Aug 6, 2021 · 1h 31m · allin
E43: Innovative venture strategies, Zymergen's implosion, Square acquires Afterpay & more
David Friedberg · 22m spoken Chamath Palihapitiya · 21m spoken Jason Calacanis · 19m spoken David Sacks · 16m spoken
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In Episode 43 of the All-In Podcast, hosts Jason Calacanis, Chamath Palihapitiya, David Sacks, and David Friedberg analyze major fund announcements, VC industry mechanics, and the catastrophic collapse of Zymergen alongside high-profile corporate frauds. They also examine Square's acquisition of Afterpay, risks of financial censorship, and consumer fintech consolidation while engaging in lighthearted banter about their summer vacations.
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 7.1 Guest teaching 4.3 Guest disagreement 3.3 The hosts pushing back 3.3
speaking balance: gold is the hosts, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 51:40 Chamath directly challenges Friedberg on agency problems
Chamath forcefully interrupts and refutes Friedberg's theory that investors fall for hype due to human narrative instinct, stating that fund managers gamble recklessly because they are spending other people's money rather than their own.
Hardest push from the hosts ▶ 51:40 Chamath rejects Friedberg's belief hypothesisChamath bluntly rejects Friedberg's framing of human desire to believe, asserting VCs would never risk their personal children's education funds on unproven deep-tech stories.
Biggest teaching moment ▶ 32:12 Friedberg educates on synthetic biology unit economicsFriedberg delivers a thorough explanation of how synthetic biology platforms fail to translate laboratory cell edits into commercial products when unit production economics are ignored.
The host holds their own ▶ 1:14:00 Chamath articulates public market compounding playbooksChamath demonstrates deep market expertise by illustrating how companies like Amazon and Square turn internal operational cost centers into high-margin external revenue streams.
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: Sacks' Boat Setup and Chamath's Beach Club Story | 1 | 0 | 1 | 1 | Casual pre-show banter among the co-hosts touching on sunscreen routines, boat setups, and listening to their own show while on vacation. | |
| The Production Board's $300M Fund and Venture Studio Models | 7 | 4 | 1 | 2 | Friedberg details the $300M fundraise for The Production Board and its backing by Alphabet and BlackRock. Chamath provides high-level commentary on how hyper-focused venture studios differ from traditional funds. | |
| Craft Ventures Fund III $1.1B Launch and Callin Syndicate | 7 | 3 | 1 | 2 | Sacks outlines Craft Ventures' $1.1B Fund III launch focused on SaaS and marketplaces, while Jason shares mechanics from their Callin allocation syndicate. | |
| VC Dynamics, Internal Markups, AUM Growth, and Governance | 8 | 5 | 3 | 5 | Chamath delivers an in-depth breakdown of institutional LP expectations, hurdle rates, and why top VC firms prioritize velocity of capital and AUM growth. The group debates internal markups on rounds like Clubhouse. | |
| Zymergen's Implosion, Synthetic Biology Pitfalls, and Public Market Fallout | 8 | 8 | 2 | 3 | Friedberg provides a comprehensive masterclass on synthetic biology unit economics, explaining why Zymergen imploded after hype-driven valuations and SoftBank capital failed to yield commercially viable products. | |
| Milestone-Based VC vs. Hype Narratives and Diligence Failures | 7 | 5 | 5 | 5 | Sacks and Friedberg debate milestone-based VC financing versus hype narratives, citing examples like Theranos, Nikola, Quibi, and WeWork. Chamath argues investors willingly suspended logic despite obvious red flags. | |
| Startup Diligence and the Line Between Fraud and Incompetence | 8 | 5 | 4 | 4 | Sacks outlines Craft's 24-hour SaaS diligence process checking core metrics, while Chamath and Sacks discuss criminal fraud versus incompetence in public and private markets. | |
| Zymergen's Implosion and Deep-Tech Narratives vs Real Metrics | 7 | 4 | 3 | 3 | Chamath recounts pitching an unnamed synthetic biology competitor that gave asterisk-laden answers about gross margin, highlighting how FOMO causes investors to forego basic checks. | |
| The Psychology of Narratives and Agency Problems in Venture Capital | 8 | 6 | 6 | 7 | Friedberg frames investment hype around the Sapiens theory of human narrative creation, but Chamath forcefully rejects this, pointing out that VCs behave recklessly because they are gambling other people's money. | |
| Early-Stage Betting, Rigorous Diligence, and Employee Financial Impact | 7 | 5 | 3 | 3 | Friedberg details the severe financial and tax consequences suffered by employees who exercise stock options ahead of crashed tech IPOs like Zymergen. | |
| Uncovering Theranos: Chamath and Jason Share Insider Encounters | 8 | 4 | 3 | 2 | Chamath shares an insider story of a executive interviewing at Theranos who wasn't allowed past reception, followed by Jason describing his tense encounter with Elizabeth Holmes. | |
| Spotting Corporate Frauds: Debating Tether and Summer Vacation Banter | 6 | 3 | 4 | 3 | Jason identifies Tether (USDT) as his top prospective corporate fraud, prompting Sacks to suggest a coordinated withdrawal stress test before the group transitions into vacation talk. | |
| Financial Censorship and PayPal's 'No-Buy List' Concerns | 8 | 2 | 6 | 2 | Sacks presents an extended argument against PayPal partnering with organizations like the SPLC to build financial 'no-buy lists', urging antitrust and congressional action against financial deplatforming. | |
| Square Acquires Afterpay: BNPL Economics and Public Market Rewards | 9 | 5 | 2 | 3 | Friedberg analyzes the unit economics of Square acquiring Afterpay, while Chamath breaks down public market rewards for growth M&A and the Amazon strategy of turning expenses into revenue lines. | |
| Financial Superapps, Banking Licenses, and Platform Monopolization Risks | 8 | 6 | 5 | 5 | Friedberg categorizes consumer financial services into five pillars, Chamath stresses the role of federal banking licenses as regulatory gatekeepers, and Sacks warns about big tech platform power. |
Statements from this episode (30)
David Sacks: SaaS and marketplaces are the best internet businesses to build
“Along with SaaS, marketplaces are the best kind of internet businesses to create.”
Palihapitiya: Annual venture capital inflows grew from $25B-$30B in 2011 to $120B in 2021
“When I started social capital, there was probably 25 to thirty billion dollars a year flowing into venture just in 2011. Fast forward a decade, we have like a hundred and twenty billion dollars a year going into tech and it's going up like crazy.”
Friedberg: Leading consecutive rounds and marking up portfolio companies drives top returns
“The guys that are known for doing this like Sequoia and Founders Fund and others have had incredible returns by doing exactly this. So the strategy does work.”
Sacks: Craft lets third-party investors lead funding rounds for Craft-incubated startups
“Now I think what we might do in that case, because we incubated it is we'd let somebody else lead the round and then we would participate. So you have some third party setting the price because we incubated the company.”
Chamath: Accepts all LPA terms without pushback when investing as an LP
“I don't really, you know, push back on a single term in any LPA because I'm only doing it mostly to support people. And so whatever terms they want, they get from me.”
Friedberg: Zymergen's collapse will cause widespread skepticism in synthetic biology
“It's really going to impact the industry broadly, because now people are going to say a lot of synthetic biology companies are smoke and mirrors, and they're really not there yet.”
Sacks criticizes SoftBank for $500M seed checks into overvalued companies
“SoftBank is engaged in a style of investing that we would never engage in. It's absolutely Pathetical to the way that we invest, right? They're making five hundred million dollar seed investments in massively overvalued companies.”
David Sacks: Craft Ventures requires revenue before funding Series A rounds
“One of the reasons why we like SaaS and marketplace at Kraft is they're very milestone based. I mean, we, you know, if we invest before you have a functional product, it's going to be at a seed valuation, you know, like a 10 cap, ten million dollar valuation, …”
Friedberg: Elon Musk is the only hype man who delivers in deep tech
“There's only one hype man on planet Earth that is good enough to pull this off and actually deliver the goods at the end of the day. It's probably Elon, like, because, you know, he funded these businesses that were deep tech businesses, Tesla and SpaceX. For m…”
Chamath Palihapitiya: Investor FOMO turns smart VCs into foolish decision-makers
“The problem is there's this momentum thing that happens among investors, as Friedberg said, where the FOMO kicks in, and some of the smartest people become some of the dumbest fucking people.”
Sacks: VC pitch process measures storytelling, not underlying business validity
“Most of what the VC process does is just measure a founder's ability to tell narratives, and that may be correlated with their ability to do marketing, but it's not correlated with whether their idea is fundamentally correct or not.”
Chamath: Fraud is minimized when investors risk personal capital or demand real metrics
“There will be the least amount of fraud when you either have irrefutable metrics, or the investor has to invest their own money.”
Sacks: Craft Ventures insists on product demos over PowerPoint presentations
“Our motto is, show me the product, not a PowerPoint, because the same PowerPoint can describe 10 or a hundred different products.”
Chamath writes early-stage checks up to $5M regardless of reasonableness
“In the early stage see a I rip I rip in 50 K to five million dollar checks all the time. I could care less if it sounds reasonable. I take a punt at it, right?”
Calacanis: 20% to 30% of promising startup deals fail basic diligence
“Between 20 and 30% of deals that look great, when we get under the covers and look at the diligence, we look at the cap table, we look at the revenue, we look at the accounting, we ask them who's doing their accounting, we ask them for bank statements, we ask …”
Chamath burned $50M to $75M on six finger-prick blood-testing startups
“I had burned about maybe 50, seventy-five million bucks on six different startups trying to do this like, you know, in-situ Kind of like, you know, finger prick blood testing”
Sacks: Stacking a startup board with political heavyweights is a red flag
“If you got one of those guys, you got one guy like Kissinger on your board, it's okay. If they're all like that, it's a problem.”
Jason Calacanis calls Tether his fraud of the moment
“I'm not backing off, I just don't want to lose a member of our little quartet here, but I will say that my fraud of the moment, the one that's making my Spidey sense go crazy, is Tether.”
Sacks claims PayPal partners with ADL and SPLC to ban users
“Basically, PayPal is creating the equivalent of a no fly list with respect to their service. Well, for anybody who they put, they deem as deplorable or undesirable, basically they're working with the ADL, the Anti-Defamation League, and the Southern Poverty La…”
Calacanis: SPLC has been sued multiple times over its list placements
“SPLC has gotten sued a number of times for putting people on these lists. They put Sam Harris at some point on the list.”
Friedberg: Square issued a third of its stock for 4% revenue growth
“They issued a third of their stock to buy this company. So basically, Square is a public company. They issued shares to Afterpay shareholders. And Afterpay only represents about four percent of Square's revenue.”
Chamath: Buy Now, Pay Later is a feature, not a standalone company
“The thing with Buy Now, Pay Later is that it is not a company. It has always been a feature, and it's a feature of a much larger financial services platform”
Chamath: Companies turning expenses into revenue streams compound long-term
“If you can see folks acquiring adjacent features, or if you can see folks taking expense lines and turning them into revenue lines, these are, in my opinion, sure bet companies that compound forever in the public.”
Friedberg: Superpowers will consolidate consumer fintech within a decade
“I have a big thesis and a big belief that over the next decade, we're going to see those five categories start to merge. And you're going to have three to five superpowers that are going to offer a consolidated stack of services and the unit economics are goin…”
Chamath claims Shopify pays Stripe approximately $350 million annually
“If you look inside the P and L of Shopify, an enormous line item now about three hundred and fifty million bucks a year is what they're paying to stripe.”
Sacks: Financial deplatforming will become a major political hot potato within a year
“I'm predicting right now that financial deplatforming is going to be the big hot potato, political hot potato over the next year.”