The Manosphere Report

0:00Jason, you are the unique person that is at the intersection of both the and

0:05the SPLC files. Do you have a comment?

0:08No comment. Do you have a comment, Jason?

0:10No, I'm not in the SPLC files.

0:11Yes, you are. I'm adjacent on the vice files.

0:13You're SPLC adjacent and you're...

0:15What does that mean? In the Venn diagram.

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

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

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

0:25Oh, my God. It's because the people...

0:27What the f*** is going on?

0:29There's a reason why I carry a stiletto and a P -35.

0:33What the f*** are you doing?

0:35There's a reason. If you want to jump the f***ing fence, feel free.

0:40J -Cal is ready. We'll let your winners ride.

0:50Rain Man David Sacks. And it's said...

0:55We open -source it to the fans and they've just gone crazy with it.

0:58Love you, Wes. It's a queen of quinoa.

1:00I'm going all in. All right, everybody.

1:03Welcome back to The Greatest Podcast in the Universe, episode 270 of the All In

1:09Podcast, your podcaster's favorite podcast.

1:12With me, again, your sultan of science, David Freeberg, the Dick Tater, Tremont Polyhapitiya.

1:19And yeah, the Rain Man is back.

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

1:24He's definitely in D .C.

1:26with POTUS. Yeah, POTUS lets him drive in the driveway.

1:30Sacks, what's going on? You pushed back, you big -shotted the entire crew and pushed

1:35the show back an hour.

1:36Simple text. He's like, with POTUS.

1:39Start it. It's unbelievable. Start later.

1:42Okay. We'll just wait. Okay, Daddy.

1:44Look at him. All right.

1:46All right, big shot. What's going on?

1:47No, look, I was in D .C.

1:50today and I was at the White House and I just asked if the president

1:54had time and he made time.

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

1:59for that. One thing I just want to say is just what a pleasure he

2:04has to deal with. You know, when I read in the media, they're always describing

2:08him in a certain way that, you know, he's yelling at people or he's moody

2:11or something like that and that's never, ever been my experience with him.

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

2:17He's always genial. Super charming.

2:19He asks questions. He's interested in the subject matter.

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

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

2:27He's charming AF. Totally. Let's just call it what it is.

2:30I mean, maybe if you double -crossed him, maybe, I don't know, but I've just

2:33never seen any evidence of how they describe him at all.

2:37And I think on our issues of AI, I think we're really lucky that he's

2:41the president who's in the White House when this AI revolution is happening.

2:45I mean, doing old history, Saks, what would happen if Kamala Ding Dong was in

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

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

2:55be promoting DEI values through AI that was in the Biden executive order.

2:59President Trump just wants the country to win and be successful and he doesn't have

3:04these like doomer neuroses about it.

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

3:11specific solutions for specific problems as opposed to being cowering in fear over this and

3:17just trying to halt all progress.

3:19And I think a really good example of that was his idea around data centers

3:22where he said over a year ago before data centers even became a hot political

3:27topic that we should let our AI companies stand up their own power generation behind

3:30the meter. And that's a much better approach than the Bernie Sanders approach of just

3:34shutting everything down. So I don't know I think we're like very fortunate that he's

3:37the president. during this critical time and the development of this technology.

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

3:43He talks to a lot of business leaders.

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

3:48He listens to all the top guys in the industry, and he synthesizes what he

3:52hears. I think he's very good at that.

3:54He was talking about the Anthropa guys, and he was like, these are brilliant guys.

3:57And he was giving the flowers to them and how genius they were and that

4:00they were working on a deal.

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

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

4:10Like you said, he said that they were very smart guys.

4:14They do have a great product.

4:15I've certainly acknowledged that. He also said that they were very left -wing, but that

4:19was something we could work through.

4:21Didn't have to be a deal killer.

4:23He said they tried to tell the Pentagon what to do, which the Pentagon didn't

4:26like. But in any event, I mean, look, he wants American companies to be successful.

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

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

4:38But I actually think it's like one of his core convictions is he just really

4:41likes smart people. He likes being around smart people.

4:44Loyal people, smart people, people who are good on camera seem to be the three

4:47circles. And hey, Saks, you fall into two of the three.

4:51All right. People need to figure that out.

4:53So topic one, SpaceX has signed a huge deal with Cursor.

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

5:01Really, they define the category.

5:04XAI and Cursor are building and collaborating on a new AI coding model that would,

5:09quote, be the world's best coding and knowledge work AI.

5:13Here's the deal. So, as it's been explained, SpaceX will either buy Cursor by the

5:18end of 2026 for $60 billion, that's $10 billion more than they were rumored to

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

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

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

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

5:40This is a money printing machine.

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

5:46They're going to triple it.

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

5:52So this is quite accretive to the revenue story at SpaceX, at the IPO of

5:57SpaceX, which is now targeting a valuation of $2 trillion, which would be trading at

6:02roughly 80 times top line revenue, which is a, you know, people would say it's

6:07a high valuation, but also can measure it with the opportunity.

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

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

6:15day. Cursor started, I think, built off of Anthropics, LLM.

6:20You could use any LLM previously on it.

6:22But in March, Cursor released the second version of their proprietary model, Composer 2.

6:28And here it is. It's ranked pretty high right now.

6:31It's between GPT 5 .4 and Opus 4 .6, as you can see on the

6:36screen. The key part of the story here is that Elon has 550 ,000 GPUs

6:44in Colossus. He's scaling up to 1 million.

6:46And then, of course, he's going to bring it to space.

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

6:54incredible for Cursor, who has been compute constrained.

6:57So this is peanut butter and chocolate.

6:59If you put these two together, I predict that this is going to move SpaceX,

7:06X, XAI, and Cursor to the front of the coding leaderboard within 12 months.

7:12That's my prediction. Shamath, shareholder in SpaceX via the...

7:17acquisition of the Starlink company that you were a backer of?

7:22What are your thoughts? The acquisition was essentially negotiated.

7:25And the way that it's structured is so that the S1 doesn't go stale.

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

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

7:37S1, have to redo the disclosures, have to redo the risks.

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

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

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

7:52Let's call it a trillion.

7:55Where could it be? Just for the purpose of this argument, let's say 2 trillion.

8:00So when the deal gets done on a stock for stock basis, it's going to

8:03be if again, if it's 60 billion in tomorrow dollars, effectively, Elon's gotten a 50

8:10% discount. And what has he bought?

8:12He can issue $60 billion of stock at a $2 trillion valuation and get a

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

8:22we know all of the immediate and short term revenue gains are.

8:26It's also patterns that are hard fought and are really valuable in reinforcement learning.

8:32He gets all of that.

8:33And then he gets a very cracked team, which we've known for a while that

8:36the cursor team is absolutely excellent.

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

8:44There was a moment where Grok had a very steep and very aggressive discount on

8:48their output tokens. And in that moment, there was just a lot of experimentation and

8:53usage. And over time, that sort of went away.

8:57So there was a lot of capacity and relatively low utilization, I think, inside of

9:03Colossus that he was able to turn around, jujitsu move the whole thing, and basically

9:08acquire the most interesting and valuable third -party wrapper service in AI right now.

9:14And the fact is that they got it effectively, I think, at this price for

9:17$30 billion. So I think it was a really good deal, really smart deal.

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

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

9:27If we were sitting here three years ago, the Biden administration didn't invite Elon to

9:35the EV summit. And the SEC and other organizations, Delaware, they were explicitly involved in

9:42lawfare. They were trying to put Elon in prison.

9:44And here we are, the most important company in the history of the United States,

9:49SpaceX AI. And Tesla now on the verge of just creating the greatest products in

9:56the history of humanity between SpaceX, clusters in space, and Optimus.

10:01Your thoughts? Well, you're right.

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

10:05sky. And so on the heels of that, the DOJ brought a lawsuit attacking the

10:10company for not hiring enough SpaceX.

10:12SpaceX, remember that? Yeah, exactly.

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

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

10:18Anyway, that's all ancient history.

10:20So let's put that behind us.

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

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

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

10:31That's what it brings to XAI.

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

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

10:42the white -hot area of AI right now, when it got started, it was really

10:48competing against generalists in the form of OpenAI and Anthropic.

10:51But now those generalists have decided to vertically integrate in this area.

10:55of coding, right? And so Cursor is now competing against QuadCode and OpenAI's Codex.

11:01And so they were dependent on foundation model companies that were getting in the business

11:05of competing with them, which was just not a good place to be, right?

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

11:13brings the compute. It just makes a lot of sense.

11:15And then they bring, Cursor brings to XAI the training data, a lot of enterprise

11:21clients, and the experience in coding.

11:24And I think this will accelerate XAI in this area.

11:27Saks, you think they're going to dump Kimi K2 0 .6?

11:32Because I think Cursor Composer 2 uses the moonshot model.

11:36There's no reasonable way that Elon's going to pay $60 billion and not run on

11:40top of Grog. I got to think.

11:41It seems like it. Yeah.

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

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

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

11:48No, wait, wait. Say more on that.

11:49What do you mean? So I think that the different developers want to have choice

11:54in that sense. There's a toggle.

11:55So one of the things that's really good about Cursor is they've got this very

11:58well built out IDE, this application layer that puts them probably from a UX perspective,

12:05meaning developers are using the tool above Codex, above Claude, above anything else.

12:12You can use a third -party IDE and integrate the models or integrate whatever other

12:17third -party service you're using.

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

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

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

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

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

12:39We call it agents. But agents are fundamentally just quickly spun up applications.

12:44But for all of them, as we're realizing very quickly, you end up making too

12:48many agents. They end up being super inefficient.

12:50They need to be engineered.

12:52And you still need to have a strong software engineering capability and competency to fix

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

13:00And that's why having a strong developer environment, a strong IDE, actually solves that biggest

13:05problem. So eventually, all the enterprises that are getting hot and heavy on agents are

13:09going to be like, whoa, wait a second, we've actually got to fix how this

13:12is all being done. As we saw this week in that story with Amazon, where

13:16there's like a million agents being spun up inside and everything's wasting resources, redundant data

13:20creation, redundant data stores, redundant API calls, etc.

13:24Tons of money being wasted.

13:26So you have to centralize still, you have to have good software engineering talent, that's

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

13:32And that ultimately will require an integration of the AI tooling with a standard software

13:38engineering front end, which is the IDE that Cursor has.

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

13:45the software engineers may end up winning you the arms race here and seems pretty

13:51smart for Elon to buy Cursor.

13:53One other piece of it, you mentioned Kimmy K2 .6.

13:56Yeah, I mean, so I think that one of the things that's going to become

13:59a priority over the next several months is this idea of optimizing.

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

14:07I mean, just month over month, they're spending increasingly large amounts because their employees are

14:12just building more and more software.

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

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

14:22task. But more mundane things could be done using an open source model or less

14:27expensive model. And I think like you're saying, whether it's the IDE or something else,

14:31there needs to be some sort of...

14:33you're saying, whether it's the IDE or something else, there needs to be a réalité

14:33or not. you're going to win the IDE, as you're going to win the IDE,

14:33which next is in order for So you're going to use a IDE, I will

14:33take a little bit more, but when you're the IDE, so we're going to middleware

14:34that determines which model you go to and how much you're willing to spend and

14:37what the most efficient way of getting the tokens is going to be.

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

14:45And I would predict we're going to be sitting here in six to 12 months,

14:49and they are going to be dramatically, dramatically improved.

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

14:57center within this red hot area of coding, which is cyber.

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

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

15:14defense. Now, the issue with Mythos is that it's very large and expensive.

15:19It's something like a 10 trillion perimeter model.

15:21And there's a lot of reports that Anthropic just doesn't have enough compute to be

15:24able to serve it. I'm not sure it was ever built to be a commercial

15:27model, to be honest, because I just think it's so big and expensive.

15:30But I think what will happen is these companies will start training dedicated cyber models.

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

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

15:45market because I think IT departments and CISOs are very worried about the risk of

15:50hacks right now, AI powered hackers.

15:53So this is something I think over the next three to six months will be,

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

16:00Polymarket says, oh, this is fate.

16:03SpaceX acquiring Cursor, 74 % chance.

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

16:11So this is happening, folks.

16:13All right, let's keep going.

16:14I think that deal structure is smart.

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

16:21Also, it kind of gives a huge motivation to these cursor guys to bust their

16:25ass and make it work over the next, I don't know, six months.

16:27Yeah, they have a $10 billion breakup fee, but I'm sure they want the deal

16:30to be successful. Well, the $10 billion breakup fee will go back to SpaceX anyways,

16:34because if they actually run the compute and they're not owned by SpaceX, they're going

16:39to have to pay for it.

16:39That is not cheap. I mean, we saw a bunch of these XAI co -founders

16:43leave after the acquisition by SpaceX.

16:45I don't know if that was the reason why, but all of a sudden they're

16:48sitting on SpaceX stock and they may have felt like they had it made, you

16:53know? Which is always a problem.

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

16:57This cursor thing came about pretty quickly because, let's just say friends of ours who

17:03were supposed to wire into that round were like, where's the wiring instructions?

17:07It all just evaporated. Here's a tweet from Elon.

17:10We don't have to speculate too much here, Sachs.

17:13He was very clear that XAI wasn't built right the first time around.

17:19The quote, XAI was not built right first time around, so is being rebuilt from

17:24the foundations up. Same thing happened with Tesla.

17:28And that tweet is from about five weeks ago.

17:31How crazy is it that when he tweets, he gets 50 .8 million views?

17:35It takes the four of us seven months to get 50 .8 million views.

17:39I mean, it's probably our collective.

17:41It's unbelievable the distribution he has.

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

17:47didn't do it right the first time, now we're rebuilding it.

17:49I mean, most are not willing to say that.

17:52He's a magnet for talent.

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

17:55And the SpaceX talent has his philosophy.

17:57He inherited, I think, a lot of, you know, maybe people for XAI or for

18:03Twitter that were not in his mold and they're clearly getting aligned.

18:08And it's also going to make his day -to -day life much easier when...

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

18:15The continuity of not having to task switch between companies is going to be great.

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

18:23Even Walter Isaacson now is on the Tesla SpaceX merger train.

18:27There you go. He just did a pod.

18:29Everybody's confirmed it. It's going to happen.

18:31We called it here first.

18:32Okay, topic two. Is there a SaaS debt bomb in private equity?

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

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

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

18:53TB acquired them in 2021 for $6 .4 billion, all cash, at the top of

18:59the market. As part of the deal, they incurred $3 billion in debt.

19:04And for background, in 2021, this company had $470 million in revenue growing, 20 %

19:10a year. Earlier this month, Bloomberg reported that TB's debt servicing costs for Medallia were

19:16about to triple from $100 million a year to $300 million a year.

19:21Blackstone and other firms refused to extend a lifeline to the company, to the SaaS

19:26company. So it looks like Toma Bravo just handed the keys back and wiped out

19:30$5 .1 billion in equity.

19:33Lee Chamath, your thoughts. We've been talking about the SaaS headwinds for a bit.

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

19:38Well, first of all, I think Toma Bravo is an unbelievably well -run organization.

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

19:49So what do I think happened?

19:52I suspect that they probably got enough of their equity, if not all of their

19:58equity. There's probably a decent chance that they did at least one or two dividend

20:02recaps in the last five years.

20:04And if I had to guess, I suspect that they are positive return.

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

20:12And so turning the keys over becomes easier.

20:14Because you have to remember, in private equity, the entire playbook is for transformations of

20:21assets that are at some point not working, right?

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

20:28us would buy, which is just sort of this, you know, clean, white sheet, de

20:32novo, grow at all costs kind of business.

20:34So they have operating partners and all of these other people waiting in the wings

20:38to un -fuck situations. That's the whole playbook.

20:43So to turn it over, I suspect means that there is a core rot that

20:49people couldn't fix combined with the fact that they have probably gotten enough downside protection

20:55that it's not a huge thing for them.

20:57Now, this is an issue for the bondholders.

21:00And then that'll maybe flow through to the borrowing costs that Tomah Bravo has to

21:04pay maybe for a subsequent deal.

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

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

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

21:13There was someone that published some internal data showing that the sales team was like

21:1918 % a target at Medallia.

21:21Do you guys know what this company does, Medallia?

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

21:28Customer experience management. I don't know what that means.

21:32Yeah. They'll basically send, like you go on Caribbean cruise ships and you get a

21:35survey afterwards. And then they use that survey data to provide management insights and operational

21:40insights to the leadership team and the operating team on how to improve the quality

21:43of their product or their service.

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

21:47So if I were to tell you guys, hey, you want to build a feed?

21:50feedback surveying loop to run your business better.

21:53Are you going to buy SaaS today?

21:54Are you going to ask your AI to spin up an agent for you to

21:57do that? And I think that's a big part of what's happened is all these

22:00sorts of companies where the alternative to buying a SaaS product is to spin something

22:05up internally. And it's much cheaper and easier to spin it up internally, you get

22:09a custom workflow. I agree with that.

22:11I'm just saying in the last five years, you think they sat on their hands

22:14and didn't take a dollar out?

22:15They're not that dumb. Maybe they took cash out, maybe they didn't.

22:18But there was still a big debt overhang and the debt's clearly gotten impaired, which

22:23means that the equity... The debt holders are clearly screwed here.

22:27The question is, is Toma Bravo screwed?

22:29And I would say, if you sat around for five years, that's not their style.

22:32They generate too much money.

22:34They're too good. So they may have taken cash out and covered some of their

22:37costs, but the equity got fully impaired.

22:39And then the debt is clearly impaired because you can see how the debt and

22:42the CLOs are trading, which indicates that this business is just not doing well.

22:47And then someone else on Twitter posted some internal information from Medallia saying the sales

22:52team is just not hitting their targets.

22:54They're like way, way off their sales targets, which I think speaks to the underlying

22:58problem here. Yes. Which is that...

23:01No, unpack that. Yeah, please.

23:02Yeah. So the underlying problem is that these businesses in the SaaS space, where you're

23:06driven by net new sales every year, how many new customers are you signing up?

23:10And then you're trying to manage retention and you're trying to increase sell through and

23:14retain customers. customers, they're just having a really hard time sourcing new customers.

23:18And there's probably higher than modeled attrition.

23:19That's right. And when you have a very kind of typically historically predictable business, where

23:24you can say, hey, I've got a net revenue retention of 118 % or what

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

23:32making last year. And then I'm signing up new customers.

23:35You can lever that business, right?

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

23:40And what's happened in the last year in particular is agents have become so good

23:45and so fast and so cheap that many enterprises can simply spin up an alternative

23:50to a vertical SaaS solution.

23:52And that's crushing the sales team's ability to sell in.

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

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

23:58happened this week. And that's Kevin Warsh's hearing for Fed Reserve Chair.

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

24:08And I actually think we all talk about the SaaSpocalypse as if it's this sort

24:11of like isolated business phenomenon where these SaaS companies are getting blown up.

24:16I think another lens to look at what's going on is the incredible deflation of

24:21how much it costs to successfully run a business.

24:24And you don't have to pay a premium price for SaaS products anymore, meaning that

24:29that piece of the business can suddenly get much cheaper.

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

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

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

24:44that it will drive productivity growth like we've never seen before.

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

24:49that there may be a dislocation between that productivity growth being realized, and how the

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

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

25:02The problem with economic deflation is that when it occurs, it means some business is

25:07seeing their revenue go down.

25:09And if that segment of the economy is levered, if they have debt sitting on

25:13top of that piece of the economy, where it's supposed to always, always, always grow,

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

25:21impaired, and that can have an economic ripple effect that is adverse.

25:24But what he's pointing out is that as a result of deflation, because it's not.

25:29coming from some cost cutting or economic contraction.

25:32What he's saying is that the deflationary forces ultimately lead to economic expansion because other

25:37parts of the economy will now grow.

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

25:43budget, and I can reinvest that capital in other ways of growing my business instead

25:48of managing my expenses, all of a sudden, my enterprise will grow and the economy

25:53will grow. He also said, just as an aside, and I want to make sure

25:56I cover this so that we're really clear, he said the way that we've been

26:00measuring inflation is wrong, and that he doesn't agree with the way the Fed has

26:03been measuring inflation because you can do a survey of any household and they'll tell

26:06you, my God, everything's so expensive.

26:08So all of the indices and bullshit that are being used to calculate an inflation

26:12index is completely misrepresenting what the average American is actually feeling.

26:16And so he wants to rethink how the Fed is addressing inflation from an interest

26:20rate perspective, but he does think that the overall kind of economic picture is one

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

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

26:30I think it's pretty clear what's happening here is that the loss, SaaS's loss is

26:35the token dealer's gain, right?

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

26:41they're writing their own tools, they're making their own dashboards.

26:44I see that every day.

26:46And if you look at the SaaS product index, here it is, Salesforce down 32

26:51% in the past six months.

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

26:57Service now down 54%, Snowflake down 43%, Adobe down 33%, Figma, which had a huge

27:03IPO pop and is now down 67%.

27:07So what is the role of venture capital and then private equity in addressing the

27:14software market? Software was eating the world, now tokens are eating the SaaS business and

27:19the software business, yeah? Well, I'm of two minds about this.

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

27:27Let me just say, backing up, that historically we only had two good exits for

27:32software businesses. One was IPO, the other was M &A.

27:35And then these big private equity shops came along and gave us a third potential

27:39exit, which is you would sell to them.

27:41And then they would raise the capital based on, I don't know, one -third equity

27:45and two -thirds debt. So it was debt finance buyouts, which is something that's been

27:49around in, let's call it, the non -tech part of the economy for a long

27:52time, but was a relatively new entrant into the world of technology.

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

27:59you need to have very stable cash flows.

28:01Because if you miss, if your cash flows miss and you can't pay your interest

28:06on the debt, then you're going to lose all your equity because the debt holders

28:10will foreclose. So in order to do a debt financing of any kind, you have

28:13to have very predictable cash flows.

28:15And it was believed for a long time that software did have those predictable cash

28:20flows, at least for the mature businesses, the ones that were at the stage where

28:25they could IPO as a potential alternative.

28:27So it was a very attractive thing.

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

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

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

28:41I mean, we're seeing public SaaS companies that are doing a billion of ARR with

28:4620 % growth rates, 80 % gross margins, and they're trading at three times ARR.

28:52Yeah. You can buy a dollar for 50 cents.

28:55So is that an opportunity, Sachs?

28:58Do you think we're going to hit rock bottom, we should do a roll -up?

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

29:05attractive. If you're a private equity shop.

29:07If you're a private equity shop.

29:07Looking at a business like that, I mean, those companies used to be valued at

29:1013 times ARR, now it's three.

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

29:15Now, the downside of that - By the way, Salesforce is off 9 % today.

29:19I don't know if you guys saw this, but the market's absolutely tanking today after

29:22the Medallia announcement came out.

29:25Right. Okay. So that would be like, you know, I said I'm of two minds

29:28about it. So I would be bullish for private equity just based on pricing.

29:32But the bearish part is that in order for their business model to work, you

29:35have to have predictable cash flows.

29:37You can't have a SaaS company go from, I don't know, 120 % net dollar

29:41retention one quarter to 80 % net dollar retention six months or a year later

29:47because a big part of their customer base is attrited to using tokens, right?

29:51Or to basically creating some bespoke software.

29:54You just said the absolute critical thing in all of this, which is you have

29:57to have predictable cash flows.

29:59I think what happens is when you're a startup, you typically have to figure out

30:03how to disruptively price to enter the market.

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

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

30:13Of price to value. The problem is when you start to stack venture capital into

30:18it, and then you stack growth equity into it, what you're effectively creating in the

30:24preference stack of your company is that you are creating a higher return hurdle, right?

30:31You got to clear 300 million, 500 million, a billion of PREF, and then you

30:35have to return 15 or 20 % on top of that.

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

30:42They increase price. But the problem is at some point when you increase price, you

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

30:51Private equity is the last stop.

30:54Because when they come in and they layer in billions and billions of dollars of

30:59not just equity, but also debt, and that has to then be completely predictable and

31:04paid back, their only lever is to raise price.

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

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

31:12And so, Sachs, part of the big problem here and why nobody wants to touch

31:16these companies is that they are overpriced.

31:18Yes, they're making a billion dollars of ARR, but the unit cost has gotten out

31:23of control. It used to be 10 % of value.

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

31:28And everybody's looking at their contracts thinking, well, when it comes time to a renewal,

31:33I'm going to just cut this in half or I'm going to cut this by

31:37two -thirds or I'm going to cut this by 75 % because the value isn't

31:41there anymore. Or they can threaten to and negotiate a better deal.

31:45And it becomes even worse because the minute you make these products headless, right, and

31:49you say, I'm just going to communicate with these products via MCP and with agents,

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

31:56What do you do then?

31:57Freebrook doesn't need 50 seats of, you know, workday.

32:01He needs two seats because the agents act as the way to write in and

32:06out of workday. So he wants to pay for two seats, not 50.

32:09And then if you multiply that by a million companies, that's what gets us to

32:13this place where it just feels like a falling knife.

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

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

32:22with what the market needs and wants.

32:24And until they reset that or you find new products that can do it cheaper,

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

32:31Yeah. By the way, Salesforce today is down 9%, 140 billion enterprise value on 15

32:37billion of free cash flow.

32:39This thing is trading at less than 10 times free cash flow.

32:42It's unbelievable. I think it might be a bargain, to be honest.

32:45I think it might be a bargain, to be honest.

32:45Yeah, it sounds like bargain hunting.

32:48And what if Benioff was the king of acquisitions?

32:50What if he just starts cleaning up and buying?

32:53He's buying his own stock.

32:55Yeah. And we didn't put this on the docket.

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

33:00Yeah. Did you see this?

33:01It's actually very, it's very smart.

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

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

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

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

33:13the ones that have that scale that have that multi product platform that have a

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

33:21their way into an evolution of the first one.

33:25And because like, if you look at it, and you compare it, for example, to

33:27other companies, I think the workday response was to say, you can't have an AI

33:31interact with us without paying some kind of like toll.

33:34You're exactly right. Whereas Benioff is the exact opposite, which is he's like, okay, we're

33:38gonna go headless for the whole thing, which is really exactly right.

33:41You're exactly right. I think that's that's going to be the distinction of the winners

33:44here and the losers. And are you on the wrong side of this?

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

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

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

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

34:02The problem is that if you cut everybody's cash flows off at year five or

34:07six or seven, then all of a sudden, I think you see the natural compression

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

34:14And that has nothing to do with business quality.

34:18That just says you you literally mathematically take year seven through n of the future,

34:23and you discount it to zero.

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

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

34:33with Google, with Uber, just having massive free cash flow, and you've got 10s of

34:37billions of dollars, you can put it to work and you can weather these storms.

34:41By the way, J. Cal, I think another way to think about this is, you

34:46know, to the question about maneuverability, and who has the gumption to make the hard

34:50choices right now? Yeah, look at Benioff.

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

34:54He's run this thing since its founding decades ago, he is willing to bet at

34:59all, he's willing to make the change.

35:01And it may be that the index you buy in this era of AI transformation

35:05is the index of founders, that the founders who are still running their businesses are

35:09going to be the ones who are most likely to see the future, they'll burn

35:12the boats, they'll make the changes.

35:14And all of the guys who have hired managers to run the business are going

35:18to do the things that Chamath's talking about, which is try and charge fees and

35:21try and maintain the old way of doing things, as opposed to reinvent for the

35:24new future. If you look at the 10Ks, if we could figure out what the

35:27unit price cost and the trend and the inflation is of a per seat license

35:33for these products, I will point to the ones that are going to die first.

35:37Can I make two quick points?

35:38Yeah, wrap us up. One is, yes, I would like fully endorse what you said

35:41about Benioff. He's made every previous wave work to his benefit, whether it was social,

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

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

35:53I'd say pretty good. So his stock might be a bargain right now.

35:57So that'd just be point number one.

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

36:04think it's fine when private equity guys use it because they know what they're doing.

36:07But I've always hated when founders take on venture debt.

36:10And I know, Jake, how you agree with me.

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

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

36:17And then they get surprised.

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

36:22It basically subjects you to a bunch of business.

36:24business covenants. And it makes it harder for you to do an abrupt shift in

36:29your business because now you've got a bank looking over your shoulder and they want

36:32to make sure they get paid and they have to review your financials and all

36:35the rest of it. And to your point, J.

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

36:41the most maneuverability. I hate taking away maneuverability from founders.

36:46And that is what debt does because it subjects you to a fixed schedule of

36:50payments. And so this is always a thing to remember, whether you're a business or

36:54you're an individual, you know, when you put on that debt, it makes you more

36:59vulnerable to big disruptions in the market.

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

37:07that in peak markets, peaks are you're going to have venture debt people offer you

37:12tons of cash. And then the problem Dave and I saw up close and personal

37:16in many different companies where the founders would look at it as like, oh, I'm

37:19extending my runway. Well, if you're a hot startup, there's always more venture capital.

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

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

37:29people rooting for you and aligned with equity interest as opposed to now you have

37:34a debt instrument. They have a different goal.

37:38They have different downside. They're trying.

37:40No bank wants to be your last three to six months of runway because that

37:44means that in a high percentage of cases, they're going to lose their money.

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

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

37:55Never, never. I have only, only, only ever seen venture debt 100 % that damage

38:01companies. And if you get the venture debt, you can never actually use it.

38:05So the venture debt investors that ultimately make money, it's because they put money in

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

38:12I hate this business. I think venture debt's like the worst vulture -like business in

38:16Silicon Valley. It's terrible. Right.

38:18And if you get down, if the last money in the bank is the debt

38:21you owe to the bank, they're going to rug you.

38:24That's when you get rugs.

38:25100%. You think they can afford to lose 100 % of their money when they're

38:30getting an 8 % return or something like that?

38:33No way. That's not how it works.

38:35VCs can afford that because we have the opportunity for a 10X or 100X or

38:401 ,000X for that moonshot so we can accept a bunch of zeros.

38:44The bank can't accept a bunch of zeros.

38:45Well, and then when they do get scared and when they do think they're going

38:49to lose their money, wait till you see what they extract in terms of value,

38:53what they ask for. They will ask, they'll double the interest rate.

38:56They'll ask for warrants. It's basically like being in debt in prison.

39:02Chamath, you can talk a little bit about your experience when you were in debt

39:05in prison. It's not going to be pleasant.

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

39:14had a moment where it was reflexively kind of collapsing inward because the assets that

39:19I was using to secure it shrank in value in a moment of market disruption.

39:23I was scrambling. And then at the same time, there was a risk.

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

39:31I had like a couple hundred million dollars sitting at Credit Suisse and they were

39:34about to implode. And so on a weekend, I was trying to figure out whether

39:37my money was still there.

39:39I had always had this rule, don't have debt.

39:42And then I violated it to try to run the number up.

39:45I almost got run over.

39:47I almost lost everything. I will never do it again.

39:51And if I ever do it again, if you guys ever hear me do it

39:54again, please just come and punch me in the face.

39:56We will. We've been waiting for an excuse.

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

40:00Buffett has this line about, oh, this is hell.

40:02our guys go bankrupt is they take on debt debt equals prison bitch keep it

40:08in your mind guys you will be unless you socialize the debt and then everyone

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

40:15governments don't get to start going off yeah don't push the button all right listen

40:19we got to talk about another just just just a quick aside on that in

40:23the 1950s all the corporations in america had pension plans where you would get some

40:27guaranteed payout at the end when you retire and they were all like we're all

40:31going to go bankrupt because a pension plan is either significantly overfunded or underfunded if

40:35it's underfunded you're bankrupt if it's overfunded you've wasted all this money you can't do

40:38anything with it so they all moved to 401ks and everything got moved to define

40:42contribution plans except except governments and that's because the government employees for public employee unions

40:50and they're like we want to keep the pension plans and now the pension plans

40:53it turns out 70 years later are going to bankrupt all the governments in the

40:57united states by the way that guy spencer pratt who's running for mayor he started

41:02uncovering all of the salaries of the union folks and their pensions in southern california

41:08it's bonkers they're making four or five hundred thousand dollars a year right before they

41:12go on pension then they double their overtime and they get two thirds or a

41:16half the pension doesn't work you got to go super annutation fund i don't know

41:20how many times we've talked about it here but well you don't need an annotation

41:23fund you just need a 401k let people have a have an account they got

41:26their money in their account yeah but it's just a way to force people to

41:29contribute to it so a forced 401k is different than a 401k you got to

41:33force people and it's you're not allowed to force people into the 401k as you

41:37know yeah as we've seen in california everything related to the government is a giant

41:41grift it's a giant scam there's tons of fraud going on uh we've talked about

41:46the homeless industrial complex 12 billion a year to homelessness but the number of homeless

41:50keeps going up there's a million examples like that the racism industrial complex yeah maybe

41:55that's a good time let's shift to spLC because i think it's a good example

41:58well we'll get to it we'll get to it um yeah but you know what's

42:00even better is you can just pass a law like the nick shirley act and

42:03you can put your fingers in your cover your eyes and say la la la

42:05la la and just pretend the fraud's not happening which is their reaction in california

42:10how much fraud has nick shirley uncovered so far in california billions he should be

42:15a billionaire you know he should be doing it privately and then getting the whistleblower

42:21awards i think that actually would be a better strategy for him we told him

42:25that was the we told him that business model remember yeah no he's i think

42:28he's addicted to the views but i mean he could literally raise money on he's

42:33making concept he's making thousands when he could be making billions to bring brooks no

42:37well but it's better it's better for the public that he's doing what he's doing

42:41thank god for nick shirley so thank you nick shirley whether you could be making

42:45more money or not what you're doing is and you know what he also did

42:47he shamed the mainstream media who's forgotten about investigative journalism who forgot the ability to

42:54knock on a door and just ask a basic question and now barry weiss with

42:59cbs has deputized one of her reporters and she's doing the exact same playbook and

43:05meeting him punch for punch where's cnn anderson cooper should have a nick shirley on

43:10his team the new york times should have a nick shirley the la time should

43:13have a nick shirley why don't they that should be your number one higher you're

43:17talking you're talking about old media that does things one way and the point about

43:20nick shirley is it's new media it's citizen journalism it's people on the street distributing

43:25fact finding distributing information gathering and old media in order to survive became an opinion

43:30organization didn't the media used to care that the pentagon was paying 900 for a

43:34hammer or what have you like 60 minutes used to do things now it's like

43:38the media just wants to protect the The waste, fraud, and abuse, no matter how

43:44egregious it is. Do you remember that guy, Dennis Kozlowski, the CEO of Tyco, who

43:49went to jail, and they had just a field day.

43:52His umbrella stand? Umbrella stand.

43:54Yes, the umbrella stand. The $6 ,000 umbrella stand.

43:57Made out of ivory from a bino elephant.

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

44:03Sax, you're so right. People really used to care, except when it was their team.

44:07And then the minute that it was their team, they're like, oh, no, no, let's

44:10just look the other way.

44:11You're right. If a CEO basically engages in some misbehavior, and I'm not defending it,

44:16the press will be all over that.

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

44:20Free pass. And in fact, we had one of the most successful, probably the most

44:24successful entrepreneur of our generation donating his time to the government to find waste, and

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

44:34They vilified him and drove him out.

44:35Yeah, they made it untenable.

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

44:41did, and they productize that and make that their platform, that's the way to win

44:47in 2028 and going forward is to convince the public that they don't need to

44:52have their taxes raised. They could have their taxes reduced just by eliminating the minimum

44:57of 20 or 30 % of waste, fraud, and abuse there is in the system.

45:02We'll get to Tim Cook stepping down in just a moment, but I want to

45:05remind everybody, liquidity sold out.

45:07I'm sorry, we added a couple of tickets, we burned through them immediately, but you

45:12can still get into the All In Summit.

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

45:18Allin .com slash events to apply.

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

45:24get a ticket. I'm a bestie, get me in.

45:27Just buy your damn ticket and don't get left out.

45:29I have a liquidity announcement.

45:30Oh, yum, yum. We are going to do one political panel, and it's going to

45:37be Dave McCormick and John Fetterman, the two sitting senators from Pennsylvania, on stage with

45:44us, talking about all topics from a left and right perspective.

45:50Amazing. So Fetterman's coming, which means the dress code is now sandals, shorts, and a

45:56t -shirt. That's great. Construction sheet.

45:58Construction sheet. Get your Timberlands out.

45:59Get your Timberlands out. I mean, is he really going to show up looking like

46:04a hobo? I love his hobo style.

46:06It's great. McCormick's very fit and handsome, so he'll balance them out.

46:10That's what we should program it as.

46:12He should wear his best Brioni suit versus the old Navy from Betterman, who wore

46:18it better. All right, listen, just rapid fire here on the Tim Cook resignation and

46:24moving on. This guy, John Ternus, is a 25 -year vet.

46:29But he did lots of hardware, worked on iPad, AirPods, and he was the favorite

46:35on Polymarket since day one.

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

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

46:45out of Steve Jobs' product line, which lasted for a decade.

46:48iPhone, Apple TV, watch. I don't need to repeat them.

46:52But here we are. We got a product person in the seat, which is what

46:56we all know they needed because, hey, these tools are getting a little bit stale.

47:01Siri, disgraziad. AirPods, disgraziad. The whole system is not built on innovation anymore.

47:08It's built, Freberg, I think you would agree, on just bringing more profits, more profits.

47:15What's your hope here? Because, man, they missed so many great swings at bat.

47:19They didn't. get the oculus you know ray -bans that meta did they canceled their

47:25self -driving car what would you hope that this new ceo of apple focuses on

47:30freeberg in terms of innovation they don't have a problem selling phones still they don't

47:34have a problem selling laptops and making a ton of money but if you're in

47:36the seat if you were on the board of apple which wouldn't be a bad

47:39idea for them if i'm being honest what would you tell the new ceo to

47:42focus on david freeberg i mean i don't know the software layer of the future

47:46is not the software layer of the past so okay it's pretty obvious i don't

47:51know how much there is to talk about but you just need the siri equivalent

47:54that's ubiquitous in all of your devices knows who you are personalized to you sees

47:59your email sees your calendar entries knows what kind of music you like has connection

48:03to your home basically build that ai layer for your life and make it ubiquitous

48:09in all of your apple devices that no matter what device you're using it knows

48:12who you are you can engage with it using kind of a natural language method

48:16and it's you know it's it's pretty obvious yeah they should buy whisper flow yeah

48:21i mean that would i don't know how they're i don't know how they're running

48:23the business but well they're running it for profits obviously sax uh i would say

48:28buy whisper flow and just replace the siri team with that because siri has been

48:31just the fact that siri can't spell polyhapatea or calacanis after 20 years of us

48:36giving them twenty thousand dollars for iphones is just disgraceful sax if you were on

48:41the board of apple again not a bad idea what would be your hope for

48:46the company what would be your sage advice for the new ceo well i mean

48:51everybody is going to be asking the same question which is what are you going

48:54to do about ai i don't know that they needed to be on the bleeding

48:57edge of it but they are going to need an answer at some point and

49:00siri can need to be ai empowered probably the way it should work is that

49:04you get to choose your model i mean i don't know that they need to

49:07pick just one model provider it could be a setting where you go in and

49:11you set up your account with whatever chat gpt or grok or claude or what

49:15have you and you can choose your own model provider and then you'll have more

49:19customization and more ability to control your your storage let me just say just on

49:25tim cook's retirement he had an incredible run as ceo of of apple i mean

49:31he ran it very effectively for 15 years the market cap of the company went

49:36up by over 10x the revenue grew from roughly 100 billion a year to over

49:40400 billion a year he also improved the quality of revenue by moving the mix

49:45into services yeah that's partly why i got why i got a higher valuation and

49:51you know people say that well they never did any innovation under tim cook but

49:55you know i've seen people tweet lists of products that were released under him and

49:59there were a lot of them now it's true nothing as big as the iphone

50:04but they did release a lot of products under tim cook and then just finally

50:07i mean you you look back over the last 15 years and there really weren't

50:12any public snafus or scandals or imbroglios with with apple it's one of the few

50:19tech brands that is still i think beloved by the population i think a major

50:24part of that was tim cook's dedication to privacy and keeping the company on the

50:28right side of that which i think users do appreciate and you know he even

50:33tim cook even got praise from the president i think it was unsolicited where the

50:38president talked about how tim cook didn't call him up that often but when he

50:42did it was something important and therefore the president tried to help them out it

50:46seems like he nurtured a good relationship with the president over over the last decade

50:50or so so you just have to say that he navigated what could have been

50:53a turbulent period with a great deal of grace and up long clearly uh chamath

50:59he was a great steward of the brand even though that list of products were

51:05all developed under steve jobs and they were just executed well but he didn't bring

51:12in a lot of new products or services any final take actually jake let me

51:16ask you a question what do you think other than ai you know ai powered

51:20siri let's say what do you think he missed i mean like what should apple

51:25have done that they didn't do they would have out by now a pair of

51:30glasses that weren't 17 pounds like the apple vision pro they would have gotten glasses

51:36that pair perfectly with your phone take videos for kids and they're coming out with

51:40it it's just on a really broken timeline they would have had a killer siri

51:44they would have had a search engine ish perplexity like product they would have had

51:49a self -driving car when you went to the apple store you would have been

51:52buying two or three very important products glasses a car and probably a television set

51:59if you look at actually what they did innovative under tim cook i think that

52:02they have great taste and apple tv produced a lot of great programming i he

52:08was working on a television set not apple tv clunked onto the back i think

52:12those three products would have been four products siri glasses car television set those would

52:18have been extraordinary and who knows what he would have come up with when they

52:21lost johnny ive and obviously steve jobs passed away they lost the soul of the

52:25company they lost the innovative groundbreaking soul of the company and they just went into

52:31profit and iteration mode but no acquisitions of note nothing important was acquired and nothing

52:39important was released vision pro you can give them like maybe that's like the sixth

52:44best product or something but it obviously hasn't hit the mainstream chamath any final thoughts

52:49from you yeah i have um three specific things to say the first is that

52:54he had honestly like an impossible job it's sort of like you play basketball with

53:02michael jordan and then you're asked to be michael jordan and i think that that's

53:07an impossible task and on that dimension i think he has done just an incredible

53:11job he has been an incredible steward of the business sax is right no major

53:17snafus i think he did a really smart thing around doubling down on privacy and

53:23just as a practical matter of being a great ceo like if you i think

53:28you can categorize ceos in two buckets one is the innovator the person that's pushing

53:34the envelope and then the second is just a great steward he's at the top

53:40of the top of the top of that second category um i sent you a

53:44couple of charts to show this and he found a lane that allowed him to

53:48separate himself from steve jobs so you know as an example like what does it

53:53mean to be a steward well when you're a steward you're allocating resources and the

53:58two most important resources you control is capital and people and i think on that

54:04dimension what tim did if you just look at this is he was able to

54:09invest appropriately in r &d they completely divested their need of intel they spun their

54:16entire new line of silicon that silicon it turns out and this will be important

54:20in the future is very useful in ai with all of this open claw stuff

54:25and you know some of you guys are completely addicted to it and they've kept

54:29the acquisitions light so he was very capital efficient if you look at the the

54:34next chart what's so interesting is It's like, it is the exact opposite of what

54:38Steve Jobs did. Look at the amount of money that Steve Jobs returned to shareholders

54:42in his tenure at Apple.

54:44It's easy to count. It was zero.

54:46He loved to keep that money on the balance sheet, and he probably, or maybe,

54:51I'm guessing, would have directed that at some huge shot on goal.

54:54In the Tim Cook era, it was very different.

54:57He shrank the share count by almost 50%.

54:58I think it's like 44%.

55:00That's insane. Is there any corollary to that, Shemar?

55:04No. He's been a prolific, shareholder -friendly CEO, finding ways to give us money back,

55:11which I think everyone who's owned the stock has very deeply appreciated.

55:15The last thing I'll say, though, is what is the future for John Ternus, and

55:19I think it's in this final chart.

55:20We talked about the problematic nature of increasing per unit pricing in SaaS.

55:29What I would say is, if you look at the iPhone, the unit price has

55:34gone up, and people would say, yes, but the capabilities have gone up in turn,

55:38and I acknowledge that. But the problem with the per unit pricing being as high

55:43as it is, is what Freebrook says is going to happen.

55:46AI rips open the canvas of the devices that we will use to interact with

55:52information and knowledge. We are going to live in a much more heterogeneous world in

55:57the future. It's not going to be two devices and two different operating systems that

56:02get you to knowledge. There's going to be all kinds of stuff, pens, orbs, who

56:07knows, Jason, your glasses, whatever.

56:10And so the problem is, if you get too addicted to a single thing that

56:14has an incredibly juicy profit margin and great stickiness and the ability to raise price,

56:21it's a hard drug to get off of.

56:24So I think really what John Ternus has to do is figure out how to

56:28move to this world where everybody will be launching umpteen devices via MCP or otherwise,

56:35all of these services will be open.

56:38It'll be agentically talking to everything.

56:41I think the moats decay.

56:44And I think if that happens, that's problematic if you're too reliant on a single

56:49thing to kind of keep it going.

56:50Yeah, and just expanding on what you said, like wearables is where they really made

56:55some good inroads in terms of getting people to use them, whether it's AirPods.

57:00And the next wearable, like this is a plod pin that I use to record.

57:04You can put it here, put it on your wrist.

57:07That AI synchronicity of having your eyes, having your ears, having your watch, having your

57:13phone, your desktop, all synced together with AI could be a huge product line.

57:18I'll also add a fifth, robotics.

57:20You know, I think Steve Jobs, if he were alive today, would have been looking

57:25at Roomba. He would have been looking at Optimus and he would have said, hmm,

57:29consumer robotics in addition to a consumer car.

57:32Those are two things I think he would have absolutely executed on at a high

57:38level. Okay, let's keep moving here.

57:40And we'd love to have you on the pod, John.

57:43So just come on the pod when you're ready.

57:44We'll have you come sit in.

57:46Go ahead, Zach, you get the final word.

57:47Just one last point on this is that I think the succession at Apple is

57:52reminiscent a little bit of the succession at Disney.

57:56And apparently Steve Jobs and Tim Cook had this conversation back when Steve was alive

58:01and Steve told Tim, don't do what Disney did, where basically after Walt Disney died,

58:07the company kind of languished because it felt so beholden to Walt's vision that they

58:14never really iterated. Now, when Walt died, his brother Roy took over, and Roy was

58:19already in the business. He was sort of like the business co -founder.

58:22He was a COO type, a little bit like Tim Cook, and he kept the

58:25magic going for about five years, and then he himself died.

58:28I think it was around 1971, and then you had this string of CEOs who

58:32took over, kind of uninspired, and it wasn't until Eisner came in in 1984 that

58:36he sort of revitalized the business.

58:39And so, as I understand it, Steve and Tim had this conversation, and Steve told

58:43him, don't be too beholden to my vision.

58:45You need to figure out your own and extend it.

58:48I think that you could argue that Tim, in a way, was like the Roy

58:52figure here, very effective business partner of Steve.

58:58He got a 15 -year run.

59:00Roy only got five, and I think, again, he added a zero to the value

59:05of the company. The market cap went up over 10x.

59:09So, you'd have to say fantastically successful run as CEO.

59:12I think the question now for John Ternus is, okay, you're now past, let's say,

59:18the Walt Disney and Roy Disney part of the business.

59:20Is it going to be like the 1970s Disney, or is it going to be

59:24more like the 1980s? Do you figure out a way to revitalize it, or do

59:27you have to go through kind of a funk first?

59:32Yeah, I think it's really illustrative of this discussion, Eisner and Iger.

59:38Because Eisner's innovation was he realized that Disney was, I think he called it the

59:44vault strategy. He would, and we probably remember this from our childhoods, he would re

59:49-release all into theaters, all of their IP every seven years.

59:53You couldn't get some of those Bambi's, whatever, Snow White and the Seven Dwarfs.

59:58You couldn't get those products except in theaters.

1:00:00And he figured out a cadence to keep publishing.

1:00:03But then Iger came in and said, hey, what if we use this balance sheet

1:00:06and we use this distribution at the parks with their brand to buy Pixar, Marvel,

1:00:14and Star Wars? And so there's multiple ways to do it.

1:00:18There might be something there in terms of acquisitions, bold acquisitions with the Apple balance

1:00:24sheet could be super accretive to shareholders as opposed to lowering the share count and

1:00:29just distributing a ton of cash.

1:00:31All right, listen, we're going to talk about the Southern Poverty Law Center.

1:00:36Racism corner. Let's go to race.

1:00:37Fake, fake racism corner. I want to know how the SPLC managed to accumulate $822

1:00:44million in offshore bank accounts.

1:00:46Yeah, this is incredible. These are big numbers.

1:00:48Okay, SPLC. How is that possible?

1:00:51What is going on? All right, let me tee it up here for the team.

1:00:54This is like one of the biggest griffs of all time.

1:00:56Anyway, this is a big one.

1:00:57SPLC has been indicted, indicted, not found guilty yet, on 11 counts of wire fraud

1:01:04and money laundering. Keep that in the back of your head, wire fraud and money

1:01:07laundering. Here's the core allegation.

1:01:09Between 2014 and 2023, the Southern Poverty Law Center used hidden bank accounts to funnel

1:01:15$3 million in donor money to paid informants.

1:01:18Like, these are confidential informants, like the police or FBI might use.

1:01:23They use these as a nonprofit NGO to infiltrate hate groups.

1:01:29And so the official mission of the SPLC is, quote, to be a catalyst for

1:01:34racial justice in the South and beyond, working in partnership with communities to dismantle white

1:01:39supremacy, strengthen intersectional movements, and advance the human rights of all people.

1:01:45Okay, sounds great on paper, examples of organizations they were trying to infiltrate, KKK, Aryan

1:01:51Nation, Nazi groups, and the United States.

1:01:53the right organizers. Proud Boys labeled as a hate group by the SPLC.

1:01:58Oath Keepers not listed as a hate group, but part of the militia movement.

1:02:02My friend Sam Harris, he was not listed as a hate group, but he was

1:02:05also pinned by the SPLC as like hate adjacent in their hate watch headlines.

1:02:12And this is something that I had a major problem with this organization on, which

1:02:15is they would just very loosely label people as hate speech and try to get

1:02:20them canceled. All of this kind of came to a head.

1:02:24The revenue before Charlottesville, you remember the incorrectly clipped Charlottesville hoax where they said Trump

1:02:30said good people on both sides, but they didn't give his full quote.

1:02:34Very unfair to President Trump, we found out later.

1:02:37And that was the reason Biden, of course, ran.

1:02:40He said the Charlottesville both sides thing was his inspiration.

1:02:4358 million in 2026, to your point, Shema, doubled and spiked to 136 million, more

1:02:49than double. And it's remained elevated ever since.

1:02:51Here's some, you know, images for the indictment.

1:02:55And I'll wrap on this and then get everybody's feedback.

1:02:58They had F37 as one of their confidential informants.

1:03:03He was a member, and this is according to the indictment, quote, member of the

1:03:07online leadership chat group that planned the 2017 Unite the Right event in Charlottesville, Virginia,

1:03:14and attended the event at the direction of the SPLC.

1:03:19F37 made racist postings under the supervision of the SPLC and helped coordinate transportation to

1:03:24the event for several attendees.

1:03:26Between 2015 and 2023, the SPLC secretly paid F37 more than $270 ,000.

1:03:33That's the legal case here.

1:03:35Let me pause there. Can I add one thing?

1:03:37Sure. Keep adding. There's a lot of details to this case.

1:03:39Yeah. So you're right that the SPLC allegedly did fund $270 ,000 to help plan

1:03:45Charlottesville. In addition to that, they secretly funneled more than $3 million to a bunch

1:03:51of violent racist extremist groups, including the Ku Klux Klan, the American Nazi Party, Aryan

1:04:00Nation, United Klans of America, and it goes on from there.

1:04:04So I think, don't forget about the $3 million.

1:04:06So this group that was supposed to be fighting racism, in fact, was fomenting racism

1:04:12by paying these groups to basically organize protests that SPLC could then point to and

1:04:20say that America has a huge racism problem, donate to us.

1:04:23And that's basically what happened after Charlottesville.

1:04:25They increased the amount of money that they were able to fundraise by $81 million.

1:04:31So that $270 ,000 investment led to an $81 million return pretty good.

1:04:36But this is kind of the whole point of the story is that these guys

1:04:38were basically running a grift.

1:04:40And one of the ways that you know, this is a grift is because according

1:04:44to the indictment, that they opened bank accounts under fictitious entities to conceal the payments

1:04:52that they were making from their own donors.

1:04:55Because if their donors knew that they were funding the KKK, they wouldn't be getting

1:05:01all these contributions from Hollywood celebrities and all the rest of it.

1:05:05So it's really just this unbelievable story.

1:05:09It really boggles the mind.

1:05:11And just to clean up a little bit there, these are allegations, they haven't made

1:05:14the jump from planning these events.

1:05:17And the SPLC claims they were not planning these things, they were monitoring.

1:05:23So that's going to be their argument on the side.

1:05:25I'm not saying I agree with that.

1:05:26I know. I know. You're right that the SPLC's cover story is that they were

1:05:31simply paying total amount of money for the August 29th.

1:05:32It was like your choice.

1:05:32informants. That's what they've claimed.

1:05:34But there's two problems with that story.

1:05:36Number one is they were paying the actual leaders of these groups, not just sort

1:05:41of moles who are infiltrating the groups.

1:05:43And second, these leaders, they weren't paid to inform, they were paid to foment the

1:05:49activities. So I'm just saying, that's the flaw.

1:05:52I understand they have this cover story that they were just paying informants.

1:05:55I'm just saying, in my view, that does not hold up.

1:05:58And again, if they were just paying informants, why the extraordinary efforts to conceal the

1:06:02payments from their own donors?

1:06:04If they were proud of these efforts to infiltrate these groups, they should have basically

1:06:08informed their donors what they were doing.

1:06:10In fact, they hid it.

1:06:12And well, here's the reason that it was hidden, according to them.

1:06:15Again, I'm not taking this side.

1:06:17SPLC is not an organization I'm endorsing in any way.

1:06:20Their version of this is we didn't plan any of this.

1:06:24If we put SPLC bank accounts together for informants, that would be like the FBI

1:06:30sending a check to an informant from an FBI account.

1:06:33That's their explanation. They're not a law enforcement agency.

1:06:36Well, that's actually the question I had about all this is like, what is a

1:06:39nonprofit doing hiring confidential informants, Chamath, to infiltrate these organizations to what end?

1:06:46And then if you show me an incentive, you're going to see an outcome.

1:06:49And the outcome here is, hey, we'll get more donations if there's more racism.

1:06:53Your thoughts just generally speaking here, Chamath.

1:06:56Again, all of this is alleged.

1:06:58These NGOs have completely run amok.

1:07:00They're cosplaying as these overlords and power brokers in our lives, and it needs to

1:07:07get stopped. They should all be dismantled.

1:07:10The people that donated to the SPLC should sue them, rip open all of the

1:07:15documentation, get their money back.

1:07:17Because just so you guys know, if you are listening or watching and you have

1:07:20donated, there's $822 million of your money sitting in an offshore bank account, waiting for

1:07:26you to get it back.

1:07:27Okay. And then separately, if you are thinking of donating to any of these organizations

1:07:32in the future, unless there is a full transparent auditing of it, you actually may

1:07:38be doing the opposite of what you thought.

1:07:40If you are against racism, you may be supporting racism.

1:07:43If you are against discrimination for gays, this could be actually promoting discrimination for gays.

1:07:50If you are supportive of trans rights, this may be pushing back against trans rights.

1:07:53Because the playbook seems to be, do the opposite, to create the narrative, give it

1:07:59to your friends in the media, who will look the other way and just amplify

1:08:02it, tell the lie, create the craziness, and then raise a bunch of money, make

1:08:07a bunch of stink, and try to curate power.

1:08:10Friedberg, do you think this is, in your estimation or your gut, tell you this

1:08:15is arsonist firefighters? They're lighting things on fire so that they can go put it

1:08:19out? Or do you think this is like a lawfare, as some people are claiming?

1:08:25Because there hasn't been, to Chamath's point, they don't have donors taking this action.

1:08:31They're being accused of wire fraud on behalf of donors who haven't shown up yet

1:08:34to do, you know, a legal action.

1:08:36What's your take on all of this, Friedberg?

1:08:39The IRS definition of what a 501c3 nonprofit organization is meant to be doing is

1:08:45to engage in exempt activities.

1:08:49The definition of exempt activities is charitable, religious, educational, scientific, literacy, public safety, or fostering

1:09:00amateur sports competition, or preventing cruelty to children or animals.

1:09:06You tell me how the f*** 90 % of what we call non - nonprofits

1:09:10today fall under that definition.

1:09:13We have completely closed our eyes to the fact that organizations, regardless of political affiliation,

1:09:20social interest, have fundamental commercial and probably not aligned interests with the definition of a

1:09:27501c3, and we've allowed them all to get away with it for far too long.

1:09:32I don't think that this is a blue or red thing.

1:09:34I think that this is a thing where we let these organizations make it easy

1:09:37to get money, to hide the money, and to do whatever the hell they want

1:09:40with the money. And we need to stop it.

1:09:43And I think that it's an amazing opportunity right now for everyone to kind of

1:09:47reset the decks by cleaning all this up and getting all of these organizations flushed

1:09:52and make sure that any organization that wants to do whatever bullshit nefarious things they

1:09:56want to do, by all means do it.

1:09:58But it's not a nonprofit and you shouldn't get a charitable donation deduction and the

1:10:03government should not be putting money into these sorts of things.

1:10:06This is an entirely different sort of activity in the social order.

1:10:10And as a libertarian, I'm all for it.

1:10:13But I don't think that they should be tax exempt.

1:10:15And I don't think they should be getting government money.

1:10:17And I don't think that individuals should be benefiting from giving them money.

1:10:20And if we could fix all that shit up, I think a lot of these

1:10:22problems are going to go away.

1:10:23And I think this is a major problem.

1:10:25I think the theme of this episode is audit everything, whether it's government waste and

1:10:30abuse, or it's these NGOs, or it's people like Dow making these chemicals that 30

1:10:35years later, you know, perhaps are correlated with cancer, we need to audit everything, we

1:10:42need to take a fresh look at this, because it's not red versus green, red,

1:10:45this is not red versus blue, it's green.

1:10:47This is clearly a monetary incentive.

1:10:50And it is incredibly disruptive for society to not know the truth about what's going

1:10:55on with race in this country.

1:10:57I got, absolutely, you guys might not know this, but this is part of the

1:11:02cancel culture moment in time where they tried to take people having reasonable discussions about

1:11:07race in this country, and tried to cancel them.

1:11:09They tried to do this to me in 2014.

1:11:11Very famously, you guys may not know this, but I have won a couple of

1:11:14awards in my career. Most offensive tweet ever by Vice in 2014 was my alleged

1:11:21racist tweet where I said, hey, if you want to get into blogging and journalism,

1:11:26there's no racism in Czech journalism, all you have to do is publish for a

1:11:29couple of years a blog post, nobody can stop you, and there'll be a ton

1:11:33of jobs available to you.

1:11:34And then what they did was they tried to cancel me and tried to cancel

1:11:36all my media properties, my investing.

1:11:39And this stuff had like a modest impact on me, maybe for a year.

1:11:43And then now it's obviously all being...

1:11:45Wait, wait, wait. I'm not sure I understand it.

1:11:47J. Cal, you're saying the SPLC put you on a cancellation list?

1:11:50No, they put Sam Harris on it.

1:11:51Vice put me on a cancellation list.

1:11:53I didn't get picked up on the SPLC, but I experienced the same thing, which

1:11:57was they said, because I said, you know, race doesn't play a role in hiring.

1:12:03You're so careful about your virtue signaling.

1:12:05I'm just shocked that anyone would try to cancel you.

1:12:08Well, that's what's shocking about it.

1:12:09It's like, I know, I was very clear.

1:12:11I said, in journalism, like a very vertical thing that I have a lot of

1:12:15experience. You're a very skilled virtue signaler.

1:12:17So, I mean, they tried to cancel me, guys.

1:12:20I don't, you know, they tried to cancel you too, Jamal.

1:12:23Jason. Go ahead. You have a question for me.

1:12:25I'm uncancellable. Yes. Because we all are.

1:12:27That's what we found out through all this.

1:12:29No. You care about what all these idiots think.

1:12:32No, I don't. They never have.

1:12:33Jason, I have a question for you.

1:12:35Go ahead. What percentage odds now do you keep in the back of your mind

1:12:38that your petite little illustrious human rights watch is actually creating human rights abuses to

1:12:45try to this is actually a very good point.

1:12:47You know, a lot of the human rights.

1:12:48organizations from back in the day what is the organization that you were what is

1:12:52it called amnesty international when i worked at amnesty national a very fine mandate the

1:12:57mandate was human rights abuses as described in the universal declaration of human rights created

1:13:03by eleanor roosevelt and the uh this is like science corner 1950 this is done

1:13:08sex no but it was torture it was people being put in jail and being

1:13:11tortured it was people being censored because of freedom of speech and that's what i

1:13:17worked on when i was at amnesty international these groups went adrift in order to

1:13:22get money human rights watch included and then they started taking on things like you

1:13:27know uh transgender rights this rights that rights and censoring people they went after sam

1:13:33harris because he had charles murray from the bell curve stop with all this bullshit

1:13:38i'm asking i think it's a 50 50 chance that all these organizations are involved

1:13:41so you think 50 50 50 chance depending on the organization splc i'm gonna guess

1:13:4695 yeah amnesty international you think is 50 50 that they're engaging in nefarious bullshit

1:13:51to try to whip up people's belief that there are human rights abuses happening that

1:13:56are not happening you're saying it's a coin flip i think it's probably a coin

1:13:59flip yeah that's what i would say today because these organizations all got co -opted

1:14:03splc might have had a great origin story but now i admire your intellectual honesty

1:14:08and i appreciate you saying that well i mean just based on facts so let's

1:14:12see what this legal case brings about well let's be clear this is not investigating

1:14:18splc 100 when you bring a grand jury indictment you've already previewed the evidence this

1:14:24is not like some guy's trying to whip up lawfare okay um actually you don't

1:14:29have to bring all the evidence but that's a side thing and they're very frisky

1:14:32about allowing you to indict somebody as we experienced with trump grand juries are a

1:14:37whole different animal yeah they will indict a ham sandwich is the line um so

1:14:42we'll see let's give them their day in court is always my position well i

1:14:45mean regardless of what happens in court if it's true that the splc is funding

1:14:49the ku klux klan and the american nazi party just so we're clear they stop

1:14:54using confidential informants but when you say it out loud it's insane it's good enough

1:14:58for me listen here's insane here's the systemic problem with non -profits and ngos is

1:15:05let me just contrast it with business in business you set up a company the

1:15:09company has to make revenue has to make profits and if it doesn't it's going

1:15:13to go out of business right because it'll lose money so there's a feedback mechanism

1:15:16from the market the company has to create products that people are willing to buy

1:15:20and those products have to make money with an ngo non -profit what have you

1:15:24they raise money they don't sell things they fundraise from donors in order to engage

1:15:31in an activity but what happens over time is the actual activities may stop mattering

1:15:36and all that really matters is they're able to keep fundraising right because they're just

1:15:39trying to figure out a justification to keep going back to donors to get more

1:15:43and more money out of them that's what perpetuates the organization and they're trying to

1:15:47keep their job exactly and then if it's an ngo that gets money from the

1:15:51government then it's even worse because all they do from that point forward is try

1:15:55to lobby the government to get more money and it doesn't really matter whether the

1:16:00program is working or not all that matters is whether they can spin it as

1:16:04working why wouldn't the southern poverty law center focus on southern poverty which is an

1:16:10issue that actually still exists it should be a better thing i mean and why

1:16:15do you call it one thing focus on racism and then all of a sudden

1:16:19whip up i'll tell you why here's my theory here's my theory on it is

1:16:23i do think that at one time in this country civil rights was a no

1:16:27cause, a very legitimate cause.

1:16:29We had the legacy of segregation and Jim Crow, and there were groups that were

1:16:34set up to basically change that.

1:16:37And they succeeded. But again, no one in an NGO or a nonprofit ever declares

1:16:43victory. They're never going to say, you know what?

1:16:45We addressed this problem. We solved it.

1:16:48I always saw that in 2008.

1:16:50Fire me. My job's done.

1:16:52Yeah. But when Obama got elected in 2008, I thought that, regardless of whether you

1:16:56liked Obama or not or agree with his politics, I thought that at that point,

1:17:00most people could see that this was not a racist country.

1:17:03Whatever else you could say, the fact that the highest office in the land was

1:17:08not denied to anybody showed that this country was not holding people back based on

1:17:13their skin color. And instead of just basically packing up shop and saying, okay, we've

1:17:18achieved our goal, the goalposts all got moved.

1:17:21Remember, that's when the whole anti -racism thing started was around Obama's second term.

1:17:26And what anti -racism was, it said that it's not good enough not to be

1:17:30just not to be racist.

1:17:32You actually have to be anti -racist.

1:17:34But what anti -racism meant was basically that all the distributions had to match the

1:17:40population. Basically, it meant a quality of outcomes, not a quality of opportunity.

1:17:44So effectively, this whole goalpost was moved from a quality of opportunity to a quality

1:17:49of results. You're right. Once you see it, you can't unsee it.

1:17:51It's like they sat around and they said, now what?

1:17:54And one person was like, I got an idea.

1:17:58Well, and make racism again.

1:18:00Exactly. Right. But if they just said, if they just said at that time, you

1:18:03know what, we're going to move the goalposts from a quality of opportunity to a

1:18:07quality of results. We're going to basically make everyone equal at the finish line, which

1:18:11is to say, I guess, communism or some sort of identity socialism.

1:18:15People would have said, eh, no, we're not on board for that.

1:18:17So instead, they created this whole new terminology to justify it.

1:18:21And it's taken us years to unpack that and realize what's really going on.

1:18:25Gosh, I don't want to put myself in a position of defending the SPLC.

1:18:29They were partners with the FBI for a long time, to your point, Chamath, or

1:18:32Sachs' point, rather. There was probably a time when it was important to infiltrate the

1:18:38KKK and the Nazi groups.

1:18:40It's not 2025. 2025. Yes.

1:18:42But it's not in 2026, like I think necessary to be doing this work.

1:18:46Sorry, it's not in 2026.

1:18:47I think law enforcement can handle it in 2026.

1:18:49Okay, I'm going to give you guys a newsflash.

1:18:51I just got, this just hit the wire.

1:18:53This is really important. Breaking news here.

1:18:56America is profoundly less racist than you think.

1:18:59Okay? There we go. Okay, breaking news.

1:19:02Wake up. Friedberg wanted to do a surprise science corner.

1:19:06This is the first. First, we don't know what he's about to talk about, but

1:19:10David looks like he's been working really hard and he needs a nap.

1:19:12So, Friedberg, you have the microphone.

1:19:14Let's go. This was not - Surprise science corner.

1:19:17Yeah, this is not necessarily a big surprise, but there was a really interesting paper

1:19:22published this week on trying to elucidate the underlying cause or predictor of colorectal cancer.

1:19:30So, I don't know if you guys know any young friends, but colorectal cancer, Nick,

1:19:35if you could just pull up this first image, or colon cancer, has become now

1:19:40the third leading cancer. Over the last 20 years or so, there's been a scary

1:19:45rise in the number of young people, people generally under 50 years old that are

1:19:50getting colon cancer. That number has climbed by over 80 % in just the last

1:19:55two decades. Historically, it's been an age -related disease.

1:20:00So, as you get older, over 70 years old, your probability of getting colon cancer

1:20:03shoots through the roof, but this rise in young - people getting colon cancer has

1:20:07been pretty alarming. And there's been a real question mark on what is causing it?

1:20:11What's the underlying trigger? So this research team out of Barcelona in Spain did an

1:20:18amazing study where they looked at the difference in the epigenome or the gene expression

1:20:25in tumor cells of patients that are under 50 years old and those that are

1:20:31over 70 years old. This sort of data will show you what different environmental triggers

1:20:38are associated with those changes in gene expression.

1:20:42So whenever we're exposed to something in the environment, whether it's some food or some

1:20:47drink or whatever else it is, some chemical in the environment, the cells in our

1:20:52body that are exposed to that chemistry or exposed to that environmental trigger have genes

1:20:57that get switched on and off.

1:21:00And you can see which genes are on and off by looking at the RNA

1:21:04of those genes, which tells you that those genes are expressing RNA to make protein

1:21:08or not make protein. And you can look at that gene expression to determine what

1:21:13is changing when a cell is exposed to a particular environmental trigger.

1:21:19And so they were able to get these samples of colon adenocarcinomas from the Cancer

1:21:24Genome Atlas, which is funded by the federal government.

1:21:28And they were then able to take a look at these cancer cells from colon

1:21:32cancer in patients that are under 50 and patients that are over 70 and look

1:21:37at the difference in the gene expression profile and what environmental triggers are associated with

1:21:44that gene expression profile. So that will tell you, hey, these environmental triggers are more

1:21:49likely the cause or an underlying driver of the risk of getting this colon cancer.

1:21:55And one thing rose to the top.

1:21:57So they looked at a whole bunch of things.

1:21:58They look at lifestyle factors.

1:22:00They look at eating index, how much you ate, how overweight you were, alcohol, birth

1:22:05weight. They adjusted for gender.

1:22:07They adjusted for all these different things.

1:22:09And as you look down this list, you'll see this is the difference between people

1:22:13that got colon cancer that were over 70, when you typically have a very high

1:22:17chance of getting it, and people that are under 50 when you don't.

1:22:20And what is going on with people under 50?

1:22:23And you can see there's this one row here that's all orange.

1:22:27That row is a pesticide called piclorum.

1:22:31Piclorum is a pesticide that was developed by the Dow Chemical Company in 1963.

1:22:38This is the chemical formula for that pesticide.

1:22:42It's related to auxin, which are these hormones that plants make.

1:22:45And in the 1960s, there was this big rush to try and make synthetic plant

1:22:49hormones that you would then apply to a plant.

1:22:51It would cause the plant to overgrow, and the plant would quickly die.

1:22:55And piclorum became a very widely used herbicide in our environment.

1:23:02It's used to manage weeds in rangeland and pasture land where cattle graze.

1:23:06It's used to control weeds near roads and near railroads on industrial sites to clear

1:23:12weeds away from highways and utility corridors.

1:23:15And the problem with piclorum, one of the things that's been known about it is

1:23:18it's very persistent. It doesn't biodegrade very well.

1:23:21Piclorum sticks around for well over a year.

1:23:24It stays in the water, it moves into groundwater, and it's persistently in the environment

1:23:29after it's been used for some period of time.

1:23:32I went back and looked at the EPA data on this chemical.

1:23:35The last time there was an EPA safety study done was in 1995.

1:23:39And so this was before we had this capacity to do epigenomic studies.

1:23:43It's like what was the just done to elucidate that even though a chemical might

1:23:48not be causing cancer immediately, and you can't apply it to a cell and see

1:23:51it trigger a cancer, the long -term use or exposure to certain chemicals in our

1:23:57environment causes a change in the epigenome, which means that these genes are being turned

1:24:01on and off. And when certain genes are turned on or off in the wrong

1:24:04way, it can trigger cells in the tissue to start to malfunction and go haywire

1:24:09and ultimately lead to cancer.

1:24:11And I think that this paper shows a pretty strong effect of piclorum in driving

1:24:16colon cancer in young people.

1:24:18It will very likely lead, and it should lead to an EPA review on whether

1:24:22this should be legally allowed, but it should also lead to a new mechanism by

1:24:26which we assess chemistry that we're using in our food supply, in our environment, in

1:24:30our industrial applications, because we can now look at all of this sort of epigenomic

1:24:35data to try and figure out what are these chemicals doing to us before we

1:24:39see them cause the problem.

1:24:40So I thought this was like an amazing paper done by this team.

1:24:43They did a lot of work to try and make sure that the statistics were

1:24:46sound in the studies that they did.

1:24:48It really, I think, elucidated something pretty scary.

1:24:51Is this like a Monsanto thing where like one company makes it or piclorum is

1:24:56broadly available? It's off patent now, and so I'm pretty sure, my guess, I haven't

1:25:01looked into this, but my guess is most of this is made generically in China,

1:25:04and then it's probably packaged up with lots of different brands in the U .S.

1:25:08and all over the world.

1:25:09So it's one of these chemicals that's just become ubiquitous in our use that just

1:25:13shows up everywhere. But I think it really speaks to the fact that historically, think

1:25:18about 1995, you can look at what the immediate chemical application of something does to

1:25:23a rat or a human cell, and you can say like, oh, it didn't cause

1:25:26cancer. It's good to go.

1:25:27Let's go. It didn't cause, quote, toxicity.

1:25:30Can I ask a question?

1:25:32In that study, are you exposed to piclorum based on where you live?

1:25:35Oh, yeah. Sorry. That's a great question, Shumat.

1:25:38So I was going to talk about this.

1:25:39Thank you for asking that.

1:25:40They then took that piclorum exposure, and then they looked at all the counties across

1:25:45the United States. They were able to gather data where there's enough data in California,

1:25:49Connecticut, Georgia, Iowa, New Mexico, Utah, Washington, and they were able to look at piclorum

1:25:54use estimates from the Pesticide National Synthesis Project and try and deduce in places where

1:25:59piclorum was highly used and not highly used.

1:26:01And once again, it elucidated signal, which is that when piclorum was used in the

1:26:06environment in the counties more frequently, there was a much higher frequency of colon cancer

1:26:10in those counties. And that R squared is weak or it's strong?

1:26:13Reasonably strong. The odds ratio is like 3x.

1:26:16It's very strong. This is accomplished, Freeberg, from a combination of big data and this

1:26:23science to study these. Yeah, I think it's important.

1:26:26And then increased testing as well, right?

1:26:28So you have this confluence of increased testing, increased data, you know, knowing where these

1:26:34instances are occurring. And if you add a layer of AI onto this, Freeberg, this

1:26:38is like a really positive use going back and looking at all these compounds and

1:26:43figuring out which ones we need to eliminate.

1:26:45Yeah. Yeah. So I'll put my PCAST hat on.

1:26:47Thank you, David Sachs, for the role.

1:26:49And I think this speaks to one of the important roles that government has in

1:26:54doing fundamental science and fundamental research.

1:26:56So the National Cancer Institute and the federal government stood up this genome atlas with

1:27:01$100 million a couple of years ago.

1:27:02They spend only a few million dollars a year now to maintain it, to get

1:27:06cancer tissue samples, and then create the availability to scientists to use those cancer tissue

1:27:12samples to do this sort of epigenomic analysis and study supported by, you know, government

1:27:17grants, or in this case, supported by a foreign university getting funding to do it.

1:27:22And so there's an important role that fundamental science still has in elucidating this that

1:27:27we would have otherwise not been able to see if we didn't have this resource

1:27:30available to us from the federal government and federal funding of scientific programs like this.

1:27:35And that leads to this discovery.

1:27:36You don't need fancy AI for this, to be frank, J.

1:27:39Cal. There's an incredible amount of data that's available or resources that are available.

1:27:43For example, what's happened in the last couple of years is what's called RNA sequencing,

1:27:47where you can actually look at which genes are on or off, not just what's

1:27:51the DNA, but in the DNA.

1:27:52Remember, we've talked a lot about the epigenome, what genes are on or off and

1:27:56how that changes when you have different cancers or when you have different chemicals.

1:28:00And when you have a certain chemical like piclorum, your colorectal cancer goes through the

1:28:05roof and you can see that relationship in those tissues.

1:28:08And then you can put all the data together and say, oh, my gosh, there's

1:28:11a lot of evidence here that points to this connection.

1:28:13Very powerful. I think it's important that it opens up the window that there shouldn't

1:28:16just be a one -off research project conducted by a team in Spain, but maybe

1:28:21should be a fundamental role that some of the government agencies play, which is to

1:28:24stop Americans and the world from getting frigging cancer.

1:28:27Let's figure out the things that we got wrong in industry and go back and

1:28:32delete them out of our food supply and out of our industrial supply.

1:28:35And I think this is a really good example of that.

1:28:37So, Exa, how does Freyberg's focus on Uranus inform your co -leading of PCAST here?

1:28:45Are you going to go deep into this colon research?

1:28:48How deep do you plan on going and how will you get through eight of

1:28:51these presentations a day at PCAST?

1:28:55It's all good. This is why we hired Freyberg.

1:28:57Yes. By the way, did you guys - He's going to handle Mars, Neptune, and

1:29:01Uranus. Absolutely. He's going to go deep into Uranus and clean it up.

1:29:06We need to clean up Uranus.

1:29:09Great work, Freyberg. Great work.

1:29:11Anyway, I think this is important, and I don't think there's any news attention on

1:29:14this since it came out a couple days ago, so I thought it would be

1:29:16worth bringing up on the show and making people aware.

1:29:19All right. But thank you guys for sitting through it.

1:29:20Well, no, I think it's great work you're doing there.

1:29:22I just read the paper.

1:29:25Yeah. All right, everybody. That's it for episode 270 of the World's Greatest Podcast.

1:29:29I am your world's greatest moderator.

1:29:33Thank you, Chamath Pajapatiya, David Sachs, and David Freeberg for the episode.

1:29:36To your friends, your neighbors, and we'll see you all next time.

1:29:39Bye -bye. Love you, boys.

1:29:40Bye -bye. We'll let your winners ride.

1:29:45Rain Man David Sachs. And instead, we open -source it to the fans, and they've

1:29:52just gone crazy with it.

1:29:54Love you, Wes. I'm the queen of kinwad.

1:29:56I'm going all in. What your winners ride.

1:29:59What your winners ride. What your winners ride.

1:30:03Besties are gone. Go 30.

1:30:05That's my dog taking notice in your driveway.

1:30:08Sex. Oh, man. My Abitasher will meet me at once.

1:30:13We should all just get a room and just have one big huge orgy, because

1:30:16they're all just useless. It's like this sexual tension, but they just need to release

1:30:19somehow. What your feet. What your feet.

1:30:26We need to get merch.

1:30:28Besties are back. I'm going all in.

1:30:35I'm going all in.

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