SpaceX-Cursor Deal, SaaS Debt Bomb, New Apple CEO, SPLC Indictment, Colon Cancer Spike

0:00 Jason, you are the unique person that is

0:02 at the intersection of both the and the SPLC files.

0:06 Do you have [laughter] a comment?

0:08 Do you have a comment, Jason?

0:10 in the SPLC files.

0:11 Yes, you are.

0:12 You're adjacent to the vice president.

0:14 You're adjacent and you're What does that mean?

0:16 In the Venn diagram

0:17 Thank you, though, for putting me in the crosshairs of all the losers.

0:20 He's got a got a really good way to select.

0:23 There's a reason why I'm carrying this, guys.

0:25 It's because people What the[ __] is going [laughter] on?

0:29 THERE'S A REASON WHY I CARRY a stiletto and a P35.

0:33 What the[ __] are you doing?

0:34 [laughter] There's a reason.

0:36 If you want to jump the fence, feel free.

0:41 [laughter]

0:40 J CAL IS READY.

0:50 [music] RAIN MAN DAVID SACKS WE open-sourced it to the fans

0:56 and they've [music] just gone crazy with it.

1:02 All right, everybody, welcome back to the greatest podcast in the universe,

1:07 episode 270 of the All-In podcast, your podcast host's favorite podcast.

1:12 With me again, your Sultan of Science, David Friedberg,

1:15 the dick tater, Chamath Palihapitiya, and yeah, the Rain Man is back.

1:22 Yeah, it's definitely David David Sacks.

1:24 He's definitely in DC with a with POTUS, yeah.

1:27 POTUS lets him drive in the driveway.

1:30 Uh Sacks, what's going on?

1:31 You you pushed back, you big-shotted the entire crew,

1:35 and pushed the show back an hour.

1:36 Simple text.

1:37 He's like, with POTUS.

1:39 Start Unbelievable.

1:41 Start later.

1:42 Okay, we'll just wait.

1:43 Okay, Daddy.

1:44 Look at him.

1:45 All right.

1:46 All right, big shot.

1:47 What's going on?

1:47 No, look.

1:48 I was in DC today and I was at the White House

1:52 and I just asked if the president had time and he made time.

1:56 And we had did have a little meeting and so we did push back the pod for that.

2:00 One thing I just want to say is just what a pleasure he is to deal with.

2:04 You know, when I read in the media,

2:07 they're always describing him in a certain way that you know,

2:10 he's yelling at people or he's moody or or something

2:12 like that and that's never ever been my experience with him.

2:15 He's always pleasant to be with.

2:17 He's always genial.

2:19 Super charming.

2:20 questions.

2:20 He's interested in the subject matter.

2:22 It's just a completely different portrayal.

2:24 I don't get where the media is coming from at all on this.

2:27 He's charming AF.

2:28 Totally.

2:29 Totally.

2:30 He's charming.

2:31 maybe if you double-crossed him, maybe.

2:32 I don't know.

2:33 But I've just never seen any evidence of of how they describe him at all.

2:37 And I think on our issues of AI,

2:39 I think we're really lucky that he's the president who's

2:42 in the White House when this AI revolution is happening.

2:45 I mean, doing alt history, Sachs, what would happen if Kamala Ding Dong was

2:48 in right now and we'd have like no data centers?

2:51 We'd have no data centers and they'd be using AI

2:53 to censor us and they'd be promoting DEI values through AI.

2:57 That was in the Biden executive order.

3:00 President Trump just wants the country to win and be

3:02 successful and he doesn't have these like doomer neuroses about it.

3:07 That's not to say we don't support any regulation at all,

3:11 but we should have specific solutions for specific problems as opposed to being

3:16 cowering in fear over this and just try to halt all progress.

3:20 And I think a really good example of that was his idea around data centers

3:22 where he said over a year ago before

3:24 data centers even became a hot political topic,

3:27 that we should let our AI companies stand

3:29 up their own power generation behind the meter.

3:31 And that's a much better approach than

3:33 the Bernie Sanders approach of just shutting everything down.

3:35 So, I don't know.

3:36 I think we're like very fortunate that he's the president

3:38 during this critical time in development of this technology.

3:41 And like I said, he's always been interested in it.

3:43 He talks a lot of business leaders.

3:45 I'm always actually very impressed with what he already knows.

3:48 He listens to like all the the guys

3:50 in the industry and he synthesizes what he hears.

3:53 I think he's very good at that.

3:54 He was talking about the Anthropic guys and he

3:55 was like these are brilliant guys and he was

3:57 like giving the flowers to them and how genius

4:00 they were and that they were working on a deal.

4:02 Any insights there about the relationship between the White House and Anthropic?

4:08 I thought what he said was very balanced and accurate.

4:11 Like you said, he said that they were very smart guys.

4:13 They do have a great product.

4:15 I've certainly acknowledged that.

4:17 He also said that they were very left-wing,

4:19 but that was something we could work through.

4:21 Hm.

4:21 Didn't have to [clears throat] be a deal killer.

4:23 He said they tried to tell the Pentagon what

4:25 to do which the Pentagon didn't like, but in any event,

4:27 I mean, look, he wants American companies to be successful

4:31 and he he I think genuinely really does like high IQ people.

4:35 I mean, he says it all the time and people think he's joking,

4:38 but I actually think it's like one of his core

4:39 convictions is he just really likes smart people.

4:42 He likes being around smart people.

4:44 Loyal people, smart people,

4:45 people who are good on camera seem to be the three circles and hey,

4:49 Sachs, you fall into two of the three.

4:50 [laughter] Uh all right.

4:52 I thought the audience would bring it that out.

4:54 Uh topic one, SpaceX has signed a huge deal with Cursor.

4:59 You know Cursor, that's the AI coding startup.

5:01 Really the the they define the category.

5:04 XAI and Cursor are building and collaborating on a new AI coding

5:08 model that would quote be the world's best coding and knowledge work AI.

5:13 Here's the deal as it's been explained.

5:16 SpaceX will either buy Cursor by the end of 2026 for $16 billion.

5:20 That's $10 billion more than they were rumored to be raising

5:23 at or they will pay Cursor $10 billion for their collaboration together.

5:29 Bloomberg says you can think of that $10 billion essentially as a breakup fee.

5:33 So, I think it's fait accompli that this deal is going to get done.

5:37 Cursor's run rate, $2 billion at the end of February.

5:40 This is a money-printing machine.

5:42 They expect to end 2026 with a $6 billion run rate.

5:46 They're going to triple it.

5:47 SpaceX projected revenue between 22 and 24 billion in 2026.

5:52 So this is quite a creative to the revenue story at SpaceX

5:56 at the IPO of SpaceX which is now targeting evaluation of 2 trillion.

6:01 Which would be trading at roughly 80 times top line revenue which is a you know,

6:06 people would say it's a high

6:07 valuation but also commensurate with the opportunity.

6:10 Cursor's valuation would be 30 x.

6:12 So this is a good deal I think for everybody at the end of the day.

6:15 Cursor started I think built off of Anthropic's LLM.

6:20 You could use any LLM previously on it but in March

6:23 Cursor released the second version of their proprietary model composer 2.

6:28 And here it is.

6:30 It's it's ranked pretty high right now.

6:31 It's between GPT-4 5.4 and Opus 4.6 as you can see on the screen.

6:37 The key part of the story here is that Elon has 550,000 GPUs in Colossus.

6:45 He's scaling up to 1 million and then of course he's going to bring it to space.

6:48 So if you believe that infrastructure matters and it's pretty clear it does,

6:53 this is incredible for Cursor who has been compute constrained.

6:57 So this is peanut butter and chocolate if you put these two together.

7:01 I predict that this is going to move SpaceXXX XAI

7:08 and Cursor to the front of the coding leaderboard within 12 months.

7:12 That's my prediction Chamath.

7:14 Shareholder in SpaceX via the acquisition of the Starlink

7:20 company that you were a backer of.

7:22 What are your thoughts?

7:22 The acquisition was essentially negotiated and the way that it's

7:26 structured is so that the S1 doesn't go stale.

7:29 So I think the way that it was announced has more to do with the fact

7:33 that they don't want to slow down and have to rewrite parts of the S1,

7:38 have to redo the disclosures, have to redo the risks.

7:42 and so I think what you're going to see is that this will get done.

7:46 In fact, the deal is effectively done.

7:48 Hm.

7:49 But what's so smart is that where is SpaceX today?

7:51 Let's call it a trillion.

7:55 Where could it be?

7:57 Just for the purpose of this argument, let's say two trillion.

8:00 So when the deal gets done on a stock for stock basis,

8:03 it's going to be if again, if it's 60 billion in tomorrow dollars,

8:09 effectively Elon's gotten a 50% and what has he bought?

8:12 He can issue a 60 billion dollars of stock at a two trillion dollar valuation

8:16 and get a model and a service that I think is extremely compelling in coding,

8:21 which is where we know all of the immediate and short-term revenue gains are.

8:26 It's also patterns that are hard fought

8:29 and are really valuable in reinforcement learning.

8:32 He gets all of that.

8:33 And then he gets a very cracked team, which, you know,

8:35 we've known for a while that the cursor team is absolutely excellent.

8:38 If you look at the Grok usage, it shows why he had this excess capacity.

8:44 There was a moment where Grok had a very

8:46 steep and very aggressive discount on their output tokens.

8:50 And in that moment, there was just

8:51 a lot of experimentation and usage and over time, that sort of went away.

8:58 So there was a lot of capacity and relatively low utilization,

9:03 I think, inside of Colossus that he was able to turn around,

9:06 jujitsu move the whole thing and basically acquire the most

9:09 interesting and valuable third-party wrapper service in AI right now.

9:14 So, and the fact is that they got it effectively,

9:16 I think, at this price for 30 billion.

9:19 So I think it was a really good deal, really smart deal.

9:21 Sacks, your thoughts if you want to unpack it a bit.

9:24 Under the framing, I think it's be interesting for you.

9:28 If we were sitting here three years ago,

9:30 the Biden administration didn't invite Elon to the EV summit and the SEC,

9:38 and other organizations, Delaware, they were explicitly involved in lawfare.

9:42 They were trying to put Elon in prison, and here we are,

9:44 the most important company in the history of the United States,

9:49 SpaceX AI and Tesla, now on the verge of just creating the greatest

9:55 products in the history of humanity between SpaceX,

9:59 clusters in space, and Optimus.

10:01 Your thoughts?

10:01 Well, you're right.

10:02 I do remember a press conference where Biden said we got to look at the sky.

10:05 And so, on the heels of that, the DOJ brought

10:08 a a lawsuit attacking the company for not hiring enough SpaceX asylum seekers.

10:13 Remember that?

10:14 SpaceX, which they can't under ITAR.

10:16 They couldn't, exactly, under ITAR.

10:18 Anyway, that's all ancient history, so let's let's put that behind us.

10:22 Look, I I agree with your guys' analysis on this.

10:25 I think these two companies are are very complementary.

10:28 Cursor, obviously, is very strong in coding.

10:32 That's what it brings to xAI.

10:34 xAI brings compute, and they bring a foundation model.

10:38 And the problem that Cursor had is that even though coding

10:42 is kind of like the white-hot area of AI right now, when it got started,

10:47 it was really competing against generalists

10:50 in the form of Open AI and Anthropic.

10:52 But now those generalists have decided to vertically

10:54 integrate in this area of coding, right?

10:56 And so, Cursor's now competing against Quad Code and Open AI's Codex.

11:01 And so, they were dependent on foundation model companies

11:04 that were getting in the business of competing with them,

11:06 which was just not like a place to be, right?

11:08 So now, they have this new alliance with a different foundation model company,

11:12 which also brings the compute.

11:14 Just makes a lot of sense,

11:15 and then they bring Cursor brings to xAI the training data,

11:20 a lot of enterprise clients, and the experience in coding.

11:25 And I think this will accelerate xAI in this area.

11:27 Sacks, you think they're going to dump Kimmy K2 .6?

11:32 Cuz I think Cursor Composer 2 uses the Moonshot model.

11:36 There's no reasonable way that Elon's going to pay

11:38 $60 billion and not run on top of Grok.

11:40 I got to think.

11:41 It seems like it.

11:42 Yeah.

11:42 Likely, but I don't know.

11:43 I think it might be tough depending on the the users.

11:46 One of the things that makes Cursor so good is wait.

11:48 Say Say more on that.

11:49 What do you mean?

11:50 So, I think that the different developers want to have choice in that sense.

11:54 There's a toggle.

11:55 So, one of the things that's really good about

11:57 Cursor is they've got this very well-built out IDE,

12:00 this application layer that puts them probably from a UX perspective,

12:05 meaning developers are using the tool above Codex,

12:09 above Claude, above anything else.

12:12 You can use a third-party IDE and integrate

12:16 the models or integrate whatever other third-party service you're using.

12:19 But, I would imagine that the developers are going to want to continue

12:23 to have at least some choice on what's actually writing the code for them.

12:26 The thing that people are waking up to in the last 120 days is

12:31 just how much of the value of AI is being realized by writing software.

12:37 And we've kind of got this wrapper term we call it agents.

12:41 But, agents are fundamentally just quickly spun up applications.

12:45 But, for all of them, as we're realizing very quickly,

12:47 you end up making too many agents.

12:49 They end up being super inefficient.

12:51 They need to be engineered.

12:52 And you still need to have a strong software

12:54 engineering capability and competency to fix all the agents,

12:57 to build all the harnesses, to make everything work well together.

13:00 And that's why having a strong developer environment,

13:03 a strong IDE, actually solves that biggest problem.

13:06 So, eventually all the enterprises that are getting hot

13:08 and heavy on agents are going to be like, "Whoa, wait a second.

13:11 We've actually got to fix how this is all being

13:13 done." As we saw this week in that story with Amazon,

13:15 where there's like a million agents being

13:17 spun up inside and everything's wasting resources,

13:19 redundant data creation, redundant data stores, redundant API calls, et cetera.

13:24 Tons of money being wasted.

13:26 So, you have to centralize still.

13:27 You have to have good software engineering talent that's

13:30 making good infrastructure and good use of these agents.

13:32 And that ultimately will require an integration of the AI

13:36 tooling with a standard software engineering front end,

13:39 which is the IDE that Cursor has.

13:41 So, I think that that's probably where everyone's waking up to the fact

13:44 that having the the software engineers may

13:48 end up winning you the arms race here.

13:50 And seems pretty smart for Elon to buy Cursor.

13:53 One other piece of it, you mentioned K me uh K 2.6.

13:56 Yeah, I mean, so I think that one

13:58 of the things that's going to become a priority over

13:59 the next several months is this idea of optimizing because

14:03 enterprises token bills are going through the roof right now.

14:07 I mean, this month over month they're spending increasingly large

14:11 amounts because their employees are just building more and more software,

14:15 but I'm not sure that anyone's been incentivized yet to be efficient about it.

14:18 And it really only makes sense to go to a frontier model for a frontier task,

14:23 but more mundane things can be done using

14:25 an open source model or less expensive model.

14:28 And I think like you're saying whether it's the IDE or something else,

14:31 there needs to be some sort of middleware

14:34 that determines which model you go to and how much

14:36 you're willing to spend and what the most efficient

14:38 way of getting the tokens is going to be.

14:41 I am deep in playing with XAI's suite

14:44 of products and I would predict we're going to be sitting here in 6 to 12 months

14:50 and they are going to be dramatically dramatically improved.

14:53 Let me just flag one other area that I think is maybe

14:56 the white-hot center within this red-hot

14:59 area of [snorts] coding, which is cyber.

15:02 And I think Mythos has kind of woken everybody up to the potential of frontier

15:08 models to be a weapon that can be used by either cyber offense or cyber defense.

15:15 Now, the issue with Mythos is that it's very large and expensive.

15:18 It's something like a 10 trillion parameter model.

15:21 And there's a lot of reports that Anthropic just

15:23 doesn't have enough compute to be able to serve it.

15:25 I'm not sure it was ever built to be a commercial model, to be honest,

15:28 because I just think it's so big and expensive, but I think what will happen is

15:33 these companies will start training dedicated cyber models.

15:36 Mhm.

15:36 Let's say Mythos comparable models, but with a lower token cost,

15:41 and I think there's a real race on right now to get those products to market,

15:46 because I think IT departments and CISOs are very

15:48 worried about the risk of hacks right now, AI-powered hackers.

15:53 So, this is something I think over the next 3-6 months will be,

15:57 again, this maybe the hottest part of the market.

16:00 Polymarket says all of this is fake,

16:03 uh complete SpaceX acquiring Cursor 74% chance,

16:07 SpaceX IPO by the end of August, 80% chance.

16:11 So, this is happening, folks.

16:13 All right, let's keep it moving.

16:15 I think that deal structure is smart, because, I mean,

16:17 to Chamath's point, yeah, it prevents the IPO process from being disrupted.

16:21 Also, it kind of gives a huge motivation to these Cursor

16:24 guys to bust their ass and make it work over the next, I don't know, 6 months.

16:27 Yeah, they have a $10 billion breakup fee,

16:29 but I'm sure they want the deal to be successful.

16:31 Well, the $10 billion breakup fee will go back to SpaceX anyways,

16:35 because if they actually run the compute and they're not owned by SpaceX,

16:38 they're going to have to pay for it.

16:39 That is not cheap.

16:40 I mean, we saw a bunch of these xAI

16:43 co-founders leave after the acquisition by SpaceX.

16:45 I don't know if that was the reason why, but you know,

16:48 all of a sudden they're sitting on SpaceX stock,

16:50 and they may have felt like they had it made, you know?

16:53 Well, it's actually always a problem.

16:55 It's always a problem with with M&A.

16:57 This Cursor thing came about pretty quickly, because Okay.

17:01 Let's just say friends of ours who were

17:03 supposed to wire into that round were like,

17:05 "Where's the wiring instructions?" It all just evaporated.

17:09 Here's a tweet from Elon.

17:10 We don't have to um speculate too much.

17:12 Here's Sachs.

17:14 He was very clear that uh xAI wasn't um built right the first time around.

17:19 The quote XAI was not built right first time around,

17:22 so is being rebuilt from the foundations up.

17:25 Same thing happened with Tesla, and uh that tweet is from about 5 weeks ago.

17:31 How crazy is it then when he tweets he gets 50.8 million views?

17:35 It takes the four of us 7 months to get 50.8

17:40 our collective It's unbelievable the distribution he has.

17:44 Well, also, how many CEOs would just fess up like that and say,

17:47 "Yeah, that we didn't do it right the first time,

17:48 and now we're rebuilding it." I mean, most of them are not willing to say that.

17:52 He's a magnet for talent.

17:53 He's a magnet for the right kind of talent,

17:55 and the SpaceX talent has his philosophy.

17:57 He inherited, I think, uh a lot of you know,

18:01 maybe uh people for XAI or for Twitter that were not in his mold,

18:06 and they're clearly getting aligned.

18:09 And it's also going to make his day-to-day life much easier when all

18:12 of these things are occurring in the same building with the same team.

18:15 The continuity of not having to task

18:16 switch between companies is going to be great.

18:19 We talked a little bit about the possibility of Tesla and SpaceX merging.

18:22 Even Walter Isaacson now is on the Tesla SpaceX merger train.

18:27 Mhm, there you go.

18:28 He just did a pod.

18:28 Everybody's confirmed it.

18:30 It's going to happen.

18:30 We called it here first.

18:32 Okay, topic two.

18:33 Is there a SaaS debt bomb in private equity?

18:37 Thoma Bravo, we had Orlando Bravo at the fourth All-In Summit uh last year,

18:43 is nearing a deal to hand its portfolio company Medallia over to its creditors.

18:49 This is a SaaS for customer experience company.

18:53 TB acquired them in 2021 for 6.4 billion all cash at the top of the market.

19:00 As part of the deal, they incurred 3 billion in debt, and for background,

19:05 in 2021, this company had 470 million in revenue growing 20% a year.

19:10 Earlier this month, Bloomberg reported that TB's

19:13 debt servicing cost for Medallia were about

19:17 to triple from a hundred million a year to three hundred million a year.

19:21 Blackstone and other firms refused to extend

19:24 a lifeline to the company to the SAS company.

19:27 So it looks like Thoma Bravo just handed

19:29 the keys back and wiped out 5.1 billion in equity.

19:33 Chamath, your thoughts?

19:34 We've been talking about the SAS headwinds for a bit.

19:36 You've been quite vocal about it.

19:38 Well, first of all, I think

19:39 Thoma Bravo is an unbelievably well-run organization.

19:43 Their returns are bonkers and Orlando is really, really, really good investor.

19:49 So, what do I think happened?

19:53 I suspect that they probably got enough of their equity,

19:57 if not all of their equity.

19:59 There's probably a decent chance that they did at least

20:01 one or two dividend recaps in the last five years.

20:05 And if I had to guess, I suspect that they are positive return.

20:10 It may not be the return that they would want.

20:12 And so turning the keys over becomes easier

20:14 cuz you have to remember in private equity,

20:17 the entire playbook is for transformations of assets

20:21 that are at some point not working.

20:24 Right?

20:25 It's very rarely that they're buying the same kinds

20:27 of businesses that the four of us would buy,

20:29 which is just sort of this, you know,

20:31 clean white sheet denovo grow at all costs kind of business.

20:34 So they have operating partners and all of these other

20:37 people waiting in the wings to un-fuck situations.

20:41 That's the whole playbook.

20:43 Mhm.

20:44 So to turn it over, I suspect means that there

20:46 is a core rot that people couldn't fix combined

20:51 with the fact that they have probably gotten enough

20:54 downside protection that it's not a huge thing for them.

20:57 Now, this is an issue for the bondholders and then that'll maybe flow through

21:01 to the borrowing cost that Thoma Bravo has to pay maybe for a a deal.

21:06 I don't know, but I doubt that they would just walk away from a business.

21:10 So, I suspect they probably got most of their money out.

21:12 I don't know if that's true.

21:13 There was someone that published some internal data showing

21:17 that the sales team was like 18% of target at Medallia.

21:22 You guys know what this company does?

21:23 Medallia?

21:24 Customer support is the general arena and customer experience.

21:28 customer experience management.

21:29 I don't know what I don't know what that means.

21:32 Yeah, they'll basically send like you go on Caribbean cruise ships and you

21:34 get a survey afterwards and then they use that survey data to provide

21:38 management insights and operational insights

21:40 to the leadership team and the operating

21:42 team on how to improve the quality of their product or their service.

21:45 So, it's sort of like this feedback surveying loop.

21:47 So, if I were to tell you guys, "Hey,

21:49 you want to build a feedback surveying loop to run your business better,

21:53 are you going to buy SaaS today or you going to ask your AI to spin

21:56 up an agent for you to do that?" And I think that's a big part of what's

21:59 happened is all these sorts of companies where

22:02 the alternative to buying a SaaS product is

22:05 to spin something up internally and it's much

22:07 cheaper and easier to spin it up internally.

22:09 You get a custom workflow.

22:10 I agree with that.

22:11 I'm just saying in the last 5 years you think

22:13 they sat on their hands and didn't take a dollar out?

22:16 They're not that dumb.

22:17 Maybe they took cash out, maybe they didn't, but there was still a big debt

22:19 overhang and the debt's clearly um gotten impaired,

22:22 which means the equity The debt holders

22:25 The debt holders are clearly screwed here.

22:27 Yeah.

22:27 The question is is Thoma Bravo screwed?

22:29 And I would say, if you sat around for 5 years, they're That's not their style.

22:32 They generate too much money.

22:34 They're too good.

22:35 So, they may have taken cash out and covered some of their their costs,

22:37 but the equity got fully impaired and then the debt is clearly impaired

22:40 cuz you can see how the debt and the uh CLOs are trading,

22:44 which indicates that this business is just not doing well.

22:47 And then someone else on Twitter posted some internal information

22:50 from Medallia saying the sales team is just not hitting their targets.

22:54 They're like way, way off their sales targets.

22:57 Which I think speaks to the underlying problem here.

22:59 Yes.

23:00 Which is that all of these that.

23:01 Yeah, yeah, please.

23:02 Yeah, so the underlying problem is that these businesses in the SaaS

23:05 space where you're driven by net new sales every year,

23:08 how many new customers are you signing up and then you're trying

23:11 to manage retention and you're trying

23:12 to increase sell-through and retain customers,

23:15 they're just having a really hard time sourcing

23:17 new customers and there's probably higher than model attrition.

23:19 That's right.

23:20 And when you have a very kind

23:21 of typically historically predictable business where you can say,

23:24 "Hey, I've got a net revenue retention of 118% or what have you,

23:28 meaning I'm I'm selling into my install base by 18% over

23:32 what I'm making last year and then I'm signing up new customers,

23:35 you can lever that business, right?

23:37 You can borrow money against those cash flows because it becomes predictable.

23:41 And what's happened in the last year in particular is agents

23:44 have become so good and so fast and so cheap that many

23:48 enterprises can simply spin up an alternative to a vertical SaaS

23:51 solution and that's crushing the sales team's ability to sell in.

23:54 That's who you're competing against.

23:56 Now, I want to make one point and just link this with something

23:58 else that happened this week and that's

24:00 Kevin Warsh's hearing for Fed Reserve chair.

24:03 Kevin Warsh went and talked a lot about the deflationary effect of AI.

24:08 And I actually think we all talked about the SaaS apocalypse as if it's

24:11 the sort of like isolated business phenomenon

24:14 where these SaaS companies are getting blown up.

24:16 I think another lens to look at what's going

24:18 on is the incredible deflation of how much it

24:22 costs to successfully run a business and you don't

24:25 have to pay a premium price for SaaS products anymore.

24:28 Meaning that that piece of the business can suddenly get much cheaper.

24:32 That AI is delivering on its deflationary promise.

24:36 I'll just say one thing about what Warsh said.

24:39 Warsh spoke a lot about the deflationary evolution promised by AI and that he

24:43 expects that it will drive productivity growth like we've never seen before.

24:47 But he said, "I don't know what that's going to do

24:48 to the job market that there may be a dislocation

24:51 between that productivity growth being realized and how the labor

24:55 markets are going to be able to respond to those things.

24:58 But fundamentally, he's saying that we're going to see economic deflation.

25:03 The problem with economic deflation is that when it occurs,

25:06 it means some business is seeing their revenue go down.

25:09 And if that segment of the economy is levered,

25:12 if they have debt sitting on top of that piece

25:14 of the economy where it's supposed to always always always grow,

25:17 like a SaaS company's top line is always supposed to grow,

25:20 suddenly that debt gets impaired.

25:21 And that can have an economic ripple effect that is adverse.

25:25 But what he's pointing out is that as a result of deflation,

25:28 because it's not coming from some cost cutting or economic contraction,

25:33 what he's saying is that the deflationary forces ultimately lead

25:35 to economic expansion because other parts of the economy will now grow.

25:40 So if I can suddenly cut, you know, call it 50% of my SaaS budget,

25:44 and I can reinvest that capital in other ways

25:46 of growing my business instead of managing my expenses,

25:49 all of a sudden my enterprise will grow and the economy will grow.

25:54 He also said, just as an aside,

25:56 and I want to make sure I cover this so so that we're really clear,

25:58 he said the way that we've been measuring inflation is wrong.

26:01 And that he doesn't agree with the way the Fed has been measuring inflation

26:04 because you can do a survey of any household and they'll tell you, "My god,

26:07 everything's so expensive." So all of the indices and[ __] that are being used

26:11 to calculate an inflation index is completely

26:13 misrepresenting what the average American is actually feeling.

26:16 And so he wants to rethink how the Fed

26:18 is addressing inflation from an interest rate perspective,

26:21 but he does think that the overall kind of economic picture

26:24 is one of deflationary pressure and productivity gains coming out of AI.

26:28 Sachs, I'll drop this off to you.

26:30 I think it's pretty clear what's happening here is

26:32 that the loss SaaS's loss is the token dealer's gain, right?

26:37 And startups are now, we always see that they're the tip of the spear.

26:41 They're writing their own tools.

26:42 They're making their own dashboards.

26:44 I see that every day.

26:46 And if you look at the SaaS product index, here it is.

26:49 Salesforce down 32% in the past 6 months.

26:53 Shout out to Bestie Benioff, best guest we've had on Sachs at the summit.

26:57 ServiceNow down 54%, Snowflake down 43%, Adobe down 33%,

27:02 Figma which had a huge IPO pop and is now down 67%.

27:08 So, what is the role of venture capital

27:11 and then private equity in addressing the software market?

27:15 Software was eating the world,

27:17 now tokens are eating the SaaS business and the software business, yeah?

27:21 Well, I'm of two minds about this.

27:23 I'm going to talk about the opportunity for private equity.

27:27 Let me just say backing up that historically

27:30 we only had two good exits for software businesses.

27:33 One was IPO, the other was M&A.

27:35 And then these big private equity shops came

27:37 along and gave us a third potential exit,

27:40 which is you would sell to them and then

27:42 they would raise the capital based on, I don't know, 1/3 equity and 2/3 debt.

27:46 So, it was debt-financed buyouts,

27:48 which is something that's been around in let's call it

27:50 the non-tech part of the economy for a long time,

27:53 but was a relatively new entrant into the world of technology.

27:57 And the reason for that is that if you're going to debt-finance a purchase,

27:59 you need to have very stable cash flows because if you miss if

28:03 your cash flows miss and you can't pay your interest on the debt,

28:07 then you're going to lose all

28:08 your equity because the debt holders will foreclose.

28:10 So, in order to do a debt financing of any kind,

28:13 you have to have very predictable cash flows.

28:15 And it was believed for a long time

28:17 that software did have those predictable cash flows,

28:20 at least for the mature businesses,

28:22 the ones that were at the stage where they could IPO as a potential alternative.

28:27 So, it was a very attractive thing.

28:29 I Like I said, I think it was great to have that third option.

28:31 I I'm of two minds about where the private equity business is today.

28:36 On the one hand, the pricing now has got to be super attractive for them.

28:41 I mean, we're seeing public SaaS companies that are

28:43 doing a billion of ARR with 20% rates,

28:48 80% gross margins, and they're trading at three times ARR.

28:53 You can buy a dollar for 50 cents.

28:56 So is that an opportunity Sachs you think

28:59 hit rock bottom you should do a roll up?

29:02 Well, on the one hand I do think that the pricing has never been

29:05 more attractive if you're a private equity shop looking at a business like that.

29:08 I mean those companies used to be valued at 13 times ARR now it's three.

29:12 I'm talking about like a category leader.

29:15 Now the downside of that Salesforce is off 9% today.

29:19 I don't know if you guys saw this but the market's

29:20 absolutely tanking today after the Medallia announcement came out.

29:25 Right.

29:26 Okay, so so that would be like you know I said I'm of two minds about it.

29:28 So I would be bullish for private equity

29:31 just based on pricing but the bearish part

29:33 is that in order for their business model

29:35 to work you have to have predictable cash flows.

29:37 You can't have a SAS company go from I don't

29:40 know 120% net dollar retention one quarter to 80% net dollar

29:45 retention six months or a year later because a big

29:48 part of their customer base is attrited to using tokens, right?

29:51 Or to basically creating some bespoke software.

29:54 You just said the absolute critical thing in all

29:56 of this which is you have to have predictable cash flows.

29:59 I think what happens is when you're a startup you typically

30:02 have to figure out how to disruptively price to enter the market.

30:06 So you're like, okay, if I deliver $10 of value I'm going to charge a dollar

30:10 and that's that's the normal playbook like a 10% ratio, right?

30:13 Of price to value.

30:15 The problem is when you start to stack venture capital

30:18 into it and you then you stack growth equity into it

30:21 what you're effectively creating in in the preference stack

30:25 of your company is that you are creating a higher return hurdle.

30:31 Right?

30:31 You got to clear 300 million, 500 million,

30:34 a billion of pref and then you have to return 15 or 20% on top of that.

30:38 So what do people do as they raise more money?

30:42 they increase price.

30:44 But the problem is at some point when you increase price,

30:48 you engender a ton of competition and you put a huge target on your back.

30:52 Private equity is the last stop because when you they come

30:55 in and they lay in billions and billions of dollars of not just equity,

31:00 but also debt and that has to then be completely predictable and paid back,

31:05 their only lever is to raise price.

31:07 They can never cut price to take share.

31:09 They don't they can't underwrite that to pay back their debt holders.

31:12 And so Sachs, part of the big problem here and why

31:15 nobody wants to touch these companies is that they are overpriced.

31:19 Yes, they're making a billion dollars of ARR,

31:21 but the unit cost has gotten out of control.

31:24 It used to be 10% of value.

31:26 It's probably now 30% of value

31:29 and everybody's looking at their contracts thinking,

31:31 well, when it comes time to our renewal,

31:34 I'm going to just cut this in half or I'm going to cut this by 2/3

31:37 or I'm going to cut this by 75% because the value isn't there anymore.

31:42 Or they can threaten to and negotiate a better deal.

31:45 And it becomes even worse because

31:46 the minute you make these products headless, right?

31:49 And you say, I'm just going to communicate

31:51 with these products via MCP and with agents,

31:54 you can't charge on a per seat basis.

31:56 What do you do then?

31:57 Free book doesn't need 50 seats of you know, work day.

32:01 He needs two seats because the agents act

32:05 as the way to write in and out of work day.

32:07 So he wants to pay for two seats, not 50.

32:09 And then if you multiply that by a million companies,

32:12 that's what gets us to this place where it just feels like a falling knife.

32:16 And I think it comes down to these unit costs.

32:18 The unit costs and the price to value of these products

32:21 are out of whack with what the market needs and wants.

32:25 And until they reset that or you find new products that can do it cheaper,

32:28 we're not going to get a cleansing and a clearing here.

32:31 Yeah, I think way, Salesforce today is down 9% 140 billion

32:35 enterprise value on 15 billion of free cash flow.

32:40 This thing is trading at less than 10 times free cash flow.

32:42 It's unbelievable.

32:44 I think it might be a bargain to be honest.

32:46 Yeah, it sounds like bargain hunting.

32:47 And what if Benioff, who's the king of acquisitions,

32:50 what if he just starts cleaning up He's a buying his own stock.

32:55 Yeah, and we didn't put this on the docket,

32:56 but did you guys see his kind of headless product announcement?

32:59 Yeah.

33:00 Do you see this?

33:00 It's It's actually very He's very smart.

33:03 Yeah, I mean he's very smart.

33:05 There's ways that that business can maneuver, right?

33:07 And I think they're pretty unique.

33:09 It may be that of all the businesses in the scape,

33:12 like that, you know, the ones that have that scale,

33:14 that have that multi-product platform,

33:17 that have a lot of your data, there's a lot of opportunity for them to you know,

33:21 maneuver their way into an evolution of the business.

33:24 one.

33:24 And cuz like if you look at it and you compare it,

33:27 for example, to other companies, I think the Workday response was to say,

33:30 you can't have an AI interact with us without paying some kind of like toll.

33:34 You're exactly right.

33:35 Whereas Benioff is the exact opposite, which is he's like, "Okay,

33:38 we're going to go headless for the whole thing." Which is really right.

33:41 You're exactly right.

33:41 I think that's that's going to be

33:42 the distinction of the winners here and the losers.

33:45 And are you on the wrong side of this?

33:46 The problem is that we have to figure out what is the bottom clearing price,

33:52 and that has nothing to do with business quality.

33:55 And so, is Salesforce a good buy at 10 times free cash flow?

33:59 Historical artifacts would tell us a screaming yes.

34:03 The problem is that if you cut everybody's cash

34:05 flows off at year five or six or seven, then all of a sudden,

34:09 I think you see the natural compression

34:11 to between three and five times free cash flow.

34:14 That's That's That's crazy.

34:16 That has nothing to do with business quality.

34:18 That just says you you literally mathematically take year seven

34:21 through N of the future and you discount it to zero.

34:25 And having free cash flow in a war chest gives massive optionality.

34:30 We've seen this with Salesforce, we've seen it with Apple,

34:32 we've seen it with Meta, with Google,

34:34 with Uber, just having massive free cash flow.

34:37 When you've got tens of billions of dollars,

34:39 you can put it to work and you can weather these storms.

34:42 J Cal, I think another another way to think about this is you know,

34:46 to the question about maneuverability and who has

34:48 the gumption to make the hard choices right now.

34:51 Yeah.

34:52 Look at Benioff.

34:52 He's the founder of the company.

34:55 He's run this thing since its founding decades ago.

34:58 He is willing to bet it all.

34:59 He's willing to make the change.

35:01 And it may be that the index you buy

35:03 in this era of AI transformation is the index of founders.

35:07 That the founders who are still running their businesses are going to be

35:09 the ones who are most likely to see They can burn the boats.

35:12 They'll burn the boats.

35:14 They can call code And all and all of the guys who have hired

35:17 managers to run the business are going

35:18 to do the things that Chamath's talking about,

35:19 which is trying to charge fees and try and maintain the old

35:21 way of doing things as opposed to reinvent for the new future.

35:25 If you look at the 10-Ks,

35:26 if we could figure out what the unit price cost and the trend

35:30 and the inflation is of a per seat license for these products,

35:34 I will point to the ones that are going to die first.

35:37 Chamath, two quick points.

35:38 So Yeah, wrap us up.

35:39 Yeah.

35:39 One is, yes, I would like fully endorse what what you said about Benioff.

35:42 He's made every previous wave work to his benefit, whether it was social,

35:47 whether it was mobile, whether it was big data, all that kind of stuff.

35:51 What are the odds he's going to make AI work to his benefit?

35:53 I'd say pretty good.

35:55 So, his stock might be a bargain right now.

35:57 So, that is me, point number one.

35:59 Just on I want to say just a quick thing about venture debt, which is look,

36:04 I think it's fine when private equity guys

36:05 use it cuz they know what they're doing,

36:06 but I've always hated when founders take on venture debt.

36:10 I know J Cal you agree with me.

36:12 Part of it is that founders forget that they have to pay it back.

36:14 They treat it like venture capital and they forget about that.

36:17 And then they get surprised.

36:18 But the other thing I've never liked about it is it makes you more fragile.

36:22 It basically subjects you to a bunch of business covenants and it makes it

36:26 harder for you to do an abrupt shift in your business because now you've

36:30 got a bank looking over your shoulder and they want to make sure they

36:33 get paid and they have to review your financials and all the rest of it.

36:36 And to your point, J.

36:37 Cal, the companies that have free cash flow right

36:39 now are the ones that have the most maneuverability.

36:42 I hate taking away maneuverability from founders and that is what

36:47 debt does because it subjects you to a fixed schedule of payments.

36:51 And so this is always a thing to remember,

36:53 whether you're a business or you're an individual,

36:57 you know, when you put on that debt,

36:58 it makes you more vulnerable to big disruptions in the market.

37:03 Yeah, it just you become incredibly brittle and founders who are listening,

37:07 when you get that in in peak markets, peak zero,

37:10 you're going to have venture debt people offer you

37:12 tons of cash and then the problem David and I

37:15 saw up close and personal in many different companies

37:17 where the founders would look at it as like,

37:19 "Oh, I'm extending my runway." Well, if you're a hot startup,

37:21 there's always more venture capital,

37:23 there's always more people who want to own equity.

37:25 The equity sale gives you optionality and you have more people on your team,

37:29 more people rooting for you and aligned with equity

37:33 interest as opposed to now you have a debt instrument,

37:36 they have a different goal,

37:38 they have different downside they're trying No bank wants

37:41 to be your last three to six months of runway.

37:43 Because that means that in a high percentage cases,

37:46 they're going to lose their money.

37:48 Yeah.

37:48 So, they're they're built to try to avoid that.

37:51 I've never seen venture debt work well to improve the quality of the business.

37:55 Never.

37:56 Never.

37:56 It doesn't only only ever seen venture debt crash

38:00 that damage companies and if you get the venture debt,

38:03 you can never actually use it.

38:05 So, the venture debt investors that ultimately make money,

38:08 it's because they put money in a company

38:09 and the company never actually used the money they gave them.

38:12 I hate this business.

38:13 I think venture debt's like the worst vulture-like business in Silicon Valley.

38:17 It's terrible.

38:17 And if if you get down if if the last money

38:20 in the bank is the debt you owe to the bank, they're going to rug you.

38:24 That's when you get rugged.

38:25 100% You think they can afford to lose 100% of their money

38:30 when they're getting an 8% return or something like that?

38:33 No way.

38:34 That's not how it works.

38:35 VCs can afford that because we have the opportunity

38:38 for a 10x or 100x or 1000x for that moonshot.

38:42 So we can accept a bunch of zeros.

38:43 The bank can't accept a bunch of zeros.

38:45 Well, and then when they when they do get scared

38:48 and when they do think they're going to lose their money,

38:50 wait till you see what they extract in terms of value, what they ask for.

38:54 They will ask they'll double the interest rate, they'll ask for warrants.

38:58 It's basically like being in debt in prison.

39:01 Chamath, you can talk a little bit about your experience when you were

39:05 [laughter] in debt in prison.

39:06 It's not going to be pleasant.

39:08 I've been in debt.

39:08 I mean, I've had a $420 million credit line.

39:13 And I had a moment where it was

39:15 reflexively kind of collapsing inward because the assets

39:18 that I was using to secure it shrank in value in a moment of market disruption.

39:24 I was scrambling and then at the same time there was

39:28 a risk It was the worst moment of my professional working life.

39:31 I had like a couple hundred million dollars sitting

39:33 at Credit Suisse and they were about to implode.

39:35 And so on a weekend,

39:36 I was trying to figure out whether my money was still there.

39:40 I had always had this rule,

39:41 don't have debt and then I violated it to try to run the number up.

39:45 I almost got run over.

39:47 I almost lost everything.

39:50 I will never do it again and if I ever do it again,

39:52 if you guys ever hear me do it again, please just come and punch me in the face.

39:56 Oh, we will.

39:57 We've been waiting for an excuse.

39:58 Can we punch you in the face for other things, too?

40:00 Buffett has this line about how smart guys go bankrupt is they take on debt.

40:06 Debt equals prison,[ __] Keep it in your mind, guys.

40:09 Unless you socialize the debt and then everyone thinks it's okay,

40:12 which is what we do with governments and that's the problem with governments.

40:16 He's going to start going off.

40:17 Yeah.

40:18 Don't push the button.

40:19 All right, listen.

40:19 We got to talk about TJ.

40:21 just just uh just a quick aside on that.

40:23 In the 1950s, all the corporations in America had pension plans where

40:27 you would get some guaranteed payout at the end when you retire.

40:30 And they were all like, "We're all going to go bankrupt because

40:31 a pension plan is either significantly overfunded or underfunded.

40:35 If it's underfunded, you're bankrupt.

40:36 If it's overfunded, you've wasted all this money,

40:38 you can't do anything with it." So, they all moved to 401(k)s and everything got

40:42 moved to defined contribution plans except except governments.

40:46 And that's because the government employees formed

40:48 government public employee unions and they're like,

40:51 "We want to keep the pension plans." And now the pension plans,

40:53 it turns out 70 years later,

40:55 are going to bankrupt all the governments in the United States.

40:57 That guy Spencer By the way, that guy Spencer Pratt who's running for mayor,

41:01 he started uncovering all of the salaries

41:04 of the union folks and their pensions in Southern California.

41:08 It's bonkers.

41:09 They're making four,

41:10 five hundred thousand dollars a year right before they go on pension.

41:13 Then they double their overtime and they get two thirds or a half.

41:17 The pension doesn't work.

41:18 You got to go superannuation fund.

41:19 I don't know how many times we've talked about it here,

41:21 but You you don't need an annuitization fund.

41:23 You just need a 401(k).

41:25 Like people have a have an account.

41:26 They got their money in their account.

41:27 Yeah, but it's just a way to force people to contribute to it.

41:30 So, a forced 401(k) is different than a 401(k).

41:33 You got to force people and it's you're not

41:34 allowed to force people into the 401(k), as you know.

41:37 As we've seen in California,

41:39 everything related to the government is a giant grift, is a giant scam.

41:43 There's tons of fraud going on.

41:45 Uh we've talked about the homeless industrial complex,

41:47 12 billion a year to homelessness, but the number of homeless keeps going up.

41:51 There's a million examples like that.

41:52 The racism industrial complex.

41:54 Yeah, maybe it's a good time to let's shift

41:56 to SPLC cuz I think it's a good example.

41:58 Well, we'll get to it.

41:59 We'll get to it.

41:59 Um yeah, but you know what's even better is you can just pass a law

42:02 like the Nick Sherly Act and you can put your fingers in your ear,

42:04 cover your eyes and say la la la la

42:05 la la and just pretend the fraud's not happening,

42:08 which is their reaction in California.

42:10 Uh hey, how much fraud has Nick uncovered so far in California?

42:14 Billions.

42:14 He should be a billionaire.

42:16 Where's his a billionaire.

42:18 You know, he should be doing it

42:19 privately and then getting the whistleblower awards.

42:21 I think that actually would be a better strategy for him.

42:24 We told him that was the We told him that business model, remember?

42:27 Yeah, no, he I think he's addicted to the views,

42:30 but I mean, he could literally raise money on

42:33 Well, he's making concept.

42:34 He's making thousands when he could be making billions to Bree Brooks' point.

42:37 No, he's Well, but it's better It's better

42:39 for the public that he's doing what he's doing.

42:42 Thank God for Nick Shirley.

42:43 Let's hear it for Nick whether you could be making more money or not,

42:45 what you're doing is And you know what he also did?

42:48 He shamed the mainstream media who's forgotten about investigative journalism,

42:52 who forgot the ability to knock on a door and just ask a basic question.

42:57 And now Bari Weiss with CBS has deputized one of her reporters

43:02 and she's doing the exact same playbook and meeting him punch for punch.

43:07 Where's CNN?

43:08 Anderson Cooper should have a Nick Shirley on his team.

43:10 The New York Times should have a Nick Shirley.

43:12 The LA Times should have a Nick Shirley.

43:14 Why don't they?

43:15 Because you're You're talking You're talking about old media that does things

43:19 one way and the point about Nick Shirley is it's new media.

43:22 It's citizen journalism.

43:23 It's people on the street distributing fact-finding,

43:26 distributing information gathering and old media

43:28 in order to survive became an opinion organization.

43:30 Didn't the media used to care that the Pentagon

43:33 was paying $900 for a hammer or what have you?

43:35 I mean, like 60 Minutes used to do things.

43:37 Now, it's like the media just wants to protect the waste,

43:41 fraud, and abuse no matter how egregious it is.

43:45 Remember, I mean, Remember that guy, Dennis Kozlowski, the CEO of Tyco,

43:49 who went to jail and they like had it just

43:51 a field day because he had He had umbrella stand.

43:54 He had like a $6,000 umbrella stand.

43:57 Made out of like ivory from like [laughter] a rhino elephant.

44:01 I know you bought that at auction, didn't you, Jim Cramer?

44:03 Sachs, you're so right.

44:04 People really used to care except when it was their team.

44:08 And then the minute that it was their team, they're like, "Oh, no, no,

44:10 no, let's just look the other way." It was a If it's a CEO,

44:13 if a CEO basically engages in some misbehavior,

44:15 and I'm not defending it, the press will be all over that.

44:18 But when the government does it, they don't do anything.

44:21 And in fact, we had one of the most successful,

44:24 probably the most successful entrepreneur of our generation

44:27 donating his time to the government to find waste,

44:31 and the media basically drove him out of that.

44:34 They vilified him and drove him out.

44:35 Yeah, they made it untenable.

44:36 Well, this is whoever comes up with a way to eliminate waste, fraud, and abuse,

44:41 like Dodge did, and they productize

44:43 that and make them that make that their platform,

44:45 that's the way to win in 2028 and going forward is

44:49 to convince the public that they don't need to have their taxes raised,

44:53 they could have their taxes reduced just by eliminating

44:56 the minimum of 20 or 30% of waste, fraud, and abuse there is in the system.

45:02 Uh we'll get to Tim Cook stepping down in just a moment,

45:04 but I want to remind everybody liquidity sold out.

45:08 I'm sorry, we added a couple of tickets.

45:09 We we we burned through them immediately.

45:11 But you can still get into the All-In Summit.

45:13 This is our fifth edition in Los Angeles, September 13th, 14th, and 15th.

45:18 allin.com/events to apply.

45:20 Please apply, and then don't come to us 60 days out and say,

45:24 "I didn't get a ticket.

45:25 I'm a bestie, get me in." Just buy your damn ticket and don't get left out.

45:29 I have a liquidity announcement.

45:31 Oh, yum, yum.

45:31 We are going to do one political panel.

45:35 Okay.

45:36 And it's going to be Dave McCormick and John Fetterman,

45:40 the two sitting senators from Pennsylvania,

45:44 on stage with us talking about all topics from a left and right perspective.

45:49 Amazing.

45:50 So, Fetterman's coming, which means the dress code is now sandals,

45:55 uh shorts, and a t-shirt.

45:56 That's great.

45:57 Construction sheet.

45:58 Get your Timberlands on.

45:59 [laughter] I mean, is he really going to show up looking like a hobo?

46:05 I love his hobo style.

46:06 It's great.

46:07 McCormick's very fit and handsome.

46:08 So, like he he'll balance him out.

46:10 So, I think That's what we should program it as.

46:12 Like, he should wear his best Brioni suit versus the Old Navy from Bettermint.

46:18 Who [laughter] wore it better?

46:19 All right, listen.

46:20 Just rapid fire here on the Tim Cook resignation and moving on.

46:25 This guy, John Ternus, is a 25-year vet.

46:29 He did lots of hardware, worked on iPad, AirPods,

46:33 and he was the favorite on Polymarket since day one.

46:37 He's a bold decision-maker, according to reports.

46:40 And unlike Tim Cook Cook, Tim Cook did a great job of squeezing

46:44 every last nickel out of Steve Jobs' product line, which lasted for a decade.

46:49 iPhone, Apple TV, Watch, I don't have to need to repeat them.

46:52 But, here we are.

46:53 We got a product person in the seat, which is what we all know they needed.

46:58 Because, hey, these tools are getting a little bit stale.

47:01 Siri, disgraziad.

47:03 AirPods, disgraziad.

47:04 The whole system is not built on innovation anymore.

47:08 It's built, Freeberg, I think you would agree,

47:11 on just bringing more profits, more profits.

47:15 What's your hope here?

47:16 Because, man, they missed so many great swings at bat.

47:19 They didn't get the Oculus, you know, Ray-Bans that Meta did.

47:24 They canceled their self-driving car.

47:25 What would you hope that this new CEO of Apple focuses on, Freeberg,

47:30 in terms of innovation?

47:31 They don't have a problem selling phones still.

47:33 They don't have a problem selling laptops and making a ton of money.

47:36 But, if you were in the seat, if you were on the board of Apple,

47:38 which wouldn't be a bad idea for them, if I'm being honest,

47:40 what would you tell the new CEO to focus on, David Freeberg?

47:44 I mean, I don't know.

47:45 The software layer of the future is not the software layer of the past.

47:48 So, Okay.

47:50 It's pretty obvious.

47:51 I don't know if how much there is to talk about,

47:53 but you just need the Siri equivalent that's ubiquitous in all of your devices,

47:57 knows who you are, personalized to you,

47:59 sees your email, sees your calendar entries,

48:02 knows what kind of music you like, has connection to your home.

48:05 Basically, build that AI layer for your life.

48:08 And make it ubiquitous in all of your Apple devices,

48:10 that no matter what device you're using, it knows who you are,

48:13 you can engage with it using kind of a natural language method.

48:16 And it's, you know, it's it's pretty obvious.

48:19 Yeah.

48:20 They should buy WhisperFlow, yeah.

48:21 I mean, that would be

48:22 I don't know how they're I don't know how they're running the business,

48:24 but Well, they're running it for profits, obviously, Sachs.

48:27 I would say buy WhisperFlow and just replace the Siri

48:30 team with that, because Siri's been just The fact

48:32 that Siri can't spell Polyhymnia or Calacanis after 20 years

48:36 of us giving them $20,000 for iPhones is just disgraceful.

48:40 Sachs, if you were on the board of Apple, again,

48:43 not a bad idea, what would be your hope for the company?

48:46 What would be your sage advice for the new CEO?

48:50 Well, I mean, everybody is going to be asking the same question,

48:53 which is what are you going to do about AI?

48:55 I don't know that they needed to be on the bleeding edge of it,

48:58 but they are going to need an answer at some point,

49:00 and Siri's going to need to be AI-empowered.

49:02 Probably the way it should work is that you get to choose your model.

49:06 I mean, I don't know that they need to pick just one model provider.

49:09 It could be a setting, where you go in and you set up your account

49:12 with whatever ChatGPT or Grok or Claude or what have you,

49:16 and you can choose your own model provider,

49:18 and then you'll have more customization

49:20 and more ability to control your your storage.

49:24 Let me just say this on Tim Cook's retirement,

49:28 he had an incredible run as CEO of of Apple.

49:31 I mean, he ran it very effectively for 15 years.

49:34 The market cap of the company went up by over 10x,

49:37 the revenue grew from roughly 100 billion a year to over 400 billion a year.

49:42 He also improved the quality of revenue by moving the mix into services,

49:47 Yeah, that's probably why it got which is why it got a higher valuation.

49:51 And, you know, people say that well,

49:53 they never did any innovation under Tim Cook,

49:55 but you know, I've seen people tweet

49:57 list of products that were released under him.

49:59 And there were a lot of them.

50:01 Now, it's true, nothing as big as the iPhone,

50:04 but they did release a lot of products under Tim Cook.

50:06 And then just finally, I mean,

50:08 you you look back over the last 15 years and there

50:11 really weren't any public snafus or scandals or embroglios with with Apple.

50:18 It's one of the few tech brands that is still,

50:21 I think, beloved by the population.

50:23 I think a major part of that was Tim Cook's dedication to privacy and keeping

50:28 the company on the right side of that, which I think users do appreciate.

50:32 And, you know, he even Tim Cook even got praise from the president.

50:36 I think it was just unsolicited where the president talked

50:39 about how Tim Cook didn't call him up that often,

50:41 but when he did, it was something important

50:43 and therefore the president tried to help them out.

50:46 Seems like he nurtured a good relationship

50:48 with the president over over the last decade or so.

50:50 So, you just have to say that he navigated what could have

50:53 been a turbulent period with a great deal of grace and aplomb.

50:58 Clearly, Chamath, he was a great steward of the brand,

51:02 even though that list of products were all developed

51:07 under Steve Jobs and they were just executed well,

51:10 but he didn't bring in a lot of new products or services.

51:14 Any final take Actually, Chamath, can I kindly ask you a question?

51:16 What do you think other than AI, you know, AI-powered Siri, let's say.

51:22 What do you think he missed?

51:24 I mean, what should Apple have done that they didn't do?

51:27 They would have out by now a pair of glasses

51:31 that weren't 17 lb like the Apple Vision Pro.

51:34 They would have gotten glasses that pair perfectly with your phone,

51:38 take videos for kids, and they're coming out with it.

51:40 It's just on a really broken timeline.

51:42 They would have had a killer Siri.

51:45 They would have had a search engine-ish Perplexity-like product.

51:49 They would have had a self-driving car.

51:50 When you went to the Apple Store,

51:52 you would have been buying two or three very important products:

51:55 glasses, a car, and probably a television set.

51:59 If you look at actually what they did innovative under Tim Cook,

52:02 I think that they have great taste

52:04 and Apple TV produced a lot of great programming.

52:07 I He was working on a television set, not Apple TV clunked onto the back.

52:12 I think those three products would have been four products:

52:15 Siri, glasses, car, television set.

52:18 Those would have been extraordinary.

52:19 And who knows what he would have come up with?

52:21 When they lost Jony Ive, and obviously Steve Jobs passed away,

52:24 they lost the soul of the company.

52:26 They lost the innovative, groundbreaking soul of the company,

52:30 and they just went into profit and iteration mode.

52:34 But no acquisitions of note,

52:37 nothing important was acquired, and nothing important was released.

52:41 Vision Pro, you can give them like maybe

52:43 that's like the sixth best product or something,

52:46 but it obviously hasn't hit the mainstream.

52:48 Chamath, any final thoughts from you?

52:49 Yeah, I have um three specific things to say.

52:54 The first is that he had honestly like an impossible job.

52:58 It's sort of like you play basketball with Michael

53:03 Jordan and then you're asked to be Michael Jordan.

53:06 And I think that that's an impossible task.

53:08 And on that dimension, I think he has done just an incredible job.

53:12 He has been an incredible steward of the business.

53:15 Sachs is right, no major snafus.

53:18 I think he did a really smart thing around doubling down on privacy.

53:23 And just as a practical matter of being a great CEO,

53:27 like if you I think you can categorize CEOs in two buckets.

53:30 One is the innovator, the person that's pushing the envelope,

53:35 and then the second is just a great steward.

53:39 He's at the top of the top of that second category.

53:42 Um I sent you couple of charts to to show this and he

53:46 found a lane that allowed him to separate himself from Steve Jobs.

53:51 So, you know, as an example, like what does it mean to be a steward?

53:55 Well, when you're a steward, you're allocating resources and the two most

53:58 important resources you control is capital and people.

54:03 And I think on that dimension, what Tim did,

54:06 if you just look at this, is he was able to invest appropriately in R&D.

54:10 They completely divested their need of Intel.

54:15 They spun their entire new line of silicon.

54:18 That silicon, it turns out, and this will be important in the future,

54:21 is very useful in AI with all of this open claw stuff and you know,

54:26 some of you guys are completely addicted to it.

54:29 And they've kept the acquisitions light.

54:30 So, he was very capital efficient.

54:32 If you look at the the next chart,

54:35 what's so interesting is like it is the exact opposite of what Steve Jobs did.

54:39 Look at the amount of money that Steve

54:41 Jobs returned to shareholders in his tenure at Apple.

54:43 It's easy to count.

54:44 It was zero.

54:46 He loved to to keep that money on the balance sheet and he probably,

54:50 or maybe, I'm guessing, would have directed that at some huge shot on goal.

54:54 In the Tim Cook era, it was very different.

54:57 He shrank the share count by almost 50%.

54:59 I think it's like 44%.

55:00 That's insane.

55:01 Is there any corollary to that, Chamath?

55:04 No, he's he's been a prolific shareholder friendly CEO,

55:09 finding ways to give us money back,

55:11 which I think everyone who's owned the stock has very deeply appreciated.

55:15 The last thing I'll say though is what is the future

55:18 for John Turnus and I think it's in this final chart.

55:20 We talked about the problematic nature of increasing per unit pricing in SaaS.

55:29 And what I would say is if you look at the iPhone,

55:33 the unit price has gone up and people would say,

55:35 "Yes, but the capabilities have gone up in turn, and I acknowledge that.

55:40 But the problem with the per unit pricing being as high

55:43 as it is is what Freeburg says is going to happen.

55:46 AI rips open the canvas of the devices

55:50 that we will use to interact with information and knowledge.

55:54 We are going to live in a much more heterogeneous world in the future.

55:58 It's not going to be two devices and two

56:00 different operating systems that get you to knowledge.

56:04 There's going to be all kinds of stuff.

56:05 Pens, orbs, who knows, Jason?

56:08 Your glasses, whatever.

56:10 And so, the problem is if you get too addicted to a single thing

56:14 that has an incredibly juicy profit margin

56:18 and great stickiness and the ability to raise price,

56:22 it's a hard drug to get off of.

56:24 So, I think really what John Turnus has to do is figure out how

56:28 to move to this world where everybody will

56:31 be launching umpteen devices via MCP or otherwise,

56:36 all of these services will be open.

56:39 It'll be agentically talking to everything.

56:41 I think the most decay.

56:44 And I think if that happens,

56:45 that's problematic if you're too reliant on a single

56:49 thing to kind of keep it going.

56:50 Yeah, and just expanding on what you said,

56:52 like wearables is where they really uh made some

56:56 good inroads in terms of getting people to use them,

56:59 whether it's AirPods or the watch.

57:01 And the next wearable, like this is an applaud pin that I use to record.

57:04 You can put it here, put it on your wrist.

57:06 That AI synchronicity of having your eyes, having your ears, having your watch,

57:12 having your phone, your desktop all sync together

57:15 with AI could be a huge product line.

57:18 I'll also add a fifth, robotics.

57:20 You know, the I think to I think Steve Jobs, if he were alive today,

57:24 would have been looking at Roomba,

57:25 he would have been looking at Optimus, and he would have said, "Hmm,

57:29 [clears throat] consumer robotics in addition to a consumer car,

57:32 those are two things I think he would

57:34 have absolutely uh executed on at a high level.

57:38 Okay, let's keep moving here.

57:40 Just comment comment one last point.

57:41 Chamath, we'd love to have you on the pod, John.

57:43 So, just come on the pod when you're ready.

57:44 Uh we'll have you come sit in.

57:46 Go ahead, Sach.

57:46 You get the final word.

57:47 This one last point on this is that I think the succession

57:51 at Apple is reminiscent a little bit of the succession at Disney.

57:56 And apparently Steve Jobs and Tim Cook had this conversation

58:00 back when Steve was alive and and Steve told Tim,

58:04 "Don't do what Disney did." Where basically after Walt Disney died,

58:07 the company kind of languished because it felt so

58:11 beholden to Walt's vision that they never really iterated.

58:15 Now, when Walt died,

58:17 his brother Roy took over and Roy was already in the business.

58:20 He was sort of like the business co-founder.

58:22 He was a COO type, a little bit like Tim Cook.

58:25 And he kept the magic going for about 5 years and then he himself died.

58:28 I think it was around 1971.

58:30 And then you had this string of CEOs who took over were kind of uninspired

58:33 and it wasn't until Eisner came in in 1984

58:36 that he sort of revitalized the business.

58:39 And so, as I understand it, Steve and Tim had this conversation.

58:43 And Steve told him, "Don't be too beholden to my vision.

58:45 You need to figure out your own and extend it." I think that, you know,

58:49 you could argue that Tim in a way was like the Roy figure here.

58:54 Very effective business partner of Steve.

58:58 He got a 15-year run.

59:00 Roy only got five and I think again,

59:02 he added a zero to the value of the company.

59:06 The market cap went up over 10x.

59:08 So, you have to say fantastically successful run as CEO.

59:13 I think the question now for John Turnus is, "Okay,

59:15 you're now past let's say the the Walt

59:18 Disney and Roy Disney part of the business.

59:20 Is it going to be like the 1970s Disney

59:23 or is it going to be more like the 1980s?

59:25 Do you figure out a way to revitalize it or do

59:28 you have to go through uh you kind of a funk first?

59:31 Mhm.

59:32 Yeah, and if I I think it's like

59:34 really illustrative of this discussion, Eisner and Iger.

59:38 Cuz Eisner's innovation was he realized that Disney

59:42 was I think he called it the vault strategy.

59:45 He would and we probably remember this from our childhoods,

59:48 he would re-release all into theaters all of their IP every 7 years.

59:53 You couldn't get some of those Bambis, whatever.

59:57 Snow White and the Seven Dwarfs,

59:58 you couldn't get those products except in theaters

1:00:00 and he figured out a cadence to keep publishing.

1:00:03 But then Iger came in and said, "Hey, what if we use this balance sheet and we

1:00:07 use this distribution at the parks and you know,

1:00:10 with their brand to buy Pixar, Marvel, and Star Wars.

1:00:15 And so there's multiple ways to do it.

1:00:18 There might be something there in terms of acquisitions,

1:00:20 bold acquisitions with the Apple balance sheet.

1:00:24 Could be super accretive to shareholders as opposed to lowering

1:00:28 share count and just distributing a ton of cash.

1:00:31 All right, listen, we're going to talk

1:00:33 about the Southern Poverty Law Center racism corner.

1:00:36 Let's go to race Fake fake racism corner.

1:00:39 I want to know how the SPLC managed

1:00:42 to accumulate 822 million dollars in offshore bank accounts.

1:00:46 Yeah.

1:00:47 This is incredible.

1:00:48 These are big numbers.

1:00:48 Okay, SPLC How was that possible?

1:00:51 What is going on?

1:00:52 All right, let me tee it up here for the team.

1:00:54 It's like one of the biggest grifts of all time.

1:00:56 Anyway, Jake has to do it.

1:00:57 This is a big one.

1:00:57 SPLC has been indicted indicted, not found guilty yet,

1:01:02 on 11 counts of wire fraud and money laundering.

1:01:04 Keep that in the back of your head, wire fraud and money laundering.

1:01:07 Here's the core allegation.

1:01:09 Between 2014 and 2023, the Southern Poverty Law Center used hidden bank accounts

1:01:14 to funnel 3 million in donor money to paid informants.

1:01:18 Like these are confidential informants like the police or FBI might use.

1:01:23 They use these as a non-profit NGO to infiltrate hate groups.

1:01:29 And so, the official mission of the SPLC is, quote,

1:01:33 to be a catalyst for racial justice in the South and beyond,

1:01:37 working in partnership with communities to dismantle white supremacy,

1:01:40 strengthen intersectional movements, and advance the human rights of all people.

1:01:45 Okay, sounds great on paper.

1:01:46 Examples of organizations they were trying

1:01:49 to infiltrate great KKK Aryan Nation neo-Nazi groups,

1:01:52 and the Unite the Right organizers.

1:01:55 Proud Boys, labeled as a hate group by the SPLC.

1:01:58 Oath Keepers, not listed as a hate group, but part of the militia movement.

1:02:02 My friend Sam Harris, he was not listed as a hate group,

1:02:05 but he was also pinned by the SPLC as, like,

1:02:09 hate adjacent in their Hate Watch headlines.

1:02:12 And this is something that I had

1:02:13 a major problem with this organization on, which is

1:02:15 they would just very loosely label people

1:02:18 as hate speech and try to get them canceled.

1:02:21 All of this kind of came to a head.

1:02:24 The revenue before Charlottesville,

1:02:26 you remember the incorrectly clipped Charlottesville hoax,

1:02:29 where they said Trump said both good people on both sides,

1:02:32 but they didn't give his full quote.

1:02:34 Very unfair to President Trump.

1:02:36 We found out later.

1:02:37 And that was the reason Biden of course ran.

1:02:40 He said the Charlottesville both sides thing was his inspiration.

1:02:43 58 million in 2026, to your point, Chamath.

1:02:46 Doubled and spiked to 136 million, more than double.

1:02:50 And it's remained elevated ever since.

1:02:51 Here are some, you know, images.

1:02:54 For the indictment, I'll wrap on this and then get everybody's feedback.

1:02:58 They had F-37 as one of their confidential informants.

1:03:03 He was a member, and this is according to the indictment, quote,

1:03:06 member of the online leadership chat group that planned

1:03:10 the 2017 Unite the Right event in Charlottesville,

1:03:13 Virginia, and attended the event at the direction of the SPLC.

1:03:19 F37B racist postings under the supervision of the SPLC and helped

1:03:23 coordinate transportation to the event

1:03:25 for several attendees between 2015 and 2023.

1:03:28 The SPLC secretly paid F37 more than $270,000.

1:03:33 That's the legal case here.

1:03:35 Let me pause there.

1:03:36 Can I add one thing?

1:03:37 Sure, keep adding.

1:03:38 There's a lot of detail to this case.

1:03:39 Yeah.

1:03:39 Yeah, so you're right that the SPLC

1:03:41 allegedly did fund $270,000 to help plan Charlottesville.

1:03:46 In addition to that, they secretly funneled more than $3 million

1:03:50 to to a bunch of violent racist extremist groups including the Ku Klux Klan,

1:03:57 the American Nazi Party, Aryan Nation,

1:04:01 United Klans of America, and it goes on from there.

1:04:04 So, I think don't forget about the $3 million bucks.

1:04:06 So, this group that was supposed to be fighting racism

1:04:09 in fact was fomenting racism by paying these groups to basically

1:04:15 organize protests that SPLC could then point to and say

1:04:20 that America has a huge racism problem, donate to us.

1:04:23 And that's basically what happened after Charlottesville.

1:04:25 They increased the amount of money that they

1:04:28 were able to fundraise by $81 million.

1:04:30 So, that $270,000 investment led to an $81 million return, pretty good.

1:04:36 But this is kind of the whole point of the story

1:04:38 is that these guys are basically running a grift.

1:04:40 And one of the ways that you know this is

1:04:42 a a grift is because according to the indictment,

1:04:46 that they opened bank accounts under fictitious entities to conceal

1:04:51 the payments that they were making from their own donors.

1:04:55 Because if their donors knew that they were funding the KKK,

1:05:00 they wouldn't be getting all these contributions

1:05:02 from Hollywood celebrities and all the rest of it.

1:05:05 So, it's really just this unbelievable story.

1:05:09 Under Uh it It the mind.

1:05:11 And just to clean up a little bit there, these are allegations.

1:05:14 They haven't made the jump from planning these events

1:05:16 and the SPLC claims they were not planning these things, they were monitoring.

1:05:23 So, that's going to be their argument on the side.

1:05:25 I'm not saying I agree with that.

1:05:26 I know.

1:05:26 I know.

1:05:26 You're You're You're right that the SPLC's cover

1:05:29 story is that they were simply paying informants.

1:05:32 That's what they've claimed.

1:05:34 But, there's two problems with that story.

1:05:36 Number one is they were paying the actual leaders of these groups,

1:05:40 not just sort of moles who were infiltrating the groups.

1:05:43 And second, these leaders, they weren't paid to inform,

1:05:47 they were paid to foment the activities.

1:05:49 So, I'm just saying that's the the flaw.

1:05:52 I understand they have this cover story that they were just paying informants.

1:05:55 I'm just saying in my view, that does not hold up.

1:05:58 And again, if they were just paying informants,

1:06:00 why the extraordinary efforts to conceal the payments from their own donors?

1:06:04 If they were proud of these efforts to infiltrate these groups,

1:06:07 they should have basically informed their donors what they were doing.

1:06:10 In fact, they hid it.

1:06:12 And well, here's the reason uh that it was hidden, according to them.

1:06:15 Again, I'm not taking the side.

1:06:17 SPLC is not an organization I'm endorsing in any way.

1:06:21 Their version of this is we didn't plan any of this.

1:06:24 If we put SPLC bank accounts together for informants,

1:06:29 that would be like the FBI sending a check to an informant from an FBI account.

1:06:33 That's their explanation of it.

1:06:34 They're not a law enforcement agency.

1:06:36 Well, that's actually the question I had about all this is like,

1:06:39 what is a nonprofit doing hiring confidential informants,

1:06:42 Chamath, to infiltrate these organizations?

1:06:45 To what end?

1:06:46 And then if you show me an incentive,

1:06:47 you're going to you're going to see an outcome.

1:06:49 And the outcome here is, "Hey,

1:06:50 we'll get more donations if there's more racism." Uh your thoughts,

1:06:54 just generally speaking here, Chamath.

1:06:56 Again, all of this is alleged.

1:06:58 These NGOs have completely run amok.

1:07:01 They're cause-playing as these overlords and power brokers in our lives,

1:07:06 and it needs to get stopped.

1:07:08 They should all be dismantled.

1:07:10 The people that donated to the SPLC should sue them.

1:07:13 Rip open all of the documentation, get their money back.

1:07:17 Because just so you guys know,

1:07:18 if you are listening or watching and you have donated,

1:07:21 there's $822 million of your money sitting in an offshore

1:07:25 bank account waiting for you to get it back.

1:07:28 Okay?

1:07:28 And then separately,

1:07:29 if you are thinking of donating to any of these organizations in the future,

1:07:33 unless there is a full transparent auditing of it,

1:07:37 you actually may be doing the opposite of what you thought.

1:07:40 If you are against racism, you may be supporting racism.

1:07:43 If you are against discrimination for gays,

1:07:47 this could be actually promoting discrimination for gays.

1:07:50 If you are supportive of trans rights,

1:07:52 this may be pushing back against trans rights.

1:07:53 Cuz the playbook seems to be do the opposite to create the narrative,

1:07:59 give it to your friends in the media who

1:08:01 will look the other way and just amplify it,

1:08:02 tell the lie, create the craziness, and then raise a bunch of money,

1:08:07 make a bunch of stink, and try to curate power.

1:08:10 Friedberg, you think this is in your estimation

1:08:14 or your gut tell you this is arsonist firefighters?

1:08:17 They're lighting things on fire so that they can go put it out.

1:08:20 Or do you think this is like a law fair

1:08:23 as some people are claiming because there hasn't been to Chamath's point,

1:08:28 it's they don't have donors taking this action.

1:08:31 They're being accused of wire fraud on behalf

1:08:33 of donors who haven't shown up yet to do, you know, a legal action.

1:08:36 What's your take on all of this, Friedberg?

1:08:39 The IRS definition of what a 501c3 nonprofit organization is

1:08:44 meant to be doing is to engage in exempt activities.

1:08:49 The definition of exempt activities is charitable,

1:08:53 religious, educational, scientific, literacy, public safety,

1:09:00 or fostering amateur sports competition

1:09:03 or preventing cruelty to children or animals.

1:09:06 You tell me how the[ __] 90% of what

1:09:09 we call nonprofits today fall under that definition.

1:09:13 We have completely closed our eyes to the fact that organizations,

1:09:18 regardless of political affiliation, social interest,

1:09:21 have fundamental commercial and probably not aligned

1:09:25 interests with the definition of a 501c3,

1:09:28 and we've allowed them all to get away with it for far too long.

1:09:32 I don't think that this is a blue or red thing.

1:09:34 I think that this is a thing where we

1:09:36 let these organizations make it easy to get money,

1:09:38 to hide the money, and to do whatever the hell they want with the money.

1:09:41 And we need to stop it.

1:09:43 And I think that it's an amazing opportunity right now for everyone to kind

1:09:47 of reset the decks by cleaning all the[ __] up and getting all

1:09:50 of these organizations flushed and make sure

1:09:53 that any organization that wants to do

1:09:54 whatever[ __] nefarious things they want to do, by all means do it.

1:09:59 But it's not a nonprofit, and you shouldn't get a charitable donation deduction,

1:10:03 and the government should not be putting money into these sorts of things.

1:10:06 This is an entirely different sort of activity in the social order.

1:10:10 And as a libertarian, I'm all for it,

1:10:13 but I don't think that they should be tax-exempt,

1:10:15 and I don't think they should be getting government money,

1:10:17 and I don't think that individuals should be benefiting from giving them money.

1:10:20 And if we could fix all that[ __] up,

1:10:22 I think a lot of these problems are going to go away,

1:10:24 and I think this is a major problem.

1:10:25 I think the theme of this episode is audit everything,

1:10:28 whether it's government waste and abuse, or it's these NGOs,

1:10:32 or it's people like Dow making these chemicals that 30 years later,

1:10:36 you know, perhaps are correlated with cancer.

1:10:41 We need to audit everything.

1:10:42 We need to take a fresh look at this cuz it's not red versus green.

1:10:45 Red This is not red versus blue.

1:10:46 It's green.

1:10:47 This is clearly a monetary incentive,

1:10:50 and it is incredibly disruptive for society to not know

1:10:52 the truth about what's going on with race in this country.

1:10:57 I got absolutely, you guys might not know

1:10:59 this, but in this is part of the cancel culture moment

1:11:04 in time where they tried to take people having reasonable

1:11:06 discussions about race in this country and tried to cancel them.

1:11:09 They tried to do this to me in 2014.

1:11:12 Very famously, you guys may not know this, but I

1:11:13 have won a couple of awards in my career.

1:11:16 Most offensive tweet ever by Vice in 2014

1:11:20 was my alleged racist tweet where I said,

1:11:23 "Hey, if you want to get into uh blogging and journalism,

1:11:26 there's no racism in Czech journalism.

1:11:28 All you have to do is publish for a couple of years a blog post,

1:11:30 nobody can stop you,

1:11:31 and there'll be a ton of jobs available to you." And then what they did was

1:11:35 they tried to cancel me and tried

1:11:36 to cancel all my media properties and my investing.

1:11:39 And this stuff had like a modest impact on me maybe for a year.

1:11:43 And then now it's obviously all being Whoa, whoa, wait.

1:11:46 I'm not sure I understand.

1:11:47 [clears throat] J K, are you saying the SPLC put you on a cancellation list?

1:11:50 No, they put Sam Harris on it.

1:11:51 Vice put me on a cancellation list.

1:11:54 I It didn't get picked up by the SPLC, but I experienced the same thing,

1:11:57 which was they said because I said you know,

1:12:00 race does race doesn't play a role in hiring.

1:12:04 You're so careful about your virtue signaling.

1:12:05 I'm just shocked that anyone would try to cancel you.

1:12:08 Well, that's what's shocking about it.

1:12:09 It's like [laughter] I know I was very clear.

1:12:11 I said, "In journalism," like a very vertical thing that

1:12:15 skilled at You're very skilled virtue signaler, so [laughter]

1:12:18 I mean They tried to cancel me, guys.

1:12:20 I don't, you know, it's They tried to cancel you, too, Jamal.

1:12:24 Jason.

1:12:24 You have a question for me?

1:12:25 I'm uncancelable.

1:12:26 Yes.

1:12:26 Cuz I don't give a[ __] are.

1:12:27 That's what we found out through all this shenanigans.

1:12:30 You care about what all these idiots think.

1:12:32 But don't.

1:12:32 I never have.

1:12:33 [laughter] Jason, I have a question for you.

1:12:35 Go ahead.

1:12:35 What percentage odds now do you keep in the back

1:12:37 of your mind that your petite little illustrious Human Rights Watch [laughter]

1:12:43 is actually creating human rights abuses to try

1:12:45 to This is actually a very good point.

1:12:47 You know, a lot of the human rights organizations from back in the day that

1:12:50 What is the organization that you were What is it called?

1:12:52 Amnesty International.

1:12:53 Oh, yeah.

1:12:54 When I worked at Amnesty International, a very fine mandate.

1:12:57 The mandate was human rights abuses

1:13:00 as described in the Universal Declaration of Human

1:13:02 Rights created by Eleanor Roosevelt and the uh This is like science corner.

1:13:06 Wait until this is done, Sam.

1:13:08 No, but it was torture.

1:13:09 [laughter] It was people being put in jail and being tortured.

1:13:12 It was people being censored because of freedom of speech.

1:13:16 And And that's what I worked on when I was at Amnesty International.

1:13:19 These groups went adrift in order to get money, Human Rights Watch included,

1:13:24 and then they started taking on things like, you know,

1:13:27 uh transgender rights, this rights, that rights, and censoring people.

1:13:32 They They went after Sam Harris because

1:13:34 he had Charles Murray from the Bell Curve.

1:13:37 Stop with all this[ __] I'm asking you a very specific question.

1:13:39 chance that all these organizations are involved in human rights.

1:13:43 50/50 chance Depending on the organization.

1:13:44 SPLC, I'm going to guess 95%.

1:13:47 Yeah.

1:13:47 Amnesty International,

1:13:48 you think it's 50/50 that they're engaging in nefarious[ __] to try to whip

1:13:52 up people's belief that there are human

1:13:55 rights abuses happening that are not happening.

1:13:56 You're saying it's a coin flip.

1:13:58 I think it's probably a coin flip, yeah.

1:14:00 That's what I would say today because these organizations all got co-opted.

1:14:03 SPLC might have had a great origin story, but now it is

1:14:07 your intellectual honesty and I appreciate you saying that.

1:14:10 Well, I mean, just based on facts.

1:14:12 So, let's see what this legal case brings about.

1:14:15 Well, let's be clear.

1:14:16 This is not Let's be clear.

1:14:17 them investigating SPLC, 100%.

1:14:19 When you bring a grand jury indictment, you've already previewed the evidence.

1:14:24 This is not like some guy's trying to whip up lawfare.

1:14:27 Okay?

1:14:27 Um actually, you don't have to bring all the evidence, but that's a side thing.

1:14:31 And And they're very frisky about allowing you

1:14:34 to indict somebody as we experienced with Trump.

1:14:37 Grand juries are a whole different animal.

1:14:38 Yeah.

1:14:39 They They will indict a ham sandwich is the line.

1:14:41 Um so, we'll see.

1:14:42 Let's give them their day in court is always my position.

1:14:44 Well, I mean, regardless of what happens in court,

1:14:46 if it's true that the SPLC is funding

1:14:49 the Ku Klux Klan and the American [laughter] Nazi Party, informants.

1:14:53 But they stopped using confidential informants.

1:14:56 That's good enough for me.

1:14:58 It's good enough for me.

1:14:59 You know what I'm saying?

1:15:00 It's insane.

1:15:01 Here Here's the systemic problem with nonprofits and NGOs.

1:15:05 Is Let me just contrast it with business.

1:15:07 In business, you set up a company, the company has to make revenue,

1:15:10 it has to make profits, and if it doesn't,

1:15:12 it's going to go out of business, right?

1:15:14 Because it'll lose money.

1:15:15 So, there's a feedback mechanism from the market.

1:15:18 The company has to create products that people are willing to buy,

1:15:20 and those products have to make money.

1:15:22 With an NGO, nonprofit, what have you, they raise money, they don't sell things,

1:15:27 they fundraise from donors in order to engage in an activity.

1:15:32 But what happens over time is the actual activities may stop mattering,

1:15:37 and all that really matters is they're able to keep fundraising, right?

1:15:39 Cuz they're just trying to figure out a justification to keep going

1:15:42 back to donors to get more and more money out of them.

1:15:44 That's how it perpetuates the organization.

1:15:46 And they're trying to keep their job.

1:15:47 Exactly.

1:15:48 And then, if it's an NGO that gets money from the government,

1:15:52 then it's even worse, because all they do from that point forward is

1:15:55 try to lobby the government to get more money.

1:15:58 And it doesn't really matter whether the program is working or not.

1:16:02 All that matters is whether they can spin it as working.

1:16:05 Why wouldn't the Southern Poverty Law Center focus on Southern Poverty,

1:16:09 which is an issue that actually still exists at some point?

1:16:12 That'd be a better thing.

1:16:13 I mean, it and why do you call it one thing,

1:16:16 focus on racism, and then all of a sudden whip up I'll tell you why.

1:16:21 Here's my theory.

1:16:21 Here's my theory on it.

1:16:22 Is I do think that at one time in this country,

1:16:25 civil rights was a noble cause, a very legitimate cause.

1:16:29 We had the the legacy of segregation and Jim Crow,

1:16:32 and there were groups that were set

1:16:34 up to basically change that, and they succeeded.

1:16:39 But again, no one in an NGO or a non-profit ever declares victory.

1:16:44 They're never going to say, "You know what?

1:16:45 Like we we addressed this problem.

1:16:47 We solved it." You know, I always thought that in 2008 when when me.

1:16:51 Fire me.

1:16:51 My job's done.

1:16:52 Yeah, well well when Obama got elected in 2008,

1:16:55 I thought that regardless of whether you liked

1:16:56 Obama or not or agree with his politics,

1:16:59 I thought that at that point most people

1:17:00 could see that this was not a racist country.

1:17:03 100%.

1:17:04 Whatever else you could say,

1:17:06 the fact that the highest office in the land was not denied to anybody

1:17:10 showed that this country was not holding people back based on their skin color.

1:17:15 And instead of just basically packing up shop and saying,

1:17:17 "Okay, we've achieved our goal." [laughter] The goal posts all got moved.

1:17:21 Remember, that's when the whole anti-racism thing

1:17:23 started was was around Obama's second term.

1:17:26 And what anti-racism was,

1:17:28 it said that it's not good enough not to be just not to be racist.

1:17:32 You actually have to be anti-racist,

1:17:33 but what anti-racism meant was was basically

1:17:37 that all the distributions had to match the population.

1:17:40 Basically, it meant equality of outcomes, not equality of opportunity.

1:17:44 So, effectively, this whole goal post was moved

1:17:48 from equality of opportunity to equality of results.

1:17:50 you see it, you can't unsee it.

1:17:51 It's like they sat around and they said,

1:17:53 "Now what?" And one person was like, "I got an idea." [laughter]

1:17:58 Well, and make race a symptom again.

1:18:00 Exactly.

1:18:01 if they just said if they just said at that time, "You know what?

1:18:04 We're going to move the goal post

1:18:05 from equality of opportunity to equality of results.

1:18:07 We're going to basically make everyone equal

1:18:10 at the finish line." Which is to say,

1:18:11 I guess communism or or some sort of identity socialism,

1:18:15 people would have said, "Uh no, we're not on board for that." So,

1:18:17 instead, they created this whole new terminology to justify it.

1:18:21 It has taken us years to unpack that and realize what's really going on.

1:18:26 Gosh, I don't want to put myself in a position of defending the SPLC.

1:18:29 They were partners with the FBI for a long time.

1:18:31 To your point, Chamath, or or or Sachs's point, rather.

1:18:34 There was probably a time when it was

1:18:35 important to infiltrate the KKK and the Nazi groups.

1:18:40 It's not 2025.

1:18:42 Yes.

1:18:42 not in 2026 like I think necessary to be doing this work.

1:18:46 I think more than four people can handle it.

1:18:48 Uh in 20 26.

1:18:50 to give you guys a newsflash.

1:18:51 I just got this just hit the wire.

1:18:53 Um this is really important.

1:18:54 Breaking news here.

1:18:56 America is profoundly less racist than you think, okay?

1:19:00 There we go.

1:19:00 Okay, breaking news.

1:19:02 Wake up.

1:19:03 Friedberg wanted to do a surprise science corner.

1:19:06 This is the first.

1:19:07 We don't know what he's about to talk about,

1:19:10 but David looks like he's been working really hard and he needs a nap,

1:19:12 so Friedberg, you have the microphone.

1:19:14 Let's go.

1:19:15 This was not Surprise science corner.

1:19:17 Yeah, this is not necessarily a big surprise,

1:19:20 but there was a really interesting paper published this week

1:19:24 on trying to elucidate the underlying cause or predictor of colorectal cancer.

1:19:30 So, I don't know if you guys know any young friends,

1:19:33 but colorectal cancer or Nick, if you could just pull up this first image,

1:19:37 or colon cancer has become now the third leading cancer.

1:19:42 Over the last 20 years or so,

1:19:44 there's been a scary rise in the number of young people,

1:19:47 people generally under 50 years old that are getting colon cancer.

1:19:51 That number has climbed by over 80% in just the last two decades.

1:19:57 Historically, it's been an age-related disease.

1:19:59 So, as you get older, over 70 years old,

1:20:02 your probability of getting colon cancer shoots through the roof,

1:20:04 but this rise in young people getting colon cancer has been pretty alarming,

1:20:08 and there's been a real question mark on what is causing it.

1:20:11 What's the underlying trigger.

1:20:14 So, this research team out of Barcelona in Spain did

1:20:18 an amazing study where they looked at the difference in the epigenome

1:20:23 or the gene expression in tumor cells of patients that are

1:20:30 under 50 years old and those that are over 70 years old.

1:20:33 This sort of data will show you what different

1:20:36 environmental triggers are associated with those changes in gene expression.

1:20:42 So, whenever we're exposed to something in the environment,

1:20:45 whether it's some food or some drink or whatever else it is,

1:20:49 some chemical in the environment,

1:20:51 the cells in our body that are exposed to that chemistry or exposed

1:20:55 to that environmental trigger have genes that get switched on and off.

1:21:00 And you can see which genes are on and off by looking at the RNA of those genes,

1:21:05 which tells you that those genes are expressing

1:21:07 RNA to make protein or not make protein.

1:21:10 And you can look at that gene expression to determine what

1:21:13 is changing when a cell is exposed to a particular environmental trigger.

1:21:19 And so, they were able to get these samples

1:21:21 of colon adenocarcinomas from the Cancer Genome Atlas,

1:21:25 which is funded by the federal government.

1:21:28 And they were then able to take a look at these cancer

1:21:31 cells from colon cancer in patients that are under 50 and patients

1:21:35 that are over 70 and look at the difference in the gene expression

1:21:39 profile and what um environmental triggers

1:21:42 are associated with that gene expression profile.

1:21:46 So, that will tell you, "Hey,

1:21:47 these environmental triggers are more likely the cause or an underlying driver

1:21:52 of the risk of getting this colon cancer." And one thing rose to the top.

1:21:57 So, they looked at a whole bunch of things.

1:21:58 They look at lifestyle factors, they look at eating index,

1:22:02 how much you ate, how overweight you were, alcohol, birth weight.

1:22:05 They adjusted for gender, they adjusted for all these different things.

1:22:09 And as you look down this list, you'll see this is the difference between people

1:22:13 that got colon cancer that were over 70,

1:22:15 when you typically have a very high chance of getting it,

1:22:18 and people that are under 50, when you don't.

1:22:20 And what is going on with people under 50?

1:22:23 And you can see there's this one row here that's all orange.

1:22:27 That row is a pesticide called picloram.

1:22:31 Picloram is a pesticide that was developed by the Dow Chemical Company in 1963.

1:22:38 This is the chemical formula for that pesticide.

1:22:42 It's related to auxin, which are these hormones that plants make.

1:22:46 And in the 1960s, there was this big rush to try

1:22:48 and make synthetic plant hormones that you would then apply to a plant.

1:22:51 It would cause the plant to overgrow, and the plant would quickly die.

1:22:55 And picloram became a very widely used herbicide in our environment.

1:23:02 It's used to manage weeds in rangeland and pastureland where cattle graze.

1:23:07 It's used to control weeds near roads and near railroads,

1:23:11 on industrial sites, to clear weeds away from highways and utility corridors.

1:23:15 And the problem with picloram,

1:23:17 one of the the things that's been known about it is it's very persistent.

1:23:19 It doesn't biodegrade very well.

1:23:21 Picloram sticks around for well over a year.

1:23:24 It stays in the water.

1:23:26 It moves into groundwater, and it's persistently in the environment after

1:23:29 it's been used for some period of time.

1:23:32 I went back and looked at the EPA data on this chemical.

1:23:35 The last time there was an EPA safety study done was in 1995.

1:23:40 And so, this was before we had this capacity to do epigenomic studies like what

1:23:44 was just done to elucidate that even though

1:23:47 a chemical might not be causing cancer immediately,

1:23:50 and you can't apply it to a cell and see it trigger a cancer,

1:23:53 the long-term use or exposure to certain chemicals

1:23:56 in our environment causes a change in the epigenome,

1:23:59 which means that these genes are being turned on and off.

1:24:02 And when certain genes are turned on or off in the wrong way,

1:24:05 it can trigger cells in the tissue to start to malfunction and go haywire,

1:24:10 and ultimately lead to cancer.

1:24:11 And I think that this paper shows a pretty strong

1:24:14 effect of picloram in driving colon cancer in young people.

1:24:19 It will very likely lead, and it should lead,

1:24:20 to an EPA review on whether this should be legally allowed,

1:24:24 but it should also lead to a new mechanism by which

1:24:26 we assess chemistry that we're using in our food supply,

1:24:29 in our environment, in our industrial applications,

1:24:32 because we can now look at all of this at sort of epigenomic data to try

1:24:36 and figure out what are these chemicals doing

1:24:38 to us before we see them cause the problem.

1:24:40 So, I thought this was like an amazing paper done by this team.

1:24:43 They did a lot of work to try and make sure

1:24:45 that the statistics were sound in the studies that they did.

1:24:48 It really uh I think elucidated something pretty scary.

1:24:51 Is this like a Monsanto thing where like

1:24:53 one company makes it or picloram is broadly available?

1:24:57 It's off patent now and so I'm pretty sure my guess,

1:25:00 I haven't looked into this, but my guess

1:25:02 is most of this is made generically in China

1:25:04 and then it's probably packaged up with lots of different

1:25:06 brands in the US and all over the world.

1:25:08 So, it's one of these chemicals that's just become

1:25:10 ubiquitous in our use that just shows up everywhere,

1:25:14 but I think it really speaks to the fact that historically, think about 1995,

1:25:19 you can look at what the immediate chemical application of something does

1:25:23 to a a rat or a human cell and you can say like, "Oh, it didn't cause cancer.

1:25:27 It's good to go.

1:25:27 Let's go." You know, didn't didn't cause quote toxicity.

1:25:31 Can I ask a question?

1:25:31 In that study, are you exposed to picloram based on where you live Oh, yeah.

1:25:36 Sorry.

1:25:36 That's a that's a great question, Chamath.

1:25:38 So, I was going to talk about this.

1:25:39 Thank you for asking that.

1:25:40 They then took that uh picloram exposure and then

1:25:43 they looked at all the counties across the United States.

1:25:45 They were able to gather data where there was enough data in California,

1:25:48 Connecticut, Georgia, Iowa, New Mexico, Utah, Washington,

1:25:52 and they were able to look at picloram

1:25:54 use estimates from the Pesticide National Synthesis

1:25:56 Project and try and deduce in places where

1:25:59 picloram was highly used and not highly used.

1:26:01 And once again, it elucidated signal.

1:26:04 Which is that when picloram was used

1:26:05 in the environment in the counties more frequently,

1:26:08 there was a much higher frequency of colon cancer in those counties.

1:26:11 And that R squared is weak or it's strong?

1:26:13 Reasonably strong.

1:26:14 The odds ratio is like 3x.

1:26:15 It's very strong.

1:26:16 This is accomplished Freeberg from a combination of big data and this uh science

1:26:24 I think it's important Yeah, I think it's important testing as well, right?

1:26:28 So, you have this confluence of increased testing, increased data, you know,

1:26:33 knowing where these instances are occurring,

1:26:35 and if you add a layer of AI onto this Freeberg,

1:26:38 this is like a really positive use going back and looking

1:26:42 at all these compounds and figuring out which ones we need to eliminate.

1:26:45 Yeah, so I'll I'll put my PCast hat on.

1:26:47 Thank you, David Sachs, for the role.

1:26:49 And I think this speaks to one of the important

1:26:51 roles that government has in doing fundamental science and fundamental research.

1:26:56 So, the the National Cancer Institute in the federal government stood up

1:27:00 this genome atlas with a hundred million dollars a couple years ago.

1:27:02 They spent only a few million dollars a year now

1:27:04 to maintain it to get cancer tissue samples and then create

1:27:09 the availability to scientists to use those cancer tissue samples to do

1:27:13 the sort of epigenomic analysis and study supported by, you know,

1:27:17 government grants or in this case supported

1:27:18 by a foreign university getting funding to do it.

1:27:22 And so, there's there's an important role that fundamental science still

1:27:25 has in elucidating this that we would have otherwise not been able

1:27:28 to see if we didn't have this resource available to us

1:27:31 from the federal government and federal

1:27:33 funding of scientific programs like this.

1:27:35 And that leads to this discovery.

1:27:37 You don't need fancy AI for this, to be frank, Jay Cal.

1:27:39 There's an incredible amount of data that's

1:27:41 available or or resources that are available.

1:27:44 What's happened in the last couple years is what's called RNA sequencing

1:27:47 where you can actually look at which genes are on or off,

1:27:50 not just what's the DNA, but in the DNA,

1:27:52 remember we've talked a lot about the epigenome, what genes are on or off,

1:27:56 and how that changes when you have

1:27:58 different cancers or when you have different chemicals,

1:28:00 and when you have a certain chemical like picloram,

1:28:03 your colorectal cancer goes through the roof,

1:28:05 and you can see that relationship in those tissues.

1:28:08 And then you can put all the data together and say,

1:28:10 "Oh my gosh, there's a lot of evidence here that points to this connection.

1:28:13 Very powerful.

1:28:14 I think it's important that it opens up the window that this shouldn't

1:28:16 just be a one-off research project conducted by a team in Spain,

1:28:21 but maybe should be a fundamental role

1:28:22 that some of the government agencies play,

1:28:24 which is to stop Americans and the world from getting freaking cancer.

1:28:28 Let's figure out the things that we got wrong in industry and go back

1:28:31 and delete them out of our food supply and out of our industrial supply.

1:28:35 And I think this is a really good example of that.

1:28:37 So X, uh, how does Friedberg's focus on Uranus,

1:28:41 uh, in you know, inform your co-leading of P-Cast here?

1:28:45 Are you going to go deep into this colon research?

1:28:48 How deep do you plan on going?

1:28:49 And how will you get through eight of these presentations a day at P-Cast?

1:28:55 [laughter] All right, it's all good.

1:28:55 This is why we hired Friedberg.

1:28:57 Yes.

1:28:58 By the way, did you guys going to handle, uh, Mars, Neptune, and Uranus.

1:29:02 Absolutely.

1:29:02 He's [laughter] going to go deep into Uranus and clean it up.

1:29:06 We need to clean up Uranus.

1:29:09 Uh, great work.

1:29:10 Anyway, Friedberg, great great work.

1:29:11 Anyway, I think I think this is important and I don't think there's

1:29:13 any news attention on this since it came out a couple days ago.

1:29:15 So I thought it would be worth bringing up on the show and making people aware.

1:29:19 All right.

1:29:19 But thank you guys for sitting through it.

1:29:20 Well, no, I think it's it's great work you're doing there.

1:29:22 I just read the paper.

1:29:25 Yeah.

1:29:25 All right, everybody, that's it for episode 270 of the world's greatest podcast.

1:29:29 I am your world's greatest moderator.

1:29:33 Thank you Chamath, David Sacks, and David Friedberg for the episode.

1:29:36 To your friends, your neighbors, and we'll see you all next time.

1:29:39 Bye-bye.

1:29:40 Love you boys.

1:29:40 Bye-bye.

1:29:43 Let your winners ride.

1:29:44 [music] Rain Man David Sacks.

1:29:50 And I said, we open sourced [music] it

1:29:51 to the fans and they've just gone crazy with it.

1:29:54 Love you guys.

1:30:00 [music] Besties are back.

1:30:05 That is my dog taking a[ __] in your driveway, [music] Sacks.

1:30:10 Oh, man.

1:30:13 [music] [music] [laughter] [music] I'm going all in.