All right, everybody. Welcome back to

the All-In podcast.

The channel's been active. We're in the

afterglow. We're in the All-In Summit

afterglow.

It's so glowing that Friedberg couldn't

make it. He has been riding a high. Nick

told me that in the last week.

Just we we've only put out a half the

clips and they've already gotten 20

million views.

Oh my lord. I you know, I I I

So we'll be we'll be around 50 million,

I think, when all the clips are released

and you let it

bake for a couple of months. That is an

astoundingly large amount of reach.

Yeah, and that's just YouTube. We're not

doing it on the podcast feed right now.

YouTube and X. Well, hopefully we get it

on the podcast feed, we get another 50

million.

But Friedberg's in his afterglow,

couldn't make it, but he's very busy

right now.

Look how happy he is. The summit went

well. Is that marijuana?

Think he's making potatoes. I think

that's his farm, but I mean the smile

is incredible.

It's marijuana.

It's Friedberg's version of founder

mode. He's in founder That's Friedberg's

founder mode. He's hitting the bong. His

founder mode gives him the munchies.

He is he's in the afterglow

and he won't be with us this week.

But He he organized such a great

conference, don't you think, J Cal? He

did great. I mean, he really took charge

of that and he crushed us and did an

amazing job.

I'd like to give him his flowers,

absolutely. It is like at least a

trillion times better than the first and

at least 50% better than the second. I

mean, that's how it should go, you know,

when you create something in the world,

Chamath, what you want to do is you want

to you want to hand it off to

professional management to then scale

it, right? Not everybody can do the

creative act of actually forming

something. You need to have these

operators to go and then execute your

vision and I just want to give Friedberg

his flowers for executing incredibly

well. We all play a role, Chamath. Sacks

launched a tequila company. I want to

say thanks to Friedberg. He did all of

these great speakers. Big thank you to

our CEO John who put together all the

operations. Nick did incredible. Nick

did incredible incredible job with those

opening graphics. They went viral. Zach

helped with the graphics. You had young

Spielberg chipping in. You had Laura did

an amazing job with stage management.

And of course, you know, I focused on

the moderation. I got a lot of great

things. So everybody plays a role. You

got Sacks with the tequila, Friedberg,

Laura,

Zach, Spielberg, Nick, John. Everybody

brought something to the table. So

congratulations to everybody.

You scale through people. That's it.

Scale through people. That's it.

Did anybody

Nobody got the joke.

We Chamath, everybody contributed. You

understand?

Sacks, new tequila company, John,

operations. You have Friedberg, content.

Me with the I mean, the world's greatest

moderator up there. What was Chamath's

contribution? Oh, yeah. Chamath showed

up.

Chamath

Chamath looked great.

I showed up.

That's just He showed up and looked

great. I brought my two votes and I

brought my vision. Absolutely. I would

also say

Fan favorite. You What you really did

that was amazing was you took a lot of

selfies. I was very proud of both of you

with the fan service. The fans were very

pleased that you guys took so many

selfies. You know, we got a lot of

feedback, too,

coming in. So

it was uh pretty pretty great feedback.

Do you think that you did better as

moderator because you finally let go of

just the conference organization? What

do you think?

Yeah, I think that you were able to

focus on your unique value add instead

of immersing yourself in a bunch of

details that could be handled by the

team.

I agree. It was absolutely fantastic.

to get you to let go.

Well, you know, you you have

It's a It's a fair point. I I did People

did say my moderation was dialed in and

I appreciate that positive feedback from

everybody and yeah, there is something

to

having people you can trust with the

content.

your moderation was excellent.

this time. It was better than before

because I think that you're actually

exceptional as a moderator and I think

you're mostly average as a conference

producer.

But I

I do think as a moderator you're

excellent. I mean, like some of the most

memorable moments were you

basically drawing out contrasting

opinions and the way that the people

engaged with them was so healthy and

good. That was the I think the recurring

theme. So I give you an enormous amount

of credit. I think you did an

exceptional job, but I also think it's

because you were able to focus on what

you're good at.

Yes. I I do agree with that. I was

talking to Jade about it and she said

and and Nick also pointed out you were

really dialed in, J Cal. What what's up?

And I said, I'm not worrying about the

party and the vendors and the front desk

and the sponsors and it is actually

you're able to to focus.

Did you have some favorite moments

yourself there, Sacks? Any favorite

moments for you or panels or things

maybe that exceeded expectations for

you?

Well, I thought the Mearsheimer Jeffrey

Sachs panel was great. I thought it

would be, which is why I helped organize

it, but I was just glad that the

audience So many people in the audience

reacted and said that was the surprise

hit of the conference.

I would say that was my favorite of the

event, one of the best panels I've ever

been part of.

the most viewed. It's like slightly

above Elon's one.

Really? Oh, just behind you. Elon

slightly ahead, but yeah, it's still

like growing. It's like finding an

audience. Well, I think that I think

that if you if you look at the one from

last year, Graham Allison, where he got

a standing ovation. The thing is there

are these village elders where

they are at a point in their life where

they're willing to just be a truth

teller, but

often times they're deplatformed and we

have the ability to actually bring some

of the smartest of them on and give them

a voice and it's incredible how much

they resonate cuz what they say is so

logical and sensible.

That's a That's a really important thing

that we have now at our disposal and I

think that people are really appreciate

it. You know, so we're like a I think

we're doing a really important job in

doing that. And now the question is what

village elders do we get next year to

keep, you know, being truth tellers?

Well, give us your thoughts, you know,

there's an All-In

Twitter handle and he's Chamath, David

Sacks and I'm at Jason and Friedberg's

at Friedberg. Just tell us who you think

would be great. But Sacks, I know you're

super excited and want to give Biden his

flowers. The Fed just cut rates 50 bips

and the stock market is tearing it up

right now. On Wednesday, Fed cut

interest rates by a half a percentage

point,

taking them down off of a 23-year high.

We've been talking about this God for 2

years here on this podcast. First rate

cut since March of 2020, which is about

when we started this podcast. J Powell

basically said the Fed thinks inflation

is coming down to around 2% nicely

and they don't want the job market to

soften any further than it already has.

He also mentioned immigration has helped

soften the market the labor market as

well, obviously with all those new

people looking for jobs. So in the last

2 months, July and August, CPI has been

at a two handle. We talked about that.

2.9% in July, 2.5% in August. Here's the

CPI over the last decade.

Obviously, massive boom

in interest that you see there from 2021

to 2023.

Many obviously think we're going to have

more rate cuts, probably 25 every

meeting for a little bit.

And um

Dow's already at an all-time high,

surged 300 points on the news.

Here's

Here's some interesting data about the

50 basis point kickoff cuts. So this is

where it gets interesting, Chamath. Fed

only started publicizing their interest

rate changes in 1994. Since '94, Fed has

initiated a cutting cycle six times.

Here's the chart. Take a good look at

that. '95, '98, '20, '19, they started

with 25 bips. '01

and '07 after the great financial

crisis, they started with a 50 bip cut.

So obviously, there was an emergency 50

bip cut in March of 2020 when COVID hit.

'01, '07, '20, '20, very severe

situations.

And the What happened in the markets is

what I want to discuss with both of you

today. In 20 2001, market fell 31% in

the 2 years after

that rate cut. In 2007, market fell 26%

after 2 years. So

and 2020, despite all the fears, market

ripped 44% over 2 years. What's the more

likely scenario, Chamath? Is this

similar to the dot-com great financial

crisis or similar to 2020?

Well, I think 2020 you have to put it a

big asterisk because the question is

what would have happened had there not

been

COVID and had there not been an entire

global shutdown. So if you go back to

that chart, you could probably just

extrapolate

and cut out that part that's flat

because the part that's flat from 2020

to 2022 was largely artificially created

because on top of that we injected so

much money into the economy. The reality

is we probably would have raised at some

rate of change that you could have

predicted from 2016. So what do you What

do you take away from that? I think that

you have to like

realize we're

at a point in the economy where you cut

rates because there's tension.

And there's tension between employment

and unemployment, there's tension

between earnings

growth and contraction.

And so, it's a stimulatory move.

So, if you look through that stimulatory

move, why is the Fed doing this and why

will they cut? Probably all the way down

to 2% or 3% by the end of '26.

It's because we now need to stimulate

the economy again.

So, the reason why markets tend to fall

once the rate cut cycle starts

is because the next couple of quarters

sort of demonstrate what I think the Fed

is expecting.

Which is that there's pressure in the

economy.

We have not seen that flow through

in earnings or in how companies describe

markets on the field by and large,

except for a few.

So, I think this part of the cycle now

will be about all of these companies

telling us whether there's nothing to

see here or whether there is actual real

pressure. And if there is real pressure

it'll probably look like the several

times before where you're just going to

have to contract the value of financial

assets because they're just not worth as

much when they're earning less.

Okay. Sachs, any thoughts here? Just

balls and strikes?

Well, I think a lot of people are

commenting on the fact that the only

other two times we've had a 50 basis

point rate cut in modern history, it has

been just before a recession.

So, I think this happened

in 2001, 2007, right before the

recession. And the Fed had to do a

dramatic rate cut because they could see

in the data that things were weakening.

So, a lot of people are asking the

question, well, is that what's going on

here? Now, Powell's comments though are

indicating

that the economy is in good shape. He

said the economy is in very good shape

that um

basically indicating that they had tamed

inflation.

And that they would look to cut another

50 basis points this year.

So, Powell's

rhetoric is

uh

in a way at odds with the magnitude of

this cut. The you know, so why didn't

they just cut 25 basis points? I think

people are trying to figure

that out. Reading the tea leaves into

Reading the tea leaves. why 50? Cuz they

could just do 25 a month. For 5 months

as opposed to economy is hot. Yeah, if

the economy is hot, why wouldn't you

tiptoe into rate cuts

uh and just do 25 now? That's the key

thing. If you look at the the dot plot

and if you look at where the smart

financial actors are betting where rates

end so, it's hard to sort of like look

at any point in time, 50 now, 25 later.

What does it all mean? It's very hard to

know, but what is much clearer is where

do we think terminal rates will be in

even in the next 18 months.

And it is dramatically lower from where

they are now. And I think that supports

Sachs, your that argument that you just

made, which is

if you're going to basically

cut this aggressively over the next year

to year and a half by the estimates of

very smart financial actors whose job it

is to spend every day observing the Fed

then they must see something. Because

otherwise, as you said, you could take a

much more gradual approach. And so, I

think that the

smart financial actors are guessing

recession, or guessing contraction.

I think what they're also guessing is

similar to non-farm payrolls

we're going to go through a couple of

difficult GDP revisions, probably

downward.

And I think that will have an impact to

people's

sense of how the economy is doing even

more than what their sense is today,

which is already teetering on it's at

best okay.

And I think all of that has to play

itself out. So, it's going to be a very

complicated and dynamic fall in that

respect.

Yeah, and and I think so much of this

has to do with

unemployment. Uh we had that period

where so many jobs were available.

Remember we talked about it here, 11, 12

million jobs available at the peak.

We can debate the numbers, of course,

but we all saw it where you just

couldn't hire talent in America. There

were so few

people available to to take positions

and man has that changed. And you get to

see it on the ground in early stage

startups where

this whole narrative, I don't know if

you saw it in your board meetings, but

hey, we can't find a person. Hey, we're

looking. Hey, that search is still

going. We're still looking for a

director sales. We're still looking for

sales people. We're still looking for

developers. We're still looking for

operations people. Now, it's the

opposite. It's like I I just I'm hiring

producers here in Austin cuz I'm

building at my in-person studio.

We had like

I don't know, a dozen viable candidates

for this position and I had a hard time

picking between you know, the top three.

Now, that's distinctly different than my

experience for the last 5 to 10 years

where

you were like how do we how do we fill

this role? So, I think that employment

has been broken. And that's the thing

that has me concerned because with all

these people who came in through the

southern border

and then you have

people outsourcing to other countries, I

wonder if Americans

are going to lose so many of these

mid-paying jobs and this will dovetail

into our next story about Amazon making

cuts.

I'm very worried about the the hollowing

out of the upper middle class, that

elite group of $150,000 jobs that then

employ nannies and spend money in the

economy. I wonder, I don't know if

you're seeing that in your company,

Sachs.

I'm not worried about the hollowing out

of that that class.

You you have disdain for that. But I

mean, just in terms of the labor market,

what do you see, you know, in companies

right now? You know,

hiring, the talent pool, etc. Well, I

mean, in tech things are are pretty

good. I mean, they they're not as

absurdly frothy as they were during the

bubble of 2020 and 2021, but things are

good. You have this huge

AI tailwind now and there's just a ton

of investment going into AI. There's a

little bit of a tale of two cities going

on. If you're in AI, things are really

bubbly and if you're outside AI, they're

they've returned to a much more normal

levels in terms of valuation and

company operations, all that kind of

stuff.

Just to go back to the state of the

economy for a second. The reason why a

lot of people were predicting a

recession

including me for a while is that the

yield curve inverting has been an almost

perfect gauge of whether a recession is

coming. It's when basically the Fed

raises short-term interest rates above

long-term interest rates. Normally

long rates are the ones that should be

higher because investors demand a higher

rate of return to tie up their money for

longer. So, something is really

off and kind of broken when short rates

go above long rates, the yield curve

inverts. And it's always been the

prelude to a recession. But the

recession doesn't come when the yield

curve inverts. It usually comes when the

yield curve de-inverts. And the reason

for that is because the Fed now sees

weakness and dramatically cuts the short

rates. So, in other words, it jacks up

the short rates to control inflation.

That works, it trickles through the

economy, the economy cools down and then

the Fed says, "Oh [ __ ] maybe we've

overcorrected." They slam on the brakes

and then they cut rates to basically

make up for the effect in the economy.

So, the yield curve has finally

de-inverted and the question is just do

we now get that recession or did the Fed

manage this to a soft landing? I don't

think we know. I'm not

I'm not like calling a recession, but

this is the the thing that people are

concerned about.

Yeah. Well, Sachs, we were talking about

AI in the group chat, right? Yeah. I

think it's now becoming really clear

that call centers are going to be the

first really big disruption caused by

AI. Yeah. I mean, all the level one

customer support is going to get

replaced by AI. I mean, LLMs plus voice

cuz

you know, it OpenAI just released their

audio API.

You saw that. At the All-In Summit, we

released

a Mearsheimer

AI. Yeah. Where we trained it on all of

his work and you can go to

mearsheimer.ai and ask it questions and

it will tell you the answers in his

voice cuz we cloned his voice

using Resemble AI. Anyway, so AI can do

voice now and it can be trained

extremely well on large data sets to

give you answers to questions, which is

pretty much what customer support is.

So, I think it's now becoming clear that

I I think within the next two to three

years you're going to see a massive

disruption in that industry.

that massively and I think there's

another underreported story, which is

people don't like to call and talk to a

customer service agent, like an actual

human, if they can avoid it. They would

much rather go on YouTube and say, "How

do I fix this?" Or, you know, ask

ChatGPT, "How do I fix this?" It's like

I don't want to waste another person's

time. Just give me the answer as quick

as possible and AI will give you the

answer quicker. YouTube will give you

the answer quicker. I've had so many

times where I have people who work for

me who are like, "I don't know how to do

that." And I literally would walk up to

their computer and load YouTube and type

in

"How do I blank?" And there's a video

there. Watch it on two speed, you can do

it. That's what's, you know, going to

also kill this. Like I I don't want to

talk to a human. Just change my flight.

Just

you know, answer my question.

Yeah, I mean, you talk about disruption.

Call centers are a very big part of the

economy in certain geographies. Oh.

Denver, Salt Lake, I mean, parts of

Florida. I mean, there's

Yeah, exactly. It's a really big deal if

like half the cost gets ripped out of

those call centers. Where would you move

those people?

If you if you had your choice, could

they move to sales?

Well, I think sales will be the one

that's disrupted after customer support.

But

but I don't know. I think it's going to

be very disruptive. One of the reasons I

think this is, you know, in the early

days of LLMs, people were saying that

legal services would be disrupted and

you saw some very highly valued startups

rocketing up based on that.

I think the problem with that is the

error rate. So, when you think about AI

applications, you have to think about

what is the tolerable error rate that

the industry will allow because we know

that AI's get things wrong, they can

hallucinate

and you're never going to be able to

make it perfect. I mean, you can improve

the quality, but it's still going to

have some errors and

when you're dealing with like legal

services for example,

you just can't have mistakes. It's just

not tolerated. However, customer support

is different. Customer support is

already organized

into levels, level one, level two, level

three based on difficulty.

And there's already in a sense a

mechanism for failover if like the level

one customer support

person can't answer the question, they

kick it up to level two.

So,

there's a place for

LLMs to start in customer support, which

is replacing all the level one and then

working their way up the chain to level

two as they get better and better. And

so, what I'm saying is that

the level of accuracy now, especially

with the new PhD level reasoning models,

is good enough.

And we don't need to wait for like some

perfect LLM model and I think this is

why this is going to be a big big

disruption. And millions of people

potentially are going to have their

their jobs disrupted or at least

transformed. Well, it could be the end

of the entire career as well, Chamath,

if you were to look at this four by four

sort of quadrant chart that Sax is

describing, which is

the cost of an error, you know, and

um the actual complexity of the job,

perhaps, or the cost of the job. How do

you How do you look at this? I know

you're

working on software that kind of does

this with your startup as well.

I mean, I'll preview

one

use case

from 8090 which is pretty stunning.

You know, we work with an a very large

regulated highly regulated company.

Public company.

And they have

a very complicated set of people and

processes

because of the the field in which

they're in.

And David, your point is exactly right.

It took us

a fairly long time,

but we're at a point now where we've

been running AI-powered software

versus the

old legacy deterministic solution

and we've been running it at 100%

accuracy now for about 10 days.

And so, this is still very new.

And since it's an incredible thing

because to your point, our first version

was like at in the mid-80s, then we were

in the mid-90s, then we were you know,

97, 98%, but there were still errors.

And it just took a lot of engineering to

figure out how to get to 100, but now

it's at 100 and it's been consistently

at 100.

And so, we're all kind of like

scratching our head because now the next

step is, well, what do we do?

To your point.

What What do we do? Do we So, we're

we're figuring that out right now.

But the art of the possible is that I

think well-crafted AI software is

as good as deterministic software in the

sense that the error rates will be

equivalent

in production

and at the level of

a very highly regulated public company

and I think that's the gold standard

because in those sectors, those

companies have zero tolerance.

It's not a toy. It's not even, you know,

level one customer support.

It's system of record type work. Yeah.

But it shows what's possible and to your

point, Sax, we're doing that today even

though they're the best models. Imagine

how good those under the underlying

models will get in a year from now.

Yeah.

Right? And we'll be able to take on more

and more work. It's It's very stunning

actually. It's really Have you guys

worked with the 01 preview yet? I I just

literally have been using this new

reasoning engine that OpenAI released

and it is extraordinary and it's kind of

thinking about the next three or four

prompts you would do and I literally

just got this while we're on the show.

I've hit the I've hit the limit for my

paid account cuz this thing is so

intense on compute, I guess. Well, the

thing with 01 is that I think it's

starting to add reasoning, but the way

that you do reasoning

is sort of this idea that you have this

chain of thought. And I think that

that's a very powerful, but early

concept.

And as we refine those

ways in which these models get to better

answers, the wonderful thing is that

OpenAI will preview 001

and then they'll have the actual 01

build probably in the next couple of

months, which will be probably pretty

spectacular. But then you'll see

something from Claude, you'll see

something from Lama and the real

art, I think, and this is where I do

think it's a little bit of alchemy

still, which I think is good because it

it keeps humans involved, all of us

involved. Yes.

Is how do you stitch all of those things

together to get to a 0% error rate? What

What Sax said, you know, how do you

minimize the blast radius and how do you

make sure these things are super high

quality?

Right. Well, and people don't It's still

a very hard technical problem. Go ahead,

Sax, and then I'll I'll show you what

So, yeah, one of the reasons why I'm

bullish on this customer support use

case is because there's a very large

data set to train on. You've got all of

the product documentation that companies

have already created. You've got all of

the previous email support, you know, so

and calls, yeah, the calls have been

recorded so you can now train the AI on

that. So, there's a very large

body of data to train the AI model on

and it's not necessarily the most

proprietary. It's not like dealing with

people's medical records or or even

confidential legal documents, something

like that. So, the data is readily

available and then the foundation models

are getting really good. I think there's

a big question here about value capture,

which is there's a number of startups

now that are becoming very highly valued

that are chasing

this disruption, this sort of customer

support agent disruption

and they're getting into very high

valuations, I even unicorn valuations

already.

And the question is, well, wait, if if

the foundation models are advancing at

such a

Exactly. Like a year from now, why

couldn't a

like a developer just a startup of a few

guys take next year's model and train it

and then commoditize the

You're making such a good point. This

So, when we were trying to figure out

like what applications we would build

and like which sectors of the economy we

would go after, I was like, guys, we got

to go after the hardest most regulated

places because those are the things and

places and people that have absolutely

zero tolerance for error and where

you're going to need to do some amount

of customization and and specialization

to actually solve these problems. And

Sax, to your point, like when you see

and I said you cannot we cannot touch

customer service. We cannot touch it

because it's going to get

commoditized and run over by these

foundational models within a year.

Right.

You'll You'll be able to employ these

It's just too easy. You'll be able to do

it on a local computer. I mean, you'll

just download the entire database of

every call on a MacBook with an M3 and

you just build on that. The other thing

that's now possible and you saw this

with Klarna because Klarna put out this

like cryptic tweet/press release where I

think maybe it was in their earnings.

Nick, maybe you can find this where

they're like, we've deprecated

Salesforce and Workday.

That was strange, yeah. How How can a

company that big deprecate those two

systems of record? How is that even It's

How is it possible?

they're writing their own, right?

Well, I'll tell I'll tell you how it's

possible. And so, this is like this next

crazy thing that's been happening.

We've been doing a version of this to go

after some other sources of software. We

haven't had

the balls, to be honest, to go after

Salesforce or or Workday, but here's how

they do it. They write these agents

and these agents can spawn other agents,

right? So, it's very classic kind of

machine that builds a machine.

And you start to observe the inputs and

outputs of a system, right? I'm I'm

hyper-simplifying, but I'm I'm just

It'll make the point.

And over time, what the agents start to

do is by observing the inputs and the

outputs, they start to guess on what the

intervening code is and the code paths

must be in the middle to generate the

outputs based on these inputs.

And so, over time, what happens is you

develop a digital twin

and then you run that

against that counterfactual, against

Workday or Salesforce

and then at some point you're like, it's

the same.

And then you say you just say, turn it

off and you're saving yourself tens or

hundreds of millions of dollars. So,

it's a version of what Klarna did. It

takes

an enormous amount of technical strength

to do it.

It also takes tremendous, I think,

executive courage and leadership because

I think that's a very difficult decision

to embark on, but if you're an engineer,

that must be an unbelievably exciting

technical challenge to be a part of, but

but that's the basic premise of what

they were able to do.

Hopefully, they share more and maybe

they even open source what they did cuz

I think it would just be an amazing

thing for all of us to look at. Yeah, I

mean, to to restate it, watch people use

a piece of software

and then based on what they do, you

could write the code which you could

take a video of a video game today, like

Angry Birds, and somebody did this. You

give the Angry Birds iPad, you know,

game from 15 years ago to AI, it's going

to back into the code

just by watching it. So, why not just

watch people use Salesforce or Workday?

And those are very expensive products,

thousands of dollars per user, right? I

want to I want to get Sachs's point of

view. Like, the thing in enterprise

software that we were always told is you

cannot touch these systems of record.

Don't ever start a systems of record

company. Don't try to touch these

systems of record companies. Don't, you

know, try to disrupt them. It's an

impossible task. But then the question

is, if you have these things,

why do you necessarily need a system of

record in the way that you needed it to

before when you're writing all this

clunky, deterministic I don't know.

Well, I saw the Klarna story where they

said they were going to rip out

Salesforce and and Workday because

they're able to write their own bespoke

code using AI. I mean, I have to say I'm

a little bit skeptical of that story for

a couple of reasons. One is,

if that's their goal, why wouldn't they

have open-sourced this these products

they created? You might as well get the

whole ecosystem working on it because

they're not trying to

sell this product that they've

internally created. They're just trying

to rip out the cost. So, why not let the

whole ecosystem see it? The other thing

is, if it's so easy to do, why hasn't

the market already been flooded with new

startups that are effectively able to

reverse engineer? I don't think you're

right. I don't think it's easy to do

because I don't think there's a

generalization here that's

productizable. Do you know what I mean?

Like, I do think that these are very

custom specific things. So, maybe

there's like some scaffolding, but I

don't think that that scaffolding has a

ton of economic value. I think it's

really good open-source stuff. Yeah.

it's what you build on top of it. And

so, that hasn't been figured out yet for

sure. Yeah, look, I I think that if

you're only using a few use cases of

these big complicated software packages,

then yeah, it's probably easier than

ever to

deprecate them, you know, eliminate them

from your stack and just have your own

internal engineers build specifically

what you need in a more tightly

integrated way. I think that is

possible. Nick, show this tweet to these

guys.

Here's the tweet. This is Oh, this was a

crazy one, yeah. So, so look at but look

at the code Look at the actual product

itself for a second. Yeah, but the

product's garbage. I mean, look how

ridiculous this is. But that was 600

Sorry, it was a billion dollars that NYC

the

This is just egregious waste. paid

Oracle 600 million to build our course

management portal. It's built on top of

Oracle's PeopleSoft suite, which they

refused to customize without an extra

400 million to hit 1 billion. New

Yorkers got the image below and pay 5

million plus a year for hosting. Look,

this this is egregious government waste.

I mean, that site looks like it's

pathetic. I mean, honestly, this looks

like a a it could have been done with a

SharePoint site and you pay some

consultant to stand it up and for 1% of

the cost. And there are better plat more

modern platforms than that. So, this is

just incredibly wasteful and inefficient

government spending.

They They're going for retro. They were

going for retro. They wanted to

harken back to the '90s. But the reason

I wanted to I wanted to show this to you

is I think that these kinds of things

will not be possible in the future. I

just don't see how one could

spend a billion dollars if one tried to

to enable that feature. Yeah, but see

Right, but that that that's 600 million

that was wasted on that um crappy

portal. That shouldn't have happened

even without AI, right? Because there's

like much better ways There are You

could You could buy a much better

product for 1% of the cost. So, or 0.1%

of the cost. There must be some

regulatory capture going on here where

somebody's got a record

like a 10-year relationships. That's

what I'm saying. Like, a 10-year

relationship with somebody in Albany

that, you know, worked at Oracle

previously. Yeah, something like It's

waste, fraud, and abuse. It's the same

thing that's happening with

um rural internet. Do you see that

story?

You want to talk about it? Our paradox

is our next story. So,

let's go for it.

In related news of our government

burning our money,

rural broadband, rural broadband and EV

charging, 42 billion and 7.5 billion,

almost 50 billion dollars combined.

Let's just go over these two programs

real quickly here.

Both were part of the 1.2

trillion-dollar infrastructure bill in

2021. 42 billion carved out to provide

high-speed internet to people living on

farms in rural locations. 7.5 billion

carved out to build 500,000 EV chargers

over 10 years. It's been a thousand days

since the bill was passed, so let's

check on the progress. Zero people have

been connected, according to FCC

Commissioner Brendan Carr. And

eight

1 2 3 4 5 6 7 eight EV chargers have

been built as of May, according to Auto

Week magazine. What's even crazier,

private industry already solved these

problems. United Airlines just announced

they're putting Starlink on a thousand

of their planes, and they're going to

offer it for free. And Starlink now has

2,500 planes under contract

with a bunch of other airlines. And

in the second half of 2023 alone, the

private sector built over a thousand

charging stations in the US. These are

two problems that have already been

solved, Sachs. Why are we burning 50

billion dollars in the future

with

uh things that have already been solved?

We've solved for this. You I own

electric cars. I have Starlink.

you know the answer. Say the answer,

Jason. Corruption.

No, come on, Jason.

Incompetence.

Really? Graft.

Keep going. I mean, you tell me.

Corruption, graft, buying votes from

your constituents?

They haven't They haven't delivered any

of it. Incompetence, yes.

Well, there's there's a couple of things

going on here. So, one is typical

government waste, fraud, and abuse where

they've allocated 42 billion for rural

internet, haven't hooked anyone up, and

we could spend a fraction of that

giving people Starlink

and allowing the private sector to do

its job. And why even pay for it, Sachs?

Why are we paying for it if it's

available for 100 bucks?

that that's the baseline, but it's worse

than that because on top of the waste,

fraud, and abuse and the fact that the

government is

grossly incompetent and inefficient, you

also have naked political retaliation

going on here. And

yeah, exactly. And Brendan Carr, who's

an FCC Commissioner, pointed this out.

He said that in 2023,

the FCC canceled or revoked an $85

million contract with a company by

claiming Starlink is not capable of

providing high-speed internet. Then, a

year

later

Yeah, of course that was a lie. And

then, a year later, the FCC is now

claiming that Starlink provides so much

high-speed internet that the word

monopoly should be uh tossed out.

Yeah. So, look, this is just pure

It's pure naked retaliation. The The

Biden-Harris administration doesn't want

to admit that Elon has the best solution

for rural internet, just like they

couldn't admit he made the best electric

cars. Remember when they did that EV

summit and they didn't invite him? That

was just nakedly political um because

he's not union.

Right. So, look, I mean, the the the

Biden-Harris administration Look, it's

blue no matter who. And Elon has drifted

from being sort of independent and

non-aligned to

He was blue. Call it what it is. I mean,

he voted for Hillary and Obama, he said.

He's no longer team blue, and so they're

punishing him for this.

Yeah.

And it's costing taxpayers a huge amount

of money. I I think this is one of the

worst decisions by the current

administration. And if Trump gets in

there, he should reverse it on day one.

Well, I mean, we need to investigate. I

mean, I think how we got to the point of

wasting 50 billion dollars

that requires an investigation, I think.

Chamath, your thoughts? One comment is,

and this is so sad, but I'm so

desensitized by the amount of waste that

I don't know whether 50 billion is a lot

or a little anymore when it comes to the

United States government. Isn't that

sad? Like, cuz now everything I hear is

in hundreds of hundreds of billions and

trillions, but 50 billion is an enormous

amount of money, right? Well, that

that's such a good point. I remember,

you know, back in the day,

60 Minutes used to do these segments on

waste, fraud, and abuse at the Pentagon,

different parts of the government. 42

billion dollars just spent on something

that really taxpayers could have for

free or without the government getting

involved. And, you know, 42 billion that

was lining someone's pocket when the

service doesn't even work. That would

have been a scandal. And the media would

have covered it. But the media doesn't

even cover it these days. And again,

it's because the media has become so

tribal that it's better dead than red

and blue no matter who. And so, because

the media would have to admit that

Elon's already solved this problem, they

just can't go there. They won't even

cover this.

And so, we have no accountability.

There's no accountability on the

government. If I had to just take a step

back and just generalize going forward,

do we want to live in the kind of

administrative state where they will

pick people

that they dislike

based on totally random criteria, a

tweet, a meme, a post,

and then all of a sudden punish a bunch

of the rest of us because of that?

They're punishing all of America because

they collect our taxes to waste on it.

And then they punish the people that

they actually say they're going to to by

not delivering what they promised. And

if you take Elon out of it for a second,

the the problem was when we crossed the

chasm and did it with the first guy,

him.

But the reality is there's only one of

him and then there's a lot of the rest

of us. And what will happen is people

would just get added to this list of

folks that certain

nameless, faceless people in the

administrative state dislike. And what

happens is the country slows down. And

the country wastes money. And the

country pilfers it away. And that has to

stop. And so what really bothers me

about these things is A,

I don't know how to undensitize myself

to the fact that all of a sudden now

because of just all of this sloppy

waste, I didn't

react as much as I should have to just

$50 billion being flushed down the

toilet on these two projects.

And then two, Jason, your point, it is a

solved problem that you can give

incredibly cheaply.

And the fact that it's not left to

private enterprise to solve this and

instead it's just brazen partisanship

combined with retaliation combined with

incompetence

and buying votes by giving this money to

other vendors who are giving them

donations. And just to give the

Democrats their due, what happens if

then Trump does the same thing for a

solution that you support and you need

and you think should be everywhere?

The the point is we don't want any of

this stuff

under any administration. And

it's it and the minute that one

administration breaks the seal

and makes it acceptable,

it becomes part of the water table. And

that's the real problem.

We broke the seal on this crazy

multi-multi-trillion-dollar spending and

it has just never stopped since then.

And you know, the incentives really

matter. If you look at a private

company, if you were at Klarna and to

our previous story and you go to the

boss and say, "I know how to get rid of

these this wasteful spending we're doing

here. We can get rid of all tier one

calls with AI and save that money." You

get a promotion.

If you're in the government,

you can't. If you're a politician and

you cut this program, your constituents

get upset. You don't have that stuff

being built in your district. There's a

perverse incentive that you can't buy

the votes, which is why these folks are

constantly trying to buy votes. And then

the second

news is the good news is

I I really applaud the people that have

the courage

to show this stuff on X, to tweet about

it so that the rest of us know about it.

And the person that talked about the NYC

thing.

But then the next step has to happen,

which is that we all need to decide that

this stuff needs to stop, otherwise it's

going to bankrupt our country. And we

have to celebrate it. That's the key. If

we can celebrate people saving money

again, like Milei is getting a lot of

credit. And that's up to us. It

leadership and podcasting or the media

or influential people have followings.

If you point out, "Hey, this is a waste.

Go save this money." And somebody does

save the money, well, why don't we start

celebrating people saving the money and

doing the right thing here? Because this

is our children's future. Is it true

that Kamala was the broadband czar

that was responsible for this thing? I

mean, it's who knows? It's just No,

because I saw it I I saw that a bunch of

senators wrote a letter to her.

And they claimed that she was the

broadband czar, but I don't know if

that's true or not true.

And whether she was responsible

she was the AI czar. I mean, the

administration did put her nominally in

charge of various technology

initiatives. Here's an idea. Save money.

Get the get the best solution at the

lowest price and then re-evaluate that

as you go. And I just want to point out

with the it's a this is a a subtle

point, but Elon also

open-sourced his patents for the

superchargers and let anybody do them.

And he opened up the superchargers to

other vehicles, which he didn't have to

do. And when they gave him a loan back

in the Solyndra days and the Fisker

days, remember they gave these

incentives in the form of loans. He's

the only guy who paid it back. Everybody

else failed. So now you're punishing the

guy who actually built the

infrastructure for both of these

projects.

So the reward for actually doing the

right thing, which Starlink did, SpaceX

did and Tesla did, is to be punished.

And then you're giving a leg up to

somebody else who's building these

charge Who's more qualified to build

these chargers at scale?

Or a satellite network at scale. The

person who's already done it. He's

already done it. I do worry that there's

a growing

version of the Elon derangement syndrome

that's also kind of like festering.

Yeah, for sure. Which

just it just stops people from thinking

rationally. Of course. I mean,

we're talking about laying fiber lines,

cable modems to people who are hundreds

of miles into the countryside. That

makes no sense when you can just beep

put a satellite dish up today.

What are we even talking about here?

mean, the government has never been

particularly efficient, but there was a

period of time where people would at

least care about wanting to make it more

efficient. And it would be a scandal if

there was political corruption to try

and bias the result in a way that

actually deprived

the intended recipients of the program

from getting the services they were

supposed to get and cost the government

way more money than it needed to. We're

so far beyond being that country anymore

where we actually debate the best

policy.

We're now it's just like we're warring

political tribes. And the objective of

the party

is to

punish its political opponents, to

engage in retaliation,

and to basically loot the public coffers

as much as possible on behalf of their

constituents.

And that's what's basically happening.

You know, it's completely dysfunctional.

Well, let's use this podcast. If you see

government waste, tell us. And nobody

cares because the media doesn't really

shine a light on it because they're

they're completely tribalized as well. I

agree with everything you're saying

except the last part. I don't think it's

on behalf of their constituents. I don't

think any of us see any benefit from any

of this spending. No, no, I meant their

donors, the the donor constituents.

Not not the citizens of the country.

But who's winning in this? It's not like

this 42 is 42 billion lining the pockets

of I don't know, name me the

How do you think these contracts get

awarded?

companies that are going to lay that

fiber are going to get that money.

And then and then they're going to kick

back political contributions.

it's been it's been three or four years.

They they haven't done a single thing. I

mean, the

I still think they're cashing the

checks. Yeah. It seems like we're at the

stage of just pure incompetence and

retaliation. We're not even at the stage

of actually then giving it to anybody

else.

I mean, that would be So they're giving

the money away and they're so

incompetent they're not getting the

political benefit from it. Well, they're

they're so incompetent they can't get

out of their own way. But somebody's

getting that call it 50 billion that we

don't need to spend. And the way that

money is awarded is going to be

political. We're going to do all our

that they're going to turn around and

give big political contributions? Of

course they are. Well, I think I think

that I think the good news is that the

more of these things we shine a light

on, the harder it'll be to

hide when these grants are actually

given or what the execution is and Let's

start a running list. Let's start a

running list. No, to your point, Sachs,

maybe like, you know, we need a revival

of the 60 Minutes, you know, waste,

fraud and abuse. On this program, we'll

do it at the end of the show every time.

We'll have a running list at allin.com

of just every one of these scandals and

we'll feature it. So leak it to us

first. Send it to us. My DMs are open.

All right, listen. Early stage investing

has always been hard. There was a tweet

storm this week that Y Combinator might

be having a hard time replicating their

early success. We'll discuss it now. A

thread this week from X user Molson Hart

caught a couple people's eyes.

He made the case that it's been a rough

decade for YC based on the accelerator's

top companies page.

YC lists its top companies by 2023

revenue there.

And uh you'll notice there's not a lot

of companies from the recent cohorts.

Out of the 50 companies featured, only

three are from the classes after 2020,

most of them being from the early 2010s.

Obviously, that's because they've been

around longer, but it sparked a big

discussion

that there were so many winners from the

2009 to 2016 era. And that maybe the

class size at YC has expanded a whole

bunch.

And maybe that's part of the problem.

But there's a bigger problem in VC that

we've talked about here. Here's a chart

from Carta that just shows the

percentage of VC funds that have made a

distribution since 2017.

Over 40% of 2018 vintage funds have not

made a single distribution yet. Uh and

it's getting to the point year five, six

or seven where you probably should have

had some distributions occur. Obviously,

a lot of this has to do with maybe M&A

and those early wins being taken off the

table. We've talked about that a whole

bunch. But here is the chart

that kind of gets really interesting.

An explosion in fund managers occurred,

as we all know. And this chart shows

from PitchBook the first time first-time

VC managers that raised a second VC fund

as a share of all first-time VC

managers. And it's now down from above

50% to below

gosh, 15%. So what are your thoughts

here, Chamath? My gosh,

venture is a really

really tough business. Every year

for the last seven, six years, seven

years, I

have published my returns, which most

VCs don't want to do.

I do it because I go back and I look at

it and I think having

public accountability actually drives

some good decisions. They They may seem

suboptimal

in the moment, but they in the long run

turn out to be good decisions. And the

biggest one

has been generating liquidity.

So Nick, you can throw up this thing,

but I'm sure there are funds in each of

these vintages that have done way better

than me. So, I'm not I'm not saying, you

know, it is what it is, but

what I want to point out is

if I go and look inside of these funds

and tell you how hard it has been to

generate this DPI,

it is like it's like dragging an entire

just

sack of potatoes over the finish line.

It's like like a truck of dead bodies

over a finish line. It is super super

hard. And the things that we have bought

are two.

One is that the gestation of companies

has totally blown out.

We used to be in a world where by year

five, six, or seven, you could return

money.

You just can't do that anymore unless

you get extraordinarily lucky, which by

the way, I got when Sachs was running

Yammer.

It was an enormous win for all of us,

but that is just exceptionally rare. And

that was M&A in year what? Five or six.

when did you sell? There are so few

There are so few entrepreneurs capable

of that. He's one of maybe five or 10.

So, other than that, I've never really

had a company

that has generated liquidity in year

five, six, or seven. They've always

generated, if they did generated it at

all,

in years 11, 12, and 13.

And so, the problem with that is that at

some point,

you have these paper marks that say

you're winning and things are working,

but there's no path to liquidity.

So, then I what I did was I stepped in

to the secondary markets and I would

sell.

And it would really upset

certain founders.

But I was very clear that when I was

running outside capital,

and I was running outside capital on

behalf of really it organizations that I

believed in, the Broad Foundation, the

Mayo Clinics, Memorial Sloan Kettering,

my job was to get them money back. You

know, these were their pension funds.

These were the things that they used to

build facilities. Cancer research.

Cancer research. I didn't have the, you

know, ability to just sit on my hands

and say, "Oh, you know what? Year 15,

don't worry."

So,

it it's just meant to say that the the

tactics of generating liquidity in

venture

are very misunderstood

and very under appreciated.

And even then, you sell some things that

are just absolute winners that had you

waited another five or six years would

have turned another, you know, one or

two turns,

but that's not the job.

The job is not to maximize absolute

every single win. The job is to return

capital in a reasonable time period so

that your investors don't run out of

money to give you.

Yeah. It's So, it's a tough game, man.

It is really really really tough.

Yeah, and the and the inside And and

sorry, by the way, and I feel this now

because, you know, the last five or six

years has been entirely my own capital.

And my gosh, it's hard. Yeah. Managing

liquidity is impo- It's impossible,

especially when you can't rely on

anybody else. So, Well, I'm thankful for

the secondary markets even emerging

because at the same time that the

secondary markets emerged and people

were willing to buy venture assets, you

know, going into their second decade,

I would have been in real trouble

without the without reasonably liquid

secondary markets.

Myself included. I mean,

My numbers My numbers would be a quarter

of what they are.

Yeah, and I took advantage of almost

every time I had one of those

opportunities to sell some shares, pare

some positions, and that's how we got

our DPI as well because, let's face it,

Lina Khan and the anti-tech sentiment

has led to these large companies not

buying startups, and instead they

compete with them. They just say, "We'll

build it in-house because you're not

letting us buy it." And it's broken the

entire ecosystem now.

That's broken the the IPO process is

broken.

I tried

to

flip that on its head with SPACs.

You know, some worked, some didn't. Many

didn't in the end. Many of mine didn't

work out at the end. There was a period

where it looked like it was working, but

these are all attempts

at changing the liquidity cycle

of these companies because the way that

things stand today, we are not in a

sustainable industry. It is if you raise

funds and think about fee generation,

but it is not if you think about

returning money to founders, LPs,

getting employees compensated for many

years of hard, you know, toil that they

put in.

It's very tough game right now.

Well, Sachs, right now we're seeing

people do things like

selling, you know, their early SpaceX or

their early Stripe, whatever it is, to

other VCs, to later stage funds, a lot

of ways to try to secure DPI. What's

your thoughts on the state of venture

today given all this data that we're

looking at today?

Well, two points. So, first, I agree

with Chamath that the amount of time it

takes to generate an outcome for, I'd

say, most startups is longer than the

10-year period of these funds. And these

funds can be extended up to 12 years

usually, but then what do you do after

that?

I this takes a lot longer than that in a

lot of cases to generate a meaningful

outcome. I just had two companies that I

invested in in my second fund, so in

2019 and 2020, so four years ago and

five years ago, just got marked up.

And it was a big markup. The company's

doing well. I call them late bloomers.

It took four to five years

for them to accomplish what they wanted

to in terms of like building out the

tech. I mean, I invested at like the

earliest stage. So, that's how long it

took, and now they just did growth

rounds and they're kind of off to the

races, but

you know, I could easily be 10 years

from here to get to Yeah. a liquidity

event. So, you're talking about more

like 15-year funds. So, I agree with

that point. The second thing though is

that

the big thing that's happened in our

industry is we had a bubble

in 2020 and especially 2021.

And we just had a ton of capital come

into the industry because the Fed the

federal government air-dropped $10

trillion of liquidity onto the economy

in reaction to COVID.

And not all that money went into VC,

went into a lot of places, but the VC

industry was flooded with cash. And you

see this in the deployments. I mean, in

those bubble years, there was something

like $200 billion a year of capital

deployment when normally it's 60 to 100

billion.

So, if twice the amount of money is

going into the industry and is being

deployed, and rounds are now twice as

big, and valuations are twice as big,

that has a huge outcome a huge effect on

returns. So, for example, the average

venture fund is like a 2x return. But if

the entry prices were artificially

doubled,

then there goes your return right there.

You get 2x returns to 1x. So, Look, I

think we're just in the hangover of this

massive liquidity bubble

that didn't originate in the venture

capital industry. It came from, frankly,

the federal government, but we're just

downstream of that. Now, what I would

say is I I do think we're at the tail

end of working that out. And the good

news is that we now have maybe the most

exciting tech wave ever, which is AI,

definitely the most exciting tech wave

since the internet came along in the mid

to late '90s. So,

the hope is we're finally going to have

like really exciting things to invest in

again.

But But yeah, look, I think we're at the

tail end of the last cycle and the

beginning of a of a new cycle. And

vintage distortion is so real, you know,

it's very hard to understand how each of

these vintages with your late bloomers

or overpriced things,

companies getting hundred million dollar

rounds

Totally. at a billion dollar valuation

before they have product market fit, and

those distortions

were just so pronounced the last five to

10 years that we're now sorting them out

like a like a house of mirrors where you

don't know who's tall, who's fat, who's

skinny, what the reality is here. And

the other big thing is this peanut

butter effect that, you know, I I

tweeted about today.

You know, during peak ZIRP, you had all

these exceptional team members, you

know, the number two, three, four, five

person at a company that was doing

great, they would leave to start their

own company. So, the talent got spread.

Then you had so many of these founders

rushing into the same vertical. So,

you'd have 20 startups because there was

too much capital pursuing the same

opportunity. You pursue the same

opportunity, what happens to earnings?

They get spread then. What happens to

customers? They get spread across 20

different products competing for the

same customer. And then what happens

with, you know, ownership stakes for us

as GPs and LPs, Chamath? The ownership

stakes because the valuations went up so

much, they got spread like peanut

butter. And instead of a Series A

getting you 20% of a company, it got you

10. Instead of a seed check getting you

5%, it got you one. There's no DPI

possible. You nailed it and Sachs nailed

it. Wait, but and the thing to remember

is both of those two things now work

together to erode the return stream for

the general partner, but really most

importantly for the limited partner. So,

I I do think that

we are in a situation where the average

returns are going to decay by 50 to 100%

because of what Sachs said and because

of what you said. On top of that, I

don't think we know what the actual cap

structure needs to be for a a successful

AI company. Is it 20 people that does

the work of 2,000 now because they have

all of these agents and systems that

work on their behalf? If that's true,

giving that company hundreds of millions

of dollars is actually the opposite of

what you want to do. You want to give

that company 10 or 15, and then let them

cook.

And so, we have a we have a right-sizing

of capital problem that needs to happen.

The data would tell you though that the

industry understands that. So, the fact

that we've gone from 50% of people being

able to raise a fund to 12% means that a

lot of people will get washed out of the

industry, less capital being raised,

which probably is foreshadowing the fact

that these companies will need a lot

less capital. But, you know, that has a

lot of implications as it ripples

through our economy. It has I think it's

very good for the early stage. I think,

you know, you guys are very good there.

You've talked about how it's good for

you.

It's very complicated, I think, for the

expansion and growth stage capital.

And then I think it's going to be

there's going to be another turn on what

happens on the IPO markets because you

can't have so many companies waiting

with

very, very few ways of accessing public

market capital and exposure. I just

think this is that is that is

fundamentally broken and we're going to

have to reinvent. We tried once with

SPACs. We're going to have to go back to

the drawing board and try again. I think

secondary markets that are more fluid. I

don't know what it is, but we need to do

something because the status quo doesn't

work.

I think there's a lot so many good

points that we're hitting here. I'll

just say the the other thing

to build on your point about, "Hey,

these take less capital."

You have to look at what does your

ownership after you've been diluted half

by 50% as a seed or series A investor.

You're going to be down to half. So, if

you own 10%, you own five. If you owned

seven like YC or we do in a company,

you're going to own three.

You're going to really have to model out

is the valuation you're looking at what

is it pencil out to for an outcome. And

when I did this with our investments, I

saw a leak in my game, which was, "Hey,

I'm putting 100k into a $25 million

round or a $50 million round as a

follow-on investment, you know, to

support the founder. Okay, what does

that do for my LPs? Well, that 100k

would need to hit some extraordinary

outcome, 5, 10, 20, 40 billion dollars

in order for us to return the fund." So,

now my team understands, "Hey, take that

125k, that 250k, that 500k, do more for

do four more accelerator companies with

it because those could return the fund."

And that's that fund math people stop

doing. I think all these fund managers

who are getting wiped out, they never

penciled out "What does this company I'm

giving a million dollars need to hit in

order for me to return my fund?"

And now they're finding out that Look at

the thing that I just tweeted. Look at

that. Let me see. You know, everybody's

course correcting. I mean, it's

basically the capital deployment's gone

back to where it was in 2019, let's call

it. So, again, we had this bubble. The

foam started building in 2020, but you

had COVID. People didn't know what to

think, so there was some restraint, I

guess. And then 2021, it just went wild.

That was nuts. Man,

The question is Those middle vintages

are just going to

beans, '21, '22.

You know, that's such an interesting

point. If you can return capital, you're

going to look like a hero.

Also, Chamath, I remember, I don't know

if it was Michael Moritz or or Doug

Leone, but I was talking to Sequoia

about the time dispersion of your fund.

Like, over what period time are you

deploying a fund? And man, people

started deploying funds in 18 months

because they could raise the next fund

so quick. So, like, screw it. I'm going

to deploy this fund in 18 months, 24

months. And LPs were saying to me like,

"How what period are you going to deploy

this?" And I said, "Well, you know, I

was taught by Fred Wilson and this

person, 36 months, 48 months would be a

good

window to deploy capital because, you

know, it smooths it out." I think you're

seeing the

the dirty little secret of the venture

business, which is at some point people

get to a fork in the road. If they

hyper-optimize for returns,

I'll put Benchmark, I'll put Fred Wilson

and USV, I'll put Sequoia's early stage

fund.

They have to introduce time diversity.

They keep the funds small and they look

to hit grand slams.

But, there are many other people and I

would say the most of the set

outside of that,

take the road more traveled,

which is then you optimize for size,

which then becomes a fee game, and so

you optimize for velocity. Get the funds

out as quick as possible, raise a new

fund. They have no intention of

generating returns

because they have no ability to. When

you have absolutely no time diversity in

this business in a pool of capital,

you're giving away one of your best

edges. David just talked about it. As a

smart practitioner, he was able to

nurture these companies and all of a

sudden they start to win. If you've all

of a sudden flushed all your money in

fund one, then you go to fund two, fund

three. By the time something in fund one

hits,

what are you going to do? You're going

to cross the funds or you're going to

justify taking money from the left hand

to pay the right hand or you're just

going to let your ownership wane because

you

frittered all the money away.

These are all the problems that most of

these folks have encumbered themselves

with. It's very difficult to get out of.

It's going to take Look, in fairness to

them, they probably, you know, got good

while the getting's good, so they'll

make a ton of money in fees, but they

will not be able to raise funds.

And those fees are not clawed back,

folks, for those of you playing along at

home.

just by the way, I feel better about

those late bloomers in my portfolio

because I know the marks are real.

Because if they're getting marked up

now, then it's very, very solid.

Compared to, frankly, some of those

marks that we got in the bubble year

like 2021, I call them tiger marks,

whether it was tiger or not,

it's just less real, quite frankly. And

a lot of those companies are retrenching

and have issues. So, a mark now it just

means something different than a mark

then. But, look, I want to you know,

just so we're not like totally beating

up on VC, there was you remember that in

this bubble period of September 2021,

everybody thought that this party would

just continue forever. And this is a

good example from the Wall Street

Journal where it's talking about how

university endowments were minting

billions in golden era of venture

capital. So,

the bubble wasn't just in VC. It was in

the public markets, too, because we had

ZIRP, right? Like, interest rates were

zero. Liquidity was just flowing.

And so, it was very easy for companies

to get liquid. They IPO'd and then the

valuations were stratospheric. So, the

distributions to LPs were massive in

2021. And then that led to, again, more

funds being able to raise bigger funds.

Everyone was just kind of paying it

forward and thought the party would just

keep going.

So,

this is what happens in a bubble is

everybody thinks that it's just going to

keep going like that. This is why it's

so important as a fund manager or an

entrepreneur for you to get great advice

from people who've been at this for a

long time and focus on the process. You

cannot control all these outcomes. You

cannot control all these meta events.

What you can control is your

relationship with your customers,

building a team, making great bets,

supporting late bloomers. That's the

critical part of all this is the process

and you can make your process better.

And so, with my team internally, I'm

constantly talking to them about our

selection of companies, how we help

companies get pulled through and get

downstream funding, how we literally our

big effort this year is, "How do we

introduce our companies to the top VC

firms?"

And we've been working on that as a

internal project, right? Of just getting

our great breakout companies to the best

investors to increase our pull-through.

It is a process and you have to trust

and focus on the process. Yeah.

Well, look,

ironically, just I mean, just to end on

sort of a positive note, if these

interest rate cuts are real, like if we

we just got 50, if we get another 50

this year, if inflation's really tamed,

and interest rates are never going to go

to zero, but if they go down

substantially,

and we have this new AI disruption, this

new AI tailwind, we could be back in

another golden era. It's not going to be

a bubble, but it could be another golden

era. So, we'll see. Start companies.

From your lips to God's ears, Jason.

Love you guys. I got to go. Love you.

All right, Chamath had to go do work.

Apparently, he's starting this new

concept, Sacks, which Chamath is

actually going to work and at a company.

Uh we never got to talk about the debate

cuz we were busy doing the summit and we

took the week off from a new episode. Uh

people wanted to hear your take. What

did you think of Kamala and Trump, the

one and only debate we're going to hear,

apparently?

Any any thoughts?

I think that

Kamala Harris performed better than

expected.

She did that, I think, mostly through

having canned answers to topics.

And she was able to kind of memorize

those answers and and say them and she

was never knocked out of her

preparation.

She was well prepared. Yeah. I think she

was well prepared. However, we now know

that these were canned answers because

in subsequent press interviews,

she gives the exact same thing. It's

like a jukebox where you just push the

button and you get the same answer.

Exactly. So, she's she's memorized a

certain number

of talking points and that's all she's

going to give you, no matter what the