Jun 30, 2022 · 1h 35m · allin
E85: SBF's crypto bailout, Zendesk sells for ~$10B, buyout targets, US diplomacy, AlphaFold & more
David Sacks · 25m spoken Chamath Palihapitiya · 23m spoken Jason Calacanis · 18m spoken David Friedberg · 16m spoken
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In this episode of the All-In Podcast, the hosts analyze Sam Bankman-Fried's crypto bailouts, examine Zendesk's $10.2 billion private equity buyout amid SaaS valuation compression, and debate US foreign policy regarding the war in Ukraine alongside AI structural biology breakthroughs.
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 99.4% of the talking time here. How this is scored →
The hosts as informed peer 7.4 Guest teaching 2.8 Guest disagreement 3.6 The hosts pushing back 3.7
speaking balance: gold is the hosts, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 1:18:39 Sacks rejects Calacanis foreign policy framing
Sacks angrily rejects Calacanis' argument on standing up to dictators, accusing him and policymakers of spouting nonsense and enabling an avoidable forever war.
Hardest push from the hosts ▶ 1:18:39 Calacanis challenges Sacks on appeasing PutinCalacanis directly refuses Sacks' premise, insisting that the free world has a moral obligation to stand up to dictators invading sovereign nations.
Biggest teaching moment ▶ 1:16:41 Sacks educates panel on 2008 diplomatic warningsSacks reframes Calacanis' 'madman' narrative by detailing specific historical cables from current CIA Director Bill Burns explicitly warning that NATO expansion into Ukraine was a unanimous Russian red line.
The host holds their own ▶ 54:22 Chamath refutes free cash flow distortions using BuffettChamath dismantles tech accounting practices that treat stock-based compensation as non-cash, citing Warren Buffett to prove it is a real operational expense.
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 |
|---|---|---|---|---|---|---|
| Episode Opening Banter and Bestie Introductions | 3 | 1 | 2 | 3 | The hosts engage in introductory banter and intro rhymes before discussing whether to poll the audience regarding episode topics. Friedberg pushes back against Calacanis, arguing that tailoring topics based on audience surveys degrades editorial integrity like mainstream media. | |
| Crypto Market Collapse and SBF's Bailout Deals | 8 | 2 | 2 | 1 | Chamath breaks down the systemic mechanics behind the crypto crash, explaining off-chain trading exchanges, uncollateralized yield farming, and contagion from Terra Luna. He highlights the complete lack of market makers and clearing houses in the unregulated space. | |
| Examining Sam Bankman-Fried's California Tax Initiative | 6 | 3 | 4 | 4 | Sacks criticizes Sam Bankman-Fried for funding a California tax ballot initiative while residing in the Bahamas for tax and regulatory reasons. Chamath provides counter-perspective, explaining how SBF uses political donations to buy influence in Washington and California. | |
| Evaluating Crypto Technology Versus Speculative Mania | 8 | 4 | 3 | 4 | Friedberg dissects the contradiction of pricing cryptocurrencies in US dollars if they are intended to replace fiat currency. Chamath and Sacks discuss how fed liquidity drove speculative asset bubbles across tech and crypto alike. | |
| Zendesk Private Equity Buyout and Public SaaS Valuation Compression | 7 | 2 | 2 | 3 | Calacanis introduces Zendesk's $10B PE buyout deal following their rejection of a $17B offer months earlier. Sacks outlines public market SaaS multiple compression down to 5.5x revenue. | |
| SaaS Growth Ceilings and the Private Equity LBO Playbook | 8 | 3 | 3 | 3 | Chamath details the structural growth ceilings faced by bottoms-up SaaS businesses attempting to move up-market to enterprise sales. He explains how increased OpEx and competition from incumbents like Salesforce stall organic growth. | |
| Founder Burnout Activist Investor Pressure and Post Buyout Restructuring | 8 | 2 | 3 | 3 | Sacks explains founder burnout when transitioning from high-growth phases to cash-flow discipline demanded by public markets. He details how private equity firms restructure cost bases to extract hundreds of millions in free cash flow. | |
| Stock Based Compensation Dilution and Free Cash Flow Debates | 8 | 4 | 5 | 5 | Friedberg and Chamath debate stock-based compensation accounting and shareholder dilution. Chamath quotes Warren Buffett to argue that adding back stock compensation to free cash flow distorts true corporate profitability. | |
| M and A Regulatory Pressures and Distressed Public Tech Targets | 7 | 2 | 2 | 2 | Sacks highlights how aggressive FTC regulatory pressure under Lina Khan prevents strategic tech M&A, leaving private equity buyouts as the main exit path. Calacanis highlights distressed public tech targets like Peloton and BuzzFeed. | |
| Corporate Debt Investing and Macroeconomic Inflation Energy Dynamics | 8 | 2 | 3 | 3 | Chamath explains shifting his public market strategy toward tech corporate debt to secure senior capital structure placement. The group discusses Powell's commitment to raising rates even at the expense of economic growth. | |
| Macroeconomic Regime Change Inflation Psychology and Ukraine War Overhang | 8 | 3 | 4 | 3 | Sacks categorizes the three macro drivers damaging markets: interest rate expectations, impending recession, and the geopolitical overhang of the Ukraine war. Chamath warns of potential double-digit inflation prints coming in autumn. | |
| Diplomatic History NATO Expansion and the Precursors to Conflict | 8 | 5 | 7 | 7 | Sacks lays out the diplomatic history of NATO expansion since 2008, citing CIA Director Bill Burns' memo warning that Ukrainian NATO integration was a strict Russian red line. Calacanis pushes back against framing Putin as a predictable state actor. | |
| Debate on Ukraine War and US Foreign Policy Diplomacy | 7 | 4 | 9 | 9 | A heated exchange takes place as Calacanis argues the free world must stand up to aggressive dictators who invade sovereign nations. Sacks forcefully counters that American foreign policy failed at basic diplomacy and predictably triggered a destructive forever war. | |
| China's Demotion of Foreign Minister and Russia Ties | 9 | 2 | 2 | 2 | Chamath references China's demotion of its foreign minister over overly pro-Russia commentary. Friedberg delivers an expert overview of a groundbreaking Science paper using DeepMind's AlphaFold to model the nuclear pore complex. |
Statements from this episode (29)
Chamath: Lack of regulation leaves systemic risk unmonitored in crypto
“This is a completely unregulated market, right? There are no middle maker market makers per se that actually have reporting requirements to any regulatory authority. There aren't any clearing houses. There isn't a way for us to understand systemic risks as it …”
Chamath: Crypto market dynamics are identical to traditional financial cycles
“We've had to listen to every millennial and Gen Z market observer in crypto tout how this is not like boomers, and they turned out to be the same. I mean, this is the thing of all. It's like of all of the times you've had to hear how it's so different, it turn…”
Sacks: Sam Bankman-Fried is supporting tax increases in California
“I'm mainly pissed off that SBF is trying to raise my taxes in California.”
Sacks predicts California budget shortfall in 2023 from lost capital gains taxes
“I think we're due for a huge budget shortfall next year because there's gonna be no capital gains.”
Chamath: The $2T crypto drawdown was overwhelmingly retail capital
“We've torched two trillion dollars and it's not of institutional capital. You know, this is overwhelmingly retail capital.”
Calacanis: Crypto will become the most regulated space ever
“I think this is going to become the most regulated space we've ever seen.”
Chamath: $1.7 trillion was torched in ETFs in early 2022
“There was 1.7 trillion, you know, that was just torched in ETFs alone just in the, since the beginning of this year, right?”
Chamath: Bitcoin's baseline fundamental price is $3,500 to $5,000
“The baseline price of Bitcoin, where things seemed, you know, where rational supply and demand were meeting each other before all these, you know, five, 10,000. 3500 to 5000.”
Sacks: Median SaaS company trades at 5.5x NTM revenue with 20% growth
“The SAS index is now down to about five and a half times revenue. I think next 12 months revenue for them, for the median SAS company and the median SAS company is growing about 20%.”
Sacks: High-growth SaaS companies trade at 8x NTM revenue
“If you're a high growth company, which starts at 40%, you're trading at about eight times the next 12 months revenue.”
Palihapitiya: Tech companies must prove sustainable margins before major investment cycles
“This is a warning sign that says you cannot go into a massive investment cycle for all companies unless you can prove that you can sustain margins, sustain growth, and minimize OPEX.”
Friedberg: Zendesk generates cash but dilutes shareholders 2.5% yearly via stock comp
“So this company's been making money every quarter. They generate cash. But in the last quarter, they issued sixty million dollars in stock to employees to compensate them for the work that they do. So that's two hundred and fifty million roughly of dollars per…”
Friedberg: Silicon Valley IPOs standardly include 4% annual evergreen share dilutions
“The standard in Silicon Valley today when a company goes public in an IPO is to have what's called an evergreen stock grant proposal. And evergreen basically means that every year the company is authorized, the board automatically authorizes the issuance of so…”
Sacks: Private equity buyers will slash Zendesk costs to generate $300M-$500M cash flow
“They are going to slash the hell out of the cost structure. They're going to run it to be highly profitable. They'll probably bring the growth down from 30% a year to 20% or 15%. But the benefit, the offsetting benefit to reducing the growth a little bit will …”
Chamath: Free cash flow driven by stock compensation distorts true profitability
“So when the only source of free cash is stock based comp, that free cashflow doesn't reflect the company's true profitability.”
Sacks: PE buyouts kill product innovation, creating startup opportunities
“When I see that the competitors have all been acquired by private equity companies, I generally think, okay, there's room for innovation here, because I know that the first thing that PE firms are going to do when they acquire a company is, like, zero out R&D,…”
Calacanis: Manscaped lost $315M in 2021 with $310M stock-based comp
“Manscaped, which is a company that sells razors for guys, they had three hundred fifteen million in net loss in 2021 with three hundred ten million in stock based comp.”
Calacanis: Peloton will be acquired or taken private due to cash burn
“Peloton, nine hundred sixty four million last quarter in revenue, lost seven hundred fifty seven million in the quarter. They have a 3.1 billion dollar market cap. They've only got eight hundred seventy nine million dollars worth of cash. I'm just looking at t…”
Chamath Palihapitiya shifts public market focus to corporate debt
“I've transitioned most of my public markets time to focus on debt.”
Chamath: US inflation will remain at 8% to 9% for months
“No, as I've said, I think you're going to see eight and nine percent inflation prints for at least the next three or four months minimum.”
Sacks: Bear market won't end without resolution on rates, recession, and Ukraine
“So, I don't see how we get out of this bear market until you get clarity and resolution of inflation and rates, number one, slowdown and recession, number two, and basically this war in Europe, number three.”
Chamath: Crude oil could reach $180 per barrel by late 2022
“You could have a 180 dollar barrel oil by November, December when it's cold, not just here, but in continental Europe. Now all of a sudden inflation gets kicks right back up again.”
Sacks: Russia-Ukraine war will end in a forced three-point settlement
“And that is what we're going to end up with. The only difference is that it's going to be implemented by force and Ukraine will be destroyed in the process.”
Chamath: Markets won't bottom until $30 trillion in liquidity is removed
“Number one is we need to reset supply and demand by taking 30 trillion dollars out of global markets. And then the second is we need an off ramp to this Ukraine Russia war so that there is predictable energy and food supply to the world so that folks can just …”
Sacks: The Russia-Ukraine war was easily avoidable through diplomacy
“My point is this, that this war was easily avoidable through the use of diplomacy.”
Sacks: Putin will not invade NATO countries because Russia is outmatched
“He's not gonna invade NATO countries because he's so outmatched.”
Chamath: Xi Jinping is more hedged and moderate on Russia than pro-Russian officials
“Xi is not. And Xi is much more hedged and moderate and, you know, wanted to have more optionality and felt that he was cornered”
Friedberg: Harvard study combined X-ray imaging and AlphaFold to map nuclear pore complex
“What this team at Harvard did that they published two weeks ago is a really groundbreaking, extremely detailed view of the entire nuclear comp, nuclear pore complex, Around the nucleus of the cell by combining both x-ray imaging and alpha fold.”
Friedberg: AlphaFold solving nuclear pore structure unlocks huge therapeutic opportunities
“This is an incredible example of how AlphaFold's been used to solve this really misunderstood or never really well understood aspect of biology that is at the root cause of so much of disease and creates all this opportunity for medicine and therapeutics, rese…”