Aug 20, 2022
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00:00:00 Speaker 1
Cole, what’s it feel like to be a guest on your?
00:00:02 Speaker 1
Own podcast today.
00:00:03 Speaker 1
I’m excited.
00:00:03 Speaker 1
Oh God, so delightful.
00:00:05 Speaker 1
You did a great job brother.
00:00:06 Speaker 1
Or like the punch up to the formatting where you actually put the questions in.
00:00:10 Speaker 1
Yeah, I think it’s like ’cause I I want us to all agree.
00:00:12 Speaker 1
On this stuff we want to grok on you know, the professional TV show they would have pre interviews with everybody, get all their positions, then they put the positions into the.
00:00:21 Speaker 1
And they, you know, they basically do it.
00:00:22 Speaker 1
What’s called a pre interview or here’s another idea.
00:00:25 Speaker 1
You could do your job.
00:00:26 Speaker 1
Wow, I mean.
00:00:26 Speaker 2
Do you know about that?
00:00:29 Speaker 1
Or, you know, or how about I turned you 3 miserable into actual likable people in 91 episodes, which nobody thought was?
00:00:37 Speaker 1
I actually think I’m becoming less likable.
00:00:39 Speaker 1
The longer I’m on this.
00:00:44 Speaker 5
All of us.
00:00:45 Speaker 1
All of our like.
00:00:50 Speaker 3
Winners lied.
00:00:55 Speaker 4
2nd we open source.
00:00:58 Speaker 3
To the fans and they’ve just got second.
00:01:02
Queen of keenwah.
00:01:05 Speaker 1
Hello and welcome to the all in pod.
00:01:08 Speaker 1
I am your moderator for today out of the hot seat doing the easy beat Dave Friedberg.
00:01:14 Speaker 1
I’m joined today by our esteemed panel.
00:01:17 Speaker 1
Back from his European shopping spree, our National Treasure, America’s favorite dictator tomorrow, Polly Abatia tomorrow.
00:01:25 Speaker 6
How are you feeling?
00:01:27 Speaker 2
Logged, you’ll say.
00:01:28 Speaker 2
You’re recovered, yeah?
00:01:29 Speaker 6
Yeah, well, I’ve got, I got a.
00:01:30 Speaker 1
Little head cold though.
00:01:31 Speaker 1
Oh well, sorry to hear.
00:01:32 Speaker 1
That hope it’s not COVID taboo now.
00:01:35 Speaker 1
I tested on COVID negative, thank God. OK, also with us, as usual, from his emergency bunker ahead of the US Civil War. The Raymond David Sacks. How are you, David?
00:01:46 Speaker 1
Happy with the late start this morning, I’m sure.
00:01:48 Speaker 1
And of course everyone favorite Skibo.
00:01:51 Speaker 1
Producer of the Woodstock of tech conferences, that one and done all in summit Miami Jason Calacanis Jason what’s it like to?
00:01:58 Speaker 1
Be a guest E today.
00:01:59 Speaker 1
Oh, it’s so delightful.
00:02:01 Speaker 1
When you said you wanted to moderate that to me was chefs kiss.
00:02:04 Speaker 1
I get to, I get to comment and not be the moderator.
00:02:08 Speaker 1
I love it.
00:02:09 Speaker 1
So we’re mixing it.
00:02:09 Speaker 1
Up a little.
00:02:10 Speaker 1
Bit today I’m going to take the lead.
00:02:11 Speaker 1
J. Cole is going.
00:02:12 Speaker 1
To sit back, I’ll say a couple of words before we start because I think last week.
00:02:16 Speaker 1
We got a little nasty.
00:02:18 Speaker 1
I definitely heard that from listeners, you know, I know.
00:02:21 Speaker 1
And so I want to kind of just address it real quick and then we can kick off the show.
00:02:25 Speaker 1
I I think it’s important to say that none of us really started.
00:02:28 Speaker 1
About doing this padava job or thinking that it would become a real regular thing, right?
00:02:33 Speaker 1
We we started doing it for fun, ad hoc and time to time, and then it became this thing that people listen to, and it became this thing that we started doing every week and people actually cared about it and suddenly became this real obligation.
00:02:44 Speaker 1
It’s almost like we got pregnant and had a baby and now it’s like.
00:02:47 Speaker 1
Four men and a baby.
00:02:48 Speaker 1
And so, you know, I think we.
00:02:49 Speaker 1
All feel this like.
00:02:51 Speaker 1
You know, challenging obligation that we never expected to take on of.
00:02:54 Speaker 1
Like taking care of the show, taking care.
00:02:56 Speaker 1
Of the pod.
00:02:58 Speaker 1
And we all have like different points of view on what we want the pod to be and what we want it to become.
00:03:02 Speaker 1
Cole cares about, you know, getting up in the rankings and listening to the audience and ultimately the shared that he wants to monetize, you know, at points.
00:03:11 Speaker 1
We’ve not always agreed on different points about that.
00:03:13 Speaker 1
You know, Thomas has the things he wants to bring to the table saxos things he wants to talk about.
00:03:18 Speaker 1
And so, you know, it’s really difficult kind of running the pod, managing the pod with four very different points of view, very different person.
00:03:24 Speaker 1
Actives on what it is.
00:03:26 Speaker 1
We all want to kind of get out of this over time and I think it causes us to get really frustrated with each other.
00:03:32 Speaker 1
We end up having real fights.
00:03:34 Speaker 1
You know you have the biggest fights with your best friends.
00:03:37 Speaker 1
You know you really let loose and lash out.
00:03:40 Speaker 1
I think last week I listened back.
00:03:42 Speaker 1
I was pretty contemptuous and my kind of retort to J.
00:03:45 Speaker 1
Cole about hitting up on the inflation topic, and I want to apologize to J.
00:03:48 Speaker 1
Cole for doing.
00:03:50 Speaker 1
I think it was, you know, I think, yeah, I think it was a little rough, but at the same time, I just want to point out, like, you know, we’re going to keep doing the show.
00:03:57 Speaker 1
So because I think you know as much as we all disagree, as much as we fight, and as much as we may even start to dislike.
00:04:04 Speaker 1
Each other and not get along.
00:04:06 Speaker 1
I think it’s really important that we keep doing this and I think.
00:04:09 Speaker 1
Restating that commitment and trying to do better is really important so you know we’re going to try different stuff out, try and find ways to find common ground, and keep doing the show productively with each.
00:04:18 Speaker 1
Together, as one experiment.
00:04:20 Speaker 1
This week I’m going to moderate and we’re going to, you know, try and take it that way.
00:04:23 Speaker 1
But you know, I just wanted to say those few words before we kick this off, guys.
00:04:26 Speaker 1
I thought it was important, especially after the last couple of weeks.
00:04:29 Speaker 1
I think it’s been a bit of a struggle.
00:04:30 Speaker 1
We’ve been having a tough time and I just want to be open about it and, you know, highlight that, you know, as an example, you can fight with people, you can disagree with them.
00:04:39 Speaker 1
And you can.
00:04:39 Speaker 1
Still keep trying.
00:04:41 Speaker 1
And I want to set that example.
00:04:42 Speaker 1
I want to keep doing that.
00:04:43 Speaker 1
So anyway, just buddy with this.
00:04:45 Speaker 1
To say apology accepted.
00:04:48 Speaker 1
And I there’s a lovely opening.
00:04:52 Speaker 1
One thing I would just punch up those the real reason we did this was because we missed each other.
00:04:58 Speaker 1
We missed hanging out with each other.
00:05:00 Speaker 1
And then this is, you know, something that’s become more successful than any of us ever imagined.
00:05:06 Speaker 1
It’s got an audience size that is just, you know.
00:05:11 Speaker 1
Hard to imagine how many people are listening to this, which then does put a little bit of pressure on it.
00:05:15 Speaker 1
We want it to be great for the audience.
00:05:18 Speaker 1
And I just want to say like I I don’t take it personally when.
00:05:20 Speaker 6
We do battle.
00:05:21 Speaker 1
On stuff, even with politics and sacks and stuff like that.
00:05:25 Speaker 1
I respect each of you.
00:05:26 Speaker 1
You are each brothers to me.
00:05:28 Speaker 1
I love each of you deeply.
00:05:29 Speaker 1
And when we fight and things don’t work out, I look at it as like personal growth or progress towards some other goals that we each have, the amount of support.
00:05:39 Speaker 1
I’ve gotten in my career from David Sacks, and Treumuth has been unparalleled.
00:05:46 Speaker 1
David Sacks was my first LP.
00:05:48 Speaker 1
He encouraged me to create my first venture.
00:05:51 Speaker 1
Chamath supported, supported me relentlessly in my career.
00:05:54 Speaker 1
I showed up for me every event I ever did, and I tried to do those same things for them.
00:05:59 Speaker 1
You and I haven’t done much business together, free bird, but I’m enjoying the business that we started beginning.
00:06:04 Speaker 5
Start charging.
00:06:04 Speaker 1
Yeah, it’s starting to.
00:06:05 Speaker 1
And I and I showed up for both of your events when you needed me.
00:06:09 Speaker 1
Yeah, doing some syndicates with you and.
00:06:11 Speaker 1
I I love doing this each week.
00:06:13 Speaker 1
I love doing.
00:06:13 Speaker 1
This each week, yeah.
00:06:14 Speaker 1
It’s like, like, I think my point was it’s a lot easier to be friends and have wine together and play poker together than it is to do a job together.
00:06:22 Speaker 1
And this has become really a job.
00:06:24 Speaker 1
And so, you know, you can have really good friends and then you try and start a company together or do a job together and you can hate each other.
00:06:30 Speaker 1
I think it doesn’t.
00:06:31 Speaker 1
Mean that you guys stopped being friends, or that we should stop doing the work.
00:06:34 Speaker 1
I think we should still keep trying to do the work, figure out a way to make it work.
00:06:37 Speaker 1
So anyway, that was the point I wanted to make this.
00:06:39 Speaker 1
I know.
00:06:39 Speaker 1
That’s the end of my my sadness, OK?
00:06:41 Speaker 1
And those weren’t prepared.
00:06:42 Speaker 1
Those are just a reaction to yours.
00:06:43 Speaker 1
I don’t know if sacks wants to say anything, but I doubt it.
00:06:46 Speaker 2
OK, let’s actually have any motions right now.
00:06:49 Speaker 6
What are you feeling?
00:06:50 Speaker 3
Yeah, I mean so moth, do you think grass fed is better or the regular built out?
00:06:54 Speaker 1
Second, I worked texting while you guys were.
00:07:00 Speaker 4
Yeah, it’s so good.
00:07:01 Speaker 1
Were hugging it out, talking.
00:07:02 Speaker 1
About different kinds of jerking.
00:07:06 Speaker 5
While we were jerking each other off you.
00:07:08 Speaker 1
Guys were researching jerky.
00:07:10 Speaker 3
I was recommending Biltong to him.
00:07:12 Speaker 1
Oh great. Awesome.
00:07:13 Speaker 1
Speaking of jerky, let’s get it out.
00:07:15 Speaker 2
Of humanae. Oh, OK.
00:07:16 Speaker 1
So now, hey, hello.
00:07:17 Speaker 1
OK, so first thing to talk about today and I kind of wanted to take it in a little bit of a different direction than I think all the other tech media have kind of addressed this.
00:07:27 Speaker 1
You know Adam Newman.
00:07:28 Speaker 1
Is back he.
00:07:29 Speaker 1
Raised $350 million from Andreessen Horowitz, there was announcement this week.
00:07:34 Speaker 1
For his new company called Flow, which as we understand it is trying to develop residential apartments.
00:07:41 Speaker 1
You know, in the same sort of vibe, quality and attention to experience as maybe was intended with we work and flow you know, seems to have started originated with Adam doing a bunch of acquisitions of real estate with his own capital and now he seems to have turned this into a real business and raised money from Andreessen.
00:08:00 Speaker 1
So there’s.
00:08:01 Speaker 2
All the commentary and.
00:08:05 Speaker 1
Joking about andreason putting this money in are.
00:08:07 Speaker 1
They crazy as well as.
00:08:09 Speaker 1
All the you know commentary about Adam Newman.
00:08:11 Speaker 1
How could anyone back him?
00:08:12 Speaker 1
The guy was so awful the first time around.
00:08:14 Speaker 1
Let me just do a quick round the.
00:08:15 Speaker 1
Horn with you guys, you know.
00:08:17 Speaker 1
Initial reactions to the to the Adam Human deal.
00:08:20 Speaker 1
And then I’d love to talk about founders having a second act because you know, Adam happens to be high profile so his failure was high profile, but a lot of founders have a failed low profile first experience and come back and kick ask the second time around.
00:08:37 Speaker 1
And investors have taken notice of that.
00:08:39 Speaker 1
And so I’d love to go there, but maybe we just do a quick reaction.
00:08:42 Speaker 1
Jaikel, I know you’ve talked about this on your other show.
00:08:44 Speaker 1
Maybe you can kind of give us your your quick commentary on, on the opportunity of the transaction and what are people talking about with respect to this, this deal happening?
00:08:52 Speaker 1
You know, people are wondering why he’s able to raise money.
00:08:54 Speaker 1
And what I always tell founders is when you see these like.
00:08:57 Speaker 1
Weird fundings and you can’t get your head.
00:08:59 Speaker 1
Around them, it’s typically has to do with track record, and incredible audacity Trump’s prior blunders.
00:09:05 Speaker 1
So say what you will about Adam Neumann.
00:09:08 Speaker 1
He is audacious and he has credibility. People forget his origin story. They only remember the Masayoshi Son, $4 billion and what happened and what he did with that. And that was a complete ***********
00:09:19 Speaker 1
It went off the rails.
00:09:20 Speaker 1
He did all kinds.
00:09:21 Speaker 1
Of inside dealing and and.
00:09:23 Speaker 1
It was. It was.
00:09:24 Speaker 1
But before that he did green desk.
00:09:26 Speaker 1
He was a bootstrapped entrepreneur, and then he created the category defining coworking space, which to this day, when you say I need to get in office, the first thing people say is better.
00:09:36 Speaker 1
We were just like they say take it to Bert, just like they say Google it.
00:09:39 Speaker 1
And just like, you know any other verb that we talk about and so.
00:09:44 Speaker 1
It’s very easy to dismiss him and say the tech industry has no morals.
00:09:48 Speaker 1
They just battleback anybody.
00:09:49 Speaker 1
He has a publicly traded come.
00:09:52 Speaker 1
That’s in the market right now. He defined the category, and he also put $300 million, apparently of his own money at stake to buy these apartments.
00:10:00 Speaker 1
So I think it’s a I would say the bet makes sense to me and I think it would make sense if we go into the bed, which I’d love to.
00:10:08 Speaker 1
Everybody else is.
00:10:09 Speaker 1
That’s an it’s an audacious bet, because housing is where the hardest industry is to tackle and.
00:10:15 Speaker 1
And he already did it for commercial, so why wouldn’t he be able to do it for residential?
00:10:20 Speaker 1
Did you see this opportunity in the market?
00:10:22 Speaker 1
Didn’t did you guys take?
00:10:23 Speaker 1
A look at.
00:10:23 Speaker 1
It or have any points of view on it.
00:10:25 Speaker 3
No, I mean we, we we don’t write 3 and $50 million size checks. So it’s just not something that we’re going to take.
00:10:31 Speaker 3
A look at.
00:10:32 Speaker 3
For that matter we don’t really do non software investments, we don’t do you know in the, you know physical world type investment.
00:10:40 Speaker 3
And I’ve kind of learned that doing anything in the physical world with atoms is 10 times harder than doing anything with bits.
00:10:47 Speaker 3
So you know, one of my takeaways in the last few years is, you know, we tend to like pure software models, not even hybrid or tech enabled models because it really does take a 10X entrepreneur.
00:11:00 Speaker 3
To do anything in the physical world.
00:11:02 Speaker 3
So we, you know, we software is kind of our knitting we we like to stick to.
00:11:07 Speaker 3
That in terms of, you know, Andreessen Horowitz making this investment here, right?
00:11:11 Speaker 3
Or your larger topic of of repeat founders?
00:11:14 Speaker 3
Look, most startups fail and most founders or good founders have an entrepreneurial streak in them.
00:11:20 Speaker 3
And so you combine those two things and there’s going to be a lot of repeat second time founders, people who are fundamentally entrepreneurial and their first thing doesn’t.
00:11:28 Speaker 3
Work out, I think that that can be a positive thing to invest in because they’ve gotten some of their mistakes out of the way.
00:11:34 Speaker 3
And they’ve learned from that experience.
00:11:36 Speaker 3
So I think the question we would just ask is what were the learnings and did they conduct their failed startup honorably?
00:11:42 Speaker 3
You know, like if they lied to investors or misled investors, then obviously we don’t want any part of that.
00:11:44 Speaker 6
Right.
00:11:48 Speaker 3
But I don’t think most failures are like that and and so as long as the founder.
00:11:54 Speaker 3
I think conducted themselves honorably had some good learnings.
00:11:58 Speaker 3
It’s certainly not disqualifier for their next.
00:12:00 Speaker 1
Sort of.
00:12:00 Speaker 1
I mean chamath you’ve been open in the past about startups that waste money and do the kind bars and red brick, you know officers and you know, easy living at the office, there’s no better example of over the top exuberance as it was at we work, right.
00:12:16 Speaker 1
I mean does that indicate to you that this guy doesn’t have a clue in?
00:12:20 Speaker 1
In terms of how to be prudent with investors capital and it’s not bakeable or how do you?
00:12:24 Speaker 1
Think about it, I.
00:12:25 Speaker 1
Have a couple thoughts.
00:12:26 Speaker 1
The first is that we work is a really interesting business.
00:12:31 Speaker 1
But that business had been built many times before, and it’s called the wheat.
00:12:36 Speaker 1
And I think what Adam was able to arbitrage was a period of time where he pitched a non real estate investor, a technology company that was really just a real estate investment trust.
00:12:49 Speaker 1
And that’s why he was able to get these incredibly heady valuations. I think the peak valuation of the work was like 45.
00:12:55 Speaker 1
Or $50 billion.
00:12:56 Speaker 1
But what happened?
00:12:57 Speaker 1
Which is that when we work, ultimately went public.
00:13:01 Speaker 1
The collective intelligence of the public markets imposed a wheat based valuation model on rework and it is now a $3.6 billion public company.
00:13:13 Speaker 1
And I don’t think you can dunk on Adam for that. It’s hard to build any kind of company, let alone a $3.6 billion company. And he was instrumental in that, so he should get some amount of cred.
00:13:24 Speaker 1
But the reality was that he was pitching people that didn’t want to hear.
00:13:29 Speaker 1
About a business that was a real estate investment trust.
00:13:32 Speaker 1
They wanted to hear about some technology and all of these other things, but ultimately when you stripped it.
00:13:36 Speaker 1
Away it was a wheat.
00:13:38 Speaker 1
Now you started it again, and from the outside in, not knowing anything ’cause, we don’t know anything.
00:13:44 Speaker 1
What it looks like is the beginnings of another wheat, except focused on residential.
00:13:49 Speaker 1
Right.
00:13:50 Speaker 1
So when you buy hundreds or thousands of apartments but again same paid different lives there the the the issue at hand though is that again he is found.
00:14:00 Speaker 1
A technology investor to buy a technology story.
00:14:04 Speaker 1
And again, time will tell whether there is a technology business here, but if it ultimately is an amalgamation of a bunch of apartments.
00:14:12 Speaker 1
With some sort of, you know, interconnected technology that helps enable a better community or what have you.
00:14:19 Speaker 1
Those kinds of rates have also been built before and REITs are valued in a very structured way on this thing called FFO, funds from operations.
00:14:28 Speaker 1
And you know what?
00:14:29 Speaker 1
The upper bound.
00:14:30 Speaker 1
Of valuation is.
00:14:31 Speaker 1
Which is if you go and look at the stock market, the most valuable rate in the world is a company called Prologis, and they have about a billion square feet under management.
00:14:40 Speaker 1
They’re about $100 billion. Company we work has about 45 million square feet under management. There are $3.6 billion company. So if you just.
00:14:49 Speaker 1
Interpolate from those two data points on the residential side. Adam is going to have to buy. You know, if you think an average apartment is 1500 square feet, he has to buy, you know, 600.
00:14:58 Speaker 1
And 65,000 more apartments.
00:15:02 Speaker 1
In order for that to be Prologis scale, you know, I don’t know to invest in a billion dollar valuation or 1.5 or two or whatever that number turns out to be makes sense if you think the upper bound is unlimited.
00:15:14 Speaker 1
But if you think the upper bound is 3 or 4 billion, the only reason to do it by the.
00:15:18 Speaker 1
Way it still.
00:15:18 Speaker 1
Makes sense for any reason to.
00:15:19 Speaker 1
Do it, and This is why I think people get tilted.
00:15:22 Speaker 1
Because now this comes to my second point.
00:15:25 Speaker 1
Which is that what?
00:15:27 Speaker 1
Adam Neumann is able to take advantage of is a very obvious powerful understanding.
00:15:33 Speaker 1
Of the venture capital business model that other founders don’t, especially the ones that dunk on him.
00:15:39 Speaker 1
And let me just explain this.
00:15:41 Speaker 1
We talked about this last week, so the only mistake I think that SoftBank really made was a velocity of money mistake, which is not setting the investment cycle of their vision farm to be 10 years instead of five.
00:15:55 Speaker 1
While every other fund has a 5 year investment cycle too, including ages and so when you have 10s of billions of dollars under management.
00:16:02 Speaker 1
Guys, guess what?
00:16:03 Speaker 1
They have the same problem SoftBank did, except with just a different quantum of capital. They want velocity of money, and so if a founder comes and asks for $350 million.
00:16:15 Speaker 1
It actually, in a perverse way, makes your life easier, because now that’s saying yes once versus saying five or six times to people asking for $50 million or heaven forbid, 350 times for people asking.
00:16:28 Speaker 1
For a million.
00:16:29 Speaker 1
And so if you’re if you’re in that seat tomorrow, if you’re in the investor seat, are you?
00:16:34 Speaker 1
Putting all that capital once with the one guy who’s managed that money before.
00:16:38 Speaker 1
Or do you want to find the guy who has it or the gal?
00:16:42 Speaker 1
Rather, you have to understand the end recent business model, Andreessen Horowitz business model is to become Blackstone.
00:16:48 Speaker 1
But for technology?
00:16:50 Speaker 1
They have like 30 billion am now, right, right, which is still you know a drop in the bucket. So if you if you look at Blackstone right, a trillion Blackstone is 100 plus billion dollar market cap company.
00:17:01 Speaker 1
Right.
00:17:01 Speaker 1
Built on 3 pillars, credit, private equity and real estate.
00:17:06 Speaker 1
You can make the argument that technology is near is as important as those 3 categories.
00:17:11 Speaker 1
And so, you know, if I think it’s pretty obvious that Andreessen is trying to build a publicly ownable security that represents.
00:17:20 Speaker 1
All things in technology.
00:17:22 Speaker 1
So again, I don’t think that they’re necessarily out to generate massive returns for LP.
00:17:28 Speaker 1
These they want to become a credible, reliable institution for to absorb hundreds of billions of dollars.
00:17:37 Speaker 1
And so ultimately the objective you think is.
00:17:39 Speaker 2
To index technology.
00:17:39 Speaker 1
So monetize their comma their their ultimate goal is to Mott is for Andreessen and Horowitz to monetize the equity of Andreessen Horowitz of the management company.
00:17:48 Speaker 1
Yeah, that’s the goal and that’s a, that’s a.
00:17:50 Speaker 1
By the way, that’s a laudable goal.
00:17:52 Speaker 1
It’s really hard to build the business.
00:17:53 Speaker 1
They’ve built an incredible business and then they should get credit for.
00:17:57 Speaker 1
That Zach’s degree.
00:17:58 Speaker 3
Well, I mean they are they I.
00:18:00 Speaker 3
Think your math right that their stated goal is to build like a larger institutional VC type investor.
00:18:07 Speaker 3
I mean, doesn’t Andresen have a portrait of JP Morgan hanging out as well or something?
00:18:12 Speaker 3
I mean, they.
00:18:12 Speaker 3
Want to turn?
00:18:13 Speaker 3
VC from being like a little craft business as something larger or more institutional. So yeah, I’m sure they jump at the chance to write a 3 or $50 million check if they believe in the company.
00:18:23 Speaker 3
Kind of shift this conversation for a second, so I’ve done a lot of commercial.
00:18:26 Speaker 3
Real estate investing, I think there.
00:18:28 Speaker 3
Are reasons to think that.
00:18:30 Speaker 3
Flow this new company could actually be.
00:18:32 Speaker 3
Better than we work.
00:18:33 Speaker 3
And let me just explain.
00:18:34 Speaker 3
So with we work.
00:18:36 Speaker 3
You know, if you talked to commercial office space owners, landlords about we work like 10 years ago, what they would have told you is, yeah, look that model is great, but we want tenants who are high credit and sign long term leases.
00:18:51 Speaker 3
Why ’cause?
00:18:52 Speaker 3
They’re not worried about what happens in a bull market.
00:18:55 Speaker 3
They’re worried about what happens in a recession.
00:18:57 Speaker 3
And they want to make sure they can cover their.
00:18:59 Speaker 3
Bank debt so.
00:19:01 Speaker 3
Landlords have always cared not just about rents, but also about having high credit long term leases.
00:19:07 Speaker 3
What we were basically did is arbitrage that.
00:19:10 Speaker 3
Of course it was a much better deal for startups because if you’re a startup you don’t have to go through a complicated process side at least.
00:19:16 Speaker 3
You could just go month to month at a Wework and you’d be willing to pay a premium for that.
00:19:21 Speaker 3
So New York business work great during an upmarket because they would rent space for save 50 bucks a.
00:19:25 Speaker 3
Foot lease it for 100.
00:19:27 Speaker 3
They were captured, the spread.
00:19:28 Speaker 3
The problem is the business was highly levered to a boom cycle, and at the first recession or bust cycle, all of a sudden they’re going to have massive vacancy because everyone can believe.
00:19:39 Speaker 3
And all of a sudden, their rents go below their the rents are collecting, go below the rent they’re paying, and the arbitrage goes away.
00:19:46 Speaker 3
They magnified that problem by making two mistakes.
00:19:48 Speaker 3
Number one, they signed a lot of top of market leases, right?
00:19:51 Speaker 3
They were signing leases at $100 plus preferred in hot markets.
00:19:54 Speaker 3
And the other.
00:19:55 Speaker 3
Thing is, they didn’t seem to have a.
00:19:56 Speaker 3
Lot of financial discipline, you know.
00:19:59 Speaker 3
I guess that show kind of makes.
00:20:00 Speaker 3
One of these sort of Bacchanalian parties, they add and so forth like that, you can get away with a lack of spending discipline if you’re a 90% gross margin business like a Google.
00:20:10 Speaker 3
But when you’re a real estate business who’s got real cogs, not having spending discipline is actually a problem.
00:20:17 Speaker 3
So for all those reasons, I think we were kind of contained the seeds of its own implosion.
00:20:22 Speaker 3
Inside of their model, and they needed to manage or mitigate those risks a lot better.
00:20:27 Speaker 3
That’s not to say though that it wasn’t a great product.
00:20:30 Speaker 3
I mean for every stock, it was an amazing product.
00:20:30 Speaker 1
It was in the early hating, yeah, I mean in the early days sack.
00:20:34 Speaker 1
So to your point, they were.
00:20:37 Speaker 1
Taking under market like really low cost per square foot space like in the tenderloin and then selling it for you know, Bryant and 3rd St rents, right?
00:20:48 Speaker 1
Then that was the arbitrage and it worked. It’s only they’ve lost that discipline, it sounds like in the second-half of the company’s history.
00:20:54 Speaker 2
Right. Well, I.
00:20:55 Speaker 3
Think it’s interesting about flow is that it’s sort of multi family, these apartment type buildings.
00:21:00 Speaker 3
Those tend to be, you know, let’s call it one year leases anyway and they’re owning them.
00:21:04 Speaker 3
They’re not leasing from a landlord.
00:21:06 Speaker 3
They’re basically, it’s so tremendous, right?
00:21:07 Speaker 3
It’s basically a standard apartment replay where Newman is going to create a consistent experience and brand across the country.
00:21:14 Speaker 3
I’m not sure that’s really been done before where there’s like a brand for apartment living.
00:21:18 Speaker 1
It’s never been done.
00:21:20 Speaker 3
And so actually it’s pretty.
00:21:22 Speaker 3
Simple in terms of measuring if it’s going to work or not, which.
00:21:24 Speaker 3
Is simply can Adam.
00:21:26 Speaker 3
Newman deliver lower vacancy rates and higher.
00:21:28 Speaker 3
Rents and then you know buy apartment buildings at market prices.
00:21:33 Speaker 3
So in other words that’s the arbitrage is can we extract more rent unless vacancy from apartment units by creating this national brand and this experience and and also you do with financial discipline.
00:21:42 Speaker 1
But this is this is.
00:21:44 Speaker 4
I mean if you got the.
00:21:45 Speaker 1
Yeah, this is my point.
00:21:46 Speaker 1
Everything we talked about is how we would actually do a teardown of any other weed that was looking for money.
00:21:52 Speaker 1
David, you know we would look at what is the FFO ultimately, it’s like you know what’s implied cap rate and what’s the FFO.
00:21:58 Speaker 1
Can you get a?
00:21:58 Speaker 1
Paid for a.
00:21:59 Speaker 1
How much do you have to spend and can?
00:22:00 Speaker 1
You get paid and this is where.
00:22:02 Speaker 1
This is where I think like, you know, trying to.
00:22:04 Speaker 1
And you know, so if if if only if on the inside of it.
00:22:08 Speaker 1
What, what instead it was not that but it was pitched as some, you know, convoluted technology play.
00:22:14 Speaker 1
It’s a little bit harder to believe.
00:22:16 Speaker 1
Again, we don’t know the details, so maybe this boy.
00:22:18 Speaker 4
Right.
00:22:19 Speaker 1
Right, sure. Actually what I would say building Saks entrants if they are going to do 700,000 apartments, you can actually put some numbers on the.
00:22:27 Speaker 1
You know, 700,000 apartments thing get extra 100, maybe 150 bucks out of a renter. I think they could for like that experience or people pay a little premium.
00:22:35 Speaker 1
They’re not going to pay 300 more, 400 more, because then they would just get a larger apartment and you know, they could spend that money ’cause it would be better spent.
00:22:42 Speaker 1
If they have 700,000 of.
00:22:43 Speaker 1
Those you’re talking.
00:22:44 Speaker 1
About a billion dollars in revenue a year. That’s with 700.
00:22:47 Speaker 1
1000 apartments.
00:22:48 Speaker 1
OK, 10 times profits, you know, whatever $10 billion valuation if Andreessen Horwitz is buying in at 1.5 or two like Jammat saying is probably correct, somewhere in that range there about 20%.
00:22:57 Speaker 1
OK. Yeah, maybe they get a 6 or 7 bagger out of this, but it’s a 6 or 7 background, a big #350. It’s not like a 20X or 50X. And we also get the branding, which I would not under.
00:23:09 Speaker 1
Value here of being the firm that backs bad boy entrepreneurs and is like willing to go there and support.
00:23:18 Speaker 1
I think it’s a real positive trend.
00:23:20 Speaker 1
It’s like, look, yeah, I don’t know you.
00:23:22 Speaker 1
You just raised a ton of money.
00:23:24 Speaker 1
Well, guess what?
00:23:24 Speaker 1
You got to put that money out because it’s not as if they’re going to think to themselves, oh, I really, really want to run this fund over three years instead of two.
00:23:32 Speaker 1
They’re not thinking that they’re like, I want to keep going out because I think their business model works by taking as much.
00:23:38 Speaker 1
Oxygen in the room as possible, which means to be actively fund raising always.
00:23:44 Speaker 1
That’s it’s tight, it’s true of Blackstone, it’s true of Apollo, it’s true of Carlyle, it’s true of KKR.
00:23:51 Speaker 1
Any of these publicly traded investment managers, they live.
00:23:57 Speaker 1
And die by.
00:23:57 Speaker 1
Their ability to constantly be raising funds, which implicitly means you have to constantly be writing funds.
00:24:04 Speaker 1
The returns decay, but that’s OK because now you’re feeding you’re taking money from pension funds and other institutional limited part.
00:24:12 Speaker 1
Those who are fine because their hurdle is like 6 or 7%. So if you deliver 11% you still look like a genius because you can absorb so much money.
00:24:21 Speaker 1
South and recent wins by showing that Adam Newman goes and picks him. And recent wins because they have the ability to write a $350 million check. And Greece and wins because.
00:24:32 Speaker 1
They have $350 million less that they have to actually put into the hands of others.
00:24:36 Speaker 1
Parents now they can do it with just one check, so it’s a multi faceted win for them and it’s a multi faceted win for Newman.
00:24:43 Speaker 1
I think there’s also brand value for the entrepreneurs.
00:24:46 Speaker 2
That have had.
00:24:47 Speaker 1
Failed startups or issues with their first startup and floating and knowing that there’s still a second bite at the apple.
00:24:53 Speaker 1
I remember a survey and I I just.
00:24:54 Speaker 1
Tried to pull it up and I couldn’t.
00:24:56 Speaker 1
Find it so I may be.
00:24:57 Speaker 1
Wrong on this but.
00:24:58 Speaker 1
First round capital years ago surveyed.
00:25:02 Speaker 1
Or did an analysis of all the investments they had made, and I think one of the biggest predictors of success in the startup was that it was the Founders second startup.
00:25:11 Speaker 1
And so if you’ve had failings the first time around, you’re more likely to have learned from those failings to improve your performance the second time around.
00:25:18 Speaker 1
And so as an entrepreneur, I looked Andreessen Horowitz after this investment and think, you know, these guys will still back, you know, great entrepreneurs, even if things went sideways or there was an issue the first time.
00:25:29 Speaker 1
And you’ve got, you know, the ultimate.
00:25:31 Speaker 1
Kind of case for that.
00:25:32 Speaker 1
OK.
00:25:32 Speaker 1
Speaking of Andreessen, I’m going to move this along.
00:25:34 Speaker 1
You guys wanted to cover this topic?
00:25:36 Speaker 1
Not my favorite topic just because I want to be careful about.
00:25:41 Speaker 1
You guys decide what you want to say, but I’m gonna bring up the the embrace and Lindy’s. I’m.
00:25:47 Speaker 2
Being an African you guys wanted?
00:25:48 Speaker 1
To cover this right.
00:25:50 Speaker 1
They are thumbs up, sure, I mean.
00:25:52 Speaker 2
Right.
00:25:54 Speaker 5
OK.
00:25:55 Speaker 4
Well, I mean.
00:25:55 Speaker 1
I think everybody is talking about why wouldn’t we were talking about it?
00:25:58 Speaker 1
OK, so during COVID during COVID, Marc Andreessen wrote uh.
00:26:02 Speaker 1
That’s a uh called build, and I’m going to read an excerpt, he says.
00:26:07 Speaker 1
You don’t just see this smug complacency, dissatisfaction with the status quo and the unwillingness to build in the pandemic or in health care generally.
00:26:15 Speaker 1
You see it throughout Western life, and specifically throughout American life.
00:26:19 Speaker 1
You see it in housing and the physical footprint of our cities.
00:26:22 Speaker 2
We can’t build.
00:26:23 Speaker 1
Nearly enough housing in our cities with surging economic potential, which results in crazily skyrocketing housing prices in places like San Francisco, making it nearly impossible for regular people to move in and take the jobs of the future.
00:26:35 Speaker 1
And then last week, Mark and his wife, Laura, submitted a letter to the town of Atherton to fight against multifamily housing, saying, I’m writing this letter to communicate our immense objection to the creation of multifamily overlay zones in African please immediately removes all multifamily overlay zoning projects for the housing element.
00:26:55 Speaker 1
Which will be submitted to the state in July.
00:26:57 Speaker 1
They will massively decrease our home values, the quality of life, ourselves and our neighbors, and immensely increase the noise pollution in traffic.
00:27:08 Speaker 1
I’m just gonna hand the mic.
00:27:09 Speaker 3
Over well, I mean.
00:27:11 Speaker 3
I’m happy to defend the residents of Atherton on this.
00:27:15 Speaker 3
I’m going to take the contrarian standpoint, but does anyone?
00:27:17 Speaker 2
So I I was going to do the same I thought you.
00:27:19 Speaker 2
Guys were gonna patch it so.
00:27:21 Speaker 3
Well, look, I mean do.
00:27:22 Speaker 3
We have a a problem where housing is too hard to construct in.
00:27:26 Speaker 3
The state of California.
00:27:28 Speaker 3
Yes, and there’s a bunch of reasons for that.
00:27:29 Speaker 3
The permitting process is Byzantine.
00:27:31 Speaker 3
It takes years.
00:27:32 Speaker 3
All those delays cost money.
00:27:34 Speaker 3
The tenant rights movement has gone so far that landlords.
00:27:38 Speaker 3
Can’t you know, it’s almost impossible to evict anybody, and that makes it so no one wants to be a landlord, so no one wants to build these multifamily buildings or buy them.
00:27:50 Speaker 3
And then, you know, you’ve got like all these taxes, so you’re just in Calvin. In San Francisco, for example, they just passed the 6% transfer tax.
00:27:58 Speaker 3
Where if we talked on the show and they basically just took 6% of my home and there’s like nothing you can do about it.
00:28:04 Speaker 3
So there’s a lot of reasons why people don’t want to invest in more housing in California, and I think that.
00:28:11 Speaker 3
This average example is sort of cherry picked because what this?
00:28:14 Speaker 3
Is really zoning, you know?
00:28:16 Speaker 3
There are these suburbs, and it’s not just Atherton.
00:28:19 Speaker 3
I mean you got the East Bay as well where people live in these areas that are zoned for single family residences as opposed to multi family and that determines the character of the neighborhood now if you go buy a house.
00:28:31 Speaker 3
In one of those neighborhoods with that zoning, then that’s what you expect to be the case.
00:28:36 Speaker 3
I mean you have to spend more money buying house in that neighborhood because you are investing in the character of that neighborhood.
00:28:44 Speaker 3
It is unfair to the residents of that neighborhood for a developer to come along and say, hey, I’m going to change the character of this place so I can make money.
00:28:51 Speaker 3
I’m going to take a bunch of single family lots, turn them into multi family apartment complexes or something like that so I can understand why the residents would be against that.
00:29:01 Speaker 3
So I would differentiate between legitimate.
00:29:04 Speaker 3
Reasons for zoning and.
00:29:05 Speaker 3
Then things that the state or cities have done.
00:29:09 Speaker 3
To undermine the market for housing, basically creating frictions or impediments in the market for housing.
00:29:14 Speaker 3
Now it is the case that as cities get bigger and need to free up land that you might need to rezone, but the areas that you should look out for, that should make sense, right?
00:29:24 Speaker 3
I mean I.
00:29:24 Speaker 3
Don’t think you.
00:29:25 Speaker 3
Go off to Atherton and change the character of that neighborhood.
00:29:29 Speaker 3
So you can buy five more units, yeah.
00:29:30 Speaker 2
He dipped.
00:29:31 Speaker 1
I mean, you should.
00:29:32 Speaker 1
You should.
00:29:32 Speaker 3
Look at like, why not look at the areas around, say, public transit like the Bart’s and so forth, where you could basically go up around there and it would make sense.
00:29:42 Speaker 3
For the neighborhood.
00:29:43 Speaker 2
I mean the example I would give.
00:29:46 Speaker 1
To kind of paint an extreme picture is let’s say you want a farm in the countryside.
00:29:50 Speaker 1
Someone buys the fall next to you and then decides they want to build a 50 story tall skyscraper next to your farm.
00:29:57 Speaker 1
You you would have a serious objection because I think that the, I mean look at the town of Venice in Italy.
00:30:02 Speaker 1
I mean chemaf you’ve you’ve been there recently, but you know communities.
00:30:07 Speaker 1
Local communities can define the character of their community by by making zoning laws that.
00:30:13 Speaker 1
You know, allow a small city to remain like a small city.
00:30:17 Speaker 1
I’ve also always been against this notion that we should allow any developer to build any size building anywhere they want in San Francisco, which has been an ardent cry from Silicon Valley progressives for years.
00:30:28 Speaker 1
That we need to let them build, let them build.
00:30:30 Speaker 1
But at the end of the day, I.
00:30:31 Speaker 1
Moved to San Francisco 22 years ago.
00:30:33 Speaker 1
And it was a small, quaint city.
00:30:35 Speaker 1
It felt like a small city, and building skyscrapers made it more congested, made it less inviting, made it feel more industrial.
00:30:42 Speaker 1
And it wasn’t appealing to me as a res.
00:30:44 Speaker 1
And I think that residents need to have the right to define what they want their community to be.
00:30:49 Speaker 1
The question it brings up then, is where?
00:30:51 Speaker 6
Do you build?
00:30:52 Speaker 1
Because all residents everywhere would want to block family housing, multifamily housing, skyscrapers.
00:30:56 Speaker 1
So I mean, come up, I don’t know if you have a point of view to counter what we’re saying, but you know, how, how do we think about solving this problem at scale?
00:31:04 Speaker 1
If everyone wants the local communities to remain quaint and interesting and not be built out, well, I I think I think that’s true for people who can afford really nice homes.
00:31:13 Speaker 1
In the suburbs, right?
00:31:14 Speaker 1
But there are a lot of people that live in highly dense housing in urban environments, and I think that’s where we need to focus first.
00:31:22 Speaker 1
If you look at the data, California needs to build 3 1/2 million extra homes by 2025.
00:31:29 Speaker 1
That’s a rule, right?
00:31:30 Speaker 1
That’s like.
00:31:30 Speaker 1
A so David’s right, like focusing on a town with a population of 7000 people.
00:31:35 Speaker 1
Is not going to solve the 3 1/2.
00:31:36 Speaker 1
Million homes we need to build.
00:31:39 Speaker 1
And it brings up a bigger question, which is then who is going to pay for all the physical infrastructure that’s going to be required?
00:31:44 Speaker 1
Let’s just say you’re able to actually double the population of.
00:31:47 Speaker 1
Atherton to 14.
00:31:47 Speaker 1
1000 well, you know, I I live near that area.
00:31:51 Speaker 1
So what I’ll tell you is Atherton has bad flooding.
00:31:56 Speaker 1
David Sacks actually used to live near there too, so sacks confirm.
00:32:01 Speaker 1
You know, depending on when it rains, huge pockets of water just collect everywhere.
00:32:05 Speaker 1
That infrastructure is bad.
00:32:07 Speaker 1
There are no sidewalks, right?
00:32:09 Speaker 1
So you kind of walk just on the road.
00:32:12 Speaker 1
So carts ripping by, you know, could pick you off at any moment.
00:32:16 Speaker 1
Now, those were decisions that, as David said, the residents of that town made decades ago because of the lifestyle that it created.
00:32:25 Speaker 1
And they traded away a highly dense urban invite.
00:32:30 Speaker 1
Whereas if you just moved a mile, you know S there are parts of Menlo Park and parts of Palo Alto that are already in a situation to absorb.
00:32:41 Speaker 1
Very dense housing where you could put that extra 7 or 8000 people pretty easily in a much where do you, what do you do when those people in that neighborhood in Menlo Park say I don’t want another apartment building here?
00:32:51 Speaker 1
I want it.
00:32:51 Speaker 1
To be down the road in Africa, right?
00:32:53 Speaker 1
How do you resolve this conf?
00:32:55 Speaker 1
And I just want to remind everyone, in September, count Governor Newsom signed these bills, right? He signed 31 affordable housing bills, which mandate by ZIP code and by city and by town the building of affordable housing to create equity in this problem. Over.
00:33:10 Speaker 1
Which basically means all these cities and all these towns are now scrambling to figure.
00:33:14 Speaker 1
Out how do we?
00:33:15 Speaker 1
Meet our state mandated objectives of new affordable housing in our ZIP code or in our.
00:33:20 Speaker 1
And by the way, well, coming over, yeah I I mean the and I think exactly as you said, what will happen now is it goes to this.
00:33:27 Speaker 1
State Commission and I think that State Commission can issue some sort of penalty or something.
00:33:31 Speaker 4
Yeah, that’s right.
00:33:31 Speaker 1
So, you know, it’s it’s, I think the residents will pay for that freedom if you will, to to not have that building happen.
00:33:40 Speaker 1
But again, I just go back to.
00:33:41 Speaker 1
It doesn’t solve the crux of the problem.
00:33:45 Speaker 1
The crux of the problem is we need to solve.
00:33:47 Speaker 1
This housing crisis in the order of magnitude of millions of homes.
00:33:52 Speaker 1
OK.
00:33:53 Speaker 1
And so millions of homes can only be absorbed mostly in cities?
00:33:59 Speaker 1
So the real conversation, and you know, is I have more sympathy for the residents of Atherton than I do for residents of the city of San.
00:34:07 Speaker 1
Francisco, OK, because there is dense housing in San Francisco.
00:34:12 Speaker 1
There already is an infrastructure, social services that were designed and built.
00:34:17 Speaker 1
There are sidewalks again.
00:34:19 Speaker 1
Simple example.
00:34:20 Speaker 1
There are stoplights.
00:34:22 Speaker 1
You know in San Francisco that a lot of these towns don’t actually have now.
00:34:26 Speaker 1
Again, that was a decision they made.
00:34:27 Speaker 1
50 years ago.
00:34:28 Speaker 1
And they would have to change that decision.
00:34:30 Speaker 1
But my point is like there are there are places that are already shovel ready.
00:34:34 Speaker 1
And the real question is why can’t we build hundreds of thousands of units?
00:34:39 Speaker 1
And so this is a good article to write because it’s a Tony neighborhood and, you know, there’s a few thousand folks.
00:34:46 Speaker 1
But I think the real issue will get solved until we figure out how to green light hundreds of thousands and millions ’cause.
00:34:51 Speaker 1
We are three and a half million homes.
00:34:53 Speaker 1
Short J.
00:34:53 Speaker 1
Cole, what do you think I?
00:34:54 Speaker 1
Mean are you?
00:34:55 Speaker 1
Well, you know the the truth here is that this is not about African.
00:34:59 Speaker 1
This is every town, every city in California is fighting all development because if you fight the development.
00:35:05 Speaker 6
Well, yeah, you would.
00:35:06 Speaker 1
Obviously, have less traffic and supply and demand your homes become more valuable.
00:35:10 Speaker 1
The place that’s flooded most of all is San Francisco, in the city where you cannot convert homes.
00:35:15 Speaker 1
You cannot take your Victorian and make it into a a town home.
00:35:18 Speaker 1
And then if you look at what’s actually happening here, what they’re fighting against, you know this.
00:35:22 Speaker 1
The hypocrisy of it is.
00:35:23 Speaker 5
You know these are townhomes?
00:35:24 Speaker 1
This isn’t like a 20 story.
00:35:28 Speaker 1
You know, giant apartment building, their townhomes, and they’re going to be $3 million each, and they’re not going to be for scary people and criminals and ruining people’s quiet life.
00:35:38 Speaker 6
It’s going to be.
00:35:39 Speaker 1
The venture partner or the receptionist or not even the receptions, maybe a venture partner.
00:35:44 Speaker 1
It’s going to be a CTO at a tech company who’s gonna be able to buy.
00:35:46 Speaker 1
This and then be that much closer to work.
00:35:49 Speaker 1
And so it does reek of hypocrisy.
00:35:51 Speaker 1
And there’s a really simple solution here, which is, you know, there are Caltrain stations up and down the peninsula.
00:35:57 Speaker 1
There are, you know, in some places you have.
00:36:02 Speaker 1
Other municipal transportation along those corridors, they should build up, they should build 10 Storey apartments, etc.
00:36:08 Speaker 1
Redwood City did this recently.
00:36:10 Speaker 1
We’ve all been there and seen the.
00:36:11 Speaker 1
Incredible. But Jay Cole, you’re talking about, you’re talking about the exact kind of solution we need because instead of trying to solve 100 units here or there, Redwood City did an incredible job. They solved it in the scale of 10s of thousands of units.
00:36:24 Speaker 1
And it completely changed the downtown.
00:36:26 Speaker 1
Of Redwood City.
00:36:27 Speaker 1
It is soft and it’s awesome.
00:36:30 Speaker 1
Incredible and afraid of so.
00:36:31 Speaker 2
Yeah, it’s incredible.
00:36:32 Speaker 1
What is African fold up?
00:36:33 Speaker 1
This is Nimbyism at its worst in my mind.
00:36:35 Speaker 1
I’m I’m not going to specifically make it about more countries.
00:36:37 Speaker 1
And I think everybody you know has the right to live in the neighborhood they want.
00:36:40 Speaker 1
They they get to state their feelings.
00:36:42 Speaker 1
I think what we need to do is convince people.
00:36:44 Speaker 1
And I think there’s two really good art.
00:36:45 Speaker 1
Let’s hear number one.
00:36:47 Speaker 1
Do you want your shaft with pants?
00:36:48 Speaker 2
You’re saying we have in speech convince people.
00:36:49 Speaker 1
To let their neighborhoods change.
00:36:51 Speaker 1
To let them evolve modestly, to have homes that their own children or their own chefs and housekeepers and associates.
00:37:00 Speaker 1
We all know people in the in the area who have bought apartment buildings for their nannies because you couldn’t get a nanny or you couldn’t get a chef, so you you bought.
00:37:08 Speaker 1
Some unit in Redwood City and you rented for nannies or whatever, like you.
00:37:11 Speaker 1
Although a.
00:37:11 Speaker 1
Know people that have not ever.
00:37:13 Speaker 1
I do know multiple Joe who have considered it.
00:37:16 Speaker 1
And so that’s the way you would convince.
00:37:18 Speaker 1
NIMBY people to evolve.
00:37:20 Speaker 1
And then there’s a second one.
00:37:21 Speaker 1
This has to do with work from home.
00:37:23 Speaker 6
When you commute.
00:37:25 Speaker 1
You know, the issues of domestic violence, depression, drug abuse, substance abuse, alcohol abuse, all of that goes way up and it’s it’s somewhere between 30 and 40 minutes of a commute.
00:37:35 Speaker 1
We start to see people quality of life seriously deteriorates and so if we want people to come back to our offices, which Apple just mandated last week, everybody is coming back three days a week.
00:37:45 Speaker 1
Like it or not, Tuesday Thursdays and you pick the other Wednesday you want.
00:37:49 Speaker 1
To come to work I guess.
00:37:52 Speaker 1
If we want people to come back to work, but you have to build some taller homes. The CEO’s the founders of the company is the founders of the venture firms.
00:37:59 Speaker 1
It’s not about market person, it’s about everybody.
00:38:02 Speaker 1
They don’t have to commute.
00:38:03 Speaker 1
The office is within walking distance or a bike ride of their office.
00:38:07 Speaker 1
People need to start thinking about their nanny, their shaft, the firefighter.
00:38:11 Speaker 1
And their employees, Jason?
00:38:12 Speaker 1
I I may have misread it, but it wouldn’t have solved the problem for the nanny, the chef, the.
00:38:16 Speaker 1
No, these would be $3 million units. No, there wouldn’t even be that, because the way that it read ’cause I read it said that it you would have qualified it by building what’s called an Adu on your property.
00:38:27 Speaker 1
So there’s people.
00:38:29 Speaker 1
So people would have built it for their grandmother or their in law.
00:38:32 Speaker 2
A lot of that.
00:38:32 Speaker 1
Some people are doing so.
00:38:33 Speaker 2
By the way, becomes there.
00:38:33 Speaker 1
But my point is, the law as proposed was already hacked and so it was never have accomplished what you were saying.
00:38:40 Speaker 1
I think the answer to what you’re saying is what Redwood City did.
00:38:43 Speaker 1
It’s what towns all around the country should be doing, which is like.
00:38:47 Speaker 1
Moving around, particularly like transportation.
00:38:49 Speaker 1
Hubs, you should be green lighting a lot of dense housing, but Jason, those are not 80 use.
00:38:55 Speaker 1
That’s it.
00:38:55 Speaker 1
On a property those are, those are 100 and thousand.
00:38:58 Speaker 1
And by the way, those also required not just the infrastructure, but it also requires the financing and all of the, you know, the banks and.
00:39:06 Speaker 1
The markets there to construct it, that’s not a problem in California, but the opposition is the problem, which is why above federal that I’m sorry, the state government getting involved and superseding or trying to supersede what happens on a local level.
00:39:16 Speaker 1
That’s why Gavin Newsom is passing these things is because each town is refusing to do it.
00:39:20 Speaker 1
But another possible solution is evaporation is so good at blocking this stuff.
00:39:23 Speaker 1
And they have.
00:39:24 Speaker 1
So much money. Let them.
00:39:25 Speaker 1
Hey, a penalty and have Redwood City or San Carlos or another neighborhood Milbrae.
00:39:32 Speaker 1
Yeah, that wants money and they want to build up.
00:39:34 Speaker 1
Milbrae is building ’cause.
00:39:35 Speaker 1
That’s where the Bart station ends is in mobile.
00:39:37 Speaker 1
They’re building up there.
00:39:39 Speaker 3
Where you’re describing like.
00:39:40 Speaker 3
All these contortions and what should be a more free market for housing construction?
00:39:46 Speaker 3
I mean the reality is we’ve done so many things to distort the market with these labyrinthine permit process processes that delayed projects for years and years.
00:39:55 Speaker 3
To, you know, to all the taxes and other rules, yeah.
00:40:00 Speaker 3
Well, I’m not sure.
00:40:00 Speaker 2
’cause that’s how it they fight it, they.
00:40:02 Speaker 1
Fight it with all these environmental.
00:40:02 Speaker 4
Well, I I think zoning is a.
00:40:03 Speaker 1
Stuff, yeah.
00:40:05 Speaker 3
Little different yet.
00:40:05 Speaker 3
So there may be some factors into the permitting process, but but I would again I would differentiate zoning, but my point is just we’ve like so broken the flu.
00:40:15 Speaker 3
Market for housing?
00:40:16 Speaker 3
That we then.
00:40:17 Speaker 3
Come along and say, see, the free market is not working.
00:40:19 Speaker 3
We need more government mandates.
00:40:21 Speaker 3
And look, is this happening in Miami?
00:40:23 Speaker 3
No, go to Miami.
00:40:24 Speaker 3
There are cranes everywhere.
00:40:25 Speaker 3
They’re building.
00:40:26 Speaker 3
And they’re building multifamily or exactly so in these frankly red cities, red states, which are much more lightly regulated, they’re building a lot more.
00:40:36 Speaker 3
But at the same time, it’s not like.
00:40:37 Speaker 1
And and in New York, which is constrained, so you have to build up, yeah, but Houston has no zoning it.
00:40:43 Speaker 4
New York City.
00:40:44 Speaker 3
Has always had a very non sentimental view towards construction.
00:40:50 Speaker 3
The city has always said OK, if you want to build something bigger and better you can tear it down and start over.
00:40:56 Speaker 3
I mean they have like air rights and so on.
00:40:57 Speaker 3
They have to respect but, but New York City.
00:41:00 Speaker 3
Has never they buy in LA?
00:41:01 Speaker 3
They don’t constantly label buildings as historic and say you can’t touch them and things like that. It’s New York City’s always wanted to keep being dynamic and growing.
00:41:11 Speaker 3
So there are other places that just don’t have this problem and they’re able to achieve this growth without building an apartment complex like in the lot next to you if you live in the suburbs.
00:41:22 Speaker 3
And have a single family residence I.
00:41:24 Speaker 3
Mean right?
00:41:24 Speaker 3
So I I just think.
00:41:25 Speaker 3
Like, you know.
00:41:27 Speaker 3
The politicians in California have so thoroughly broken the.
00:41:30 Speaker 3
Market for housing?
00:41:31 Speaker 3
And now what happens is you get an article like this that’s basically scapegoating the residents of a suburb as being the source of the problem.
00:41:41 Speaker 3
When they didn’t create.
00:41:42 Speaker 1
This problem, they’re just fighting to keep the status quo, so they’re perpetuating it.
00:41:45 Speaker 1
I would say it’s the best description.
00:41:46 Speaker 3
But you know, like so.
00:41:47 Speaker 3
First of all, I have no special work for after I lived there for a couple of.
00:41:50 Speaker 3
Years and it’s.
00:41:50 Speaker 3
Kind of like a Stepford community, I mean.
00:41:53 Speaker 3
I had to move back to the city, yeah.
00:41:54 Speaker 2
Say more.
00:41:55 Speaker 3
Well, I’m like, you know.
00:41:57 Speaker 3
Somehow I’m just more comfortable stepping over dirty needles and excrement.
00:42:01 Speaker 1
You’re 40.
00:42:03 Speaker 3
I moved back to San Francisco.
00:42:05 Speaker 3
But masochists look evidence like.
00:42:08 Speaker 3
A really weird place, because it’s.
00:42:10 Speaker 1
Just like Al Pacino and the devil’s advocate, Phil.
00:42:13 Speaker 1
Had sex in.
00:42:14 Speaker 3
In addition to there being no sidewalks, there’s literally no offices.
00:42:17 Speaker 3
There’s no grocery store.
00:42:19 Speaker 3
There’s no commercial real estate of any kind.
00:42:21 Speaker 3
There is no downtown.
00:42:23 Speaker 3
There is there, you know, so I don’t know, like.
00:42:26 Speaker 3
Where the hook.
00:42:26 Speaker 3
Is that you would all of a sudden put an apartment complex? I mean, you’re literally going to be building it in someone’s backyard.
00:42:32 Speaker 3
So the character of that neighborhood just doesn’t.
00:42:34 Speaker 3
Support it and I think.
00:42:35 Speaker 3
You know, people coming together to form their own cities.
00:42:38 Speaker 3
You know, under the principle of subsidiarity should be allowed reasonable freedom to basically construct a city as they were in the way that they want to.
00:42:46 Speaker 1
Live and there are other cities that competition free.
00:42:49 Speaker 1
Bug there’s other cities that competition.
00:42:50 Speaker 1
Houston has no zoning.
00:42:52 Speaker 1
Essentially, so you can if you have a lot and you want to make it into a school or a hotel or a restaurant.
00:42:57 Speaker 2
See what you.
00:42:58 Speaker 1
Like you could do it and then outside of Austin you kind of have that same thing.
00:43:01 Speaker 1
People build all kinds of weird compounds and.
00:43:03 Speaker 1
Stuff out there.
00:43:03 Speaker 2
Are you guys following any of these like?
00:43:04 Speaker 1
So it’s a competition between those cities and I think San.
00:43:07 Speaker 1
Francisco is losing, yeah.
00:43:08 Speaker 1
Are you guys following any of the startup cities that are being built where there’s like a new city being built from the ground up?
00:43:13 Speaker 1
And any of those seem like real.
00:43:16 Speaker 1
I don’t know the.
00:43:17 Speaker 1
Names of any of them, but you know.
00:43:19 Speaker 1
I mean, are these real or these real projects?
00:43:21 Speaker 1
Are we going to see these emerging like?
00:43:22 Speaker 1
Next Gen.
00:43:23 Speaker 1
Cities that you know could be viable places to.
00:43:26 Speaker 2
Move to and live or is it really?
00:43:28 Speaker 1
It’s about, you know, transforming some of these cities that are less regulatory and that’s ultimately what will.
00:43:32 Speaker 1
Win in the market.
00:43:33 Speaker 1
You know, part of why the the regulation has gotten so perverted in a lot of these towns is because you’ve been able to gerrymander how you know these public school districts get funded.
00:43:42 Speaker 1
And so you know why folks are so protective of it.
00:43:45 Speaker 1
Is is again and you know to.
00:43:48 Speaker 1
To under score one of Saxos points, this is much more prevalent in democratic States and democratic cities where you know.
00:43:57 Speaker 1
Coastal elites have really gerrymandered these school districts, and that’s a large reason why.
00:44:03 Speaker 1
They they don’t want a lot of building, they want to protect the tax base and they want to be able to funnel those specific tax dollars into a few schools for their kids.
00:44:13 Speaker 1
And that’s it, yeah.
00:44:15 Speaker 1
And so it’s it’s that it’s actually a really good point about people.
00:44:17 Speaker 1
Don’t know this undercurrent which.
00:44:19 Speaker 1
Is the peninsula, by the way.
00:44:19 Speaker 1
It is.
00:44:20 Speaker 2
Down to earth.
00:44:21 Speaker 1
This is the dirtiest little secret in just doing these.
00:44:23 Speaker 1
Democratic states.
00:44:25 Speaker 1
Again, mostly democratic, but if you look inside of California and a couple of other states, how horrendous, Lee gerrymandered.
00:44:33 Speaker 1
It is so that you can basically redistrict in a way to cordon off tax dollars to only then send to one or two public schools and sit inside of your area your ZIP code, because that’s what the law says.
00:44:45 Speaker 1
It’s a ZIP code oriented scheme, is well versus created.
00:44:49 Speaker 1
Incredibly horrible incentives for people.
00:44:52 Speaker 1
So magic David is right, which is that there’s a there’s a contortion.
00:44:55 Speaker 1
Of laws that come together that underlies some of these decisions have been manifesting a petition like this and et cetera.
00:45:02 Speaker 1
They all need to get cleaned up.
00:45:04 Speaker 1
And Jamath it’s even worse than that because the same people who have rigged it so that all their tax dollars stay in their non development community, then they’re over funding their public schools.
00:45:15 Speaker 1
They could have easily or private, but they’re using all that money for just their private school and the one in the town next to it.
00:45:20 Speaker 1
Needs power off.
00:45:21 Speaker 1
Or whatever.
00:45:22 Speaker 1
They have no money and then.
00:45:24 Speaker 1
These people have the audacity to fight against school choice so that those poor people can take tax dollars and.
00:45:30 Speaker 1
Then pick up a bet.
00:45:31 Speaker 1
So it’s hypocrisy all the way up and down.
00:45:34 Speaker 1
And you know, I think This is why people are largely moving to different places around the country and it’s a competition.
00:45:39 Speaker 1
Between States and cities.
00:45:40 Speaker 1
OK, we’re going to go from super local to global.
00:45:43 Speaker 1
You know, this is a topic I wanted to talk about today.
00:45:47 Speaker 1
’cause I, I want to bring together a couple of of breads.
00:45:51 Speaker 1
And get your guides his take on, you know, all of these things kind of coming together and what it means for foreign policy and how things might play out on the global stage in the next, you know, call it years to decades jinpei it’s been reported this week.
00:46:08 Speaker 1
Is taking a trip to Saudi Arabia.
00:46:12 Speaker 1
You know, this is just a few weeks after Joe Biden made his trip to Saudi Arabia.
00:46:16 Speaker 1
I’ll read a just an excerpt.
00:46:18 Speaker 1
He’s going to end his more than two years of self-imposed in person diplomatic isolation and his first trip is going to be to Saudi Arabia.
00:46:27 Speaker 1
Yeah, you know, this is from unnamed Saudi sources, so it’s unclear.
00:46:30 Speaker 1
This isn’t an official statement, this is just reporting.
00:46:34 Speaker 1
You know, the Wall Street Journal reported in March that after six years of negotiations, China and Saudi Arabia are getting close for China to start paying, paying yuan for oil that they would be buying from the Saudis.
00:46:50 Speaker 1
So there’s an important kind of economic tie up that may be emerging that.
00:46:54 Speaker 1
That could affect the US dollar and the importance of the US dollar on the global economic stage.
00:47:00 Speaker 1
And meanwhile this week as well, it’s been reported that China is doing military exercises with Russia inside Russia.
00:47:08 Speaker 1
So there is an extension of China and their influence and their economic tie ups and their military activity with both China, I’m sorry, with both Russia and Saudi, I also want to highlight.
00:47:20 Speaker 1
Another important point that came out this week.
00:47:22 Speaker 1
Saudi Aramco reported their earnings, the largest earnings ever for a company.
00:47:28 Speaker 1
$48 billion of net profit in 1/4. That is more profit than Microsoft, Apple, Facebook, and Tesla combined in a single quote.
00:47:37 Speaker 1
Here it is the most profitable business and Saudis?
00:47:41 Speaker 1
Have been very.
00:47:41 Speaker 1
Public about their intention of divesting their interest in Saudi Aramco, which is their state owned and state-run oil company, and moving into other businesses.
00:47:51 Speaker 1
Over the past couple of months, it’s been reported that they’ve accumulated a nearly $100 billion equity portfolio.
00:47:58 Speaker 1
Owning stocks like Alphabet, Zoom, Microsoft and others, it’s also been reported that they own over $160 billion of US price.
00:48:06 Speaker 1
Trees. So the US is very dependent in the private equity community, in the VC community and in the public markets on Saudi dollars.
00:48:14 Speaker 1
Saudis have been large holders of U.S. dollars and now through China it looks like the Saudis maybe having a tie up that brings them closer to China. It through this trade relationship with Iran and the visit from Jingping while.
00:48:26 Speaker 1
China is actively exercising, you know, their military inside of Russia.
00:48:31 Speaker 1
Is the future a China, Russia, Saudi axis and should we be concerned and should we be changing any of our tactics on foreign policy?
00:48:41 Speaker 1
David Sacks as this you know, set of threads plays out over the next couple of months and and you.
00:48:48 Speaker 1
Know going in there?
00:48:48 Speaker 3
Yes, I think we do need to make some changes, binds backing away from this now, but in his first year he declared the Saudis St Pariahs, and he did push them into China’s arms. What was the point of that?
00:49:00 Speaker 3
Biden recently had to go to the Middle East to basically beg Saudi Arabia to increase their production of oil.
00:49:06 Speaker 3
So he’s already acknowledged that policy didn’t work. And one of the reasons it didn’t work is because simultaneously with declaring these allies to be enemies, he basically restricted US energy production, which is, you know, strategically undermined. So.
00:49:20 Speaker 1
And and the US has military bases in Saudi Arabia. Very strategic assets for the US military.
00:49:26 Speaker 3
Yeah, let’s listen the the US relationship with.
00:49:26 Speaker 1
Family southern weapons.
00:49:29 Speaker 3
Sorry, baby is always.
00:49:30 Speaker 3
Going to be complex.
00:49:32 Speaker 3
There are complicated friend to have.
00:49:34 Speaker 3
But it’s much better.
00:49:34 Speaker 3
To have them as a friend than basically drive them into China’s arms.
00:49:38 Speaker 3
And the reality is, whatever you think about the regime there and how oppressive it is, first of all, we don’t get to choose the people running these countries.
00:49:46 Speaker 3
That’s the lesson we should have learned over and over again from all these failed regime change.
00:49:50 Speaker 3
Second, do we have any reason to believe that if that regime got toppled, it would get replaced with something better?
00:49:56 Speaker 3
I think we all know that if the regime there fell, it would probably be replaced with something fundamentalist that we would like even less.
00:50:04 Speaker 3
And certainly if another nation were to basically dominate the region like Iran, that would be worse for.
00:50:10 Speaker 3
Us as well.
00:50:11 Speaker 3
So our relation with them is complicated, but ultimately they.
00:50:14 Speaker 3
Should be I?
00:50:14 Speaker 3
Think allies of the United States and we should not be working overtime to push them into China’s arms. And I think similarly with Russia we basically declared ourselves.
00:50:24 Speaker 3
To be engaged in this.
00:50:25 Speaker 3
Proxy war with Russia which?
00:50:28 Speaker 3
Strategically, there’s just nothing in it for us.
00:50:31 Speaker 3
You can sympathize with the people of Ukraine all you want, but it’s dangerous.
00:50:32 Speaker 2
Yeah, yeah. I mean you.
00:50:35 Speaker 1
You’ve said that in the past.
00:50:36 Speaker 1
And I think the question is, does this China military exercise in Russia indicate an escalation of our conflict with China to you, you know, or is this something that, you know, just kind of par for the course in terms of?
00:50:50 Speaker 1
You know, neighbors, you know, conducting.
00:50:53 Speaker 3
Mearsheimer, just an article in foreign affairs talking about the Ukraine war, reminding us that it’s.
00:50:58 Speaker 3
Still going on?
00:50:59 Speaker 3
I think people somehow think that this war is just stable and it’ll settle into forever war status.
00:51:05 Speaker 3
Kind of like like Afghanistan.
00:51:06 Speaker 3
These conflicts and releases went on forever.
00:51:08 Speaker 3
It’s actually very dangerous.
00:51:10 Speaker 3
It can always.
00:51:11 Speaker 3
Escalate out of control and as long as it’s going on, I think we just have to remember that it’s going on.
00:51:16 Speaker 3
It poses a huge global risk and I would say.
00:51:19 Speaker 3
One of the things that again, we should be aware of is this idea that even though we have problems and conflicts with multiple nations, we still don’t actually want to push them into each other’s arms.
00:51:31 Speaker 3
Again, the civil Union and China during the Cold War being the key example.
00:51:35 Speaker 3
I mean, this principle of geopolitics goes back thousands of years to the Romans.
00:51:39 Speaker 3
Right DVD at Imperat divide and rule you do not want to unite your enemies and what we’ve done here is we keep pushing them together.
00:51:47 Speaker 3
You know, China and Russia historically have not been friends.
00:51:52 Speaker 3
They share longboarders together.
00:51:53 Speaker 3
Neighbors generally have problems with each other.
00:51:56 Speaker 3
These are nations with serious conflicts or differences of interest, and we’ve made it really easy for China to to turn Russia into the junior partner in that relationship.
00:52:07 Speaker 1
Timoth do you think US foreign policy needs to change and that we’re setting up this, you know, axis of conflict, this this access of allies that that we don’t want to have the allies and.
00:52:19 Speaker 1
You know, would you kind of.
00:52:22 Speaker 1
And also you know, do you get concerned about this?
00:52:25 Speaker 1
Oil Umm trade where there may be some.
00:52:29 Speaker 1
You know, economic.
00:52:30 Speaker 1
Tie UPS that that really could affect you.
00:52:32 Speaker 1
You know the the dollar as a reserve currency.
00:52:35 Speaker 1
Look, couple things.
00:52:35 Speaker 1
I I think it’s.
00:52:36 Speaker 1
Really dramatic to kind of.
00:52:39 Speaker 1
Painted in the stark kind of like bipolar terms.
00:52:42 Speaker 1
I think that we are post all of that.
00:52:45 Speaker 1
So I understand how the Cold War it was easy to fall into binary definitions of good and evil run in zero, US versus them, team A versus team B.
00:52:55 Speaker 1
But in 2022, I don’t think that’s.
00:52:56 Speaker 1
How things work.
00:52:57 Speaker 1
Anymore, we’re in a highly interconnected, highly global world.
00:53:01 Speaker 1
It’s very complicated.
00:53:03 Speaker 1
Dollar flows are real time.
00:53:06 Speaker 1
Their massive cooperation is real time.
00:53:09 Speaker 1
It’s all over the world.
00:53:10 Speaker 1
It’s with every country, so it allows every country actually the first chance that they’ve ever.
00:53:14 Speaker 1
Really had.
00:53:15 Speaker 1
To maximize their own potential for their own citizens, and that’s really what every country goal is, right?
00:53:21 Speaker 1
And so in that lens, look what just happened today, Gazprom said.
00:53:26 Speaker 1
They’re going to shut off Nord Stream one just for, you know, a few days.
00:53:30 Speaker 1
But as a result of that, emat gas has just gone absolutely nuclear and just.
00:53:34 Speaker 1
Through 14 X 14X where it was pandemic, right. You know prices are unit for year ahead. So, so if you take a step back, we are at Max energy production with all of the capacity all around the world, 100 plus odd million barrels a day, OK, global productivity.
00:53:55 Speaker 1
Absorbs that.
00:53:56 Speaker 1
There is very little room right now to expand that without pushing the date in which that capacity is available out until, you know, 2028 to 2030, so effectively a decade from now.
00:54:09 Speaker 1
So if you’re in this situation in your country with vast natural resources, of which I’ll just remind us, America is 1.
00:54:18 Speaker 1
I think the most important thing you can do for your own citizens is to monetize these Petro chemicals now.
00:54:24 Speaker 1
Get it out of the ground in a reasonable way.
00:54:27 Speaker 1
Sell them in the marketplace because there’s demand for it.
00:54:31 Speaker 1
Take that money and reinvest it in your people.
00:54:34 Speaker 1
And I think if you look at it that way, the best run countries are responding to this moment in time like any company would.
00:54:42 Speaker 1
How do you maximize demand and sell the product you have?
00:54:45 Speaker 1
To the most number of customers globally.
00:54:47 Speaker 1
And so I think the Middle East is doing an incredible job, the US, by the way, bypassing.
00:54:51 Speaker 1
The IR a.
00:54:53 Speaker 1
Finally, I think is on the right footing because we can talk about this in a moment, but the path to permitting and the path to clean up, and by the way it puts fossil fuels on a level playing field with.
00:55:06 Speaker 1
With clean energy alternatives, unloading alternatives, yeah, the best thing that could have happened, OK.
00:55:11 Speaker 1
So I think we’re all behaving in a very rational, market focused way.
00:55:18 Speaker 1
And so I would focus less on trying to dramatically kind of resolve these things as a few countries versus everybody else, I don’t think.
00:55:25 Speaker 1
That’s what’s happening.
00:55:27 Speaker 1
Yeah, much more complex.
00:55:28 Speaker 1
Much more complicated than that, but I think the simple explanation is people with resources in the ground of the country in which they will have a responsibility, if they believe that there’s market demand, to absorb that so that they can take the revenue that comes from it and reinvest it in Europe.
00:55:44 Speaker 1
People, that is true for the United States, it’s true for Saudi Arabia, it’s true for every country rule.
00:55:49 Speaker 1
Yeah, I mean, Saudi Arabia is clearly making these investments, right?
00:55:52 Speaker 1
Not just on, you know, energy, but also housing and new industry and education.
00:55:53 Speaker 6
Yeah, by the way I.
00:55:54 Speaker 6
Mean like?
00:55:58 Speaker 2
By the way, Saudi, Saudi.
00:55:58 Speaker 5
And then what do you do with that much money?
00:55:59 Speaker 1
Arabia because and Saudi Arabia is becoming much.
00:56:01 Speaker 2
More liberal as a result to.
00:56:03 Speaker 1
Right. The education standards, yeah.
00:56:03 Speaker 6
But I do it.
00:56:04 Speaker 1
And even if you look at the investment, like you know you didn’t, you didn’t need to go to Dave Swenson.
00:56:10 Speaker 1
And understand portfolio allocation, although I think the guys in Saudi are smart enough to have probably done it, but.
00:56:17 Speaker 5
If you have a lot of.
00:56:19 Speaker 1
Money coming from one kind of business.
00:56:22 Speaker 1
And you need to make sure that you can diversify so that you can reinvest over a long period of time.
00:56:27 Speaker 1
If you look at countries that had huge petrochemical related revenue flows, the Nordics, what did they do?
00:56:32 Speaker 1
They stood up these huge sovereign wealth funds and those sovereign wealth funds went abroad and they bought all kinds of non correlated assets to those Petro chemicals.
00:56:42 Speaker 1
That is the same thing that Saudis doing financial.
00:56:45 Speaker 1
Security for their people.
00:56:46 Speaker 2
But it’s like.
00:56:47 Speaker 1
It’s like what is the furthest uncorrelated asset from oil?
00:56:50 Speaker 1
It turns out it’s Apple.
00:56:51 Speaker 1
Facebook met.
00:56:52 Speaker 1
On Google and you have to transfer it, yeah.
00:56:55 Speaker 1
Hey, Jacob.
00:56:56 Speaker 1
So Jacob, let me let me ask this contrarian question for you, because you often talk about the authoritarianism of these states, Saudi, China, Russia.
00:57:07 Speaker 1
You know, it seems to me as we observe what’s going on in Saudi and maybe the case could be made in China to some degree, although there are steps taken back but also in Russia that the US influence the economic and the political influence associated with these, these foreign policy conversions.
00:57:26 Speaker 6
Could they maybe be driving?
00:57:28 Speaker 1
These countries to be more liberal, you know, we’re seeing in Saudi now that women can drive that there’s new industry to this education, that there’s a technology industry booming, that the you don’t need to have a turnover of government and a turnover of what is often classified as authoritarian regime for the operating model.
00:57:48 Speaker 1
To be influenced by the West in such a way that change happens more slowly and you do see liberalism emerge in these countries with better educational standards, more equality, most more human right.
00:58:01 Speaker 1
And so do you think we’re cut ’cause you often kind of paint a picture that it’s bad guys versus us, you know, do you not think that we’re making an influence on these places locally?
00:58:09 Speaker 1
And it would seem that it would take a section to like, it’s bad guys versus US.
00:58:10 Speaker 2
Well, I.
00:58:13 Speaker 1
I don’t.
00:58:13 Speaker 1
I don’t think we want to create a legion of dictators and more driving.
00:58:16 Speaker 1
That’s what this is.
00:58:17 Speaker 1
I would actually agree with sacks, we should be embracing these folks.
00:58:21 Speaker 1
And having strong relationships with them, even though we are fundamentally different operating systems for our country’s democracy versus for our champions.
00:58:29 Speaker 1
You so you think we should have a relationship with Putin?
00:58:31 Speaker 1
Just 100%, I mean and we did right. I mean Abama was making some progress on that and we, we did some great work when.
00:58:40 Speaker 1
And obviously Trump has a very, very long standing, very deep.
00:58:45 Speaker 1
We don’t exactly how deep relationship with Putin and we we did great work with we department need to be.
00:58:52 Speaker 1
He did his pageant over there.
00:58:53 Speaker 1
I’m making some jokes.
00:58:54 Speaker 1
They’re better off apartments.
00:58:55 Speaker 2
Yeah, yeah, that was that was a joke.
00:58:55 Speaker 1
Who knows?
00:58:57 Speaker 1
Just a little joke there, but we will find out over time I suppose.
00:59:01 Speaker 1
But we did great work with China in terms of containing.
00:59:03 Speaker 1
North Korea’s.
00:59:05 Speaker 1
Nuclear ambitions, right?
00:59:07 Speaker 1
And so there are things we can collaborate on.
00:59:09 Speaker 1
I think the most important thing, though, is that while we are embracing them, building fabric between them, communication, trade, whatever it is, we are not relying on them.
00:59:17 Speaker 1
And that and that’s really what we have to look at when it comes to the Kingdom, because if not for the fact that the Kingdom won, the, you know.
00:59:25 Speaker 1
Born on top of, you know, oil fields lottery.
00:59:29 Speaker 1
We would not be in a deep relationship with this country.
00:59:32 Speaker 1
They’re living under a 10th century.
00:59:35 Speaker 1
You know, rule in terms of how they treat women, gay people, etc.
00:59:38 Speaker 1
Human rights is an important issue.
00:59:40 Speaker 1
And we wouldn’t have a deep relationship with them if we didn’t have to do it boiled.
00:59:43 Speaker 1
But we do.
00:59:44 Speaker 1
And So what I think we really need to be focusing on here is maintaining great relationships.
00:59:49 Speaker 1
With them, yeah, we.
00:59:49 Speaker 1
Don’t want to drive them to each others arms?
00:59:51 Speaker 1
But to trimont point, I I don’t think they’re creating the Legion of Doom to take on the USI think they’re just doing what’s in their economic interest and we need to do it’s in our economic.
01:00:00 Speaker 1
Interests which really is investing in nuclear, investing in solar, batteries, wind and even Britain rituals.
01:00:05 Speaker 2
In the interest of any interest, yeah.
01:00:07 Speaker 1
And yes, within the interests of the free.
01:00:08 Speaker 1
World and Europe, exactly.
01:00:11 Speaker 1
And if we are independent of them, then we don’t have to go over there and kiss the ring like Biden had to do.
01:00:17 Speaker 1
We don’t have to, you know, deal with excuses when they do horrible things like murder, Khashoggi or, you know, just this past week they put Sama Al Shahab in jail.
01:00:28 Speaker 1
She’s a PhD student from University of Leeds.
01:00:31 Speaker 1
She’s now going to go to jail for decades because when she went back to Saudi Arabia on vacation, this happened last week.
01:00:39 Speaker 1
Because she retreated, people, and so these human rights violations, the murder of Khashoggi, all these things add up the weavers, etc, and we’ll have a better ability to negotiate and lead them as the shining city on the hill when we work on being that shining city on the hill and we’re not dependent on them.
01:00:55 Speaker 1
And that’s really what I think we have to focus on is reducing the dependency on this country.
01:00:58 Speaker 1
I think we all agree with whether it’s.
01:01:00 Speaker 1
Devices, PP drugs making our iPhones or or oil to keep us what?
01:01:06 Speaker 1
And then so does Europe.
01:01:07 Speaker 1
And that’s where.
01:01:08 Speaker 1
Normal comes in.
01:01:09 Speaker 1
Speaking of reducing dependency, you know Joe Biden signed the Inflation Reduction Act.
01:01:15 Speaker 1
Some people have said this is the most important bill signed in years, if not decades.
01:01:21 Speaker 1
By, you know, passed by U.S. Congress, signed by a president because it touches on so many points that folks believe will really move the needle with respect to climate change.
01:01:36 Speaker 1
Tim, I think you made an interesting point in our group chat and I think maybe we should start there, which is you know, at the.
01:01:43 Speaker 1
End of the day.
01:01:45 Speaker 1
The systems of industrial production on planet Earth.
01:01:49 Speaker 1
Were made in such a way that we never accounted for the costs of the external output of these systems, meaning we can bone fuel, put CO2 into the atmosphere or put methane into the atmosphere in.
01:02:03 Speaker 1
The case of animal agriculture.
01:02:05 Speaker 1
And we get a low cost product that we consume and ultimately no one specifically pays for the cost of the carbon going into the atmosphere, which I and you know, many scientists would argue is having an anthropogenic effect on the warming of the planet and and more catastrophic weather and and all these other risks that we’re now facing.
01:02:26 Speaker 1
And so the idea was you.
01:02:27 Speaker 1
Know those principles.
01:02:29 Speaker 1
You should tax people for tax industry, tax businesses for the production of atmospheric carbon that causes an effect that we’re all going to have to pay to repair over time.
01:02:41 Speaker 1
So you know, is that a point of view that you hold him off ’cause, you know, you kind of brought this up in our group tax but.
01:02:46 Speaker 1
That’s that would be the ideal scenario to resolve climate change is if you just tax.
01:02:51 Speaker 1
Carbon, we kind.
01:02:52 Speaker 1
Of, you know, have a real solution here, and that this whole bill is ultimate.
01:02:56 Speaker 1
Really, you know, meant to kind of resolve the fact that we simply cannot find a way to a carbon.
01:03:02 Speaker 1
I actually think that what this bill did was killed the idea of a carbon tax.
01:03:06 Speaker 1
I think it makes it completely.
01:03:11 Speaker 1
Unimportant and it will never see the.
01:03:13 Speaker 1
Light of day. Why?
01:03:15 Speaker 1
I think it’s because in the absence.
01:03:17 Speaker 1
Of what we did in the IR a.
01:03:21 Speaker 1
There wasn’t a clear way of doing exactly what you said, which is letting.
01:03:27 Speaker 1
People figure out what the equivalent trading price would be for burning a pound of coal versus, you know, generating the energy needed to run something off of nuclear.
01:03:38 Speaker 1
There was no market clearing function for that.
01:03:41 Speaker 1
And the reason is because you couldn’t get an equivalent amount of capacity affectively available online so that they could compete one for one.
01:03:48 Speaker 1
What we did through this I RA was essentially use money to create so many subsidies and then to also green light the way that incremental fossil fuel projects.
01:04:02 Speaker 1
Come to market.
01:04:03 Speaker 1
So that now they actually going to be put on a level playing field.
01:04:08 Speaker 1
In the broad open market so they can compete. When that happens, I think you will make those trade-offs better yourself.
01:04:15 Speaker 1
And as a result, I don’t think that there will be a necessary offset mechanism that will be required because this plan will still get us to about 40% of the way there where we want it to be by 2030, which is still a pretty decent.
01:04:28 Speaker 6
Leap forward.
01:04:30 Speaker 1
There is no plan that gets us to where we all need to be anyways and I think that the appetite to go from this plan to where we need to be.
01:04:40 Speaker 1
Doesn’t really exist. So I think that we’re just going to have to kind of grit our teeth, get through the implementation of the RA and realize that this is the beginning of a probably 100 plus year project.
01:04:53 Speaker 1
Nothing is going to get solved by 2050. Maybe you’ll see something done by 2100, probably not.
01:05:00 Speaker 1
It’ll probably be a 21, fifty 2200 kind of an objective. And in that lens, I think like a whole bunch of business models got turned upside down.
01:05:09 Speaker 1
So I think carbon markets and carbon trading are not going to be the thing that we thought it was going to be.
01:05:15 Speaker 1
I think stuff like direct air capture again are going to be toy projects off to the side.
01:05:20 Speaker 1
I don’t think that those are tools or not.
01:05:20 Speaker 2
Totally agree, totally agree. Yeah.
01:05:22 Speaker 1
Those are not going to be credible businesses like we thought they were going to be.
01:05:26 Speaker 1
Instead, the raw tonnage of dollars would do what America was able to do for solar and PV over 2000 to 2022, which is just crushed the cost per Watt into the pennies so that it can be equivalent to Hydro Poland nuclear and put everything on a level playing field and then allow the market to figure.
01:05:47 Speaker 1
Yeah, I mean, there’s a.
01:05:48 Speaker 1
Lot of other.
01:05:49 Speaker 1
Stuff in this bill I I want to highlight.
01:05:52 Speaker 1
For you guys.
01:05:53 Speaker 1
I don’t know if any of you looked at the CBO, CBO, the Congressional Budget Office.
01:05:57 Speaker 1
Any time the bill is being voted on, they do an accounting analysis on how much spending and how much revenue there will be as a result of this bill for a 10 year.
01:06:06 Speaker 1
Yeah, I.
01:06:07 Speaker 1
Period. Yeah. And so, yeah, if you look at every year for the next 10 years, the CBO score for this bill is that we’re going to spend an incremental, we’re going to increase the deficit by $330 billion for the next five years.
01:06:20 Speaker 1
And then we’re going.
01:06:21 Speaker 1
To decrease the deficit by 320 billion in the five years.
01:06:24 Speaker 1
After that.
01:06:25 Speaker 1
So the net effect over 10 years is we’re only spending $17 billion on the on the bill. And then on the revenue basis, the expectation is we’re going to generate 67 billion in revenue in the first five years and then another 20 billion in the in the back.
01:06:40 Speaker 1
Here’s so this is actually being accounted for and presented as deficit reduction. And that’s because there’s 87,000 new IRS agents being hired to go out and audit people and find new revenue.
01:06:52 Speaker 1
And there’s a 15% corporate minimum tax being imposed on all companies. And what this means is that companies, public companies, private companies bring over building their revenue.
01:07:01 Speaker 1
Historically, pay taxes on a book basis.
01:07:04 Speaker 1
Now they’re paying taxes on a financial statement basis, meaning the actual accounting that they present to their shareholders.
01:07:10 Speaker 1
I can I ask you guys a question?
01:07:11 Speaker 1
How much was given to the IRS?
01:07:14 Speaker 1
80 billions, yeah, yeah, 10s of billions.
01:07:17 Speaker 1
80 billion.
01:07:18 Speaker 1
How much do you think it would cost?
01:07:20 Speaker 1
I don’t know.
01:07:21 Speaker 1
Pick your pick to pick the most excruciatingly expensive third party outsourcing firm you could.
01:07:29 Speaker 1
OK to build an entire system to basically automatically review every single tax return and throw exceptions and machine learning and machine learn.
01:07:42 Speaker 1
What frog looked like or what misrepresentation? Let’s say $5 billion would be the most expensive. It would be the most expensive piece of software ever written.
01:07:52 Speaker 1
And this is what was so kind of like that was the only part of the bill that made not, uh, less sense to me, I think.
01:07:58 Speaker 1
Like if you put really smart computers on the case or gave it to deep mind.
01:08:03 Speaker 1
In Google and said can you guys build this system with?
01:08:06 Speaker 1
Machine learning in AI you flat.
01:08:07 Speaker 5
We’re done.
01:08:08 Speaker 1
Tax and a simpler tax which I guess this is trying to build pressure free, but when I looked at this and you sent it, my initial reaction was.
01:08:10 Speaker 2
But you don’t.
01:08:15 Speaker 1
You know this old adage possibly to these guys to find 87,000 humans that want to work at the IRS #1.
01:08:16 Speaker 6
It’ll be implicated.
01:08:21 Speaker 1
By the way, there’s a.
01:08:22 Speaker 1
Funny video on the recruiting that’s been going on for that, but yeah, go.
01:08:24 Speaker 1
Yeah, but I mean, you know, because like, they were, they were asking for people who were where they were even like have guns and like put their body in Harvard.
01:08:31 Speaker 1
As I get the IRS.
01:08:31 Speaker 4
It’s crazy.
01:08:32 Speaker 1
I I was like, that can’t be well, anyway, the greatest.
01:08:35 Speaker 1
This is what I got from this excel.
01:08:36 Speaker 1
Spreadsheet the greatest tool for writing fiction is not Microsoft Word.
01:08:40 Speaker 1
It’s excel.
01:08:41 Speaker 1
Like there is no way this thing is netting out to 0.
01:08:44 Speaker 1
Like, this thing sort of costs us a fortune.
01:08:46 Speaker 1
Government is in shambles, we don’t know what we’re doing.
01:08:49 Speaker 1
I thought that the links you sent for the podcast with the pros and cons of the carbon tax is really interesting because it is so complicated.
01:08:58 Speaker 1
When I heard these tax experts explaining.
01:09:00 Speaker 1
How you would implement a carbon tax and the import and export and then how often would have to be tweaked?
01:09:05 Speaker 1
And then who decides what your corporate footprint of your watches and and where did the minerals come from to make the watch?
01:09:11 Speaker 1
And who gets paid on carbon? It just seemed to me there’s a fool’s errand. Would be much better to just what if your?
01:09:17 Speaker 1
Watch is made from Diamond and not carbon.
01:09:20 Speaker 1
Well in that case you should just pay $1,000,000 because you are never lead us coastal elite. We should just start with yachts and watches. But my what I realized was.
01:09:25 Speaker 6
Yeah, yeah.
01:09:32 Speaker 1
What we really need to focus on and.
01:09:33 Speaker 1
You tell me if what you.
01:09:34 Speaker 1
Then come for bug.
01:09:37 Speaker 1
Instead of doing this carbon tax, which seems incredibly elegant but we all know is impossible to get consensus across hundreds of governments and locales to to negotiate this.
01:09:46 Speaker 1
It will never happen, at least not effectively and in real time.
01:09:50 Speaker 1
Wouldn’t it be a much better technique to do what we do in venture, which is here are the biggest problems in the world.
01:09:56 Speaker 1
Here are the which in this case.
01:09:57 Speaker 1
Could be the biggest emitters here are the best solutions.
01:10:00 Speaker 1
Here are the teams working on the best solutions.
01:10:01 Speaker 1
Let’s give the teams working on the bus solutions money.
01:10:04 Speaker 1
Tell to work down that list and if it happens to be, you know, ships coming from China, you know with a bunch of containers on and contain.
01:10:12 Speaker 1
We we measure that and you know the the thing I’ve learned after the first six months of investing in carbon ’cause we have a syndicate.
01:10:18 Speaker 6
Now that mollywood.
01:10:19 Speaker 1
Was working with me on this private syndicate.
01:10:22 Speaker 1
We couldn’t find a lot of great investments.
01:10:26 Speaker 1
You know that made sense that weren’t, you know, asset heavy.
01:10:29 Speaker 1
But then we started to find, we found two great monitoring companies and they’re monitoring air pollution and they’re monitoring ship pollution and we made investments in both of those and that seems to be where we’re at is we should be monitoring and figure out where the carbon is and then trying to solve.
01:10:44 Speaker 1
Based on which ones are these is to solve, let me just say two things on that.
01:10:47 Speaker 1
Bill Gates has done a great job of this.
01:10:49 Speaker 1
You can read his latest book or go to Gates notes and he’s done exactly what you described, which is break it all down, show what we should do.
01:10:54 Speaker 1
And that’s actually how he’s investing his own money.
01:10:56 Speaker 1
He’s putting his money where his mouth is.
01:10:57 Speaker 1
So there’s a really good blueprint for this.
01:11:00 Speaker 1
He’s done the best job of anyone I’ve seen the issue with the carbon taxes, you have to come up with a consistent.
01:11:04 Speaker 1
Reliable way of measuring the carbon.
01:11:06 Speaker 1
And then you have to do it consistently and broadly.
01:11:08 Speaker 1
How do you miss you?
01:11:09 Speaker 1
If you miss one factory or another, then you have to ratchet up the price over time.
01:11:13 Speaker 1
So first thing is the challenge of how do you agree on measuring.
01:11:16 Speaker 1
Second is how do you agree on broad accountability?
01:11:18 Speaker 1
Third thing is how do you ratchet the pricing over time? Third thing is how do you deal with the offshoring problem as soon as you start taxing companies in the US?
01:11:25 Speaker 1
For carbon emissions, all the production is going to go offshore, where they’re not taxing for carbon emissions and there’s no way to account for what they’re doing offshore.
01:11:32 Speaker 1
And this has been the challenge with China and India and so on.
01:11:33 Speaker 6
No, there is. There is.
01:11:35 Speaker 1
There is.
01:11:36 Speaker 1
And then the final, the final, yeah, sorry, let me just hit the final one.
01:11:39 Speaker 1
We’ll come back to it.
01:11:39 Speaker 1
But the final big one is just the equity and carbon tax. People have said that the ultimate increment in cost of production is going to adversely affect lower income people because they cannot afford the price of some stuff going up by 25 to 50% and it’s really, you know, a luxury good.
01:11:56 Speaker 1
A luxury kind of privilege to be able to pay for the incremental cost of stuff to account for the carbon offset needed so that that’s that.
01:12:03 Speaker 1
That’s the set of issues that have been pushed back against the carbon tax and it’s why it’s been impossible to get implemented and to really get into markets, or ichimoku.
01:12:11 Speaker 1
But now I’m just going to say party, the problem in in all of those issues if you offshore is still that there’s people pushing for what’s called the scope three accounting which is like you know you got to go back to your supplier and your supplier, supplier and your supplier, supplier, supplier and where does it end?
01:12:26 Speaker 1
It’s impossible.
01:12:26 Speaker 1
Where does it end?
01:12:27 Speaker 1
It’s it’s it’s not credible.
01:12:28 Speaker 1
So, you know, I think that the bill has.
01:12:31 Speaker 1
Actually cleaned up a lot of future question marks about what we have to do as a country to go about doing our part for climate change, and I think it probably creates a reasonable blueprint for everybody else.
01:12:43 Speaker 1
And now they’re going to have to do some version of the same thing.
01:12:46 Speaker 1
And what’s amazing is that if we actually pass this framework, which is still yet to be written around how to make permitting more seamless and efficient for these hydrocarbon projects, it will really unleash a massive torrent of both revenues back to the United States.
01:13:06 Speaker 1
It will increase our national security and will allow us to really kind of put a dent in this thing because it will pull.
01:13:12 Speaker 1
Forward the amount of competition that it creates to actually get off those hydrocarbons, which is a.
01:13:18 Speaker 1
I’ll tell you, I got, I, I got a notice from someone who’s an investor.
01:13:22 Speaker 1
So there’s a lot of climate tech funds now, a lot of funds.
01:13:25 Speaker 1
Cole, you said you got a syndicate in carbon, but there’s a lot of funds and a lot of investors that are putting a lot of capital just into early stage climate technologies, which travels everything from energy to materials to food to industrial and manufacturing.
01:13:39 Speaker 1
And so on. And I got a note from one of these these companies startup that highlighted that the dollar 25 per gallon cred.
01:13:48 Speaker 1
Get a tax credit for, you know, clean production of fuel.
01:13:53 Speaker 1
Which, which has to demonstrate a 50% emissions reduction in the manufacturing process, will now make this startup profitable.
01:14:01 Speaker 1
And by the way, you get an extra penny per gallon for every 1% reduction in emissions below that 50% threshold.
01:14:07 Speaker 1
And so there’s a lot of startups that I’m hearing about that their unit economic models were questionable before.
01:14:14 Speaker 1
Now, because of this bill, they are flipping prop.
01:14:17 Speaker 1
And so I personally think we are going to see a significant influx of venture capital and support for a lot of these climate tech and you know new energy material and manufacturing projects that otherwise may have been held back because the subsidy will kick start.
01:14:31 Speaker 1
The question for.
01:14:32 Speaker 1
Me, that I still don’t have a good answer to is are they sustainable over the long run?
01:14:37 Speaker 1
If this bill gets shut down or repealed and the funding sources stop and the subsidy stop, do these businesses survive or are we simply creating regulatory capture models like we did with other energy products in the past and with food and such?
01:14:49 Speaker 1
Margin positive today.
01:14:52 Speaker 1
Free this bill in climate change, and the bill is the only way that you get there.
01:14:58 Speaker 1
You’re DOA, you just don’t.
01:14:59 Speaker 1
Know, great point. Yep. Zacks, the biggest line in this bill is the corporate minimum tax. I don’t if you saw this, but 15% minimum tax applied to the accounting profit reported by any company over a billion dollars and they’re estimating it will generate.
01:15:13 Speaker 1
313 billion of incremental tax revenue over the next 10 years.
01:15:18 Speaker 1
Do you have a point of view on whether this corporate minimum tax is going to cause an issue with startups and companies going public or the valuation in the public markets?
01:15:27 Speaker 1
Or is this just you?
01:15:29 Speaker 1
Know, hey, this should happen.
01:15:29 Speaker 1
It doesn’t matter.
01:15:30 Speaker 1
I don’t know if you spend much time on this.
01:15:31 Speaker 3
Well, no, I mean.
01:15:33 Speaker 3
I I think the the issue here is that why is it that these companies are able to pay so little taxes?
01:15:40 Speaker 3
Well, the reason is.
01:15:40 Speaker 3
’cause there’s a zillion loopholes and incentives and tax breaks in the existing code that they’re taking advantage of, and these large companies have lots of accountants, and lawyers are not deliberately violating the law.
01:15:51 Speaker 3
They’re scrupulously.
01:15:52 Speaker 3
Adhering to it and taking advantage of it.
01:15:54 Speaker 3
So it’s all these tax breaks that they’re able to use to pay no taxes.
01:15:59 Speaker 3
Well, what does this bill do?
01:16:01 Speaker 3
You talk about the spending on climate. You know, the 386 billion. Most of it is tax incentives and some block grants.
01:16:10 Speaker 3
So this is now the preferred.
01:16:12 Speaker 3
Form of, you know, quote UN quote spending.
01:16:15 Speaker 3
In these bills are tax credits and incentives. This is the way they’re going to change people’s behavior. So, in other words, the bill on the one hand is complaining that corporations don’t pay enough taxes ’cause distributed tax breaks, while on the other hand creating a whole slew of new tax breaks.
01:16:30 Speaker 3
So there’s a little bit.
01:16:31 Speaker 3
Of a contradiction there again.
01:16:33 Speaker 3
Do why are?
01:16:34 Speaker 3
Companies paying no taxes because of the last 10 bills, tax breaks that we’re supposed to move the behavior of businesses and consumers in a certain direction.
01:16:43 Speaker 3
So just recognize that that’s the case.
01:16:47 Speaker 3
I think you also made a really good point about the Phantom deficit reduction here.
01:16:51 Speaker 3
So like you mentioned.
01:16:53 Speaker 3
And we see this in lots of bills.
01:16:55 Speaker 3
All the excess spending, all the deficit spending occurs in the first five years, and all the deficit reduction occurs in the last five years.
01:17:02 Speaker 3
Something always intervenes to prevent the the savings from taking place.
01:17:06 Speaker 1
It’s like startup.
01:17:06 Speaker 1
It’s like startup projections, right?
01:17:08 Speaker 3
It’s like we.
01:17:10 Speaker 1
Lost my sales guy.
01:17:10 Speaker 3
Well, we’ll cut the budget next.
01:17:12 Speaker 3
Year, you know and so.
01:17:13 Speaker 3
Just to give one example of this, so this ACA subsidy extension, so this is the Obamacare.
01:17:20 Speaker 3
Sub states about 67 billion a year. They’re extending it for three years, but they’re assuming it’s gonna die at that point as opposed to keep being extended.
01:17:28 Speaker 3
And no one is going to want to vote to make that go away in three years, just like they.
01:17:32 Speaker 3
Don’t want to?
01:17:32 Speaker 3
Vote to make it go right now.
01:17:33 Speaker 3
So if you extend that subsidy 3 years from now, just that one item alone makes the.
01:17:39 Speaker 3
Deficit reduction this.
01:17:40 Speaker 3
Bill goes from 305 billion over the 10 year period to -, 155 billion. So just that one item if you continue it and don’t sunset it, just that one thing makes this.
01:17:52 Speaker 3
A hugely deficit not?
01:17:56 Speaker 3
Reducing bill but deficit increasing Bill.
01:17:58 Speaker 3
And so you wonder, what problem is this bill really solving?
01:18:01 Speaker 3
And they can’t seem to agree on that.
01:18:02 Speaker 3
I mean, first they’re telling us it’s a deficit reduction bill, then they’re telling us it’s a climate bill.
01:18:07 Speaker 3
Then they’re telling us it’s an inflation reduction bill.
01:18:09 Speaker 3
It seems to me that if they were really proud.
01:18:11 Speaker 3
Of this and.
01:18:11 Speaker 3
Believing that they would choose a name for the.
01:18:13 Speaker 3
Bill that actually reflected what it was, well, all bills would.
01:18:16 Speaker 1
Be named something for everyone.
01:18:17 Speaker 1
Sex, I mean.
01:18:18 Speaker 1
Like that’s how all these bills get.
01:18:19 Speaker 1
In order to pass a bill, bipartisan bill, you gotta.
01:18:22 Speaker 1
Give something to everyone, I mean.
01:18:24 Speaker 3
But this is mostly, you know, this is mostly a climate related bill.
01:18:29 Speaker 3
You know, this is mostly, this is mostly tax breaks and block grants related to climate.
01:18:32 Speaker 1
Because there’s also, I mean, there there’s a huge tax issue with the the the IRS agents and the corporate minimum tax, but there’s also a huge component on prescription drugs.
01:18:37 Speaker 4
Right.
01:18:42 Speaker 1
Jim off.
01:18:43 Speaker 1
I don’t know if you spent any time looking.
01:18:44 Speaker 1
At this.
01:18:44 Speaker 3
I’m sorry, just on the IRS agent kind of say add one detail on that.
01:18:44 Speaker 1
But yeah, sorry, go ahead.
01:18:46 Speaker 1
Yeah, yeah.
01:18:48 Speaker 3
So the claim of the administration and the sponsors of the bill is that this would not increase taxes on anyone sort of middle class.
01:18:56 Speaker 3
And so the Republicans I think is one of the few politically smart things.
01:19:00 Speaker 3
They did. They introduced an amendment basically prohibiting these new 87,000 IRS agents from conducting audits of anyone making less than $400,000 a year.
01:19:09 Speaker 3
Which was what Biden said. You know, he wouldn’t increase taxes. Anyone below 400,000. That amendment was rejected on straight party lines. So this idea, yes, is called the Crapo amendment.
01:19:17 Speaker 6
Oh, really? Right.
01:19:20 Speaker 3
5050.
01:19:21 Speaker 3
And Vice President here is set to come in and make the tie breaking vote.
01:19:25 Speaker 3
So obviously they know that there’s going to be a lot of net new audits on people making less than four that yes, exactly.
01:19:30 Speaker 2
Small business owners.
01:19:33 Speaker 3
So the next time.
01:19:33 Speaker 1
So I mean, my my understanding of this is it’s like small business owners, people who run a small business and a service business and are they really accounting for their books correctly?
01:19:41 Speaker 1
Are they really expensing the right things?
01:19:44 Speaker 1
Are they accounting for revenue?
01:19:44 Speaker 3
All or they’re going to get rimmed.
01:19:46 Speaker 2
And that’s that’s, uh, that’s that’s where.
01:19:47 Speaker 3
Yeah, they’re gonna get Grammy by this.
01:19:49 Speaker 3
Because look, let’s face it, billionaires already getting audited.
01:19:52 Speaker 3
You know, you run out of tweets saying, listen, I get audited as a matter of.
01:19:55 Speaker 3
Course every year.
01:19:56 Speaker 3
You know, these people already have, so yeah.
01:19:58 Speaker 1
Dude, I use a big four accounting firm.
01:20:01
Yeah, I.
01:20:02 Speaker 5
Mean this is, I mean the amount.
01:20:04 Speaker 1
I I have a partner, I have a partner of like Anderson that is literally like, you know, covers me like it covers a Fortune 500 trucking company, not is.
01:20:12 Speaker 1
Not being ridiculous put.
01:20:13 Speaker 6
Him in your at your your put him in your nanny unit.
01:20:14 Speaker 1
I mean it’s, it’s it’s it’s 10s of.
01:20:16 Speaker 1
People, I mean by the way sax, sax is.
01:20:18 Speaker 1
Right, like if if you look at them.
01:20:21 Speaker 1
You know the ultra well.
01:20:23 Speaker 1
I I think it would be, I would be shocked if any of those folks were actually evading taxes at all, because it’s impossible the way that this infrastructure runs.
01:20:32 Speaker 1
Like, you know, you’re getting key.
01:20:34 Speaker 1
Ones from Blackstone.
01:20:35 Speaker 1
What are you going to do?
01:20:35 Speaker 2
Oh boy, oh boy.
01:20:36 Speaker 1
So you’re gonna change that?
01:20:37 Speaker 1
Like, you know, like, do you guys even know the pin number of your bank card?
01:20:41 Speaker 1
I have no idea.
01:20:42 Speaker 1
So, like, complicated.
01:20:44 Speaker 1
OK.
01:20:44 Speaker 1
So, so my point is I don’t think that if there is, if there is cheating of taxes, it’s happening at that level.
01:20:51 Speaker 1
What’s happening at that level are much more structural issues, like carried interest, which they decided not to touch.
01:20:57 Speaker 1
Ordena state.
01:20:58 Speaker 1
Trust and dismissal of those are those? No, I don’t think that this is my point. It’s not mistakes. There’s nobody with a pencil ruled filling out a K1 for Bill Gates, dummy. That’s my point.
01:21:09 Speaker 1
No, I know, but people can make mistakes. What if a K1 gets left off? That’s what I’m saying is when they find something, it’s usually easily.
01:21:13 Speaker 5
What are you?
01:21:13 Speaker 5
What are you?
01:21:15 Speaker 1
Factoring help, it doesn’t nothing.
01:21:17 Speaker 3
Jason, when I get my tax return, it’s it’s done by an accounting firm and I just signed.
01:21:17 Speaker 2
I’ve had.
01:21:17 Speaker 1
It listed.
01:21:18
Never happened.
01:21:22 Speaker 3
It I don’t, I don’t put anything together.
01:21:22 Speaker 1
Well, I know that what I’m talking about is what are the IRS people going?
01:21:25 Speaker 1
Find is, you know, I think, well, what are they going to find is not they’re going to find a lot of middle class and upper middle class folks and they’re going to have to focus on them because individually it may not represent a lot, but when you multiply it by the number of people inside the United States and this is.
01:21:44 Speaker 1
What the Wall Street Journal and a bunch of other folks have been saying now when you apply 87,000 people and tasked them incrementally with doing a job.
01:21:53 Speaker 1
It’s not going to touch these folks that are already audited.
01:21:56 Speaker 1
It’s going to touch the folks that are not audited.
01:21:58 Speaker 1
And by and large, a much, much larger majority of middle income and upper middle income people are not audited.
01:22:06 Speaker 1
Which is why I think you could spend a lot less than $80 billion and just build software that guarantees only those that.
01:22:13 Speaker 1
Should be audited are.
01:22:14 Speaker 1
And uses machines to help figure out these leaks or start simplifying the tax code. Because when you add this 15% minimum free bug, what is that going to do to the strategy of a public company?
01:22:25 Speaker 1
OK.
01:22:25 Speaker 1
So we should show less earnings, put more to work or we’re not going to be able to depreciate this or you know, whatever.
01:22:30 Speaker 1
I mean, it’s going to create.
01:22:31 Speaker 2
I actually feel yeah.
01:22:31 Speaker 1
All these second and third order.
01:22:32 Speaker 1
Impact impacts that we don’t know.
01:22:33 Speaker 2
No, I mean that.
01:22:34 Speaker 1
Well, I think’s access point is important, which is one that we don’t yet have insight into, which is what is this going to cannibalize because ultimately if there is a minimum tax, it doesn’t make sense to pursue incentives that create a tax break today.
01:22:49 Speaker 1
And therefore those incentives won’t be invested in whatever those incentives are.
01:22:53 Speaker 1
I don’t know what they are, you know, low income manufacturing zone development or or whatever.
01:22:58 Speaker 1
Who knows?
01:22:59 Speaker 1
You know what they are.
01:23:00 Speaker 1
You know, come and build your business here and get tax breaks, et cetera, et cetera, local, state and federal tax breaks if they’ll start to get.
01:23:09 Speaker 1
Written over, then there’s going to be really adverse effects and I think that that’s something to watch.
01:23:14 Speaker 1
I don’t understand it well enough.
01:23:15 Speaker 1
Certainly I’m not an accountant, but I I would be kind of worried about and keeping an eye on that front.
01:23:21 Speaker 1
I do think the bigger question, which is a biotech 1?
01:23:25 Speaker 1
The prescription drug price cap minimizes the profits that a number of pharmaceutical companies will be making.
01:23:31 Speaker 1
It gives the authority to go and negotiate prices.
01:23:34 Speaker 1
This is the second largest line in the bill.
01:23:38 Speaker 1
And there was a survey done.
01:23:40 Speaker 1
By Health Affairs org on an R&D survey which said will you guys reduce your.
01:23:48 Speaker 1
Your investment in new drug development and I think that they came based on this bill and I think that they came up with some estimate that there would.
01:23:57 Speaker 1
Be 2 the number 2 fewer drugs that would be kind of, you know, made available per year because of reduced spending.
01:24:07 Speaker 1
As a result of the price CAP which basically reduces revenue which will in essence reduce R&D invest.
01:24:14 Speaker 1
You know, guys like Bernie Sanders will say, hey, that’s not true.
01:24:18 Speaker 1
All that money is going to share buybacks and dividends and so on.
01:24:22 Speaker 1
But it is a fact that those share buybacks and those dividends will still continue and if they are reduced, so will the R&D expense and if the R&D expenses reduced, fewer drugs will come to market.
01:24:33 Speaker 1
And so, you know, there’s also a question mark and people will debate this for the next decade, which is how much will this prescription drug price CAP actually have an effect on R&D investment and ultimately on new drugs that come to market? My personal opinion, sorry, let me just say my personal opinion.
01:24:49 Speaker 1
I don’t think that this will have a huge effect.
01:24:51 Speaker 1
I think this is an excellent part of the bill.
01:24:52 Speaker 1
I think the government should have authority to go and negotiate there, the largest buyer of these drugs, and typically when the US government, the federal government, steps in to be the largest spender on a particular line.
01:25:02 Speaker 1
The cost of.
01:25:03 Speaker 1
That line balloons like we’ve seen in health care.
01:25:06 Speaker 1
Like we’ve seen in education and like we’ve seen in military and defense spending.
01:25:13 Speaker 1
And so I’m hopeful that this will actually provide a more effective market force in allowing the biggest customer in the market to negotiate prices.
01:25:22 Speaker 1
And that the the VC is instead of making 48% IR, they’ll ultimately make 28% IR on the investments that they’re making in biotech startups.
01:25:31 Speaker 2
That’s just my.
01:25:31 Speaker 6
Well, hold on. What?
01:25:33 Speaker 3
Exactly does it mean for the?
01:25:35 Speaker 3
Government to negotiate prices as opposed to the government just to fix prices.
01:25:39 Speaker 3
Reasons is price.
01:25:41 Speaker 1
Well, if they’re, if they’re doing some things for right answer, if they’re the largest single largest customer sacks, right, I mean you know and then they are the market, I mean what’s the right thing to do?
01:25:51 Speaker 3
Well, I mean, you’re you’re saying that.
01:25:55 Speaker 3
These drug companies are going to make a lot less money.
01:25:57 Speaker 3
Well, obviously that’s going to have a downstream impact in their willingness to fund new drugs and you know that new investment.
01:26:02 Speaker 2
New ID.
01:26:04 Speaker 3
Und now no.
01:26:04 Speaker 6
Yeah, yeah.
01:26:05 Speaker 3
One likes pharma companies, so I’m not defending exorbitant profits or whatever, but I don’t really know what it means for the government to say they’re negotiating.
01:26:12 Speaker 3
I mean, the government just tells you what it’s going to.
01:26:14 Speaker 3
Be and that’s.
01:26:15 Speaker 3
Price fixing and these companies are going to adjust. Yes, the government will pay less money in the near term. In the long term, there could be reduced investment in R&D.
01:26:26 Speaker 1
But I think they’ll be a balance of.
01:26:28 Speaker 1
You know do.
01:26:28 Speaker 1
You don’t hold governments jamath don’t all governments.
01:26:31 Speaker 1
I know that you’re close to some of these drug companies.
01:26:34 Speaker 1
Don’t all governments negotiate the purchase of these drugs?
01:26:38 Speaker 1
And then if they don’t like the price, there are alternative drugs and they’ll say, hey, listen, your drug is too expensive compared to these other two solutions, so we’re going to buy this one.
01:26:46 Speaker 1
Primarily for our universal.
01:26:47 Speaker 1
Health care.
01:26:48 Speaker 1
There’s an interesting thing that happens, which is that there’s a there’s drugs that are proprietary and under patent, OK.
01:26:56 Speaker 1
These could be chemical drugs or they could be biologics, OK?
01:26:59 Speaker 1
And eventually what happens is when they go generic then folks will step in and make lower cost versions of those generics like you know, I mean, I’m on a statin, I think a couple of you guys are on a statin like I don’t, it’s it’s Lipitor, but it’s not Lipitor, right?
01:27:15 Speaker 1
It’s a torva Staten.
01:27:16 Speaker 1
It’s like some generic drug that I just take OK as.
01:27:19 Speaker 1
For example, and and there’s a lot of folks that make that and the cost of those pills basically go to 0.
01:27:26 Speaker 1
But there’s a bunch of categories, particularly for biologic drugs, where it’s very different.
01:27:30 Speaker 1
It’s very difficult to make out what’s called the biosimilar.
01:27:32 Speaker 1
This is a generic drug, so long and short of it is, there’s all these classes of drugs that kind of like stand alone without.
01:27:39 Speaker 1
Enough competition, and I think there are two ways to solve this problem.
01:27:43 Speaker 1
One is where the government steps in.
01:27:45 Speaker 1
Which I think is good, but the better way has already has already been happening in the United States.
01:27:51 Speaker 1
So you know, there’s a non profit which is a collective between a bunch of hospitals called civic up and I think that’s a really interesting example.
01:27:58 Speaker 1
And what those guys do was they said we’re just going to create our own generic drug manufacturer and we’re going to make the drugs we want.
01:28:04 Speaker 1
We’re just going to make them super cheap and you know they’re they’re in the midst right now of completing a massive facility.
01:28:11 Speaker 1
I think it’s in Virginia, where they’ll be able to make as much insulin as is needed for the entirety of America for no more than 35 bucks a dose.
01:28:22 Speaker 1
Right, that’s gangster.
01:28:24 Speaker 1
It’s just super gang.
01:28:25 Speaker 1
So make our own.
01:28:27 Speaker 1
And by the way, when California said they’re going to make their own, what they really meant was that they’re going to go and RFP it out.
01:28:34 Speaker 1
And my hope is that they end up going with somebody like Civica who has the experience of actually building it.
01:28:39 Speaker 1
Otherwise it’s just going to California, just going to waste.
01:28:42 Speaker 1
For proposal, if you generate RFP is request for proposal, but there are these emerging.
01:28:42 Speaker 1
Hundreds of millions of.
01:28:49 Speaker 1
Non profits that are basically doing the work of the government.
01:28:52 Speaker 1
I think that’s a better solution to what Sax is actually.
01:28:54 Speaker 1
In petition, right, it’s.
01:28:55 Speaker 1
Kind of creates competition, yeah.
01:28:57 Speaker 1
We gotta move along ’cause, I think.
01:28:59 Speaker 1
Thank you.
01:29:00 Speaker 1
Great job Friedberg, right?
01:29:01 Speaker 1
Just one moderator to another exceptional job, you know?
01:29:03 Speaker 1
I appreciate it.
01:29:04 Speaker 1
I think one of the interesting things sitting in your seat, J.
01:29:06 Speaker 1
Cole, is.
01:29:07 Speaker 1
You see everyone elses face.
01:29:09 Speaker 1
And you see the boredom and the annoyance that people experience during with the park.
01:29:13 Speaker 1
Watch the Irles leave for a drink, I think, I think Jim Bob is eating Funyuns.
01:29:15 Speaker 6
The eye rolls.
01:29:18 Speaker 1
Saxon journal.
01:29:20 Speaker 2
Judy, I’m sorry. And.
01:29:20 Speaker 1
I’ve been eating jerky all day.
01:29:21 Speaker 1
You shouldn’t be.
01:29:22 Speaker 1
Don’t two been.
01:29:23 Speaker 1
On the podcast, please. Yeah.
01:29:24 Speaker 1
No, and I think that the.
01:29:26 Speaker 1
Don’t want to do is Jeffrey Toobin on this podcast?
01:29:27 Speaker 4
How would you feel?
01:29:29 Speaker 1
What is that?
01:29:29 Speaker 2
Let’s hold you.
01:29:31 Speaker 1
Jeffrey Toobin was a CNN anchor.
01:29:33 Speaker 1
Who on?
01:29:33 Speaker 1
Zoom accidentally switched.
01:29:34 Speaker 4
Feedly, Turkey.
01:29:35 Speaker 1
No, no, he masterbated on a zoom call.
01:29:38 Speaker 1
With us.
01:29:38 Speaker 1
But the fact is that after.
01:29:39 Speaker 1
Your beef, jerky said, jerking.
01:29:41 Speaker 1
And I just, you know, I said I was eating jerky, dummy.
01:29:43 Speaker 1
You said you were.
01:29:44 Speaker 1
Jerking something?
01:29:45 Speaker 1
That’s all I heard.
01:29:45 Speaker 2
No, I said.
01:29:46 Speaker 1
I’m sorry.
01:29:46 Speaker 1
Oh by the way, so I am no longer fighting with Philomath I Oh my God, guys, still blocked.
01:29:53 Speaker 1
So I was so mad at him.
01:29:53 Speaker 2
What happened?
01:29:55 Speaker 1
OK, so, you know, I finish.
01:29:57 Speaker 1
I finish this transaction.
01:29:58 Speaker 5
I think I finished talking transaction to.
01:30:02 Speaker 1
Sell the Warriors, you know this is.
01:30:03 Speaker 5
This is a.
01:30:03 Speaker 1
Six month ordeal, OK, I started in November, right?
01:30:07 Speaker 1
I’m starting to sell Fames I decided I’m going to.
01:30:10 Speaker 1
Well, the Warriors, I sell it to a large private equity fund in November or December and then we had to wait for them to close the second fund and then we sold the rest of it and it closed in June or July.
01:30:22 Speaker 1
And then I put up this tweet, right?
01:30:24 Speaker 1
Like thanking.
01:30:24 Speaker 1
Everybody in banking.
01:30:26 Speaker 1
You heard the same line in which I I’m like, I thank Peter Teal, and I thanked Joe Lake.
01:30:32 Speaker 1
Everybody is happy except for Helmuth who called me and is angry and he’s like I I.
01:30:37 Speaker 1
You know, he had this issue with how it was characterized at how he had introduced me or something where he wanted credit for having done the deleted the tweet storm.
01:30:45 Speaker 1
We should’ve been.
01:30:45 Speaker 1
Higher up or, you know, and I was like, well, what if it hadn’t made any money?
01:30:48 Speaker 1
Would you have just made me whole?
01:30:50 Speaker 1
Like what?
01:30:51 Speaker 1
Would you have done like, it’s like he was like the.
01:30:52 Speaker 1
Architect of this thing anyways, I was so bad.
01:30:56 Speaker 5
I just said.
01:30:57 Speaker 1
I’m not talking to this ******* anymore.
01:30:58 Speaker 1
I’m done with him.
01:30:59 Speaker 1
I’m done breaking up with him.
01:31:01 Speaker 1
And he would call me when I was in Europe and I would ignore and I would get this incredibly enjoyment from just.
01:31:06 Speaker 5
Pressing 2 to voicemail.
01:31:08 Speaker 1
He would send me text messages in war.
01:31:11 Speaker 1
And then I I mean, this is always.
01:31:13 Speaker 1
It happens this way.
01:31:14 Speaker 1
I did it once and that caught me.
01:31:15 Speaker 1
She’s like.
01:31:16 Speaker 5
Why did you?
01:31:16 Speaker 5
Ignore his vocal.
01:31:17 Speaker 1
And I said I hate, so I’m.
01:31:19 Speaker 5
How I told her the story.
01:31:21 Speaker 5
She got so ******* mad.
01:31:23 Speaker 6
At me and.
01:31:24 Speaker 1
Then I had to send this text.
01:31:26 Speaker 1
I’ll just read you the text because I think there’s just so ******* hilarious.
01:31:29 Speaker 1
I was going to ignore you for the.
01:31:31 Speaker 1
Rest of my life.
01:31:32 Speaker 1
Based on your tantrum with me earlier.
01:31:34 Speaker 1
This year but.
01:31:35 Speaker 1
Not has convinced me to see where you are.
01:31:37 Speaker 1
Coming from in part.
01:31:38 Speaker 1
Anyways, we’re good.
01:31:39 Speaker 1
Call me later.
01:31:41 Speaker 5
He called me once.
01:31:43 Speaker 5
I was waiting at your deck speed open.
01:31:46 Speaker 4
This picture.
01:31:49 Speaker 5
And why you gotta be here?
01:31:50 Speaker 5
Such a jerk.
01:31:51 Speaker 5
He’s your friend.
01:31:52 Speaker 5
You have no friends.
01:31:54 Speaker 5
Only your friends are going away.
01:32:00 Speaker 6
Good thoughts.
01:32:00 Speaker 2
Is it OK you gotta play poker with?
01:32:02 Speaker 2
You know we driver again before.
01:32:04 Speaker 1
We wrap sax is going to give us instead of.
01:32:05 Speaker 1
Doing science corner.
01:32:06 Speaker 6
Good morning from corner.
01:32:07 Speaker 1
We’re going to do monologue Mar-a-lago corner.
01:32:09 Speaker 3
Tell us when it’s like.
01:32:10 Speaker 1
Sacks yeah, what is Mar-a-lago like?
01:32:12 Speaker 1
Had you’ve had your membership now for 18 months?
01:32:14 Speaker 3
Never been there never been.
01:32:15 Speaker 3
There, but no.
01:32:16 Speaker 3
I wanted.
01:32:17 Speaker 3
I wanted to.
01:32:18 Speaker 3
I want to.
01:32:19 Speaker 3
Give a shout to this article because last week I took some heat because somehow I guess you’re not allowed to question anymore the rectitude of the FBI, the J Edgar Hoover’s FBI, we’re not allowed to question anymore. Or a lot of people feel that way.
01:32:32 Speaker 3
There was an article that came out in real clear investigations just I think yesterday and what it exposes.
01:32:39 Speaker 3
Pretty amazing.
01:32:40 Speaker 3
The group, the unit within the FBI that could.
01:32:44 Speaker 3
Did the raid on Mar-a-lago easy, the same group that conducted the investigation into Trump back in 2016 that lied to the FISA court that had its members, its leaders, Peter struck, were fired for basically wrongdoing?
01:33:01 Speaker 3
Whose members are actually under investigation right now by the special Counsel, John Durham.
01:33:06 Speaker 3
And you’ve got people who are on probation right now?
01:33:09 Speaker 3
So this is the same room.
01:33:10 Speaker 3
But that basically conducted the raid on Mar-a-lago.
01:33:13 Speaker 3
So I think there’s still more to come out about this.
01:33:15 Speaker 3
But it’s just amazing to me actually, that Christopher Wray, the head of the FBI, and Merrick Garland of the DOJ, thought that this wouldn’t create the appearance of a conflict of interest or impropriety.
01:33:27 Speaker 3
The fact that you’ve got the same unit that previously.
01:33:31 Speaker 3
Was disciplined for wrongdoing.
01:33:34 Speaker 3
In an investigation of Trump is the one conducting the raid on Mar-a-lago.
01:33:37 Speaker 3
So pretty amazing.
01:33:39 Speaker 1
Cole retort.
01:33:40 Speaker 1
I’m sorry, what we’re talking about.
01:33:43 Speaker 4
OK, I’ll tell.
01:33:44 Speaker 1
You? I’m so brutal.
01:33:46 Speaker 1
No, I I just want to make.
01:33:48 Speaker 1
A couple of child actors.
01:33:50 Speaker 1
Look at these pumps.
01:33:50 Speaker 2
They’re on.
01:33:51 Speaker 2
They’re on camera right now.
01:33:51 Speaker 1
Look at these pops.
01:33:52 Speaker 2
Very, very cute.
01:33:53 Speaker 1
Good work, nice thoughts and.
01:33:54 Speaker 6
You look so beautiful.
01:33:55 Speaker 5
Sax, what you’re?
01:33:56 Speaker 1
Seeing there.
01:33:57 Speaker 1
Hold on, sax, before you get back to Trump, what you’re seeing there is a family unit.
01:34:01 Speaker 1
This is when a family gets together and expresses love towards each other, but continue about monologue.
01:34:05 Speaker 2
No J. Cole, Jake.
01:34:06 Speaker 3
That’s wonderful. That’s wonderful.
01:34:08 Speaker 5
You could take a picture of this and you could send it to your friends on Christmas.
01:34:12 Speaker 1
Alright, Jason, you you are you do not accept the real clear investigation report that maybe there is some long term.
01:34:20 Speaker 2
I’ll come here, I have.
01:34:22 Speaker 1
Actually, some feedback.
01:34:23 Speaker 1
It’s nothing to do with sacks, I just think.
01:34:26 Speaker 1
A lot of times I get positioned as sometimes when I’m moderating.
01:34:30 Speaker 1
I like to challenge sacks.
01:34:31 Speaker 1
Last week I chose to stay out of it.
01:34:32 Speaker 1
I’d let him go and I think one of the reasons.
01:34:34 Speaker 1
People didn’t like your comments last week.
01:34:37 Speaker 1
Sacks was other than, you know, Jay over being dead.
01:34:40 Speaker 1
For 50 years.
01:34:41 Speaker 1
Putting that aside in it being irrelevant, I think the reason people didn’t like it was because I didn’t come back at you and question some of the things you were saying.
01:34:49 Speaker 1
And so I think they felt there was an unbalanced discussion.
01:34:51 Speaker 1
They expect me to do that, but I don’t want to be pinned.
01:34:54 Speaker 1
As the adversary Tutas axis positions in every case, because I’m an independent on the moderate, I voted Republican, voted Democrat my whole life.
01:35:02 Speaker 1
I voted for both of those parties, but I do think that what’s happening here is, you know, Trump is under 5 different investigations.
01:35:11 Speaker 1
He’s got a career of doing disgraceful, criminal, fraudulent.
01:35:14 Speaker 1
Things, and I feel very bad for GOP friends, are for bad for Republicans because they have to carry.
01:35:20 Speaker 1
Water for him.
01:35:21 Speaker 1
And it’s they they put themselves in this really difficult position of defending him.
01:35:26 Speaker 1
And, you know, we’ve talked on this podcast about January 6th.
01:35:29 Speaker 1
We talked about voter fraud.
01:35:32 Speaker 1
My good friend, one of my best things, David Sachs said he doesn’t believe that the election was there was election fraud.
01:35:36 Speaker 1
And he doesn’t.
01:35:37 Speaker 1
He did.
01:35:38 Speaker 1
He thought January 6 was disgusting.
01:35:39 Speaker 1
I’m not speaking for you.
01:35:40 Speaker 1
That’s what you said.
01:35:41 Speaker 1
And so I think, you know, the fact that the Republicans feel the need to defend him constantly is one of the problems here, and I think on the other side, the fact that the media is forcing.
01:35:52 Speaker 1
Republicans to defend him and creating this narrative and this hysterics like, Oh my God, CSP Espionage Act.
01:35:58 Speaker 1
He’s doing espionage.
01:35:59 Speaker 1
This might be very so.
01:36:00 Speaker 1
People Trump lied, cheated, stole his whole career from Trump University to what’s happening with.
01:36:07 Speaker 1
You know the Trump Corporation now with the CFO and his nonprofit. This is his life as a history of Griff’s and crimes and unethical behavior.
01:36:17 Speaker 1
What the GOP needs to do is stop defending him and just let him go off into the sunset, as sacks pointed out last week.
01:36:23 Speaker 1
And that’s what this.
01:36:24 Speaker 1
Podcast needs to do because there’s no.
01:36:26 Speaker 1
Reason for me to sit here and do the.
01:36:27 Speaker 1
Left wing talking points, or for, you know, sacks to do the right wing talking points.
01:36:32 Speaker 1
The fact is, first principles Trump’s a grifter.
01:36:35 Speaker 1
He’s a Democrat who drove the GOP.
01:36:38 Speaker 5
OK.
01:36:38 Speaker 3
It my point is not to defend every shady deal that Trump’s ever done, or even to defend Trump at all.
01:36:44 Speaker 3
My interest is having a DOJ and FBI that’s not politicized.
01:36:48 Speaker 3
It is not used as a political weapon or to pursue political targeting or vendettas.
01:36:53 Speaker 3
And the reality is at some point.
01:36:55 Speaker 3
We’re going to move past Trump as a country, but the precedents that are created now are going to stick with us for a long.
01:37:00 Speaker 3
Time and the reality.
01:37:02 Speaker 3
Is we should not have an FBI and a unit within the FBI that is pursuing these political vendettas.
01:37:08 Speaker 3
And in this article by RealClearPolitics the.
01:37:11 Speaker 3
Amazing thing.
01:37:12 Speaker 3
The amazing thing is Christopher Wray prohibited this unit from seeking warrants from the FISA court.
01:37:20 Speaker 3
So he.
01:37:20 Speaker 3
Knew there was enough.
01:37:21 Speaker 3
This behavior last time to basically private them, but seems to me that’s a very narrow take away. It seems to me that the take away should be we don’t allow this.
01:37:29 Speaker 3
Unit to pursue Trump again because they committed so much wrongdoing.
01:37:32 Speaker 1
Yeah, it would be cleaner to have a clean unit, right?
01:37:33 Speaker 3
Last time they did it.
01:37:35 Speaker 1
Yeah, yeah, makes sense if that’s if it’s true ’cause that is from a biased source, and if it is, true, but it would be good.
01:37:35 Speaker 3
Why wouldn’t they do that?
01:37:36 Speaker 3
So it seemed.
01:37:40 Speaker 4
How we do that?
01:37:40 Speaker 3
By every RealClearPolitics come like a Politico.
01:37:43 Speaker 3
Look, guys, this.
01:37:43 Speaker 1
Has been a lovely bun.
01:37:44
Lots of answers.
01:37:45 Speaker 1
Cole, thank you for letting me sit in.
01:37:46 Speaker 1
Your seat today, yeah.
01:37:47 Speaker 1
Good, great.
01:37:49 Speaker 1
You know, I appreciate that.
01:37:50 Speaker 1
It was it was a lot of fun.
01:37:51 Speaker 1
Maybe sacks would like to have a run in the seat at some point here.
01:37:53 Speaker 1
He doesn’t.
01:37:55
Right.
01:37:55 Speaker 1
But for your as your guest moderator for today, I’m Dave Friedberg and this is your all in pop.
01:38:01 Speaker 1
Thank you.
01:38:02 Speaker 1
Bye bye.
01:38:04 Speaker 3
We’ll let your winners lie.
01:38:05 Speaker 4
Right.
01:38:07 Speaker 1
Rain Man.
01:38:07
David Saxon.
01:38:12 Speaker 3
Open source it.
01:38:13 Speaker 3
To the fans and they’ve just gone crazy.
01:38:15
With it, love you.
01:38:16 Speaker 1
Queen of quinoa.
01:38:24 Speaker 1
Best these are.
01:38:27
Yeah, dog.
01:38:28 Speaker 1
In your driveway.
01:38:29 Speaker 4
Second, should all just give?
01:38:32 Speaker 3
Oh man.
01:38:33 Speaker 1
Yeah, sure. We.
01:38:34 Speaker 1
Meet me at.
01:38:35
The room and just.
01:38:36 Speaker 1
Have one big, huge origin ’cause they’re all just.
01:38:38 Speaker 1
Useless, it’s like this like.
01:38:39 Speaker 1
This sexual tension, but they.
01:38:40
Just need to release that out.
01:38:42
What you’re about be wet your baby.
01:38:45 Speaker 3
Where your feet wet.
01:38:48
Where did you get murky tzarfati?