had bad fuel sources.

We had artificial cooling. We

effectively

artificial cooling and now we take But

that's counter to the narrative of what

we all think is happening.

Oh, well, the argument is that we've

actually been warming the atmosphere,

which we have been. We can see the data

that shows that everywhere all over the

Earth, not just about sunlight coming in

on the oceans, and not just ocean

warming. But the the atmosphere is

warming, the planet is warming. And so,

this is by by blocking the sunlight

above the oceans, we were artificially

dampening that effect. And we were

reducing the amount of heat energy that

was getting into the oceans. So, now by

taking that away, we're seeing the heat

energy in the oceans accelerate. And now

the oceans are getting much, much

warmer. Right. So, the pollution was

good?

Turns out it was good.

paradox here. Is that it was creating a

blocker for sunlight. And to your point,

Chamath, exactly like shouldn't we just

be going back to what was normal? But at

the same time, in the same system, we

had heated things up. So, this is a

multi-factored system

that we're dealing with Friedberg and I

I guess the takeaway from all of this is

that

we got to be really careful with what we

do with the environment, right?

Well, I mean, let's talk about

economics, right? So,

what how much real estate do you guys

think is on the Florida coastline?

What's the real estate value?

Friedberg, can you just anchor this like

was it that it was supposed to be a

category five and now it's a category

three when it hit land? Right. So, what

happens typically when storms hit land

is they no longer have that hot ocean

pumping energy back into the storm that

keeps the feedback loop going. So, the

storm cycle starts to break down. All

hurricanes when they hit land, they

start to break apart and so the

category, which measures the wind speed,

actually reduces. This is just a natural

thing that happens. But, this was a

category five hurricane when it made

landfall, I believe it was category

four. So,

you know, it was a massive hurricane

that

should not we should not dismiss it

because my understanding was Helene was

cat four

when it

like hit North Carolina. But, I read

yesterday that

yeah, what happened with Helene was it

was cat

is cat three when it hit Tampa or

something. Is that not right?

Yeah. Yeah, so that's right. But, what

happened when Helene hit North Carolina,

it was not a cat four.

What happened is as that storm moved

inland,

it hit the the mountains and the first

mountains it hit are on western North

Carolina. That area is elevated. There's

mountains there. So, when a heavy hot

storm runs into cold mountains, all the

moisture dumps out. It's like it runs

into it and suddenly everything

precipitates out of that storm. And

that's why some parts of western North

Carolina got like 18 some high some

people measured as high as 30 inches of

rainfall in a couple of hours. So, this

insane dumping happens when that hot air

hits cold hits a cold region and

suddenly everything all that warm

moisture precipitates out and dumps to

the ground. So, it ran into a mountain.

It's effectively why everything fell out

of North Carolina. All right, so you're

saying that it wasn't uh Democrats who

basically uh

Right. What do you think

What do you think Zach? Let me ask you

this cuz there is there Who did it Zach?

I don't know. Maybe Nancy Pelosi cast a

spell or something and uh

Yes. Well, isn't there a lot of

geoengineering conspiracy theories uh

going on in your cohorts? I mean, what's

your

think so. But Vinod wants us to be very

clear that we need to

We need to stop all of this

disinformation that somehow Democrats

are behind that storm.

Well, there are a lot of

can assure everyone that it was just

precipitation.

online that there's a ton of um laser

geoengineering being run by government

agencies to drive these storms.

taking that seriously. Well, I mean, the

the origin of this though Freeburg is

people have done experiments for decades

on trying to control the weather or you

know, alter the weather and and they're

doing that in the Middle East by seeding

clouds and creating more rain. We saw

that with the Dubai floods. They said

that that might have been caused by over

seeding of clouds uh which they're doing

there. And then there have been

experiments just to you know, for the

crazy laser people conspiracy theorists

theorists on X.

There actually have been experiments

with lasers, you know, being shot into

hurricanes and storms, correct?

Are you Alex Jones? Is that what we're

doing? Well, no. I'm not saying Alex

Jones but I'm just saying that's the

origin of where people are kind of

building on this. There have been

Okay, so so let's just talk about the

the hurricane the amount I'm teeing it

up for you to debunk is what I'm doing

here. Yeah.

Putting particulates in clouds to

accelerate precipitation

is I mean, we've done that for a hundred

years. You know, you can do you can

increase the precipitation rate when

there's already clouds that have formed.

But that has nothing to do with creating

an extraordinary amount of energy. All

of this energy

that the oceans are like giant

batteries.

And when a hurricane gets going, that

battery is accelerating the hurricane

and the hurricane sucks up more power

from the battery and it creates this

incredibly dynamical system. There is no

human created energy system that can

force form a hurricane. A hurricane is

an extraordinarily powerful natural

phenomenon that arises from the amount

of energy that can come out of very,

very, very hot oceans, relatively

speaking. So, you know, that's really

where these hurricanes are coming from.

Now, they're going to be more frequent

if the ocean temperatures remain

elevated as they seem to be and continue

to be elevated and this can be a

function of generally the temperatures

warming on Earth, generally the removal

of sulfur dioxide, generally these El

Nino La Nina cycles.

There's a lot of factors, but it seems

to be the case that we are having a very

significant trend of continuously warmer

oceans and those continuously warmer

oceans means that we're going to have

what used to be called a one-in-500-year

storm, which is what Asheville is being

turned at, one-in-500-year. These sorts

of storm events can happen every couple

years. And we're now looking at

one-in-100-year events happening every

two to three years.

In the United States with the the

hurricane activity that we've been

seeing. I think a lot of the conspiracy

theories are built on actual experiments

that happened. This one, Project Storm

Fury, I'm sure you know about, was to

try to modify hurricanes by putting in

some chemicals that would uh freeze them

and dull them. So, they're they're kind

of building on this.

it apart. Yeah, break it apart. So, you

know, there there there have been

experiments here with altering weather,

altering hurricanes, but that doesn't

mean it's Putin, Pelosi,

or you know, the Illuminati or whatever.

get let's get back to brass tacks. So,

well, let's talk about the economics.

So, there's there's 500 billion to a

trillion dollars of real estate value on

the Florida coastline.

And what used to be a one-in-100-year

event, the average Florida homeowner

historically has been paying about 1% of

the real estate value in insurance.

So, now if your real estate is likely to

be wiped out

one out of every 20 years instead of one

out of every 500 years, the cost of

insurance gets to the point that it is

untenable for most people to pay for

their insurance. Florida has a

state-backed reinsurance provider called

the Florida Hurricane Catastrophe Fund.

And this fund issues debt to meet its

coverage demands because it reinsures

insurance companies in order to

incentivize them to come into the state

and underwrite homeowners insurance.

you should explain the loop here, which

is you go and get a mortgage,

the bank says you need to get insurance

if I'm going to lend you the money to

buy the home.

So then a bunch of insurers need to

decide that they're willing to

underwrite that area. And then when they

give you that insurance, they then want

to lay that risk off and go to reinsure.

Is that the cycle? That's right. And

what's happening is they would normally

underwrite that risk. They would say

this is going to cost you going to lose

the value of your home every 100 years

or every 200 years. But now the models

are showing because of the frequency of

these sorts of hurricane events and the

severity of the hurricane events that

maybe you'll lose the value of your home

once every 20 years or once every 30

years.

And no consumer is going to be willing

or able to pay that much for the

insurance on their home.

So the state over the last several years

has had to step in and effectively

subsidize the insurance. And now the

state reinsurance vehicle only has

statutory liability maximum of $17

billion

in a single hurricane season. Now I

think they got lucky with Milton today,

but some were estimating that the Milton

losses were going to be in excess of a

hundred billion, bigger than Katrina.

It's likely as of this morning the

reinsurance websites are all saying it's

probably a 40 to 50 billion dollar loss

event. Which still exceeds the state's

reinsurance capacity. So you can kind of

think about Florida state's reinsurance

being being effectively bankrupt. It

doesn't really have the capacity to

underwrite the insurance anymore. So the

real question for everyone is is the

federal government going to have to step

in and start to support the price of

homes because if they don't

Well, it's a terrible precedent to set

because if you do it for Florida, then

you'll have to do it in Texas, and

Louisiana, and Mississippi.

with wildfires and floods.

and Arizona, there's there and Texas,

there's going to be no way

to create a clear demarcation of who

gets a bailout and who doesn't. We which

which will mean that everybody will get

a bailout or nobody gets a bailout.

That's right. And if everybody gets a

bailout, and if you think about how

systematically unpredictable, at least

in the southern states,

the weather is, you're going to be

talking hundreds of billions of dollars

a year, probably. The total value of all

mortgages in home homeowner mortgages in

Florida is $454 billion.

And those people typically have, you

know, a debt-to-equity ratio probably on

the 50% to 80% range. So, if the value

of your home dips by 25% cuz everyone

starts selling their homes, leaving

Florida, or they can't get insurance,

then

the people that live in Florida, most of

them have their net worth tied up in

their home, are going to see their

personal net worth wiped out or cut in

half. So, it's not just an economic

problem, it's a social problem that now

there are so many people that have put

their entire net worth into their home,

the value of their home is written to a

point that it no longer makes sense

given the frequency at which homes are

going to get destroyed in

that's probably the reason why they'll

have to do it because Exactly. But then

that calculation will have to happen for

every single homeowner in every single

state at

where this is a this is an issue. Yeah.

Wait, Freeberg, are you saying the

entire Florida coastline is no longer

economically viable? No, it's totally

viable. It's just the question is what

are you willing to ask at what price?

Will you pay 5% of your home value for

insurance every year?

You know, will you pay 2%, 3%?

If the expected life of a house is 20

years, then

no, that's not that's not viable.

It becomes very, very untenable. Well,

it used to be one in 500 year, now it's

probably one in 50, right?

apply to the entire coastline or just

parts of it?

Well, I mean, you saw that the range at

which these events can happen is all

over the place. and the and the

challenge is the events are getting more

significant

because of this warm ocean weather that

we see, this warm ocean temperature. So,

only good news for you, Burke, is that

now people are building the first couple

of floors in high-rises in Miami and

homes on stilts with concrete and with

resistant, you know, salt water

resistant material. So, there is a

counter to this. So, we might

An investment in climate resilience,

that's right.

Yeah, so it might actually be an

opportunity to upgrade all these homes

to resistant ones using another set of

technologies, but the bailout is really

interesting, too, Sachs, because

Florida's got a lot of electoral uh

college votes, doesn't it? Like I I I

hate to bring this back to politics.

But

you know, promising people bailouts is

how these politicians seem to be getting

votes these days.

is anyone talking about a federal

bailout? I mean, is that This is

something you're predicting.

is saying is that there's a there's a

pretty obvious parade of terribles here

where the question will have to be

answered one way or the other. Because

if you only have a $17 billion

reinsurance fund and there's $50 billion

of damage, somebody's going to have to

come in and cover the gap. And if it's

the insurance companies,

expect your insurance premiums to double

or triple. That's right. And that's what

happened in California. And by the way,

State State Farm left a lot of

California most of the

this is what I was going to say. Most of

these big insurance companies have

already done the calculus to realize

that these regions are no longer

profitable enough to justify the

downside risk.

100%. Bigger problem. So, then the the

ones that are left are insolvent

reinsurers or insurers that are just

funding short-term arbs because they

know that the odds are they're going to

get wiped out, so they'll price gouge

effectively. So, you know, a different

example is that here where I live in

Menlo Park, we're not in a flood plain,

we're not in a fire region, none of that

stuff.

But in order for us to get home

insurance, you have to now go through a

risk assessment. And in our specific

case, we were like, "Hey, what should we

do with our roof?" And they were like,

"You got to take the roof off if you

want home insurance." We're like, "Well,

home insurance is probably a good thing

to have."

Was it a wood shake roof on your house?

It was a beau- You saw our house, it's a

beautiful wood shake roof, and we had to

remove it. And the two choices were a

$350,000

like iron

Composite materials, yeah. Or or like

70k for composite. And it's like, this

is insane. And Kev,

the cost of insurance was just egregious

in the absence of

going in one Anyways, we ended up

getting the

For most homeowners, when the cost of

insurance gets to a certain threshold,

you don't have budget for it, you can't

afford it. And so that's a lot of why

the insurers leave. They'll underwrite

anything at any price, but they just

know that most consumers can't afford

it. Here's some other interesting

statistics uh related but unrelated. In

the early 1900s, the city of Phoenix,

Arizona averaged 5 days a year of

temperatures of 110° or warmer.

By the 2010s, Phoenix averaged during

the 2010s 27 days a year where the

temperature was 110 or higher.

Since 2021,

Phoenix averaged

100 plus days. 42 days, and in 2024,

it's been 70 days so far this year that

the temperature is over 110. So this is

affecting And so there's there's

increased risks in California with

wildfires, increased risks with

hurricane. There are a lot of these

factors, and I have friends that work in

reinsurance and in the insurance

markets. Even Even if you don't get

affected by a wildfire disaster, when

that that article was in the Wall Street

Journal, it I think it said that um

the number of average days above 100 was

like 100 something. Yes. And and the

profile They profiled this retired woman

who was an insurance adjuster or

something.

And the whole point of the article was

not that her her house was destroyed or

at risk, but the cost of electricity has

gone just absolutely sky high. Even with

solar panels, even with storage,

you need to basically lean on the grid.

And the grid now just charges you an

exorbitant amount of money. And so these

these folks are paying thousands of

dollars here. So if you imagine the the

trifecta,

you have all of this climate risk that

could destroy your home.

You're paying an enormous premium for

home insurance. And then you're paying

an enormous premium for electricity from

the main line power utilities. It's it's

not sustainable. Yeah. Yeah. And and

just for background, FEMA manages

something called the NFIP, National

Flood Insurance Plan.

And

it's historically about 50% cheaper than

private flood insurance. They have 4.7

million active policies providing 1.3

trillion in coverage.

But they instituted a new risk

assessment system and that caused rates

to increase and

yeah, it's uh because of all this, the

policies have decreased over the last

couple years, meaning less people have

flood insurance at the same time that

these things are getting worse.

And so

yeah, this is a a really tough issue. I

wonder if this is an opportunity,

Chamath,

if

you think about historically how

insurance worked, it worked in

communities where people would help each

other out and do barn raising kind of

events when somebody had a problem. So

if we just put on our entrepreneurial

hats here,

if you look at the cost of insurance, if

a hundred different people bundled the

cost of their homes together, put money

into some sort of platform like an Uber

Airbnb marketplace, and there was some

management structure here of

self-insurance because I know some

people are doing self-insurance for

health care at their companies, for this

kind of thing. Do you think there's

going to be a new business opportunity

here

That already exists, Jason. It's called

a mutual. And those are like a good

chunk of the industry are mutuals where

it's the shareholders are the members

and they all share the risk and the

ownership. But the problem is those

things work because you have broad

geographic coverage. If you had to go

just into Malibu and

self-insure, the rates would literally

be the greater than the value of the

home.

one would pay into it. So, if you

actually if you do proper underwriting,

what's happened in the last couple of

years is all the reinsurance companies

and all the insurance companies have had

to re-underwrite the rates that they

charge for insurance because the

frequency of a disaster has gone up.

Mhm. And the new price that they should

be charging is so high, it doesn't

matter how the capital structure is set

up. It's simply there's a there's one

big event that's going to cause a big

wipeout for a large number. My personal

belief is I think that the the real

estate markets in some of these places

are um

meaningfully mispriced. And

specifically what I mean is that they're

massively overpriced. That's right.

Because I think when you actually

account for the climate damage and the

long-term financial stability of the

insurers and the reinsurers,

I don't think that many of the markets

that

have seen these crazy sky-high prices.

I'll name two to be specific, West Palm

Beach and Malibu. So, both ends of the

coasts.

These things just don't make sense. And

I think people view these things as

investments, but on the West Coast when

you deal with things like soil erosion

and other things, I think it's a there's

it's a calamity waiting to happen. And I

think on the East Coast when you factor

in the

extreme weather conditions, even Jason

your comment about rebuilding these

homes in a more foolproof way doesn't

solve it because it you won't be able to

rebuild the entire state.

There's a lot of people that just can't

afford it.

There's a lot of folks

that will not have adequate coverage.

So, I just think these are disasters

waiting to happen, unfortunately.

Yeah, it it's and Saxby, there is some

movement right now.

A lot of people, even of means, are

renting their homes and so

in the real estate market what are your

thoughts on that? Just

renting versus buying now becoming like

a

something that you know people in the in

the top half of home owners or potential

home owners are now electing to not own

their home and rent.

Have you been monitoring that?

hadn't heard that. I mean the the trend

that I thought was happening was that

you had these big funds like BlackRock

or whatever buying up huge numbers of

homes and then running them to low end

homes, yeah. Low end or medium Yeah. you

know, to families. I thought that's what

was going on. I hadn't heard that

at the high end of the range that people

were renting.

well if you think about it like there's

there seems to be a tap when you have a

$10 million home of what you can

possibly rent it for and it's it's the

the the prices are now making more sense

to keep more sense to keep your money in

the market or in other places and then

rent. I'm just hearing now.

Freeberg, are you are you long real

estate in Florida or coastal California

if you could or do you treat them

differently?

I think they're different but Florida's

like

I mean I don't know how you do the math

on

I just don't know what you do on a

trillion dollars of real estate value

with half a trillion of mortgages

when you have real exposure on loss more

frequently than one in 100 years.

They're to your point they need to be

repriced and how do you reprice those

homes in the significant level that they

need to be repriced without causing

massive economic and social consequence.

That's what's that's what's kind of I

think challenging me in thinking about

what's the path here. So is it a is it a

good thing that I sold my Miami place

last week?

Once again, Sachs makes a great trade.

Pretty awesome. Well done, Sachs. You

top ticked it again. Well done,

Sachs-y-poo.

Just like

I really loved I loved that house. Oh.

It was on the beach side.

loved that house. Where do you think I

stayed when I was town?

You're so selfish. I lost a

I lost a place to stay. I mean the yacht

access alone, being able to get out on

the bay and get on a boat, the the

Sea-Doos, all this great stuff. Ah.

Okay, all right. Let's uh let's keep the

Freeberg train going here. Huge news.

AlphaFold creators just won a Nobel

Prize in chemistry. Two members of

Google's DeepMind AI research team,

Demis Hassabis and John Jumper, received

this year's Nobel Prize in chemistry.

They both work for Google's DeepMind, as

you know, and Freeberg, again, all in

getting there first, explained what

AlphaFold was back on episode 14 in

December of 2020. That was almost 4

years ago.

Freeberg, maybe um you could explain Did

we did we predict that they would win

the Nobel Prize at the time?

you did. I will go check the receipts

using

on. Hold on. Hold on. It was it became

it became much more likely that they

would win the Nobel after they won the

Breakthrough Prize. I mean, just a just

to point this out, but

Yeah, yeah. Shout out Yuri Milner. Shout

out Yuri and Julia.

And Julia.

Because when those guys

won that award for 2023

and you you heard the extent of what

they've done,

it was almost like obvious that they

were going to win a Nobel after the

fact. So, I think the really interesting

thing is actually

in this community, I think the

Breakthrough Prize is actually

meaningfully more relevant and a

positive directional indicator to

Breakthrough science.

Well, it's kind of like winning Sundance

or Cannes. You win the Palme d'Or, you

become a favorite to win at the Oscars,

right? In the Academy Awards. So, that's

actually interesting. The regional or

more industry centric award could lead

to the next one. So, Freeberg, just

explain to us why this is so important

I just think it's I just think it's much

more rigorous than the Nobel. I think

the Nobel can be a little bit gamed, I I

Oh, interesting. Okay.

What do you think, Friedberg? Explain to

the audience why this is important and

and what's transpired since we talked

about it 4 years ago.

There's been a long

challenge in biochemistry on

understanding or predicting or

visualizing

the three-dimensional structure of of

proteins cuz remember proteins are

produced by long chains of amino acids.

And those amino acids are kind of create

like a bead beaded necklace and then the

the whole necklace collapses on itself

in a very specific way.

And that three-dimensional molecule,

that big chunky protein, does something

structurally physically.

And so trying to understand the shape of

a protein is really hard. I mean, we've

used kind of X-ray imaging systems to

try and identify it and try to build

models to identify how does that quote

protein folding work? How do those amino

acids collapse on each other to create

that three-dimensional construct? And if

I don't know if you guys remember in the

early 2000s,

there was a Stanford Folding@Home

distributed computing project. Do you

guys remember this? Yeah.

It would use people's machines and extra

CPU like the SETI@home project to

Precisely, yeah. Exactly right, yeah. So

it like it ran on the background of your

computer. It used your CPU cycles when

you weren't using your computer. And it

tried to model protein folding. And so

this has been a a problem that folks

have tried to tackle with compute for

decades to figure out the 3D structure.

This is so important because if we can

identify the 3D structure of proteins

and we can predict them from the amino

acid sequence,

we can print out a sequence of amino

acids to make a protein that does a

specific thing for us. And that unlocks

this ability for humans to create

biomolecules that can do everything from

binding cancer to breaking apart

pollutants and plastics to um you know,

uh creating entirely new molecules to

running in some cases like what David

Baker did at University of Washington.

He shared the Nobel Prize creating

micromotors, mini motors hmm, from

proteins that he designed on a computer.

And so this becomes, I think this great

like big holy grail in biochemistry and

the AlphaFold project at at DeepMind

inside of Google solved this problem.

And and by the way, since since then

they've come out with AlphaFold 3,

they've launched a drug discovery

company called Isomorphic Labs where

they're

basically predicting molecules that will

do specific things for a target

indication

and then they use the AlphaFold models

to actually design and develop those

molecules.

And there have been literally dozens of

companies that have been started since

DeepMind was published and probably

several billion dollars of capital

that's gone into companies that are

creating new drugs, creating new

industrial biotech applications using

this protein modeling capability that

was unleashed with DeepMind a number of

years ago. So it really has transformed

the industry. It'll be a couple years

before we see it transform the world,

but it's it's it's an exciting kind of

thing, yeah. Not to virtue signal here,

but those are plus-size proteins now,

Freeberg. They don't like being called

chunky. You got to call them plus-size

proteins. Plus-size proteins.

One one really difficult technical

question for your Freeberg. Is there any

way for you to take this amazing

breakthrough

and make Sachs interested in it? Is

there any possible vector here for it to

relate to Sachs and get him off his

Blackberry right now?

Blackberry? I think he's playing chess

with Thiel and J.D. Vance is watching

them play chess.

I think that's what's going on right

now. It's really hard. I mean the poor

audience here is watching Sachs looking

down.

All right, let's keep this train moving

here. Enough of the shenanigans.

Anyway, congrats to the teams, the

various teams that won the Nobel. Yeah.

I mean it's just great.

And and David Baker at the Baker Lab at

the University of Washington, also a

breakthrough prize winner.

Yeah.

What's interesting to me is like these

two Nobels, these guys, but also

Geoffrey Hinton's,

you know, you're really seeing

the convergence of the hard sciences and

computer science.

Totally. in a really meaningful way. And

I think that that's so interesting and

cool.

I think in the group chat, Chamath, you

had an interesting, hey, maybe there

should be a computer science award

for, you know, a Nobel computer science

award. And uh I actually think it's the

opposite now, which is that it's amazing

to see folks using computers

to improve our understanding of the

natural sciences. And I think that

that's a really great place to be. So,

what Demis and John and David are doing

in the life science is amazing. What

Geoffrey Hinton, you know, did, you

know, 20, 30, and 40 years ago and 20

years ago in terms of training deep

neural nets, also really amazing. In

related All computer based. Yeah, all

computer based. And in related news,

Benioff just nominated himself for

excellence in CRM management. So,

congratulations to Benioff on nominating

himself for a Nobel.

What is that comment?

Why are you attacking Benioff? What is

that comment? The audience What did he

do wrong? Yeah, it's just a joke. It's a

joke.

What are you doing?

They're just jokes.

Have you not learned anything from the

Apollo Lucky in Tax to people that

attack you?

AN ATTACK. IT'S A JOKE. Benioff has done

so much for philanthropy. Just ask him.

If you

Dude, he's doing the best he can. He's

doing a great job. This is how I got in

trouble WITH PAUL GRAHAM.

CAN YOU PEOPLE HAVE A SENSE OF HUMOR

about yourselves?

it's not even it's not even funny. If

you had said something else.

I mean, okay, give me give me a funnier

Nobel. Go ahead. Go go ahead.

Benioff runs a $300 billion market cap.

He's chomping at the bit to come back on

the pod and explain why AI is not going

to disrupt SaaS.

Really? Oh, is he? He wants to be back

on the pod?

me. He wants to come on. We'll check in

We'll check in in a hundred billion

dollars.

He had his chance. That chance is

closed. He shot his shot and it did not

land. That door was closed when he

insulted our guest about not being able

to afford the Disney cruise.

you all-in people pores.

Oh my god.

Now you're piling on. Anybody coming to

Dreamforce 2025? Okay, let's move on.

Sorry. Anyways, leave Benioff alone,

Jason.

Leave

It's like

Leave Britney alone. That famous meme.

Leave Benioff alone. So, how many new

enemies do you want to create?

I just it's they're just jokes, people.

Just jokes.

Just when you thought he was running out

of feuds, you know.

I'm not in A FEUD WITH ANYBODY. I'M

MAKING STUPID JOKES. The reason people

tune in is cuz you laugh and learn. Did

you guys see that that tweet?

That uh somebody suggested throwing a

conference with all of J Cal's haters.

JASON CON

J CAL

JATERS JATERS convention

What is it called? Jaters? Jaters, yeah.

J haters

Yeah, Jason haters. Jaters, yeah. I'd

like to shout out my jaters.

They're just jokes, folks. I I I love

you, Mark. Benioff

Uh come on the pod, Zuck.

I think somebody could launch a

successful summit just doing that. It's

like it's like a ready-made audience.

And they're clearly passionate. They're

clearly passionate. All the YC founders

will be there.

Keynote day one, Palmer Lucky. Keynote

day two, David Sacks.

David Sacks

I think it would rival the All-In Summit

in terms of the passion of the fans.

All three of us would show up. J Cal

would be so devastated.

Keynote one Are you kidding me? I think

it's hilarious. Yeah, I would have to

I'd have to keynote. INSTAGRAM

OH. BENIOFF

I LIKE BENIOFF. WHAT I DON'T I'M TRYING

TO MAKE AMENDS with Benioff. He's just

got to have a sense of humor. Oh my god.

Um Megan Kelly

Oh, yeah. Megan

Special fireside chat, Megan Kelly and

Palmer Lucky.

Wait, does Zuck hate you, too? Why does

Zuck hate Oh my god, J Cal was just so

I was brutal to Zach in the early days.

Brutal, yeah. Why?

Well, he just

Anyway, we'll get to it later.

But you're right. Like, you know,

throwing a conference for J haters would

just be That's like a ready-made

Jaters. That is an underserved and

passionate demographic.

be bigger than 10 Passionate

demographic. Just Just look at Zach's

replies.

Community with shared values. Hey, man.

If I can get 25% of those ticket sales,

I'm in. Let's go.

All right. Let's keep the train moving

here.

We have an update on the DOJ's antitrust

suit with Google. Looks like they're

going for the breakup as Chamath

predicted.

You remember the Bloomberg report back

in August. We covered it in episode 192.

Google is found liable for maintaining a

monopoly in search and digital ads. Now,

the DOJ is working

on the remedy, right? Okay. They're

guilty, so now comes time for the

remedy.

And the DOJ is, quote, this is from

Bloomberg, "Considering asking a federal

judge to force Google to sell off parts

of its business." And according to this

filing, the DOJ is specifically

considering structural remedies that

would prevent Google from using products

such as Chrome, Google Play, that's the

app store on Android,

and Android itself to advantage Google

search. 32-page document released by the

DOJ lays out several options, and uh

we'll go through them and talk about

them here.

The obvious one, terminating Google's

exclusive agreements with hardware

companies like Apple. They're the

default search engine there for 30 or 40

billion a year. Samsung, that's a layup.

Uh separating Chrome and Android. My

god, that would be drastic, ripping that

out of the Google ecosystem. Prohibiting

certain kinds of data tracking, that's a

layup as well. Or other behavioral and

structural changes for the company. I'm

going to pause there, Friedberg, and get

your thoughts on this as a former

Googler and you interviewed Sergey at

the summit, but I don't think we talked

to Sergey about this because obviously

he would not be able to talk about it.

So, what are your thoughts here on a

potential remedy? I think we've talked

about this. I I mean, look, I've shared

in the past my belief that companies

that are big

that have excess capital that then

invest that excess capital in R&D can be

a net benefit for all of us.

Look at Bell Labs. Bell Labs had a

monopoly on

through their association with

AT&T

with

developing radar, microwave, the

transistor, integrated circuitry

information theory, everything that is

the basis of the internet, computing

even

nuclear technology and so on. It's

because they had this extraordinary

capital flow from the scale of the

business and they were able to invest in

R&D. Similarly, Google acquired

and invested for many, many years in

DeepMind and we just talked about how

Demis and team won the uh

uh the Nobel Prize for the work that

they did. And they, by the way,

published

the protein structure for 200 million

proteins for free out of that service.

I just want to zoom out for a minute and

talk about the fact that this isn't

about

you know, whether Google has a monopoly

in search that prohibits competition or

in ads that prohibits competition, but

or do is it really worth

penalizing any company that's big,

particularly do we lose the benefit of

those big companies investing in

technology that pushes us forward?

Google also invested in Waymo for years

and years and years which arguably

spurned and drove investment from many

other companies in self-driving

technology and if Google hadn't done

that would self-driving have taken off

the way it did? I don't know.

Same with Kitty Hawk and Larry's

investment in EVTOLs and that that

spawned a lot of EVTOL investing. And

similarly, if you think about Amazon and

their investment in AWS where they were

burning cash for many years.

That turned out to spawn arguably a lot

of uh interest and investment in cloud.

And so, I I don't think that these big

companies are bad just because they're

big. I think we should take apart the

monopolistic antitrust actions and

behaviors that they take and then

identify ways to remedy those behaviors

versus just saying anyone or anything

that's big should be taken apart because

there is a tremendous benefit to be

gained from the R&D dollars that they

all put into things that, you know, move

the whole industry forward. And I think

that leadership's important and needed.

Otherwise, if you've got a bunch of

startups that are trying to get $10

million checks from VCs, I'm not sure

they're going to build a Waymo, and I'm

not sure they're going to build uh

Amazon Cloud, and I'm not sure they're

going to build a DeepMind

you know, protein folding company and

publish it for free. So, I don't know,

that's just my point of view.

Chamath, what's the likely outcome? How

do you How do you think about this

stuff? Chamath, you kind of nailed this

one

pretty good with these predictions. Tell

us we'll be sitting here 5 years from

now, what will have occurred?

Unfortunately, not what Freeberg just

said.

It'll be the opposite. There'll be some

form of forced remedy. I'm sympathetic

to Freeberg's argument. I don't think

that it's really a good thing in the end

because I do think there are some

incredible examples

of

Google specifically reinvesting in a way

that's really

added value in the world. Mhm.

I think the problem though is that

the technology innovation cycle has

gotten too elongated. So, you're not

seeing

creative destruction be the natural

force that keeps all of these companies

in their own swim lanes. And so, they

are allowed to become

too amorphous and too profitable, and I

think it becomes an obvious target for

politicians. I think that's a really

good

observation there about the timeline of

this because if you look at this

I have started now and I know many

people are starting their search journey

on Claude and chat GPT every day. I'm

doing 30, 40, 50 queries and follow-ups

per day. I force my entire team to do

that as well.

And so just as there's an actual viable

competitor to Google, this action has

reached, I don't know, the halfway mark.

This is going to wind up being

completely meaningless acts if chat GPT

does build a viable competitor

co-exister that siphons off search.

Am I wrong here?

Well,

it is ironic that frequently the

government takes actions on these

monopolies at precisely the moment

they're subject to the greatest

disruption. Totally. The same thing

happened with Microsoft in a way, but it

was still a good thing that the

government acted when it did because

there was a risk of Microsoft porting

over its desktop into this new era of

the internet. I think it's still a good

thing to be looking at breaking up

Google. I actually think that would be

good. At the end of the day, it might

even be good for shareholders.

This thing should be probably three

separate companies like we've talked

about in our previous show. But it is

true that Google is facing the most

existential threat to its search

monopoly and it is a monopoly

in the form of

OpenAI at this point in time.

I have one final thought here and piece

of advice for Sergey and the team over

there and I and I tell Sergey directly,

they have to get good at making apps. To

go use chat GPT, you take out the app

and it's a wonderful, beautiful

experience. When you go try to figure

out how to use Gemini, it's like

shoehorned into search results and then

it's like some subdomain. That's why

people aren't using it. Go buy the

domain name chat.com and make a

dedicated app just for Gemini and make

it kick ass. You're You're right. You

suck at apps.

We said this when when you asked

about the bear case of Open AI.

If the DOJ is going to go after Google,

and by the way, the interesting thing,

Jason and I mentioned this to you is

that in the same article that floated

the trial balloon about this remedy of a

Google breakup, the headline in the Wall

Street Journal, which I think was very

purposeful, said Google and Meta. So, I

think that they, if given their

druthers, they being the powers that be

in Washington,

will probably want to take a run at both

of these companies. They'll start with

the one that they think they can

disassemble the quickest, and then

they'll go to Meta afterwards.

My strong advice

to Meta and Google

is

if this is going to happen,

you got to go out

kicking and punching and fighting and

scratching. And I think the most obvious

thing is what you just said, Jason,

which is you are the front door to the

internet.

And there is this completely new

emergent technology.

And where is the same response to chat

GPT

that you had to X, or that you had to

Snapchat, or that you had to TikTok?

Because if it's going to happen, it's

going to happen, and then you might as

well just go for it. Yeah. Build the

apps, make them kick ass, make the chat

GPT alternative, and get it to billions

of people yesterday.

Mhm. That would be the most logical

game theory thing to do

to build up a pool of users that you

will rely on

when

the DOJ tries to come with some consent

decree or whatnot. So, this is the time

to build up the assets now, as

aggressively as possible. Yeah. And uh

selling YouTube would be the ultimate. I

know that the ad networks you pointed

out for your burger are connected.

But if they distributed

and if they spun

I'll give you I'll give you something

about the ad thing. Can you imagine $500

billion

going into Google's coffers in YouTube

shares? They would have $500 billion in

cash, Chamath.

I had a I talked to a company he a CEO

of a of a public consumer-facing company

and this was

in the context of some 80 90 stuff.

And

he said that he and and two other CEOs,

the three of them you guys would all

know. These are very big companies. The

three of them combined are particularly

large.

And they said they've had multi-year

road maps to try to build a reasonable

set of tools in advertising and it's

been impossible.

And partly why is that the the tools

that the big folks offer are so good

that they just cannibalize and run over

the entire market. And so what they hear

from CMOs is we would love to advertise

on your company, your site, but A, your

tools are substandard and B, even though

your inventory is cheaper, you just

don't give us the same scale and breadth

that we get in these other big places.

I'm not saying that that's either right

or wrong.

But through the lens of probably what

the DOJ sees is when a lot of these

folks write letters to them talking

about what they're going through. This

is what they're saying and I suspect

that if you could actually have

a more fragmented market in some of

these key markets, it's going to be a

little bit easier for these smaller

companies to have a business. Now, you

could say, well, tough luck, you tried

and you couldn't build it. I get that

argument and I think and I think that

that at some point that is legitimate,

but the problem is if you're public and

you're trying to make your company

profitable,

what do your engineers want to work on?

They want to work on consumer-facing

forward features. And so what always

falls off the list? It's the stuff at

the end. The ad tech, yeah.

And so anyways, it's this recursive

negative loop that a lot of these other

companies are in in the shadow of these

big companies that I think is going to

cause the DOJ to try to do something.

You know, this is a great setup for M&A.

It's a great setup for IPOs, starting to

look like. And this is a multi-

administration case that's been going,

right? I think it started under Trump,

went into Biden, and is now going to

continue on to Trump or or Harris.

So, what are your thoughts here, Sachs?

Well, in terms of the political

environment for M&A next year? Yeah.

Yeah, I mean, so obviously it depends

which administration's in power.

A lot of Democrats,

you know, prominent Democrats in tech

like Mark Cuban or Reid Hoffman have

been making the case that if Kamala is

president, she's going to be much more

hospitable and friendly towards M&A. And

they've been saying explicitly that they

want Lina Khan fired.

Well, in response to that, AOC just came

out and said, "We're going to have a

throwdown if you do that." So,

I don't I don't expect

I would not expect a substantial

difference or improvement in the

in the regulatory

permissiveness towards M&A if if we have

a Democratic administration. If the if

you have Trump in office next year, I

think that there there will be an

opening up of of M&A. I think the

Republicans have their own issues with

big tech, but those issues tend to

revolve around censorship and

bias in search results and LLMs, things

like that, as opposed to bigness per se.

So, I think it will be easier to get M&A

done next year if you have a Republican

administration. Absolutely. I am going

to be printing money in a Trump

administration. It is going to be

obscene how many M&A deals and IPOs are

going to occur. There is such a huge

backlog.

But I do think there I do think the

Democrats want to get this moving as

well. And I was talking to Reid Hoffman

uh and you and Peter Thiel in the

Illuminati meeting. And uh they voted

190 to 2 to replace Lena Khan in the

Illuminati meeting. Chamath, why didn't

you make the Illuminati meeting last

week? I'm shocked that you weren't

there. I'm not I'm not invited to that.

Pe- People don't know that you're being

facetious, Jason. Oh, really? They don't

understand that I'm joking about the

Illuminati?

They often don't. They often don't.

Well, I'm sorry to the low IQ

listeners who don't know that the

Illuminati is not real.

Oh, now now you're insulting the

audience?

No, I'm insulting the ones who believe

there's an Illuminati.

He's trying to sell tickets to the J

Ball.

Sell tickets to the haters ball.

With Buck Nasty. Zuck Nasty. Jane

Caldwell is the biggest hater in the

tech industry.

You ever see the haters ball, Sachs?

I have not seen it.

Chappelle's Show? No. Chamath, it looks

like between the time we mentioned it on

the pod, it's it's actually happening.

Here it is, the haters ball is

happening. There it is. Lena Khan,

David Sachs.

Wait, why am I there?

Chamath, cuz you're a headliner. You're

you organized it. I think you're the

host.

to be a keynote?

You're the MC.

I'm the I'm Okay, wow, I'm the MC. There

look, there's there's Zuck Nasty and

there's Palmer Lucky.

You guys don't know this bit from

Chappelle?

No.

The haters ball from Chappelle? Oh my

god, it's the funniest bit

on Chappelle's Show. It It's literally I

mean, I saw a lot of Chappelle's Show. I

never I don't remember that one. Oh god,

just show the real picture, Nick. Um on

the Chappelle's Show, they have all of

these pimps

who have a a yearly convention, which is

their player haters ball.

this. I've seen the player haters ball.

is sit there with like a toothpick in

and they hate on each other and make fun

of each other.

I've seen this. I've seen

It is the funniest bit in the history of

the Chappelle's Show. All right, let's

keep the train moving here. CRV is

giving back or maybe not calling down

275 million from their LPs. Charles

River Ventures, shout out to my pal

Jordan Zachary and Greek brother from

CRV.

Historically, they invest in early stage

startups. They did DoorDash, Airtable,

Twitter back in the day.

They had two funds that they raised back

in 2022, billion-dollar early stage fund

and a 500 million growth fund.

Sometimes people call that an

opportunity fund or a select fund.

The New York Times reported CRV is going

to give back about half of that 275

million to investors or technically

probably not call it down. The four

partners at CRV

gave an exclusive to the New York Times,

so either getting ahead of this story or

maybe, you know, who knows what the

motivation here is.

But the reason they gave is that the

market conditions for late stage have

worsened dramatically and that the

valuations are still too high. Yes, the

rent is too high.

And that there aren't any exit options

as we just talked about with the

administration, no IPOs, no M&A.

And that VC map doesn't work in the late

stage. So, I'll just stop there. There's

a bunch of other notes here. Obviously,

this isn't the first time this has

happened. I think Founders Fund cut the

size of its eighth fund in half from 1.8

billion to 900 million. They didn't

actually give the capital back to VCs

like they're saying CRV did here. Again,

I'm not certain if that's what's

happened or not.

They put the extra 900 million into its

ninth fund if they decide to raise that,

which I'm assuming Founders Fund will.

Chamath, do you have any thoughts on

this?

I I guess trend We have two stories

here, so I don't know if you

Peter Thiel Peter Thiel did this and he

gave back

quite a large piece of his fund a couple

of years ago and then CRV just did it.

I I want to make sure I get the citation

right. I think it was Thomas Laffont at

Coatue

who said this. It was really powerful.

It made a huge impression on me, which

is that the Nasdaq creates about 800

billion dollars

of enterprise value a year. And he

brought that up in the context of

private markets have to exceed that in

order for it to be a real viable

alternative to just owning public

indices.

And so, if you factor in illiquidity

risk and the duration,

you have to probably generate, I don't

know, a trillion, 1.2 trillion dollars

of enterprise value in private tech

every year.

That just seems like it's really hard to

do. Where is all of that value getting

created?

So,

I think that venture needs to go through

a phase where it re-rationalizes. You

know, this is sort of what I said at

David's LP day, which is I think that

LPs have made a couple of very big

mistakes.

And I think the biggest mistake that

they've made is by smearing too much

money across too many general partners.

And I think if you had to redo it,

A, it's probably a lot less money in

total, but B,

and the example I gave there was instead

of giving $50 million to Craft and $10

million to somebody else, you're better

off giving $60 million to Craft and not

even having that other GP.

Because that GP makes everybody's life

complicated. They overpay, they mispay,

they're probably not supposed to be a GP

in the first place, and so they force

returns down.

And then when you contrast that again to

a public market that is systematically

creating

$800 billion of enterprise value a year,

this is an incredibly tough game and

it's getting much, much harder. Mhm. So,

I think that if you just take a step

back, these are the right things to do

because you're much better off having

a smaller pool of capital that you can

concentrate into the things that matter.

You're probably better off having

smaller teams versus bigger teams.

And you're probably better off trying to

forge LP relationships where they're not

doing 50

fund investments because it just makes

the entire industry lag

public liquid alternatives, and I think

that that's just not good. Peanut butter

getting spread a little bit then there.

Any thoughts Freeberg on

this trend, if we can call it that? It

or is this like maybe they're reacting

right as the market is changing and

valuations are getting more reasonable

and the exit opportunities are getting

more reasonable. It seems like this was

the right reaction 2 years ago, but

maybe it's the wrong reaction now. What

do you think, Friedberg? For a venture

firm to return capital, they need to

have at least one or two big winners.

And so if that winner needs to be a 10x

or a 20x or a 30x of the fund

because most of the other investments in

the fund are not going to work,

you need to be able to enter at a

reasonable price and there needs to be

enough opportunity relative to the

capital trying to invest in that

opportunity out there for it to make

sense. So in a market where there is

excess venture capital,

where valuations are at a premium,

and where you don't see the exit path,

the M&A or the IPO events that make

sense that you can actually realize that

model,

you should take less capital and make

fewer sure investments. And I think that

that's what it some folks have realized.

They don't want to be chasing

um you know, highly valued inflated

opportunities

and they don't want to be putting

capital into tier B

or tier C opportunities just for the

sake of deploying capital. This is a

really interesting moment where you can

kind of see

who are the the right folks in terms of

thinking long-term in Silicon Valley,

long-term in terms of building an

investment practice in private venture.

And maybe who are folks that are trying

to build their AUM stack. And folks who

have done reasonably well, like Founders

Fund has probably the most exceptional

track record in Silicon Valley as a

venture firm.

They are very cognizant of the market

conditions and I think that they're

being very smart. By the way, the other

thing I've heard from LPs is they're

similarly

trying to find more concentrated capital

themselves. So they're trying to put

more capital to work in fewer managers.

And so there's a real weed from the

shaft moment happening in Silicon Valley

venture right now. What I think a couple

years ago was hey, everyone's going to

go do a startup. A few years ago became

everyone's going to go do a venture

fund. And now I think the frost that has

occurred because of that is being

cleared out. And to just explain this

math before I get Sachs'

thoughts on this. If this was a $500

million fund, let's say they were

putting $25 million into each

we'll take management fees out of it.

$25 million into each opportunity at a

billion-dollar valuation they would own

2 and 1/2 percent obviously of those

firms. They need to get probably a $30

billion

power law exit a 30X acts in order to

just return the fund. There'll be some

dilution obviously along the way. That's

why it's not 20X. And the number of

companies that go from a billion to 30

billion

per cycle is incredibly low. Uber,

Coinbase, Airbnb.

I It's a really short list, huh? Sachs

in recent history?

Robinhood?

Look, just just go back to the CRV

thing. You said at the outset of the

conversation that this was either a

growth fund or an opportunities fund.

That makes a really big difference.

Explain, please.

Because well, an opportunities fund

typically exists

to back up your winners. In other words,

if the venture fund is producing some

big winners, the opportunities fund

exists to deploy more capital into those

into those companies. As opposed to a

growth fund, which is you'd be

underwriting brand new companies from

scratch. But typically an opportunities

fund is limited to companies that you're

already an investor in through your

venture fund.

So, that makes a big difference. I mean,

if CRV has a billion-dollar venture fund

and only a $500 million opportunities

fund, it may just be the case that they

don't need all of that capital to back

up the winners. They can do their pro

ratas out of the main fund. So,

I I suspect that that might be what's

going on. I actually think this is a

pretty good time to have a growth fund.

A lot of the

Well, because a lot of the crossover

capital has left the ecosystem. Okay. A

few years ago

and that sort of cohort, SoftBank,

Masayoshi Son. Yeah, well, Tiger and and

SoftBank are still around, but there are

other

very large investors, hedge funds, and

so on

who had come into the ecosystem with

billions of dollars a few years ago, and

now they've left. And some of those

funds that you're talking about, like

Tiger, used to be $10 billion funds, now

they're $2 billion funds. So

been right-sized. They're not violently

doing I mean, the the Tiger deals, my

understanding was they weren't joining

the board in a lot of the cases, and

they were outsourcing the diligence, and

that was a pretty violent pace. I don't

know all the details.

is the best time in probably five years

to have a growth fund. Hm, interesting.

But to to your point about the size of

the venture fund, the bigger the venture

fund, the bigger the winner that you

need to make that pay off, obviously.

Yes.

And so, because of the power laws, so to

take an example,

I don't know, let's say you've got a

billion-dollar venture fund.

Let's say that at IPO, you own 10%

of whatever that that winner is.

And because of the power law, your your

fund performance is really determined by

your best outcome, right? Yep. So,

in order to take a $1 billion venture

fund and say deliver a 3x, Hm. you know,

so 3 billion of returns, and your best

company you own 10% of, that implies you

have a $30 billion winner in that fund.

And there are precious few outcomes

where you have a $30 billion

IPO, right?

Yeah, I mean, you can count them on two

hands the last cycle, like I just did.

You got you got Uber, you got Robinhood,

you got

Coinbase, Stripe will eventually come

out. You got SpaceX. Well, that was two

cycles ago. So, I mean, Yeah, you're

going to need to have a meaningful

ownership position in a massive company

in order to make a fund that big pay

off. The the data that I think LPs look

at shows that smaller venture funds tend

to perform better for this reason. 500,

600 million dollar funds. So yeah, I

personally wouldn't want the pressure of

a billion dollar venture fund. That

would be really hard. As a five or 600

billion dollar venture fund, you kind of

need to have or want to have like a

decacorn

outcome to make that a great fund. But

to have to have a 30 billion dollar plus

outcome, it's it's even more difficult.

Moving on, Pew just published uh some

really interesting research on TikTok.

Uh if you don't know the Pew study,

they've been doing it for decades. It's

very well respected um and uh bipartisan

or non-partisan. Four in 10 US adults

aged 18 to 29 are now regularly getting

their news from TikTok. Here are some

charts for you to take a look at. As you

can see, the younger generation is

really spending a lot of time on TikTok

and getting a lot of their news there. I

know this because

uh yeah, I I've I've talked to a bunch

of kids about this and

people that use TikTok, 52% are

regularly getting their news from the

platform. And

that number has skyrocketed compared to

other social platforms. Take a look at

this chart. Here's X, 59% of people say

they get their news at X. It's really a

news platform, so that makes total

sense.

You look at Facebook, it's you know, 48%

right now. Reddit 33%, YouTube 37%.

In 2024, Instagram 40% but TikTok 52, up

from 22%. So it's no longer just dancing

and this is the reason I think many

people in the government

were concerned about the attack vector

that the CCP would have in the United

States since they still control the

company. For services like Snapchat,

LinkedIn and WhatsApp and Nextdoor, it's

below 20 below 30% get their news from

there. There's your Truth Social there

uh Sachs, 57% of people get news there

and Rumble 48%. So what do what's your

takeaway from from this? Just Sacks,

looking at it and this impact that

TikTok has, is this concerning on a