Jan 8, 2022 · 1h 6m · allin
E62: Elizabeth Holmes verdict, fraud origins & takeaways, navigating "The Great Markdown" & more
Chamath Palihapitiya · 16m spoken David Sacks · 16m spoken David Friedberg · 13m spoken Jason Calacanis · 12m 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 62 of the All-In Podcast, the hosts analyze the legal and financial implications of Elizabeth Holmes's Theranos fraud conviction, examine public tech market multiple compressions during 'The Great Markdown,' and offer strategic survival metrics for private startup founders.
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 99.3% of the talking time here. How this is scored →
The hosts as informed peer 6.9 Guest teaching 2.6 Guest disagreement 2.9 The hosts pushing back 3.8
speaking balance: gold is the hosts, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 19:12 Chamath aggressively interrupts Friedberg on VC diligence
Chamath directly cuts off Friedberg, calling his statement 'fucking bullshit' when Friedberg suggests lack of original thinking is unique to bad Theranos deals.
Hardest push from the hosts ▶ 15:26 Sacks refutes JCal's theory on calling passing VCs as witnessesSacks completely rejects JCal's premise that prosecutors should have called top VC firms who passed on Theranos, explaining how criminal fraud law actually operates.
Biggest teaching moment ▶ 11:50 Chamath and Friedberg educate JCal on microfluidic physical limitsFriedberg and Chamath break down biological and physical assay limits to explain to JCal why running hundreds of tests on one drop of blood is scientifically impossible.
The host holds their own ▶ 28:30 Sacks breaks down Federal Reserve policy mechanics and market impactsSacks demonstrates deep financial expertise by explaining the specific differences between Fed announcements, rate hikes, quantitative tightening, and balance sheet runoff.
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 |
|---|---|---|---|---|---|---|
| New Year Banter & Chamath's Sandalwood Candle | 1 | 0 | 1 | 1 | Casual New Year opening banter featuring Chamath's joke about his $24,000 sandalwood candle and Friedberg telling a story about a COVID scare at Chamath's house during poker. | |
| Omicron Variant Severity & Personal Test Stories | 6 | 1 | 2 | 2 | Sacks breaks down the legal specifics of Elizabeth Holmes' conviction, explaining the distinction between wire fraud against investors and charges regarding patients. | |
| Life Sciences Diligence & Limits of Microfluidic Testing | 7 | 5 | 2 | 3 | Friedberg and Chamath explain microfluidics and assay physics, educating JCal on why running hundreds of tests on a single drop of blood is scientifically unviable for small molecules. | |
| VC Red Flags & Silicon Valley's Avoidance of Theranos | 7 | 4 | 3 | 6 | Sacks pushes back against JCal's proposal that prosecutors should have called VCs who passed on Theranos, explaining that failing or declining an investment is not criminal fraud. | |
| Founder Lessons & Delaware Section 220 Information Rights | 7 | 3 | 6 | 7 | Chamath forcefully interrupts Friedberg's critique of investor diligence, arguing that relying on social proof is standard operating practice across Silicon Valley venture rounds. | |
| Startup Financial Opacity & Real-World Grift Examples | 7 | 2 | 3 | 3 | JCal details Delaware Section 220 shareholder inspection rights, while Sacks and Chamath recount real-world startup financial opacity and dubious acquisition tactics. | |
| "The Great Markdown": Fed Policy & SaaS Multiple Compression | 9 | 2 | 3 | 4 | Sacks and Chamath provide detailed macroeconomic analysis on Fed FOMC policy shifts, rate hike expectations, balance sheet runoff, and SaaS valuation multiple compression. | |
| Unicorn Write-Downs & Regulatory Obstacles for Mergers | 8 | 3 | 4 | 5 | Friedberg highlights the valuation overhang for 900 late-stage unicorns, while Chamath challenges JCal's claim that startups have four years of runway to catch up to inflated marks. | |
| Navigating Market Turmoil: Default Alive, Burn Multiples, and Founder Advice | 9 | 4 | 3 | 4 | The hosts debate operational survival metrics for founders, contrasting Paul Graham's 'default alive' concept with Sacks' SaaS burn multiple framework. | |
| Andreessen Horowitz's $9B Fund & The Future of Public VC Firms | 8 | 2 | 2 | 3 | The group discusses Andreessen Horowitz raising $9 billion and analyzes the structural financial rationale for megafund venture firms to eventually IPO like private equity giants. |
Statements from this episode (23)
Sacks: Founders can sell vision but must be truthful about current status
“As a founder, you can be as messianic as you want to be. You can promise, you know, anything about your vision and what you intended to the future, but what you must do is be accurate about the current state of your business. You cannot lie about the deals tha…”
Chamath: No professional Silicon Valley VCs invested in Theranos
“There's not a single person in Silicon Valley, I think, who put in a single shekel into this thing who actually does this as a real job.”
Friedberg: 20 companies on top startup lists are total scams
“As you go down that list, This, 20 companies are total scam companies. They're fraud. They're not going to work. They're grifters.”
Chamath Palihapitiya lost nearly $100M on three failed blood-testing startups
“I've actually funded three of these businesses and I've poured almost a hundred million dollars of money into it and they've all failed”
Chamath: He and Friedberg are currently witnessing an active biotech fraud
“There's a fraud in biotech going on right now that David and I saw up front.”
Sacks: Media inevitably tears down startups after building them up
“Because the media really has two kinds of stories. They build up and they tear down. And when they're done building you up, they're gonna tear you down because that's the only story left to write.”
Chamath: Mid-stage VC investors rely on signaling over due diligence
“There is a valley of funding between the series A and maybe the D or the E. Where I really think a lot of folks just look for signaling value based on who the Series A investors were.”
Friedberg: Shorting 'Theranos 2.0' company worked out really well
“Oh, by the way, I did short it. It worked out really well.”
Chamath: Facebook kept financials on an air-gapped offline computer
“We actually kept The financials on a physical computer that was not connected to the internet so the people that wanted it would actually have to come to our office and then we would put them in like a windowless room without their phone or something.”
Calacanis: Delaware Section 220 overrides restrictive contractual information rights
“Whatever you have in information rights, whatever your lawyers wrote, Is not above section two 20 in Delaware.”
Chamath predicts the tech stock market sell-off is mostly over
“We're probably, to be honest with you, like, actually, like, we've puked it all out for the most part, in my opinion.”
Chamath Palihapitiya sold off almost all third-party PIPE holdings in Q4 2021
“I exited a ton of positions, all my pipes, you know, my third party pipes, I basically sold off except for one, you know, I generated some liquidity in other places as well.”
Chamath Palihapitiya asserts public company fundamentals remained strong in Q4 2021
“I don't think a single thing in the last quarter has changed in the underlying fundamentals of the majority of businesses that are public.”
Calacanis: Many unicorns will result in break-even M&A pushes
“So there'll be a lot of pushes, I think is my prediction of those 900 unicorns.”
Chamath: Late-stage startups have two years or less of runway
“Those companies absolutely do not have four years of runway. I will bet dollars to donuts. They have two years or less.”
Sacks: Higher risk of US recession in 2022 from Fed overreaction
“And so, I think there's actually like a much greater risk now of the economy going to recession this year because of the Fed's overreaction this week.”
Chamath: Facebook, Google, Apple, Microsoft, Amazon raised under $250M combined
“Facebook, Google, Apple, Microsoft and Amazon raised collectively less than two hundred and fifty million dollars.”
Sacks: Default alive is too high a bar for early SaaS startups
“I personally think that trying to achieve default alive status is too high a bar. I mean, it's a wonderful thing if you can do it. I mean, Facebook did it. Google did it. The very best companies did it. But I know very few SaaS companies that could continue to…”
Sacks: VCs will fund SaaS startups with burn multiples under 2 in recessions
“If a SaaS company can say add ten million of net new AR in a year and burn 20, I think VCs will fund that all day long, even in a recession.”
Chamath: World's best businesses barely grow 20% after 15 to 20 years
“Even the best businesses in the world after 15 or 20 years are barely growing at 20%.”