All right, everybody Welcome to the number one podcast in the world. I am your boy Jake how the world's greatest moderator executive producer for life with me again on the all in podcast is the Rainman David Sachs. Yeah, looking healthy looking good looking trim the hairs great. How you feeling
brother? Good. Good. Good. Good good
haircut looks good. And I do you go to the barber The Stylist they come to you to everybody wants to know
they come to me. Yeah.
And then with us, of course your Sultan of science, he loves those vegetables. His name is David Friedberg from Berkeley to the Bay our boy. Are you doing there? Brother? Are you living the lake lifestyle? You have a nice restful August loving loving the outdoors, but for you, you look so healthy speaking of looking healthy celebrated birthday with Jason Kun yesterday. Happy 39th. Jason Kun Kun. We did a long mountain bike ride.
With our other body Z and Metallurgy family Barbecue last night. Have a good time. When you do a little portobello mushrooms. What did you do? You put a little zucchini on the grill. Let's just say I show up with my own food to a barbecue. Absolutely you do. All right, and everybody's favorite the chairman dictator shamov Polly Hoppity a you love him. You hate him, but you can't ignore him how you'd look at the number of buttons here. You got the Mau collar on and I don't think any of those buttons are bud.
My little
buddy man.
He became a meme. Once again. Once again the all in podcast creating memes. You were swirly. You were swirling a little white wine last week you were in the arena and I'm putting up all the numbers going macro and your swirling wine the audience loved it. What's going on today? Do you have a bottle that was a 20-19 cuddle Bosco really glazing? Can you tell us the flavor profile the notes? What did you get? What did you get as you were swirling?
There was some Plum there's a little truffle there the boysenberries little poison very fertile moths.
It was a touch of inflation with a hint of
unemployment.
You know
boys I have saved me I had a big week this week. You know, I'm at the Lakes tell but I mean a little trip to Silicon Valley. I was hanging out with rule off at Sequoia. And as I'm prone to do I love to go to Bucks you guys meant to Bucks before in Woodside. Yeah. I went one couple years now and I've never been back since okay. That's my favorite place to get breakfast or get my little Tuna Melt. I've been going there for ages. It's a little bit of a legendary place where Steve jurvetson maybe Hotmail
the Tesla investment all kinds of famous stuff happens at
bucks. Well, it's where PayPal got its first funding round where John Malloy from Nokia Ventures beam the money to Peter and Max at bucks on a Palm Pilot on Palm Pilot way back in 1999.
Yeah, for those people don't know Palm Pilot was the most Innovative and poorly designed product. I was a Salesman Nick Daman college so good, but you know, I'm wearing my
And I got my Bucks menu here boys. It was like a pinnacle of my career.
I've been waiting for this if you go to bucks and you look at the side, you can get your crispy brussels sprouts their Freiburg get your sweet potato fries. But there it is Jake Al's onion rings are now on the menu at bucks. I have hit the big leagues folks. Wait, is that is that real? Did you really get that I did and you like version but but you like I know I love a good tuna melt. It's a weird sandwich, but they do it. So great there and I keep asking for onion rings for like a decade and we don't do I know
You don't do any ranks who animal zoo boo. Yeah, and so suddenly, you know that the team there comes out. They say Jake how we have two different types of onion rings. Please pick which one you like best. I went with the panko crusted Freiburg. These are for you delicious panko-crusted and they put them on the menu. So I was so touched I don't well we're on while we're on sandwiches sure. You know what I love what do you mean a Reuben made with turkey breast instead of so strongly. Have you guys ever had a turkey? Wonderful? I haven't it's
Because I think a pastrami Reuben is a little too much. It just feels too sclerotic to fast-track your arteries are yeah, it's terrible but like you get a good Thousand Island sauce and like the sauerkraut and kimchi. It's amazing. I took my I took when I was in New York couple weeks ago. I took my daughter to Katz's Deli. I took her on a little tour of the Lower East Side and we made a stop at Katz's. What's your favorite Sammy there Max is Del e by the way, how's the turkey you think Max has been why did you do a paid promo for bucks at Woodside? I don't believe you.
Hat every time they sell one of those onion rings that I get one dollar on my account there. So I'm gonna get afraid to an amine group never ends. I don't get it onion rings. Perfect. Okay, I mean you're selling potatoes and here we go. Hi we go loud. Every Jake can go high we go low-tech. Although we go. Hi. All right. Listen tremont's bit ago outcome is on the table. The doj is looking at breaking up Google. This is huge news.
As in our industry last week we talked about the ruling that Google had any legal Monopoly in Search and advertising. The case was brought by Trump's doj back in 2020. Jamaat said to outcomes are possible little old Big O little o consent degree, you know, like Microsoft did back in 2000 with the Internet Explorer decision the Big O.
We didn't think that was a major possibility. But here we are Google getting broken up doj is going Big O on Wednesday Bloomberg reported. The doj is considering a breakup according to the article. Most likely break up targets are Android OS Google Chrome and AdWords. Okay last time the Government tried to break up a monopoly was 20 years ago when they try and fail to dismantle Microsoft, we know how that's going on. The company's doing great. So let's talk about it aside from search and advertising just kind of Five Pillars at
go and then you're a former googler. She will go to you first Freiburg. I think plowed 40 billion in Revenue growing 30% YouTube thirty four billion growing 15% little volatile because it's advertising that doesn't include like premium YouTube TV, and that's tough. But oh my Lord YouTube is up to 2.7 billion monthly active users World populations 8.2. So quite significant Netflix has 38 billion in Revenue. They're worth almost 300 billion. So that's an interesting. Corollary. You got way Mo doing 50,000 paid trips a week now.
2.5 million a year and that's growing quite nicely.
You got Android right? They don't disclose revving. You got the G sweet. So let's start with you Freiburg. And then I'll go to you tomorrow because you made the prediction. What do you think would be?
A creative or generally increase the market cap and be something that Google would be happy with and the government would be happy with if you had to like maybe shed one or two properties. What's a possible outcome here and your thoughts broadly on this? I'll just start by commenting. I'm not really sure what the Improvement to Consumer pricing or competition would be.
In different break up scenarios got really like to understand the doj is analysis on that. How does breaking up one of these things improve the consumer experience? I could see the case for Android because Android defaults to Google search, but again Androids and open source operating system. And so everyone has their own fork or a lot of the handset manufacturers will have their own Fork of Android. Obviously the Google Fork defaults to Google search. So it benefits Google services.
Has quite well, I think that would be an analysis that the doj would really have to kind of prove out that there is real anti-competition associated with Google's influence over the open-source Android operating system forth, but they managed and license out I think understanding that would be good. I do think that there's a lot of value on Lock and YouTube. So if Google were to just generally spin-out YouTube
That is probably a business that on its own would attract an investor base that might otherwise not want to get into the conglomerate and you know, there's always this notion of what's called a conglomerate discount when you put a lot of different businesses together the businesses in aggregate get valued less than the individual Parts. What would be valued on their own because different investors interested in a business investment thesis would like to bet on cloud would like to bet on YouTube would
like to bet on AI and so and and so each one of these kind of like segments if they can be unlocked can actually be value-creating in terms of overall market cap. The challenge is the way YouTube's infrastructure operates. It operates on shared infrastructure with the rest of Google services. So does cloud so to search so does AdWords so there's one common Cloud infrastructure that everything runs on and then there's one common Advertiser pool. There are dedicated advertising sales.
What in YouTube but there's also dedicated shared infrastructure on Advertising between YouTube and search and AdSense and so on and there's ad sales teams that actually can sell across search and third-party publisher sites and YouTube and so, you know breaking up those share teams becomes a little more technically difficult, but YouTube certainly seems like an unlock. The question is what happens with all the infrastructure layer. Does that go with cloud and if it does then YouTube AdWords and search all become customers of cloud.
So that might be one way that this could work but I think net if this were to happen there could be a lot of upside in the market cap. I'll also say just feels like the tenor of all of this is anti success.
And not anti-competition. And anyway anything that's kind of successful or big is automatically deemed to be a monopoly and I think we really have to kind of understand how are consumers and the market for competition being affected by having all these things together and that's what should really be focused on and studied not just the fact that something is big and successful. We'll see how that all plays out. Alright schemata you predicted the possibility of the big. Oh here. We are your thoughts on what this might look like.
Chances of it happening and then just maybe if you're interested in the anti success approach you or do you think this is more, you know valid criticism of Google's massive search Monopoly.
Well, when I painted that series of outcomes just kind of like looking forward. I really didn't think that this big ol outcomes was a very large probability. I was like, you know, I would have handicap that at single digit percentages. Hmm and I think the reason why the doj leak this thing and floated this trial balloon essentially is in part I didn't weigh enough
What sax was talking about which is that there really is a massive bipartisan amount of support against Google Now it cuts on two different dimensions. I think that there is one dimension which is more Republican oriented, which is just about freedom of speech and putting your thumb on the scale. But if you take the Democratic point of view, it's more the anti successful vein that Freiburg just mentioned.
The thing is though that it'll make strange bedfellows because it unites both sides against pushing for a big outcome. If you go back to the last Big O outcome that we had in antitrust law, which was the AT&T in the 70s and 80s that lawsuit was a decade-long, right? And essentially what happened was when
It looked like AT&T was going to lose the case. They were the ones that proposed splitting itself up. And so I think that it's this is going to start this really interesting chess game here where obviously Google has to appeal in Flight goes but if it looks like the political pressure is going to build and the courts aren't going to let them off the hook and have a little o outcome.
Probably the best thing to do is for Google to initiate it themselves because they can answer a lot of the questions that Friedberg just raised and they'll do it in a way. We're going back to
The people that matter along with the customers and the employees are the shareholders. You can do it in a way where the sum of the parts will be greater than the value today of Google. So I think that there is a shareholder win. It needs to be offered by Google and then negotiated but to be really honest with you Jason when I when I kind of was thinking about it last week, I really thought this was the single digit probability. I still think it's a single digit probability and if it grows
Rose
it's the most meaningful thing that's happened in technology quite honestly. Alright sacks from a business perspective. Well, it's actually
thought I agree with Hamas that Google has the opportunity to do something really interesting here, which is get ahead of the curve and break itself up before the political system forces that onto it and the advantage of doing that is that it could partition the company in ways that are economically smart. The big categories would be search advertising and YouTube and I think
I have two big economic benefits for shareholders one is you unlock value by D conglomerating like Freiburg was saying second. Once you break up the company into these pieces, there's less places for employees who aren't doing anything to hide, you know for all this bureaucracy to hi. I mean look Google is famous for employees who don't do anything right the guys sitting on the roof sunning themselves all day. If you break up the company into three or four smaller companies, right? There's this way less room for
people to hide and I think that they could all be leaner more efficient operations and that would accrue to the benefit of shareholders. So I think that would make a lot of sense and then furthermore I guess a third point is that you first all the possibility of the government doing something that could actually be very harmful and you know that the piece here is that I guess the doj is talking about spinning up Android and chrome and I think it's worth pointing out that those aren't really businesses in and
Themselves the reason why Google developed Android and chrome was to prevent anybody from getting up stream of them, right? They saw what Microsoft did in terms of capturing the operating system and then capturing the browser and they didn't want to potentially allow Microsoft or anyone else to essentially win The High Ground capture The High Ground Upstream of them and be able to divert traffic away from search to their own search engine or some someone else's search engine. So they began this strategy of commodity.
Using those layers of the stack and it worked brilliantly. I mean Android and chrome have become very popular and it guarantees that nobody else can get Upstream of them and then disintermediate them, but the problem is if those things get spun out and have become businesses on their own how would they function as businesses not clear to me that there's an obvious strategy there. I would like to ask Freiburg Freiburg. Do you see a way that Chrome and Android could be spun out in and become
Viable businesses on their own or do you agree that they were essentially created to commoditize layers of the stack rather than become profitable businesses of
on the road. So they were both created to avoid third parties blocking access to Google search. That's why they were both started. And remember some Dar was the product manager on Chrome originally that was his big kind of product that he ran for quite some time. So Android was all about making sure that the handset manufacturers
didn't basically default consumers to do search and use the internet in a way that would disadvantage Google. So Google said, you know what just like Jacques is doing currently with Lama. Google said, let's make an open source mobile operating system. It's better than any other mobile operating system and will make sure that consumers have choice and have the ability to go where they want to go and it's not just defaulted by the telcos or the handset manufacturers. So that was the reason and obviously they ended up making their own Fork of Android, which is the most popular Fork of Android.
It has Google as a default search engine. So yeah, and they get license fees from that but front fundamentally, it's really just in service of making sure that people go to Google Search. So where that ends up sitting in a split up company. I have no idea.
And chrome similarly, you know Google originally supported Firefox and gave a lot of money to Firefox and then Firefox just wasn't moving fast enough to Google started hiring Firefox engineer isn't built Chrome and house as a way to keep Netscape and Internet Explorer from blocking access to Google search and defaulting and they built a default to Google search. Obviously. What do you think Jacob? You know, I have a long relationship with Google as a content creator and they they do have a massive Monopoly in search. That's absolutely
True and the justice department I think is well within their rights to take a deep dive on that. They don't have it in ads. If you look at the competition for Google and advertising you got meta Tick-Tock and Amazon which have very very significant advertising businesses and then like a bunch of new players which are referred to basically as a shopping cart and networks that scoober instacart doordash Etc.
And so when you look at this, it's kind of paradoxical that it really does rhyme with what happened with Microsoft's there two decades late on this the search Monopoly has been squeezed for every dollar and to build every
Subcomponent of Google's Monopoly lights shopping, all of these things put into Google search and put at the top above organic search has basically killed hundreds hundreds of startups over the decades and so actually don't think this is going to do much if they do a break up the easy solution or Google and I agree with that. I think people who said that here is to just spin out YouTube and way Mo those two are perfect Standalone businesses. Yeah, there's some back-end stuff.
But like you said Freiburg, they could become customers of the ad network of the cloud for some number of years, but YouTube and way mostly be like a four hundred billion dollar company a 50 billion dollar company and those are right in the Zeitgeist of the future and what advertisers want. So I think offering those two up would unlock massive shareholder value the most damaging one would be Android if they force them to sell Android that is going to be massively damaging because an independent Android company could then, you know, give their search to
Ought to beg and Microsoft would happily noted that not could not could they they must in order to capture it with maximum economic value, right and so of Android right, correct? And so that is the dominant player that they have handsets so
worth. How much is that worth? Because maybe that does make Android a viable
business on its own when you know, it would be probably 30 billion in Revenue a year.
Okay, great. So let's do it. I take back what I said it can survive is
Business Chrome can't write Chrome can't be Android and Chrome go together.
That would be incredibly damaging to Google. That's the most damaging. The easiest is YouTube and way Mo in this whole mix but I'll give you the wild card in all of this about the mouth. Sorry just real quick. I think about the math on that. So let's say it spins out and it generates 30 billion in Revenue a year and Google owns the majority of it and eventually they'll sell it down. But that business will be valued on the money that Google's paying so Google will make that Equity value back to they own the shares and the
We'll lose one third of their revenue to that new company. Now, of course, they'll get it back in the equity but then they don't have it because about a third of searches are mobile now and that's increasing the big wild card and all this is Apple when I was doing Mahalo, which was a human-powered search and over 10 years ago thats the coil back. I emailed it to Steve Jobs. He opened it. He played with it a bunch. I won't talk about anything else in that regard, but they had a search Project in the works when Steve Jobs was in charge over there. They were
looking at search because he had such an ax to grind with Eric Schmidt because they launched Android and he kicked Eric Schmidt off the board and there was a lot of hand wringing their I think apple is and I've heard this from folks around Apple that they're looking at search again and there's DuckDuckGo and this company called Brave that has their own search engine search API that's gotten very popular. I believe apple is going to launch their own search engine and compete heads up with Google. And so I think that's going to be the very interesting.
Thing that happens in this market the question then becomes trauma.
This is the Shrek management to a level like it did Microsoft and you have a lost decade and it takes their eyes off the prize of well a I know and the reason I say no is that I think that people's reaction to these things become more sophisticated in time because folks go back and actually study what happened.
In the Marbella situation AT&T and the are box what happened in Microsoft? And so I suspect that they know how to Shield the rank-and-file employee from whatever is going to happen. So I think that that's less likely I think was referring to management, you know.
But you think it disturbs you think it distracts management from running the business FEMA.
I don't think so either because I think that these things get put into a very tight group of people mostly lawyers who then go and deal with this issue. I think that there's an acute moment where if they think that they're going to lose an appeal or that appeals lock going to get heard then yeah. I do think management and the board are brought together and be again if history is a guide they should want to propose the terms on which they
they break their own company up because I think if the government tries to decide there's going to be so much imprecision that they'll break the company and I think that would be a shame because I mean look take a step back.
The breaking up of Google is great or competition and for startups, but let's not forget. Google is an incredible company that has created enormous amounts of good. They have done way more good than bad way more like three four five orders of magnitude more good than bad and to break a company like that. I think would be a really bad outcome.
From a competitive Dynamics perspective and Game Theory. It's pretty reasonable to hobble them. That's why I think the small o outcome is much more palatable and seems more clear to me a breakup is a really Draconian action, and I'm not sure that when you look at Google versus AT&T in the and the baby bells, I don't think it's anywhere near the same.
But if there is the political will
they'll be able to craft and change some of the laws that allow these folks to just keep going after them. And if that happens, I think it's going to be really important for Google to define the terms of their own break up. I want to just underline what Jim offset real quick being big can be very good in the sense that it can drive and ability to invest in Innovation that is not possible without the scale and the significant cash flow that's being generated by being that big and AT&T.
Great example Bell Labs. So the way AT&T was set up is there was all the local telephone companies under the city spell system that AT&T owned and then Western Electric was the company that manufactured all the telephone equipment that was put into the the telephone system. And then Bell Labs was the third entity. It was the research arm and all that. They did at Bell Labs was do research and they were fully funded at all this cash flow pouring into them. So they could discover and work on an event whatever they wanted with that capital.
Bell Labs is so insane. If you go if you guys haven't read any of the books on Bell labs and what was discovered there and how it operated. It truly is like the most Innovative Center ever in human history, but they invented like antenna arrays they invented microwaves invented radar. They invented the transistor. They invented information Theory which was the basis for everything in the internet. There was even some efforts to try and invent a nuclear bomb before the Manhattan Project started the invented integrated circuits and on
On and on and on and that's because they could invest all this money in doing this research that would have been very difficult for a small start-up or a company that's trying to grow and is barely profitable to be able to do at Google. They've invested billions of dollars in way Mo and I think as we all know way Mo really was if not the leader but the inspiration for a whole generation of autonomous driving that ultimately will come to Market and will really transform our lives in a meaningful way in the same way Amazon and Microsoft and meta have all invested tens of billions of dollars in innovation.
And look at what suck is doing at meta with the open sourcing of the Llama models. It's incredible. That would have never been possible if you had a small company that was trying to get profitable. So I just want to highlight like these businesses just because they're big and successful doesn't necessarily mean that they're stifling innovation. In fact, they may be accelerating Innovation and enabling progress. I'm just pointing out that the cash flows are being generated the way they're investing those cash flows.
It's pretty pretty impressive. And we lose that if we end up going after every big company just because they're big and saying hey we should take away their ability to do this. I'm going to take the other side of that. I think that what they can do with their massive amount of power is destructive to competition in the marketplace. If you look at self-driving we have had tens of billions of dollars invested without way Mo it would have been just fine there have been so much money Tesla Uber, you know, I'll cruise GM there's
You people out there. There's plenty of capital out there from around the world and I think when these companies and Facebook's one, I think proves my point what you're saying here is I think it would be better that you didn't have these companies that could put 20 billion dollars into something and you had 50 startups go after it rather than these giant companies. Just steal it and overpower them flooding them with capital. It makes the world West Dynamic that's duck can just and Google can keep taking the next category from the marketplace Red Sox you had a
point.
If you break Google up from a conglomerate of let's call it for monopolies or duopolies or companies with extraordinary Market power into four separate companies. There's still going to be generating extraordinary profits and those could still be invested in a way Mo. So, I don't know that it stops The Innovation are workshopping. This issue is pretty much convinced me that it should be for companies search advertising YouTube and Android because I think Android could be a standalone business because of the value of the order
Sergeant Callo.
Cloud is insert your
advertising that's got me figured out. I don't know the answer to that.
Yeah, so, I mean, I guess it's a negotiation now, maybe they put up one or two to be spun out and then the negotiation happens and do know she could have regime change in Washington. Okay, let's keep moving through this incredibly juicy docket Starbucks. CEO is out after a year and a half of under performance star B's CEO laxman nourish him step down and after just 16 months on the job. I'll break down what went wrong and get your reaction.
Reaction to all this and I have some strong feelings on it Freiburg as well earlier this week Starbucks shares were down 20 percent year-to-date compared to the S&P up 12% companies are two straight quarters of declining Revenue the definition of merge session. In fact, they've had to raise prices massively due to inflation that has annoyed customers and customers have been irate about the weight which has been caused by two things one. They have a broken Staffing algorithm. That's led to massive understaffing and then the app has become the star be Zapped is
Is incredibly complex and you can order ridiculous drinks that's causing a certain lots of what why do you keep saying star beans? It's what the kids call it what the kids call it star B's that's part of the job. Okay - that's it. Yeah, and they've added like all these like fruity drinks with and stuff. That would be like along the Boba lines that have made and become incredibly popular with Millennials and gen Z
So anyway, laxman was the hand-picked successor by Howard Schultz and Schultz help prep and train laxman, but he's been super critical of them recently kind of like the Bob Iger Bob capek relationship. We saw play out in 2022 over at Disney Brian nickel. The currency of Triple-T is going to take over at the end of August investors. Love this move shares jumped 25% on Tuesday to sorry. What did you call it? It's called Chipotle normal people call a straight hole right above the current CEO of Chipotle.
Chipotle
Chipotle
CEO bowl a Chipotle is on a heater when he switches teams the odds go with them and Starbucks has a bunch of activist investors who are winning massively as part of putting pressure on this.
A Burg Starbucks and Nike both iconic Global Brands bow that faltered. What's your take?
Walton, the one argument is there's a Founder LED problem here which is when the founders steps out and Professional Management takes over and you have the same expectations that you had when the founder was leading things go sideways, but Starbucks faces many more kind of macro economic challenges make if you pull up Starbucks an actual report. So here you can see that their net revenue growth was only one percent year over year, but they're operating.
Has been on the decline so they have not really been able to boost their operating margin very much in the past five years. So while they've raised prices they've had a really hard time making more money and that's because the cost of food and the cost of Labor and the cost of rent and the capital expenditures needed to upgrade stores has far exceeded the ability for them to grow revenue and compete and now revenue is flatlining because consumers are getting tapped out with respect to how much they can spend and there's only so much
Much Innovation, you can really do to charge more get people to come in the store more and drive up Revenue. Brian nickel has an incredible reputation.
Prior to Chipotle here and Taco Bell and here and Taco Bell for several years and made it one of the most profitable Q Sr. Quick Serve restaurants in the world. He did this by focusing on every nickel. He is notorious for being a Cost Cutter for being an efficiency driver for being a productivity Hound he goes into the business and he figured out every step in the supply chain every step of the operating activities of the employees in the stores and figures out ways to make sure
did you say that Brian Nichols focuses on every nickel was
up don't interrupt. There was a lot of investor activism around Chipotle because they were wasting money like no one's business. The guy had a private jet. He was flying the business management team back and forth between Denver and
New York they were spending money on crazy projects and the board fired the CEO founder of Chipotle brought in nickel nickel came in and made Chipotle an incredibly profitable growing business and the expectation is all coming to do the same here that maybe over the years Starbucks is Success has bred laziness Starbucks is Success has bred fat slowness productivity Decline and that this guy is the right guy to come in and find all the nickels and Brian Nichols is probably the right guy, which is why you're seeing the
Kind of rally as hard as it has sacs are for our trip. Anybody have strong feelings
here. Yeah, I would just add something here, which is I do think that macroeconomic forces played a huge role here we've seen that we have had tremendous amount of inflation over the last few years and Starbucks has gotten more expensive and if you're a worker whose wages have not kept up with inflation. Do you really want to spend 10 15 bucks on a cup of coffee that I mean? It's a pretty fancy cup of coffee. I'm not saying it's not but when you could just go to your
your Commissary at work and pour yourself a cup of coffee for free. Do you really want to work roughly an hour every day to pay for your coffee fix and I think more and more consumers are just saying that this is a luxury good I'm looking at cut costs when I go to the grocery store and buy groceries. There are 30% more expensive than they were a few years ago. I got to cut somewhere and a luxury cup of coffee just seems like a really easy place to cut. So I think that's a huge part of this and I don't know how Brian Nichols going to fix.
That it's a macroeconomic force come out here. That's I have a couple the first is that I think Starbucks is actually an incredible brand and it's actually a really good business.
And the mistakes here has nothing to do with the product per se meaning Chipotle. If you remember someone got poisoned there there was like botulism the chicken was bad. So there was a core product problem, but that's not the case here.
if you unpack what Starbucks is, I think that they are a premium product and
that's reinforced by what Zack said, which is a price in such a way because they believe that they are premium product. The problem is they are not a premium brand and the difference is / meds as an example is a premium brand they can charge whatever they want under all weather condition. They have pricing power. So if their inputs go up they can make sure they maintain margin by changing the final price at the customer paid Starbucks doesn't have that power.
So they charge like a premium product but they're not a premium brand that has pricing power and that's why you've seen this compression. So very specifically when the new CEO came in.
I think made one important mistake, which is he came in on the heels of a very Rosy set of projections at Howard Schultz in the board put out to the street and I think that he had an opportunity then and there to just cut it because they saw inflation. They saw what it was doing. And if you just looked around the corner you would have seen that there would have been this compression in the product.
And I think what he should have done is just cut the analyst projections in the forecast to give him room and time. He didn't do that.
and by the way, when you bring in somebody who ran Taco Bell
that is proving that this is neither a premium product nor premium brand anymore. It is a mass-market product that will ebb and flow cyclically with the vicissitudes of inflation. That doesn't mean if the bad business. I'm just saying it's just an observation.
I expect that Brian nickel if he is smart, we'll look at this forecast and shredded to give himself time. So that's the sort of the short-term thing the long-term thing though in the following image, which I just sent to neck. I think there's a real question mark on this company over the medium to long term and I think it's best represented in this graphic Starbucks is a sugar company.
So for example a caramel macchiato 32 grams of sugar a mocha Frappuccino 60 grams of sugar. This is three times what you're supposed to have of the human in a day Apache No, 53 grams of sugar a caramel ribbon crunch frappuccino 62 grams of sugar and these products also averaged four to 500 calories per drink.
So the real issue, is that more consumers as they question.
The repercussions of consuming a lot of sugar. What will they do as more consumers get on glp ones? What will they do as more people think about the fact that that was never an enemy in fact fats are actually really good for you. The problem. Was that the sugar Lobby convinced us that that was bad and sugar was okay what will consumers do and I think that's a really big strategic question mark because the company has to embrace where the world is going.
The world is going away from sugar.
And I think they stink straighten sound smarter. They're going to have to really figure out what to
do could Starbucks introduced a line of low-calorie drinks that use sugar substitutes to achieve the
same they've done but it came up. I got that. Yeah, they have every single syrup comes in sugar-free and regular. So when I go there now that I'm on GOP is and have lost all this weight and I drink less I just get the Nitro cold bro. It's got zero calories or five calories. I may throw a little cold from on.
It and then my kids I do you kids want that's knowing the kids with the kids is critical. What I do with my kids is I do low sweet or like 1/3 sweet. I order one giant one. I pour it into three glasses at home with ice and I caught it with water because it is like drinking an unbelievable amount of sugar. It is nuts and the denominator. I'm gonna I'm gonna go get an espresso after this you put a little half and half in it and you get the fat.
No good. I mean here's what here's what happened. The thing about Starbucks. I study Starbucks and I spent some time with Howard Schultz. Actually you hear each. All right, maybe you could talk about your each side just a little bit until you tell little retail sciquest. But the thing about Starbucks is they realized early on that when you can customize a consumer experience the consumer comes back more frequently. So when you see your name written on that cup you feel like you're getting your product. You're not buying an off the shelf product. You're getting a custom personalized experience what that led to is people
Demising their drinks and what did they find that they like when they customize their drinks sugary sweet add-ons and then that became more and more of the standard menu and then that just kept evolving and that's just the consumer feedback mechanism working which is to Tomas Point led to 60 grams sugar drinks that are now the standard product at Starbucks. Not an espresso or cappuccino, which is how they started and it's really unfortunate. I don't think that Brian Nichols going to focus on that to be honest given his background with Taco Bell and chipotle that know that whenever anything
Here to your point. He'll be able to plug the leaks. My my question is just more. What did the company that's selling a product that people are learning is worse and worse for them. What do they do? They have to embrace a different alternative but I think it can be very hard because it may be so disruptive to the core product that they sell. Yeah, that's that's what do you think? I mean, what do you think about surprised? I mean, it's got I am my kids love Starbucks. We are regular consumers. The app is extraordinary.
Yeah, and I think the key issue here, you know is obviously the inputs and inflation that's a major driver but wage inflation is a critical piece of this. Here's a chart for you, you know just in terms of weekly earnings of full-time workers since Q for 2019 Starbucks started having a lot of Labor movements a lot of unionization a lot of complaints from the green aprons and they have massively raise salaries. They were at you know, $15 or $16 17. A lot of people were going into gig
Door dashing, you know Uber and so this competition for entry rung employees forced Starbucks, and I know this from The Uber experience and then doordash people wanted to set their own schedules not be like in a shift work and so you could make 20 bucks working for Uber and doordash. You're making 15. You have to drag your ass into Starbucks at 5:00 6:00 7:00 a.m. And work a shift and not be able to pick up your kids that led them to go to like twenty twenty two dollars.
As per our for these Baristas and they continue to raise those rates. They've been very generous with employees. And so I think that's a key piece of it. I think the big story here is going to be automation. I think you're going to see a lot more robotics in these if you look at I just had the CEO of what's the salad company that people are sweet dreams. Yeah. I just had to see us wheat grains on this week in startups and he is all in on Automation and they are making salad robots and they've already got two or three stores.
And his whole concept is this going to take three dollars out of every salad. We have an investment in a company called Cafe X. Nicky can play a clip of it these two machines and fso have broken million dollars a year in Revenue. They are serving a massive number of and they've sold two dozen of these to other people. So I think automation is what's going to come to this. I don't think you can sustain it and the money has to come out of somewhere and the two big costs that can come out of is the real estate and the employees and I think that's what's going to we're going to see in the very near future is
Duncan also, I will predict yeah, no, I'll probably predict that eats the right will you doing we had automation I actually working on a major project with Jonathan at Sweet green and Starbucks and chipotle it is I need them all. Yeah, and then the Chipotle see you got fired. We're going to roll out automation with Chipotle and he got fired and nickel came in and our deal blew up.
It killed the deal. So that's probably how that might work and impact a business like that. I'm packing my God. So it was going to take out basically these businesses today are running at call it 30% ebitda margins at Peak Performance. That's like Chipotle's best class by taking out labor. You could probably take out another 20 points a cost which could translate into lower prices for consumers higher throughput lower weight times. All of these kind of experiential differentiators are going to be significant certainly true for Starbucks certainly true for
We green, I would expect that with nickel coming in. You'll see some experimental stores as you point out J Cal that'll be more highly automated but we'll also I think one of the first things you're going to see from Nicole within the first year at Starbucks is a reduction in the complexity the menu. This is something he has done historically and he focuses like he did a Taco Bell he creates a couple of key highlight products and creates these Innovative product ideas. And then those become the banners that bring people into the store, but it's a simpler menu with kind of more attractive interesting.
Products that bring people in and then if you couple automation to reduce some of the cost you can bring that labor cost down. So yeah, and this is a key point, you know, the order of complexity is what's killing the the Baristas therefore there's for quintillion ordering options at Starbucks today. And so the expectation has always been that that is what brings people coming back to the store. But what nickel has shown in the past with Chipotle and with Taco Bell's you can actually have a simpler menu with a few points of customization. You don't need to have infinite.
Customization and everything and my guess is Steve Jobs didn't write with his four quadrant. We take back over. He was like listen, what's business? What's consumer? What's high-end? What sluts portable what's desktop? I forgot what the four quadrants were, but he did any of you look Freiburg to your point of the cost savings right now the majority of orders in Starbucks. I believe are coming in through the app and what I was told, you know in some of the buzz I heard from Baristas.
Was that they are they are prioritizing mobile orders to punish the people online to get them to download the app because that gets rid of cashiers and McDonald's has no cashiers in a lot of restaurants right now you just order at a giant touchscreen. So the cashiers will be gone. The cooks will be gone and eventually the Baristas will be gone and I'll just be the Catholic a the cashier problem also creates a wait time problem because it's a Serial ordering process. Everyone stands in line. They order one at a time and there's only one and two the Baristas you've taken
all of these are really good points. I just think that the CEO would not have gotten fired had a just moved the forecast down by 20% when he came in this area. So did you see this incredible clip of him saying he doesn't want anybody working past six pm Nick play this clip. This is like President Robert CEO the previous Starbucks CEO. I mean this clip is so brutal. We should talk about this in the context of Eric Schmidt's interview as well Jacob this it showed a clip and then let's talk. Let's show are yeah, of course man and talk about like work culture in America. I think this is a really important.
And point Stephen tastic sciquest. Let's do it. Alright, so now there's a big culture thing going on here Freiburg of hard work in corporations. I don't know if you saw Eric Schmidt at Stanford. They took this talk down and Eric Schmidt is walking the comments back. But here we go folks. This is the money clip from Eric Schmidt Google decided that work-life balance and going home early and working from home was more important than winning and the startups the reason startups work.
Is because the people work like hell and I'm sorry to be so blunt, but the fact that matter is if you all leave the university and go found a company, you're not going to let people work from home and only come in one day a week. Mmm delish action box clip
that's a self-evidently true. I mean, he's basically making a point similar to what I said about Google so large that employees can hide and not do very much and you know, they
can kind of see it's not just it's not
not just Google it. It's pervasive letters. Yeah, let's pull up the the Starbucks CEO a very disciplined about balance if there's anything after 6 p.m. And if I'm in town, it's got to be a pretty high bar to keep me away from the family anybody who gets a minute of sign off of that better be sure that it's important because if not, I'll just wait for another day. This makes me so uncomfortable. Just hearing that I feel totally I mean retire bra just retire. What is America value is the
Question does America value success performance or does America value comfort? And the problem is American American work culture has shifted to value and comfort and that is the inevitable outcome of Decades of extraordinary success. And now the performance culture is losing to the Comfort culture and I think you guys are a couple doing a lot of things together. The problem is that I don't think that that's the his truth. Actually. I think that this
Guys clip sounds very inauthentic. I think what probably happened is the pr and policy group of Starbucks says Hey, listen, here's the average age of your employee. And here's what they value and he probably spouted some politically correct nonsense to try to inspire the troops. I think a lot of CEOs do this. Like I think we're seeing in modern media today that a lot of CEOs have actually become the least version of their authentic self.
They are being packaged by people to dress and act and say things in a certain way and I think what happens as a result of that is that you have a wayward culture where nobody knows what people stand for that's when the corrosiveness of folks not working at all or having jobs at two different companies comes in like that's a total moral and ethical breach that happens because people think it's acceptable.
Bo and I think people think it's acceptable because it's not in the talking points of how the CEOs are trying to package themselves to tens of thousands of employees. Hmm. So you think this was a PR design genuflect. I like that inside sacks your thoughts overall.
Well, it could be a genuflect. I don't know look I would say that there are a lot of Americans who do feel that way about work, but I think it's not appropriate and in two cases.
Number one is if you're ambitious and you really want to rise in your organization. Then you got to have more of the Jake a Latitude, which is I'm going to be the first to work and the last one to leave and I'm going to show my boss and we get promoted. So if you want to be ambitious in your career, that's not a good attitude to have and then on the Other Extreme if you're the CEO of the company, your attitude is got to be I'm 24/7 with this shit, you know, it's like I'm always online. I'm always reachable the buck stops with me now. Obviously you're going to cut out.
Time to be protected that you can start with your family, but your attitudes always got to be that I'm available. You know, I don't turn off my phone. I don't do any of that stuff. I just think that if you're running an organization, you can't take this attitude that so it's 6 p.m. I'm Switched Off, you know, it just doesn't work that way. Yeah, especially if you're running well, I don't think that's
yeah. Yeah, I mean
appropriate thing for someone like that to say when he's the CEO of a multinational corporation.
Yeah. I think that is the
the key Insight Sachs I'm with you on this which is leadership starts at the Top If the leader says Hey listen, don't bother me after six. I'll talk to you at 9 a.m. Then not just going to go through the entire organization and it's already hard enough to run these organizations. Now if you were on a lifestyle business as your local cafe, and you want to do that and you're running it at a break even that's fine. This is a publicly traded company with shareholders with massive competition who could get taken out by all these other brands that are that are trying to compete with it. You have to have this
This is a war we are at War we have to figure out how to lower prices. We need to grind every nickel from you know, the supply chain rent. We have to renegotiate contracts and then you know, just to speak on the work ethic issue. This country is in a very significant War about going back to work and work ethic you mentioned over employed and the ethics around that shimoff and then there's a group of Americans and I've been studying this a bit.
That are opting out of capitalism or hacking capitalism is a very interesting movement. It's called fire financial Independence retire early. And if you look at the two subreddits over employed and the fire subreddit young people are saying how capitalism is there to be hacked and my way of hacking it is I'm going to have two jobs and I had to start up come to me and say we've got this great engineer literally from Google who wants to work from us and he's making 400 K. We can get them for a buck fifty and I said, oh wow, that's great. Why would he do that is independently.
Well, they said no, he's keeping his job at Google. He says it takes 1020 hours a week and he's going to work 60 hours a week for us. And I said is that ethical or legal? And they're like, I don't know. That's why we're asking you these are 20 year old Founders we head back and I was like, this is incredibly unethical and you're going to get us in a lawsuit don't do it. But that is what's you know, the give and take and if you look at what happened with delve this past six months. Have you been following that Freiburg the Dell story? No, it's pretty incredible. They told everybody were coming back to office people were like, I don't want to come back to off.
Okay reasonable. You think you do a better job at home? I get it what they said was if you want to be work from home. You can't get a promotion and you can't get a salary increase and you know what employee said? Okay. I don't want an increase. I don't I get my choice is to stay at home and have no salary because I don't care about a raise. I don't care about a promotion then they said you know what we're cutting 12,000 people. You have to come back to office Jay Penske and his company told every have to come back to office. So now that you know, you have this era of being
Fit and you don't need as many people from a II think everybody is coming back to the office unless you were part of the 20% of truly Elite workers. Thanks for coming to my TED Talk. Even then though. I struggled to understand why anybody who has any ambition would think that they're going to achieve the same amount of stuff working by themselves, then they will by working with the group of colleagues that you expect in a physical space together. Well influence our
Culture and no, but I'm saying like when you when you look at the great things that the world needs that we are building and should be building. I don't see many good examples where those things are done in a remote way. I see it a necessity of people to be together, whether it's the design something together to talk about something together to debate something together to learn from each other to grow as a person and you're robbing yourself of
all of that
and so I just think that it is a short-term optimization that a lot of people will regret not necessarily in the moment, but when their career doesn't go where they want to or the company they work at doesn't go where it should go to or is capable of going to Bill start to look for a scapegoat. But the real reason is that they've abandoned the idea that they need to be together.
And I just think that that's that's a tragedy and it's a turns out the best of our companies. Like when I rank my portfolio the ones that are doing the best are in total different Industries, but the single consistent theme is we are all back together on person isn't that interesting sort of sense? It's much more productive because I think Innovation happens as a team you need collaboration and it's way easier to do that when
One is together in the same place. There's more room for spontaneity or spontaneous interactions. The reason why Steve Jobs designed the Spaceship Campus in that famous circle was because it maximize the opportunity for Serendipity right? Like there's no there's no
exact same thing. The labs are quad that you have to walk through to go from meeting to meeting. So everyone interacted intersection of the technical term for that is collisions, and there's been a lot of research on random collisions and agree.
I
wholeheartedly with it. Yeah, look, I just want to underscore this point. I think there's nothing wrong. If somebody says look my family's most important thing in my life. I only want to work 40 hours a week. I'm going to do a 926 job with an hour lunch break. That's 40 hours. Don't call me after 6 p.m. You can design your career that way but that is not a career that's going to enable you to either run a company as a CEO or be a founder of a start-up or be on a track to one day being.
Founder or CEO? This is not compatible. I mean
even just an amine your
executive, right? Exactly. So you have to decide what track you're going to be on and I think there's a lot of millennial Jen's e-types or confused about this and they have the entitlement of saying well, I want to just do the 40 Hour Week thing. But then I also expect to rise rapidly and be an executive and be a founder of be a you know, CEO and attack way
and that the point is not going to work. Yeah. It's not going to happen and you know In fairness I think a lot of
young people have not been mentored because they came up in the Cova generation and we're now four years later and they just haven't had the chance to be mentored or be in an office and a lot of senior Executives and CEOs are not coming to the office, you know, a part of my move to Austin is I'm building a theater to record the podcast then and I'm building an incubator space and we're moving back to in person my grandfather the existing employees and I'm only hiring people in person now because I feel something very big has been lost in terms of meeting with Founders in
And and young people see me interact and my other senior team members with those Founders in person during a pitch meeting during a product jam session during a fundraising review Coachella. Can I just say something about mentoring? I also think mentoring can be described as capital and mentoring and small Elementary capital M is where it some person is assigned.
Do you and they're going to imbue some magical phrase or saying or thing and all of a sudden everything is gonna work out for you?
That form of capital and mentoring doesn't exist and has never worked for those that have tried it. The thing that's really productive is small and mentoring and that happens when you model behaviors of really smart people and really capable people who really ethical people and again that happens because you're seeing them on a day-to-day basis not just in a meeting but in the gaps between meeting and Bill include you in certain things or you'll have
Lunch with them and this is what I mean by all of these people that are looking for an accelerant in their career.
They've robbed themselves of the most powerful accelerant possible, which is capable people to surround themselves with yeah. I think it's so well said they're going to look back on these decisions and they're going to regret them. I agree 100% And my one of my first jobs working at land systems. My mentor Mike Savino was always working late. He was trying to move up in the organization and I wouldn't leave before he left and then he would walk by and he'd say was in New York City. Hey, what are you working on? I'm sorry.
I'm reading these Novell networking books. I'm trying to get my certification. I'm trying to learn more. I want to get out of hardware and get into software and he'd say, oh I'm going to get some didn't want to come now. He was four levels above me in the organization. I was the lowest he was second to the highest and then I got to go to dinner with him. And then I got to hear about all the big clients. I got to hear how you know, they were doing the pitches and then he started including me and pictures and all of a sudden I went from four degrees from him to reporting into him and that's how I learned, you know, look at the person on the left.
Left look at the person to see Annie.
I was don't think I yeah was actually I was a certified now engineer. I was I was a certified Novell engineer as well. I gotta get it out of 16 Shadow Derek Schmidt. Yeah. I mean if you had that in the 90s you could make you know, 50 75 100 K. Well the person that helped me little and mentored me. He's like listen man. I'm not going to tell you how to do pictures or whatever, but I'm going to teach you how to install this. I'm going to teach you how to manage it and
That was mentoring and that was really valuable and I sat beside this guy made a huge difference in my career. Absolutely. And if you want to be a freelancer be a freelancer, okay, let's go to our little election update and some news about Kamala.
And a little bit of socialism coming. So here's how I set it up today. We'll see how this goes 2024 election update is here. I'm going to do two things gentlemen. I'm going to just tap the latest polls and then I asked our crack while in research team to just give me the top, you know, a couple of issues in the principles own words, the principles being, you know, the Press on either side and the for people who are running for office. So let's just go to the numbers here Nate silver a friend of the Pod now has come on.
Iris at 57% favorite to win the electoral college. There's your first chart you can compare this to what happened with Biden before the hot swap.
Trump had a 73% probability to win the electoral college. So that is the the swing of all swings and obviously a lot has happened since then as well as the assassination attempt on Trump.
Massive swing for Harris as you can see in Nate Silver's chart. He's doing something called Silver bolts. He's not a 538 anymore. But this is the most telling chart you can see Biden Trump there and it's almost a clean sweep in red and then you go to Harris Trump and the shift has been 100% blue. Pretty dramatic Paris is flipped. According to Silver, Pennsylvania, Wisconsin, Arizona, Michigan, Nevada and Virginia. Here's a couple of quotes and then we'll get into it the big critique from Republicans. This past week is
is that Harris won't do interviews God. It's just ridiculous that they have not sat for interviews and meanwhile Trump is doing every podcast and and Twitter spaces on the planet, but the big news is that this might have changed by the time you listen to this podcast. Everybody knows we take about Thursday's for the world's number one podcast and it comes out on Fridays Washington Post Jeff Stein reported that Kamala Harris will propose the first ever Federal ban on corporate price gouging for food and groceries and Friday.
I will get it I'm gonna hand that off to you Freiburg to detail. I'm gonna throw up take it easy. Sorry, but just waiting to get there. You're going to get your you're going to get your rare vegetables in a second. So the other big gonna get your vegetables cassia me and soon. All right from the JD Vance corner. He is questioning Tim waltzes service. Here's the quote. Well, I wonder Tim Waltz when were you
I ever in War. When was this Paris campaign in responding and is 24 years of service the governor carry fired in trained others to use weapons in War in nubile innumerable times yada yada yada a lot of back and forth there about that issue, but let's get to and it was an incredible to our spaces audio is a little rough, but the content was great. You want had a conversation with Trump and they talked about nuclear power.
You know on offers a service has two or three times to Trump Zach's to do efficiency in the government and maybe cut some costs but that's what happened notably in the last week Freiburg. What's your take on this reported by The Washington Post and I think confirmed by Politico move by Kamala Harris. Thank you for asking price extinct. Thank you for having feelings out. Yes. Yeah, I
unequivocally hate socialism
socialism destroys Innovation destroys productivity and destroys individual liberties
Agriculture and Food Markets have insanely competitive Dynamics because there are commodity markets. There are tons of competitors. There is no Monopoly and making food there is no Monopoly making cpg products. There is no Monopoly in retail. There is no Monopoly in grocery stores. It is a small margin highly competitive highly fragmented free market and the free market Works in that everyone is always competing with each other creating new productivity improvements and as a result over time prices come down.
Down except when the government intervenes and gets involved. So I would argue that the real cause of price inflation and food is not the supposed price gouging by corporate players in the AG and food industry all of whom are deeply competitive with one another but rather is the result of the inflation associated with government spending and stimulus coming out of covid Nick exhibit one.
The FED balance sheet from covid to today the fed's balance sheet Grew From four point two trillion to seven point two trillion dollars a growth of 70% The Federal Reserve went out and they bought assets and they issue debt to Banks and introduce liquidity into the system. If you go to the next slide as a result the M2 money supply increased from 50 and trillion to 20 21 trillion since covid a 40% increase. Okay, so now there is more money in the system. So the cost of
Everything should go up which is exactly what we've seen we can walk through a couple of the other commodity price charts from the st. Louis fed. Here is the price of electricity as an example. The price of electricity has gone out a little bit less than 2 money supply. But the truth is when you start to actually look a tad commodity prices over time what's happened is there was certainly a boost coming from covid but the competition and the challenges in overproduction in the App Market started to hit and started to bring prices back down. So here's the price of strawberries.
Birdies today are selling for less than they were pre coded potatoes are now back to where they were pre-coated. Now. Let me give you some statistics on some of the supposed price gouging companies in the industry Kraft Heinz stock pre covid-19 bucks a share today Kraft Heinz stock is 34 bucks this year 2019 revenue of 25 billion 2023 revenue of 26 billion ibadah on 2019 of six point 1 billion ebit on 2023 of 6.3%
Billion, there's not a lot of profit gouging. In fact Kraft Heinz has not been able to keep up with the inflation Starbucks, which we just talked about their stock was at $90 pretty covid and today 93 bucks 2019 revenue of 26 billion operating income of 4.1 billion 2023 revenue of 36 billion, but operating income only 5 .9 margins have come down in Starbucks Nick if you pull up the Mackenzie chart, this is a study of the grocery industry the state of grocery in North America.
23 by Mackenzie accelerating pressures on profitability to cope with the pandemics upheaval Grocers have had to dramatically increase capex increased supplies as a result. They've seen a significant impact on margins. Here's the margin profile pre-pandemic and today gross margin has declined by two points from 47.62 45.6 ebitda margin has declined by one and a half points. And now let's just go to the final chart which is cpg companies the companies that make food and sell.
It to Consumers as you can see during the covid era.
The three-year rolling TSR has declined since covid across the board. So food companies are seeing food prices. Come down to farmers are really suffering labor costs have tripled since the pandemic but they're still having to sell product at the same price. Cpg companies have lower margins and supermarkets have lower margins. So there is nowhere in the agri-food supply chain that we are seeing fundamentally price gouging or profit-taking happening. What has happened is the cost of Labor the cost of moving stuff around.
The cost of fuel the cost of electricity the cost of goods has all risen with inflation because of the increase in the money supply and federal spending and the stimulus associated with the Federal Reserve buying assets onto their balance sheet. So arguably I would say that trying to step in and cap prices will reduce competition and as a result will reduce investment in improving productivity and we have seen this countless times with every socialist experiment in human history has started with caps on food, and it has resulted in bread lines like you see in the image.
Image behind me today as we can see in Soviet Russia. This is a mistake. It is a problem and it's anti-American. It is anti-free Market. It is anti Innovation its anti productivity and ultimately its anti Liberty and I cannot stand it. That's my rant. Okay. Thanks for coming to Freiburg stead talk to Marcus or you're nodding strongly in agreement. This is just dumb and pandering am I correct?
There is no sustainable solution to inflation.
If you cap for a company can charge because what they'll do is they'll just stop producing do manage to the margin that they'll just stop and the reason they can stop is that they would rather contract and maintain their profitability then lose money and then what happened to there's less products in the market and so the prices go up. So I think it stands to reason that the hair is campaign has access to some reason
He's smart people. They also have access to really smart people like Larry Summers. And so I think if they just make a few phone calls, they'll figure out that this is a really terrible idea Saxony thoughts overall election and the specific issue. You take it either way you like.
Yeah. So this story was reported by The Washington Post and by Bloomberg and others. So it appears to be more than just a rumor or conjecture. I mean, these are Publications
jeans that are apparently well Source within the Harris campaign. So I think it is fair game for us to comment on this policy proposal that she apparently will be coming out with
Look, I think Freiburg is right about the policy. The idea of price controls is widely discredited across the political Spectrum. I mean, I think virtually all economists agree on this. This was Pride extensively in the 1970s. Not just under Jimmy Carter, but Nixon tried wage and price controls and Gerald Ford had this whole program called whip inflation. Now where they print out these buttons called these wind buttons and then Carter extended it. That's why we
Huge lines at the gas pumps is because we had price controls on gas and those lines of the pump went away almost overnight when Ronald Reagan came in and remove the price caps on on gas. So we've tried price controls before it didn't work and it is remarkable that she would be proposing here are potentially as her first major policy proposal on the economy to go back to this 1970s era failed policy.
And I think it's really tipping her hand in terms of where her economic proposals are going to come from and what she really thinks keep in mind that throughout the the Biden presidency. He rhetorically would blame corporate Greed for the rise. In inflation. We saw as like a scapegoat because he didn't want to blame himself for all the spending but she's going further now and actually instituting this as policy.
Yeah, and so just to be clear with everybody we don't have the actual policy here.
It's been reported seems like it's true. Maybe it's not maybe they step it back. We don't know the details of this at all. What we do know is has been tried before what we do know is there are times when you could like in an economic emergency like during what was the giant hurricane or Wars? You know, what you can keep your eye on this, but the truth is as we just talked about what Starbucks, you know Sachs is like I got a free cup of coffee or close to free. I make my own cold brew.
You can shout out Café Du Monde because I don't want to pay eight dollars from the market responds. And when you put your thumb on capitalism where you put 12 thumbs on capitalism and on the scale all kinds of weird behaviors that car it does not work. I end consumers can just simply opt out they can make breakfast at home to make it brown bag their lunch and it's your point. Then companies are going to be like, holy shit.
People are not buying a dollar coffees. Let's make a cheaper Happy Meal to support your point. And what your mouth was messaging on our chat. Look at Walmart stocks up 7% today because they offer lower priced solutions to Consumers and Dollar General and Dollar Tree a rally as well when the market competes consumers benefit and there are companies that will win and the companies that try to price gouge in the companies that try to charge too much will lose Starbucks has been trying to charge too much for sure.
Or water they have a real problem. They are now tackling Walmart is trying to bring value to Consumers. They are winning that is how free markets work when the government steps in and says here's how much margin you can make your here's how much prices should be. It ruins everything and the entire incentive structure goes away and you end up with bread lines Sachse poo. What do you
got? Well, there was a really interesting story in the Wall Street Journal this week called Kamala Harris has economic team and agenda start to take shape and it was
Interesting because it said here in the first paragraph that the challenge of her economics team is quote differentiating the candidate which is Harris from her unpopular boss, which is Biden without abandoning his policies and the problem that they have is that for the last three and a half years. There has been no daylight between Harris and Biden and in fact / in Jean Pierre said exactly that in the article, there's been no daylight. They've been highly aligned now in response to that what the campaign
Been trying to do is a not say anything about policy. Just try to redefine the candidate based on biography. She's done. No interviews with the media. She's done. No sort of unscripted speaking appearances and the media has cooperated with this so far the most egregious example, was that Time Magazine cover story, which was this really Gauzy profile. That was hey geography, even though she refused to even do an interview with Time magazine in that story. So strategy number one.
Has been just a kind of hide from the media in terms of what you would really do strategy. Number two was adopting some of Donald Trump's most popular policies. So she just announced no tax on tips. She was I think widely kind of criticized for being a copycat on that and now we finally have strategy number three, which is to tiptoe into the campaign with her own original proposal on price controls, which I think it's being roundly criticized but it shows were her policy instincts are coming from I mean
This is somebody who has always been on the Progressive left when she was a member of the Senate gov track rated her as the most liberal member of the Senate even to the left of Bernie Sanders and Elizabeth Warren and you're now seeing this come out in her policy proposals. So look, I think she's definitely gotten a bounce in the polls over the last few weeks because of this favorable media coverage, but it's a sugar high based on something that's not substantive. I mean, she didn't put forward any proposals and I think that now that she
finally is putting out policy proposals that can be questioned or in analyzed and criticized. I think this is going to be the beginning of I would say a bit correction in her campaign
Tikal. Do you agree giving her strategy is off at this point and it's starting to hurt her to put out these candles. I say I am I remain undecided moderate left-leaning moderate voted Republican 35% of the time Democrats 60 percent of time and I've been studying the strategy here are strategies crushing Trump.
So obviously it's working now we I mean, I don't like it. I think everybody should be doing debates. I was really upset that there wasn't a debate or a speedrun primary. I don't like the fact that Trump and Biden skipped out on the primary debates. I think they should be forced to do to Bates forced to do interviews. And so I you know, I'm at front I hate what this is doing to democracy Now pragmatically.
Running out the clock as a strategy and not defining your positions too much and just you know selling The Vibes is a brilliant strategy and it's working and you know, as Trump said the vp's don't matter what you did as VP doesn't really matter what JD Vance thinks his VP doesn't matter. Vp's don't matter you're voting for the president. The vp's get in line Trump Trump's positions jade events flipped a bunch of his positions to align with Trump and I think Kamala to the same.
When she worked with buying that's your job is to align with the president. Now that she has her own / and Waltz is going to flip to her. So I think they're putting out moderate Vibes. I think they're kind of socialists. I think they're not a socialist as Bernie and Elizabeth Warren, but they're not moderates, but they're pretending to be moderates and that is working as a strategy. They are demolishing Trump and then Trump is, you know, getting bad advice around him. I think you know if I would handicapped us in a wrap up with just one more minute I think Trump was so
On all and he was so good at the RNC for the first half of his speech when he is presidential when he has a big open tent. I love him. I think he's great and I think he's like World positive when he goes into grievance culture when he goes after the race stuff like he did with the black journalist when he goes after gender or JD does the gender stuff in the cat stuff. I hate that stuff moderate states that stuff women hate that stuff and the moderates and the women in the swing States will decide the election and Trump's campaign is
a wound during right now. They have to get they have to flip it back to that Trump 2.0. I described many times where he serious presidential not bowling people not doing the insult comic thing this going after wall. It's going after cat ladies. It's just gross and not necessary. So I think you know, maybe Trump after the RNC after the DNC will go back to Trump 2.0 that would be much better and I think Trump has a chance of winning if he does that if Kamala goes moderate, I think she's going to win. So that's my that's my strategic take I am under remain undecided as a
But you just said she's a socialist not a moderate
I think in her heart cheese between like if you had Clinton and a great question if you had Clinton and you had a you know, Bernie Sanders, I think she kind of Falls between the two but I think she's pretending to be a moderate to get votes, right? Yeah, just like Trump will pretend to be super right wing to get the you know for acted up but he's kind of a moderate
to socially I think Trump is the moderate in this race and he's much more moderate than she is. I think that actually is true.
Look, I think that she's pretending to be a lot of things. She's pretending to be a moderate when really she was the most liberal member of the Senate. She's pretending to be a change agent. When really she's the incumbent keep in mind that she has been in office now for three and a half years as part of the by an heiress ministration and she was perceived within that Administration as their Emissary to the left wing of the party. I mean remember that when she was put on the ticket Biden was perceived as the moderate and she was perceived as the person on the left and she was going to basically help consolidate those votes. So she's pretending
To be a lot of things that she hasn't and the reason why it's working is because the Press has fully cooperated and letting her run a campaign without doing press interviews without doing unscripted appearances. And the Press frankly is embarrassing Itself by revealing themselves to be effectively DNC operatives and that Time Magazine cover story was just the latest example of that. I do think that this strategy can only work for so long. I think that the media is starting to feel a little
A bit embarrassed they're starting to get a little bit shamed about the fact they're letting her just give them the Heisman and I don't think she can run out the clock for three months without doing interviews. I just think that I think she can do this for another week or so. I think that they're going to run this Playbook through the convention, but eventually she's going to have to start doing interviews and she's gonna have to start putting out more substantive policy proposals and I think the fact that this price control proposal is their very first one that they've put out I think
Shows that this is not going to be easy for her.
It certainly jolted me awake sacks. I'll tell you that. So yeah, I
mean, it's this idea that she can pretend to be a moderate and just run on Vibes with no interviews and no substance proposals. I don't think is going to work for three months. I think she's going to reveal
herself adding an educated voter base is going to wake up to that and particularly in that independent segment. There's going to be a lot of acknowledgement that maybe these are not going to be the right policy. I think they're preparing their policies and they're going to drop him after the DNC trim out. What's your take on?
Atta G, and then we'll move on to science corner.
and even the middle of the relief rally that Biden isn't in the race, I think that we had a different version of a relief rally when everybody realized that wasn't from having been assassinated, so
these are the pendulum swings I think of
An electorate that still hasn't been given a clear definition of a tour be in this case. I think what's happening is there's a lot of testing of language and ideas and Concepts that both sides are doing and I think we will not know where this election is going to go on until after September the 10th and that first presidential debate because I think that hmm, these big issues will be put to the test student analyst asking the questions will Corner both candidates. Both of them will have points of view.
And then I think they'll have to go into these five states that matter on these five issues that matter and I do think that this will be one of those issues because this is a very aggressive proposal that has a lot of implications.
And that has a lot of historical context of never having work literally never so it's done. We haven't seen it. But it it seems dumb on its face and just to be clear there is no proposal. We're just commenting on reports of a proposal Rose will probably come out on Friday this weekend so you can read it for yourselves and we'll talk about the actual proposed if there is one who knows it could be bad reporting could all be cap Freiburg. You want to talk about bowing?
Well, I wanted to just highlight the the Starliner project and unbelievably issues on Blue give us an overview and then let's let's let's chop it up as we wrap two NASA astronauts flew on the Boeing Starliner capsule June 5th, and they dock with the ISS and they're now stuck on the ISS and they might be stuck there until February because the Starliner has a number of technical issues the astronauts cannot get back in the Starliner and just fly back to Earth.
Says kind of evaluating the options here on what to do and whether to put them on a SpaceX crew Dragon capsule in February to get them back. So I just want to talk a little bit about the history of this project and provide a little context before we highlight the particularly acute story of two astronauts being stuck in space right now, which is an incredible story. So this is a next-gen Space Capsule that was designed to take people to and from low-earth orbit. Basically to the ISS and now
I say if you guys remember in the 2000s decided to stop making their own vessels and they're going to start using third-party contractors. So they went out and had a competitive bidding process and ultimately in 2010. They gave both SpaceX and Boeing the winning contracts to develop these commercial crew Transportation capabilities SpaceX, obviously developed the crew Dragon capsule. So it was unveiled in 2010 as the cst-100 Boeing's first commercially developed Space Capsule the company would take
Got all the financial risk for developing it with a fixed price contract from NASA of 4.2 billion dollars to date by the way. Boeing has taken a 1.6 billion dollar Financial hit on the development of this program SpaceX, by the way, one of 2.6 billion dollar contract to develop the crew Dragon capsule and just to give you guys a sense. The crew Dragon capsule has flown 13 missions thus far to the ISS. And this was the first crewed mission flown by Boeing both of which
Which got contracts at the same time? So originally it was going to be a 20-17 launch timeline and I just want to hit on some of the history of the Starliner problems 2016. It was delayed just to confirm you said it was 4.2 billion dollars that contract that contract with Boeing to develop the Starliner capsule. So the first issue is arose in 2016 when there were design problems. The first crewed flight was then pushed back to be scheduled for 2019 and 2018. They found issues with propellant leaks which led to more delays 29.
Tina test flight parachute failed December of 2019 they had their first uncrewed test flight and there was software errors that would have caused destruction of the spacecraft this led to NASA and Boeing submitting 80 different changes that needed to happen before they did their next uncrewed test flight. So they then push that all the way out to 2021 Boeing ended up saying cost us half a billion dollars to do that then in August of 2021 13 propulsion system valve issues were discovered
On the launch pad the flight was aborted and the capsule was returned. They eventually got it up again in space in May of 2022 and a dock with the ISS and it returned back to Earth. Even the one of the parachutes failed when it returned to Earth. It still made it down this again led to the 2023 first crude launch which means people are in the capsule. This was originally supposed to be in 2017 and they kept pushing it back because if more issues of the parachute system and then
Finally got it launched in June 5th of 2024 with two astronauts on board to go to ISS and come back on the way. They discovered that five out of the 28 maneuvering thrusters, which is how they can move this capsule through space to get it to dock with the ISS and ultimately make its way back to Earth We're malfunctioning they have now discovered five helium leaks helium is stored in a pressurized system to actually control those thrusters and make it move through space and now they may not even be able to get
Get this capsule to fly off of the ISS. So on June 28 NASA announced that while the Starliner is theoretically capable of returning the astronauts to Earth in an emergency on the ISS. The capsule is not approved to fly until these Thruster issues and the leaking helium are figured out or better understood and they have now pushed the decision to the end of August. It would be massively embarrassing for Boeing if these two astronauts had to be rescued by SpaceX.
It's a crew Dragon capsule had to find its way up to the ISS. They hopped on and they came back to Earth clearly a massive problem, but it's a certainly a personal and a human story now with these two astronauts truck stuck on the ISS. And you know, come on you've had a lot of comments on Boeing in the past. But I mean does this feel like like it continued underscoring of the issues at Boeing and just to be clear to mount that the statistics are 34 Starliner to on man one, man. And then for SpaceX with the dragon they did at 11:00.
Eight with NASA three with commercial commercially with like other passengers. Yeah. Yeah. So the NASA cargo Dragon which only has a cargo on it not people has completed nine successful missions to and from the ISS. There are six more planned and they've obviously done 13 missions with the crew dragon. And by the way, I don't know if you guys know this this is a surprise but exciting to share that we are going to have a crew Dragon capsule from SpaceX at the all in Summit in l.a. Parked on the lawn so you can actually go inside and check it out and take a little tour in the maze.
Thing so thank you to the SpaceX team for bringing the crew Dragon capsule tomorrow. Ah my gosh. I mean, where do I begin? Look Boeing is he's three very complicated businesses that try to live as one. So you have a commercial airline business. You have a defense business and you have the space business. I'll be the first one to say that I think it's extremely difficult to be good at any one of those three things.
And the probability of getting all of those three things right is basically next to Impossible. That's just a general comment. And I think that specialization is better.
The second thing that I'll say is that I observed this company about five years ago and I wrote about it in my annual letter and part of the reason why I wrote about it was there was a quote I'll never be able to judge what motivated dentists Moen burglar whether it was a stock price that was going to continue to go up and up or whether it was just beating the other guy to the next rate increase. He said he added later if anybody ran over the rainbow for a pot of gold on stock. It would have been his who do you think said this?
It was the incoming CEO Boeing and I was still flabbergasted because I had never seen something like this. So in a company where safety has to be the number one
priority
to have an individual that's characterized by the incoming CEO as solely focused on their Compensation Plan sort of explains why there's all these fissures in this company because again back to that famous Charlie Munger quote.
Show me the incentive and I'll show you the outcome if the incentive is safety and world-class engineering. That's what you'll get. But if the incentive is earnings per share growth, then that's what you will also get and Boeing was a darling of the stock market for a very long time.
And now what happens is underneath the other things that actually should matter by a safety.
Are slightly deprioritized and then you have these issues. I really hope these two people get back safe. It seems like they're doing a lot of experiments and they love being up there but it's a little bit unacceptable that they have to be there until February but I do trust that if you want has to go and get them Basics will do a great job and they'll be home soon sacks one of the great things about this. Thank God NASA gave two contracts out of hey, give him one. You know my God.
Could you imagine if that was Lobby would be asking my godson's to go get them and then like, you know, we're in a little I don't know if you've been watching this. I thought we could tax. It's like you guys are benefiting having dependent on Putin at this moment in time when Ukraine is making massive gains into Russian territory. I know this hasn't come up all that much, but that would be really dangerous. By the way. Just back to what Freiburg said before. Sorry to interrupt you before you go sucks, but
Why is this even possible it's exactly as you said Jake L. We have competition but why is competition possible? It's because of what Freiburg talked about before we didn't have a set price the government didn't come and say you will build it for x and I'm only doing it one time the free market was able to solve this problem and it turned out the more capable solution was 40% cheaper than the one that they thought was going to work and the one that was 40% cheaper was also on time.
Time and in the other one was unreliable and this other one seven eight nine ten years delayed its 100% tomorrow. That's a perfect examples of everyday of the fact that these other ideas just don't work. Yeah, I think we've pretty much beaten that capitalism is the greatest Force for Innovation and lowering prices sexual thoughts on this and situate Manatee. Yeah. Yeah. God forbid people will get air conditioning at a lower price, you know and smartphone.
Phones Etc Sachs your thoughts
here.
Yeah, I mean look if we're talking about capitalism, I think about what the Austrian Economist Joseph schumpeter said which is capitalism as a process of creative destruction and the creativity happens in the early days when you've got a Founder who's creating a start-up and the business gets big but then it gets older and the founder goes away and the company can drift become bureaucratic and sometimes it can renew itself and maybe you get a Brian nickel and maybe to save it and sometimes it doesn't.
And the companies that get old and don't renew themselves eventually fade away and they get destroyed and replaced by other startups. It's a system that has worked incredibly well in America and it's the basis for all of our prosperity and Innovation you when you compare that to the political process, it's very different. I mean the political process kind of has this knee-jerk resistance to change and Innovation and it has an Impulse to control things it wants to control.
Prices it thinks it can solve problems with this top-down mandates and it doesn't reform itself. It creates new bureaucracies and never gets rid of them. I mean we create new departments. They never go away that is keep getting bigger and bigger. There's never any creative destruction is just like a Bob it's a one-way ratchet of your credit growth. So it's really clear what creates prosperity and I do think we have now reached a point where the government has gotten so big and so out of control and so expensive.
That it actually is threatening this engine of creative destruction. And at some point I think voters are you have to make a choice about whether they're going to try and rein in the government and create more room for capitalism Innovation, or they're going to allow it to get overtaken and love your hapless and quote and reminds me of the Winston Churchill one, which I'm sure you've heard the inherent Vice of capitalism is the unequal sharing of blessings. The inherent virtue of socialism is the equal sharing of miseries.
It's that's a great quote. Winston Churchill is strong man's drug he with that dude. That's a guy I would like to hang out with if I got to hang out with Teddy Roosevelt my gosh. I like to go Churchill took a bath every day Freiburg. Please don't bring up this whole thing about bats because then you're going to make me pull out of my phone the three or four times you called me from the bath and I took a screenshot. I can literally free.
It's in the bath. He lights candles. He takes a picture of his pal stems and he sends it to me and calls me from the bathroom off. You can't see any was always called. I have PTSD he's called me from the bat. I know he's in the bath because you hear this kind of like echoey kind of you know, so it does and it's like a so my God, you're in the bathtub. Yeah, it's good to hear that. He's in the bathroom. I'll call you
later. It's so just the way I mean that invasion of Russia.
That you're talking about is not what you think it is. We got so yes,
we haven't had a general fact update in a while. I'm I actually want to hear your take on this acts. Like what did you talk about? The really are trying to Puttin ya don't ya? What is the real story with the Ukraine counter Invasion into
Russia? I think you're falling for a lot of a lot of hype. I mean what's happening is that the stage of the war is that the the fighting is in the donbas and a long 1200 km front in Ukraine where the Russians have just been pounding.
The ukrainians the Russians have more soldiers. They have more artillery. They have more air power and they have air superiority and they've just been annihilating the ukrainians mean Ukrainian casualties According to some sources are somewhere between 30,000 and 60,000 a month its massive and unsustainable. So what solinsky did is he basically through this Hail Mary where he took some of their best forces their best to reserves and had them attack this undefended part of Russia curse. And yeah, they
took a few hundred miles of undefended territory, but there's nothing strategically important there and now Russian air power is basically creating significant casualties among those forces and the Ukrainian forces are now trying to figure out what to do. I mean, they're basically running around this part of Russia, like headless chickens trying to figure out where they can dig in and find the some defensive fortifications. I don't know was on skis trying to accomplish. I guess it's kind of a PR offensive. A lot of people have been fooled into thinking that this is somehow a game.
In the war it's not all zielinski has really done is take some of his best troops away from where the strategically important fighting is have them attack this part of Russia. And over time. Russia's is going to mop them up. Did the Russians get caught with their pants down? Yeah, I guess they did. Is that an embarrassment to Putin? I guess it can be spun. That way. Does it change the outcome of this war in any way? No, it's not and what we're on track for is at some point. Probably next year Ukraine is going to collapse.
Oops, I mean their position in this war is unsustainable and taking some of their top troops feeding them into her Square. They can be easily picked off by the Russians is only going to accelerate that process
and then socks. What about North stream what we just found out about
Brewster. Well, the Nordstrom story is very strange because we're on our third or fourth explanation here of what what happened. I mean, it was pretty clear that somehow the US who was behind it and they've been
I mean, you know first they said that the Russians did it right which makes no sense. That'd be like the Russian shooting their own legs off. That was the first cover story then they kind of went with I guess illusion. He did it from a yacht. I guess. That's the story they're on now.
Yeah, the Wall Street Journal report. Just give people the background why we're talking about this the Wall Street Journal reported that Germans investigation into this, you know, the people who are impacted by it. Here's the quote the holding was born out of a night of heavy boosting and the iron determination.
Termination of a handful of people who had the guts to risk their lives for the country to Ukraine operation cost around 300,000 according to people who participated in Bob's Small rented yacht with a six-member crew including train civilian divers one was a woman whose presence helped create the illusion. They were a group of friends on a pleasure Cruise. So you're saying you don't believe that German
report. Well, no, so this report about that yacht being used and and house illusion. He was like The Mastermind of this. Yeah.
That's report is not anything new. This has been out for I don't know at least six months. I've always been skeptical about this the thing to understand about the Nord stream pipeline is that it was a massive structure surrounded by huge amounts of concrete on the ocean floor and blowing this thing up required some significant expertise in underwater demolition. I'm just very skeptical that could be accomplished by six guys on a yacht under delusional.
I mean the ukrainians have never had a Navy. This just doesn't seem like something that's in their wheelhouse of capabilities and all it always made more sense to me that the US was involved
somehow, but how do you how do you think an article this detailed that points to
the Dutch
intelligence Community the German intelligence Community American into how does that article like this with this much detail then get written and put into the Wall Street Journal. How does that
happen? I think intelligence sources wanted to happen. I mean they have to get their sources from somewhere. Right and I'm just saying that this story about solutioning The Yacht has this is not new. This has been out there for many months. Look. I mean, it could be true. I mean, I guess I don't know for sure, but I guess I'm also just saying I'm a little bit skeptical about this I mean Seymour
Shadow other reporting from different sources who claimed that the u.s. Was behind it and president bind himself at a press conference said that if Russia invades Ukraine, we will bring an end to the north stream to Pipeline and when a reporter asked him, how will you do that? He said we have ways we'll get it done and similarly Victoria nuland warned at a press conference that Nordstrom to will not move forward if Russia invades and then lo and behold the pipeline gets blown up and if you're comparing
which of these two forces has the capability to do something like this. I know for sure that the u.s. Does Ukraine. I'm just a little more skeptical of
just to give you some facts to into some facts here. It was only 264 feet or so down where they blew it up. I've Dove to 130 140 feet many times. You can easily die three four five hundred feet. This is not difficult. I could dive to 260 feet with you know, one day of training and I've done half of
At and I've only dived 25 times in my life. So this is easily accomplished tax. And so this sounds like it's dead on I mean, I know you don't
either do what about the
explosives? Yeah. It's a very simple I mean, you're literally attaching it to a bike and you hit boom it. I mean these people are the Ukraine people in the
face of explosives to do something like this.
No, it does not in the face of Ukraine defending itself against Russia. One of the greatest military is on the planet.
Get this idea that that same group of people who have held Russian at Bay for two years plus can't go down 260 blow it up is ridiculous. They could easily do this. This is not a difficult task super easy for the Ukraine Army of your decision to know I don't think because I have facts 260 feet down. I've do to 130. It's very easy to go to 60. Yeah, but that's your box. I mean, it's just call reality trim off. I'm sorry sax is the most Pious person in the world when it comes to this is history.
Over here and Jason Jason Jason Jason you what you just said was if here are the facts. It's 260 feet down. I've gone to half bat so it's possible. So they do that's what he's saying. It's two dozen sites like this axis. This is this is 2 this is beyond the capability of the Ukraine Army that's ridiculous. It's Axl killed. A lot of people are dumb then it is the stupidest.
But you're also an explosive expert as well as an
expert at one special diapers
on a yacht did this
easily easily six? Ukrainians? These are hardcore mofos. You think these Ukraine's are not hardcore. They were proud. They probably there are poor they did it drunk. I bet you they were half in the bag when they blew that shit up.
That's why Russia can't beat
them. I've also read the Seymour Hersh story and it just makes a lot more sense to me. That's all I'm going to say is it just makes a lot more sense to me. And by the way, I've never taken away anything from the ukrainians as a fighting force. I mean clearly they are fighting bravely and they are hardcore. I've never taken that away from them and I've certainly not saying that they're incompetent anything like that and they've definitely been massively plussed up by American weapons
and you like to see them win versus Russia and get Russia out of their country, right?
I would like to
to see America stay out of other people's Wars and I would have liked to have seen them agree to a peace deal. That would have avoided this
work. Okay, who would you rather wins the war Russia or Ukraine if you had to pick who would you rather see my
War? I don't think America should take sides. In other people's Wars. I think we should stay out of them. And I think we should agree to peace deals when we can and not sabotage those peace deals.
Yeah. I'm for peace deals to I'm also I'm also for democracies beating autocracies. Okay, everybody. This has been another amazing episode. Let's get
cancelled elections.
This is been another
Amazing episode of The Island podcast for the Rainman. Yeah, David Sachs the one and only Sultan of science David Freiburg getting ready for the all in some it sold out great speakers lots of surprises for y'all and our chairman dictator so rested so tan working 15 hours a day in Italy and we'll talk about wine. I have my best of something that you must have something so I have something for you.
Around 80 90 that I'll be able to talk about it hopefully soon as oh yum yum who Iceland a little bit skiing it. All right everybody. I am world's greatest moderator and the executive producer for life. Love you boys. See you next time everybody.
Bye.
Rain Man David sack
You Georgie because they're all the same useless. It's like this like sexual tension and they just need to release them how
your feet to get Merchants are and now the plugs the all in Summit is taking place in Los Angeles September 8
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