Mar 3, 2023 · 1h 56m · allin
E118: AI FOMO frenzy, macro update, Fox vs Dominion, US vs China & more with Brad Gerstner
Jason Calacanis · 28m spoken Brad Gerstner · 25m spoken David Sacks · 25m spoken Chamath Palihapitiya · 23m spoken Doug Leone · 47s spoken
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In Episode 118 of the All-In Podcast, hosts Jason Calacanis, Chamath Palihapitiya, David Sacks, and guest co-host Brad Gerstner discuss the generative AI boom, macroeconomic interest rate pressures, tech sector restructurings, stock-based compensation, the Fox News Dominion lawsuit, and escalating U.S.-China geopolitical tensions.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. The hosts hold 73.7% of the talking time here. How this is scored →
The hosts as informed peer 6.1 Guest teaching 3.4 Guest disagreement 3.1 The hosts pushing back 3.1
speaking balance: gold is the hosts, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 1:41:54 Sacks vs JCal heated clash over Ukraine war provocation
Sacks erupts at JCal for mischaracterizing his foreign policy position, shouting at JCal to stop lying and calling his view naive idealism.
Hardest push from the hosts ▶ 1:13:08 JCal pressing Sacks on Fox News election denialismJCal directly confronts Sacks on Fox News hosts knowingly broadcasting false claims about the 2020 election while claiming media criticism principles.
Biggest teaching moment ▶ 1:05:00 Brad Gerstner exposing stock-based compensation accounting tricksBrad educates the panel on FASB accounting rules and how tech companies use adjusted EBITDA metrics to hide massive stock dilution from investors.
The host holds their own ▶ 43:02 Chamath demonstrating earnings quality breakdown with cash flow chartChamath uses financial data to show that S and P 500 reported net income has reached a 30-year high divergence from actual operational cash flow.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | The hosts as informed peer | Guest teaching | Guest disagreement | The hosts pushing back | Why |
|---|---|---|---|---|---|---|
| Pre-Show Banter and 'Chema-Style Austerity' | 1 | 0 | 1 | 0 | Lighthearted pre-show banter covering JCal's Japan trip and Chamath's high-end dinner menu, featuring minor ribbing about 'austerity' caviar. | |
| Political Discourse: DeSantis' Wall Street Journal Op-Ed and Bill Maher on Wokeism | 5 | 0 | 1 | 1 | Chamath and Sacks discuss Ron DeSantis' Wall Street Journal op-ed and Bill Maher's comments on wokeism, dissecting GOP primary strategies. | |
| The Generative AI FOMO Frenzy and Sequoia's Platform Shift Perspective | 7 | 5 | 3 | 3 | The hosts and Brad debate the generative AI boom, drawing parallels to the dot-com era while Chamath outlines hurdle rates created by high short-term bond yields. | |
| OpenAI's API Price Cut and Platform Monetization Strategy | 7 | 2 | 2 | 2 | Sacks explains OpenAI's 90 percent API price slash and integration with apps like Notion, while Chamath breaks down platform take rates. | |
| LP Capital Allocation, High Hurdle Rates, and the Venture Power Law | 6 | 6 | 4 | 3 | Brad playfully corrects Chamath on treasury yield figures and explains why institutional LPs maintain long-term venture allocations focused on top-tier power law funds. | |
| Silicon Valley Restructurings: Cram-Downs, Board Departures, and Founder Realities | 7 | 4 | 3 | 3 | The panel discusses startup down-rounds, cram-downs, and VCs leaving board seats, with Chamath arguing founders must prioritize underwater employees. | |
| Macroeconomic Update: Yield Curve Inversion, Inflation Stickiness, and Earnings Quality | 8 | 6 | 3 | 4 | A dense macroeconomic breakdown where Sacks tracks 2-year yields, Brad details inflation stickiness, and Chamath highlights a 30-year gap between earnings and cash flow. | |
| Macroeconomic Outlook and Seed Investing Landscape | 7 | 2 | 2 | 2 | JCal expresses optimism about early-stage seed valuations while Sacks offers a gloomy macro warning about rapid rate hikes ending ZIRP stimulus. | |
| Salesforce Restructuring and Silicon Valley Founder Agency | 7 | 5 | 3 | 3 | Brad examines Marc Benioff's pivot toward operational discipline at Salesforce, crediting Elon Musk for giving Silicon Valley CEOs the courage to trim bloat. | |
| Stock-Based Compensation and Pro-Forma Accounting Grift | 8 | 8 | 4 | 3 | Brad delivers a deep dive into stock-based compensation accounting tricks, showing how adjusted EBITDA hides massive shareholder dilution. | |
| Fox News Dominion Lawsuit and Defamation Law Reform | 7 | 4 | 6 | 8 | JCal presses Sacks on Fox News hosts promoting false election claims, prompting Sacks to defend Tucker Carlson while advocating for the end of NYT v. Sullivan's actual malice rule. | |
| TikTok Federal Ban and Great Power Competition with China | 8 | 5 | 3 | 4 | Brad outlines ByteDance financials and US TikTok metrics while Sacks and Chamath contextualize the impending TikTok ban as part of Great Power Competition. | |
| Debate on China's Ukraine Peace Proposal and Geopolitics | 6 | 3 | 9 | 9 | An intense confrontation erupts between JCal and Sacks over Ukraine, with Sacks angrily rejecting JCal's summary that Sacks blamed the US for provoking Russia. | |
| Discussion on Harvard Legacy Admissions Study | 4 | 2 | 1 | 1 | Chamath presents a study on Harvard legacy admissions, followed by a video clip of Draymond Green giving his perspective on Black History Month. | |
| Stripe Valuation and EBITDA Margin Chart Correction | 6 | 2 | 2 | 2 | Chamath corrects an error from the previous week's Stripe valuation analysis regarding gross vs net revenue metrics. | |
| Long-Read Article Recommendations: 1MDB and Wirecard | 3 | 1 | 2 | 2 | The episode wraps up with Chamath and JCal sharing long-read article recommendations on the 1MDB scandal and Wirecard fraud. |
Statements from this episode (34)
Sacks: DeSantis wins Republican base by using government power against progressivism
“Well, I think this is why I think DeSantis is doing well with the Republican base. And, you know, if you see polling of the Republican primary is he understands that it's not good enough just to have this sort of Reagan s totally hands off government approach.…”
Doug Leone: Investors will overestimate AI in the short term
“We're going to overestimate it in the short term. We're going to invest in everything in the same way that in 1999, we invested in everything.”
Chamath: Credit Suisse offering private clients 6.5% on 3-month T-bills
“Credit Suisse sent all their private banking customers an offer. They are now offering 6.5% for a three month T-bill.”
Chamath: Capital poured into ~500 early AI startups will get torched
“And so the 500 odd companies, Jason, you mentioned, We'll get a lot of it and it'll get torched because most of them probably won't amount to much of anything in the short term.”
Gerstner: AI is a platform shift equal to or larger than internet and mobile
“I mean, I happen to agree with Doug that this is a platform shift on the same magnitude as the internet or mobile itself. In fact, it may be bigger. Than both of those.”
Gerstner: Meta will spend $20B in a single year on AR/VR
“Meta's gonna spend twenty billion in one year alone on AR VR.”
Gerstner: Altimeter is studying AI closely but has made few investments
“I would say that we are spending an extraordinary amount of time In this space, we haven't made a lot of investments.”
Chamath: OpenAI selling 49% to Microsoft proves foundation models have capped upside
“If it was a highly proprietary asset, you would have never sold 49% of it to Microsoft for ten billion dollars, because you would assume that it was worth a trillion dollars. So it's a huge tell on the part of OpenAI, their deep understanding, and they underst…”
Calacanis invested $500K for 10 percent in a ChatGPT wrapper startup
“Serial founder and team that we've backed for that had an exit said, can I show you something? I said, yeah, got on the zoom, showed me a little proof of concept using chat GPT. And he said, this is my idea. This is the vertical. And I just said, okay, what do…”
Chamath: OpenAI can hit $1T by aggressively undercutting API costs
“For open AI, the way that it could become a trillion dollar company is actually by cutting the cost to such a low degree that nobody else can effectively compete with it. And then at that point, they can become a small, small, small tax. You'd rather just pay …”
Gerstner: Three-year Treasury yield is 4.7%, not Chamath's 6.5% figure
“First, when I look at the three-year treasury bill, it's like 4.7, not to quibble here. So I think Chamath's getting a little goosey goosey on his 6.5.”
Gerstner: Small VC funds without DPI will struggle as scale players expand
“I think sub-scale, small funds with no DPI they're gonna find a really, really tough time to Chamath's point about DPI raising capital. And you're going to see the scale player scale.”
Sacks: 2023-2024 will bring widespread down-rounds for 2021 peak startups
“I think what we're gonna see in the second half of 23 and all of 24 is a lot of medicine being taken, a lot of down rounds, a lot of structure. It's gonna be a tale of two cities. The hot area You know, AI is going to continue to receive new investment, and al…”
Chamath: Founders are responsible only to employees, not investors
“Good founders have a responsibility to do what's right for themselves and their employees. Nobody else.”
Sacks: Craft Ventures voluntarily halved a portfolio company's valuation
“We voluntarily slashed the valuation in half and reissued options to the employees to keep them motivated.”
Chamath: Federal Reserve likely to raise rates to 5.5%
“And so I still kind of maintain that we're probably going to have a five and a half percent fed funds rate.”
Chamath: S&P 500 income-to-cash gap is worst in 30 years
“And so right now we have the worst earning situation. So the worst gap between what we are telling people versus what is actually in the bank account that we've had for 30 years since 1990.”
Gerstner: Focus on five growing companies rather than predicting macro
“Find five companies that you think are going to grow and earn more money irrespective of the direction of rates and inflation. Own those and enjoy your life.”
Sacks: Tech sector may already be past the worst of its downturn
“Yeah, so I think that there's going to be Some pain ahead. Now, you know, ironically, from the standpoint of the tech ecosystem, we may have already taken our medicine, and we may already be on the other side of it.”
Sacks: Founder CEOs possess far more operational agency than they exercise
“The thing I came away with, Realizing is just how much agency, particularly founder CEOs have that they just don't use, you know, they're always like hemming and hawing and wringing their hands and acting like they're tied down by this or that. And the reality…”
Chamath: Big tech issued at least $1.5T in stock-based comp since 2015
“Can you imagine the totality of stock based comp that's been given out by all these companies since 2015 when they were kegering their employee bases by 25% a year? I bet you it's A trillion and a half dollars at least.”
Gerstner: Stock-based compensation is the greatest grift in Silicon Valley history
“100%. This has been the greatest grift in the history of Silicon Valley for sure.”
Gerstner: Coinbase reported stock-based compensation equal to 70% of revenue
“Coinbase, I think just reported SBC, which Hold your hat, Saks, was 70% of revenue. Not 70% of their earnings. 70% of their revenue.”
Gerstner: Booking.com diluted shareholders 5% over 15 years vs 25% for Salesforce
“If you look over the last 15 years, if I'm an owner of Booking.com, I was only diluted by about five percent. If I was an owner of Salesforce or Expedia, I was diluted by about 25%.”
Gerstner: Basing corporate bonuses on adjusted EBITDA is negligence
“If you give bonuses to anybody in your business that are, that is based on an adjusted EBITDA metric, Rather than free cash flow per share is the key here, it's negligence.”
Sacks predicts Fox News will not be held liable in Dominion lawsuit
“I think this would be a better world if Fox were liable, but I don't think they're going to be because that's not the legal standard.”
Sacks: The Supreme Court should overturn New York Times v. Sullivan
“I think what we need here is to rewrite the defamation laws. I think the Supreme Court needs to overturn New York versus Sullivan.”
Gerstner: ByteDance generates $120B revenue and $25B profit
“ByteDance's revenue is about a hundred and twenty billion dollars. It's been reported their profits are about twenty five billion dollars.”
Chamath predicts TikTok will be banned in the United States
“Will it be banned? Yes, because it's the most obvious cultural way to pick a fight with China without actually picking a fight with China.”
Sacks predicts TikTok will not be destroyed by US-China competition
“I don't think Chamath is right that TikTok is going to be GPC roadkill.”
Sacks: US has consumed 9 years of Stingers and 5 of Javelins
“We've used something like nine years of stingers and five years of javelins, and we're running out of ammunition.”
Sacks: Russia holds a six-to-one artillery advantage in Ukraine
“The Russians actually have a six to one artillery advantage, which is why they're actually doing much better in this war than people are acknowledging.”