All right, everybody, welcome back to the number one podcast in the world.
It's episode 185 and you're going to be delighted by today's docket if you're into politics. We
remove the taping back at day, gentlemen, because we knew there would be a presidential debate.
So with me to discuss all of things presidential debate and the news, finance, markets, maybe even a
little science from our science boy, David Freiburg, is the Rainman David Sacks? Yeah.
True. Well, I haven't seen his frozen or he's staring everybody down. How are you, sir?
We're about to enter the end game, Jason. Oh, the end game is here. Okay. We're in the end game now.
And from a we work in the home office in Pasadena is our friend, the consultant of science. He's
back to work. He's in his cube. Did you get the TPS reports done? How you doing there, Freiburg?
The humble headquarters of O'Holo genetics, beautiful lab downstairs. I'll take you on a tour one
day. Can't wait to hear my friends gloat and bloat themselves on the show today after the debate
last night. It's going to be insufferable. I'm looking forward to it. Okay. So you're building the
next $10 billion company and we don't get to invest, but we do get a tour. Thank you. Let's go to
note. We're better. We prove this every week. If you get our money and I will open up the round
again for you and you guys. You said this three times. When do we wet our beast?
Jake House ride about this actually. That's how you know the winner. The one he doesn't let us
invest it is the winner. It's the easiest way to sport foliar. He's like, hey, can I can I introduce
you to a soda pop machine? Let's get to the show here enough of the craziness. Last night was
the first presidential debate and there's no easy way to put this. It was an unmitigated disaster
for the Democrats and President Biden. Gosh, he looked confused. Lots of slips, lots of gaps. If
you are under a rock living in a cave without Starling and you missed it, here's a couple clips.
Everybody's talking about this one where Biden lost his train of thought for, I don't know,
close to 10 seconds. Play the clip. Making sure that we're able to make every single solitary
person eligible for what I've been able to do with the COVID. Excuse me with dealing with
everything we have to do with. Look, if we finally beat Medicare. Thank you, President Biden,
President Trump. Gosh, that was brutal. And the reaction from CNN, even MSNBC's joy,
read as far left as you can go was brutal and candid. And here it is. The knives are out
from the Democrats for President Biden. Right now, as we speak, there is a deep,
a wide and a very aggressive panic in the Democratic Party. It started minutes into the debate
and it continues right now. It involves party strategists, it involves elected officials,
it involves fundraisers. And they're having conversations about the president's performance,
which they think was dismal, which they think will hurt other people down the party in the ticket.
And they're having conversations about what they should do about it. Some of those conversations
include should we go to the White House and ask the president to step aside. Other of the
conversations are about should prominent Democrats go public with that call because they feel this
debate was so terrible. That was painful. I love Joe Biden. I love for Joe Biden. He did not do
well at all. And I think there's a lot of people who are going to want to see him consider
taking a different course now. There is time for this party to figure out a different way forward.
If you will allow us to do that. I too was on the phone throughout much of the debate. My phone
really never stopped buzzing throughout. And the universal reaction was somewhere approaching panic.
The people who were texting with me were very concerned about President Biden
seeing extremely feeble, seeing extremely weak. This has been quite frankly a car accident
in slow motion that we've seen over and building and questioning it. And as has been pointed out,
Joe Biden sought this debate at this remarkably early time because he knew he was losing.
And he needed to change the narrative. And he did change the narrative. He sunk his campaign
to that. All right, gentlemen, there is absolutely no way any of us could have predicted this.
Oh, wait, Nick, put it up. Read the room, Democrats. You have put up a candidate that nobody wants.
His policies on the border and some other issues are not in sync with the majority of the country.
At some point, the Democrats just have to take a deep look in the mirror and say we feel
that a bad candidate who's too old and people don't believe will stand up to scrutiny of like,
say, being on the all-empot for two hours or in the debates or with a hostile interview or any
of those possibilities. And so I think if that's the case, we really need to have the Democrats think
deeply about maybe fielding a different candidate. I believe that's what's going to happen in the
next 30 to 60 days. So I'm pretty good. You think we have switched a route? 100%. I mean, if you just
do really think there's a switch a route. 100% will be a switch a route. Who's the switch a route?
I have no idea. It could be Gavin. It could be anybody. Anything's possible. I think Trump's
going to demolish him in the debate. I think he'll sync to 30% in the polls. And then the Democrats
will find a way to give him a graceful out. And then they'll field somebody else. I think the Democrats
and Senate close the sounds were waiting to see what happens with this Trump trials conviction.
Would you call law fair? What other people call fair use of the law? And then they are going to
see how he does in the debates. That's why they move the debate up in June. And I think they know to
pull the plug on this if it gets too far gone. And they have the ability to do that because all
these kind of say is, you know what? I'm feeling old and I want us to win. And I'm going to slot
somebody else in. All right. And to wrap this up prediction markets showing Biden has plummeted.
To let's check the number. Oh, yeah. 33% in the the sharps as you've referred to them on the program.
Uh, are basically saying Biden's going to drop out now 44% chance over a polling market will
Biden drop out of the presidential race and then predicted another one of these prediction markets
where you can actually bet real dollars. It's not a plug for them or commercial. It just
doesn't happen to be two of the bigger ones. Newsom sits at 14% now. Biden 33% Trump at 58%
at the start of the evening before the debate. Biden was at 47%. Post debate.
Chimoff we see Biden 47% to 33% nothing like this has happened in modern politics. Your thoughts.
Chimoff probably up to you and then sacks will give you the the red meat. Let me just start by
saying that President Biden is a person that's given up his whole life to work on behalf of America
in the best way that he thought was possible. He's overcome a lot of tragedies. I think he's
worked very hard. He's diligently tried to do what he thought was right on behalf of the people
Delaware and then the United States. My honest takeaway is that that person though is no longer
really in charge. I think that that was very troubling for me and it actually makes the last
sort of six months make a lot more sense. I thought the fact that we could not get a response
from the White House to be I took it a little bit actually personally. I was wondering why for
someone that had been such an ardent supporter. I couldn't even get an email back when I was
consistently asking them to be on the pod. Now I see that it wasn't just one single act. It was
part of a holistic strategy. It was the same strategy that box RFK out of the Democratic
primary because could you imagine if this event had happened when he had to debate RFK in the
Democratic primaries it would have been exposed then. It's probably partly to explain
how the law has been used in New York State whether you want to call it law fair or not but it was a
very directed partisan action. All of these things are now three data points that are really important.
You will not come on an open format show like ours to just speak openly. None of us were going to
attack him or try to corner him or box him in. You prevented other people from actually challenging
you and directly asking questions of you in the Democratic primaries and then you try to put
political pressure on your opponents. All of that is systematically about a group of people that
are unelected who are trying to control democracy and I think that that's the most troubling
takeaway from this. I don't think that you should take away from last night that Joe Biden had a
bad debate. I think what we should take away is that there is a person who should be allowed
to transition into the sunset and be celebrated for what he's done and instead there are people
that frankly at the margins are acting pretty unethically and at the limit is actually acting
somewhat diabolically to prop this person up so that they can keep power. For example, you've
been in situations where you would expect the team that runs a company to be able to stand up and
say the CEO is not in a position to run this company anymore. That's what you would expect if
there's good governance and honesty. What was Ron Claim doing as an example when he was doing
debate prep? Did he legitimately believe that Joe Biden was prepared for this or mentally capable
of actually doing this and the fact that they are allowing his legacy to be destroyed after 50
years I think is really tragic. Yeah, well said by the way, Jamal, sexier thoughts on what we
witnessed last night in the reaction to it. Well, let me speak as an objective and independent
political observer just as independent as you, Jake Hal. Let's do that. Let's be a defendant
today, show. Yeah, look, anyone can have a bad night. Absolutely. I think his campaign put out
the word that he had a cold and maybe he just had a bad night. I mean, after all, it was media
people like Joe Scorsbow just saying a week ago that not only was Biden cognitively fine,
but in fact, he was the best Joe Biden he had ever seen. Just a week ago or two weeks ago,
Reid Hoffman was saying that he had a two hour lunch with Joe Biden and Biden was regaling him
with details of AI and Gaza and he was good. And so what we've heard from all these highly reputable
people is that Biden may not present that well in public, but in private, he's just fine.
You're saying they're lying and they lied to the American people.
Well, I'm actually taking them at their word because they seem very trustworthy sources to me.
I see no reason to swap out this candidate. I think that anyone could have a bad night.
And there's no reason. There's no reason whatsoever for the media to be panicking like this.
Satire sucks. Satire sucks. Satire sucks. Satire sucks. Satire sucks. Satire sucks.
Well, I mean, look, I just, I think that there's no reason for this kind of panic.
I believe in democracy and the Democratic primary voters have spoken. This is the candidate who
they voted for. Okay. And there is there is a stand by your message. Stand by your man. Stop being a
whim. Just because your candidate had one bad night. You don't stab him in the back like this. Absolutely not.
And even I think Van Jones said that Republicans wouldn't do this if Trump had a bad night.
He's like, why are we all stabbing Biden in the back? So look, this is a candidate who you've
been supporting for years. This is a candidate who you rigged the primaries for. You boxed out Bobby
Kennedy, who, you know, I thought was a fantastic candidate. You basically boxed out Dean Phillips.
This is the candidate who you wanted. And just days ago you were saying was completely mentally fit.
In fact, the best he'd ever been. Okay. So you made your bed. So you made your bed.
So you made your bed. So you made your bed. So you made your bed. So you made your bed.
So you made your bed. So you made your bed. So you made your bed. So you made your bed. So you made your bed.
So you made your bed. So you made your bed. So you made your bed. So you made your bed. So you made your bed. So you made your bed. So you made your bed. So you made your bed. So you made your bed. So you made your bed. So you made your bed. So you made your bed. So you made your bed. So you made your bed. So you made your bed. So you made your bed. So you made your bed. So you made your bed. So you made your bed. So you made your bed. So you made your bed. So you made your bed. So you made your bed. So you made your bed. So you made your bed. So you made your bed. So you made your bed. So you made your bed. So you made your bed. So you made your bed. So you made your bed. So you made your bed. So you made your bed. So you made your bed. So you made your bed. So you made your bed. So you made your bed
of the big winner of last night's debate was probably Russia, China, Iran, maybe the Saudis, licking their chops, watching the utter dysfunction in the leadership of the party in the leadership of the country as it stands today.
The notable mention I will say was the debate format. I absolutely loved the fact that there were no interruptions that the mics went mute that there was no audience and the moderators didn't kind of challenge back and forth and try and make themselves the show. That was very unique in a presidential debate. So I actually like the debate format. They stopped interrupting me.
Thanks for the interrupt and I think that as SACs points out, the biggest issue is that this was front and center, Biden's decline in capacity and aptitude for quite some time. I didn't tell you guys this before, but last October, a senior member of the Democratic Party reached out to me for a quote meeting. I took the meeting in October.
And of course, it turns out they were asking me for money. Little did they know I don't give any money to politics ever never have never will. So their their handlers are more on us for bringing this person in to come and talk to me in the meeting. I said, you cannot put Joe Biden forward as your candidate.
What the hell are you guys thinking? He's like, no, he is completely stable. He is as sharp as he's ever been. I sent him an email and I'm going to read you what I said to him. This was in the first second week of October.
I said, Joe Biden does not appear equipped to be president of the United States. I think the continued heralding of Democratic Party leadership of the president's performance and ability to continue to serve into the next term is mind boggling.
His inability to conduct even a basic interview or give a clear and concise statement in a candid setting highlights a clear and obvious decline in function since he took office.
It is important for Democratic leadership to find an alternative candidate and message this soon doing so. I believe will buoy fundraising efforts across yada yada yada.
I said, I would feel uncomfortable with the Democratic majority Senate head and house giving a leader with declining aptitude nearly limitless effect.
I sent this as my response to his follow up request for money. This was the second week of October and I wanted to pull up the date on this because it was so apparent back then what was going on.
What so striking is how long mainstream media and leadership in the Democratic Party have tried to tell an alternative story that was so obviously revealed to be not true last night.
And that is the thing that I think makes me say America is losing because there are a few people that are in charge of controlling the narrative.
There are a few people in charge who decide who gets to be the candidate.
And those few people are keeping democracy from working effectively because the raw data, the direct data imagery, the video, the media content that has come out of Biden over quite some period of time made it so obvious that he was not in full capacity.
And so that was my biggest kind of takeaway is that there's something wrong.
We're saying that the media is the right country.
You're saying the media and the Democratic Party leadership are lying to America.
Yeah. And I think, but because if you, because the fact that we all had this information, we've seen the videos, we've seen the interviews and every time a video or an interview comes out, it has been excused away as, oh, well he tripped or, oh, you know, it wasn't well edited.
And every time there's a story. And then when it's fully exposed, it becomes like, well, my God, the fact that they all flipped so quickly is what's so shocking because this was there.
And you know, if you're on Twitter, you can see these clips being talked about by millions of people.
But then media and Democratic leadership won't acknowledge them.
The subversion of democracy is really the real threat to democracy to your point.
You have the right to elect a person up or down. None of us are choosing to elect a shadow cabinet of handlers to run America.
That's not what any of us are signing up for.
Yeah.
And I think that's what we have the risk of having for another four years if this lie isn't exposed.
What I, what I find unbelievably shocking is all of these data points now just makes so much sense because the through line is, as you said, a coordinated effort to kind of obfuscate his decline.
Like if you thought about this in a different way, if you took a twenty nine year old and a thirty two year old, would you say that they're the same?
Absolutely, right?
If you took a thirty nine and a forty two year old, they're the same.
A forty nine and a fifty two year old, they're the same.
But the reality is a seventy nine and an eighty two year old or a seventy eight and an eighty two year old are meaningfully different.
And the reason is that because there is significant decline every year, every month, every day, and you're seeing the impact of every week, day, and month and year as a president of the United States, where on an eighty two year old body.
And I'm not sure any of us would do much better.
But the reality is that when you're at that age, there's a level of transparency that's required and we have the opposite.
So take Warren Buffett as the counterfactual to this. Warren Buffett is in his early nineties.
But what does he do every year?
He marches tens of thousands of people into Omaha.
He sits them down.
He sits at the front of a dius with Coca-Cola and peanut brittle and speaks for six to eight hours.
And he's sharp as a tack.
Well, the point is if you decide after those six to eight hours of fully transparent, unedited interaction with Warren Buffett that you don't think he's capable of leading Berkshire, you can sell the stock.
What they don't do is hide him behind the shadows, propping him out and package interviews and all of this other stuff.
That is unamerican and undemocratic.
And you see why because the importance as freeberg said is so high, you probably do have a lot of people outside the United States.
Really questioning what is going on in the greatest country in the world right now that this can even happen.
And the people that you thought were so anti-Trump, right, that they would do anything to make sure that Donald Trump was unelected.
Well, they're actually not that anti-Trump. They're just pro power because the thing that they care more about than their hatred of Donald Trump is their desire to stay in power.
I think these are all very well said Frank Freeberg, nicely done. I mean, how is anyone at this point in time surprised?
Like we have been talking about his cognitive ability for a couple of years here on this podcast.
Everybody's been talking about it on Twitter. They've been talking about it on social media. Everybody's been talking about it at every Christmas and everything's giving for a couple of years right now.
And this long form discussion podcast test is the ultimate test. And I think people need to take that to heart. If you look at the long form podcast, as I'm just saying this to Twitter on Horn here, it could be Joe Rogan.
It could be Tim Ferriss. It could be whoever you want, Lex Friedman. When you saw RFK, the VEK, Trump, Chris Christie, Dean Phillips come on this podcast, talk for in some cases two plus hours, it was clear they were there.
And this is completely selfish on the part of Biden's family, the people around him to stay in power. And the hot swap's coming. I just I'm telling you right now, he is not going to be in this race in the next 30 days.
Well, the hot swap is going to create a free for all Jesus, which is better, better than running somebody who has a 30% chance of winning. And I'm going to take this as that further.
This is 25th Amendment territory. This person is not fit to serve as president for the remaining of his term. What we saw last night was incredibly troubling. He was not there.
And I've been saying this to him blue in the face for months. This is absolutely disgusting that they did this. This is elder abuse. I don't say that as a joke. I say this sincerely.
I remember when my dad had to take the keys away from my grandfather, God rest his soul. My grandfather wanted to drive that car, you know, the streets of Brooklyn, his station wagon.
My dad at some point said this guy keeps clipping other people's mirrors. We got to take the car away. So you know what my dad did. He went to my grandfather, God rest his soul.
And the car was stolen. And I'm sitting there as a seven year old next to my dad. And I'm like, I wasn't stolen. And my dad said, you know what? The car was stolen pop. We can't afford a new car. I'll lend you my car once in a while.
My dad then stole the car for 800 bucks and got out of there. That's what we need to do. You got to take the keys away from Biden. He's not fit to finish the rest of his term.
Period full stop.
And everybody else now sees what, you know, half of us saw for the last year.
That's a rebuttal.
Look, who are you going to believe the J cows uninformed non expert opinion or the expert medical opinion of Dr. Jill Biden with her doctor in education?
Well, I mean, the bias is strong when you see that clip. I mean, play the clip of Biden post. These guys are so deranged. These lunatics are so deranged. They thought they won last night. Here's a clip of Jill Biden.
Telling Biden, he did good.
Joe, you did such a great job. You answered every question. You know the fact that we asked the crowd what did Trump do?
You're not running. Joe Biden's not running. You are not running. This is a force. And now the value.
He's so happy. He looks so happy in that moment, getting that approval. I mean, give the man some milk and cookies. I mean, he was literally let the man retire to your point.
Compassionate, chamaaf said a great like the guy had a lifetime of service. Let the guy retire. Let him spend time with his grandkids, great grandkids, whatever he's blessed with.
And let's let's do the hot swap now.
It's incredible that not a single staff member has resigned. Isn't that incredible? Like where they see this Jason and they have the moral clarity to say hold on a second. This is really wrong.
Not a single one. That is really good point. It's a really good point.
I thought I thought one of Trump's best moments in the debate. A line that I hadn't heard him say before is that Joe you never fired anyone.
You know, and he was specifically talking about the Afghanistan withdrawal, but just more generally when have you ever fired anyone for getting anything wrong.
Whereas I Trump fired, Komi, I fired other people and I paid a political price for that. But at least I was willing to fire people who do a bad job.
You're not. Well, now we know the reason for that is because there is no Biden. Biden is just the staff. So why would the staff ever fired themselves?
And this is why it's actually important to have a leader at the top to have a commander in chief as opposed to just a shadow government consisting of party apparatus.
And that's what we have is with a problem is when the staff get something wrong. There's no one there to fire them.
How like how does somebody who's worked for Biden for 40 or 50 years who sat in camp David helping to do debate prep at no point have the compassion to say, sir, this is not.
Or because that would be firing themselves, Jamal.
Not only reason that it's a rhetorical question. I'm just seeing.
There's a more sinister reason. And I think sector pointing it out there, which is they consider Trump such an existential threat and they want to maintain power that they're willing to do anything to keep power.
And you know, listen, I don't want to get into Trump here, but he's got his own ways to stay in power himself. This was an embarrassment for America this debate. This is the fact that these are the two candidates is an employee embarrassment.
Well, I think the real embarrassment for the media was the fact that they were exposed. The fact that matter is for months, if not years, they've been saying that this candidate is fine.
He is cognitively fit. In fact, he's the best he's ever been. I've had two hour lunches with him. He's wonderful. That's what they've been telling us. And the reason why their panic was so visceral last night.
And all these post game wrap up shows is they saw their credibility going down the drain. They saw that they had been exposed.
It wasn't just the fact that Biden was exposed. They were exposed for putting out this North Korea level propaganda for months and years.
And everybody should understand these people were part of the cover up. It wasn't just the Biden team who once hold on to their jobs. It was the media. It was his entire Democratic party apparatus. They're all in on this giant con.
I wouldn't have a problem with this sex. If it was like Reagan where they were like, God, it's got 18 months left. We're going to ride this thing out. And yeah, maybe we let him have a quiet thing.
But to actually put him up for another four years is the issue here. If they just said, listen, we could 25th Amendment this guy or let him finish the last six months. That's one thing.
But to say we want four more years of this. I mean, how much worse is it going to get?
Hey, what's going to happen right now? I guarantee you is he's out. We're going to have president Kamala. She's going to get her flowers for four months. She'll get to be the first female president in the United States.
Then she steps out of the way. She decides she's not going to run because she's got things to do with her family. And there will be two new people who will be moderates.
And then the real election starts in about 15 days.
I don't think you need to go into all of those mechanics to get the outcome of a new candidate. All Joe Biden has to do is go into the Democratic convention and release the delegates.
Yes, of course. Yes, but the problem with releasing the delegates is I do think it creates a free for all unless the party then exposes this next facet of their plan, which is that they are so in control that they only allow one candidate to go up there.
Oh, they've already got that. Yeah, that's done.
And then I think what happens is depending on who that person is, they'll either I think the Democratic party is probably at risk of a pretty meaningful reset. And I think that these tactics, I think are very much seen and understood by the American people.
I think that people do not like this idea that you vote for person A, but instead you get persons B through Z. I don't think that's what anybody thinks the election for the president of the United States should be. It should be two people independently.
And then when you see one person that's not really in a position to run faithfully.
I actually think that you know, Donald Trump last night showed tremendous restraint and compassion. I think that is the right way to deal with this situation.
I think it's just acknowledging that President Biden is not altogether there. So without making claims of a cold or anything else, this is the security and the well being an economic prosperity of the most important country in the world.
Why are we messing around?
This is put it plainly the Democratic party is a collection of interests who want to remain in power. The Democratic party is the party of government. Its goal is to allocate money and power from the government to the collection of interests who back the Democratic party.
In other words, it's basically a collection of interests who want to loop through a public. Well, obviously no one's going to vote for that. So they have to make it about something else.
They choose a figurehead. They talk about how this is about saving democracy. They basically invent hoax after hoax life or light to basically maintain their power.
And I think what's happened is the mass has come off. The whole thing the whole shell game has been revealed. It's obvious that Biden was always a puppet for these interests who are hiding behind him. And now it's all being exposed.
This also goes all the way back to 2016 because if you remember and you look at the real run up into the 2016 primary, you have to remember President Obama sat Joe Biden down and said, you cannot run.
And the reason was to direct the Democratic party and establishment and energy towards Hillary Clinton who ultimately lost that election. There's a very important question here, which is if Joe Biden had actually run in 2016, you may have actually had him beat Donald Trump in 2016.
And you probably would have continued into 2020. This would be a totally different situation for the Democrats. So back to your point, David, all of these back room shenanigans and negotiating and gerrymandering and politicking and power broken is not how democracy should work as messy as the Republicans are.
I have to give, you know, I tip my hat to them. They run very straightforward, fair, visible, transparent face offs between people.
And you may not like the candidates, but the process is what it's supposed to be messy, turbulent, but you see all sides, whereas this tends to be managed from the inside out. And I think that that is as your point being exposed.
And I think that's what really has to stop within the Democrats. They need to open the floodgates. A Bobby Kennedy should have had the chance to run.
Dean Phillips should have actually had the chance to run, but they were not and they were prevented. And by the way, props to Dean Phillips, who in a very respectful and compassionate way was telling the truth from day one.
And he was essentially censored. He was not allowed to basically tell you what he told everybody what he observed in front of his face.
Right. And if people had listened a year ago to Dean Phillips, then the voters in the Democratic primary could have made a different choice. They could have maybe replaced Joe Biden, but the party elders and the powers that be did not let that happen.
And now they're in a panic a year later trying to do a hot swap because it's manifest to everyone to the American public that Joe Biden is not fit to serve.
Yeah, but the real time to hold on the me to speak to the hot swap for a second. The time to do the hot swap was a year ago when Democratic primary voters could have voted for someone new.
The problem you have now, Jake, how I actually think that on balance, the hot swap is not going to happen. Let me just tell you why I think you make a really good argument for it. Nonetheless, the reason it's not going to happen is that Joe Biden and Joe Biden have come out this morning and said there's no way that he stepping down.
It was just one bad night. He's fit to serve. There is no mechanism to replace a nominee who's ready won all the necessary primary votes without their consent.
So if if the Biden's are saying we're not stepping down, there's no mechanism to force them to step down. And that's the situation we're in right now.
It's a very simple mechanism. He's going to he's going to capitulate and you're going to have a promise Obama is going to give him a call, I guarantee you Obama is going to talk to him in the next 72 hours. Guarantee the hot swap happens. I'm absolutely to make a special right now on it.
Let me finish my point. Yeah, they can pressure him. And that's what you're talking about is they're going to try and leverage him out. But the truth the matter is that if they can't find the right leverage points, he does not have to step down.
The right leverage point is very simple. He's not going to get any more donations. Last night, the Democrats who are donating all set no more money for Joe Biden. So he's going to have no oxygen. You need money to run these things.
But I looked as one other final problem with the hot swap theory is not only is there no mechanism to force Biden to do it. But I don't think there's a consensus right now on who the replacement would be.
The fact the matter is that Kamala Harris is next in line and she pulls even worse numbers than Biden does. So there's every reason to believe that she would do worse than Biden in the election.
And I think it's not going to be easy to basically shift her and push her aside. And so you can talk about news. You can talk about Michelle Obama. You can talk about Hillary Clinton. The fact the matter is that I think you're going to have a big Kamala problem.
And because of that, you know, there's no mechanism and there's no clear replacement. I think that although a lot of people are going to say what you said, Jake Al about the hot swap being desirable.
I think in the end of the day on balance, probably not going to happen, although certainly I admit it could.
I'll bet you $10,000 right now to whatever charity you want that Biden will not be in the nominee.
You could be right. But they've got to work out those we want. They got to work out those two problems. They got to work out those two problems.
I'm just I'm just offering you a $10,000 bet. And I'm not giving you any on straight money.
I would not bet a lot of money on this because I'm not sure. I'm just raising some problems with the hot swap theory.
Okay. Freeberg. Yeah, you have a little bit silent here. You want to wrap us out so you can get to the next time I'll wrap us out.
I think I'll read the final paragraph of the email I sent to the Democratic Party leader a few months ago as a coda to this conversation. Here goes.
The United States is facing a fiscal crisis, the likes of which the world only sees every few hundred years as world leading nation states overextend themselves, take on unaddressable debt loads, increase social programming and eventually collapse under these conditions.
The cost to service the interest alone on our federal debt is now greater than a trillion dollars per year.
This already exceeds the discretionary defense budget. The debt service expense will only swell as interest rates are unlikely to decline back to 0%.
And I do not subscribe to the easy to refute economic arguments of modern monetary theory.
Simple arithmetic is all that's needed to discredit it. Furthermore, I can identify dozens of federal programs sponsored by Democrats that are not achieving their objectives yet we continue to fund them as if they were performing exactly as anticipated when originally conceived.
Every federal program should be held to account for performance every year. If not, they should be defunded.
Instead, I see the party pushing new programs that create new expense burdens without first addressing programs that simply aren't working.
Accountability is a critical first step in reducing our federal deficit below 7% of GDP. I believe our nation is facing financial and the social peril.
I urge the party to become the quote party of reason and results put forward leaders that can lead hold government programs that aren't working to account make sure that every dollar spent on social programming as a measurable impact and if they fail to deliver results cut them.
The opportunity to be the party of reason and results is wide open myself and many of my friends would scramble for the opportunity to support that party.
That's the end of my statement. And I think to get a response.
Then a month later, the handler said so and so has this on their docket. They're going to call you never going to call.
Yeah, because you're not a donor. They only care if you donate and you're not a donor.
I donated. I donated and I didn't get anything. All I asked for was to sit down and talk to the president.
I mean, he couldn't the debate format to your point freeberg was like the easiest debate format ever. And the greatest thing I think Dave Portney pointed this out on Twitter.
Like Trump's best strategy was to just let Biden talk. Like just get out of the way and let him talk. And there was one moment where he's like, I'm sorry.
I mean, Trump was pretty graceful here, which is a big statement. He like at one point was like, I'm sorry. I don't understand what he just said.
Like I don't know how to respond to something. I don't understand what his point was.
Hot swaps coming. And I am an undecided voter. Have a big announcement.
Sax. I have a big announcement about my own voter. You want to hear it? Yeah, let's hear it.
This is breaking news. I am not voting for Biden. I've eliminated Biden as possible. I was waiting to see what I have.
I never was clear about that. I am also eliminated Trump. You've also eliminated Bobby Kennedy. So you have not eliminated Trump or Biden.
Kennedy. I said, I should do she the first time. Maybe Cornell West.
Let's move forward. Let's move forward.
Who's last? Bring anybody out of Kipney. We can have birdies part two. I mean, the weekend of birdies joke is real.
I mean, it's cruel and it's real. And my lord get it together. All right.
There's a really interesting trend going on that I wanted to get everybody's thoughts on AI and corporate efficiency killing tech jobs.
Let's pull out this chart. This somebody shared in our group chat from Fred.
These are software developer job postings on indeed. From early 2020. That's pre-COVID obviously to this year. Look at this.
The number of job postings for developers has absolutely come crashing down by 80%.
This is below pre-COVID numbers. In addition to this, we talked about getting back to work.
Penske and Dell saying you have to be back in the office starting this fall for days a week or resignation accepted.
What are you seeing in your portfolios? Any thoughts on this trend of the major jobs, the high paying elite jobs, Chema.
Maybe going away. This is a trend we haven't seen in our lifetime. So it's always room for elites at elite companies. And now it seems.
The demand's gone. What's going on here?
I just think that company formation has changed after the end of Zurb. And so I think that that chart speaks more to a couple things. One is that.
Where typically people were hiring for software engineering roles, which was a lot of SaaS businesses, contracted a lot.
And the net new amount of SaaS startups also I don't think materially increased. And so that was one big switch.
The second is you went through a whole bunch of layoffs at the big cap tech companies as they reestablished profitability.
I think when you layered those two things that explains that chart more than the emergence of AI tools.
Just practically what I see is all of these AI tools can add a 10 or 15% lift to an individual person. If you are in a traditional organization.
I don't think these things are the panacea that they're marketed as being. These are not creating 10x engineers.
At some point these tools will be good enough. And at some point companies will get started from scratch that use those tools and create a level of productivity at one tenth of the workforce.
But that hasn't happened yet. So I think that that chart is more about layoffs and contraction and tech more than anything else.
And just to explain this chart a little bit more in depth, the 100% number back in 2020 then boost up to two and a half times that amount and then comes back down to 60% of that amount.
So it's an index. We don't actually have the raw numbers here of the number of developer jobs open or close.
SACs your thoughts. What are you seeing in company formation to Chimaltz point. And overall, what do you think this means for the American elite workforce people with really high end degrees.
And really high end salary expectation.
Well, I agree with Chimaltz. This is too soon for AI to be responsible for this. I mean the AI productivity gains are just starting and we're not really seeing job elimination yet or job replacement.
I think this is just a symptom of economic weakness. And the main reason for the economic weakness is the rate hike cycle.
Remember, we went from practically zero percent interest rates to five and a half percent in one year.
And a lot of people were expecting that to cause a recession. That's normally what happens when you get a very, very rapid rate hike cycle is it sucks liquidity out of the economy.
And it contracts economic activity and you get a recession. I was one of the people who thought that and that didn't happen.
I think one of the reasons it didn't happen is there was a huge backlog of jobs of sort of open job postings. I think originally it started at 12 million open jobs.
Well, what's happened is the rise in straights has created some economic weakness. It's caused a reduction in liquidity and investment.
It's created more pressure on companies to be profitable. And so all those things have cascaded through and it what is doing is it's burning off this job backlog.
So we haven't necessarily seen unemployment yet, but we're seeing a reduction in the job postings. And I think that's what's going on.
And I would just say that the economy may not be in recession yet, but I just think it's weak. And this is just one metric showing that.
Freiberg, you're running a company now you're doing hiring qualitatively. What you're seeing in terms of hiring from when you were running production board.
You had many companies people were fighting it out in the peak Zerapara, you know, and giving people incredible incredible, you know, compensation packets and packages.
And then you also had like sort of people trying to take talent and maybe talent hoarding was going on.
It seems to have dramatically switched. We've been putting job postings out and seeing hundreds of people apply for jobs that we would get dozens previously.
What do you see? What's the game on the field in terms of hiring?
I'm not really, I don't really have a great perspective on this. We're we hire very specialized people at O'Holo and in the special specialty field we're in, we're the best in the world. So everyone wants to work here.
Got it.
I'll answer your question, Jake, I'll see from our portfolio companies as hiring's got easier. It is way higher, much easier to hire devs right now, software developers, then two years ago, no question about it.
Yeah, and I think globalization also having a big impact here. I honestly my theory on this is that because there's not three competing offer sacks from big tech when you're a startup, you know, trying to land somebody and you're like, we have to be Uber or Airbnb or Coinbase, you know, like a mid market company or the Google offer, the Apple offer, the Amazon offer.
Typically, like a developer would have those three sets of offers. Here's a startup that's willing to give you 1% of the equity. Here's a mid market company and Uber and Airbnb, a Coinbase, that's offering you 300K. And then here's the like incredible $500,000 offer from Amazon or Google.
Those offers just aren't there. So then it makes for the ability for startup to hire great talent. This is the best time possible to be a startup. The talent on the field is incredible.
Opening I is considering a for-profit profit conversion. And that means possibly an IPO soon. According to Port Sam, Altman recently discussed this with major shareholders, like maybe Microsoft.
And it's possible open AI will become a for-profit benefit corporation similar to in-thropic or XAI. If you don't know what a for-profit benefit corporation is, a benefit corporation or B Corp in the industry means you have a stated mission.
That the board is responsible for going after, you know, save the whales, provide AI software for all of humanity, whatever it is. In addition to the standard acting in the interest of all shareholders.
And so this of course means open AI, which was valued at 86 billion could IPO at some point. What are your thoughts on this? We saw the revenue numbers are crushing it.
We've got some of them on open AI. IPO, is that a possibility in your mind? I mean, it makes so much sense for them. So I think they should do it as quickly as possible.
We are in the first inning of what should probably be an enormous tectonic shift in technology. And I think if anything, whoever wins in the first inning usually isn't the one that's winning by the ninth inning.
And so I would encourage anybody that's winning right now to monetize, get secondaries, take money off the table as fast as possible because the future is unknown.
And the more disruptive the technology is, the more entropy there is, which means that there's going to be more changes, not less.
And again, I would just look at search as an example. I would look at social networking as an example.
When you look 20 years later, the people who captured all the value were not the ones at the beginning who everybody thought was going to win. And so I think if it plays out similarly, it's important for the people that are in the lead today to recognize it's too early.
And they should monetize their perceived success as quickly as they can to the largest magnitude possible.
In other words, you might be opening the bag. You might be my back. Grab the bag. You can't grab the bag.
But what is it called secure the bags or secure the bag? Yeah, right.
What do you think you're secure the bags on a potential IPO by Sam and the team at OpenAI and the impact that might have on the wider space?
Well, for a long time on this show, I've been saying that you need to clean up that, you know, convoluted business team corporate structure with all the line charts everywhere.
That structure is what created all the problems with this nonprofit board that they had. You've got a for profit entity reporting to a nonprofit board. It created a culture clash.
And as we've said before on the show, it's not an idea for a start state of eight on structure using a tried and true C corp is the way to go.
You're ready for IPO. If you ever get that far, you don't need to like restructure the company. It was always funky and weird that OpenAI had this nonprofit structure.
And really they should have fixed it years ago. And like I said, given Elon his equity, given Sam his CEO package.
And they didn't do either one of those things. And so now they're left with this crazy org chart. That's a mess.
And I'm really sure I mean, I think it's I think you would want to clean it up as soon as you can because I think my sense is that the longer you wait on these things, the harder it actually gets, but yeah more calcified these things get.
I'm not sure how easy it is to actually fix this thing. But yes, they should fix it. They should make it a standard C corp. They should make things right with Elon because he provided the for four million of C capital.
They should make it right with Sam. He should get a C.O. comp. And then they should IPO so that the public actually has the ability to invest in this AI wave.
And ride this wave as you know, the same way they did with the whole calm boom in the late 90s. I mean a lot of those calm companies didn't work out but some of them did Amazon Google and so on.
And the public had the opportunity to participate in that huge in a wave of innovation. And I think we go to something like that.
We still need more public companies. Yeah, for your break, you got a thought here. Before we go into super intelligence and you'll use new company.
I don't care if open a eyes for profit or nonprofit effects a few people that put money in and the employees doesn't affect anyone else.
They'll affect the public if they can buy shares and they get to participate. You could say that about any business, right? Yeah, but the open AI is one of the leading companies of the AI wave.
It is the leading company. It's the leading company. They apparently raised money in an 80 billion dollar valuation. So one could also argue that a company doing three billion in revenue, getting an IPO done at 120 billion market cap.
Maybe the public already missed the big wave.
Well, no, I don't think so. I mean, we saw a lot of these companies that you could have said that about Nvidia and it.
Yeah, you could go up. It could go up. It could go down.
But anyway, there's a bunch of people who put money in who are going to make a lot of money if the saying gets to be for a trend line is doubling revenue right here every year.
So yeah, my argument is that it'd be good for open AI to clean up its Byzantine cap table and structure. And it would be good for the public to be able to have the opportunity to invest. So it's a win-win.
I'm not saying they have to do it this minute. I mean, I think that it does take time to get your reporting to the level of maturity necessary to be a public company.
And you don't want your earnings or your revenue. You don't want your numbers to be volatile.
If you were an employee freeberg and it went out at 120 billion, would you clear your position if you could? Would you sell half your position?
I don't know enough. I don't know enough. I'm assuming most of those trim off. Anybody anybody want to play along here?
Well, I've heard that they've had quite a bit of turnover because there's been pretty good secondary market activity, which means a lot of the employees have cashed out and they've made so much money.
Just like what's happening in Nvidia now, there's very little upside relative to how much money you've already made.
So that point a lot of the early people start to leave a shadow higher.
Yeah, so they're trying to hire more people. It sounds like I heard 70% of employees at Nvidia a million years now.
That's a crazy number.
Well, I was going to say, you know, that question that you asked is really a highly personal question because you could think that open AI is a great company that's going to be worth a trillion dollars in the future.
Sure. But it still makes sense for you to take chips off the table because 100% of your net worth is in that one company.
So let me ask it that way. You got 90% of your net worth in Nvidia. I'm sorry, 90% of your net worth.
You're a person that open AI sitting on 10 million dollars and shares. Do you sell half all? What would you do personally, sex?
I would take some chips off the table. I don't.
If you were first, if you're like this is 90% of your net worth 99% of your net worth.
Well, I mean, you're an insider. So maybe you have a lot of information.
If you were really bullish on the future of the company, maybe you take 10 or 20% of your chips off the table.
If you're less bullish, maybe it is 50%. So I don't know. I'd be influenced by my perspective on that.
But I think that you could think it's the greatest company in the world. And still it would make sense for you to take some chips off the table because you don't want all your ex one basket.
That's a personal diversification decision.
And if it was a hundred twenty billion dollar valuation with three million revenue, Chimoff, and you're trading a 40X or whatever it is times next year's revenue.
Let's assume they do five billion next year. You're still looking at 30X revenue.
You would clear. I think these multiples are not really what's going to drive their behavior. I think open AI is running a very strategic game plan to become part of the tech establishment as quickly as they can so that they
are on the inside looking out as opposed to the outside looking in. They were able to add the former head of the NSA to their board of directors.
They were shooting on that. By the way, Chimoff, that was interesting. People got pretty. It's how you become part of the establishment. Do you think the former head of the NSA no longer has a security clearance or knows people in the NSA? No, of course not.
And I think that there is a group of people that want to make sure that these kinds of technologies and capabilities are firmly within the hands of the United States apparatus and not anybody else.
And so I think that that pulls them closer to the kinds of folks that could otherwise give them a hard time or regulate them or et cetera, et cetera. So now what happens is when you have Senate hearings about this stuff, it's more likely that it's confidential behind closed doors is under the purview of national security.
All these things are beneficial to open AI. And then secondly, they were able to get Elon to drop his lawsuit conveniently. I think it was like on the same day that the head of the NSA was added to the board of the former head of the NSA.
So the next logical step is now to create capital markets distribution, which is really about syndicating ownership of the company to all the big deep pools of money so that they are also growing in the same direction in support of open AI.
And so that's what a lot of people don't get. It's not about valuations or this and that this is about creating a high level game theory of how to create an international apparatus that supports your corporate objectives.
There are a few companies that have done this well and they are now one of them. The only thing left is to get shares into the hands of the black rocks, the T rows, the all the big mutual fund apparatuses of the world that then syndicate to all the individual investors of the world.
And you have everything you have government connections, you have no real legal overhang. Then the likelihood that an IRS agent all of a sudden decides to audit open AI is basically zero.
Okay, so to summarize, it's cynical, but you're building an ally base that then makes it harder to investigate the company criticize the company or anything like that.
That's the same. I don't think it's cynical. It's like a smart business strategy.
Strang, what do you take on that sex?
Well, yeah, they're borrowing their way into the deep state. I mean, the quipro quo is we will be your vessel. We will be an arm of the intelligence community of the deep state. You will give you access to whatever it is you're looking for.
And in exchange, you're going to basically protect us and allow us to get rich. And frankly, that's the deal that all the big tech companies have made. They are all in bed with the intelligence community. And we saw this in the Twitter files where you know every week for the year before the 2020 election.
There were meetings between the trusted safety people, the censorship division of Twitter and the intelligence community. So these people are working arm and arm. And basically the big tech companies have given themselves over in a way to this powerful apparatus, this, you know, the deep state in exchange for you're there willing to basically give up power in exchange to be left on Federer to make their money.
I think it's a horrible development for the civil liberties of the ordinary American. But I think that is a reality of what is transpired.
Yeah, the number of CIA former CIA former FBI Justice Department people working at the Googles. Facebook's met as apples of the world is like a very large number. I have family.
As many of you know in law enforcement and in the deep state, I guess, I should call it sex. And they are constantly asking me about job offers they have from these companies and should which one should they go to this is after they've done tours in Afghanistan and, you know, speaking many different foreign languages and then all of a sudden they secure this incredible, you know, three X salary bump by working in big tech.
So there is something to all of this. Ilya announced his new startup. Finally, it's called safe super intelligence ink or SSI. He was obviously an open AI co founder, former other chief scientist and co head of super alignment.
Last month he announced he was resigning from open AI after a decade with the company. And you remember, he was on the board that helped August rate.
Sam Wattman's firing and then he reversed course a few days after an express retinate. Everybody was asking where's Ilya during all of this on Twitter.
The co founders in SSI include Daniel Gross, a YC partner and pioneer labs co founder and open AI engineer Daniel Levy.
Companies goal right now is in the title develop a safe super intelligence. Here's what Ilya told Bloomberg the company is special in that its first product will be the safe super intelligence and it will not do anything else until then.
And Friedberg is this super intelligence making safe super intelligence a great business model or is this something else it's a little bit confusing to come into the market and compete with a throttle or a governor I guess on your startup.
At least that's what some people are discussing. So what are your ideas. No idea. I don't know what these guys are doing.
I haven't seen anything. Yeah, okay, I'll free burn another assist. Okay, quick bounce pass to Zach. Yeah, give us your opinion.
Ilya caveat one about to say by by saying that I've not heard the pitch directly for this company I've only read what you've read in in the press that what they're trying to do is the safe super intelligence and I'm not bullish about that pitch because I think it makes the company a little bit schizophrenic it's working across purposes with itself on the one hand.
You're a new company which means you're behind you've got to catch up with open AI or Google these other companies that now have been creating you know models for years so you've got to move very fast on the other hand you're saying you're going to basically make this very safe well to be frank safety concerns are break pedal they don't help you move faster they make you move slower.
So governor and in fact I think that this is the main reason why Sam Altman either kicked these people out of the company or or starved their resources until they left remember that when a bunch of these people left open AI they said that hey we were originally promised 30% of the computing resources by Sam and then he
had to have done that promise and give us what we needed so they all left well I think that was that wasn't by accident I mean I think that Sam wants to win he wants to develop AI as quickly as possible specifically AGI and he had this group inside the company that frankly was a lobby for moving slower.
So now they have their own startup. He's now the group and he kicked out right and so I don't but I don't think that's the recipe for winning because you're the guys you want to move slower.
It would be like taking the DEI group from Twitter and having them start a new Twitter.
Well I think that's a little bit harsh because I do think that by all accounts.
Carpathy is like a top top notch technologist and he's one of the leaders in the space yeah but I do think that he's going to be hamstrung by his own concerns about safety and I think this is maybe the tragic situation is we're going to have this competition by all these different companies to advance the company.
And the companies that care about safety more than others are going to lose and so you have this Darwinian effect going on where there's going to be a race to AGI and I think that is genuinely a little bit scary for where this this all leads us but I tend to think that it's not going to be solved by trying to impose the safety governor as you said.
I think maybe the best you can do is impose a truth governor so you know Elon says we're going to make sure that our model at X AI the rock model is scrupulously honest it's not going to lie to you and I think maybe that's the best you can do is is advanced AI to be truthful but when you start injecting these other safety concerns I just think it slows you down hamstrings you.
I think the best way to hit truth is to cite your sources I have been putting into an I don't know if you have you played with for oh yet or Claude's new sonnet Jamath.
Yeah I mean it is unbelievably good if you put site your sources it's really starting to understand what you're asking for I don't know if you've seen this but I was asking it like I'm hiring some positions give me the high low average of this position give me five sources of information put it in a table and then average the high low and median.
And it came back to me sacks with an incredible thread Jamath of this position and then source glass door you know indeed salary dot com whatever it was and I was like holy cow this is an hour or two of research work done instantly there's an important insight here that I think people are missing which is that foundational models are quickly becoming a consumer surplus every model is roughly the same they keep.
Better and better but they're also approaching these asymptotic returns and what do you do when something approaches an asymptotic return you need to change a key underlying variable that you used to build these models and it looks like one of those variables that people are looking at is how you basically take the internet not as raw data but then you actually kind of refine it and refine it some more and then use that as the basis of learning and what that does is it drives up model costs to a degree that.
Are probably untenable for most companies except but for a few so I think it was Dario amade the CEO of an topic who said the cost of a good functional model today is in the billions but you know by 2027 it could easily approach a hundred billion dollars.
The problem that represents for Elias company and I wish the best of luck but the reality is there isn't a hundred billion dollars for him to have google find it Microsoft find it Facebook find it Amazon coming out of the eye will probably find it Amazon find it but I suspect that these other startups there just isn't that much money going into a I because the returns don't justify so.
I think the bigger problem that you have is that it's becoming an arms race it's not dissimilar actually to ride sure when people saw uber success they thought well this is simple.
And it was but you had to subsidize losses for decades before that company was profitable but meanwhile you had to starve all of these other companies that were funded to compete with uber until they ran out of money and died.
I think that you could make a claim that the a i foundational model market will look similar to that one startup can probably win but there will be a bunch of open source alternatives they're all asymptotically similar and so it's an arms race on cost and compute.
And I just don't see vcs having the temperament and the wherewithal to fund hundreds of billions dollars into multiple companies to do that.
Freeberg any thoughts on the latest models have you played with them i'm curious i have been having tremendous results there seems like there is.
I don't know i don't want to say step function but man it's a lot better right now.
Have you used any of these models and are you applying any of them inside of your company we're using a lot more models.
And we're seeing them be very practically applied at the edge so you don't need to have large models running on a large compute cloud to get practical value and this is definitely a big.
A big point in the industry is that you're getting highly functional applications specific models that can be run in a more local environment on the edge so they're not running the cloud on big compute clusters and there's incredible applications in things like machine vision and control systems.
You can ultimately see this being i don't know if you guys know that chinese dog we never talked about this.
China basically ripped off Boston dynamics really sense what it looks like and they created this military dog Nick can you pull up the clip and then they put machine guns on the back of the dogs back the models are running locally in these devices in fact i think we're going to have a few.
Demonstrations of this at the.
At the all in summit so the robotic applications are pretty powerful machine vision applications are very powerful and when you see this insane video from China by the way this is a totally different topic you guys see this.
I have seen this it's so this thing goes autonomously into a building and it can then find its target and eliminate its target with the machine gun on the back incredible.
And you can see this becoming like let's say they build a assembly line and they put out 10 million 50 million of these things and these things can now go run autonomously in the field this is the dark side of small.
Highly performative application specific models running in an embedded way imagine those are amphibious and they could travel against the travel across water and or on another destination i don't know where would a beach invasion.
That was a very funky tangential aside right we talked about Microsoft and the bundling issues a number of times your sanctuary had a spicy take on this well the EU just charge Microsoft with antitrust violations over how it bundles teams there quote unquote slack killer into office here's a quick chart Microsoft teams obviously was bundled everybody has it automatically with office you don't get a choice and they rock it into 75 million members.
2022 slacks 12 million you've obviously got a lot of thoughts here i'm sure to as well.
To nonsense you were the early investor in this looks like sales force just got a big win bany off gave some commentary on X Microsoft excels with bundling it's not it's there not so secret weapon for dominating new markets we know the playbook office plus teams windows plus explorer azure plus visual studio 365 plus one drive and Xbox plus.
Game Xbox plus game past here's a clip of sacks discussing this on episode one 13 of your all in podcast if Microsoft can basically clone.
The sort of the breakthrough innovative product you know just say they do one every year and then they put a crappy version of that in their bundle yeah 10% or 50% worse but they give it away effectively for free as part of the bundle.
And then they basically pull the legs out from under that other company so can't be a vibrant competitor and then the next year they'll just raise the price of the bundle right and they've done that was slack they've done that with octa they've done that was zoom can we have a vibrant tech ecosystem at least in B2B software if Microsoft can just keep doing that indefinitely right sacks you heard your quote there guessing you're not shocked by this action.
Well I think the EU made the right decision here they basically cited with sales force who made the complaint and said that Microsoft was engaged in illegal bundling.
By combining Microsoft office and teams and the reality is Microsoft office is a product that every company has to have every certainly every enterprise has to have.
And by bundling it means that that enterprise receives the teams product for free until of course the price of the bundle goes up the next year which it has it just about every single year.
So what that does is when that enterprise is evaluating the choice of do we use teams or do we use slack or for example glue or some other tool teams on the margin appears to be free.
Where slack is going to have to pay for seats and I think that is that is illegal bundling you know when you have a monopoly in one product and you systematically use it to keep.
Adding you products that again on the margins appear to be free because you've bundled them and I think the EU has done the right thing here which is push to end the bundling every single product needs to have its own all a car pricing and when you add together the all a car prices.
It should equal the price of the bundle so in other words you don't get anything on the margin for free the customer needs to have the discretion to choose what it wants.
If we don't do that I do think that Microsoft will use the power of the bundle to systematically dominate enterprise software and they won't take on everybody at once but like I said they'll every year they'll add a new product to the bundle.
What's the what's the middle ground here between the interest of consumers which is hey I'm getting free a free version of slack.
It's not free it appears to be free on the margins because it's now part of the bundle but then they raise the price of the bundle the next year correct they they boil the frog so.
So once they killed once they pulled the legs out pull the rug out from under their competition yes and that competitor is no longer viable now they can raise the price of the bundle.
Okay and so it's kind of like dumping in a way I mean this is a very oldie and to trust argument when you would dump product in the market to kill a competitor or you would price under your cost to kill a competitor right yeah you dump to basically drive a competitor out of business because there's large cost of entry there's large cap acts required to create a new competitor.
And this is basically what they're doing is they should be able to give you they appear to give you the slack clone or whatever for free but then once they pulled the rug out though increase the price the bundle.
So what's the balance here between say I don't know Apple giving away a free note pay note taking app or a free journaling app to consumers and hey consumers get this benefit of free product versus the bundling concept here with hey we'll give you for free but eventually we're going to boil the frog what's your thought of how to adjudicate this or to execute on it Microsoft.
Microsoft has been bundling to bundling products to kill competitors for 40 years the 10 years that they didn't do it was the 10 years when Steve Balmer was in charge during which there was a legal document between Microsoft and the Justice Department a consent degree that prevented them from doing it that consent degree came to be because of this exact strategy and the most famous example that was the tail end of that process was the same as the last time.
The end of that process was when they used Internet Explorer and they bundled it with Microsoft windows and they killed Netscape right so there's umpteen examples of this.
So I think that they've gone back to their old playbook it's a playbook that you have to remember the executives that run Microsoft have been there for 30 and 40 years they know this play and they know that it works and they've been rewarded incredibly handsomely by the public markets so they're going to keep doing it.
Slack have sold the sales force now look I'm not complaining it was a 27 billion dollar acquisition but the question is if it were allowed to compete feature for feature.
Could it have beat teams possibly with the board have made now is on the board of slack a decision to have tried possibly but none of those options were on the table because when you see a product it doesn't matter how inferior it is get bundled in it's kind of DOA and then you know you're on a melting iceberg.
And so you have to make a very quick decision to preserve enterprise value so I think what this comes down to is the the FTC and the DOJ need to dust off that old consent decree read it and figure out whether this makes sense again it seems like folks in the EU.
Have more recently read that consent degree that make and regulators look what we said all along is at the right approach to antitrust is to stop anti competitive tactics bundling is at the top of the list instead what they've stopped is all.
And they stopped is all M and A which is actually bad for the ecosystem because you you deny risk capital or reward and you need that reward in order to induce the next stage of risk taking so again I think this was a good decision by the EU regulators and the competition authorities in the US should actually be looking to this again it's a better approach than stifling M and A.
So right on this we're so aligned if you look at I've been talking to a lot of LPs. And in talking to them they're looking at corporate credit and P and E deals because they can get a return on those and then they're looking at venture and they're saying hey why is there no M and A occurring where's our DPI can you guys sell some of these companies is like yeah we can't sell them because Lena Khan is going to the scuttle this M and A and what that means is in a very real way we have.
Dollars being taken out of innovation in early stage and being put into you know privatizing SaaS companies whatever real estate deals and this is really dangerous for America we really need more of this okay I'll make one last wrap on this.
Topic I'll take the other side of bundling I think ultimately if bundling benefits the consumer or the customer from improved prices I don't buy the antitrust arguments on a lot of these cases I don't think that you're keeping competitive solutions in the market if the benefit if the benefit of the lower cost product is actually there for the consumer the customer supermarkets for example do this right so there's a lot of products in the supermarket like peanut butter milk eggs.
That have historically been big loss leaders because they get people in the store once they get it.
I'm not pleased they're effectively peanut butter is not a monopoly monopoly the supermarkets that find a bundle commodities but when when a product is a monopoly and every
commodity has finite shelf lives right so you're talking about one week and teams is not a monopoly right I'm actually installing it Microsoft offices and the price is
versus you can't rip it up you can't rip other options you have options there's plenty of options and the other benefits that you can switch on the market power of course they do I can switch to
the state money but in the enterprise I don't have to buy it I don't have to buy enterprise licenses for office I can buy Google Docs.
I think that way. I don't think that way. Yeah I mean I've ever had to do Google's competing effectively in the office space against Microsoft.
You have to look as the do always competing effectively against teams like none of these businesses have a monopoly.
Yeah zoom I would I would argue is getting.
What's the monopolistic lock in the amazing thing about that is there's no switching cost there's no switching costs what.
I don't think we're debating that I think what we're debating is the sales practice where Microsoft says well you need office you need windows and you need 365 or sorry active directory well if you'd
like all of these things we're going to give you this product for free as well and they're going to be tightly integrated then when you go to slack you have to pay more and then you think to yourself well how do I go back to my CFO and say I need an extra one point two million dollars
here for this enterprise license to slack and then people say well you're saving money if you stick with Microsoft they're giving me because you want to kill slack they'll just raise the
bundle that's the point that's a theory and if that's true that should be prosecuted I don't think that the I see a lot under the Microsoft.
Yes that's for action yeah but that's the violating action that's my point that's the one why can't you just make Microsoft you have having a bundle should not be a
violating action no all Microsoft has to do is they've got a price of the bundle allocate that price across all the components of the bundle so people can buy each
product all a cart that's all they can still they can still sell a bundled offering if at the end of the day that some is cheaper than you buying the alternative all
a cart from third party vendors that is a great deal for you as a customer can be cheaper yeah but the point is here is proactively keeping competition and I think
that creates a good competitive dynamic but you know maybe I'm thinking too first principles on this I think you're missing something here
which is like what happens then when let's just say slack there wasn't a suit or for slack okay let's take the Internet browser example because I think it's better if you didn't have a multi hundred
billion dollar company prop up a product because they just felt like it i.e. Chrome and Google you would have had Microsoft run away with the core interface for the Internet we
don't know how that would have turned out so by luck we've had some mode of come of consumer choice but it's not as if Firefox did well Firefox went to basically irrelevancy
and that's what that's going to zero so there are examples where when Microsoft has done this they can starve the market of choice over long periods of time and I think if you hold on
hold on a second so if you're if you're if your whole point is well let's just bet on the large
of other large companies that's a bad bet but I will show you multiple counter examples Google meet does not dominate market share
you're talking about the largest you're talking about the largest of companies you're talking about competitive practices find me venture
funded people risk taking people who need a return on investment Google is the worst example they have the most indiscriminate forms of spending I'm not saying that they
shouldn't be allowed to just counter example to the point about bundling that's not a good example because we have Google wave or any of these other
nonsense products that didn't work I think I'm not calling Google me the point the point of a healthy product environment and market is not that one
incumbent and another incumbent can create their own crappy versions it's that you could theoretically have an open market where somebody can be funded with nominal amounts of capital and
compete effectively that isn't possible in many markets and software because of these kinds of strategies so what you're reduced to are these huge companies with this product sprawl I don't think those are good products and I think we're lying to
ourselves to say that they are Google meet is a terrible product okay so whatever they're competing with is a terrible alternative that's my point and they've lost market share they have not one market share by
bundling and if you try to find a real competitor to build an alternative to it they're not able to get funded because the venture investor says no I can't and that's the market power that
is a powerful competition that's what this is about and if you as an entrepreneur come up with a much better product than Google meet a VC will say wow we can go and blow up the
side of the hall of that ship I totally disagree with perfect I don't think there's a single person Microsoft bought Skype how many years ago for eight and
a half billion and the zoom checked if left unchecked and blue Microsoft will I mean zoom is a stand alone unbundled product and they totally dominated the market while everyone else has been doing
bundling the bottom line is if left unchecked you will see people abuse this it is not a big ass to have all our cart pricing and that will make the playing field yeah and also the
much more example is a terror the zoom example is a terrible one and and the reason is that PNL would have a whole blown on the side of it if they did not have 90% of
their R&D and opX in China so but for the grace of God and Eric strategic thinking they were able to survive but that is a perfect example of a company that
would absolutely not have existed had they not had a labor arbitrage that is not the basis of a competitive and fair market and you cannot expect people going off to all four corners of the
world and trying to do all these gymnastics to viably compete against the Microsoft and a Google I would argue that is not what do be a doby has a bundling solution they if
you guys have ever tried to sign up for a doby or end your subscription it's nearly impossible if they just had actually taken against them for
that they got these insane practices they make you buy everything to get access to one thing well they come along and
the thing that kills the market they come in and they're like we're better product better markets do win even with bundling that's my
I think the interesting thing with Adobe is that they have a product suite that's used in a narrow field I think what's
accessing is Adobe is about a sort of vertical system of record I think what the thing about Microsoft and you could
obviously about Google is but less so but definitely for Microsoft is they are these very horizontal broad amorphous systems of record that you
cannot easily replace there aren't people running around building nine of the nineteen things that Microsoft gives you in the
bundle that's the problem. Okay, well, for the more I mean on this very show we are arguing that the Figma acquisition should go through because
we created a new market for web designers whereas Photoshop was basically for graphics designers it doesn't compete with Photoshop it
compete to some of their other design programs but that's anyway all right we're not going to settle it here and there's a different
screen of bundle in a suite sweets are okay bundling when you already have them in opley in the relevant part of the
building is when you take a wrench and a can of peanut butter and put them together here you're going to take them both
like well I only need the wrench while you're going to take the peanut butter and they're like well I already have peanut butter so I don't need to buy new
peanut. I mean we saw this in the cable providers and direct TV as well you know just you can only works if you want to
for ESPN and if you don't like sports or listen another amazing episode for compassionate Chimoff satire sacks and the Frank
sacks wants to say one more thing I just have a perfect wrap up. Okay satire sacks go ahead what you're
going to take you with this here we go satire sacks. No let's put this tweet by Joe Biden president Biden. Oh God.
Is he elder abuse? No I want to I want to compliment Joe Biden on continuing to fight you keep fighting Joe
do not let the media get you down one bad night is not a reason to get out of the race. All these people
stabbing in the back they're basically ingrates and backstabbers you're doing just fine. All right and from
candid to the Democratic party discreet the odd your disgrace what you did to the American people with
this rope a dope is ridiculous. 20 discreet the odd 25th amendment get this guy out of office president
Kamala hot swap it Dean Phillips let's go we'll see you all next time on the all-in podcast. Love you
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