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00:00:00 Speaker 1
Hey everybody welcome to another episode of the All In podcast is been a crazy couple of weeks here.
00:00:07 Speaker 1
We had the all in summit and boy was this amazing.
00:00:11 Speaker 1
Our best E Davis report couldn’t make it today.
00:00:14 Speaker 1
He had some personal things he had to attend to, so joining us again is Brad Gerstner.
00:00:20 Speaker 1
Welcome back to the 5th besting draw on his Visha 4th appearance.
00:00:25 Speaker 1
Now including the all in Summit I think you’ve been on four times.
00:00:29 Speaker 1
Very good. Alright, that’s about.
00:00:31 Speaker 1
5% of the episodes and nice, nice stuff.
00:00:34 Speaker 1
I think that’s a nice little.
00:00:34 Speaker 1
Ship in your in your belt there.
00:00:37 Speaker 3
I’m an unworthy replacement for Friedberg.
00:00:40 Speaker 3
But I do what I can do.
00:00:40 Speaker 1
Nobody can replace freedom, that is so true.
00:00:43 Speaker 2
2nd letterwinners lied.
00:00:47 Speaker 3
Rain Man.
00:00:48 Speaker 2
2nd we open.
00:00:53 Speaker 1
2nd just going around the horn here, trim off.
00:01:02 Speaker 1
Did you have a favorite moment on stage?
00:01:04 Speaker 1
A fitment moment off stage?
00:01:06 Speaker 3
Well, what is your?
00:01:07 Speaker 1
General impressions of the Orland Summit, 2022 I saw.
00:01:12 Speaker 1
The people I met were really impressive.
00:01:16 Speaker 1
I really enjoyed meeting people and learning what they did.
00:01:21 Speaker 1
I also thought you and your team organized.
00:01:25 Speaker 1
Really an incredible event and I forgot how good you are at these things, but I give you a lot of credit.
00:01:31 Speaker 1
I really enjoyed participating.
00:01:34 Speaker 1
The only thing that I was nervous about during that whole thing, which probably limited a little bit of my fun.
00:01:41 Speaker 1
Was my mom was coming?
00:01:44 Speaker 1
In 81 and so I was not super psyched to really be in the throes of all the parties, to be honest. Just ’cause. I was like.
00:01:52 Speaker 1
I don’t, I don’t necessarily want to get COVID and I didn’t want to introduce.
00:01:56 Speaker 1
It to her and got it.
00:01:58 Speaker 1
You know, not ended up getting really, really sick, but more like a flu and a cold.
00:02:03 Speaker 1
Yeah, but, you know, I’ve been trying.
00:02:06 Speaker 1
My mom signed.
00:02:08 Speaker 1
I I know a bunch of folks that came out unfortunately tested positive.
00:02:12 Speaker 1
That was the only.
00:02:13 Speaker 1
That’s the only.
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Downside where I would I.
00:02:15 Speaker 1
Would have wanted to be a little bit more carefully but.
00:02:19 Speaker 1
That was the only thing that was but.
00:02:20 Speaker 1
That’s not anybody’s control, so.
00:02:22 Speaker 4
Yeah, hold on a second.
00:02:24 Speaker 4
I I recall that.
00:02:25 Speaker 4
When I had a Christmas party.
00:02:27 Speaker 3
Back in December.
00:02:28 Speaker 4
There is a in Fairchild, October like.
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Super spreader.
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A week later, he called my Christmas Party a super shredder.
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Even though I tested everybody at the door, every single person was.
00:02:36 Speaker 4
Negative at this show, always coming.
00:02:38 Speaker 1
In the backyard.
00:02:40 Speaker 4
So my parents went to this conference.
00:02:42 Speaker 4
They both are service.
00:02:43 Speaker 4
My aunt who lives in Miami, he was in her.
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70s she got COVID.
00:02:48 Speaker 1
How are they doing today?
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OK, better.
00:02:49 Speaker 4
They’re they’re doing good.
00:02:50 Speaker 1
Are they OK?
00:02:51 Speaker 1
That’s most important.
00:02:51 Speaker 4
Yeah, there’s been good.
00:02:52 Speaker 4
It’s, you know, it’s so mcleon.
00:02:52
You know.
00:02:54 Speaker 4
It was like, you know, it’s like bad for two days and then get better.
00:02:57 Speaker 4
So they’re gonna be 5.
00:02:57 Speaker 1
Yeah, they are.
00:02:59 Speaker 4
Yeah, one day, then one day.
00:03:01 Speaker 3
So my brother got covered and.
00:03:03 Speaker 4
Your brother got it.
00:03:05 Speaker 1
For Johnson and we both got it.
00:03:07 Speaker 1
And then Josh, his wife, got.
00:03:09 Speaker 1
It so she.
00:03:10 Speaker 1
Uh, we took the pack.
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Love and everybody great now.
00:03:13 Speaker 1
But yeah, if if you go to my a lot of people who came to the event, it was their first time out.
00:03:18 Speaker 1
Like, this was for a lot of people, I think, very emotional and exciting because it was their first venture out and if you go to Miami, to a conference like you’re gonna get.
00:03:27 Speaker 4
Yeah, Clovis.
00:03:28 Speaker 4
Especially if the event organizer doesn’t test anybody.
00:03:32 Speaker 1
He impractical. She has 850 people. Nobody.
00:03:34 Speaker 1
Would com this.
00:03:35 Speaker 4
Not going to make a profit, right?
00:03:37 Speaker 2
Now wouldn’t prevent that.
00:03:38 Speaker 1
Expensive, you could put.
00:03:39 Speaker 1
That on the people, they could just share their results.
00:03:42 Speaker 1
But I think at this point, you know, even on the planes going out there, nobody is wearing masks.
00:03:46 Speaker 1
I don’t know if you know where you guys were flying private, but you.
00:03:49 Speaker 1
Know my flight.
00:03:50 Speaker 1
Out there it was all, you know, nobody.
00:03:51 Speaker 1
Wearing masks anymore, but still we need to.
00:03:52 Speaker 4
Anyway, J.
00:03:53 Speaker 4
Cole, I think everybody.
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Who went to the conference?
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Took the risk upon themselves of scatter COVID and you know, it’s not the end of the world or anything or all fine, but I’m just pointing out the hypocrisy.
00:04:05 Speaker 4
So yes, exactly.
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Take care.
00:04:07 Speaker 4
It’s like you’re like Nancy Pelosi or something where personalizing every time a Republican gets COVID it’s their fault.
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I’ll post it on the Internet though.
00:04:15 Speaker 4
But when you throw a super spreader and I think IIS now stands for all in super.
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Better yet, it’s not your fault.
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It was well beyond your control it.
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Was the virus so.
00:04:25 Speaker 4
It was probably just floored.
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It was just this fault.
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It was my idea.
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Yes, it’s a Santa Claus.
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It’s all right.
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In fact, I was going.
00:04:29 Speaker 1
It’s amazing that both of you at both of you now have grown super spreader events.
00:04:34 Speaker 4
Yes, but in my mind I tested.
00:04:36 Speaker 2
Yeah, it’s not.
00:04:38 Speaker 4
Even that mine wasn’t super spreader.
00:04:40 Speaker 1
Alright, in all seriousness, did you have a favorite moment on stage or some reflections on the event?
00:04:45 Speaker 1
I don’t think one thing was really good by.
00:04:47 Speaker 1
The way and then the only thing I would say.
00:04:48 Speaker 1
Palmer Luckey thing is pretty incredible.
00:04:51 Speaker 3
Well, we will be.
00:04:53 Speaker 1
We will be releasing the possible after you.
00:04:55 Speaker 1
To see that.
00:04:55 Speaker 1
So I think that that episode is iopa.
00:05:01 Speaker 1
Yeah, we don’t want.
00:05:01 Speaker 3
To say too much, but things that you.
00:05:02 Speaker 1
I thought were.
00:05:05 Speaker 1
Bully, I think you handled.
00:05:06 Speaker 1
Yourself really well, so thank you for that.
00:05:09 Speaker 3
Pramod, what actually happened?
00:05:11 Speaker 3
I wasn’t there for that portion.
00:05:13 Speaker 3
I haven’t heard anything about it.
00:05:13 Speaker 1
Yeah, I’m gonna give a mini summary.
00:05:15 Speaker 1
Here of it I guess.
00:05:16 Speaker 1
I’ll give you the outside inversion.
00:05:19 Speaker 1
He gives what I can only describe as an incredibly.
00:05:23 Speaker 1
Motivating breakdown of American defense and what his company now you know. You have to remember to put it in context. This is a 29 year old young man.
00:05:34 Speaker 1
Who has now started 2 multibillion dollar unicorns.
00:05:37 Speaker 1
So you know this, he’s going to be around for a.
00:05:40 Speaker 1
Long time doing amazing things.
00:05:43 Speaker 1
But he talks about Andro, which is his defense company, really impressive, and then the whole, you know that everybody is kind of like rousing and cheering and applauding.
00:05:52 Speaker 1
And then he said, you know, I have something else that I want to get off my chest and I.
00:05:56 Speaker 1
Was standing beside Jason Fox.
00:06:00 Speaker 1
I was looking at the monitor.
00:06:01 Speaker 1
I was looking at the mirror.
00:06:02 Speaker 1
At myself but.
00:06:05 Speaker 1
And checking your sweater.
00:06:07 Speaker 1
And he said, you know, there’s a person here that that has been, you know, really hard on me, you know, tried to ruin my life, attacked my family.
00:06:15 Speaker 2
Right.
00:06:16 Speaker 1
And represents, you know, these release this strain of very influential people in Silicon Valley who have gotten it.
00:06:22 Speaker 1
Totally wrong basically.
00:06:24 Speaker 1
He called out cancel culture and then he called out Jacob and to check our strategy after.
00:06:29 Speaker 1
He was done.
00:06:31 Speaker 1
Jacob was the first one that walked out on stage.
00:06:34 Speaker 1
Short promising it, and then we all sat down with Tochterman and the.
00:06:37 Speaker 1
Two ended up putting it out at.
00:06:39 Speaker 1
But there were moments that were very heated in the middle of it.
00:06:41 Speaker 1
The whole thing was incredible to watch.
00:06:44 Speaker 1
I gotta be honest with you.
00:06:46 Speaker 4
Yeah, I would, I would say.
00:06:48 Speaker 4
The most shocking and surprising aspect of the whole thing was that a person as important as Palmer Luckey.
00:06:56 Speaker 3
Felt a need.
00:06:58 Speaker 4
To get revenge on the person as unimportant.
00:07:04 Speaker 1
He’s like, my career was really important people in Silicon Valley.
00:07:08 Speaker 1
I initially thought, Oh my God, he’s talking about me.
00:07:13 Speaker 1
I was always swarmed by that too.
00:07:15 Speaker 1
If I’m being honest, he’s like my entire career was stopped in his tracks and I had to crawl my.
00:07:20 Speaker 1
Way back because.
00:07:21 Speaker 1
Jason Calacanis said this, and I was like.
00:07:27 Speaker 1
Actually, I’m looking forward to when.
00:07:29 Speaker 4
So it’s going.
00:07:29 Speaker 1
To be a great episode, it’s going to be coming.
00:07:31 Speaker 1
Out next week. Thank you.
00:07:32 Speaker 4
That was on my watch, yeah, and I I want to give a shout out to.
00:07:32 Speaker 3
To all the speakers too.
00:07:35 Speaker 4
To Glenn Greenwald, Matt Tidy and Antonio Garcia Martinez for appearing and you know, we did two different panels.
00:07:42 Speaker 4
We did one on domestic politics with Glenn and TV.
00:07:46 Speaker 4
And then the we did.
00:07:47 Speaker 4
A debate on Ukraine which has now been.
00:07:49 Speaker 4
Published between Glenn and Antonio and particularly want to thank Antonio because it did.
00:07:55 Speaker 4
End up being a little bit of A2 on one at the end, which wasn’t my intention, but I have my own views on it too, although I did try to be somewhat restrained and.
00:08:04 Speaker 4
Even hands in the moderation, but it’s a really good debate.
00:08:07 Speaker 4
We should have had longer, we only about 30 minutes, but you can see that online right now.
00:08:13 Speaker 1
It’s actually a great example of actually how to listen to somebody else having to completely, diametrically opposed you and still be respectful about those guys are great to.
00:08:21 Speaker 1
Listen to that.
00:08:21 Speaker 1
I think it’s a new format fact that I think.
00:08:23 Speaker 1
You know, somebody was like, hey, maybe you and Jacob would do it.
00:08:25 Speaker 1
I think you and I moderating like two people who decides it could be like a really interesting format for us for future events practice.
00:08:30 Speaker 1
You have a a favorite.
00:08:32 Speaker 1
Moment on stage, maybe outside.
00:08:33 Speaker 1
Of Iran.
00:08:33 Speaker 1
And of course you can mention this alive.
00:08:34 Speaker 3
So I would say it, you know, maybe.
00:08:36 Speaker 3
Both on stage and off stage.
00:08:39 Speaker 3
You know, I think, listen, I think this podcast has taken some shots and probably appropriately show at times for being a bunch of men in a little bro culture and the effort made to build authentic community and diversity into that room.
00:08:55 Speaker 3
I’ve been to a lot of conferences, whether it’s clarity, alky or.
00:09:00 Speaker 3
Patty Wexler, extraordinary.
00:09:03 Speaker 3
You know, minds, women, all diverse cultures, economic backgrounds.
00:09:07 Speaker 3
When we walked around the floor, heat, you know, Indiana, Kentucky, Respiratory Ed.
00:09:13 Speaker 3
Everywhere, right?
00:09:15 Speaker 3
And who are starting companies having authentic conversations and frankly were grateful for the Community and the advice that they were being given.
00:09:24 Speaker 3
These were from big startups to very small startups and so for me that was a a highlight, the effort you made, I don’t know, almost 40% women, you know.
00:09:34 Speaker 3
Both economics, I thought, as well as, you know, geographic diversity and then, you know, listen, I I had a moment after Bill and I after Gurley and I got off stage.
00:09:45 Speaker 3
I I was stopped by a group of founders and they said, hey, we need.
00:09:48 Speaker 3
Your help.
00:09:49 Speaker 3
I said what?
00:09:50 Speaker 3
And they said we are that company you and Bill were just talking about instead was screwed. We raised $100 million last November from from Tiger at 100 times. They are. What do we do?
00:10:03 Speaker 3
Right.
00:10:03 Speaker 3
And like, like the fact that that you know that those conversations are going on, of course they’re not screwed is a very interesting company.
00:10:11 Speaker 3
But it led to a real conversation that you don’t often have, and conferences like that.
00:10:16 Speaker 3
And so I thought it was much more than just a bunch of talking heads on stage.
00:10:20 Speaker 3
Age, I thought it was a real.
00:10:21 Speaker 3
Give and take.
00:10:23 Speaker 3
In the you know, in the crowd, afterwards the parties.
00:10:26 Speaker 3
The in between.
00:10:28 Speaker 3
And so I really enjoyed that.
00:10:30 Speaker 1
The other big thing that we avoided?
00:10:33 Speaker 1
Uhm failing on was putting back to me.
00:10:37 Speaker 1
I think these animes are some of the most interesting parts of that conference and I think that we should make sure that we probably do an anime Jason like both ways if we do a two day conference.
00:10:47 Speaker 1
The beginning.
00:10:48 Speaker 2
In English.
00:10:50 Speaker 1
And the audience is asking us and and just to explain to people how we were able.
00:10:54 Speaker 1
To, you know, curate the audience, we asked people and things that could play book for other people.
00:10:59 Speaker 1
If they wanna steal it too, they could.
00:11:02 Speaker 1
They could pick the price they wanted to pay based on their station in life. And so people said, I want to come, I’ll pay 500, I’ll pay 1000, I’ll pay 2500 instead of the 7500 ticket.
00:11:10 Speaker 1
Price, which was like 300 people in the audience and we just said.
00:11:14 Speaker 1
Hey, what do you love about the show?
00:11:16 Speaker 1
You know what would come into the conference mean to you?
00:11:18 Speaker 1
And we kind of distorted that.
00:11:19
And we looked.
00:11:20 Speaker 1
For people who are passionate about the show and then you know the the thing that stuck out to me and I know Freberg had a great time as well.
00:11:27 Speaker 1
Was the passion of the audience and how much they appreciate what we do here every week.
00:11:32 Speaker 1
And so the love that we got, people asking to take selfies, people telling us what the show meant to us here, and people coming from all different stations in life, really.
00:11:41 Speaker 1
It made it not elitist, but it felt like the people who were there were all builders.
00:11:48 Speaker 1
And that was really an interesting part.
00:11:49 Speaker 1
What I instructed the team to do was anybody who was like a real estate broker, a money manager, a sales executive or business development person, I said let’s not have them there.
00:11:58 Speaker 1
No offense to those you know critical functions, but a lot of people will come to these events to challenge a customer.
00:12:04 Speaker 1
But I said, anybody who’s a builder, an artist, they’re making something in the world.
00:12:07 Speaker 1
Let’s give them the priorities for these scholarship, because so, you know, when you met people, they were all building something interesting in the world.
00:12:13 Speaker 1
And no press, I think also created a certain vibe there.
00:12:17 Speaker 1
We didn’t have the media.
00:12:18 Speaker 1
They’re criticizing every panel and you know every speaker.
00:12:23 Speaker 1
And so it’s it’s.
00:12:24 Speaker 1
I think it’s just, yeah, made it somewhat natural.
00:12:26 Speaker 1
Well, I think it really couldn’t do it without all you guys in Freeburg and the best theories.
00:12:30 Speaker 1
And Brad, you were helping behind the scenes, so couldn’t do without everybody and my.
00:12:34 Speaker 1
Team, you know, job.
00:12:34 Speaker 4
Your dress has turned out surprisingly well, I thought.
00:12:37 Speaker 3
So I mean.
00:12:37 Speaker 4
On that, I thought the whole thing was a J.
00:12:39 Speaker 4
Cole grift, and it actually.
00:12:41 Speaker 4
Turned out very serious.
00:12:41 Speaker 1
So there’s been a list of some Griffin going offshore and moves.
00:12:43 Speaker 4
He’s overseen accounting of exactly where all the money went, so they think.
00:12:46 Speaker 2
It’s it’s close.
00:12:48 Speaker 1
We’ll have that count.
00:12:49 Speaker 1
Any day now.
00:12:49 Speaker 1
Fax any dinner.
00:12:51 Speaker 3
So what could you have done better?
00:12:52 Speaker 3
What would you change?
00:12:53 Speaker 3
For the next sentence.
00:12:53 Speaker 1
Uhm, you know I?
00:12:56 Speaker 1
It’s a great question. You know, we we always do a document with lessons learned right after the event. So I went through my team and I had 26 people from my team. 21 from launch and an expired from inside came and you know helped staff the.
00:13:10 Speaker 1
And a little more time to work on the speakers in the agenda.
00:13:14 Speaker 1
If we had a little more time but would have teased out of each bestie, you know, maybe 5 or 10 speakers or topics they wanted and worked backwards.
00:13:22 Speaker 1
So it’s just a little more time to to to experiment with the format, but I I took an experimental approach to it we did have.
00:13:29 Speaker 1
People who did solo Dolo.
00:13:30 Speaker 1
Like Ted style talks, we then had people come on stage with the besties and do discussions, but having all besties on stage all the time, it’s.
00:13:38 Speaker 1
A little hard for.
00:13:39 Speaker 1
For everybody in their daily likes to focus on maybe a couple of things.
00:13:43 Speaker 1
Other people like Trump and I like.
00:13:44 Speaker 1
To be on stage for everything.
00:13:46 Speaker 1
But the format was experimental and there was a couple of great moments, I think, when we overlapped folks.
00:13:52 Speaker 1
I think Nate Silver overlapped with keeper boy, you and Bill Gurley together.
00:13:57 Speaker 1
Tim Urban, I’m sorry, overlapped with Kiefer.
00:13:59 Speaker 1
Boy, those were magical moments, I think.
00:14:01 Speaker 1
And so I have.
00:14:03 Speaker 1
Some something in my brain about leaving individual talks and data points with the besties and then having the next speaker on the stage, the next speaker and I would have liked to have more time to.
00:14:15 Speaker 1
Refine that format I think.
00:14:16 Speaker 3
OK, my only question is, was the Palmer Luckey deal was?
00:14:19 Speaker 3
That a plant.
00:14:20 Speaker 3
Did you plan that?
00:14:22 Speaker 1
I come, I’ll take the back stories like, you know, I’ve had invited him on.
00:14:23 Speaker 3
That in there.
00:14:27 Speaker 1
This thing starts before all in.
00:14:28 Speaker 1
Came out many times.
00:14:29 Speaker 1
He said **** you, basically.
00:14:31 Speaker 3
In so many words, I hate Jake.
00:14:32 Speaker 1
App and then when all they came.
00:14:34 Speaker 1
Out he’s the.
00:14:35 Speaker 1
Standard Excel on I think particularly stand updated taxes and I think David knows a lot of the investors, the investor pools getting overlapped in a lot of different circles of ours.
00:14:45 Speaker 1
And I simply like to come to the.
00:14:48 Speaker 2
Damn it.
00:14:49 Speaker 1
And I and I basically said to impart felt like listen I think the work you’re doing to protect the country.
00:14:54 Speaker 1
Most people Silicon Valley don’t believe and build their.
00:14:56 Speaker 1
Weapon systems, but.
00:14:57 Speaker 1
I kind of am with you on this.
00:14:59 Speaker 1
So we probably have some common ground here.
00:15:00 Speaker 1
I think the mission of what you’re doing is more important than our disagreements from, you know, the Hillary Clinton versus Trump days.
00:15:06 Speaker 1
Maybe we could just, you know, put that aside and have your feet and surprising.
00:15:09 Speaker 1
Those people were like, yes, I didn’t.
00:15:11 Speaker 1
Know they were doing yes, because you had a.
00:15:13 Speaker 1
Plot to jump on me, but.
00:15:15
You know, like I don’t mind being.
00:15:16 Speaker 1
Dunked on if I’m wrong about something or.
00:15:18 Speaker 1
I’m right, it’s.
00:15:19 Speaker 1
The whole spirit of this show is to, you know, to learn and grow and have great conversations.
00:15:24 Speaker 1
So with that.
00:15:24 Speaker 1
Maybe we start the show now.
00:15:26 Speaker 1
Let’s do it all.
00:15:27 Speaker 1
Right, let’s go.
00:15:28 Speaker 1
Let me am I still allowed to do intros or is it too triggering?
00:15:31 Speaker 1
’cause I do have interest for this week.
00:15:32 Speaker 1
Do it.
00:15:33
They do it OK, I.
00:15:34 Speaker 1
Got some only other noise.
00:15:36 Speaker 1
Well, yeah, that’s the caveat that I cannot guarantee.
00:15:39 Speaker 1
But anyway, himself getting ready to gallivant across the Italian countryside.
00:15:44 Speaker 1
He spent 40K at all in summit on food and wine. He took 400 selfies in three hours, though.
00:15:49 Speaker 1
Sweaters, my Lord.
00:15:50 Speaker 1
They reek of power.
00:15:51 Speaker 1
The dictator himself is back.
00:15:53 Speaker 1
Paulie Hoppity wasn’t back to the show.
00:15:55 Speaker 2
Thank you.
00:15:57 Speaker 3
His body looks like he doesn’t eat.
00:15:59 Speaker 1
Cake. He’s got a.
00:16:00 Speaker 1
Major stake in Snowflake.
00:16:02 Speaker 1
You might have heard him earlier in the week with Bill.
00:16:06 Speaker 1
He’s a crossover fund manager with that DB, our fifth best.
00:16:10 Speaker 1
See, the audience hangs on every word he has to say.
00:16:12 Speaker 1
The dark nights of Namaste.
00:16:14 Speaker 1
Welcome back.
00:16:15 Speaker 3
To the program Brad Cursor.
00:16:17 Speaker 3
I like it either.
00:16:18 Speaker 2
What? Speedy? Yeah.
00:16:20 Speaker 1
If you don’t know, then you don’t know. You can look that up. Urban dictionary. He’s about to turn 50, but it looks like he’s 65. After 72 hours from Miami, we’re not sure he’s still alive.
00:16:31 Speaker 1
The current paper injections was fast under his eyes. His portfolio has been down for 35 straight days, no surprise.
00:16:38 Speaker 1
The Rain Man.
00:16:38 Speaker 1
Himself is back.
00:16:43 Speaker 1
Is it OK?
00:16:44 Speaker 1
I might have gone too rough.
00:16:45 Speaker 1
On sax, alright, I guess we start with markets and.
00:16:49 Speaker 1
S&P 500 down 15% year to date down down 11%.
00:16:53 Speaker 1
Two stocks of note that did particularly well during COVID zoom and Snowflake, reported their earnings this week, and they beat expectations.
00:17:01 Speaker 1
Of course, that gives them no reprieve. Market cap for zoom 31 billions, had almost $6 billion in cash, which was a.
00:17:13 Speaker 1
The president moved her to cash up, I guess during.
00:17:16 Speaker 1
The boom times.
00:17:17 Speaker 3
The stock dropped 18.
00:17:19 Speaker 1
Percent acid area is so great for them. Q1 revenue 20231 billion, 12% year over year to get an 80% gross margin for that business. Pretty impressive.
00:17:29 Speaker 1
500 million.
00:17:30 Speaker 1
Adjusted free cash flow 7000 employees.
00:17:34 Speaker 1
Perhaps almost 500,000 per employee at this point and stock is still down 43% year to date, but a little bump here, so I I guess we might be bumping along the bottoms.
00:17:43 Speaker 1
And then just to quickly recap Snowflake and get your comments after that snowflake before their quarterly earnings yesterday $41 billion market cap, they got almost 4 billion in cash.
00:17:54 Speaker 1
They were down slightly at the taping of this episode today, and they’re down 67% from the peak of $409 a share in November.
00:18:02 Speaker 1
So they’re not in the 85% plus club like Coinbase and Pelagon, but still they’ve lost 2/3 of their.
00:18:09 Speaker 1
Market CAP 422 million of revenue even.
00:18:13 Speaker 1
5% year over year beat their expectations and dumb.
00:18:18 Speaker 1
Gross margin 72%, net retention 174 percent, 70% growth with a similar existing customers. So David’s access point about wide fast is so great, they got 4000 employees.
00:18:30 Speaker 1
6300 total customers. So I guess maybe starting with you, Brad, since you’re you’re in this in the thick of it, thoughts on, I know you’re major Snowflake early supporter, thoughts on what’s happening in the market and maybe any indication from these two, let’s face it strong results?
00:18:49 Speaker 1
In the bouncing along the bottom, I think is how we’d all describe what’s happening, right?
00:18:54 Speaker 1
Now well, I.
00:18:56 Speaker 3
What makes investing hard is sometimes you have to hold simultaneous truths, right?
00:19:00 Speaker 3
And the reality is there’s a lot of cognitive dissonance when you see something down thirty 4050%, but it may be still that fair value, right? We were talking about last October.
00:19:09 Speaker 3
Like, make no mistake about it, just take Snowflake as an example. The move from 400 to 200 was probably just what I would describe as normalization in a world where rates were going back to 2 1/2 or 3%.
00:19:25 Speaker 3
Right.
00:19:25 Speaker 3
The market last October had gone too high.
00:19:29 Speaker 3
We discussed it on this pod.
00:19:30 Speaker 3
We discussed it on CNBC.
00:19:32 Speaker 3
And so I expected a return to what we call the five year average as we discussed at the summit.
00:19:38 Speaker 3
What’s been surprising to me is the negative reflexivity that’s kicked in as a result of the war in Ukraine.
00:19:45 Speaker 3
Uncertainty about hyperinflation, uncertainty about hyper rates and so now we’re seeing software generally all risk assets growth assets trading now thirty 4050% below the five year average, right.
00:19:59 Speaker 3
So I don’t think it’s helpful to say, well, none of that should have happened. No, the reality is normalization meant that all of this stuff was going to be down 20 to 50% because it was way overvalued last fall.
00:20:12 Speaker 3
We gaslighted ourselves in many respects, we didn’t hedge it perfectly in many respects, but that’s, you know, that’s what happens.
00:20:20 Speaker 3
In late market cycles. So the question is where are we today? And for example, like why is the NASDAQ up 300 basis points?
00:20:27 Speaker 3
Today, right? This it feels like whiplash. I come in one day and you know, you have market caps up 10%, one day, down 10% than that.
00:20:36 Speaker 3
And so I think it’s really important to help the people listening understand, you know, like what happened this week and what’s going on.
00:20:43 Speaker 1
It is been kind of a, uh, a pretty mixed bag this week in fact, of things going down from a particular take on this.
00:20:52 Speaker 1
So what we’re seeing in the market this.
00:20:54 Speaker 1
Week specifically with.
00:20:55 Speaker 1
Precipitous drops and then, you know, the bouncing up against.
00:20:59 Speaker 1
Look we.
00:21:00 Speaker 1
We still had some amounts of rates.
00:21:04 Speaker 1
Uncertainty from the Fed. I think people weren’t sure how aggressively they were going to hike, but by early this week it was pretty clear there was going to be 250 point hikes, one in June.
00:21:17 Speaker 1
And one in July and then effectively a pause because then the Fed funds rate will be at around 2% and everything from there will probably be passed and data dependent. OK, that’s effectively what they said.
00:21:32 Speaker 1
Now I think the the markets had actually already started to see that writing on the wall.
00:21:38 Speaker 1
So if you go back to you know one of our favorite measures which is the 10 year break even, it’s effectively rolled over which meant that you know which means that from the highs in sort of late April it started to come down.
00:21:51 Speaker 1
Which says that, you know, they were thinking that, you know, the inflation was not going to be as bad in the back.
00:21:57 Speaker 1
Half of.
00:21:57 Speaker 1
The year.
00:21:58 Speaker 1
And then the second is that corporate credit, which is really what matters in some ways to the Fed because that’s where they can intervene.
00:22:06 Speaker 1
What is the spread above treasury that a company can issue debt?
00:22:11 Speaker 1
When it goes crazy and it goes up, it means, Oh no, the cost of capital is going up.
00:22:16 Speaker 1
That’s going to be hard for companies to raise money they may have to lay people off. They may need to get into cost cutting mode, right? That’s what goes through everybody’s mind.
00:22:23 Speaker 1
But that’s all for now. About 35 and 40 days rolled over, which means that the gap has started to shrink.
00:22:31 Speaker 1
You know, between the US Treasury price and what you know, decent corporates can can issue debt out.
00:22:38 Speaker 1
So it looks like.
00:22:40 Speaker 1
We are set up for potentially a decent little rally here.
00:22:45 Speaker 1
The problem is, is it a rally that is sustainable or is it a rally that’s basically what we call a dead cat bounce or a bear market rally where you know you just get some one or two weeks of release before the thing Spears down again and.
00:23:00 Speaker 1
For nothing, though, although tomorrow on Friday there’s going to be a really important set of inflation data that gets released and I think everybody is going to be flooding these details.
00:23:09 Speaker 1
So right now we’re in a moment of pause.
00:23:12 Speaker 1
And there is the potential if this data comes back as reasonably good, which means prices are, you know, not escalating as much as you thought.
00:23:22 Speaker 1
Inflation is not going to be as bad.
00:23:24 Speaker 1
Growth is going to be moderate that that gives a lot of ammo for the Fed to kind of take.
00:23:29 Speaker 1
Their foot off the off the gas here and the fact that our kids will go boom.
00:23:34 Speaker 1
Fax The the interesting note I think is.
00:23:39 Speaker 1
What we talked about here, everything was correcting except housing and we were wondering when this, you know, the increasing rates would hit mortgage rates.
00:23:49 Speaker 1
Mortgage is way above 5% in the last two weeks. I think it’s.
00:23:52 Speaker 1
Come down a little bit, but the mortgage rates basically doubled and then we finally saw it earlier in this week.
00:24:00 Speaker 1
What day was it? It’s two days ago, so we’re taking this on Thursday, starting on Tuesday. New home sales, 591,000.
00:24:09 Speaker 1
They expected 749 and I think the last month before that was 763. Is that indicative of?
00:24:18 Speaker 1
The raising the rates and slowing down inflation has finally occurred.
00:24:24 Speaker 1
And that that.
00:24:24 Speaker 1
Maybe the Fed maybe steered too much.
00:24:28 Speaker 1
Into the turn.
00:24:28 Speaker 1
How do you interpret that map if it’s a pretty massive miss in terms of home sales?
00:24:32 Speaker 1
In the estimate.
00:24:33 Speaker 4
Well, the cost of buying home are going way up because home loans are now more expensive.
00:24:38 Speaker 4
So that’s going to factor into all sorts of Schumer purchases or anything that’s financed.
00:24:43 Speaker 4
It can be more expensive.
00:24:44 Speaker 4
But you’re also seeing companies starting to slow down spending, really starting to slam on the brakes.
00:24:50 Speaker 4
We see the Startup Lab Corps all slashing costs right now, but that’s eventually going to percolate up to big companies.
00:24:56 Speaker 4
Two, you saw it dollars memo basically when he got back from Wall Street and republished.
00:25:00 Speaker 4
That couple weeks ago.
00:25:02 Speaker 4
Saying we need to up our pencils.
00:25:03 Speaker 4
Tried everything.
00:25:04 Speaker 4
What Wall Street is looking for now is free cash flow.
00:25:08 Speaker 4
So it seems to me like we’re headed into a pretty serious downturn or recession here.
00:25:13 Speaker 4
I mean, I’ve been saying we’re in recession for months.
00:25:16 Speaker 4
The the the tricky thing for the Fed is that they don’t have a lot of good options because we have a lot of recession indicators blinking red right now.
00:25:27 Speaker 4
At the same time, inflation is so.
00:25:29 Speaker 4
High. So they’re kind of caught between a rock and a hard place. I think what the Fed should have done is, in 2020 hindsight.
00:25:36 Speaker 4
Is back last summer.
00:25:38 Speaker 4
We first got that shot, CPI.
00:25:41 Speaker 4
Print number of like 5.1%.
00:25:44 Speaker 4
Seemed to come out of the blue because for years and years have been talking about deflation.
00:25:48 Speaker 4
Nobody saw inflation was the problem.
00:25:50 Speaker 4
All of a sudden we got that 5.1.
00:25:51 Speaker 4
Percent grant.
00:25:53 Speaker 4
They weren’t told denial about it.
00:25:54 Speaker 4
They they just dismissed it, saying that inflation was transitory and, you know, Yellen said the same thing and so basically everyone just ignored.
00:26:02 Speaker 4
The data for six.
00:26:04 Speaker 4
And what they should have done was stop QE right then and there.
00:26:07 Speaker 4
They could have taken a little bit of time to think out, you know, a rate increase strategy.
00:26:13 Speaker 4
But they were still.
00:26:14 Speaker 4
Basically engaging in QE for nine months after that, you know, first inflation warning and.
00:26:21 Speaker 4
If they’ve stopped.
00:26:22 Speaker 4
Doing there, then we wouldn’t have had.
00:26:23 Speaker 4
This asset bubble in the second-half of last year, that’s what inflated the most.
00:26:30 Speaker 4
And we could have had more of a soft landing.
00:26:32 Speaker 4
Unfortunately, now they left the they kept inflating.
00:26:37 Speaker 4
And really until the end of Q1 and they’ve yanked away the punch bowl so violently that I think the real economies think of enter recession.
00:26:45 Speaker 3
So that’s where.
00:26:45 Speaker 4
We are right now.
00:26:46 Speaker 4
I mean I.
00:26:47 Speaker 4
Don’t know what that what the right?
00:26:49 Speaker 4
Answer is now.
00:26:51 Speaker 4
Given that we’re in this, you know, almost saturation, airy position.
00:26:54 Speaker 1
Let’s try and answer that Brad.
00:26:56 Speaker 1
What is if if we didn’t act soon enough if you agree with soccer point, pretty hard to disagree with and we didn’t take the medicine a little bit at a time and and now maybe we’ve overreacted or maybe it’s going to get worse.
00:27:09 Speaker 1
What is the right thing for us to be doing now because all these companies doing hiring.
00:27:15 Speaker 1
Layoffs at the same time at the housing market.
00:27:17 Speaker 1
Tanks at the same time crypto tanks at the same time the stock market.
00:27:20 Speaker 1
And this feels like a major shock to the system.
00:27:25 Speaker 1
Is it time to maybe reconsider some of these?
00:27:30 Speaker 1
You know, for the feds or reconsider, or just slow and steady wins the race here.
00:27:34 Speaker 1
What’s the best option?
00:27:35 Speaker 3
First, we should erect statues to Senator Manchin for saving the Republic by vetoing Sidney, too.
00:27:42 Speaker 3
That would have been devastating.
00:27:43 Speaker 1
Bill Baxter.
00:27:45 Speaker 3
That would have been devastated, so we’ll revisit that. Listen, the Fed said two really important things this week, they said #1.
00:27:54 Speaker 3
Our communications have been helpful in shifting market expectations.
00:27:59 Speaker 3
What that means the Fed is the air traffic control.
00:28:03 Speaker 3
They said to the markets at the beginning of the year, you’re 90 degrees off runway heading.
00:28:09 Speaker 3
Get your *** back on runway heading.
00:28:11 Speaker 3
It was a slap in the face to market and it was a radical adjustment.
00:28:16 Speaker 3
Now you hear the Fed in these little statements.
00:28:19 Speaker 3
This week, they said.
00:28:21 Speaker 3
We’re well positioned this year to assess the effect of policy firming in the back after they say we’re going to hit it with 5050 and then we’re going to take a look.
00:28:31 Speaker 3
So now think of it as air traffic control.
00:28:34 Speaker 3
Your 2 degrees to the left, your 2 degrees to the right.
00:28:37 Speaker 3
They’re steering us on runway heading.
00:28:39 Speaker 3
I don’t think the Fed wants to do anything.
00:28:41 Speaker 3
At this moment, to lose credibility in the inflation fight, we’re going to get 50, we’re going.
00:28:47 Speaker 3
To get another.
00:28:48 Speaker 3
50 But they’re doing what they want to do, which is keeping markets sufficiently tight, right?
00:28:54 Speaker 3
They wanted to take the crypto market down.
00:28:57 Speaker 3
They wanted to take all the excessive risk in the stock market down, right? You’re absolutely right. The inventory of $350,000 homes spiked from four months to 9.
00:29:08 Speaker 3
That’s right, used car prices are rolling over the last three months, all the things they needed to.
00:29:14 Speaker 3
Do they’re doing.
00:29:15 Speaker 3
Right, they need to stay the course. However, the hyperventilation this week by Bill Ackman on Twitter says the Fed needs to be doing radically more that somehow we need to be raising rates to six, seven, 8% in order to squash inflation. To me seems highly misdirected and totally out of touch with the practice.
00:29:36 Speaker 3
On layoffs at FY they’ve already announced 750 companies that are announcing layoffs, right? The market is giving the drill.
00:29:46 Speaker 1
I I totally agree with this.
00:29:48 Speaker 1
I think we’re in a we’re in a pretty reasonable place here.
00:29:51 Speaker 1
The real, the real question is now.
00:29:53 Speaker 1
What do you need to take the market lower and this is more of a nuanced but.
00:29:58 Speaker 1
You know when you look at companies that are now quote UN quote, shoot, right, let’s take an example like you. You know what we hear a lot about?
00:30:06 Speaker 1
Google or Facebook like people here. My gosh this is cheap ’cause if you want a screen on it. It’s like 10/11/12 times.
00:30:13 Speaker 1
Twice to earn.
00:30:15 Speaker 1
Well, the price, you know, because you can look on the.
00:30:18 Speaker 1
The real question is, are the earnings right?
00:30:21 Speaker 1
And the thing that can take the market lower is if you actually think earnings are modeled incorrectly.
00:30:29 Speaker 1
Right, so he thought this week as well.
00:30:33 Speaker 1
I mean completely just blew themselves up.
00:30:35 Speaker 1
Percent down just per day.
00:30:38 Speaker 1
Yesterday, again, to say something about that guy, they have the most incredible propensity to self immolate on earnings calls than any other company I’ve ever seen.
00:30:47 Speaker 1
There’s probably been three times, no less than three times over the last four years.
00:30:53 Speaker 1
Where I don’t know whether it’s just poorly scripted or not well rehearsed or the people that are helping Evan get ready for these things, but these are disastrous calls.
00:31:06 Speaker 1
You know, Facebook’s had a couple in its lifetime, but snap consistently, probably once every 18 months will do this.
00:31:13 Speaker 1
Anyways, the thing just completely implodes. The stock imposed by 48% or something and then it’s, you know, rolls over to companies like Facebook and Google would enter off 8 or 10%.
00:31:25 Speaker 1
A part of telling you the story is that if you think Facebook and Google, just as an example again, are cheap at 10 times, while you better hope that the earnings are right because the earnings are absolutely wrong. That’s actually 27 times in 19 times.
00:31:38 Speaker 1
You know, I’m making new members up to give you the example because the earnings are fundamentally wrong.
00:31:42 Speaker 1
So that’s the risk now that’s left in the market.
00:31:45 Speaker 1
In my opinion, that could take it much, much lower is.
00:31:47 Speaker 1
It that you know.
00:31:49 Speaker 1
All of this slowdown really contracts spend.
00:31:52 Speaker 1
And the earnings are actually not as.
00:31:55 Speaker 1
The forecasted earnings will need to be revised over the next two or three quarters.
00:32:00 Speaker 1
And that’s where we will probably see the low.
00:32:03 Speaker 1
If however growth is muted and the feds plan as Brad said is a really good analogy.
00:32:06 Speaker 2
That’s bad.
00:32:08 Speaker 1
Now just course correct by degrees, you know a degree here, degree there.
00:32:14 Speaker 1
We’ve probably consolidated the lows.
00:32:17 Speaker 1
So said another way, we look at a company like SNAP or Google, a lot of their expected value has to do with people AD spends.
00:32:26 Speaker 1
We now see.
00:32:27 Speaker 1
Less homes being sold, so maybe people in real.
00:32:29 Speaker 1
Estate stop spending less.
00:32:30 Speaker 1
On Edge, they’re a major advertising category, maybe direct to consumer.
00:32:34 Speaker 1
People are not buying because of supply chain issues.
00:32:36 Speaker 1
This stuff is.
00:32:37 Speaker 1
Too expensive and we’re not going to spend on ads.
00:32:40 Speaker 1
And so all of this ad revenue, that’s some of the first to come.
00:32:43 Speaker 1
Out of people’s budgets.
00:32:45 Speaker 1
So you know even as great as snaps results actually work, they were up 38% year over year the generating over 100 million free cash flow.
00:32:55 Speaker 1
The guide was terrible because what they said was our E, right, how earnings right?
00:33:01 Speaker 1
Not modeled accurately, right.
00:33:04 Speaker 1
And so that’s.
00:33:05 Speaker 1
The worst that you now have to take to every company.
00:33:07 Speaker 1
You cannot look at a screen at Yahoo Finance or Bloomberg, look at a price earnings ratio and say wow, seven times.
00:33:14 Speaker 1
That’s so cheap it may not be 7.
00:33:16 Speaker 1
You have to do your own work.
00:33:18 Speaker 1
It could actually be much higher than that because the earnings may be at risk.
00:33:22 Speaker 1
The earnings being at risk is this contagion that we talked about, I don’t know, six middies we’re going on almost a year now.
00:33:29 Speaker 1
Fact we talked about, uh, contagion happening ’cause we’ve all experienced it in the last two recessions to the.com bust in.
00:33:35 Speaker 1
The Great Recession.
00:33:36 Speaker 1
So what are you seeing in terms of at companies this contagion risk are people cancelling?
00:33:42 Speaker 1
Past contracts on the margins, obviously people are doing hiring freezes.
00:33:46 Speaker 1
Obviously people are laying people off or people are disturbed.
00:33:50 Speaker 1
Renegotiating salaries.
00:33:53 Speaker 1
You know what?
00:33:54 Speaker 1
What’s the next couple of shoes to drop here?
00:33:56 Speaker 1
That would signal to you a true bottom here.
00:33:59 Speaker 1
Like have you seen, I thought maybe one would be if somebody offers somebody an investment with a two or three times liquidation preference.
00:34:06 Speaker 1
Have you seen more of those?
00:34:06 Speaker 1
Yet have you seen people say we’re going to renegotiate salaries?
00:34:09 Speaker 1
’cause that’s when it was really dark.
00:34:10 Speaker 1
Right, the last two times that.
00:34:12 Speaker 1
Was the true darkness.
00:34:12 Speaker 4
No, it’s not.
00:34:13 Speaker 4
It’s going to take time to get to that point.
00:34:15 Speaker 4
I mean where you start seeing structuring deal in deals is when a founder.
00:34:20 Speaker 4
It’s trying to preserve evaluation they got last year and that can’t really be justified, but.
00:34:25 Speaker 4
They don’t want to just take.
00:34:25 Speaker 2
The down round.
00:34:26 Speaker 4
So you try to preserve the optics in the last round by building all these preferential terms.
00:34:31 Speaker 4
We don’t like to do deals that way, but you’ll start to see that happen later this year when you know companies get more desperate.
00:34:37 Speaker 4
That’s not the first thing that happens, though.
00:34:40 Speaker 4
I think that that, to your point about the talent market, it’s definitely going to happen.
00:34:44 Speaker 4
Hasn’t happened yet, no.
00:34:46 Speaker 4
What has to happen is first all these open Rex get cancelled companies free for hiring plan, then eventually they do layoffs.
00:34:52 Speaker 4
That’s coming.
00:34:53 Speaker 4
And then the pilot markets closed out that here it’s right exactly.
00:34:54 Speaker 1
That’s that’s here.
00:34:54 Speaker 1
Both of those things are here, both are here.
00:34:57 Speaker 1
So what’s the next in talent was?
00:34:58 Speaker 4
Well, yeah, I mean, look, but it was in the next six months, the child markets not to be as hot.
00:35:03 Speaker 4
And you know, in the same way that startups aren’t getting tense from sheets now, that maybe they get one or two if they’re a good company.
00:35:11 Speaker 4
Same thing with talent, right?
00:35:12 Speaker 4
They’re not going to have 10.
00:35:13 Speaker 4
Job offers.
00:35:13 Speaker 4
They might have one or two and that’s gonna create.
00:35:17 Speaker 4
That’s not going to create the same upward pressure, continuing upward pressure for for increases in comps to your point about like little fast contracts these types I mean.
00:35:28 Speaker 4
I think software is.
00:35:29 Speaker 4
Pretty sticky, I mean, if it’s a good product.
00:35:33 Speaker 4
Will deal cycles get longer?
00:35:35 Speaker 4
Will there be more mortality risk?
00:35:38 Speaker 4
In the starter for SMB customer bases of companies, yes.
00:35:43 Speaker 4
Uhm, I think one concept that Subs may want to wrap their heads around is what I would call deferred mortality risk, heating that during the last few years during the boom times, the graduation rate from C to series ADA Series B was very high, perhaps artificially high.
00:36:00 Speaker 4
So there’s a lot of companies that got funded in advance to the next round.
00:36:03 Speaker 4
Where in more normal times they wouldn’t have made it so.
00:36:07 Speaker 4
Now if those companies haven’t really fixed their issues, they just deferred the mortality.
00:36:12 Speaker 4
So I think all of us probably exacly and need to be modeling out higher logo churn for the different customer bases that are skewed towards startups recipes and we don’t know what those numbers are going to be yet.
00:36:27 Speaker 4
But that is likely to happen.
00:36:29 Speaker 1
I think that that’s right.
00:36:30 Speaker 1
I think the other thing is that there’s a lot of companies that are going to have to get religion on free cash flow conversion ASAP.
00:36:37 Speaker 1
And I just think that most CEO’s, to be very blunt.
00:36:42 Speaker 1
Are poorly educated and innumerous, so their level of numeracy to even understand this is pretty poor and most board directors are equally.
00:36:53 Speaker 1
Can you unpack it right now?
00:36:55 Speaker 1
What does it mean to to get the business to free cash flow?
00:36:59 Speaker 1
What does it take, why is it important and what are the how do those businesses?
00:37:02 Speaker 1
Look differently to the market.
00:37:03 Speaker 1
Spend less.
00:37:06 Speaker 1
Then you make.
00:37:07 Speaker 1
Can hold on, I just want to make sure I got.
00:37:09 Speaker 1
It correct.
00:37:10 Speaker 1
Money, but the number of the.
00:37:13 Speaker 1
Money we make is.
00:37:14 Speaker 1
Higher than the number of the money you spend.
00:37:16 Speaker 1
Product and then there’s a delta there.
00:37:19 Speaker 1
There’s some difference between those two numbers and that number is important to some people where you’re saying.
00:37:23 Speaker 1
I think increasingly getting that number to be greater than zero is going to be really important.
00:37:30 Speaker 1
It it allows you again, everybody starts to throw up this whole thing, which is, Oh my God, you can never slow growth and the company will die.
00:37:39 Speaker 1
And yeah, maybe in a vacuum that that’s true, but when every other company is fighting tooth and nail to survive.
00:37:46 Speaker 1
The only thing that you need to do is actually survive by surviving.
00:37:49 Speaker 1
You win and.
00:37:51 Speaker 1
If you can basically make your cash last as long as possible, even if you cut to the bone and stop growing.
00:37:58 Speaker 1
If you come out the other end and you’re the only company that’s left, you will win and run over the market.
00:38:03 Speaker 1
You may have pushed to the right a few years your plans of world dominance, but they’re still available to you.
00:38:10 Speaker 1
It’s the company that.
00:38:11 Speaker 1
Foolishly thinks that they can continue to spend money at the same rate or in.
00:38:14 Speaker 1
The same ways.
00:38:15 Speaker 1
That are going to learn this hard lesson because.
00:38:18 Speaker 1
I hope that some investors are not going to tolerate.
00:38:22 Speaker 1
Being able to, you know, provide incremental capital to organizations funds who are then you know, miss allocating that capital to basically support a poorly marked portfolio and I think that is going to be the real come to Jesus that actually makes all of this income clean like pension funds, family officers.
00:38:43 Speaker 1
Endowments all these organizations.
00:38:45 Speaker 1
Are smart enough to realize that they’re giving good money after bad if what those folks are going to do is not demand portfolio rehabilitation and instead are just going to basically keep the marks of their old funds because they’re just in a in a game of waiting it out.
00:39:01 Speaker 1
Well, taking action greater than, you know, blind hope and just going, you know, steady doing what?
00:39:07 Speaker 1
You’ve been doing.
00:39:08 Speaker 1
You gotta make some.
00:39:09 Speaker 1
I mean, look, I’ve loved projects, I think.
00:39:11 Speaker 1
That most growth oriented funds are looking at their portfolios and they’re trying to balance 2 strategies.
00:39:19 Speaker 1
Strategy one is get into massive rehabilitation mode.
00:39:22 Speaker 1
The problem is, most of these people have never built or run a company, so they have no idea how to rehabilitate anything.
00:39:27 Speaker 1
They’re, you know, market momentum folks.
00:39:30 Speaker 1
And in that they were excellent.
00:39:31 Speaker 1
But in actually helping CEOs build and rebuild the business, I think that they’re not as well suited.
00:39:36 Speaker 1
Doesn’t mean they can’t do it, but they’re not as well suited.
00:39:39 Speaker 1
That’s passe.
00:39:41 Speaker 1
But I think that path is very painful and it requires you to take medicine, the bitter medicine, which is to basically mark your portfolio down 50 or 60% just like the public market.
00:39:51 Speaker 1
Terminal valuations have gone down.
00:39:53 Speaker 1
The other alternative is to basically raise enough money.
00:39:57 Speaker 1
To do, for example, unpriced converts into those same companies so that you don’t have to remark, so that the auditors will be allowed to carry these space valuations, you can maybe mark it down 10 or 15%, so I don’t have to mark it.
00:40:10 Speaker 1
Down 50 or 60% and hope.
00:40:13 Speaker 1
The market returns to its previous state, but as we’ve all talked about, that previous state is probably unreliable because it was a moment where we had a global pandemic where we took rates to zero and we printed 9 or $10 trillion of excess liquidity that inflated these things. So I got to think that, you know.
00:40:33 Speaker 1
Prices in 2019 were a little bit ticking up. 2020 were really taking up 2021 was egregious in 2022 is the current is you know where it all comes untruth.
00:40:46 Speaker 1
Brad explained to us, we hear free cash flow, we heard income, net income, EBIT, DA, we hear all these terms now free cash flow is what everybody is focused on.
00:40:57 Speaker 1
I believe that seems to be the predominant.
00:41:00 Speaker 1
Uhm, rallying cry and a lot of public market companies.
00:41:03 Speaker 1
Now can you?
00:41:04 Speaker 1
Explain to people what the difference between these things are, because people kind of bundle them together.
00:41:08 Speaker 1
Why would somebody like Dora?
00:41:10 Speaker 1
Gruber, just say, hey, you know, we’ve been talking about adjusted EBIT, EBIT income, that income, all this stuff, but free cash flow is what we want to focus on now or is that correct?
00:41:19 Speaker 3
Yeah, but still, you know our friend Bill Gurley rails on this, adjusted, adjusted and you know, look to your left, look to your right, adjust it one more time even though right like in market.
00:41:30 Speaker 3
Like this what people want to know or what’s the green stuff I can take out of the business and put under?
00:41:35 Speaker 3
My mask is.
00:41:36 Speaker 3
Free cash flow, distributable free cash flow and not only that.
00:41:40 Speaker 3
How much per share?
00:41:43 Speaker 3
I think the single biggest issue growth investors are focused on today is the easy.
00:41:48 Speaker 3
Way out for all these companies.
00:41:50 Speaker 3
They’ll tap down a little bit on their hiring.
00:41:52 Speaker 3
They’ll tap down on their spin, but out of the back door, they want to give a bunch of free stock to employees to help offset that pain.
00:42:00 Speaker 3
This is really important to understand because.
00:42:03 Speaker 3
Stock is a real excel.
00:42:05 Speaker 3
Right.
00:42:06 Speaker 3
When a company goes public, the more shares you have, the lower your price.
00:42:09 Speaker 3
So it is a real expense to everybody, the founders, the employees, the investors, right?
00:42:15 Speaker 3
And So what?
00:42:16 Speaker 3
What I think the single biggest conversation going on in boardrooms is Silicon Valley today is, hey, can we have a little bit more stock?
00:42:24 Speaker 3
This year, whether it’s.
00:42:26 Speaker 3
Options or whether it’s outright our issues to give to employees, because if we don’t give it to employees, they tell us.
00:42:31 Speaker 3
They’re going to lead.
00:42:33 Speaker 3
This is a real hard truth.
00:42:34 Speaker 3
I had a CEO of an incredible company call me and say Listen.
00:42:39 Speaker 3
We pay our engineers 1,000,000 bucks ahead, but we give them stock that over the last five years has been worth another $1,000,000 each year.
00:42:48 Speaker 3
So they built their lives as though they had $2,000,000 a.
00:42:52 Speaker 3
Year in income they bought.
00:42:53 Speaker 3
A house they bought cars.
00:42:55 Speaker 3
They said the shift to private schools based upon that $2,000,000 and now will we tell them that this upcoming.
00:42:55 Speaker 1
Vacation, yeah.
00:43:03 Speaker 3
The note we’re not making hole on that million.
00:43:05 Speaker 3
It can’t be when when we win, you win and when we when we lose you then.
00:43:10 Speaker 3
So the tough conversation is we’re not re upping you because the stocks?
00:43:15 Speaker 3
Been cut in half.
00:43:16 Speaker 3
And so now that engineer saying, yeah, but this year that means I’m only getting paid 1.2 million and the answer, the top answer.
00:43:24 Speaker 3
Is yes.
00:43:25 Speaker 3
Right, shared sacrifice. You should have never assumed that that was going to be worth an incremental $1,000,000 a year.
00:43:31 Speaker 3
But that takes leadership.
00:43:33 Speaker 3
That takes courage.
00:43:34 Speaker 3
That takes a board that knows what they’re doing to explain the over the full arc of that employment.
00:43:40 Speaker 3
And the first thing the mercenary employee says is law.
00:43:43 Speaker 3
Just don’t work somewhere else.
00:43:45 Speaker 3
And the right?
00:43:46 Speaker 3
Answer for a good leader is OK.
00:43:49 Speaker 3
If that’s your approach to this business, then you need to go work somewhere.
00:43:49 Speaker 1
OK.
00:43:53 Speaker 3
Else, I mean, you just did a great test, right?
00:43:55 Speaker 1
That’s a great filter.
00:43:56 Speaker 1
You, you you’re a mercenary, and, you know, you were with us when we’re up, but you’re not with us when we have to take some austerity measures.
00:44:03 Speaker 1
Is this the end of entitlement across the board?
00:44:06 Speaker 1
I mean, we had an entitlement class, everybody.
00:44:09 Speaker 1
But they could raise the VC fund. Everybody thought they would have 100% IR because they would just buy entities and flip crypto projects that had no released prod.
00:44:17 Speaker 1
And the famous employees, they just thought I can just keep you know, raising my salary X amount and now it looks like Apple said everybody comes back to work three days a week and we don’t see a lot of people quitting Apple ’cause there may not be another option and maybe a lot of the firings that are occurring.
00:44:34 Speaker 1
I am thinking of cameo here has topped three of their top.
00:44:37 Speaker 1
Like 6 or 7 leaders leave.
00:44:40 Speaker 1
I interpreted that as maybe they had really big com packages and when they did the layouts they said you know what?
00:44:45 Speaker 1
The number twos in these positions can get the job done for a third of the price.
00:44:50 Speaker 1
Maybe that’s better for the business.
00:44:52 Speaker 1
So is this the end of austerity?
00:44:54 Speaker 1
The end of entitlement?
00:44:55 Speaker 4
I think so.
00:44:56 Speaker 4
A lot of it.
00:44:57 Speaker 4
There was a great article here in Boulder was thinking about recently about Netflix, where Netflix they’re finally getting real about their kind of entitled, their work entitled employee Pool.
00:45:09 Speaker 4
And this is in the New York Post, but there are many other newspapers that covered it.
00:45:14 Speaker 4
Basically, it says here Netflix tells work workers to quit affair fund.
00:45:17 Speaker 4
It if you find it hard to support our content, breath Netflix may not be the best place for you, said the memo.
00:45:24 Speaker 4
So yeah, he said.
00:45:24 Speaker 1
Serious. Full stop.
00:45:26 Speaker 4
They’re just sick of it.
00:45:26 Speaker 4
There’s not gonna put up with it anymore.
00:45:28 Speaker 4
They’re sick.
00:45:29 Speaker 4
Being held hostage by their employees.
00:45:31 Speaker 4
Do things that they couldn’t uh, muscle being leaders of the company by starting a petition or boycott campaign every time they want to drive the company in a certain direction.
00:45:40 Speaker 4
And so I think companies are finally.
00:45:41 Speaker 4
Figuring out this is the.
00:45:42 Speaker 4
Only way to.
00:45:43 Speaker 4
React to basically being held.
00:45:45 Speaker 4
Hostage if you don’t like it, but.
00:45:47 Speaker 1
If you don’t have 7-8 job.
00:45:49 Speaker 1
Offers you know, and recruiters calling you constantly.
00:45:52 Speaker 1
Because everybody is on.
00:45:52 Speaker 1
The hiring freeze?
00:45:54 Speaker 1
Well, then maybe people will appreciate.
00:45:56 Speaker 1
The contract of I work for.
00:45:58 Speaker 1
You you give me money, and then everything else is superfluous on that note.
00:46:02 Speaker 1
Can anybody see the work easier?
00:46:03 Speaker 1
Base with infliximab results yet.
00:46:06 Speaker 1
Yeah, this, this, this.
00:46:07 Speaker 1
It’s on Netflix.
00:46:08 Speaker 1
It’s unbelievable.
00:46:11 Speaker 1
I mean, Dave Chappelle, you know, in terms of bravery, Ricky Gervais was like, I’ve already made my money, I’m burning the the whole building down and he, he went full.
00:46:22 Speaker 1
Equal opportunist and I mean I think the trans issue became like 10 or 20% of the of his latest specials.
00:46:30 Speaker 1
So it does seem like the comedians were saying, you know what?
00:46:33 Speaker 1
We’re going to make jokes, gonna make jokes about everybody.
00:46:36 Speaker 1
We’re not going to buy into this.
00:46:37 Speaker 1
You can’t cancel us.
00:46:38 Speaker 1
We’re just going to keep making jokes and we’re going to keep making money and that.
00:46:43 Speaker 1
That, you know, people are going to be held hostage.
00:46:45 Speaker 1
I think it’s over independent of what you think of making jokes of, you know, various marginalized or smaller groups of people.
00:46:53 Speaker 4
Should we fix the master with something?
00:46:55 Speaker 4
Brad said a while back about how mansions save the Democratic Party.
00:46:59 Speaker 4
So I think there is actually the same point there.
00:47:01 Speaker 4
Yeah, yeah.
00:47:02 Speaker 4
Such notorious right wingers that Jeff Bezos has said something very similar lately.
00:47:06 Speaker 4
When you see that where?
00:47:08 Speaker 4
Fighting, try Biden tried to blame billionaires for the insulation and says this was having none of it.
00:47:14 Speaker 4
He said no, listen, it’s not because of us or our companies, because you printed too much money.
00:47:18 Speaker 4
And Joe Biden start.
00:47:20 Speaker 4
He’s had mansion saves you from yourself.
00:47:22 Speaker 4
Because it would have.
00:47:23 Speaker 4
Been another 4.
00:47:24 Speaker 4
Trillion of spending, on top of all the other trillions of spending that we had last year.
00:47:28 Speaker 4
So it’s absolutely the case that that if the administration was left to its own devices, remember they were touting back in December, they were touting the idea that this 4 trillion build back better spending would somehow be the cure to inflation.
00:47:41 Speaker 4
Imagine if they had poured that gasoline on the fire.
00:47:44 Speaker 1
I mean, we would go.
00:47:44 Speaker 1
To 20% inflation we might have had.
00:47:46 Speaker 1
A currency, you know, like a.
00:47:49 Speaker 3
Serious currency issue? No.
00:47:50 Speaker 2
Yeah, but.
00:47:51 Speaker 4
Well, that leads to point.
00:47:53 Speaker 4
So I don’t want to make a partisan point here.
00:47:54 Speaker 4
I want it.
00:47:55 Speaker 4
There’s there’s a serious economics point here with or learning.
00:47:58 Speaker 4
I hope our policymakers learn from this, which is what happened over the last couple of years. We had $10 trillion of money printing, right? Why they do that? They thought.
00:48:08 Speaker 4
That they could stimulate our way out of this.
00:48:11 Speaker 4
So this recession that they had induced with lockdowns?
00:48:13 Speaker 4
In any event the.
00:48:14 Speaker 4
Point is, they thought they could stimulate economic activity by printing money and maybe civically politically.
00:48:20 Speaker 4
They thought it would be good for them in the terms what actually happens that temp trillion goes into the economy, but there’s no corresponding increase in the output.
00:48:28 Speaker 4
Prison services.
00:48:29 Speaker 4
So two things happen.
00:48:30 Speaker 4
First price levels wise and we get inflation and 2nd we get an asset bubble in the stock market.
00:48:36 Speaker 4
And then the way both those things sort of come crashing down to Earth is the Fed looks at this inflation and suddenly has the Jack up interest rates that pops the asset bubble.
00:48:46 Speaker 4
It vaporizes something like 14% of global wealth and then simultaneously workers feel a lot poor because their wages haven’t kept up with inflation. So this whole idea that you can just.
00:48:56 Speaker 4
Print money as a way to create wealth and prosperity.
00:48:59 Speaker 4
I hope we take away from this.
00:49:01 Speaker 4
I think recession that we’re going into is that is not a viable strategy.
00:49:05 Speaker 4
The only thing that creates wealth in the society is the output of goods and services that people want.
00:49:11 Speaker 4
And you just can’t try to sort of play games with that by creating Phantom, this sort of phantom money that doesn’t represent a real increase in good service.
00:49:22 Speaker 1
Yeah, it’s hard for people not to take this all as partisan, but if you just look at the objective facts, the last two administrations have printed money like drunken sailors, and it’s a mess.
00:49:33 Speaker 1
Right now. So you you.
00:49:34 Speaker 1
Can divorce yourself from any conception that.
00:49:36 Speaker 1
This is partisan.
00:49:38 Speaker 1
Trump spent the ship ton of money, and so did Biden. And who’s more qualified than Trump and Biden’s fuel on Bezos?
00:49:45 Speaker 1
The people who appear on this podcast, we have much more of a pulse on what’s happening in the actual real economy and in entrepreneurship and capital allocating than these people and.
00:49:54 Speaker 3
I love the fact that now.
00:49:56 Speaker 1
You know, babe.
00:49:57 Speaker 3
So this is a shitposter he just doesn’t.
00:49:59 Speaker 1
Get it? He doesn’t care.
00:50:01 Speaker 1
And I think we’re having like an honest discussion now, right?
00:50:01
Well, I do.
00:50:04 Speaker 4
One of the one of the areas where I I don’t think you want gets enough credit is when he explains macroeconomics.
00:50:10 Speaker 4
So I think he actually really understands the the what an economy is.
00:50:15 Speaker 4
I mean an economy is basically a trading system for the production of goods and services.
00:50:20 Speaker 4
If you were to go disappoint, he’s made if you were to go to a desert island.
00:50:24 Speaker 4
And somebody that gives you a billion dollars when you’re sitting on that island, you can’t buy anything.
00:50:29 Speaker 4
It doesn’t make you wealthier.
00:50:31 Speaker 4
What makes you wealthier is the production of goods and services that people want, and that’s ultimately what an economy is.
00:50:37 Speaker 4
Money is to see accounting system.
00:50:39 Speaker 4
The dollars is the accounting system.
00:50:41 Speaker 4
If you start printing lots of money, all you’re doing is debasing the accounting system.
00:50:44 Speaker 4
It doesn’t make anyone richer.
00:50:45 Speaker 4
And yet you know the way that.
00:50:48 Speaker 4
Conversations around economics really take place. The only thing over here about is stimulating demand. You never really hear anything about production. And I mean this is an old debate that goes back to the 1980s about, you know, supply side economics. But regards to what you call it, wealth opening times from our capacity to produce goods and services.
00:51:08 Speaker 4
People want it’s.
00:51:09 Speaker 1
A great point trimbach all this adds up to company.
00:51:13 Speaker 1
And the government’s balance sheet becoming tighter and more efficient. So the talent diffusion across the industry, perhaps everybody being entitled and getting overpaid, people not wanting to go to work, people who have jobs, not wanting to go to the office, all of this seems to have actually reversed in three months.
00:51:33 Speaker 1
So this medicine we’re taking, we stopped eating bad food, we started working out, we’re getting better sleep.
00:51:40 Speaker 1
This is going to turn around for the the companies that takes the medicine, the management teams, the capital allocators who do the hard work and sharpen their pencils as we talk.
00:51:48 Speaker 1
About this will all result in a more efficient and vibrant economy, yes.
00:51:54 Speaker 1
I think for the most part, I think they’re still going to continue to be examples of folks who basically run themselves into a brick wall because they don’t want to make the.
00:52:02 Speaker 1
Hard decisions. Fast.
00:52:03 Speaker 1
It’s going to be more exaggerated in Silicon Valley because we have a culture of tolerance and we have an economic business model that supports.
00:52:14 Speaker 1
Kind of irresponsible decision making and supports poor governance, you know?
00:52:19 Speaker 1
Look, I have said this many times.
00:52:21 Speaker 1
But a fun job, ultimately.
00:52:24 Speaker 1
Is to make a very important decision about whether they truly care about generating massive returns, or whether the fee income becomes so meaningful so as to drown out every other incentive that they have.
00:52:38 Speaker 1
And I think by and large in Silicon Valley, if you track all of the.
00:52:44 Speaker 1
Increase frequency and fund raising.
00:52:47 Speaker 1
You can also probably follow those dollars and they generally will be the most poorly run.
00:52:53 Speaker 1
They’ll be held the least accountable.
00:52:57 Speaker 1
And I think.
00:52:58 Speaker 1
Those will have the largest negative outcomes.
00:53:02 Speaker 1
And then instead, if you follow the dollars of the the real practitioners who have discipline, they looked kind of sheepish and silly for years in the middle of a rally.
00:53:13 Speaker 1
But they’re the ones that are able to really reset and help some of these few companies really win.
00:53:19 Speaker 1
And I think that you’re going to go through that cycle over the next four or five years.
00:53:24 Speaker 1
And so you.
00:53:25 Speaker 3
Know that’s it’s.
00:53:26 Speaker 1
Well such must because I have felt after I’ve been made to feel silly by some folks who said why are you asking you diligence?
00:53:33 Speaker 1
Why do you want to have a board seat?
00:53:35 Speaker 1
Why do we want to talk to customers?
00:53:37 Speaker 1
Why are you asking for month by month revenue made a sub economic decision like the idea that over the last four or five years you optimized.
00:53:44 Speaker 1
For anything except the market, beta was kind of dumb, you know, and and the worst thing that you could have done in that period was confuse alpha and beta, meaning alpha is what you are able to do because of your discrete skill.
00:54:00 Speaker 1
Versus anybody else.
00:54:02 Speaker 1
Beta is when just the market goes up.
00:54:04 Speaker 1
Said differently, you could take any NBA player and put them on a high school basketball team and they would be the, you know, college told you any single one.
00:54:16 Speaker 1
OK, that’s data.
00:54:19 Speaker 1
You then can be the MVP of the NBA.
00:54:21 Speaker 1
That’s alpha.
00:54:22 Speaker 1
Yeah, OK.
00:54:24 Speaker 1
And I think that a lot of folks were made to feel very silly or, you know, a downer or wet blanket in these last few years who will probably have the last laugh.
00:54:37 Speaker 1
It’s been an unbelievable Brad to watch the changing of attitudes and the entitlement in fundraising and private markets in the last.
00:54:47 Speaker 1
60 days.
00:54:48 Speaker 1
And it’s been even more pronounced in the last 30.
00:54:50 Speaker 1
I’ve literally had people we talked to last.
00:54:52 Speaker 1
Month, who had really crazy expectations.
00:54:54 Speaker 1
They’ve come down.
00:54:55 Speaker 1
By 50%.
00:54:56 Speaker 1
They wanted 50.
00:54:57 Speaker 1
Now there are 25. They didn’t want board seats. Now there are capabilities, information rights. They were fighting against information rights.
00:55:05 Speaker 1
I don’t know why that’s the hill to die on now.
00:55:06 Speaker 1
They’re like information rights yet.
00:55:08 Speaker 1
So here’s our CFO e-mail we need to get money in the door.
00:55:11 Speaker 1
So I guess what’s the silver lining here?
00:55:14 Speaker 1
It does seem to me that’s a great setup right now it just let me ask you a question.
00:55:17 Speaker 1
Hold on. Yeah.
00:55:18 Speaker 1
I go to Brad like and then you’re forgetting one other key thing in in the in the race.
00:55:23 Speaker 1
To raise all of this money.
00:55:26 Speaker 1
What did these folks do?
00:55:27 Speaker 1
They hired these middle level kids as partners into their venture firms and gave them money to put into companies.
00:55:34 Speaker 1
What do these people know?
00:55:36 Speaker 1
Know mentoring.
00:55:37 Speaker 1
Not saying it disparagingly.
00:55:38 Speaker 1
I’m just like, what do they know?
00:55:40 Speaker 1
How do they know how to actually invest?
00:55:42 Speaker 1
Investing is just not you see it, you just say OK.
00:55:45 Speaker 1
But yeah, sounds cool. Yeah.
00:55:45 Speaker 3
Well, I think it.
00:55:46 Speaker 3
You know, there are some of those younger folks who are going to turn out to be All Stars in there.
00:55:52 Speaker 3
It’s just like in the NBA.
00:55:53 Speaker 3
And there gonna be some that, you know, proved to be right in the beta.
00:55:55 Speaker 3
But let me answer Jason question because.
00:55:57 Speaker 3
You know, maybe end on the.
00:55:58 Speaker 3
On the on the note of.
00:56:00 Speaker 3
Optimism, you know, in some countries, you know, notably.
00:56:05 Speaker 3
China right now, they’re doing a lot to prop up a bunch of companies that.
00:56:08 Speaker 3
Should be allowed to fail.
00:56:10 Speaker 3
Right.
00:56:10 Speaker 3
One of the beautiful things about free market capitalism, the creative destruction, the cycle time on creative destruction in this country has never been faster.
00:56:20 Speaker 3
Right.
00:56:21 Speaker 3
Make no mistake about it, if you took money at a valuation over a billion dollars.
00:56:26 Speaker 3
OK.
00:56:27 Speaker 3
Last year you’re not, that’s not a venture capital bet.
00:56:32 Speaker 3
I call it quasi public.
00:56:34 Speaker 3
Right, you stepped into the bigs and.
00:56:37 Speaker 3
You said I.
00:56:37 Speaker 3
Will deliver this plan.
00:56:40 Speaker 3
And if you don’t deliver the plan, there’s not going to be a lot of tolerance.
00:56:44 Speaker 3
There’s not going to be tolerance for just giving away a bunch of more stock.
00:56:48 Speaker 3
There’s not going to be tolerance for no course correction, right?
00:56:52 Speaker 3
Maybe in seed or Series A right?
00:56:54 Speaker 3
There’s a lot of tolerance because you sign up to a lot of unpredictability.
00:56:59 Speaker 3
But the level of tolerance that you’ll see out of late stage growth investors is going to be akin to what they do with a public company that runs them off a Cliff.
00:57:08 Speaker 3
You know how that is used then on those earning calls.
00:57:11 Speaker 3
So I think this is going to shine a light on the bifurcation that we really have.
00:57:17 Speaker 3
We call all of this.
00:57:18 Speaker 3
Venture capital.
00:57:20 Speaker 3
But the truth of the matter is serious scene and before is venture.
00:57:25 Speaker 3
Once you’re stepping into the bids and take your money at a billion, 2 billions, the expectations are different.
00:57:31 Speaker 3
Your access to capital will be different.
00:57:33 Speaker 3
The expected course correction will be different, right?
00:57:34 Speaker 2
Right.
00:57:37 Speaker 3
But I take it as a uh, I take it as a sign of.
00:57:40 Speaker 4
Right.
00:57:41 Speaker 3
That we’re going to work through this, we’re going to have you know, the the private markets are absolutely going to go through a reset, but we’ll get through it and the winners will win.
00:57:50 Speaker 3
And those who fail the course correct, and want to fly into the wall, we’ll do that and we’ll get on with the next generation of incredible entrepreneurs solving big problems, the secular curve of technology.
00:58:01 Speaker 3
Solving big problems has never been steeper, right?
00:58:04 Speaker 3
And the cycles that overlay that secular curve are not suspended.
00:58:09 Speaker 3
We have not suspended wars.
00:58:11 Speaker 3
We have not suspended economic cycles and so we’re going to have to get through this one.
00:58:15 Speaker 3
It’s happening in record pace.
00:58:17 Speaker 2
Actually, that’s actually.
00:58:18 Speaker 4
Think why won’t let me ask that broader question about that which is what’s the potential here for more of like a V shaped recession where to your point the markets correct more rapidly and violated the never snaps misses of you know issues the new forecast down 40%.
00:58:36 Speaker 4
Is there a possibility that this thing gets resolved in, say, six months?
00:58:40 Speaker 4
That’s not to say.
00:58:41 Speaker 4
That valuation levels are over back to where they were you know in the second-half of.
00:58:46 Speaker 4
2021.
00:58:47 Speaker 4
But in six months could we have sort of done this big reset wash out a lot of the problems and you know again valuations are not back but the market, the the capital markets become become unfrozen and we’re back to a more normal.
00:59:01 Speaker 4
Operating environment.
00:59:03 Speaker 4
As opposed to say yeah, as opposed to say.
00:59:04 Speaker 2
Right.
00:59:06 Speaker 4
Like more of a you where we’re kind of bouncing around the bottoms here in this volatile state for about 18 months.
00:59:13 Speaker 4
Uhm, you know, and then it’s more like the.com crash. We come out of it in two years.
00:59:17 Speaker 4
I see smart people on both sides this right here, Jason Lumpkins been saying.
00:59:21 Speaker 4
I think this.
00:59:21 Speaker 4
Is kind of short, deep, sweet six month reset.
00:59:25 Speaker 4
Fred Wilson just wrote 18 months at least.
00:59:27 Speaker 4
I think Sequoia is saying two years.
00:59:30 Speaker 4
I mean, I think our instinct is.
00:59:32 Speaker 4
18 months or two years?
00:59:33 Speaker 4
But what do you think that possibility is that we could be in a more normal environment in six months?
00:59:38 Speaker 2
Right.
00:59:38 Speaker 3
So let’s let’s separate public markets and venture markets.
00:59:41 Speaker 3
’cause venture markets as you know have a six step 12 month lag just in terms of the RE.
00:59:47 Speaker 3
But I would say you know the future distribution of probable outcomes, there’s a down citation upside, Jason.
00:59:52 Speaker 3
The base case, I think the base case is by this fall will have very good evidence right there, inflations rolling over.
01:00:00 Speaker 3
I think it is rolling over what the Fed is likely to do the upward bound on, on interest rates and I think.
01:00:06 Speaker 3
We’ll be at a point where we can start underwriting to the five year average again. Make no mistake about it, the S&P and the NASDAQ today are still 30% above where they were in January of 2020.
01:00:22 Speaker 3
30% above where they were in January 2020. How much better is the world today than where it was in January?
01:00:29 Speaker 3
2020, well, I think what the market is saying is that we’ve grown the economy on a nominal basis about 15.
01:00:36 Speaker 3
Percent during that time and.
01:00:38 Speaker 3
Earnings have about.
01:00:39 Speaker 3
Doubled, right, the earnings margins of those.
01:00:42 Speaker 3
Companies are about double. So you would expect normal course and trajectory maybe that those companies will be 30% more valuable. The problem is as we look ahead to chimos point, the earnings are.
01:00:55 Speaker 3
Likely to come.
01:00:56 Speaker 3
Down profit margins.
01:00:57 Speaker 3
Are being squeezed.
01:00:58 Speaker 3
So I think there’s a decent, decent argument.
01:01:01 Speaker 3
There’s more pain to come in the public markets that we haven’t seen the bottom.
01:01:05 Speaker 3
However, I do think that the Fed is taking a good course here.
01:01:08 Speaker 3
I don’t think that we have runaway inflation.
01:01:11 Speaker 3
I think that, you know, we’re going to have an investable environment come this fall, however, I think.
01:01:16 Speaker 3
For venture, there’s a 6 to a 12 month ride to that.
01:01:20 Speaker 3
So I think you’ve got to add it to those six months to really get to the market clearing prices for all these companies.
01:01:27 Speaker 3
But I think it’s incumbent upon all of us to give really good feedback today, and I see a lot.
01:01:32 Speaker 3
Out of it.
01:01:33 Speaker 3
Right to entrepreneurs about making that course correction, if they’re only turning the plane 10 degrees when they see lightning dead ahead, they’re making.
01:01:42 Speaker 3
A huge mistake.
01:01:44 Speaker 3
The default action by every founder today should be a 90 degree course correction, unless they have very good idiosyncratic.
01:01:53 Speaker 3
Reason in that business.
01:01:55 Speaker 3
In terms of their outperformance to stay the course?
01:01:58 Speaker 1
Brian for the world to look for.
01:02:00 Speaker 1
The best, yeah.
01:02:01 Speaker 1
And you even bifurcate the companies in private markets, the ones that have strong product market fit and the ones that don’t.
01:02:10 Speaker 1
There’s a lot of companies to David’s point that we’re getting serious dies without product market fit. You know, it’s it’s one thing to get your Series A when you have this like weak product market.
01:02:19 Speaker 1
Fit in a great story for me.
01:02:20 Speaker 1
Testing seriously is happening on momentum.
01:02:23 Speaker 1
It’s like that to.
01:02:25 Speaker 1
Me is is.
01:02:25 Speaker 1
Going to be impossible to resolve that company has to go to 0 or has to reset or give even give.
01:02:30 Speaker 1
Money back to founders.
01:02:31 Speaker 1
Those are those really the three things I would see as a true bottom, like the really dark moment where people have two or three liquidation preferences, people reset, reset comp.
01:02:41 Speaker 1
And tell people, listen, we’re going to cut comp 30% across the board for now.
01:02:45 Speaker 1
If you don’t like to.
01:02:45 Speaker 1
Leave and then finally people saying, you know what, we’re going to give this $0.60 on the dollar back to investors.
01:02:52 Speaker 1
Those are the three things I saw during with two down.
01:02:55 Speaker 1
You’re saying something that I think is also important.
01:02:57 Speaker 1
That’s not who we talked about, which is that there’s going to be a lot of really good companies with really horrible capital structures, really terrible tap tables.
01:03:05 Speaker 1
Really bad valuations, really big overhangs of preference stock that are going to have to get worked out.
01:03:12 Speaker 1
And in getting that worked out, going back to what Brad said, the person was close to X 90 degrees.
01:03:19 Speaker 1
We’ll win, and the reason they win may not even because they’re being that courageous.
01:03:24 Speaker 1
They’re just being less stupid than everybody else.
01:03:25 Speaker 1
Cloud honesty.
01:03:27 Speaker 1
It has yet to remember in most of these markets over the last four or five years, we funded four or five versions of every imaginable company.
01:03:35 Speaker 1
Right. And there’s going to be 2 winners, 70 and 30% here and and they’re really only going to be 1 winner. And then there’s going to be a marginal second kind of also ran by capture some value and everybody else is not that valuable.
01:03:48 Speaker 1
And you know, that’s roughly been true, but the reason we were able to support that was that every company looked kind of interesting, anyone with traction.
01:03:56 Speaker 1
Could be, you know, competed against because the only differentiator at the time was very cheap money that was effectively free and it was flowing in, you know, faster than you could count.
01:04:06 Speaker 1
So all of that has to get sorted out.
01:04:08 Speaker 1
So I just think that that those dynamics shouldn’t be ignored and so, you know that’s right.
01:04:14 Speaker 1
I mean, it was obscenely saying that it’s hard work for a board and founders to do this, but what choice do you have?
01:04:19 Speaker 1
Well, let’s assume it’s the charge.
01:04:19 Speaker 2
You probably eat much.
01:04:21 Speaker 1
Markets like the debt markets, which I would say are much more sophisticated, OK, cutthroat liquid.
01:04:30 Speaker 1
When you see the people that made the money, two things are true.
01:04:34 Speaker 1
Number one is their incredibly sharp elbow.
01:04:36 Speaker 1
Then #2 is they make money in moments like this, right? If you look at Apollo’s great returns or blackstones compute returns or celebrities, you know these folks for the you know, they they really were the Barbarians at the gates, and they made all the money.
01:04:49 Speaker 1
In moments of true dislocation.
01:04:51 Speaker 1
If you apply that construct here, you know we’ve never had to go to a period where there are some real terms and conditions attached to the incremental dollar.
01:05:02 Speaker 1
And I think that if that does come to pass in Silicon Valley, you’re just going to have a reckoning.
01:05:06 Speaker 1
And I think that that what it would really do is just pull it out the winners and the losers.
01:05:12 Speaker 1
And it’ll sort out the folks that were able to get to default or close to default alive, or at least default life support.
01:05:17 Speaker 3
Satisfied investible people. The.
01:05:20 Speaker 1
Basketball like that went too fast.
01:05:21 Speaker 3
Is that true?
01:05:22 Speaker 1
I mean tax made a great tweet.
01:05:24 Speaker 1
He basically says not default, alive or dead, investable or not.
01:05:27 Speaker 1
And that’s an even finer filter or pretty powerful.
01:05:29 Speaker 4
Well, no, default people alive is fantastic.
01:05:32 Speaker 4
If you can get there, basically just need cash flow positive.
01:05:34 Speaker 4
I mean all default log means is that your cash flow positive or your candidate cash flow positive based on.
01:05:39 Speaker 4
The money you have in this game.
01:05:39 Speaker 1
You don’t need money.
01:05:40 Speaker 4
Yeah, exactly.
01:05:41 Speaker 4
You don’t need money.
01:05:42 Speaker 4
Well, course that’s the best place to be is you don’t need money.
01:05:44 Speaker 4
But I think, you know for early stage companies that’s.
01:05:47 Speaker 4
Almost an impossible standard.
01:05:49 Speaker 4
You know, it takes time to get to the point based house deposits, so therefore I was trying to pose a standard that I saw.
01:05:55 Speaker 4
It was more actionable for founders because it was because it wasn’t impossible.
01:05:59 Speaker 4
And I call it defaulting festival, which is here are the metrics that you need.
01:06:03 Speaker 4
At least I can tell you what they are in the fast world, you know, here’s what.
01:06:07 Speaker 4
Great metrics look like here.
01:06:08 Speaker 4
So goods metrics look like here from danger zone metrics and you need, you know out of the five key metrics you really need three or four great ones and one or two good ones to raise in this environment and no danger metrics.
01:06:20 Speaker 4
And if you don’t have those, you need to give yourself the time to fix the problems in your business to get to those metrics.
01:06:26 Speaker 4
On that note, you know Sequoia had a really good chart called survival of the quickest that illustrates this concept of giving yourself time, and I threw it in the chat, but basically what it shows is there’s a green line, orange line.
01:06:40 Speaker 4
The green Line is the company that realizes in May of 2022 that we’ve gone into a.
01:06:46 Speaker 4
Very different environment and they slashed their burn in half and they basically doubled their run.
01:06:52 Speaker 4
Anyway, and then there’s the other company that.
01:06:55 Speaker 4
Just keeps going along the.
01:06:56 Speaker 4
Same path they were at.
01:06:57 Speaker 4
Until they realized, oh, wait a second.
01:06:59
You know, and then it you.
01:07:00 Speaker 4
Know some points in the future they realize is going to change.
01:07:03 Speaker 4
Then it makes a small cut to make another small cut and they’re always behind the 8 ball and I’ve seen this.
01:07:07 Speaker 4
So many times before that the.
01:07:09 Speaker 4
Company doesn’t make cuts.
01:07:11 Speaker 4
Until they’re forced.
01:07:12 Speaker 4
Do and so they never really LinkedIn the runway. And then when they.
01:07:16 Speaker 4
Finally, do make the cuts to go into a death spiral and die.
01:07:18 Speaker 1
And now they’re over the Atlantic, and there’s not enough fuel to get to a.
01:07:21 Speaker 1
Landing strip, then you.
01:07:23 Speaker 1
Just plunged into the cold ocean and die.
01:07:26 Speaker 4
Daughters really have to think.
01:07:27 Speaker 4
About the the asymmetry of the risks that they.
01:07:30 Speaker 4
Face right, which is let’s.
01:07:31 Speaker 4
Say that you cut too much.
01:07:34 Speaker 4
And the environment is.
01:07:35 Speaker 4
Better than you think it’s going to be.
01:07:37 Speaker 4
Well, you can always hire back, I promise you.
01:07:38 Speaker 1
At a lower price, in all likelihood.
01:07:40 Speaker 4
I promise you you’ll be able to hire back.
01:07:41 Speaker 4
OK, but.
01:07:42 Speaker 4
On the other hand.
01:07:43 Speaker 4
If you don’t cut enough and the situation is worse than you think.
01:07:47 Speaker 4
Then he does die, so you This is why Antigrowth said only the paranoid survive.
01:07:52 Speaker 4
You’ve got to think about the downside risk and be more skewed towards the batch scenario than sort of the the sort of wishful thinking scenario.
01:08:02 Speaker 3
Hey, sorry, did I just just one?
01:08:04 Speaker 3
Final point here.
01:08:06 Speaker 3
You know, because we have all these decks lying around now by venture capitalists telling founders to go make these really tough decisions.
01:08:14 Speaker 3
Being a little self reflective.
01:08:17 Speaker 3
Where were we all six months ago?
01:08:20 Speaker 3
Where were we in October when we were putting more money in and they were hiring like crazy?
01:08:25 Speaker 3
Where were we in November?
01:08:27 Speaker 3
Right.
01:08:27 Speaker 3
I remember some of the conversations that.
01:08:29 Speaker 3
We were having but I like I posted in in chat layoff dot FY.
01:08:36 Speaker 3
Right, the number one company on.
01:08:37 Speaker 3
That list, yes here.
01:08:39 Speaker 3
Sequoia company. OK, are they making a course correction? You bet your apps they are. They’re laying off 4500 people, 15% of the workforce.
01:08:49 Speaker 3
The second company on that list? Lacework, an altimeter software company that’s doing terrific, growing hundreds of percent, laying off 300 people.
01:08:58 Speaker 3
20% rate a 90 degree turn of the plane, right? That company will never need cash again. But it’s not just flying toward the lightning. They’re making the tough decisions because.
01:09:09 Speaker 3
That’s what leaders do in businesses that are even good businesses.
01:09:13 Speaker 3
There are a lot of companies that are ship businesses that should be on this list, but they’re bumbling along and not making the tough decisions.
01:09:20 Speaker 3
We need venture capitalists that instead of, you know, this being a popularity contest.
01:09:26 Speaker 3
Venture capitalists need to look inside as well and say.
01:09:29 Speaker 3
What about our firm?
01:09:32 Speaker 3
Didn’t didn’t work.
01:09:33 Speaker 3
Right.
01:09:34 Speaker 3
Why weren’t we issuing these course corrections and telling people to tap the brakes?
01:09:38 Speaker 3
A little bit when?
01:09:39 Speaker 3
We knew markets were overheated last year, right?
01:09:42 Speaker 3
And so I think there’s, there’s a lot of responsibility that sits on both sides of the table, but I’m, you know, there’s 714 startups on this list.
01:09:51 Speaker 3
By the time.
01:09:52 Speaker 3
We’re done. There are going to be at least 3000 startups on that list.
01:09:54 Speaker 1
And that’s not to say adizero edit here.
01:09:56 Speaker 3
That’s another reason I say the Fed.
01:09:59 Speaker 3
Is getting what it.
01:10:00 Speaker 3
Once, right, this labor market is, you know, is cooling down very quickly at Eastern Silicon Valley.
01:10:05 Speaker 1
Well, I mean and the fact that people felt like they didn’t need to take a job and they could live off credit and there would always be jobs for them, I think people are going to have to where you think like.
01:10:14 Speaker 1
Can I be unemployed forever?
01:10:16 Speaker 1
And you know, do I need to take my career seriously during to pay down my debt or?
01:10:20 Speaker 1
I need to have a balance.
01:10:23 Speaker 1
Balance sheet during my personal balance sheet needs to be in order as well and that’s what individual workers need.
01:10:28 Speaker 1
To think about.
01:10:29 Speaker 4
Yeah, I mean, Brad is right that there’s certainly enough blame to go around in the ecosystem and you know, VCs bought into these Fauci valuation levels last year to some degree.
01:10:40 Speaker 4
We’re all gaslit by by the Fed and these low interest rate policies.
01:10:41 Speaker 1
Thunder clap.
01:10:44 Speaker 4
I wrote my posts about burn multiple and how to measure capital efficiency 2 years ago.
01:10:49 Speaker 4
It’s getting a lot more retweets.
01:10:50 Speaker 4
Now there’s it back then, but but look, do VCs have some self reflection to do up?
01:10:57 Speaker 4
But you know, it’s a lot of tweets going around basically saying.
01:11:00 Speaker 4
Like people objecting to this advice on the grounds you’ll hear something like if you BCS wanted us to operate more efficiently than you should have invested more efficiently, or if you wanted us to be disciplined, you should have been more disciplined in university.
01:11:17 Speaker 4
And to me, that’s kind of missing the point.
01:11:19 Speaker 4
It’s kind.
01:11:19 Speaker 4
Of cutting off your nose to spite your face.
01:11:21 Speaker 4
The reason we’re giving this advice?
01:11:23 Speaker 4
Is because we just want our companies to survive and we think, Bruce, we don’t want to zero.
01:11:26 Speaker 1
You don’t want to hear us.
01:11:28 Speaker 4
We’ve been through multiple down cycles and the truth of matter is unless you’ve been in the business world for over 14 years, you’ve never been through a down cycle.
01:11:36 Speaker 4
I mean, that means that, you know, no founder under the age of what, like 36 has even seen.
01:11:43 Speaker 4
A down cycle before they don’t know what it can be like when you go into a two year nuclear winter.
01:11:48 Speaker 1
But they probably, they probably.
01:11:49 Speaker 1
Weren’t the pilots at that time anyway, so it’s more like people who are 4045 have this car check because they were.
01:11:51 Speaker 4
That’s right.
01:11:54 Speaker 1
In the pilot seat, right?
01:11:55 Speaker 4
Totally, totally. So the reason you’re hearing all these VC’s all of a sudden say, get more disciplined, this is mainly because we’ve seen.
01:12:02 Speaker 4
This movie before.
01:12:03 Speaker 3
And we don’t.
01:12:04 Speaker 4
Want to run out of money and die?
01:12:06 Speaker 1
Think you can take me, sword if you could.
01:12:10 Speaker 1
The stock of all of these rando peanut gallery CEOs tweeting their disdain on Twitter, you are.
01:12:18 Speaker 1
It would be a great index into edge at 16 stuff just lights that company to zero.
01:12:23 Speaker 1
Yeah, just turn your ******* Twitter up and and just dropping it passes I I, we we would be remiss if we didn’t talk about at least for this last segment about the tragedy in new Val D Urologie, Texas, 80 miles.
01:12:38 Speaker 1
West of San Antonio on Tuesday 19 elementary kid.
01:12:41 Speaker 1
2 adults were murdered.
01:12:43 Speaker 1
How are we going to?
01:12:45 Speaker 1
Talk about this without losing their.
01:12:47 Speaker 1
It’s really hard.
01:12:48 Speaker 1
I think maybe the road.
01:12:49 Speaker 1
Maps not I.
01:12:50 Speaker 1
Give this a lot of us was like flying license first segment on the market crumbling wrong on ******* life reports for an hour and 10 minutes.
01:12:57 Speaker 1
And I think part of it is because none of us can really talk about this without losing our cool.
01:13:02 Speaker 1
Look really hard and but I do think we did good work.
01:13:04 Speaker 1
Must I I was thinking about the good work we did in the episode of Roe V Wade and we actually came to a point where we said, you know, here are the extreme positions.
01:13:13 Speaker 1
And then you were like, hey, wait a second, I found this data point. From this data point, we actually figured out, hey, 80% of people.
01:13:19 Speaker 1
Want this definition of abortion in the United States?
01:13:24 Speaker 1
So I’ll throw it to you tomorrow.
01:13:26 Speaker 1
It will outrage.
01:13:27 Speaker 1
We’re all frustrated, but maybe we could start there.
01:13:29 Speaker 1
Is there a consensus of what could be accomplished here, that you’ve come through our stories to think about a whole bunch, but you know, we’re all outraged?
01:13:39 Speaker 1
We could all yell and scream here, but the path forward is where my.
01:13:42 Speaker 1
Mind goes, I’ll just tell you what I what I.
01:13:44 Speaker 1
I have been thinking about.
01:13:48 Speaker 1
This is just a random stream of consciousness.
01:13:53 Speaker 1
I think that the Democrats will not make any progress.
01:13:59 Speaker 1
Because they try to make this, unfortunately a moral virtue signaling issue, the Republicans will not make any progress.
01:14:11 Speaker 1
Because they.
01:14:13 Speaker 1
Become sort of very binary adamant.
01:14:16 Speaker 1
An absolutist about constitutional rights and the interpretation of that right in a very specific way.
01:14:23 Speaker 1
The truth is in the middle.
01:14:25 Speaker 1
You know if you go back before.
01:14:27 Speaker 1
We talk about urology.
01:14:29 Speaker 1
Peyton Jondra, who was the kid that shot up the tops?
01:14:32 Speaker 1
Supermarket in Buffalo and killed Untim.
01:14:36 Speaker 1
You know, black shoppers.
01:14:40 Speaker 1
Lived in a state where there was a red flag law.
01:14:43 Speaker 1
For those that don’t understand what red flag laws are, David, you know, tweeted some stuff about it as well, but.
01:14:48 Speaker 1
Essentially, it allows a community member or a family member or a school teacher or a police officer to essentially put a restraining order around an individual that they think could.
01:15:00 Speaker 1
Cause harm and use that as a way to confiscate their weapons.
01:15:04 Speaker 1
People have talked about red flag laws as being possible while he lived in a state.
01:15:08 Speaker 1
The kid was, you know, put under a slight cold, you know, a year ago and it it all just falls through the cracks now, you know, Ted Cruz or somebody else said, let’s spend $10 billion and only have one.
01:15:20 Speaker 1
Orange for school and put an armed guard there?
01:15:23 Speaker 1
Well, then you find out that you’ve already, you know, doubled their security spent over the last two or three years.
01:15:30 Speaker 1
They actually had a person that may or may not have just kind of like stepped to the side or something to estimate the police, according to the AP.
01:15:39 Speaker 1
He showed up and stood around for 40 minutes before they were able to actually breach the school.
01:15:45 Speaker 1
You know, so much so that the quote on the AP article was that there was apparent that.
01:15:49 Speaker 1
Tried to get other parents to for 40 minutes they were standing there.
01:15:55 Speaker 1
You know, in California you have, you know, very restrictive measures.
01:16:00 Speaker 1
But we’ve had, you know, in San Bernardino and other places we’ve had mass shootings too as well because the drugs can just get transported across state lines and.
01:16:06 Speaker 1
There’s there’s no real way to stop this.
01:16:09 Speaker 1
The NRA I find out just so if.
01:16:11 Speaker 1
You guys are interested?
01:16:13 Speaker 1
Mitt Romney took $13.6 million from the NRA. This is the moral finger wagger.
01:16:20 Speaker 1
Of the Republican side, who you know last time I checked is a multicenter millionaire, but somehow still needs to take $13 million from these.
01:16:28 Speaker 1
Folks, which bird took 7,000,000 Roy Blunt, 4.5 million. Tom Telesco, point 4,000,000. Cory Gardner 4,000,000 Marco Rubio 3.2 million.
01:16:38 Speaker 1
There’s no effective counter lobby that says.
01:16:42 Speaker 1
How about we have a more moderate and restrained pro gun set of rights and sealed candidates on the left and the right that could Jason find this middle ground?
01:16:53 Speaker 1
And so you.
01:16:53 Speaker 1
Know we’re in this two or three day period it seems like where folks will get extreme and then nothing will happen.
01:17:02 Speaker 1
Here’s one thing that I think we can all agree as well if you look at the underlying family situation of all of these mass shooters.
01:17:11 Speaker 1
There is a really disturbing theme that I think is worth putting out there.
01:17:15 Speaker 1
These are all university young men, 1819 odd years old.
01:17:22 Speaker 1
They come from broken families, this individual, Salvador Ramos.
01:17:27 Speaker 1
Father was absent.
01:17:30 Speaker 1
Again, according to the times, in the Wall Street Journal article I read, mother intermittent drug use issues, lived with the grandmother, bullied, they’re unemployed, barely graduated, if graduated at all, in high school.
01:17:42 Speaker 1
They harbored these deep resentments towards women or minority groups.
01:17:47 Speaker 1
They then project a lot of their frustrations.
01:17:50 Speaker 1
They were bullied potentially in high school growing up and all of the they were posting all kinds of very challenging content.
01:17:58 Speaker 1
And apparently this kid had a one tick tock of where he sat in a car with a dead cat in the paper bag.
01:18:05 Speaker 1
You know he would post on Instagram of assault rifles.
01:18:09 Speaker 1
And nothing happens.
01:18:10 Speaker 1
So I just think that we have to acknowledge that there’s a complete failure of our politicians.
01:18:18 Speaker 1
And at this point I think they should all be replaced writ large.
01:18:21 Speaker 1
Every single one.
01:18:22 Speaker 1
Nobody has added value to this solution.
01:18:25 Speaker 1
Nobody has really tried to figure this out.
01:18:28 Speaker 1
But then also, like parents have to do something incrementally, more from the perspective of the community because these kids are going to school with our kids.
01:18:39 Speaker 1
And it’s the.
01:18:39 Speaker 1
Red flags are there, the red.
01:18:40 Speaker 1
Flags are there is just one last thing and I said I said to Brad, I said to my kids.
01:18:44 Speaker 1
When you interact with your friends, I just want you to understand when you’re on social media and you encounter this content.
01:18:50 Speaker 1
I hope you never like either scared or embarrassed or unsure enough to just show somebody when this stuff is happening so that you can let somebody with a little bit more maturity and judgment try to figure out.
01:19:01 Speaker 1
What to do with anything at all?
01:19:03 Speaker 1
But these communities are completely failing these kids as.
01:19:07 Speaker 1
Well, Brad, you have some data.
01:19:08 Speaker 3
I would say that every ******* country on the planet has kids with mental health disorders, but not every country on the planet has kids getting shot up in schools and supermarkets and churches.
01:19:23 Speaker 3
That is a unique feature of the system that we accept this the system we created.
01:19:30 Speaker 3
Right, I’m not against guns.
01:19:32 Speaker 3
You guys know, I took my kids to a shooting range last weekend, but the idea that we let you know assault weapons being sold in this country with no background checks?
01:19:47 Speaker 3
That we let assault white rifles be sold in this country with no limits on magazine sizes, that you can just replace magazines.
01:19:55 Speaker 3
It’s total insanity, right?
01:19:58 Speaker 3
So I think this is a country that.
01:20:01 Speaker 3
Does a lot of self help, but we are not self helping here after the assassination attempt of Ronald Reagan.
01:20:10 Speaker 3
Amazingly, Republicans found their voice.
01:20:14 Speaker 3
And they said, let’s have an assault.
01:20:17 Speaker 3
Being in on the salt weapons.
01:20:19 Speaker 3
So let’s have a ban on assault weapons that expired.
01:20:23 Speaker 3
And we as I asked my.
01:20:24 Speaker 3
Analyst, I said.
01:20:25 Speaker 3
Plot the number.
01:20:27 Speaker 3
Of shootings.
01:20:29 Speaker 3
Since the expiration of that ban.
01:20:33 Speaker 3
And it’s terrifying.
01:20:36 Speaker 3
And it should be something that we just, like, don’t accept.
01:20:38 Speaker 3
Like the middle ground.
01:20:39 Speaker 3
Jason, I saw what you tweeted.
01:20:42 Speaker 3
There is an obvious middle ground, right?
01:20:45 Speaker 3
There’s about whether it’s background checks that Steve Kerr, I mean, he’s gone viral feeling the same way we all feel, but there are also.
01:20:53 Speaker 3
Tactical solutions why the hell do we let assault?
01:20:58 Speaker 3
Why not put a scrambling device on these weapons so that you can’t fire them in schools and churches?
01:21:05 Speaker 3
If somebody says that’s a breach of their Second Amendment rights, I’m sorry.
01:21:10 Speaker 3
I’m also not going to allow you to drive into the schoolyard with nuclear material.
01:21:15 Speaker 3
There are some rational limits.
01:21:17 Speaker 3
We can agree to it.
01:21:19 Speaker 3
So I don’t think this is a partisan thing at this point in time.
01:21:22 Speaker 3
Nobody saying, you know, ban all guns, right?
01:21:26 Speaker 3
In fact, I I think there’s a formality among gun owners.
01:21:30 Speaker 3
They too want reasonable limitations on these things which are killing machines, not hunting machines.
01:21:37 Speaker 1
Fax any documents.
01:21:39 Speaker 3
Yeah, I mean.
01:21:40 Speaker 4
I I so I think we’re looking for solutions.
01:21:42 Speaker 4
I think these red flag laws and building on them is is the way to go.
01:21:46 Speaker 4
You know the.
01:21:47 Speaker 4
The problem with.
01:21:48 Speaker 4
With background checks, and I’m not against them.
01:21:51 Speaker 4
I mean, you know, I’ve, I’ve gone through background checks to get, you know, my guns and I’m in favor.
01:21:57 Speaker 4
But they just wouldn’t have.
01:21:58 Speaker 4
Done anything to stop the Buffalo shooter?
01:22:00 Speaker 4
They didn’t.
01:22:00 Speaker 4
I mean, you know, the Buffalo shooter was in New York.
01:22:03 Speaker 4
They’ve got the toughest gun control laws in the nation.
01:22:06 Speaker 4
The background checks didn’t stop him from getting the gun because he bought it.
01:22:09 Speaker 4
Lawfully to never criminal record.
01:22:11 Speaker 4
So you know it doesn’t.
01:22:13 Speaker 4
That by itself isn’t going to do it.
01:22:14 Speaker 4
So I think where these red?
01:22:16 Speaker 4
Flight logs are useful is that we’ve seen with these all these school shooters, they have a similar kind of profile, right?
01:22:24 Speaker 4
They are disturbed young men like in there.
01:22:28 Speaker 4
At her full full age, 1819, early 20s, exactly.
01:22:30 Speaker 1
Grab a lesson.
01:22:32 Speaker 4
Now the shooter.
01:22:34 Speaker 4
In Ubaldi, I mean there are reports coming out now that he.
01:22:38 Speaker 4
Had been cutting.
01:22:38 Speaker 4
His face.
01:22:39 Speaker 4
That he had aimed at BB gun, at people.
01:22:42 Speaker 4
So he was clearly mediating certain words, this idea of shooting people.
01:22:46 Speaker 4
He had posted violent fantasies, basically, of mass shootings on social media.
01:22:53 Speaker 4
And he told his classmates he wanted.
01:22:55 Speaker 3
To kill him.
01:22:55 Speaker 4
I mean, there’s almost.
01:22:56 Speaker 1
Always a call for help here.
01:22:58 Speaker 3
It was a Buffalo.
01:22:58 Speaker 1
Right.
01:22:59 Speaker 3
Shooting, I mean the people who these.
01:23:01 Speaker 4
Like psychos go to school with are the least surprised they all know because these people have been warning.
01:23:07 Speaker 4
They’ve been saying that they’re going to.
01:23:08 Speaker 4
Do it.
01:23:09 Speaker 4
So I.
01:23:10 Speaker 4
Think we have?
01:23:10 Speaker 4
This problem of because these young psychotic people, and I think the reason why it happens young is when somehow they get into adulthood, whatever this mental illness they’ve got basically takes hold and they snap it become psychotic and it doesn’t take long for them to act on those payments, their violent.
01:23:30 Speaker 4
So the simple solution here, I think, is to prevent those people from getting guns.
01:23:36 Speaker 4
You know, if you threaten mass violence, you shouldn’t be able to get a gun.
01:23:41 Speaker 4
And I, you know, I personally don’t think that’s the original Second Amendment rights, because, look, someone can’t get guns either.
01:23:47 Speaker 4
If you commit a felony, you can’t get a gun.
01:23:50 Speaker 4
These people haven’t committed a felony yet, but I don’t want to wait until they do.
01:23:54 Speaker 4
If they if they have these kinds of red flags against them, then there should be a way to file to basically get a protective order preventing gun.
01:24:02 Speaker 1
David, we don’t.
01:24:03 Speaker 1
We don’t let 12 year olds drive cars.
01:24:04 Speaker 1
We don’t let them drink.
01:24:05 Speaker 1
Here because we don’t want 12 year olds drunk driving, right?
01:24:08 Speaker 1
And then at some point there is a licensing that occurs.
01:24:11 Speaker 1
I think a.
01:24:11 Speaker 1
Lot of this is framing. I think it just is, once again very analogous to this abortion issue, where most people are pro-choice and want restrictions on abortion where they don’t occur after a certain number of weeks, just like you are up to.
01:24:25 Speaker 1
And I was just, you know, ideating on this and I think replacing the NRA, to your point, smart, they have funded people.
01:24:33 Speaker 1
They’ve become a key funding source for a lot of folks and they’ve they’ve been over funded themselves.
01:24:40 Speaker 1
What if we had Americans for reasonable gun safety?
01:24:42 Speaker 1
And we have this organization raised a ton of money.
01:24:45 Speaker 1
And they.
01:24:45 Speaker 1
Just outbid the.
01:24:46 Speaker 1
NRA for Republicans and for people who are against background checks.
01:24:50 Speaker 1
It’s a good question.
01:24:51 Speaker 1
He looked Mike Bloomberg started Everytown for Gun control after Newtown, and it did it.
01:24:56 Speaker 1
It hasn’t really has, I think, the impact test that we wanted.
01:25:00 Speaker 1
I think.
01:25:00 Speaker 1
Part of it is just what you.
01:25:02 Speaker 1
Said so, let me just give you.
01:25:03 Speaker 1
My, my little four bullet points here and here.
01:25:06 Speaker 1
There you are right that people are absolutists.
01:25:09 Speaker 1
No abortion, you know, no restrictions and no guns.
01:25:14 Speaker 1
Or no restrictions on guns.
01:25:15 Speaker 1
Background checks we all agree on.
01:25:17 Speaker 1
Make them more intense and make them proportional to the caliber of the weapon.
01:25:22 Speaker 1
If you follow these weapons, why don’t we have you go through a training course?
01:25:25 Speaker 1
So for a pistol?
01:25:26 Speaker 1
You’ve got a 2 hour training course for an AR15 or something that’s more powerful. How about an 8 hour course?
01:25:31 Speaker 3
With four offers.
01:25:32 Speaker 1
Then you could actually see the red flags emerged in which somebody who has this red.
01:25:35 Speaker 1
Flag issue go to that.
01:25:37 Speaker 1
The red flag laws should be national and they should be very strong.
01:25:40 Speaker 1
And then?
01:25:41 Speaker 1
Finally, what if we?
01:25:42 Speaker 1
Introduce insurance for certain classes or weapons at all.
01:25:45 Speaker 1
If you want to get a rifle you know to go hunting or a pistol for self-defense. Maybe you don’t need to have insurance, but maybe if you have one you don’t need temptress, but once you get to high caliber, once you get to having clips that are.
01:25:58 Speaker 1
Certain size.
01:25:58 Speaker 1
What if we just had some basic insurance?
01:26:00 Speaker 1
Because that would.
01:26:00 Speaker 1
For us then, somebody to underwrite the danger of.
01:26:03 Speaker 1
That weapon did.
01:26:04 Speaker 4
Not look, that the trick here is to figure out a system that has the least possible impact on law abiding Americans.
01:26:11 Speaker 4
So it may be a few thousands of these mentally, highly mentally disturbed young men.
01:26:20 Speaker 4
But like I said.
01:26:21 Speaker 3
Their schools know.
01:26:22 Speaker 4
Who they are, yeah, right.
01:26:23 Speaker 4
And what we need is a process where you.
01:26:27 Speaker 4
Know that doesn’t.
01:26:28 Speaker 4
Turn into the No fly list, so all of a sudden everybody is on it.
01:26:31 Speaker 4
Or or or content moderation or something like that.
01:26:32 Speaker 1
We training insurance team.
01:26:35 Speaker 4
This is the problem, but this is what the NRA is afraid of is that you create a.
01:26:38 Speaker 4
Red flag for office.
01:26:39 Speaker 4
And all of a sudden, thousands or millions of people.
01:26:42 Speaker 4
Could be on it right, so you need it.
01:26:43 Speaker 1
Right, But that’s not true because you had you had this kid who could.
01:26:46 Speaker 1
Have been put on it in.
01:26:48 Speaker 1
In New York was it?
01:26:49 Speaker 4
Right. No, no.
01:26:50 Speaker 4
No, look, I think we need to.
01:26:51 Speaker 4
I think we need to figure out.
01:26:52 Speaker 4
How do you create due process around this?
01:26:54 Speaker 4
And I I think I think it’s a school.
01:26:57 Speaker 4
They know.
01:26:57 Speaker 4
Mean you get multiple affidavits from a T.
01:27:00 Speaker 3
They should be put on the.
01:27:01 Speaker 3
List Yeah, School is a brand or a.
01:27:02 Speaker 1
But the problem the problem statement, the problem isn’t that.
01:27:05 Speaker 1
These these kids.
01:27:06 Speaker 1
Aren’t identifiable because, as you say, David, they’re hiding in plain sight in these schools.
01:27:11 Speaker 1
The problem is that there is no mechanism or incentive for any of these kids, parents, educators, teachers, community members to do something about it because they don’t know what that something is.
01:27:22 Speaker 1
And this is where these kids are left to fester, fester, fester and and it boils over.
01:27:27 Speaker 1
And is all of us that have to pay a collective price.
01:27:30 Speaker 4
And receivers consumer worse than that.
01:27:31 Speaker 1
Can you find who?
01:27:32 Speaker 4
Some off because in the.
01:27:33 Speaker 4
OK, so the the Buffalo shooter was referred to for psychiatric evaluation because?
01:27:39 Speaker 4
They thought he.
01:27:39 Speaker 3
Did have mental?
01:27:40 Speaker 4
And then they released him after we signed.
01:27:43 Speaker 4
By then he got the gun.
01:27:44 Speaker 1
He got the gun.
01:27:45 Speaker 4
He should have been put on a red flag.
01:27:46 Speaker 4
Listen, that should have.
01:27:47 Speaker 3
Been the end of it.
01:27:48 Speaker 1
And then trivia database like in federal database, which there the NRA fights too.
01:27:48 Speaker 3
It’s unbelievable.
01:27:52 Speaker 1
I also want to say something about these technology companies.
01:27:55 Speaker 1
There is an explicit decision that technology companies can make to be able to review.
01:28:02 Speaker 1
Context from certain kinds of accounts and start to build the cluster and distribution of risk.
01:28:10 Speaker 1
It is possible I helped build one for one of these companies.
01:28:12 Speaker 1
So don’t tell me it’s not and I I will not tolerate in some non-technical person turning smell possible. It is absolutely possible and these technology companies should have a mechanism.
01:28:24 Speaker 1
To be able to say, you know what, here are these thousand accounts, David, in the United States of these thousand individ.
01:28:30 Speaker 1
Tools that you know are sort of getting to a red line here.
01:28:34 Speaker 1
Yeah, sync line, whatever.
01:28:34 Speaker 4
Yeah and but it’s it’s also it’s not it’s not just going to be what they.
01:28:39 Speaker 4
Post on social media.
01:28:40 Speaker 4
It’s although in.
01:28:41 Speaker 4
Both cases, Buffalo and ubaldi, they both posted that they were going to do what they did, but in.
01:28:46 Speaker 4
Addition to that, you do not, yes.
01:28:47 Speaker 1
No, it’s the curl of bread crumbs and not.
01:28:49 Speaker 4
If you have multiple.
01:28:49 Speaker 2
Saying it is growing with urgent search.
01:28:50 Speaker 3
Warning System an early warning system.
01:28:52 Speaker 3
Is a great idea with.
01:28:54 Speaker 4
We’ve all be that the cops were called out multiple times for violent disturbances.
01:28:58 Speaker 4
You know and.
01:29:00 Speaker 4
You combine that with what he’s telling.
01:29:02 Speaker 4
People in the schools.
01:29:03 Speaker 3
And what he’s posting on social.
01:29:04 Speaker 3
Media, you know there’s.
01:29:06 Speaker 4
An identifiable profile here.
01:29:07 Speaker 4
It’s not 1 red flag, it’s multiple red flags.
01:29:10 Speaker 1
Where this is where these corporate social media companies need to take off.
01:29:16 Speaker 1
All of this for profit focus.
01:29:19 Speaker 1
That’s extreme.
01:29:21 Speaker 1
At this point, be willing to degrade margins to hire the 10s of thousands of people to manually review code.
01:29:27 Speaker 1
OK, OK.
01:29:28 Speaker 1
There should be a mechanism that allows these folks to plug into some system that law enforcement can use.
01:29:34 Speaker 1
There is an early warning system that can be built with.
01:29:37 Speaker 1
Layer human review before this stuff gets out of control, David, to control people, individual civil liberties, OK, but that is a big step forward from where we are today, which is nothing.
01:29:49 Speaker 1
There is zero leadership in America offices for workers.
01:29:51 Speaker 1
David, you you correctly pointed out I.
01:29:55 Speaker 1
Think it’s a suit?
01:29:57 Speaker 1
You can’t penalize people who are legally getting guns or create some expression for them.
01:30:01 Speaker 1
I understand that.
01:30:02 Speaker 1
Would you consider training or insurance and just take each one individually for high capacity?
01:30:09 Speaker 1
These deadly assault rifles would you consider?
01:30:12 Speaker 1
What would you consider each of those in terms of realistic?
01:30:15 Speaker 1
You know, having some basic training a four hour?
01:30:17 Speaker 1
Training class like they can do for like each could do for driving across.
01:30:18
I mean.
01:30:21 Speaker 1
Should we have that for assault rifles and?
01:30:22 Speaker 1
Then should insurance be required?
01:30:23 Speaker 4
What training does is prevent accidental shootings.
01:30:27 Speaker 4
OK, that’s I’m not against training.
01:30:28 Speaker 1
Break abnormal.
01:30:30 Speaker 4
I love training.
01:30:30 Speaker 4
I do training.
01:30:31 Speaker 4
But but look what frames?
01:30:32 Speaker 1
Should be mandatory.
01:30:33 Speaker 4
I’m sorry, what training prevents.
01:30:35 Speaker 4
Is accidental shootings Buffalo and evolving.
01:30:38 Speaker 4
And all these school shootings are not actual shootings.
01:30:39 Speaker 4
They’re going out to explain as many people as possible, and they know how to use these weapons.
01:30:43 Speaker 4
I mean the problem is is what their objectives are, so I don’t think.
01:30:47 Speaker 4
Training solves it well.
01:30:48 Speaker 4
Let me ask you this.
01:30:49 Speaker 1
If you were in training for four hours in your instructor.
01:30:51 Speaker 1
And you were?
01:30:51 Speaker 1
Trained to look for red flags and it presents some friction from this.
01:30:55 Speaker 1
Person going and buying it and doing the next day, wouldn’t that help?
01:30:58 Speaker 1
And then going to have?
01:30:59 Speaker 3
To buy insurance the bubble.
01:31:00 Speaker 4
The shooter case this this grocery store for like 4 months.
01:31:03 Speaker 4
I mean they are patients, they are methodical and.
01:31:06 Speaker 4
How they go?
01:31:06 Speaker 1
They would have gone through the term.
01:31:06 Speaker 4
About causing this car.
01:31:08 Speaker 4
I think so, but you.
01:31:09 Speaker 3
Don’t even necessarily need.
01:31:11 Speaker 4
That filter Jake out because I’m just telling you that the profiles of these psychos, it’s so dramatic.
01:31:18 Speaker 4
When you go back and look, I mean again, multiple red flags are killing animals, hiding the pony designs.
01:31:22 Speaker 1
I just don’t understand.
01:31:23 Speaker 4
It’s human safe and the cops being called out on them.
01:31:23 Speaker 1
Yeah, I got it.
01:31:26 Speaker 4
Depressingly social media their class.
01:31:28 Speaker 4
They’re all terrified of them.
01:31:29 Speaker 4
Their own families are terrified of them.
01:31:31 Speaker 1
Now doing, Sir.
01:31:32 Speaker 4
Just need to basically we.
01:31:34 Speaker 4
Need an incentive to trim off point.
01:31:36 Speaker 4
For schools, I think to create these profiles and file the right forms the affidavits in the.
01:31:40 Speaker 3
OK.
01:31:41 Speaker 1
Data that now do insurance for high capacity assault rifles, would you be in favor of adjudicated viable solutions?
01:31:47 Speaker 4
So what does that do?
01:31:48 Speaker 4
I don’t.
01:31:48 Speaker 4
Understand what that does.
01:31:49 Speaker 1
Well, it means you would have to apply.
01:31:51 Speaker 1
And say, hey, I’m Jason Calacanis, I’m 18 years old, I’m in the school.
01:31:54 Speaker 1
I would like to apply to own an AR15 and then some insurance companies say, OK, you’re 18 years old, you’re a male, you live in Texas.
01:32:01 Speaker 1
Your bill is going to be $600 a year for this gun. Oh, OK, you’re a 45 year old now in Wyoming.
01:32:07 Speaker 1
Your bill is going to be $100 for this because we’ve done some actuary tables.
01:32:11 Speaker 1
On the actual risk, would you be in favor of insurance?
01:32:12 Speaker 2
Right.
01:32:12 Speaker 4
I I think the.
01:32:13 Speaker 4
Key to solving this problem is to create the minimum disruption on law abiding Americans, 10s of millions of them, who like to sign here.
01:32:20 Speaker 1
Single patient.
01:32:21 Speaker 4
And I look, I don’t know what that would.
01:32:24 Speaker 4
Do exactly I want to stop.
01:32:25 Speaker 4
Up the basically that I think, what are a relatively small number of psychos?
01:32:30 Speaker 4
Young psychos?
01:32:31 Speaker 2
OK.
01:32:31 Speaker 4
Maybe there’s only a few 100 or few thousand sort of candidates in the entire country.
01:32:36 Speaker 1
OK.
01:32:37 Speaker 4
I I don’t want, I don’t want to wait.
01:32:38 Speaker 4
For them to become felons to to basically.
01:32:41 Speaker 4
Prevent them from getting guns.
01:32:41 Speaker 1
And by the way, there’s, uh, there’s there’s a bunch of.
01:32:46 Speaker 1
To study about this, there’s been a lot of social science studies about the individuals that own guns legally, and those individuals such sort of break and commit these crimes.
01:32:56 Speaker 1
And whether we want to admit it or not, there is a definable archtype.
01:33:02 Speaker 1
It starts with gender, then there’s socioeconomic conditions, then.
01:33:04 Speaker 4
So sweet.
01:33:06 Speaker 1
You know families.
01:33:07 Speaker 1
In this sense, these are knowable things.
01:33:12 Speaker 1
These can be built into a combination of software and human review.
01:33:16 Speaker 1
And we need to create incentives so that these kids can get some kind of help or interventions.
01:33:22 Speaker 1
And the worst case is we kind of, you know, do something with them.
01:33:26 Speaker 1
In a way that.
01:33:27 Speaker 1
Helps us protect everybody else because.
01:33:30 Speaker 3
Sorry to interrupt, but we do this every day.
01:33:33 Speaker 3
He turned this country on its head after September 11th.
01:33:37 Speaker 3
We started profiling everybody and this acts as like minimum standard of disrupting other people lives.
01:33:45 Speaker 3
The Department of Homeland Security disrupted everybody lives.
01:33:49 Speaker 3
Take off your shoes.
01:33:51 Speaker 3
Go through the security before you get on a plane.
01:33:54 Speaker 3
We changed everything in months because.
01:33:58 Speaker 3
We said we’re under attack.
01:34:00 Speaker 3
But there we’re under attack by a foreign presence, a foreign terrorist presence here were under attack by sick kids who need help.
01:34:09 Speaker 3
OK, but we need to disrupt our lives.
01:34:12 Speaker 3
Need to change things.
01:34:13 Speaker 3
Right.
01:34:14 Speaker 3
In order to save these innocent kids who are being shot up in schools where they’re supposed.
01:34:19 Speaker 3
To be safe.
01:34:20 Speaker 3
And so I agree, let’s profile them.
01:34:23 Speaker 3
Let’s get these companies doing their jobs, helping us identify these kids.
01:34:28 Speaker 3
Get these kids.
01:34:29 Speaker 3
Help, but we need to raise the volume and raise the urgency in DC the way we did after September 11th, 2001. But this is a national crisis as opposed to going back to the normal right distribution.
01:34:44 Speaker 1
By the way, after 2011 I was on a no fly list.
01:34:48 Speaker 1
And I think I told you guys this story before.
01:34:50 Speaker 1
But I would.
01:34:51 Speaker 1
Have the triple act on my boarding pass for years until about 2007 or 2008.
01:34:57 Speaker 1
Constantly profiles, you know, put in the back room, the whole 9 yards.
01:35:03 Speaker 1
But in the end, you know, did did it make me feel kind of like less than a lot of other people?
01:35:09 Speaker 1
Yes, but did I do it because I I think it was the on the broad strokes the right thing to do is yeah, so you would take a little friction.
01:35:17 Speaker 1
And so, you know if I needed to basically turn over all.
01:35:19 Speaker 1
My kids, you know the social media or there was a mechanism where.
01:35:23 Speaker 1
You know.
01:35:25 Speaker 1
As much as we try to teach our kids, you know, all of these other things that that allow us to make a socially progressive society.
01:35:31 Speaker 1
If the guidance counselor also sat around and asked his kids anonymously hey, is there anybody in your class you think needs your help, why don’t you do that too?
01:35:40 Speaker 1
There is friction because that that I think we’re all willing to take because the counter.
01:35:45 Speaker 1
Factual is too horrible to bear.
01:35:49 Speaker 1
And this is an example of 1.
01:35:51 Speaker 1
Of those things.
01:35:52 Speaker 1
Would you be in favor of insurance and training?
01:35:56 Speaker 1
I don’t think, I don’t think these are good ideas.
01:35:56 Speaker 3
For this order.
01:35:57 Speaker 2
Right.
01:36:00 Speaker 1
I don’t think they will curb the issue.
01:36:02 Speaker 1
I do think what David said is like there’s a level of evil.
01:36:07 Speaker 1
Or mental illness in these people that cause them to be incredibly methodical and I think that we shouldn’t underestimate.
01:36:09 Speaker 2
Let’s ignore.
01:36:18 Speaker 1
So they would get through the insurance free image after the training.
01:36:20 Speaker 1
Well, I think, I think, you know, look, there’s a lot of people that drive cars without insurance, right?
01:36:24 Speaker 1
It’s you can drive off a lot and you can be insured and.
01:36:25 Speaker 3
Yeah, nothing happened.
01:36:27 Speaker 1
You know, so I.
01:36:28 Speaker 1
Think that those are good ideas, Jason.
01:36:31 Speaker 1
Where it will falter is we have a political system where the primaries for both sides are dictated by the looniest 10% of the left.
01:36:43 Speaker 1
And the right?
01:36:43 Speaker 1
Yeah, we’re going to.
01:36:44 Speaker 1
Vote in our Prime Minister practical gun control just like abortion and impossible task unless.
01:36:51 Speaker 1
We completely turn our political class upside down on both sides.
01:36:56 Speaker 1
Well, OK, so I think these are good ideas, but in the meantime, I think parents have to do something because nobody is coming to our aid.
01:37:04 Speaker 1
And I think that’s the most important thing we can do is just say the.
01:37:07 Speaker 1
Truth out loud.
01:37:09 Speaker 1
There is an identifiable archetype of being people.
01:37:12 Speaker 1
Should you?
01:37:13 Speaker 1
Should pop up, there’s no doubt there.
01:37:14 Speaker 4
The politicians who are making this about lawful gun ownership, they’re not helping.
01:37:19 Speaker 4
They’re actually hurting because you’re activating millions of Americans who lawfully own guns and believe in the Second Amendment to oppose reasonable measures like, like I’m saying, hyper targeted measure.
01:37:31 Speaker 2
Right.
01:37:33 Speaker 4
There’s like these red flag laws, right?
01:37:35 Speaker 4
And so if we make the whole issue about gun ownership in general, you’re.
01:37:40 Speaker 4
Not going to.
01:37:41 Speaker 4
Get any reasonable changes.
01:37:42 Speaker 1
Give me the reason is the opposite.
01:37:44 Speaker 1
The salesman wants the sales go up every time we have this happen.
01:37:47 Speaker 1
My kids, and I’m sure your kids as well, have now gone through multiple active shooter drills in our school, but at no point have my kids been sat down and taught some of the warning signs of their fellow classmates.
01:38:01 Speaker 1
And a mechanism to raise their hand and say, you know what?
01:38:04 Speaker 1
This is absolutely really worrisome here.
01:38:07 Speaker 1
They don’t have that training.
01:38:08 Speaker 1
They do have training on how to lock the door, how to flip the desk, how to go into a closet, which is a horrible thing.
01:38:14 Speaker 1
To have to teach a child.
01:38:16 Speaker 1
But if we’re already there, I just say take the extra step and teach.
01:38:19 Speaker 1
The kids, because they’re living on Instagram and Tik T.O.K every day.
01:38:23 Speaker 1
They see their friends and their, you know, classmates every.
01:38:26 Speaker 1
Today, and we need to start figuring out an early warning system, because what is happening continues to happen.
01:38:33 Speaker 1
These politicians are ineffective.
01:38:36 Speaker 1
They do nothing to help parents.
01:38:38 Speaker 4
Right, that’s true.
01:38:39 Speaker 4
I I like, I like the early warning system because you’re right like they’re so first of all the the red flag laws or something that’s done on.
01:38:45 Speaker 4
State by state basis, something like 90.
01:38:47 Speaker 4
The states have red flag laws, including New York, but it didn’t work in New York.
01:38:51 Speaker 4
Buffalo shooter because.
01:38:52 Speaker 1
Gotta be federal.
01:38:52 Speaker 4
No one, no one used the system.
01:38:54 Speaker 4
Don’t be asking.
01:38:55 Speaker 4
Federal I just think that people actually apologize.
01:38:55 Speaker 1
Well, it’s gotta be a central neighborhood.
01:38:57 Speaker 4
People accept.
01:38:58 Speaker 4
To use this system.
01:38:59 Speaker 3
So you had.
01:39:00 Speaker 3
In the Buffalo shooter, the Kid was referred for psychiatric treatment and.
01:39:03 Speaker 4
They sold in red flag and this is bonkers.
01:39:06 Speaker 3
So people have to.
01:39:07 Speaker 4
The school systems have to learn how to use these laws weekend, so it’s point we need an early warning system.
01:39:13 Speaker 4
We need that translating into red flags that go onto 1 record and then they can’t buy guns after that.
01:39:18 Speaker 4
It’s it’s really simple, at least so.
01:39:20 Speaker 4
Maybe they turn 30 or something.
01:39:22 Speaker 4
I mean, it’s it’s the the the problem is that.
01:39:27 Speaker 4
About half the states don’t have this mechanism, and then the half that do aren’t using it effectively enough.
01:39:32 Speaker 1
I just shared with you guys the chart the the most pernicious part of this debate, and I think this is a pretty solid debate we had here.
01:39:39 Speaker 1
So thank you to.
01:39:40 Speaker 1
The gentleman for all participating in it.
01:39:43 Speaker 1
Is every time we have one.
01:39:44 Speaker 3
Of these gun sales spike.
01:39:46 Speaker 1
If you look at the chart and then your time to share the nick, you can you can share it on the YouTube channel.
01:39:50 Speaker 1
2,000,000 guns in the January after Obama’s reelection. The Sandy Hook shooting, he hit pecans. Obviously during coronavirus people got scared and bottle bunch of guns after September 11th, a blog.
01:40:00 Speaker 1
These moments are sadly.
01:40:02 Speaker 1
Going to drive AR15 set because.
01:40:02 Speaker 4
So why do you think that is?
01:40:03 Speaker 4
Why do you think?
01:40:03 Speaker 1
People have fears, of course, people fear.
01:40:04 Speaker 4
That is ’cause all the conversation is about banning guns and what we should be doing is preventing.
01:40:09 Speaker 4
Psychos from getting Johns known cross oceans.
01:40:11 Speaker 1
We need.
01:40:13 Speaker 1
Result Capita increased by 50% in the last 10 years. The last 10 years have been the safest 10 years.
01:40:19 Speaker 1
In our lifetime.
01:40:21 Speaker 1
Yet for some reason, people feel the need to arm themselves more and more and more now high as an immigrant into this country.
01:40:28 Speaker 1
Except the rules of the country that I come to, there is a constitution. There is a Second Amendment. I respect people’s rights to own guns. I’ve held the guns.
01:40:37 Speaker 1
Like I said, once in my life I had a panic attack and I had to put it out there, so it’s not for me, OK?
01:40:43 Speaker 1
But I respect your right to have them.
01:40:47 Speaker 1
I think that we need to teach people how to think about the precursors before they get the whole divisons really, sadly.
01:40:54 Speaker 1
Uh, westring our kids, it turns out.
01:40:58 Speaker 1
I just put a nice script tweet in the chat for you guys to take a look at.
01:41:01 Speaker 1
Normal Journal of Medicine.
01:41:03 Speaker 1
Massive uptick now, gun deaths.
01:41:07 Speaker 1
Combined with all gun deaths, group gangs include suicide and includes mass shootings.
01:41:14 Speaker 1
But firearms related deaths and injuries now exceeds motor vehicle crashes and so does opioids.
01:41:20 Speaker 1
But we have a crisis after new.
01:41:22 Speaker 1
England Journal of Medicine just to.
01:41:23 Speaker 1
Be very honest.
01:41:25 Speaker 1
It’s not.
01:41:25 Speaker 1
It’s not necessarily only about kids because they included 18 and 19 year olds in that shop.
01:41:30 Speaker 3
Sure, sure.
01:41:31 Speaker 1
So both are adults.
01:41:33 Speaker 1
OK, young adults and kids.
01:41:34 Speaker 1
And so drug overdoses and firearm related are spiking massively.
01:41:40 Speaker 1
This is my point about having this debate.
01:41:42 Speaker 1
This is being armed by the by the left.
01:41:45 Speaker 1
And then the right says, well, hold on, it doesn’t include 18 and then everybody gets.
01:41:49 Speaker 1
Not in that whole, absolutely. The shooting. These shootings are being done by people 1819. But putting all this aside, I just want to make a bigger point about our children in the last few years with this COVID this spike occurred during COVID of drug overdoses and firearms.
01:42:04 Speaker 1
So there’s a lot of suicide in here as well, so we should think holistically about, you know, how kids are dying.
01:42:09 Speaker 4
Maybe I want to listen to that, which is we have plenty of gun laws on the books that aren’t enforced.
01:42:14 Speaker 4
Right now in San Francisco.
01:42:15 Speaker 4
You can’t get chasing the gene transforce a gun charge.
01:42:18 Speaker 4
He a young kid named Kelvin Shoe got killed because his his killer. A guy named Brian Young. He was arrested weeks before I’m done charges and she said Eugene just let him go and in LA with Gascone he thought all gun enhancements to charge her.
01:42:37 Speaker 3
The whole, the whole.
01:42:38 Speaker 1
Thing is in confidence across the board.
01:42:38 Speaker 4
So we’ve always progressive prosecutors who aren’t even prosecuting the drug laws on the books.
01:42:43 Speaker 4
That’s gotta change.
01:42:44 Speaker 1
And Ted Cruz thinks this is about the back door being unlocked.
01:42:47 Speaker 1
I mean the stupidity across.
01:42:49 Speaker 1
The board left.
01:42:50 Speaker 1
Everybody in between me.
01:42:51 Speaker 1
Confidence is stunning and it has to stop.
01:42:54 Speaker 4
Yeah, but Jake, Outlook, I mean, if you make this about people lawful gun ownership, we’re going to oppose what you want to do.
01:42:59 Speaker 4
We gotta make it about preventing.
01:43:00 Speaker 1
Well, there has to be some.
01:43:01 Speaker 1
Incremental controls.
01:43:03 Speaker 1
Then she creates a healthy sound.
01:43:04 Speaker 4
Since all the controls are basically preventing known psychos from getting weapons, OK, so.
01:43:10 Speaker 1
You want to focus on that.
01:43:11 Speaker 1
But to be clear, no additional gun control for you background checks.
01:43:14 Speaker 1
Or anything or you OK?
01:43:15 Speaker 4
No, I’m here without checks or not.
01:43:17 Speaker 1
I just want to say red flag.
01:43:18 Speaker 1
Laws and background.
01:43:19 Speaker 3
Checks for good.
01:43:20 Speaker 3
I know we have to wrap.
01:43:22 Speaker 3
I think the consensus was around red flag.
01:43:25 Speaker 3
There’s a known profile.
01:43:26 Speaker 3
Trimat articulated it well.
01:43:29 Speaker 3
I don’t think we helped the cars to build the consensus by calling a sick 16 year old kid struggling with self identity a psycho.
01:43:39 Speaker 3
And because their their kids who?
01:43:41 Speaker 3
Live all around us.
01:43:42 Speaker 3
This is little about lecture.
01:43:43 Speaker 3
This is about building consensus.
01:43:45 Speaker 3
I think we can profile those folks.
01:43:47 Speaker 3
They clearly have psychotic.
01:43:49 Speaker 3
Uh, challenges, right.
01:43:52 Speaker 3
But there is intervention to help these kids.
01:43:55 Speaker 3
I know a lot of kids who frankly had challenges during high school who turned out to be great.
01:44:00 Speaker 3
Great human beings.
01:44:01 Speaker 3
So these are kids at a very vulnerable age.
01:44:04 Speaker 3
We should profile them within the community.
01:44:07 Speaker 3
Social networks should help us identify these folks, and we should give them help.
01:44:10 Speaker 3
And I think you can build.
01:44:11 Speaker 3
A reasonable consensus around that.
01:44:14 Speaker 4
Yeah, I I agree.
01:44:15 Speaker 4
Just to explain myself, I’m like when I use the word cycle, I’m referring to the the ones who actually.
01:44:20 Speaker 4
Became shooters, you know I’m referring to those ones.
01:44:23 Speaker 4
You’re right that if we’re talking about.
01:44:25 Speaker 4
People who haven’t done any.
01:44:26 Speaker 4
And guess who are mentally ill?
01:44:28 Speaker 4
Yes, we should get them help.
01:44:30 Speaker 4
So I’m not trying to prayer, Sir.
01:44:30 Speaker 1
I mean mental.
01:44:31 Speaker 1
Illness, you know, this is, and this goes to health care as well.
01:44:34 Speaker 1
We should have national mental health services available freely to every American.
01:44:40 Speaker 1
We are in a mental health crisis.
01:44:42 Speaker 1
Between COVID and just modern life and suicide is becoming the number one cause of death, sadly for many.
01:44:49 Speaker 1
Uhm, demographics now, including our kids.
01:44:52 Speaker 1
And so while we do a great job making cars safer and creating life, saving drugs and emergency rooms and and medical attention has gotten unbelievable.
01:45:01 Speaker 1
And making all these, you know, great advances.
01:45:05 Speaker 1
Mental health we’re not making the advances.
01:45:06 Speaker 1
We need.
01:45:07 Speaker 1
I’m so, so, so sorry to all those hammers.
01:45:09 Speaker 1
Yeah, it this is just heartbreaking.
01:45:12 Speaker 1
I gave you more.
01:45:13 Speaker 1
Yeah, I I’m just so sorry for all those people doing it.
01:45:17 Speaker 1
It’s heartbreaking.
01:45:20 Speaker 1
Let’s take some action here and, uh, put those thoughts and prayers.
01:45:22 Speaker 1
Let’s actually come up with a ******* plan and execute on it.
01:45:27 Speaker 1
For years, I put up with this.
01:45:29 Speaker 1
Sorry for the indignity.
01:45:30 Speaker 1
It’s OK, I said.
01:45:31 Speaker 1
Uh, my honest perspective is.
01:45:35 Speaker 1
There is a clustering and a technology component to this that can meaningfully help, and we need to start knowing that there are these patterns.
01:45:44 Speaker 1
We need to say the words out loud.
01:45:46 Speaker 1
They are patterns for these school shooters.
01:45:49 Speaker 1
For these mass shooters, those patterns can be written down.
01:45:52 Speaker 1
They had been written down.
01:45:55 Speaker 1
And we need to do something about it.
01:45:57 Speaker 1
They need to be codified in some form of valid systems.
01:45:59 Speaker 1
And if we’ve already taught our kids how to duck and hide, I think we can also teach our kids how to raise your.
01:46:04 Speaker 1
Hand well before they need to learn to duck.
01:46:06 Speaker 1
And I identified as being bullied in trigger points most about being profiled if we profile somebody and they’re not a mass shooter candidate, but they’re just depressed or they’re being bullied.
01:46:16 Speaker 1
Well, that’s very special for these stages of health as well.
01:46:18 Speaker 1
So there’s no downside to profiling somebody who’s struggling.
01:46:21 Speaker 1
You’re profiling them with the intent of getting them help.
01:46:24 Speaker 1
So let’s just profile the kids.
01:46:26 Speaker 3
Who are struggling?
01:46:27 Speaker 1
Profile them for good and you’ll custom.
01:46:30 Speaker 1
Show who’s struggling here.
01:46:32 Speaker 1
My point is that you actually know.
01:46:34 Speaker 1
They’re going to probably be struggling and.
01:46:35
Then you know.
01:46:35 Speaker 1
The kids get involved. I could graphic in demographic profiles of the 99% of the cases that we’ve seen over the last two decades, and all in encouraging politicians and technology companies to do is.
01:46:49 Speaker 1
Come together, create some standards.
01:46:52 Speaker 1
You know, what’s the downside?
01:46:53 Speaker 1
What’s the downside?
01:46:55 Speaker 1
Zero had mechanisms like this, by the way, where you know, these technology companies already do these kinds of profiles on other kinds of situations, you know, typically need official requests and other kinds of, like, legal interventions in order to unlock this data.
01:47:08 Speaker 1
But it’s not as if this is, you know, antithetical to what they do in other.
01:47:13 Speaker 1
They certainly do it for fraud and advertising.
01:47:15 Speaker 1
It’s not exist.
01:47:16 Speaker 1
The technological prowess of these companies cannot be applied to a K means clustering of this issue, OK, just use a simple machine learning context like this is they put a lot effort into finding click fraud, right?
01:47:27 Speaker 1
This is going to be it’s very similar.
01:47:28 Speaker 3
Our problems, problems.
01:47:30 Speaker 3
We don’t alone.
01:47:31 Speaker 3
Young men.
01:47:33 Speaker 3
We’ve been emailing with the Middle East, who are citizens of this country who’ve been posting online that they want to run a plane into ability to go get their pilots license right.
01:47:44 Speaker 3
We profile them after September 11th and we said no, boss.
01:47:49 Speaker 3
And all trim off.
01:47:50 Speaker 3
Is saying is usual ******* common sense.
01:47:53 Speaker 3
Identify these folks that we know are struggling to need.
01:47:56 Speaker 3
Help and bring them.
01:47:57 Speaker 1
On a list and say they can’t buy.
01:47:58 Speaker 3
An assault weapon.
01:48:01 Speaker 1
Right, everybody, it’s time to go.
01:48:03 Speaker 1
Thank you to Brad Kirschner for sitting in.
01:48:06 Speaker 1
Thanks again to the dictators.
01:48:08 Speaker 1
Multiple happy to and.
01:48:10 Speaker 1
Thanks, Sacks, and thanks to everybody who spoke at the all in summit.
01:48:14 Speaker 1
We’ve been releasing all of the videos.
01:48:17 Speaker 1
Free Bird will be back next.
01:48:18 Speaker 1
Week as well the.
01:48:19 Speaker 1
Palmer Luckey explosive episodes will look for a great week of all in content next week.
01:48:25 Speaker 1
We’ll see you all next time.
01:48:26 Speaker 1
Bye bye.
01:48:29 Speaker 4
More like your winters live.
01:48:32 Speaker 1
Rain Man, David.
01:48:36 Speaker 4
And instead we open sources.
01:48:39 Speaker 3
That sounds great.
01:48:40 Speaker 2
One second.
01:48:59 Speaker 3
This is all this.
01:49:00 Speaker 1
Data room and just have one big Georgia.
01:49:03 Speaker 1
Looking at the sexual tension that.
01:49:05 Speaker 2
Just released their house.
01:49:10 Speaker 4
Your feet.