All In Podcast Episode 103 Notes November 5 2022

 November 5 2022

• Jason Uber Moncler grift

• JCal and Sacks pitching in and helping out Elon for resolving issues at Twitter

  • Very much part time thing, helping a friend
  • Within hours of Elon taking over the company on Friday 4chan attack happened, created bots and tweets were negative, racist, slurs, etc
  • They were posting to 0 followers or to other bot accounts - posting racist tweets into the ether
  • So activist groups are claiming racist tweets went up 500% - so its just an organized operation, feed it to news outlets and they feed it to advertisers and so the problem becomes a problem
  • So ad revenue dropped
  • But Elon hadn’t even changed the content moderation policies
  • Lex ep 333 with Andrej Karpathy is interesting - new bots are great, using GPT-3 it will be hard to deal with these
  • Micropurchase to read an article will be a super feature
  • If content is published without a byline - it might be interesting - might be an important behavior change to how journalists cover the news
    • This is how The Economist does it
  • No byline publication means you have to build more trust - Economist has done it over decades
  • Substack has proven that you can build a great business with good content

• 2 guys who pretended to be fired employees, Ligma and Johnson - Dierdre Bosa admitted her mistake

  • LigmaJohnson - journalists didn’t figure it out because they didn’t want to because it fit their narrative
  • Importance of citizen journalism
  • Live coverage makes it complicated - journalists are trying to beat each other and have no fact checking
  • If the story fits their priors they run with it because it fits their narrative
  • They sent the live TV producers down there and so they found these “engineers” who were “fired”
  • Chamath’s kids are better copy editors than journalists 🙂
  • This is a grievance industrial complex - its funny in the case of Ligma Johnson but not in the case of 4chan attacks

• Layoffs in tech

  
  
  

  
  

  • Opendoor
  • Chime
  • Dapper Labs
  • Twitter
  • Cloudkitchens
  • Stripe
  • Apple, Amazon, Google, Facebook hiring pause
  • But Google and Facebook have not slowed down
  • This is the beginning 😟
  • Fed said rates will be higher than you think for longer than you want
    • So build a sensitivity model to understand mathematical model
      • Dollar in front of you is more important than dollar in the future
    • 5% interest rate - so you need to return 10-11% returns to be better than bonds
    • They are reprioritizing value of short term profits
    • Layoffs and cost reductions are the way SV companies do it - to improve timelines for profit
  • Elon will shows us just how lean these SV advertising companies can be run
  • So some folks will come in and copy Elon playbook - this will catalyze a lot of buyout activity and M&A activity
  • 15 private companies > $10B, 40 public
  
  
  

  
  

  • So many companies on the right could go private in the next 18 months if they are unprofitable - 2/3rd of these companies have no line of sight to profitability in the next 2-3 years - they will have to raise money at very egregious terms so might go private - say half of them - so like 100 of them could go private in PE deals

  • Economy is headed off a cliff right now - even the best companies in Sacks’ portfolio are going through restructuring or reforecasting

  • Coinbase and Carvana are in trouble - Carvana could go bankrupt but maybe Coinbase is in good position - not sure - they have to pay 12-13% for their debt but their business is very dilutive

  • Some private companies are worth less than they have raised - so their options are worthless

  • Its survival of the quickest - most quick to adapt are the best able to weather this

    
    
    

    
    

  • Second half of 2021 if you raised $100M at $1B valuation - if you burned $50M then you might think remaining $50M is 5% dilution - but if you’re now worth $250M then its 20% dilution

  • Current 3 month T-Bill rate is 4%, you can buy Muni bonds that tripled tax advantaged, can buy divided stocks of 5% dividend yields, can buy corporate bonds with 6-7% yields

  • David Soloff - angle of attack has changed - from Fed - this is now triangle sawtooth - it will take longer to get where we need to be and you will have to stay there longer - if you can’t get there default alive you might run out of money

  • Have to plan for conservatism right now - till 2025 - probably better to put money in T-bills - guaranteed 4%

    • Corporate bonds 10% - high quality public tech companies - they have to pay higher rate - equity always has to pay higher
    • US govt is likely to default but least likely to default
      • Other countries can’t print more dollars

  • Added 261000 jobs in October - administration is eager to point to this given elections coming up

  • Actually 328000 fewer employed Americans

  • Stripe is highest valued private software company and they did layoff also

  • Real recession coming up 😟

  • Fed was too slow to react to inflation and now they will be too slow to react to recession? 😟

    
    
    

    
    

  • 1 million people lost to Covid and starting with Trump presidency we lost 7-8M immigrants so that hits the economy - for labor participation

  • People have found other ways to earn income that is not showing up in labor force statistics - etsy, shopify, youtube

  • Everyone doesn’t need to go work at a company - we need to find out how much people are earning

    
    
    

    
    

  • Gig workers are 9% of workforce - drivers are making $36/hr

  • Independent contracts ARE counted in labor participation (yes or no?)

    • Maybe not

  • Bank of England warning that UK will face longest ever recession

  • Average recession lasts 18 months but you don’t know how long when you’re in it - there’s a lot of unknown unknowns, founders need to be ready - if recession is deeper and longer then you need to be ready

  • Recession could last 2 years - better to grow slowly and survive and then have hypergrowth after recession is over

  • If most people have most of their net worth in housing which is crashing - it will be hard now

  • Snowflake, Atlassian, Cloud Computing Index is all down, Twilio down - its just math, not a judgement on these companies - CEO of SaaS have to be careful

  • Profitable industrial companies are up

  • Folks making deepest cuts fastest are going to be rewarded most - like what Elon is doing

  • Bill Gurley said big RIF should have been done earlier - otherwise you have to keep doing it more and more

  • Jack Welch used to recommend 10% cuts every year

  • Google and Facebook are adding so many people

    
    
    

    
    

  • Apple is putting brakes on non-engineering hiring

  • Companies doing RIF fast and deep will be rewarded by shareholders who get signal that business wants to turn profit so will be rewarded (cash today vs cash tomorrow)

  • Apple is a first among equals - different class

  • Ask Founders - what was your plan at the end of 2019? (2020 and 2021 were extremely distortive)

    • It was the last time you were thinking without distortions that were created

• Mid terms

  • Republican wave

    • CNN poll, 5 scary numbers for democrats
      • Biden has 42% approval rating
      • 75% of country says we are in a recession
    • RealClear Politics - Rs win 31 house seats, Arizona, Nevada, Georgia, etc
    • Nate Silver says within 1 standard deviation Republican wave or Republicans fizzle out
    • Rs will probably win House but Senate is a coin flip
    • Oz has a higher chance in Pennsylvania vs Fetterman so R
    • Ohio is probably R
    • Arizona is maybe R - Mark Kelly might lose to Blake Masters - they are tied now
      • Closest race in the country

  • Divided government - Republicans will control congress, Dems will control presidency

    • So gridlock might stop crazy money spending
    • Rs won’t be able to pass legislation but they can do investigations
      • Lockdowns, Covid issues, NIH cover ups
    • CDC said maybe put opioids in the hands of Americans - what?
    • Propublica and Vanity Fair will win Pulitzer for breaking news that Covid came from the

  • Experts want to declare a Pandemic Amnesty - Atlantic - they want to pull expert card and say they can do what they want during Covid, now they want to declare Amnesty

  • Still a long tail of damage to our kids - stimulant prescription single biggest epidemic in children, twice as more as contraceptives and asthma drugs

  • Children were miseducated during covid, huge psychological and academic damage to them - test scores down vs other countries, teachers have got away by explaining issues away - instead they are blaming the kids of misbehaving

  • We failed them because of our response to Covid so we need accountability

  • Biden popularity changed a lot

    
    
    

    
    

  • Biden started more popular than Trump, now just as unpopular

    
    
    

    
    

  • Biden’s arguments to country to vote Dems

    • Voting other party is a vote against democracy - this is not a real pitch
    • Instead should focus on inflation, crime, schools, learning loss, etc
    • Dems should be kept in power forever because of Jan 6

  • Running out of strategic oil reserves

    
    
    

    
    

  • Chamath gave $1M to Democrats

    • He wants stasis so nothing bad happens between now and 2024
    • See what happened in Germany - economy turned, inflation is out of control
      • They nationalized assets
      • If you have split govt here then these things won’t happen

  • Chamath and Sacks are funding opposite sides of the field

  • Rise of Trump, Bolsonaro, AOC, Warren, Sanders is all about populism

    • Jan 6
    • Brexit
    • Such radical outcomes, cost of these outcomes blow up in our face
    • Tides of populism are receding in this wave
    • Populists did not cause inflation, it was MMT
    • Bond market fired Liz Truss - she’s not a populist
    • Bolsonaro announced that he will relinquish power
    • Populism thread is just threat inflation
    • Accountability is lacking in institutions, competence also

  • Nayib Bukele interview with Tucker Carlson on Fox News - President of El Salvador - he is impressive

  • Peasants with pitchforks are rising up against elite class

  • People don’t feel there is a level of competence in institutions

• Meta competitor to AlphaFold

  • We have sequenced 1M species’ DNA
    • About 3000 animals including humans
  • Google’s AlphaFold published it for 200M species
  • 1 tsp of soil might have 100B organisms of about 1M species
  • Metagenome
  • Lot of drug discovery mines proteins
  • Cost of compute is going down so Google and Facebook can solve hard science problems
  • This affects material science, agriculture, human health