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Speaker 1: I can't actually believe it that the starlink has you know,

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zero internet problems and land Basin is the one that's

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actually causing the issues.

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Speaker 2: Let's see, I'm on starlink right now. There is a

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storm moving in same and let me check my speed

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right now? Does I already have cloud cover? We haven't

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had any sun all day today.

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Speaker 1: I've I've had like maybe two or three hours based

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out in like you know, fifteen twenty minutes like increments

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of like intense sun and then just you know, no rain.

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And now we have no rain. Crazy like that really

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awesome lightning that goes through the clouds but never comes down.

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M yeah. So it's it's it's it's interesting. The uh,

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the summers have been very different than they normally are

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the past you know, three or four years, we get

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like progressively weirder. But like you live in the south Folk, right,

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oh yeah, all throughout the summer, every single day in

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the afternoon it rains, you know, monsoon intense for a

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period of about you know, twenty thirty minutes, and that's it.

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Speaker 3: Stune.

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Speaker 1: Yep, we haven't had rain all summer, really, yeah, Like

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maybe I'm thinking like maybe eight days in three months.

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And when it does come, like you know, you probably

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heard some of the stories out of like Fort Lauderdale

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with like the massive flooding and stuff, it just it

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monsoons for like two days. So I don't know whether

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the jet stream has shifted or what, but it's very unusual.

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Speaker 2: When I used to live when I used to live

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in Hollywood, and I lived about half mile off the beach,

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and there was like a week every year in July

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where it would just rain all week. I mean it

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would and it would just pour for seven days in

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a row. And you know, that's what I got used to.

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Speaker 1: So we have that exists. It's just we don't have

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a mid day rain anymore. And it's fucking weird. Yeah.

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Speaker 2: My, I mean, my starlink isn't as fast as it

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normally is, but it's way it's it's five times as

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fast as I need for live streaming, So you and

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I need more power for live streaming than just recording

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like this, I should be fine.

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Speaker 1: That's that amazes me a lot more than like most people,

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because most people, like you, never thought of satellite internet

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in that way until sartainly came around. But like being

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being intact like I've I've watched three or four of these,

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just absolute failure and the fact that Elon Musk was

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able to knock it out at first shot into a

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usable product, right, like for first off, Like anything in

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hardware is a nightmare, right, this is this is actually

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why you know, Peter THEO is always talking about why

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we don't like, hey, we were promised flying cars and shit,

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why don't we have them? Instead we have you know,

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just software, Yeah, tons and tons of software, And people

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try and argue with me about like, oh, no, tech

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has been advancing like crazy, like how can you say that?

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And I get a lot of heat for it, especially

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doing what I do right, because what I'm basically saying

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is my industry is bullshit. And what will eventually come

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down to is I'll say, okay, well, let's say if

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we got rid of your you know, your flat screen's

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at home and your laptop and maybe like the little

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whatever touch screen thing in your or in your cell phone,

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what exists in your life to convince you that you're

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not in nineteen seventy And the answer is nothing.

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Speaker 2: Well, I mean technologically, yeah, the culture, the culture, it

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would be.

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Speaker 1: The yeah, okay, yeah, but like in your house, Like,

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how do you if I got rid of all your screens?

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Like are you in the seventies in the sixties. Yeah,

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everything exists online and it's I mean because a risk.

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Speaker 2: I fought against getting a smart TV for like the longest, longest,

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longest time, and I probably might not even have one now,

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but it came with the house. And it's just like

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my my monitor is a forty inch smart TV, but

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I mean I have everything disconnected from it. I don't.

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It's not acted to the to the Internet and everything,

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so so it's all it is is just a monitor.

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Speaker 1: I actually used I have a forty two inch monitor.

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Like I think anybody that would like the multiple screen

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setup is just causing that set themselves unnecessary screen.

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Speaker 2: But the only good thing for the multi screen monitor

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is like for live streaming, if you're live streaming to

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different platforms, to be able to have each platform open

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so that you can like read comments in real time.

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Because what I do is, you know, I have to

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open them, I have to switch tabs and things like that.

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But you know, when you're if you have multiple that's

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the only reason I could think about it, think that is, I.

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Speaker 1: Mean, there's what that or maybe trading.

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Speaker 2: Yeah, oh yeah, yeah, definitely.

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Speaker 1: But the reason why I wonder, like why Starlink made

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me think about that is because the reason why we

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have so much innovation in software is because we watched

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the Defense Department take a big old step backwards and

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private capital was supposed to kind of fill in the gap.

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Speaker 4: Right.

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Speaker 1: VC exploded at the same time as you say, Star

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Wars was winding down, and Star Wars brought us things

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like the Internet. Star Wars brought us well, right, the

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satellite Internet as well, all the cool hardware stuff that

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we have, and all VC got us was software, right,

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So like, if you know, the Internet went away, a

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majority of our technology wouldn't really exist because it would

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exist only on our machine, and maybe I guess it

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would exist on multiple machines if we all got together

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and had a land party. But from an investment standpoint, right,

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software is much much easier to invent because all right,

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let's say like you get halfway, you're two years into

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the project, a year in the project, and you find

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out like, fuck, we did this wrong. We have to

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go back to like we have to go back a

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year and re engineer. You have to go back to

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where we were a year ago, and then re engineer

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from there into this new direction because of this problem

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that we found with software that's not going to cost

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me any additional money then I was going to already

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lay out just you know, that money is being spent

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backtracking a little bit, encoding in a different you know,

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a different tree than you know I was on already.

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But with hardware, like let's say the company has got

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like forty million sunk into it and you have to

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change the product, right, something doesn't work, there is a

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very good chance that you are going to burn another

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forty million to fix it, right, because there is no

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quick fix there. Because like a coder is going to

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be sitting there in front of his computer screen coding,

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whether if he's coding this other thing that he was

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supposed to be building that you have to change directions on,

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or whether he's coding you know, the new thing. It's

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the same guy earning the same salary in front of

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the same computer.

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Speaker 4: Right.

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Speaker 1: But with hardware, we're talking about like suppliers need to retool,

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engineering shops need to prototype you know what the new

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you know, modification is like it can cost, it can

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burn basically, you know, all of the money that you

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have up to that point is just wasted. And there's

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a very high likelihood of that. So from a VC standpoint,

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like all right, I have a hardware play and I

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have a software play. Both of them could have huge returns.

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They could be you know, I could have two Unicorns,

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I could have a star Link and I could have

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a Google. I am going to choose the Google every

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single time because of that list.

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Speaker 5: So Stormy, this is something, Uh, this is a great

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way to get into this. So I've been thinking of

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it in terms of the resource curse or Dutch disease.

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I was very interested to discover that Jade Bank has

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been looking at this as well, that basically dollar industry have.

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Speaker 1: Oh sorry, go ahead, I said, a lot of guys

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in my industry.

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Speaker 5: Have okay, yeah, because because that seems to be the issue. Uh,

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and this is very similar to So the problem I've

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raised is especially publicly.

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Speaker 4: Traded securities, is basically that asset bubbles.

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Speaker 5: Crowd out capex, which is what you're describing, because everybody

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just wants that quick shot in the arm of getting

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their you know, stock line go up.

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Speaker 4: They're not willing to take the long.

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Speaker 5: Term you know, uh, low time preference, slow growth to

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do real r and get real growth, and basically we've

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run out of quick which is also a mark point

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in dow of capital.

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Speaker 1: You can see this in pharmaceuticals more than anywhere else.

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Speaker 4: Yeah, Blockbuster drugs ended in like the eighties.

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Speaker 1: Yep, exactly, all the ease, all the low hanging fruit

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is already picked. I was explaining this to Dark Enlightenment

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the other day.

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Speaker 6: One of the smarts guys I think I've talked to

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in a very long time, and we were talking about

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like he was like I had like a kind of

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like a.

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Speaker 1: Roadmap or not like a roadmap, but like some bullet

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points that if Trump were to be able to do,

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we could dodge a lot of what's coming our way.

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Because I one hundred percent agree with you as far

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as the liquidity crisis, except I see them compartmentalized. I mean,

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we can hammer that out.

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Speaker 4: Right.

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Speaker 1: So from a regulatory standpoint, everyone thinks like, oh, you know,

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just changing corporate tax law is just you know, I

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was like, basically that is only going to like GDP increase,

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because if we lower their taxes by ten percent, that

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just means they're going to make ten percent more money,

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and then this not's going to go up ten percent,

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right whatever, It is generally linear thinking, right, not orthogonal.

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And the answer to that is actually worthogonal. It goes

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completely perpendicular. Right. The reason why big corporations publicly traded

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ones is a big difference. I'm sure as you know, Sean,

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the reason they do what they do is largely because

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of tax policy, right, tax policy or environmental regulation. Right.

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And so let's say I have, like what the US

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has rather persecutory corporate tax structures. Right for me, if

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I end the year with any money, that's money you

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get to tax.

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Speaker 4: Right.

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Speaker 1: So if I spend that money in R and D,

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that takes a while, right, So, like you know, a

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roadmap style approach, like we're going to hit several milestones

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of capital outlaying right, and a good chunk of that

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R and D money is going to be spent the

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next fiscal year. Fuck that means I get text on

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that money, and then I'll have less money to spend

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on R and D. But I can if I don't

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spend money in R and D like Maderna is not

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doing now and paying the stock price. Honestly, that company

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should go to zero. It has been a very painful

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short for me. The last two years have sucked. But

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that company's eventually going to go to zero. But they

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reduced their R and D budget and the stock got

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hammered immediately. And the reason for that is you can

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relatively assume, like, fuck, well, if you're spending money in

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your company, you know, trying to invent new shit, then

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I can pretty much assume that your numbers now are

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going to be your numbers in the future. And if

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your numbers suck now, well then you know it's going

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to suck in the future, but just suck more. Right,

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So I'm gonna get the fuck out of that stock

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and go buy somebody that is that. So what they

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do instead is they do stock buybacks.

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Speaker 4: I'm just about to say, yeah, stock.

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Speaker 1: Buybacks are a short term bribe to for investors like

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please don't leave, please, please, please don't leave. I know

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we can't come up with new shit, but that's because

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we really can't end the fiscal year with any money

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on our balance sheet, or the irs comes and fox

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us in the ass. So we're kind of you kind

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of you're putting CEOs, you're forcing CEOs to do very

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short term thinking. And I think CEOs get a lot

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of shit because they're systems thinkers. You don't get to

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be a CEO, all right. Your brain isn't built for

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it unless you are one. And these are the type

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of guys that generally have the dynamism to where they

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would like to build shit if you would let them.

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And because the regulatory regime, you're forcing these guys to

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think one quarter at a time.

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Speaker 5: So you don't think it's the principal agent problem. I've

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been looking at it more than you know, or kind

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of like selectric theory that they have to defend a

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position from.

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Speaker 1: The board a binary spectrum. Okay, there's guys like let's

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say Jamie Diamond, Right, Jamie Diamond is the CEO and

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chairman because he owns that many shares, right, he worked,

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he literally took all the dollars that he's ever made

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a Wall Street and something into JP Morton J Stock.

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That company is as much a part of his. See, Sean,

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you probably have run into this a little bit. I

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don't know, like if you're dealing with like family offices

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or whatever. But rich people don't talk about money.

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Speaker 5: Yeah, I was a whole deep dive on Thorstein Veblin

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and kind of the issue with the leisure class. And

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this is also I think why they're because they're more

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focused on status than money, it often means that they're

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not they're not focused on creating resources.

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Speaker 4: There's kind of this pervasive myth that we're in like

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a post scarcity society.

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Speaker 5: And so and because reputation or fame is a zero

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sum game, whereas wealth as a grow of the pie game.

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You know, once they've hit that that satiation level of

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money or resources, now they want to get cutthroat in

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the zero sum game of reputation and social status.

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Speaker 1: Well like so like there you have all like Jamie

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Diamond already has a social status in the world. He's

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got all the money in the world, but his identity

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and this Elon Musk is very similar. And I want

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to draw a distinction between CEOs that are board employees

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and CEOs that are CEOs because they are also the chairman.

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You see a very distinct difference in how these type

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of men act. Right, So like an Elon Musk, he's

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CEO of Tesla because he owns that many shares, right,

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his skin is very much in the game right, and

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his identity, right, Elon if Tesla goes to shit. If

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Tesla goes to zero, that means Elon Musk has gone

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to zero, right.

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Speaker 5: But I mean he's founder and co founder, right, so

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he has that that identity of you know, this is

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his baby, as opposed to coming as a manager where

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it's a temporary gig, you know, like a nomenclatro where

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I'm going to abuse the office that I have because

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i know I'm only going to be here for ten

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years and then I'm out and getting my golden parachute.

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So they don't really care about the long term of

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that business. It's just you know, a vehicle for them.

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Speaker 1: So you could you could summarize this between internal and

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external CEO promotion, all right, So like if you've worked

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your ass off to get like your whole life and

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now you're in the C suite or like just next

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to the C suite, if I promote you to CEO,

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then you have a tremendous musket in the game, because

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not everybody's going to be able to do what Jamie

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Diamond or Elon must did. Elon Musk bought Tesla and

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it was very young. It was like a series D right,

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So that means it had you know, five funding ground

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plus you know, including the seed, and was just starting

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to get a product out of the door, right. I

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think I think they maybe shipped you know, fifty sixty

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cars at the time they want it, and he transformed it.

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But the reason he probably did so was because that

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was really all his money at the time that he

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bought it. He didn't have any other choice but to

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make that work. And if we if CEOs were promoted

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internally right from guys that worked their way up to it,

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I think it would solve some of that because the

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parachute CEO is the CEO you're describing, right, this is

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a professional CEO. That guy's a fagot yep.

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Speaker 4: Yeah. Well, I mean that's the whole managerial revolution thing

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is that you know, they take over institutions, but just temporarily.

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Speaker 1: Yeah, one hundred percent, they're they're they're very short term players.

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But if you think about like who are the real

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who are the CEOs? You think of, like, so, who

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were like because back in the before the CEO is

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a modern term, a relic of the manager of revolution.

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I guess you said before that they were tycoons. Right, right.

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You know, Elon Musk has probably got about as much

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money as you know, Andrew Carnegie, and there's some other

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guys like Soros that he's got a fuck ton of money,

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but they act completely differently, all right. So I find

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that these owner CEOs are the great man types, are

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the tycoon types, and the professional CEOs like I personally,

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I do not believe that somebody should be allowed to

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be a CEO unless they own enough stock. Right, if

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you own enough stock to where you're tramer of the board, right,

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you get to be CEO. You don't get to pick

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somebody else that you can hire and fire, because then

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you're just going to be disinterested. You're only going to

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show up when there's a fucking problem. But anyways, we're

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getting tout tracked too well.

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Speaker 5: So I think this is why you know, Elon took

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Twitter or now X private through a leverage buyout. I mean,

329
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I think that's the life raptor or the you know,

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the escape for a lot of these publicly traded companies

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is before they go liquid, it's going to take that

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kind of you know, that kind of mentality or that

333
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kind of person to have that like private stake in

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the game where it's you know, it's equivalent to their identity,

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as you're saying basically.

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Speaker 1: Yeah, and well, I see we're going into a place

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where I think corporate debt is going to so I

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think publicly traded companies will continue. Unfortunately, I would prefer

339
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they all die just after I've gotten liquidity first, after

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I've sold my being public shairs of things. I hope

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they die because I think they're a disaster. And every

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one of these tycoons has bought the exact same thing. Like,

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I don't know, Pete, I can't remember if you did

344
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you did you do something on Henry Ford.

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Speaker 2: I've never done any a deep dive on Henry Ford

346
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for you know, obvious reasons of wanting wanting to do

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that carefully.

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Speaker 1: Yeah, maybe it was a myth of the twentieth century guys.

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And I didn't know this.

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Speaker 2: They definitely, they definitely did Henry Ford.

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Speaker 1: Yeah, yeah, I didn't know this. I knew about it

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for JP Morgan, and I knew about it for both

353
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Rockefeller and Carnegie, but I didn't know Ford was the

354
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same thing. Right, Like so Ford put in his will

355
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and literally came back to the company at ninety something

356
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years old when he found out that, you know, people

357
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in his absence were trying to take the company public,

358
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like he would have burned every single factory to the

359
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ground out. And he said so on numerous occasions before

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that company was taken public. And that's why they only

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got to do it after he died, because it allows

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you know, this is why I think the difference between

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private and public capital is such a big distinction, and

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why you see private equity on one side of the

365
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dividing line and public capital on the other side, except

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in the term of like CEOs that are also chairman,

367
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so like David Solomon, JP Morgan, Right, those are the

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only guys really from Wall Street that are really pushing

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back against what's trying to be implemented. The rest of

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them are all from the private equity side because their

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capital is being deployed for decades at a time. Right,

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If I'm investing a bunch of money inside the United States,

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then I need to say, well, fuck, I guess this

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place can't go to shit now, ken it? Because my

375
00:22:03,440 --> 00:22:06,440
money is stuck here, right, My money is stuck in

376
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these companies and I can't just go sell it like

377
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you know, any any oney of these you know, finance.

378
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Any one of these hedge fund types, right, th'll you know,

379
00:22:17,400 --> 00:22:19,640
buy a stock, sell the next day, right if it's

380
00:22:19,640 --> 00:22:23,079
a quant fund, right, or high frequency fund, They'll sell

381
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and buy the same stock thousands of times in a minute.

382
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Like they have zero attachment to that company. To them,

383
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it's literally just an abstract number, and they have no

384
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long term commitment to the company and the place that

385
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the company operates. The company may have like attachment to

386
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the town where it derives its labor force from, but

387
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the guy who who you know, by a perversion of

388
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our society, gets to vote on what that company does,

389
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he doesn't give a fuck about it.

390
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Speaker 5: So that's also something I've been thinking about in terms

391
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of the focus on market cap as opposed to cash flow.

392
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Gentleman I talked to once. You have a great example

393
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of you know, mister Darcy in uh, you know, what's

394
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the same aus novel. But wealth used to be measured

395
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in terms of how much like yeah, as a landed

396
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gentleman you it generated in a year.

397
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Speaker 4: You know, there was no market for.

398
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Speaker 5: You know, real estate in the seventeenth century or whatever

399
00:23:27,319 --> 00:23:29,880
it was. You know, these depths of market is a

400
00:23:29,920 --> 00:23:33,640
new phenomenon to to make that the the measure of

401
00:23:33,680 --> 00:23:36,000
the value of a company, and I think that's going

402
00:23:36,079 --> 00:23:38,200
to be one of them. To your point that that's

403
00:23:38,200 --> 00:23:40,559
the benefit of an ill liquid asset where you have

404
00:23:40,599 --> 00:23:43,759
to have a ten year or longer time horizon, is

405
00:23:43,799 --> 00:23:46,680
now you actually have to be focused on profits as

406
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opposed to just you know, how can we juice up

407
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the earnings per share not by increasing earnings, but by

408
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reducing the number of outstanding shares?

409
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Speaker 1: So running through what you think a patron network would

410
00:24:00,960 --> 00:24:04,440
look like. Okay, So, so.

411
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Speaker 5: Because kapex is risky and it's long term, how this

412
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has historically been done in Imperial Japan is actually very

413
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interesting in this regard.

414
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Speaker 1: Uh.

415
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Speaker 5: Germany, uh, you know, for the last century has been

416
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interesting this.

417
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Speaker 4: Way as well.

418
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Speaker 1: Frederick List economies.

419
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Speaker 5: Yeah, you need banking support where they're willing to make

420
00:24:28,480 --> 00:24:30,480
those kinds of long term loans that they're going to

421
00:24:30,559 --> 00:24:33,559
stick it out. That that's really the key that we

422
00:24:33,680 --> 00:24:36,240
don't have so patronage for our guys. You know, we

423
00:24:36,359 --> 00:24:39,839
we've got that talent. Uh, you know, we've got a

424
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huge a glut of weaponized autists who if somebody could

425
00:24:45,519 --> 00:24:47,440
just figure out how to get them income in order

426
00:24:47,480 --> 00:24:51,480
to afford a home, get married, start families. You know

427
00:24:51,519 --> 00:24:53,799
they would put in the eight hour work weeks, but

428
00:24:54,039 --> 00:24:58,160
that's not what's rewarded when just trying to you know,

429
00:24:58,400 --> 00:25:02,240
I p O or uh gin up. The outstanding share

430
00:25:02,279 --> 00:25:06,160
price is focused basically in short term gains through marketing,

431
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as opposed to that R and D, which is risky

432
00:25:09,039 --> 00:25:13,319
and to your point it it's opportunity costs right. Richard

433
00:25:13,319 --> 00:25:16,160
Werner is very good on this as well. Anytime you

434
00:25:16,559 --> 00:25:19,200
create an an additional line of credit or create more

435
00:25:19,200 --> 00:25:21,119
money in the economy, it's going to go to one

436
00:25:21,119 --> 00:25:23,559
to three places. It's going to go into an asset bubble,

437
00:25:23,880 --> 00:25:26,400
it's going to go into capex, or it's going to

438
00:25:26,400 --> 00:25:29,400
go into consumption. When it goes into consumption, that's a

439
00:25:29,480 --> 00:25:31,720
very obvious problem. You get the inflation like we've been

440
00:25:31,759 --> 00:25:34,599
seeing the past few years. The prices everything goes up

441
00:25:34,640 --> 00:25:37,359
because there's just more money chasing. Basically the same number

442
00:25:37,359 --> 00:25:42,319
of goods going into capex is ideal, especially because then

443
00:25:42,400 --> 00:25:46,119
the increased efficiency from that improved capital structure is going

444
00:25:46,160 --> 00:25:49,880
to offset that inflation with deflation and balance out, which

445
00:25:49,920 --> 00:25:52,720
is what real growth in an economy. Would be, but

446
00:25:52,799 --> 00:25:56,400
that entails entrepreneurial risk. You have a longer time horizon.

447
00:25:57,240 --> 00:26:00,359
There's just a lot more unknowns with that. So what

448
00:26:00,480 --> 00:26:03,079
tends to get favored is investing in an asset bubble.

449
00:26:03,480 --> 00:26:06,000
It's the you know, you're you're dealing with bigger companies,

450
00:26:06,000 --> 00:26:09,279
you can write bigger checks. The results are basically instantaneous,

451
00:26:09,279 --> 00:26:11,960
and they're basically guaranteed, whether you're investing in stock or

452
00:26:12,000 --> 00:26:16,839
real estate, the same thing as inflation in consumption goods,

453
00:26:17,200 --> 00:26:20,119
except because it's in an asset bubble. Well, you see

454
00:26:20,160 --> 00:26:23,400
that hit right away, and you don't have to be

455
00:26:23,440 --> 00:26:25,640
any kind of like creative or confidence to do that.

456
00:26:25,720 --> 00:26:29,880
You know, it's all just you know spreadsheets and you

457
00:26:29,920 --> 00:26:31,119
know fictional goods.

458
00:26:31,480 --> 00:26:33,720
Speaker 1: You're literally right. There's no a single hedge fund manager

459
00:26:34,119 --> 00:26:36,519
in the history of the industry that has been in

460
00:26:36,640 --> 00:26:39,519
the s and P. Five hundred for more than fifteen years.

461
00:26:40,559 --> 00:26:44,000
Speaker 5: Well, and even then came out with paper recently that

462
00:26:44,519 --> 00:26:46,720
basically all stock market growth has been because of the

463
00:26:46,759 --> 00:26:50,920
Great Moderation. Basically it's just because the government is issuing

464
00:26:50,960 --> 00:26:53,519
a bunch of treasuries getting the bank you know that

465
00:26:53,720 --> 00:26:56,200
that was it thirteen banks or whatever. That are obligated

466
00:26:56,200 --> 00:26:59,839
through open market operations to buy them, and then that

467
00:27:00,039 --> 00:27:04,480
credit goes immediately into S and P five hundred. Especially

468
00:27:04,480 --> 00:27:06,759
now that index funds are more than fifty percent of

469
00:27:06,759 --> 00:27:11,400
the market, you're basically, you know, a portion of it

470
00:27:11,920 --> 00:27:14,240
because you're on the index, a portion of.

471
00:27:14,200 --> 00:27:16,839
Speaker 1: It does, right, Those treasuries go out there to be

472
00:27:16,920 --> 00:27:23,039
levered up. Right, So this is my theory on COVID.

473
00:27:23,240 --> 00:27:26,359
Let me know what you think what happened in August

474
00:27:27,200 --> 00:27:28,200
of twenty nineteen.

475
00:27:28,960 --> 00:27:31,640
Speaker 5: Yeah, it's an overnight repo rate spike, which is very

476
00:27:31,640 --> 00:27:34,160
interesting that that came out right afterwards.

477
00:27:34,440 --> 00:27:38,440
Speaker 1: Yes, exactly, so if you had a rep And I've

478
00:27:38,440 --> 00:27:41,880
been kind of bad in this around with friends, so

479
00:27:41,920 --> 00:27:46,799
this is the first time anybody's heard it publicly. So

480
00:27:46,960 --> 00:27:52,880
I think that tam Luongo is right about his zero

481
00:27:52,960 --> 00:27:56,559
dollar thesis is so much so I dug very deeply

482
00:27:56,599 --> 00:28:02,920
into its origins, which he describes how it exists now, right,

483
00:28:03,119 --> 00:28:05,680
And I went and dug up how it came to

484
00:28:05,720 --> 00:28:15,000
be because I've had conversations like that. Side Pete sat

485
00:28:15,079 --> 00:28:19,759
in on one of one of a conference series of

486
00:28:19,759 --> 00:28:25,200
conference calls I host right, Well, we take turns hosting right,

487
00:28:25,759 --> 00:28:28,480
and one of those. Actually one of the one of

488
00:28:28,480 --> 00:28:31,799
the two women that were on the call. She was

489
00:28:32,720 --> 00:28:36,559
a former FED governor and she was on the liboard committee.

490
00:28:37,480 --> 00:28:42,759
This woman is probably in her seventies, and you know,

491
00:28:42,920 --> 00:28:46,440
this woman should know more about global capital markets than

492
00:28:46,480 --> 00:28:49,599
anyone in the world. And I asked her one day

493
00:28:49,920 --> 00:28:57,480
and I said, X, Y Z, it's true that nine

494
00:28:57,559 --> 00:29:03,480
out of every ten dollars is is printed by offshore banks. Yeah,

495
00:29:03,480 --> 00:29:06,519
the course find says yes, yes it is. And I

496
00:29:06,559 --> 00:29:11,160
was like, okay, and all those offshore dollars they're indexed

497
00:29:11,160 --> 00:29:14,359
to libor right, And then she goes, yeah, of course of

498
00:29:14,400 --> 00:29:16,039
course they are. What else would they be wouldn't know

499
00:29:16,039 --> 00:29:18,880
what else they'd be indexed on. And I was like, okay,

500
00:29:20,200 --> 00:29:25,599
so the FED doesn't control the U the dollar and

501
00:29:25,640 --> 00:29:28,079
she's like no, no, of course not, Like okay, what

502
00:29:28,480 --> 00:29:31,480
do you mean, like that's not the case. I'm like, okay, Well,

503
00:29:32,359 --> 00:29:36,960
if nine tenths of the dollars are printed offshore by

504
00:29:36,960 --> 00:29:43,880
overseas banks, and those dollar denominated debts right are index

505
00:29:44,039 --> 00:29:49,400
to an interest rate that is set by twenty banks

506
00:29:50,079 --> 00:29:53,119
in London, not a one of them being a US bank,

507
00:29:54,599 --> 00:29:59,200
then that means the FED only has control over ten

508
00:29:59,279 --> 00:30:02,319
percent of that. So if I own ninety percent of

509
00:30:02,359 --> 00:30:05,880
your company, right, I owned ninety percent of the shares

510
00:30:06,440 --> 00:30:10,240
and I can vote those shares, then that makes that

511
00:30:10,440 --> 00:30:15,759
my company, not your company. And this woman was fucking speechless,

512
00:30:16,960 --> 00:30:19,720
All right, Geela, it is like, I have to come

513
00:30:19,759 --> 00:30:21,960
back to you. I have to think about that. I'm

514
00:30:21,960 --> 00:30:27,319
thinking myself. I'm like, bitch, you do the like playing

515
00:30:27,359 --> 00:30:31,640
the law right, like you were in charge of a

516
00:30:31,720 --> 00:30:34,200
fucking portion of a guy damn global economy, and this

517
00:30:34,359 --> 00:30:38,559
never occurred to you, and it bothered me, and it

518
00:30:38,599 --> 00:30:40,960
bothered me and it bothered me. And I just run

519
00:30:40,960 --> 00:30:45,160
into this again and again and again. Wanted a similar

520
00:30:45,200 --> 00:30:52,519
type conversation with a famous duconynist. And this guy couldn't understand.

521
00:30:52,680 --> 00:30:54,599
He's like, I couldn't even this is a this is

522
00:30:54,599 --> 00:30:59,680
an economist that Goldman Sachs contracts right often, right, this

523
00:30:59,720 --> 00:31:02,440
guy goes on like speaking tours, and investment banks stop

524
00:31:02,480 --> 00:31:04,519
what they're doing, and everybody gets out of class for

525
00:31:04,599 --> 00:31:07,039
an afternoon to go listen to this fucking asshole speak.

526
00:31:07,640 --> 00:31:09,920
And I asked him, like, well, what happens if there

527
00:31:10,039 --> 00:31:13,799
is a sovereign debt default in a g seven country,

528
00:31:15,000 --> 00:31:17,319
and he looked and looked at me, He's wearing the

529
00:31:17,359 --> 00:31:20,480
face and said, I don't I don't even know where

530
00:31:20,519 --> 00:31:22,960
that would fit into my worldview, Like I wouldn't even

531
00:31:23,000 --> 00:31:24,960
know how to model that, Like I don't even I

532
00:31:24,960 --> 00:31:27,200
don't even know where to start with that. I'm like,

533
00:31:27,319 --> 00:31:31,960
really really, like you're a fucking global economist and you

534
00:31:32,000 --> 00:31:36,200
can't you know, at least hypothesize, right, like fucking just

535
00:31:36,240 --> 00:31:39,559
spitball what a sovereign debt default would be like in

536
00:31:39,599 --> 00:31:43,160
one of these like who are you people? And I've

537
00:31:43,200 --> 00:31:46,200
just run into it again and again and again, and

538
00:31:46,799 --> 00:31:50,079
the only conclusion that I can come to is that

539
00:31:51,400 --> 00:31:54,119
all of the people that set up this infrastructure right

540
00:31:54,240 --> 00:31:58,279
the plumbing. Like if I bought your house right and

541
00:31:58,720 --> 00:32:03,039
you built it yourself, and you know, you moved to

542
00:32:03,160 --> 00:32:05,559
some foreign, some far away country and I can't get

543
00:32:05,559 --> 00:32:08,640
a hold of you, and I have a plumbing league,

544
00:32:09,640 --> 00:32:12,960
I'm going to have to fucking tear that house down

545
00:32:12,960 --> 00:32:15,039
to the studs because I don't know where the pipes are.

546
00:32:16,799 --> 00:32:21,519
Speaker 5: Yeah, you plumb find the movie cube of you know,

547
00:32:21,559 --> 00:32:25,200
there is no master plan. It's a headless blunder operating

548
00:32:25,279 --> 00:32:26,960
under the illusion of a master plan.

549
00:32:27,039 --> 00:32:29,240
Speaker 4: You know, I think they inherited the exactly.

550
00:32:29,279 --> 00:32:31,720
Speaker 5: They don't know how it works, and they're just trying

551
00:32:31,759 --> 00:32:34,039
to keep it going and keep it from exploding.

552
00:32:34,240 --> 00:32:36,160
Speaker 1: Well yeah, because they don't know, and that means they

553
00:32:36,160 --> 00:32:39,640
don't know how to stop it from exploding. Right. So,

554
00:32:39,839 --> 00:32:42,799
like if everybody that's set up the current, you know,

555
00:32:42,839 --> 00:32:46,079
we'll call it the euro dollar system, everyone that put

556
00:32:46,119 --> 00:32:49,039
that into place, all of the boomers that are in

557
00:32:49,160 --> 00:32:53,480
charge of shit that won't retire. Right, what these guys

558
00:32:53,519 --> 00:32:58,200
came into whatever firm that they're at, right in the eighties,

559
00:32:58,200 --> 00:33:00,759
the mid eighties, that's like when they just got on

560
00:33:00,799 --> 00:33:05,079
the trading floor. Whatever. That means everybody, all the men

561
00:33:05,480 --> 00:33:09,319
that set up the Bretonwood system were not only retired,

562
00:33:09,599 --> 00:33:13,640
but we're dead by the time any of the people

563
00:33:13,759 --> 00:33:17,519
currently in charge got anywhere near the steering wheel. So

564
00:33:17,640 --> 00:33:21,319
none of these fucking people, I would say, more knowledge

565
00:33:21,519 --> 00:33:24,640
of how the global financial system actually works exists in

566
00:33:24,680 --> 00:33:28,799
our spheres. Then does the institutions, then does the elites.

567
00:33:29,880 --> 00:33:35,039
So Tom Lamongo is effectively correct, right, this euro dollar system,

568
00:33:35,279 --> 00:33:38,839
this nine tenths of all these offshore dollars, they're going

569
00:33:38,920 --> 00:33:44,480
to blow up, right, they are hypothecated dollars. And I

570
00:33:44,519 --> 00:33:48,240
don't know how familiar you are with his thesis, but

571
00:33:50,359 --> 00:33:53,880
I use JP Morgan Private Banking. And I got a

572
00:33:53,960 --> 00:34:00,599
letter in December of twenty twenty three, twenty three or

573
00:34:00,599 --> 00:34:03,359
twenty twenty two, remember it was December tide four years

574
00:34:03,559 --> 00:34:09,760
and it said you cannot deposit any Liboard denominated securities,

575
00:34:10,159 --> 00:34:14,239
like you're not allowed, right, A, we won't allow you, right.

576
00:34:14,360 --> 00:34:17,119
And then I get another letter like a week later

577
00:34:17,800 --> 00:34:21,480
that said, if you have any liboard denominated securities, you

578
00:34:21,559 --> 00:34:23,840
must sell them by January. And I don't get like,

579
00:34:24,079 --> 00:34:26,960
there's not a type of you know, bank that tells

580
00:34:27,039 --> 00:34:30,079
you you have to must do anything. Right. They're generally

581
00:34:30,199 --> 00:34:32,239
very nice and cordialine you know, beat around the bush

582
00:34:32,280 --> 00:34:35,960
for a while, but they were. It was very clear.

583
00:34:36,000 --> 00:34:38,119
It was like a you know, five or six sentence

584
00:34:38,199 --> 00:34:40,760
letter that was like you have to do this. You

585
00:34:40,800 --> 00:34:43,920
can't have any liboard denominated securities or instruments in your

586
00:34:43,920 --> 00:34:44,760
account at all.

587
00:34:46,800 --> 00:34:51,320
Speaker 5: Everyone to come back to the patronage question, though, okay, okay,

588
00:34:51,360 --> 00:34:55,679
So a historic example of a blow up would be all.

589
00:34:55,679 --> 00:34:58,239
Speaker 1: Those all those dollars in all those trade, all those

590
00:34:58,280 --> 00:35:02,519
people buying stock over aren't allowed to play, right, So

591
00:35:02,599 --> 00:35:04,719
I'm saying like there's a very good change in the

592
00:35:04,719 --> 00:35:07,400
future that we may exist in a vacuum. I guess

593
00:35:07,559 --> 00:35:09,119
was the point I was trying to get at without

594
00:35:09,119 --> 00:35:12,280
sounding like a crazy person, right, the US dollars being

595
00:35:12,320 --> 00:35:13,800
put to work in US markets.

596
00:35:14,599 --> 00:35:18,199
Speaker 5: So a historic example of, you know, right after the

597
00:35:18,239 --> 00:35:20,559
Great Depression, once it hit Germany, is that the middle

598
00:35:20,599 --> 00:35:23,639
class who owned stocks in Germany got wiped out, and

599
00:35:23,679 --> 00:35:27,840
that was a big part for you know, the revolutionary

600
00:35:27,840 --> 00:35:31,760
movements that occurred soon after to stabilize things. But the

601
00:35:31,760 --> 00:35:34,280
people who actually had physical control of the factories and

602
00:35:34,400 --> 00:35:38,119
farms did very well. They did better in fact, in

603
00:35:38,159 --> 00:35:41,639
the midst of that. So as far as patronage, I

604
00:35:41,639 --> 00:35:43,239
guess the question why I use kind of Germany and

605
00:35:43,280 --> 00:35:48,119
Japan as historic examples is, you know, getting people to

606
00:35:48,199 --> 00:35:52,840
invest directly in the things that are real capex, that

607
00:35:53,360 --> 00:35:57,800
create real tangible value that they know their savings is

608
00:35:57,800 --> 00:36:00,599
safe in an industry that actually makes things. You know,

609
00:36:00,920 --> 00:36:04,199
if you if you work at Mitsubishi and your savings

610
00:36:04,239 --> 00:36:07,239
account is with Mitsubishi Bank, and you know Mitsubishi is

611
00:36:07,239 --> 00:36:10,920
making you know, generators and fighter planes and you know cars,

612
00:36:10,920 --> 00:36:13,880
and air conditioners and whatnot. You know, they have the

613
00:36:14,280 --> 00:36:18,559
economic capacity of selling things that are valuable to other

614
00:36:18,599 --> 00:36:23,559
people and getting well for that. That there's some security there, right,

615
00:36:23,559 --> 00:36:26,199
as opposed to these accounting fictions that we're talking about,

616
00:36:26,199 --> 00:36:28,280
which is, yeah, when they blow up, you have an

617
00:36:28,280 --> 00:36:31,159
IOU for what I mean, I think ETFs.

618
00:36:30,679 --> 00:36:32,760
Speaker 4: Are a whole other version of that as well.

619
00:36:33,159 --> 00:36:35,800
Speaker 5: Uh, nobody's really looking at at the divergence risk or

620
00:36:35,800 --> 00:36:39,400
slippage between you know, ETFs and what they claim to represent.

621
00:36:41,920 --> 00:36:45,400
So for our guys though, who actually are focused on

622
00:36:45,480 --> 00:36:51,360
real productivity in creating that parallel infrastructure, I guess you know,

623
00:36:51,679 --> 00:36:53,679
to get one or two steps of head ahead of this,

624
00:36:53,920 --> 00:36:56,719
right that you're not left holding the bag finding out

625
00:36:56,719 --> 00:36:58,760
that it's a cat and not a pig in the pope.

626
00:36:59,119 --> 00:37:03,280
Speaker 1: All right, Well, so majority of the Boomer's capital is

627
00:37:03,360 --> 00:37:07,119
tied up in public markets, right, So we're talking about

628
00:37:07,119 --> 00:37:10,519
a complete destruction of capital markets in your hypothesis, right,

629
00:37:10,559 --> 00:37:13,880
we're talking about the destruction of Boomer capital, which.

630
00:37:13,639 --> 00:37:16,079
Speaker 5: I mean, I'm betting what's going to happen is similar

631
00:37:16,079 --> 00:37:18,519
to Maiden Lane with the mortgage backed securities, is that

632
00:37:18,559 --> 00:37:21,519
they'll you know, sovereign as hwe decides the state of exception.

633
00:37:21,599 --> 00:37:23,840
So they'll say, well, it's okay for FED to own

634
00:37:23,880 --> 00:37:27,159
special purpose vehicles. It's an economic emergency. We're not really

635
00:37:27,159 --> 00:37:30,280
going to prosecute ourselves. And basically, they'll create a special

636
00:37:30,280 --> 00:37:33,199
purpose vehicle to take these index funds onto the FED

637
00:37:33,280 --> 00:37:35,920
balance sheet, and then they'll do gated redemption so that

638
00:37:35,960 --> 00:37:39,880
boomers still get their retirement income. It'll be uncomfortable, they'll

639
00:37:39,880 --> 00:37:43,440
lose their liquidity, but they'll maintain the notional value of

640
00:37:43,480 --> 00:37:45,920
those securities. And then they're just going to use financial repression,

641
00:37:45,920 --> 00:37:49,039
which is a fancy way of saying inflation. Instead of

642
00:37:49,079 --> 00:37:52,840
the stocks dropping in notional value to what they're actually worth,

643
00:37:53,119 --> 00:37:55,679
they're going to use inflation to debase the currency until

644
00:37:55,679 --> 00:37:58,960
it reaches that artificially high water mark. And then and

645
00:37:58,960 --> 00:38:01,159
then the boomers will be dead by the time that happens,

646
00:38:01,159 --> 00:38:04,159
and their retirement income won't be a political question anymore.

647
00:38:04,440 --> 00:38:06,760
Speaker 1: Well, what time are you What time are you thinking?

648
00:38:08,679 --> 00:38:10,920
Speaker 5: So I'm not saying it's going to happen soon. It

649
00:38:10,920 --> 00:38:12,679
may not even happen in my lifetime. I'm in my

650
00:38:12,719 --> 00:38:16,360
forties now. So let's say between ten to thirty years.

651
00:38:16,760 --> 00:38:20,800
Speaker 1: Okay, Well, so the boomers population is a very interesting thing.

652
00:38:22,360 --> 00:38:27,719
So that Jewish guy in what you can call it

653
00:38:27,760 --> 00:38:31,239
a Peterston this a little bit at dinner, right. So

654
00:38:31,519 --> 00:38:37,800
chaos theory is terribly named, right, It's actually nonlinear systems dynamics, right.

655
00:38:37,840 --> 00:38:40,840
And it was discovered when they tried to model two

656
00:38:40,880 --> 00:38:44,440
things that on the surface seemed like very simple systems.

657
00:38:44,719 --> 00:38:48,400
One was the weather. It's like eight or nine different inputs,

658
00:38:48,400 --> 00:38:51,239
like very much pressure wins me whatever. The other one

659
00:38:51,320 --> 00:38:55,880
was population, right, it was a deer population, and they

660
00:38:55,960 --> 00:39:03,119
found that even though the whole system operated on five variables, right,

661
00:39:03,159 --> 00:39:05,000
does that mean this should be a total of twenty

662
00:39:05,039 --> 00:39:06,360
five possible outcomes?

663
00:39:07,159 --> 00:39:07,360
Speaker 5: Right?

664
00:39:08,360 --> 00:39:13,079
Speaker 1: Every thousand or so iterations? It would give them some

665
00:39:13,199 --> 00:39:18,440
insane number and they couldn't make this go away. So

666
00:39:19,280 --> 00:39:23,760
the boomers are that, right. So, like the story that

667
00:39:23,800 --> 00:39:25,719
you're told is that, like, okay, after World War Two,

668
00:39:25,840 --> 00:39:29,199
everybody came home foot blood, Like, okay, well, how come

669
00:39:29,239 --> 00:39:32,440
South America has a baby boomer generation? How come India

670
00:39:32,440 --> 00:39:34,760
has got a fucking baby boomer generation? Did they come

671
00:39:34,760 --> 00:39:37,519
home from World War two? And fuck a lot? No,

672
00:39:39,039 --> 00:39:41,719
that's not what happened. So the boomer generation is a

673
00:39:41,760 --> 00:39:47,639
global phenomenon and COVID. So basically, the you know, our

674
00:39:47,679 --> 00:39:52,079
population decreasing five x would actually be a return to

675
00:39:52,159 --> 00:39:56,320
the mean. Right. It is the boomer generation that is

676
00:39:56,360 --> 00:40:00,599
the anomaly. It's the boomer generation, if the outlier. So

677
00:40:01,639 --> 00:40:04,800
right now, we're already down thirty percent on our boomer count,

678
00:40:05,199 --> 00:40:08,119
and we lose roughly ten to thirteen percent every year,

679
00:40:08,960 --> 00:40:12,360
all right, So that means in three years, right, we're

680
00:40:12,400 --> 00:40:17,760
already passed. We're inching up on fifty percent. Right, and

681
00:40:17,800 --> 00:40:23,639
then after that point, they they're no longer the dominant

682
00:40:23,679 --> 00:40:28,159
economic factor. Right, And this is why everyone's this is

683
00:40:28,159 --> 00:40:30,360
why they are freaking out. This is why nothing they

684
00:40:30,400 --> 00:40:34,159
do works right, This is why the market doesn't work.

685
00:40:34,239 --> 00:40:37,360
This is why none of the debt works, right, right,

686
00:40:37,480 --> 00:40:39,519
this leverage bubble that they've made.

687
00:40:40,199 --> 00:40:44,519
Speaker 5: Yeah, Mike Green famously the analogy of you know, if

688
00:40:44,519 --> 00:40:46,639
your brakes don't work in a car, but you're driving

689
00:40:46,719 --> 00:40:49,119
up a hill, you don't really notice it. But then

690
00:40:49,159 --> 00:40:52,039
once you cross the peak and are driving downhill and

691
00:40:52,079 --> 00:40:54,280
your breaks don't work, then then you're in for a

692
00:40:54,280 --> 00:40:59,159
big problem. And yeah, the way of these securities as

693
00:40:59,199 --> 00:41:02,559
a way of sucking inflation out of the system. Well,

694
00:41:02,599 --> 00:41:05,159
now that they're selling to redeem that in order to

695
00:41:05,239 --> 00:41:08,159
generate their retirement income, it's all getting pipe back in.

696
00:41:08,239 --> 00:41:13,760
So yeah, the the demographic crisis mixed with you know,

697
00:41:13,800 --> 00:41:15,119
with that band aid solution.

698
00:41:15,679 --> 00:41:18,079
Speaker 1: No, I think the demographic crisis is and the crisis

699
00:41:18,079 --> 00:41:19,960
at all. I think it's a blessing, right, I think

700
00:41:19,960 --> 00:41:23,119
it's the best thing that will ever happen to the country. Right,

701
00:41:23,199 --> 00:41:27,599
So check this out. You have a pyramid, right, So

702
00:41:28,079 --> 00:41:32,079
our whole society is a pyramid scheme, right where you

703
00:41:32,199 --> 00:41:34,360
have a whole bunch of people at the top or

704
00:41:34,400 --> 00:41:36,760
on the bottom working their ass off, right, and that

705
00:41:36,840 --> 00:41:39,519
money filter's up and it gets taken out a little

706
00:41:39,519 --> 00:41:41,199
bit of time to support the people at the top

707
00:41:41,199 --> 00:41:44,800
of the old people's right, and what we have right now, right,

708
00:41:44,840 --> 00:41:46,239
So you can add up the baby you can add

709
00:41:46,320 --> 00:41:52,039
up the Zoomers and the millennials together, and there's five

710
00:41:52,039 --> 00:41:54,920
times as many boomers as those, right. So actually, I

711
00:41:54,960 --> 00:41:56,960
think you could probably throw in the gen xers too,

712
00:41:57,559 --> 00:41:59,440
but I'm not going to any right, So just the

713
00:41:59,840 --> 00:42:02,840
just the GENA there's the gen z ers and the millennials.

714
00:42:02,880 --> 00:42:05,960
Put those together. There's five times as many baby boomers. Right,

715
00:42:06,000 --> 00:42:08,079
So what we have is the pyramid scheme has flipp

716
00:42:08,119 --> 00:42:10,559
upside down, a small amount of people at the bottom

717
00:42:10,599 --> 00:42:12,639
working and a large amount of people at the top

718
00:42:12,880 --> 00:42:16,480
taking all the resources. What happens when they're gone?

719
00:42:17,480 --> 00:42:17,639
Speaker 4: Right?

720
00:42:17,639 --> 00:42:19,840
Speaker 1: So the baby boomers also own all the houses, they

721
00:42:19,880 --> 00:42:22,119
own all the small businesses they don't want, all the

722
00:42:22,159 --> 00:42:26,039
medium sized businesses, right, all of the infrastructure that you're

723
00:42:26,079 --> 00:42:29,719
talking about, right, let's just use it in tern let's

724
00:42:29,760 --> 00:42:33,440
just part we'll just call infrastructure and you know small

725
00:42:33,440 --> 00:42:37,239
and mid sized businesses as we'll just use houses. It's easy, Furtal,

726
00:42:37,239 --> 00:42:40,800
we understand, how do you sell if the baby boomer

727
00:42:40,840 --> 00:42:43,440
is on all the houses, right, and there's five times

728
00:42:43,679 --> 00:42:46,320
as many of them as there are of us, How

729
00:42:46,360 --> 00:42:51,400
do you sell five houses to one person? You don't?

730
00:42:52,039 --> 00:42:52,280
Speaker 4: Right?

731
00:42:52,440 --> 00:42:56,159
Speaker 5: And also you know the issue is they're not selling

732
00:42:56,679 --> 00:43:01,039
or as a dying up at that bottom of the

733
00:43:01,039 --> 00:43:04,199
inverted pyramid, do not have the capital to buy them out.

734
00:43:04,360 --> 00:43:07,280
Speaker 1: Right. But the problem is going to sort itself out

735
00:43:07,280 --> 00:43:09,800
because you can't sell five houses to one person.

736
00:43:10,000 --> 00:43:13,840
Speaker 5: Well, there'll be some massive when they die, or they'll

737
00:43:13,840 --> 00:43:16,119
give it all the way to charities and foundations for

738
00:43:16,400 --> 00:43:19,119
political purposes. You know, they'll give it to Haitians because

739
00:43:19,159 --> 00:43:20,719
they hate their white kids that much.

740
00:43:21,119 --> 00:43:27,639
Speaker 1: Maybe, But whether they give it away to Haitians or not,

741
00:43:28,599 --> 00:43:31,320
a large portion of them are not going to. Right,

742
00:43:31,360 --> 00:43:35,039
there's no way that you have that type of disparity

743
00:43:35,119 --> 00:43:38,840
without a correction and price. So I think the housing

744
00:43:38,880 --> 00:43:44,320
affordability the problem is going to sort itself out. And

745
00:43:44,679 --> 00:43:47,039
in the way that that is going to be sorted out,

746
00:43:48,159 --> 00:43:54,880
we are guys, if they are ready and prepared, are

747
00:43:54,920 --> 00:43:59,880
going to face a once in a hundred year buying opportunity, right,

748
00:44:00,039 --> 00:44:03,000
And I mean like, okay, you can't afford a house.

749
00:44:03,079 --> 00:44:07,159
Person that is listening to this right, well, in the

750
00:44:07,199 --> 00:44:08,920
future that I'm talking about, you're probably not gonna be

751
00:44:08,920 --> 00:44:11,639
able to get a fucking mortgage either, So that sucks.

752
00:44:12,840 --> 00:44:16,159
But could you buy a house it was ninety percent off?

753
00:44:17,239 --> 00:44:20,840
I bet you could, especially when even if it's ninety

754
00:44:20,880 --> 00:44:23,360
percent off, there's still four of them that aren't going

755
00:44:23,440 --> 00:44:26,440
to get bought, So obviously it's going to get a

756
00:44:26,480 --> 00:44:29,239
little bit worse than nine percent off. But just hypothetically,

757
00:44:29,360 --> 00:44:31,320
could you afford a house at ninety percent off? I

758
00:44:31,360 --> 00:44:34,199
bet you could? Right? Or what about a small business.

759
00:44:34,320 --> 00:44:40,199
What about a machine shop? Right? What about and small

760
00:44:40,199 --> 00:44:44,800
engineering company with five or six C and C machines Right,

761
00:44:44,920 --> 00:44:48,679
Because at the same time this is happening, we have

762
00:44:48,760 --> 00:44:53,840
this other thing happening, which is the strategic defense initiative

763
00:44:54,239 --> 00:45:00,280
for onshore in production. Right, and big mega corporations like

764
00:45:00,320 --> 00:45:04,199
the ones that currently dominate everything, well it's called dominate production.

765
00:45:04,840 --> 00:45:09,559
They're like cruise ships or battleships or the biggest whatever.

766
00:45:09,559 --> 00:45:12,480
The biggest fucking ship you can think of is they

767
00:45:12,519 --> 00:45:17,679
take a really long time to turn around. So this

768
00:45:17,840 --> 00:45:21,880
is just a hypothetical or a hunch, but I think

769
00:45:22,039 --> 00:45:29,239
the demographic reality is going to set in right as

770
00:45:29,280 --> 00:45:33,199
we're going into peak on shoring, right, and there's no

771
00:45:33,320 --> 00:45:37,119
way that you on shore without shortages. There's no way,

772
00:45:38,599 --> 00:45:42,880
which is going to create an artificial demand scenario. Right now,

773
00:45:42,960 --> 00:45:45,440
anything you want to buy is made by fucking Globo

774
00:45:45,519 --> 00:45:48,920
Fagot Corp. And it's made in China and shipped to

775
00:45:48,960 --> 00:45:52,760
you and you can go to your Walmart and get it. Right.

776
00:45:53,239 --> 00:45:56,960
But if Globo Corp. Has to move all of its

777
00:45:57,000 --> 00:46:00,760
production over here, that takes time. Right, They can't even

778
00:46:00,760 --> 00:46:05,400
build a fucking semiconduct their facility in Arizona. It's just

779
00:46:05,400 --> 00:46:09,360
going to take a while. So that means that there

780
00:46:09,400 --> 00:46:12,079
is going to be a demand opportunity that won't exist

781
00:46:12,159 --> 00:46:13,960
any other time in history. I don't think a not

782
00:46:14,039 --> 00:46:15,800
in history. That's a ridiculus statement. But let's just say

783
00:46:15,840 --> 00:46:20,000
in the next eighty years or whatever that someone is

784
00:46:20,039 --> 00:46:23,840
going to have to fill the gap. So right now,

785
00:46:23,880 --> 00:46:27,360
small and medium sized businesses can't compete because you're competing

786
00:46:27,400 --> 00:46:32,239
against literally the entire Third World making things for peanuts

787
00:46:32,239 --> 00:46:37,800
and whatever. But if we're on shore in manufacturing again,

788
00:46:38,840 --> 00:46:40,719
there is going to be at least a three or

789
00:46:40,760 --> 00:46:45,599
four year maybe even longer period until their manufacturing facilities

790
00:46:46,719 --> 00:46:49,599
are constructed in the places that they're on shoring too.

791
00:46:49,960 --> 00:46:53,239
So who is going to step in and fill the gap? Right?

792
00:46:53,360 --> 00:46:57,880
Shortages mean price increases, Yes, that sucks, but what that

793
00:46:57,920 --> 00:47:02,519
also means is opportunity that was previously taken away. So

794
00:47:02,599 --> 00:47:07,000
small and medium sized businesses, the engineering shops, they have

795
00:47:07,039 --> 00:47:10,519
to make fancy stuff that's EAR compliant. Right, So like

796
00:47:10,519 --> 00:47:13,639
if you have ten C and C machines, the only

797
00:47:13,679 --> 00:47:16,519
way you could even make any money at all is

798
00:47:16,519 --> 00:47:21,239
if you're doing aerospace or defense because the regulatory compliance

799
00:47:21,519 --> 00:47:25,800
structure called e TAR is still burdensome that it can

800
00:47:25,880 --> 00:47:29,280
only be done by US companies and can only be

801
00:47:29,360 --> 00:47:33,840
done by these small engineering shops because at a large scale,

802
00:47:34,360 --> 00:47:38,000
the regulatory burden becomes too much. So like Lockheed Martin

803
00:47:38,079 --> 00:47:41,079
isn't actually a defense contractor, right, it doesn't build shit.

804
00:47:42,159 --> 00:47:46,800
It just buys a whole bunch of pieces from tiny companies,

805
00:47:47,280 --> 00:47:50,039
mid sized companies, mom and pop sized companies and assembles

806
00:47:50,079 --> 00:47:53,639
them and then sells it to the government for much more. Right,

807
00:47:54,039 --> 00:47:59,079
But if I can make a bunch more money, right

808
00:47:59,280 --> 00:48:03,800
making something much simpler, right, like I don't know, think

809
00:48:03,840 --> 00:48:07,239
of what's a you know, a small metal object like

810
00:48:07,320 --> 00:48:12,840
a kitchen appliances? Right, my C and C machines could

811
00:48:12,840 --> 00:48:15,599
make way more because Global Corp fucked up and there

812
00:48:16,199 --> 00:48:21,119
you know, their blender factory is not here yet, right,

813
00:48:21,400 --> 00:48:25,400
there is now a market opportunity where one previously did

814
00:48:25,440 --> 00:48:29,320
not exist for me to stop making bullshit eye TAR

815
00:48:29,400 --> 00:48:34,079
compliance stuff and crank the fuck out a bunch of blenders.

816
00:48:36,519 --> 00:48:41,320
Speaker 5: So typically, though, you know that it still requires bank

817
00:48:41,400 --> 00:48:44,960
capital in a medium term in order to do you know,

818
00:48:45,000 --> 00:48:48,000
expansion or retool or whatever it.

819
00:48:47,920 --> 00:48:52,599
Speaker 1: Is to do that not a fire sale, right.

820
00:48:53,039 --> 00:48:55,159
Speaker 5: So even that too, like because you mentioned the boomer

821
00:48:55,239 --> 00:48:57,599
selling their businesses, but they're not going to sell working businesses.

822
00:48:57,599 --> 00:48:59,320
I think that's going to be a very rough transition.

823
00:48:59,360 --> 00:49:02,039
It'll be an ass at sale and then you know,

824
00:49:02,079 --> 00:49:03,880
whoever does buy it is going to have to figure

825
00:49:03,920 --> 00:49:08,559
out how to apply it for future team.

826
00:49:08,920 --> 00:49:12,719
Speaker 4: But so you know, in terms of answering this patronage.

827
00:49:12,280 --> 00:49:17,079
Speaker 5: Question of how do you have that capital network and

828
00:49:17,440 --> 00:49:19,400
maybe you have some insight on this from working in

829
00:49:19,519 --> 00:49:23,639
VC in order to you know, sponsor something like that,

830
00:49:23,760 --> 00:49:27,039
right that you're identifying talent people who could make that

831
00:49:27,159 --> 00:49:30,039
happen to do that retooling of that C and C equipment,

832
00:49:30,519 --> 00:49:31,960
and you're going to invest in them and have that

833
00:49:32,039 --> 00:49:36,559
tenure time horizon because it's not going to be you know,

834
00:49:36,639 --> 00:49:39,800
the managerial states banking system, right, this is going to

835
00:49:39,880 --> 00:49:41,440
be private money that has.

836
00:49:41,360 --> 00:49:44,800
Speaker 1: To do this. Yes, I see an explosion of private

837
00:49:44,840 --> 00:49:51,480
lending in the future, and also it doesn't have to

838
00:49:51,559 --> 00:49:54,920
just be private lending. And honestly, I don't think that

839
00:49:55,199 --> 00:49:57,440
may I don't think that's actually the way that it

840
00:49:57,480 --> 00:50:02,079
should be done, right, So I think think this, do

841
00:50:02,079 --> 00:50:04,320
you know VC structure came about.

842
00:50:06,079 --> 00:50:09,800
Speaker 5: Yeah, So yeah, feel free to explain from the beginning,

843
00:50:09,840 --> 00:50:12,119
because yeah, I think the smartest people in finance and

844
00:50:12,159 --> 00:50:16,280
economics are usually of that financial historian mindset. So beginning

845
00:50:16,280 --> 00:50:17,559
at the beginning is usually best.

846
00:50:17,599 --> 00:50:21,440
Speaker 1: It's it's from an in a nutshell, it came from

847
00:50:21,440 --> 00:50:25,920
whaling because whaling was so risky, right, you had the

848
00:50:26,239 --> 00:50:31,000
general partner and the limited partner. Right, the general partner

849
00:50:31,880 --> 00:50:33,719
is going to put up let's say, ten percent of

850
00:50:33,719 --> 00:50:38,119
the money. Right. So in our fund we do a

851
00:50:38,119 --> 00:50:41,800
bit more than ten percent, but ten percent is pretty standard, right.

852
00:50:41,840 --> 00:50:44,639
So ten percent of the money in the total pot

853
00:50:44,760 --> 00:50:47,480
of what we'll just called the fund a big pot, right,

854
00:50:47,480 --> 00:50:52,400
which it effectively is ten percent of the money in

855
00:50:52,440 --> 00:50:57,360
the pot is mine, right. And I am very skilled

856
00:50:57,400 --> 00:51:03,360
at picking whaling locations or startups, whichever one, right, And

857
00:51:03,440 --> 00:51:09,000
you would like to capture some of you know, my

858
00:51:09,480 --> 00:51:15,719
location picking startup picking prowess. So you're going to take

859
00:51:15,760 --> 00:51:19,280
a passive seat, which means I will invest your money

860
00:51:19,320 --> 00:51:25,159
as I see fit, right, but I will split the

861
00:51:25,239 --> 00:51:28,559
returns with you. Is in like, I will only take

862
00:51:28,679 --> 00:51:31,360
ten percent or twenty percent of the money I make you,

863
00:51:32,880 --> 00:51:38,000
So you know it's a pretty good deal. And ninety

864
00:51:38,039 --> 00:51:40,559
percent of that pot is going to be filled with

865
00:51:40,679 --> 00:51:45,719
outside investors, right, and they just get to sit at home,

866
00:51:46,199 --> 00:51:50,559
you know, in Nantucket or whatever fishing place, while I

867
00:51:50,639 --> 00:51:52,679
actually go out and I find the whales and find

868
00:51:52,719 --> 00:51:58,119
the startups. I think that exact same structure would be

869
00:51:58,280 --> 00:52:05,000
very very good. It lends itself to joint venture very easily, right,

870
00:52:05,280 --> 00:52:09,119
because if I have the capital, you know who's not

871
00:52:09,320 --> 00:52:14,400
going to be retooling those machines? Me? You know who's

872
00:52:14,480 --> 00:52:17,920
not going to be trying to take those products to market? Me?

873
00:52:19,599 --> 00:52:22,679
Who's not going to be working twelve hour days, seven

874
00:52:22,719 --> 00:52:29,360
days a week. Me? So I want a passive ride.

875
00:52:31,480 --> 00:52:35,960
Joint venture is probably the best way to do it

876
00:52:36,000 --> 00:52:38,039
because it binds my interest.

877
00:52:39,239 --> 00:52:39,480
Speaker 4: Right.

878
00:52:39,719 --> 00:52:44,239
Speaker 1: If I'd lend you money, my interest is only in

879
00:52:44,280 --> 00:52:49,480
the interest being paid, whether it's you or I boot

880
00:52:49,519 --> 00:52:53,400
you out and somebody else wants to assume your loan

881
00:52:53,559 --> 00:52:57,119
or whatever, I only care about the interest. But if

882
00:52:57,119 --> 00:53:02,440
it's a joint venture, I care about the actual underlying

883
00:53:02,480 --> 00:53:05,199
business and your ability to manage it. It's that skin

884
00:53:05,239 --> 00:53:10,239
in the game type thing, right. So I think whichever

885
00:53:10,280 --> 00:53:16,440
way you're going to do, you would want, right, So.

886
00:53:15,519 --> 00:53:18,320
Speaker 4: So so do we have that for our guys though, Like,

887
00:53:18,400 --> 00:53:22,360
where is the based fund that is putting that money into?

888
00:53:22,679 --> 00:53:26,719
Speaker 1: Show me the basic companies. I've had this conversation with

889
00:53:26,800 --> 00:53:30,360
a dozen people. Uh, Pete, I think I've ranted to

890
00:53:30,400 --> 00:53:31,519
you about this for a little bit.

891
00:53:31,559 --> 00:53:34,480
Speaker 2: But it's probably he made about he made about how

892
00:53:34,559 --> 00:53:36,960
people just he maane, about how people just say you

893
00:53:37,039 --> 00:53:38,719
got to be building, you got to be building, and

894
00:53:38,760 --> 00:53:39,960
then but then I'll tell you.

895
00:53:40,039 --> 00:53:44,519
Speaker 1: What to build that and the dissident published.

896
00:53:45,159 --> 00:53:48,880
Speaker 2: Yeah that everybody, we need more distant publishers. We do, Yeah,

897
00:53:48,880 --> 00:53:49,519
we don't.

898
00:53:50,639 --> 00:53:51,079
Speaker 4: That took me.

899
00:53:51,199 --> 00:53:52,960
Speaker 5: That actually took me by surprise. With some my point

900
00:53:52,960 --> 00:53:55,880
out it is like, you know, really, the don't it right?

901
00:53:55,880 --> 00:53:57,880
It's just a bunch of artists, And I'm like, I

902
00:53:57,920 --> 00:54:00,480
never really thought of it that way. And it was

903
00:54:00,519 --> 00:54:04,119
also pretty disappointed to think of it that way because

904
00:54:04,119 --> 00:54:09,039
I think there are a lot of engineers, builders, design

905
00:54:09,159 --> 00:54:14,840
like people who make concrete things who you know, can't

906
00:54:14,920 --> 00:54:17,440
get a living that would give them a home, a

907
00:54:17,480 --> 00:54:18,719
wife and kids.

908
00:54:19,079 --> 00:54:21,159
Speaker 4: Yeah, there's to be a way to make that a.

909
00:54:21,159 --> 00:54:24,840
Speaker 5: Discount rate where they would happily work their asses off

910
00:54:25,000 --> 00:54:27,679
to make things that are actually valuable if they knew

911
00:54:27,679 --> 00:54:31,119
they had some kind of like underwritten guarantee of decent

912
00:54:31,199 --> 00:54:31,920
quality of life.

913
00:54:31,960 --> 00:54:34,440
Speaker 1: In that sense, this is what artists deserve to be poor.

914
00:54:35,679 --> 00:54:39,239
Speaker 5: Sure, right, yeah, but there's there have to be our

915
00:54:39,320 --> 00:54:42,199
guys who are engineers who would make things if somebody

916
00:54:42,360 --> 00:54:44,639
believed in them to make that kind of long term bed.

917
00:54:45,000 --> 00:54:47,039
Speaker 1: Yeah. So the answer to why there is no base

918
00:54:47,239 --> 00:54:52,239
VC fund is because no one has been able to show.

919
00:54:53,000 --> 00:54:56,199
I don't care whether it's based or not based. I'm

920
00:54:56,239 --> 00:55:04,639
an investor, right, you know what doesn't pay bills? Moral platitudes, right, right,

921
00:55:04,960 --> 00:55:09,320
like you being more based than the fucking I don't

922
00:55:09,360 --> 00:55:13,320
know training with a unicorn company. I'll go be based

923
00:55:13,320 --> 00:55:17,039
by myself with my unicorn bucks, thank you very much.

924
00:55:17,159 --> 00:55:21,360
Like it's my money. Right. It proved to me that

925
00:55:21,760 --> 00:55:27,199
you have got a company that will deliver me outsize

926
00:55:27,239 --> 00:55:32,119
returns to justify the insane risk. Right. What our guys

927
00:55:32,159 --> 00:55:37,159
don't understand is that if you want money for things, right,

928
00:55:37,159 --> 00:55:42,679
you want guys to invest in your thing, Well, you're

929
00:55:43,000 --> 00:55:47,199
in a competition. You just don't know it, right, I

930
00:55:47,360 --> 00:55:51,000
have literally thousands of things that I can do with

931
00:55:51,039 --> 00:55:55,599
my money. I can make five percent on my money

932
00:55:55,639 --> 00:55:59,280
guaranteed by the government. I could do that, and I

933
00:55:59,280 --> 00:56:04,320
could take zero risk. Right. I can take some risk

934
00:56:04,719 --> 00:56:07,960
and invest in a stock that's publicly traded, and if

935
00:56:08,000 --> 00:56:11,639
I don't like it, or if it starts to look sketchy,

936
00:56:11,800 --> 00:56:14,880
I can bail out whenever the fuck I want to. Right.

937
00:56:15,679 --> 00:56:18,960
But what you're asking me to do is to tie

938
00:56:19,039 --> 00:56:22,639
myself to the hip to you. Basically be signed these

939
00:56:22,679 --> 00:56:28,440
twins with my money right to where if you turn

940
00:56:28,480 --> 00:56:31,719
out to be a fucking idiot that doesn't know what

941
00:56:31,760 --> 00:56:35,280
they're doing, I am stuck with you. My money is

942
00:56:35,320 --> 00:56:38,440
going to ride all the way down to zero right

943
00:56:38,519 --> 00:56:40,559
where if it was if you were a stock, I

944
00:56:40,599 --> 00:56:43,119
could just sell you the second I got the first

945
00:56:43,119 --> 00:56:47,000
whiff or retardation, I'd be out the door. Right.

946
00:56:47,039 --> 00:56:51,719
Speaker 5: So you know who doesn't have this Like qualmbo is

947
00:56:51,840 --> 00:56:54,880
if you own a bank and you're creating a credit

948
00:56:54,920 --> 00:56:58,559
basically out of thin air, you can afford to, you know,

949
00:56:58,719 --> 00:56:59,480
take losses.

950
00:56:59,719 --> 00:57:03,400
Speaker 1: That's as different you asked me where where the base

951
00:57:03,519 --> 00:57:06,880
V sees come from? If we're talking about venture lending,

952
00:57:08,039 --> 00:57:11,000
you know, if I'm unsure of your ability to run

953
00:57:11,000 --> 00:57:14,920
a machine shop, I could give it to you. Invent

954
00:57:14,960 --> 00:57:20,119
your debt at twelve percent interest, and if you do

955
00:57:20,159 --> 00:57:23,760
not succeed, I will sell your building and I will

956
00:57:23,760 --> 00:57:26,559
sell all your machines and hopefully that will pay the difference.

957
00:57:28,159 --> 00:57:31,159
So like investing in a company is asking me to

958
00:57:31,159 --> 00:57:35,639
take a ride with you, and lending you money is

959
00:57:36,000 --> 00:57:40,239
significantly less risk and infinitely more protections. But the rate

960
00:57:40,280 --> 00:57:43,400
of return is generally capped at something like twelve percent.

961
00:57:43,800 --> 00:57:45,840
I'm not making any multiples. There's going to be zero

962
00:57:46,079 --> 00:57:50,719
x's in my return, so I think, and this is

963
00:57:50,719 --> 00:57:55,599
why different businesses lend themselves to different style of capital formation.

964
00:57:58,119 --> 00:58:00,960
Speaker 4: So how don't want to put this?

965
00:58:01,039 --> 00:58:03,719
Speaker 5: I think there's a question of you know, to bring

966
00:58:03,760 --> 00:58:05,840
it back to you know that you know it's being

967
00:58:05,880 --> 00:58:08,880
based in that there's a question of political will, right

968
00:58:09,039 --> 00:58:12,679
like China, as a communist government said we are just

969
00:58:12,719 --> 00:58:16,719
going to dominate manufacturing, and as a you know, a

970
00:58:16,760 --> 00:58:20,840
political dictat dumped a ton of money to make that happen,

971
00:58:21,239 --> 00:58:24,599
and it worked, right, And now people complained about overproduction,

972
00:58:24,639 --> 00:58:28,000
which I don't think is a real thing, but they

973
00:58:28,079 --> 00:58:30,719
you know, they completely dominate manufacturing, a lot of you know,

974
00:58:31,239 --> 00:58:33,039
electronics manufacturing.

975
00:58:32,519 --> 00:58:33,000
Speaker 4: And so on.

976
00:58:33,719 --> 00:58:37,320
Speaker 5: There's no reason we can't do that. Also, I think

977
00:58:37,360 --> 00:58:40,800
it's just a question of having the will to make

978
00:58:40,840 --> 00:58:44,239
it happen. You know again, Imperial Japan did the same thing.

979
00:58:44,320 --> 00:58:47,760
They they lent to people and said, you know, we've

980
00:58:47,760 --> 00:58:50,639
got faith in you. Yes, you have no track record,

981
00:58:51,159 --> 00:58:54,400
but because we share a common culture and we want

982
00:58:54,440 --> 00:58:57,119
the same goals, we think you're not just going to

983
00:58:57,320 --> 00:59:00,840
screw this up or take advantage. You know, it's not

984
00:59:00,880 --> 00:59:03,760
going to be uh you know PPP money for fake

985
00:59:03,880 --> 00:59:05,000
inner city businesses.

986
00:59:05,440 --> 00:59:08,360
Speaker 1: But they get the state though, right, So like, let's

987
00:59:08,360 --> 00:59:12,280
say you sucked at your business, right, I can be like,

988
00:59:12,280 --> 00:59:16,360
oh shit, now I have a huge deficit and I

989
00:59:16,559 --> 00:59:20,840
need to make that up. So everyone guess what we're

990
00:59:20,880 --> 00:59:24,039
doing an income tax race, sorry or right?

991
00:59:24,159 --> 00:59:28,119
Speaker 5: Or it gets spread out, it's inflation that's never recovered

992
00:59:28,159 --> 00:59:31,719
through because the capital structure did not become more efficient.

993
00:59:31,840 --> 00:59:32,480
Speaker 4: It's just you.

994
00:59:32,880 --> 00:59:34,920
Speaker 1: Yeah, but if you're going to ask the private person,

995
00:59:35,880 --> 00:59:40,360
who is going to cover Like, there's no incentive mechanism

996
00:59:41,559 --> 00:59:44,119
for me to for me to take that bet. Right,

997
00:59:44,280 --> 00:59:48,239
if it comes down to like state mandated investing. In

998
00:59:48,280 --> 00:59:54,079
the twenty thousandth right wing dissident book publisher, I'm going

999
00:59:54,159 --> 00:59:56,800
to bury my money in the backyard and pretend to

1000
00:59:56,800 --> 00:59:58,639
be poor until you go away.

1001
00:59:58,880 --> 01:00:02,360
Speaker 4: So I guess I'm thinking of it in terms of that, for.

1002
01:00:04,280 --> 01:00:08,719
Speaker 5: You know, a people, a culture who values actual productivity.

1003
01:00:10,159 --> 01:00:15,239
You know, it make those high trust relationships at a

1004
01:00:15,320 --> 01:00:19,239
discount before people who are actually competent become so rare

1005
01:00:19,800 --> 01:00:23,159
and such a necessity that they're going to set their

1006
01:00:23,159 --> 01:00:26,159
own price. You know, I think there is an opportunity

1007
01:00:26,199 --> 01:00:28,559
to buy them keep now because people don't realize what

1008
01:00:28,639 --> 01:00:29,119
time it is.

1009
01:00:29,719 --> 01:00:32,119
Speaker 1: See, I've been urging, and let me know what you

1010
01:00:32,159 --> 01:00:35,920
think about this. I've been urging every person. So I

1011
01:00:36,320 --> 01:00:41,159
basically my little spiel about you know, whether it's economics

1012
01:00:41,239 --> 01:00:47,480
stuff or whatever. Usually it ends in like an inundation

1013
01:00:47,840 --> 01:00:50,880
of DMS or whatever, and they ask me like, I

1014
01:00:50,920 --> 01:00:52,960
am in X Y and Z situation, what do I

1015
01:00:53,039 --> 01:00:56,679
do if I have X y Z amount of capital?

1016
01:00:56,760 --> 01:01:00,880
Or I do if I have you know, no capital,

1017
01:01:00,920 --> 01:01:03,719
what do I do? I've gotten like a wide range

1018
01:01:04,320 --> 01:01:06,480
of these. And it's the younger guys obviously they tell

1019
01:01:06,480 --> 01:01:08,880
them like, hey, I don't have any capital right.

1020
01:01:08,800 --> 01:01:12,440
Speaker 4: Like, because lending that was basically asset based.

1021
01:01:12,480 --> 01:01:15,159
Speaker 5: I mean that that's the vicious cycle of you know,

1022
01:01:15,360 --> 01:01:17,519
lending is based on what do you have assets as

1023
01:01:17,559 --> 01:01:20,400
collateral in order to get future loans, And unless you're

1024
01:01:20,400 --> 01:01:23,559
a boomer that owns a house and a large sock portfolio,

1025
01:01:23,639 --> 01:01:26,000
you don't have the collateral to get that loan. But

1026
01:01:26,119 --> 01:01:29,679
under you know, the New Deal, for example, uh, you know,

1027
01:01:29,719 --> 01:01:32,480
they did red landing, redlining and say, oh, you're the

1028
01:01:32,519 --> 01:01:34,480
kind of person that lives in this neighborhood and you're

1029
01:01:34,519 --> 01:01:37,119
probably responsible and you're probably going to pay back there

1030
01:01:37,199 --> 01:01:39,559
thirty year mortgage that they invented out of nowhere. The

1031
01:01:39,599 --> 01:01:42,440
idea of thirty year mortgage was crazy to bankers until

1032
01:01:42,440 --> 01:01:44,920
that got pushed through and turns out actually most of

1033
01:01:44,920 --> 01:01:47,199
them did pay their mortgage and it worked.

1034
01:01:48,559 --> 01:01:55,360
Speaker 1: So I've I've gotten And you said you caught that

1035
01:01:55,360 --> 01:01:58,400
that show I did with the adjacent from the two

1036
01:01:58,400 --> 01:02:03,199
good podcasts, Yes have ended. I believe, if memory serves,

1037
01:02:04,400 --> 01:02:14,159
is how I got to where I am through childless boomers,

1038
01:02:14,239 --> 01:02:18,360
which there are a lot of that are successful, and

1039
01:02:18,480 --> 01:02:25,280
also through boomers who've been insanely very successful whose kids

1040
01:02:25,320 --> 01:02:28,199
don't give a fuck what they what dad does. They

1041
01:02:28,199 --> 01:02:30,960
don't don't give a shit, theyn't want to hear his stories. Right,

1042
01:02:31,000 --> 01:02:33,199
they just cared about their credit card. They'll be paid.

1043
01:02:34,400 --> 01:02:37,719
And I basically was the guy that would listen to

1044
01:02:37,760 --> 01:02:40,960
those stories, right. I wanted to hear all the stories.

1045
01:02:41,840 --> 01:02:44,719
And we give the Boomers a lot of shit, we

1046
01:02:44,840 --> 01:02:48,599
really do, and a lot of it is deserved and

1047
01:02:48,639 --> 01:02:56,000
a lot of it isn't right because they don't everything

1048
01:02:56,119 --> 01:03:02,880
in their tautology, you know, as basically their paradigm, everything

1049
01:03:02,880 --> 01:03:06,239
that they've because your paradigm is also your It's not

1050
01:03:06,320 --> 01:03:09,800
just like what you believe, it's the information you build

1051
01:03:09,840 --> 01:03:12,760
your reality with. It's like your sense of making the

1052
01:03:12,760 --> 01:03:15,079
world the options that you think are available to you.

1053
01:03:15,599 --> 01:03:19,639
So when they're unhappy, right, like let's say the boomers

1054
01:03:19,639 --> 01:03:22,599
without you know, whose kids don't give a shit or

1055
01:03:22,679 --> 01:03:25,199
that that they've done everything in their life right, they've

1056
01:03:25,239 --> 01:03:29,599
achieved tremendous amounts of financial success, they don't know the

1057
01:03:29,639 --> 01:03:33,639
options that we know about, you know, spiritual success. They

1058
01:03:33,639 --> 01:03:36,800
don't know these other things are available to them that

1059
01:03:36,920 --> 01:03:40,000
we know. So I don't I don't blame them as

1060
01:03:40,079 --> 01:03:44,159
much as everybody else does. So with these guys that

1061
01:03:44,199 --> 01:03:47,960
I'm talking about, like I was that guy, I was

1062
01:03:47,960 --> 01:03:49,960
the surrogate kid, that cared.

1063
01:03:49,960 --> 01:03:53,239
Speaker 5: So is what you did replicable? Like that's the question

1064
01:03:53,239 --> 01:03:55,960
I had. My first question is, well, where do you

1065
01:03:56,000 --> 01:03:58,239
meet these boomers? You know, I would love to have

1066
01:03:58,280 --> 01:04:01,639
those kinds of conversations with them as well. Finding them

1067
01:04:02,039 --> 01:04:04,360
and getting them to be willing to have that conversation

1068
01:04:05,280 --> 01:04:06,639
is a whole other thing.

1069
01:04:07,559 --> 01:04:08,719
Speaker 1: This is what this is what I was trying to

1070
01:04:08,719 --> 01:04:10,639
get up before when I was talking about the machine

1071
01:04:10,719 --> 01:04:16,960
jumps capitalformation. I see the solution not as like private

1072
01:04:17,039 --> 01:04:24,800
lending necessarily. I see it as apprenticeships. I see apprenticeships

1073
01:04:24,880 --> 01:04:29,800
solving a lot of what we are talking about. Because

1074
01:04:30,360 --> 01:04:33,840
I bet you every like if you live in you know,

1075
01:04:34,320 --> 01:04:38,719
let's say, I don't know, you know, rural Appalachia, right,

1076
01:04:39,960 --> 01:04:42,960
I can't. You know, there's not a lot of multi

1077
01:04:43,000 --> 01:04:47,119
millionaire boomers around you. There's probably two or three and

1078
01:04:47,159 --> 01:04:51,320
you they own businesses that operate in those communities, right.

1079
01:04:51,639 --> 01:04:55,400
And I've had a good friend of mine was in

1080
01:04:57,039 --> 01:04:59,480
and this is going to ruff a lot of feathers

1081
01:04:59,480 --> 01:05:01,360
because I know, like, oh, we can't teach your guys

1082
01:05:01,360 --> 01:05:03,320
to beat plumbers or whatever like I had.

1083
01:05:03,599 --> 01:05:05,559
Speaker 5: And I've seen a lot of boomers where they're not

1084
01:05:05,679 --> 01:05:09,079
interested in teaching or place. They're like, oh, I don't

1085
01:05:09,079 --> 01:05:10,719
get paid for that, that's not my job.

1086
01:05:10,880 --> 01:05:11,079
Speaker 1: You know.

1087
01:05:11,079 --> 01:05:13,000
Speaker 5: They're they're part of that paradigm you talk about, is

1088
01:05:13,000 --> 01:05:16,199
that they lack a sense of legacy, you know, and

1089
01:05:16,239 --> 01:05:17,800
often they think, well, I'm just going to do this

1090
01:05:17,880 --> 01:05:19,639
until I'm gone, and then I don't care what happens

1091
01:05:19,639 --> 01:05:22,480
in my plumbing business afterwards, because I'll be in the

1092
01:05:22,519 --> 01:05:25,199
ground that. You know, they have no sense of like, well,

1093
01:05:25,199 --> 01:05:28,800
why should I take on extra work and extra responsibility.

1094
01:05:28,800 --> 01:05:31,639
I'm already in a mindless routine that I could just

1095
01:05:31,760 --> 01:05:34,280
keep doing what I'm doing until he.

1096
01:05:34,480 --> 01:05:38,559
Speaker 1: Was autonomy to them, right, And what I'll say is,

1097
01:05:38,559 --> 01:05:43,840
is this all of the guys that should be working

1098
01:05:44,320 --> 01:05:47,000
for them, right, they can they cannot give a shit

1099
01:05:47,000 --> 01:05:50,880
about legacy. That's fine, but that's not the problem that

1100
01:05:50,880 --> 01:05:54,960
they are facing. Right. So my friend is mother died

1101
01:05:55,079 --> 01:05:57,039
and he had to go to New York and basically

1102
01:05:57,039 --> 01:06:02,480
handle her estate and her a refrigerator was broken, and

1103
01:06:02,519 --> 01:06:05,960
it was an old refrigerator that he wanted to keep, right,

1104
01:06:06,519 --> 01:06:11,800
and there was one refrigerator repair person for like all

1105
01:06:11,840 --> 01:06:17,480
of like you know, northern New York. And it took

1106
01:06:17,559 --> 01:06:19,639
him two months to get this guy to show up.

1107
01:06:21,480 --> 01:06:24,280
And the guy was a single boomer, right, he'd been

1108
01:06:24,320 --> 01:06:29,239
in business for thirty years, and he is trying to

1109
01:06:29,400 --> 01:06:36,800
find employees that he will happily pay ninety dollars an hour,

1110
01:06:36,960 --> 01:06:39,280
eighty dollars an hour because he charges one hundred and

1111
01:06:39,280 --> 01:06:41,880
fifty an hour, and he can't find a single fucking

1112
01:06:41,920 --> 01:06:46,639
person to come work for him. Because we were just

1113
01:06:46,679 --> 01:06:52,199
as signumed as they were, right, every single person that

1114
01:06:52,239 --> 01:06:55,639
we see in our age group, Yes, kat I will

1115
01:06:55,719 --> 01:06:59,800
let you in. You're not the boss. They all went

1116
01:06:59,800 --> 01:07:04,800
to college degrees, even college degrees, they can't even fucking use.

1117
01:07:04,840 --> 01:07:09,719
It don't matter, And a job like that is beneath

1118
01:07:09,760 --> 01:07:11,159
them in some capacity.

1119
01:07:11,360 --> 01:07:14,320
Speaker 5: Yeah, they don't want to get dirty and twenty and

1120
01:07:14,440 --> 01:07:15,920
most product.

1121
01:07:16,880 --> 01:07:20,880
Speaker 1: Here some fucking faggot place when they if they were

1122
01:07:20,920 --> 01:07:23,880
willing to get even slightly dirty, which is another thing

1123
01:07:23,880 --> 01:07:26,840
that our guys do. Right leftists don't like getting their

1124
01:07:26,840 --> 01:07:30,599
hands dirty. Right leftists and they're intellectuals, and that you know,

1125
01:07:30,840 --> 01:07:34,280
manual labors beneath them. You know, it's not beneath like

1126
01:07:34,440 --> 01:07:37,519
we do that ship for free. Yeah, here's the type

1127
01:07:37,559 --> 01:07:38,599
of people that do that ship.

1128
01:07:39,280 --> 01:07:43,519
Speaker 5: I work in finance and that's like my leisure activity

1129
01:07:42,239 --> 01:07:45,000
is exactly so.

1130
01:07:46,480 --> 01:07:49,239
Speaker 1: We are those guys and we will dance or do

1131
01:07:49,280 --> 01:07:51,320
it for almost one hundred dollars an hour.

1132
01:07:52,559 --> 01:07:57,559
Speaker 5: So there, because maybe this just means there's a market

1133
01:07:57,599 --> 01:08:00,559
to be the matchmaker between these two because I mean,

1134
01:08:00,599 --> 01:08:02,519
that's great to hear that there are the ones who

1135
01:08:02,719 --> 01:08:04,920
want to hire the apprentices and bring people in. That's

1136
01:08:04,960 --> 01:08:09,360
exactly what I'd be looking for. Like another example is

1137
01:08:09,440 --> 01:08:13,280
PLC programmer for industrial machines, and it tends to be

1138
01:08:13,440 --> 01:08:17,039
those old boomers who have all the wisdom and you know,

1139
01:08:17,319 --> 01:08:21,760
forty years of experience, but there's no openings to get

1140
01:08:21,880 --> 01:08:24,920
a twenty year old who does want to get dirty

1141
01:08:25,039 --> 01:08:28,159
and wants to make that ninety dollars an hour to

1142
01:08:28,199 --> 01:08:29,439
start working in that field.

1143
01:08:29,680 --> 01:08:30,880
Speaker 4: There's no like.

1144
01:08:30,840 --> 01:08:38,119
Speaker 5: Until they pass away, that opening doesn't exist. And because

1145
01:08:38,119 --> 01:08:39,439
I think there's a lot of our guys who do

1146
01:08:39,479 --> 01:08:41,479
want those kinds of jobs and they can't find them.

1147
01:08:41,800 --> 01:08:45,920
Speaker 1: Like there's like three engineering shops that I've been taking

1148
01:08:45,960 --> 01:08:48,119
extra capital and socking it away and see and see

1149
01:08:48,119 --> 01:08:52,399
machines nice. Yeah, I don't plan on putting them to

1150
01:08:52,479 --> 01:08:55,359
use myself. I'm not opening up a machine shop. Right,

1151
01:08:55,760 --> 01:08:58,760
I have friends that own machine shops, and I'm going

1152
01:08:58,840 --> 01:09:02,960
to use the deeply acquired CNC machines I got at

1153
01:09:03,000 --> 01:09:08,359
a discount because you know, businesses in Chicago are going bust,

1154
01:09:10,039 --> 01:09:12,359
and I am going to use those machine shops because

1155
01:09:12,359 --> 01:09:16,399
they're already acting there. They cannot meet the demand that

1156
01:09:16,439 --> 01:09:19,880
they have and it's a huge problem. Their biggest problem

1157
01:09:20,119 --> 01:09:24,159
is CAD engineers. Right, there's not enough young guys that

1158
01:09:24,479 --> 01:09:29,119
no CAD and are willing to learn, you know, at

1159
01:09:29,159 --> 01:09:32,000
a slightly discounted great for a year all of the

1160
01:09:32,119 --> 01:09:36,359
you know, changing the machine, changing the the dies and

1161
01:09:36,399 --> 01:09:40,199
bits or whatever, and doing you know, the less exciting

1162
01:09:40,520 --> 01:09:43,520
you know, CE and C job for a year while

1163
01:09:43,560 --> 01:09:46,840
they learned the actual C and C job and no CAD.

1164
01:09:46,920 --> 01:09:49,520
Speaker 5: So, if this is such a massive market this location,

1165
01:09:49,680 --> 01:09:53,600
where is the VC for you know, the right wing

1166
01:09:53,800 --> 01:09:58,359
trades university? You know, maybe they can't afford to do that.

1167
01:09:59,439 --> 01:10:01,960
So you know, what's that coding college where it's like

1168
01:10:02,000 --> 01:10:05,479
they get subsidized on the classes and then uh, part

1169
01:10:05,479 --> 01:10:08,000
of their salary for the first three years that they're

1170
01:10:08,000 --> 01:10:10,560
working gets clawed back in order to pay for the

1171
01:10:10,680 --> 01:10:13,800
education that made that job possible. Like again, it seems

1172
01:10:13,800 --> 01:10:17,039
like there's an economic opportunity or business opportunity to close

1173
01:10:17,079 --> 01:10:21,840
that gap too, you know, to make those ends meet

1174
01:10:22,000 --> 01:10:23,479
where currently now they're not.

1175
01:10:23,800 --> 01:10:27,399
Speaker 1: Right. Well, so if the answer if the question is

1176
01:10:27,439 --> 01:10:31,640
where's the VC to come and and you know, fund

1177
01:10:31,680 --> 01:10:35,840
to university the technical he won't, right, because that's not

1178
01:10:35,840 --> 01:10:42,159
going to make him money. But like a what you're

1179
01:10:42,319 --> 01:10:44,159
what you're kind of what we're kind of circling around

1180
01:10:44,399 --> 01:10:52,640
is let's say a a staffing agency. Okay, sure, all right,

1181
01:10:52,720 --> 01:10:58,039
and if somebody put a very compelling staffing agency right

1182
01:10:58,079 --> 01:11:01,600
and was able to draw umps, right, this is the

1183
01:11:01,680 --> 01:11:05,520
other thing, right, it's comps. Right. So whenever he's like, well,

1184
01:11:05,520 --> 01:11:07,520
where are the vcs, how come no one's funding? Like

1185
01:11:07,560 --> 01:11:09,800
I've had people try and get like like, oh, this

1186
01:11:09,840 --> 01:11:14,359
person's I've got a great you know, YouTube channel, or

1187
01:11:14,359 --> 01:11:17,520
do you want to help me fund my song? I'm

1188
01:11:17,560 --> 01:11:21,720
a great musician, right, Like, that's not going to make

1189
01:11:21,760 --> 01:11:25,000
me like it showed me a business model, right, show

1190
01:11:25,039 --> 01:11:29,119
me a business plan? Right. Nobody's putting the work in

1191
01:11:29,439 --> 01:11:33,439
to think or to learn what somebody like me is

1192
01:11:33,479 --> 01:11:38,640
expecting to see. And your competition looks like right, you know,

1193
01:11:38,760 --> 01:11:41,479
all the non based, normy pitch decks that I get

1194
01:11:41,880 --> 01:11:47,600
and the very valuable businesses that exist underneath them. You

1195
01:11:47,720 --> 01:11:52,079
need to be like that, but better and my money

1196
01:11:52,159 --> 01:11:56,119
is going to go right. So we're all about meritocracy

1197
01:11:57,000 --> 01:11:59,680
until it's like, oh, how come nobody's investing in our space?

1198
01:11:59,800 --> 01:12:02,920
Now out and now we want communism, Well where's the VC.

1199
01:12:03,199 --> 01:12:05,840
Just come in and give me my money, Like no, motherfucker.

1200
01:12:06,000 --> 01:12:09,279
Give me a business and I will invest in it

1201
01:12:09,359 --> 01:12:11,119
if it is a business that looks like I can

1202
01:12:11,159 --> 01:12:14,840
generate a reasonable rate of return and over.

1203
01:12:14,680 --> 01:12:16,640
Speaker 4: What time frame? Though, because I think you know, the

1204
01:12:16,920 --> 01:12:18,079
problem I've seen with a lot of.

1205
01:12:18,159 --> 01:12:20,840
Speaker 5: VC and even some of the VC firms that are

1206
01:12:20,840 --> 01:12:25,239
private equity firms that are trying to be based, is

1207
01:12:25,560 --> 01:12:29,359
because of that opportunity cost that you mentioned, they have

1208
01:12:29,399 --> 01:12:31,239
a very short time price and they want to make

1209
01:12:31,239 --> 01:12:32,000
the quick flip.

1210
01:12:32,319 --> 01:12:32,520
Speaker 4: You know.

1211
01:12:32,520 --> 01:12:35,760
Speaker 5: They want to buy the business, juice it up, and

1212
01:12:35,840 --> 01:12:38,479
then sell it three years for you know, ten X.

1213
01:12:38,720 --> 01:12:41,079
They're not looking to say, Okay, I'm going to invest

1214
01:12:41,119 --> 01:12:44,359
in this business for the next twenty years because they're

1215
01:12:44,359 --> 01:12:46,640
going to have amazing cash flow and we're going to

1216
01:12:46,720 --> 01:12:49,800
get a percentage of you know those profits that.

1217
01:12:49,720 --> 01:12:52,399
Speaker 4: Whole time like a buy and hold strategy. You know,

1218
01:12:52,520 --> 01:12:54,119
it must be a market cap.

1219
01:12:55,560 --> 01:12:58,960
Speaker 1: That's quote, that's growth, that's growth. Private equity, right, they

1220
01:12:59,000 --> 01:13:01,199
buy businesses and flip them and lever them up and

1221
01:13:01,199 --> 01:13:04,159
flip them all right, So long term private equity is

1222
01:13:04,159 --> 01:13:07,920
a different animal, right, So like Carlisle Group is, they're

1223
01:13:07,960 --> 01:13:12,199
buying businesses that are already large caps so to say,

1224
01:13:12,239 --> 01:13:15,880
like one hundred million plus in fact, like much larger,

1225
01:13:15,960 --> 01:13:18,960
usually several billion dollars, that have been in business for

1226
01:13:19,000 --> 01:13:23,640
a very long time. And they see you know, distributions

1227
01:13:23,760 --> 01:13:31,319
as their primary methodology of generating returns. And VC is

1228
01:13:31,359 --> 01:13:34,039
the person that takes the risk in the beginning, right,

1229
01:13:34,079 --> 01:13:38,840
So my exit horizon right from the time I invest

1230
01:13:39,399 --> 01:13:44,159
his best case scenario of seven years best case. So

1231
01:13:44,359 --> 01:13:48,439
if I'm investing in a startup, unless you get unless

1232
01:13:48,479 --> 01:13:52,800
you're super super successful and within a within a couple

1233
01:13:52,840 --> 01:13:57,560
of years, grow so fast that you're already like causing

1234
01:13:57,960 --> 01:14:03,720
the major companies sucking heartburn and sleepless nights, so they

1235
01:14:03,720 --> 01:14:06,039
have to buy you out of anxiety of what you

1236
01:14:06,079 --> 01:14:11,159
could become. Then maybe five years, but best case scenario

1237
01:14:11,279 --> 01:14:15,399
on average, I'm looking at a seven year investment. I

1238
01:14:15,439 --> 01:14:18,760
am stuck with that, right, So you and I are

1239
01:14:19,319 --> 01:14:24,399
Siamese twins, my money and your business idea for seven years.

1240
01:14:25,600 --> 01:14:28,199
Speaker 5: So what's your expected exit in this scenario? Is it

1241
01:14:28,279 --> 01:14:32,119
something other than buyout or IPO.

1242
01:14:33,560 --> 01:14:36,319
Speaker 1: Usually purchased by a larger company, Because I'm investing in

1243
01:14:36,399 --> 01:14:41,479
early stage companies. So an early stage company is going

1244
01:14:41,520 --> 01:14:46,439
to basically try and become a thorn in the side

1245
01:14:46,640 --> 01:14:49,520
of the major companies by doing their business in a

1246
01:14:49,560 --> 01:14:53,439
different way, much better, to the point where my business

1247
01:14:53,479 --> 01:14:57,720
model is superior to your business model. And if you

1248
01:14:57,840 --> 01:15:03,159
allow me to continue, I will kill you. So you

1249
01:15:03,159 --> 01:15:07,399
can either buy me now or be killed by me later.

1250
01:15:08,359 --> 01:15:11,279
What do you want to do? And every big business

1251
01:15:11,439 --> 01:15:16,520
is going to say, funnel, here's your giant cartoon check.

1252
01:15:17,000 --> 01:15:19,800
Speaker 5: Right, But that but that's also how they get nerved, right,

1253
01:15:20,079 --> 01:15:22,840
is you know if meta you're.

1254
01:15:22,680 --> 01:15:27,079
Speaker 1: Asking me me, you're asking me to solve both We

1255
01:15:27,199 --> 01:15:30,119
just have to fix the world and mega mega company problems.

1256
01:15:30,159 --> 01:15:32,279
What Google does with your tech that they buy is

1257
01:15:32,319 --> 01:15:34,239
whatever they want to do because they own it. I

1258
01:15:34,279 --> 01:15:37,600
can't fix Google, but I can get them to buy

1259
01:15:37,640 --> 01:15:42,600
early stage companies if I cause them enough headache. And enough,

1260
01:15:42,760 --> 01:15:44,439
you know, few response.

1261
01:15:46,640 --> 01:15:48,720
Speaker 4: And how do we at our own Google?

1262
01:15:48,760 --> 01:15:50,560
Speaker 5: I That's where I'm going with this, right, And it's

1263
01:15:50,560 --> 01:15:53,199
the parallel infrastructure thing of you know, if what is

1264
01:15:53,279 --> 01:15:54,000
really going to count?

1265
01:15:54,079 --> 01:15:55,479
Speaker 4: Especially you know when.

1266
01:15:55,359 --> 01:15:59,880
Speaker 1: It's like this is the problem with parallel infrastructure conversation,

1267
01:16:00,800 --> 01:16:07,000
They're always parallel infrastructure and not superior infrastructure. People go

1268
01:16:07,079 --> 01:16:11,399
where the superior infrastructure is, right, just like capital, Right,

1269
01:16:11,520 --> 01:16:16,159
my investor dollar is going to go in the best

1270
01:16:16,199 --> 01:16:18,840
investment opportunity my.

1271
01:16:20,359 --> 01:16:24,279
Speaker 5: You know, human capital, so that that's contingent on the

1272
01:16:24,319 --> 01:16:28,720
managerial States bank. Then you know, that's like why you

1273
01:16:28,760 --> 01:16:33,199
know Ricardian comparative advantage and global Homo doesn't work out

1274
01:16:33,279 --> 01:16:36,399
in real life is because it's the banks that are

1275
01:16:37,600 --> 01:16:40,279
you know, putting the FED put in that system and

1276
01:16:40,319 --> 01:16:42,600
to go out, you know, to fight the Fed usually

1277
01:16:42,640 --> 01:16:43,439
ends in disaster.

1278
01:16:44,720 --> 01:16:49,359
Speaker 1: No, like with big companies. Right, Google's abount to die.

1279
01:16:51,520 --> 01:16:55,359
I would say within five years, right, and not a

1280
01:16:55,359 --> 01:16:57,279
lot of people don't see it coming, but a few

1281
01:16:57,279 --> 01:16:59,880
of us are. Right, I'm not gonna be the Fed

1282
01:17:00,119 --> 01:17:04,720
did it. It's going to be its bigness. Right. When

1283
01:17:04,760 --> 01:17:10,000
something becomes big, big and bureaucratized, to a point it

1284
01:17:10,119 --> 01:17:16,680
cannot rapidly defend itself, very similar to like a nation state,

1285
01:17:18,520 --> 01:17:21,840
the more bureaucratic layers. And that's what this way. If

1286
01:17:21,880 --> 01:17:25,279
all of a sudden, let's say like fifty percent of

1287
01:17:25,359 --> 01:17:28,960
the Mexicans in Mexico weren't actually Mexicans at all, and

1288
01:17:29,000 --> 01:17:31,479
were actually Chinese people pretending to be Mexicans, like in

1289
01:17:31,560 --> 01:17:33,720
costumes that they took off when they were at home

1290
01:17:33,760 --> 01:17:37,000
in their house, and then all of a sudden, one

1291
01:17:37,079 --> 01:17:39,800
day they took up their costumes and charge across the

1292
01:17:39,840 --> 01:17:47,239
border with Achas, we'd be fucked, and we'd be fucked

1293
01:17:47,720 --> 01:17:54,319
because our bureaucratic structure is so large and burdensome, it

1294
01:17:54,399 --> 01:18:02,159
is incapable of rapidly pivoting, directing its sources and defending itself.

1295
01:18:02,800 --> 01:18:07,159
A corporation is no different. Google can't defend itself from

1296
01:18:07,239 --> 01:18:11,760
competitors because it has to do everything by committee, and

1297
01:18:11,800 --> 01:18:16,000
there's ninety different layers of bullshit. Right, So basically, somebody

1298
01:18:16,039 --> 01:18:19,600
inside Google may have a brilliant idea on how to

1299
01:18:19,760 --> 01:18:23,960
defend Google from this upstart attacker, right, but that guy's

1300
01:18:24,000 --> 01:18:28,359
idea is just that guy's idea. He has to get

1301
01:18:28,359 --> 01:18:31,720
it past his manager, right, and that manager has to

1302
01:18:31,760 --> 01:18:35,720
see the same opportunity that he does. Unlikely, and then

1303
01:18:35,760 --> 01:18:39,119
that guy has to go to his regional director or

1304
01:18:39,279 --> 01:18:42,840
whatever asshole titles they have or like change agent or

1305
01:18:42,920 --> 01:18:46,000
whatever faggety bullshit that they put on their LinkedIn. Right,

1306
01:18:46,079 --> 01:18:47,920
it has to go through a whole lot of LinkedIn

1307
01:18:48,000 --> 01:18:52,800
faggety titles, and it probably won't and even if it

1308
01:18:52,840 --> 01:18:57,399
does the best case, it is so watered down it

1309
01:18:57,479 --> 01:18:59,199
is nihon ineffectual.

1310
01:19:00,800 --> 01:19:04,680
Speaker 5: So stock is how they really at risk if they

1311
01:19:04,680 --> 01:19:07,079
could just do stock buybacks, though, I mean, I think

1312
01:19:07,119 --> 01:19:09,600
that's the big problem with this, the bigness and the

1313
01:19:09,600 --> 01:19:13,840
managerial revolution in general, is the need for profit motive

1314
01:19:14,079 --> 01:19:17,239
basically goes out the window because you've got you know,

1315
01:19:17,319 --> 01:19:21,039
the banking system.

1316
01:19:19,760 --> 01:19:21,840
Speaker 1: Aren't going to help you. If this other company is

1317
01:19:21,840 --> 01:19:24,720
growing faster than you, investor dollars are going to go there.

1318
01:19:24,760 --> 01:19:33,000
You can only buy back so much stock without fucking revenue. Right.

1319
01:19:33,039 --> 01:19:36,479
If company like let's say TikTok, if I wanted to

1320
01:19:36,479 --> 01:19:40,039
make a long term play intact, let's say like by

1321
01:19:40,079 --> 01:19:44,800
long term I mean three years, right, if I were

1322
01:19:44,840 --> 01:19:47,000
to go back or let's just say and go forward,

1323
01:19:47,000 --> 01:19:54,479
three years. TikTok's growth is parabolic, and Google's growth has

1324
01:19:54,520 --> 01:19:58,239
been relatively flat and stayed the same, maybe up and

1325
01:19:58,319 --> 01:20:02,119
down three or four percent for the last decade. Right,

1326
01:20:02,359 --> 01:20:06,039
there is no more market share, Like, I don't care.

1327
01:20:06,199 --> 01:20:07,920
I'm not going to make any money on the company.

1328
01:20:07,920 --> 01:20:10,279
It's already big already. How do you make your money?

1329
01:20:10,439 --> 01:20:12,760
You make your money on the ride up, Right, You

1330
01:20:12,800 --> 01:20:17,439
make your money on a little company becoming a big company. Right,

1331
01:20:18,359 --> 01:20:21,960
But a big company, like a mega company, has gotten

1332
01:20:21,960 --> 01:20:26,199
nowhere else to go, Right, There's not another billion customers

1333
01:20:26,359 --> 01:20:29,880
that exist for Google to acquire. Well, but so infinity

1334
01:20:29,920 --> 01:20:33,640
customers had to acquire. So that's growth and capital is

1335
01:20:33,680 --> 01:20:34,039
going to go with.

1336
01:20:34,399 --> 01:20:39,119
Speaker 5: Their share price is driven not by revenue and growth

1337
01:20:39,239 --> 01:20:43,079
in that sense, but because they're you know, on the

1338
01:20:43,239 --> 01:20:45,680
S and P five hundred index, and the higher the

1339
01:20:45,680 --> 01:20:49,520
share price, the more that the index funds the black

1340
01:20:49,600 --> 01:20:53,720
rocks and the vanguards have to buy them. Uh, you know,

1341
01:20:53,760 --> 01:20:58,479
the bigness becomes its own feedback loop. I think I

1342
01:20:58,560 --> 01:21:01,319
think the problem with indexing and general is that you know,

1343
01:21:01,399 --> 01:21:04,760
all that decision making about being profitable in future revenue

1344
01:21:04,800 --> 01:21:08,479
and buying at a discount is evaporated and it's just

1345
01:21:09,079 --> 01:21:11,039
you know, oh, the share price goes up.

1346
01:21:11,159 --> 01:21:11,840
Speaker 4: Need more of it?

1347
01:21:14,520 --> 01:21:20,000
Speaker 1: Polaroid, man, you're talking to me about Polaroid. Polaroid was

1348
01:21:20,039 --> 01:21:24,760
the biggest company in the world that didn't see the

1349
01:21:24,800 --> 01:21:27,079
digital camera coming. It literally was like one of the

1350
01:21:27,119 --> 01:21:28,439
big I think it was with one of the top

1351
01:21:28,479 --> 01:21:32,960
three biggest companies ever at the time. Right, it was

1352
01:21:33,000 --> 01:21:36,720
the biggest of big and it thought the digital camera

1353
01:21:36,800 --> 01:21:42,800
was stupid. And now Polaroid is a tiny little slipper

1354
01:21:43,199 --> 01:21:46,840
in some holding company amongst there's thousands of other brands

1355
01:21:47,199 --> 01:21:51,199
that nobody gives a shit about, right, or a good

1356
01:21:51,199 --> 01:21:53,199
example of it in more modern time and a more

1357
01:21:53,239 --> 01:22:03,039
distorted time would be BlackBerry or Erickson. Right, these are

1358
01:22:03,359 --> 01:22:07,039
these were I think I don't think people remember how

1359
01:22:07,159 --> 01:22:11,039
big these companies were literally just five years ago, eight

1360
01:22:11,119 --> 01:22:19,000
years ago. These were behemoths, and they didn't defend themselves.

1361
01:22:19,319 --> 01:22:21,640
They could have done all the stock linebacks they wanted,

1362
01:22:21,640 --> 01:22:27,319
and they could they did, And they could have went

1363
01:22:27,439 --> 01:22:31,760
down to you know, Joe's inne in accounting and told

1364
01:22:31,800 --> 01:22:35,199
her to write up X amount of bond issuances and

1365
01:22:36,079 --> 01:22:38,880
take it across the street to the broker and go

1366
01:22:39,079 --> 01:22:44,039
raise me twenty billion dollars. But eventually you get bumped

1367
01:22:44,039 --> 01:22:47,720
down to junk bonds. Right, you go from double A

1368
01:22:48,119 --> 01:22:52,359
or triple A to double A. Still no revenue. Now

1369
01:22:52,359 --> 01:22:55,439
we're going to go from double A to single A. Well,

1370
01:22:56,079 --> 01:23:00,880
revenue get better. No, but our debt services here got at.

1371
01:23:01,039 --> 01:23:05,880
Speaker 5: But again, but the company, the ones who are buying

1372
01:23:05,920 --> 01:23:11,960
those shares are predominantly running indices, and on top of that,

1373
01:23:12,000 --> 01:23:14,279
they're doing it levered because it's through the futures market.

1374
01:23:14,479 --> 01:23:16,359
Speaker 1: So are we talking about the company or are we

1375
01:23:16,399 --> 01:23:18,840
talking about the shared buyer that runs the industy?

1376
01:23:19,159 --> 01:23:22,560
Speaker 5: Because right, so let's say, you know it's running some

1377
01:23:22,960 --> 01:23:24,720
you know S and P five What is with the

1378
01:23:24,760 --> 01:23:25,479
S and P five hundred?

1379
01:23:25,520 --> 01:23:26,880
Speaker 4: It's you know, big tech is like.

1380
01:23:27,159 --> 01:23:31,399
Speaker 5: The seven firms on that and uh, you know, if

1381
01:23:31,399 --> 01:23:34,560
it wasn't for them, it'd be negative. And it's highly

1382
01:23:34,600 --> 01:23:39,560
concentrated in those seven. You know the fact that indexing

1383
01:23:39,840 --> 01:23:41,239
is what is determining.

1384
01:23:41,520 --> 01:23:44,239
Speaker 1: Would you say that in Nvidia is in everyone's index?

1385
01:23:45,720 --> 01:23:49,039
Speaker 5: Yeah, and that's I think why they're so big. Now

1386
01:23:49,239 --> 01:23:52,640
it's not because the AI or GPU sales. I think

1387
01:23:52,640 --> 01:23:55,199
it's you know, just being on the index gives them

1388
01:23:55,720 --> 01:23:58,439
a boost that now they have to get blought because

1389
01:23:58,439 --> 01:24:00,000
that's the definition of what the index is.

1390
01:24:01,520 --> 01:24:05,399
Speaker 1: So Nvidia should be around here for like, let's say

1391
01:24:05,399 --> 01:24:06,079
three years from now.

1392
01:24:09,760 --> 01:24:12,319
Speaker 5: I think now that indexing is more than half of

1393
01:24:12,359 --> 01:24:14,680
the market, I think you're going to see indexing having

1394
01:24:14,720 --> 01:24:22,880
a bigger influence over share price than fundamentals, because you're.

1395
01:24:22,800 --> 01:24:25,319
Speaker 1: Kind of telling me gravity doesn't exist. So is it

1396
01:24:25,359 --> 01:24:29,119
absolute or big influence or absolute influence enough to.

1397
01:24:29,079 --> 01:24:34,119
Speaker 5: Be I think it's because of so Mike Green explains

1398
01:24:34,159 --> 01:24:37,680
this better than maybe I am right now. But indexing

1399
01:24:37,760 --> 01:24:40,880
is running the market, and it's not the fundamentals of

1400
01:24:42,439 --> 01:24:46,680
revenue and you know, future profitability the way that people

1401
01:24:46,800 --> 01:24:51,760
traditionally think of stocks as value. It's it's on all

1402
01:24:51,800 --> 01:24:54,600
it's an algorithmic trade. It's on autopilot.

1403
01:24:56,920 --> 01:25:01,600
Speaker 1: Even what drives that algorithm. What algorithm is it? Is

1404
01:25:01,640 --> 01:25:03,640
it a momentum algorithm? Okah, right?

1405
01:25:03,680 --> 01:25:05,439
Speaker 4: So right, So basically it's a momentum trade.

1406
01:25:05,479 --> 01:25:05,600
Speaker 1: Right.

1407
01:25:06,239 --> 01:25:09,920
Speaker 5: You know, when when given money by when.

1408
01:25:10,000 --> 01:25:16,079
Speaker 1: So CFO of Nvidia walks in on his wife fucking

1409
01:25:16,159 --> 01:25:23,600
some Haitian that she found in the garden, and he

1410
01:25:23,680 --> 01:25:27,800
shoots her and then shoots himself and then on the

1411
01:25:27,840 --> 01:25:30,399
news the next day it will be in Vidia's CFO

1412
01:25:30,800 --> 01:25:34,239
kills himself. You want to know what those momentum algoes

1413
01:25:34,279 --> 01:25:36,760
are gonna do. They they're not even gonna care about

1414
01:25:36,760 --> 01:25:41,960
the Haitian. They're going to assume that something catastrophic has

1415
01:25:42,000 --> 01:25:49,079
happened in Nvidia, right, and they're going to dump in video.

1416
01:25:49,880 --> 01:25:57,560
So momentum trading is just momentum, right, it follows other momentum.

1417
01:25:58,159 --> 01:26:02,239
So if the hedge funds who are paying attention all

1418
01:26:02,279 --> 01:26:05,880
start dumping, then the momentum algorithms are chasing the hedge

1419
01:26:05,880 --> 01:26:11,159
fund's momentum. Right, hedge funds start buying, then the momentum

1420
01:26:11,199 --> 01:26:19,439
algorithms are chasing that momentum. Right. The market is impossible

1421
01:26:19,560 --> 01:26:25,880
to manipulate in totality because it is hundreds of trillions

1422
01:26:25,880 --> 01:26:31,439
of individual transactions that have into relationships to every other

1423
01:26:31,560 --> 01:26:33,800
thing that they're not even transacting with.

1424
01:26:34,560 --> 01:26:34,680
Speaker 4: Right.

1425
01:26:34,760 --> 01:26:39,319
Speaker 1: So like by my a stock of X, that market

1426
01:26:39,479 --> 01:26:43,079
for that information is now going to affect some fucking

1427
01:26:43,199 --> 01:26:49,159
bond in China, right, because it's a fractal relationship, right,

1428
01:26:49,199 --> 01:26:54,239
it is self similar at all scales. So a good

1429
01:26:54,279 --> 01:26:59,079
example of it is like the treasury, you know, how

1430
01:26:59,079 --> 01:27:02,920
the Treasury was batting around this eighty dollars oil price

1431
01:27:02,960 --> 01:27:05,239
cap and everyone's like, no, that's not gonna work. That's terrible.

1432
01:27:06,199 --> 01:27:11,279
But yet, for some reason, every time oil looks like

1433
01:27:11,319 --> 01:27:16,680
it's about to break eighty dollars, either some crazy news

1434
01:27:16,720 --> 01:27:20,239
that ends up getting found out to be incorrect three

1435
01:27:20,359 --> 01:27:23,760
or four days later after the fact, but at that

1436
01:27:23,800 --> 01:27:27,640
point it's like our jobs report, the revision doesn't matter,

1437
01:27:28,680 --> 01:27:33,119
or some mysterious selling comes and hammers the market. So

1438
01:27:33,239 --> 01:27:36,600
this eighty dollars price cap that was the most retarded

1439
01:27:36,640 --> 01:27:39,039
thing ever and was roundly shouted down by the entire

1440
01:27:39,079 --> 01:27:42,239
financial market, but the Biden administration was really intent on.

1441
01:27:42,319 --> 01:27:46,520
They literally fucking shell uts around the world brought it

1442
01:27:46,520 --> 01:27:50,239
to COP twenty six or whatever the fucking retarded one. Anyways,

1443
01:27:50,439 --> 01:27:53,640
that seemed to miraculously happen. We have effect had an

1444
01:27:53,680 --> 01:27:57,159
eighty dollars oil price cap the last two years, but

1445
01:27:57,760 --> 01:28:04,319
the level effort of market intervention has both increased in

1446
01:28:04,399 --> 01:28:09,119
magnitude and increased in frequency. So if I'm trying to

1447
01:28:09,159 --> 01:28:13,800
suppress something down and the force of my interventions each

1448
01:28:13,880 --> 01:28:16,920
time require more and more and more force. At the

1449
01:28:16,920 --> 01:28:18,720
same time as I have to do it more and

1450
01:28:18,760 --> 01:28:21,800
more and more and more often. What that's showing you

1451
01:28:21,920 --> 01:28:25,840
above above the surface, what's happening below the surface is

1452
01:28:26,880 --> 01:28:34,359
a nonlinear system happening, right, so a feedback loop. So

1453
01:28:35,079 --> 01:28:40,239
even all the momentum, even all the Treasury intervention, eventually

1454
01:28:41,319 --> 01:28:44,840
you can only do it so much because the cost

1455
01:28:45,479 --> 01:28:53,039
of each intervention becomes exponential rapidly, and the frequency in

1456
01:28:53,079 --> 01:28:57,359
which you have to intervene is going to increase exponentially,

1457
01:28:58,359 --> 01:29:02,920
and eventually all that effort and all that time and

1458
01:29:03,319 --> 01:29:07,000
force that you've been putting down all explodes at once.

1459
01:29:08,479 --> 01:29:10,800
By the way, That's that's what's going to happen in

1460
01:29:10,840 --> 01:29:15,960
the energy. But anyways, besides the one, so these the

1461
01:29:16,159 --> 01:29:21,279
power that you are attributing to ETFs and these index

1462
01:29:21,319 --> 01:29:24,760
funds exists, but is not omnipotent.

1463
01:29:25,279 --> 01:29:28,159
Speaker 5: And do you know indexes are more than fifty percent

1464
01:29:28,199 --> 01:29:31,039
of the market. And then because indexes are also the

1465
01:29:31,079 --> 01:29:33,880
benchmark used by active fund managers, you have a lot

1466
01:29:33,880 --> 01:29:36,880
of closet indexers as well, because they have professional risk

1467
01:29:37,000 --> 01:29:39,479
or career risk that you know, they need to be

1468
01:29:40,399 --> 01:29:42,640
close at least to the index or they're going to

1469
01:29:42,680 --> 01:29:43,119
get fired.

1470
01:29:43,279 --> 01:29:46,279
Speaker 1: So many things are going down rapidly. Do you think

1471
01:29:46,319 --> 01:29:48,760
that everyone at Blackrock is going to like stare at

1472
01:29:48,760 --> 01:29:52,800
it like, oh shit, well we better not do anything.

1473
01:29:53,119 --> 01:29:54,920
We better not go find some other assets to put

1474
01:29:54,920 --> 01:29:55,239
this in.

1475
01:29:56,800 --> 01:30:00,359
Speaker 5: Well, if it's an index by definition, they can't right now.

1476
01:30:00,359 --> 01:30:02,600
If it's active that that is supposed to be part

1477
01:30:02,640 --> 01:30:06,159
of their mandate. But that's being crowded out by the

1478
01:30:06,279 --> 01:30:10,680
rise of indexing, and because it is a feedback loop,

1479
01:30:12,479 --> 01:30:15,000
you know. So yeah, until you hit that top of

1480
01:30:15,039 --> 01:30:18,159
the hill and you realize your breaks don't work, it

1481
01:30:18,239 --> 01:30:20,680
keeps working until it doesn't. So I think that is

1482
01:30:20,760 --> 01:30:27,479
more the that you know, rubber band effect of you know,

1483
01:30:27,560 --> 01:30:30,720
acid prices rise because acid prices rise, and that's just

1484
01:30:30,760 --> 01:30:32,640
going to keep turning up and up and up until

1485
01:30:33,399 --> 01:30:36,520
that meets the demographic crisis of boomers needing to sell

1486
01:30:37,239 --> 01:30:38,880
and market makers aren't going to be able to make

1487
01:30:38,920 --> 01:30:43,119
money on making a market in them because there's nobody

1488
01:30:43,119 --> 01:30:44,279
on the other side of that trade.

1489
01:30:44,319 --> 01:30:45,880
Speaker 4: You know, the millennials and Gen z are not going

1490
01:30:45,920 --> 01:30:46,840
to be able to buy them out.

1491
01:30:48,439 --> 01:30:50,600
Speaker 1: We'll have to disagree, and it will have to agree

1492
01:30:50,640 --> 01:30:55,000
to disagree. Okay, all right, So let's.

1493
01:30:54,760 --> 01:30:59,760
Speaker 2: Move to want to want to get back to back

1494
01:30:59,800 --> 01:31:02,640
on point with what we got together to talk about.

1495
01:31:03,399 --> 01:31:05,840
We've been going for a while, so if you wanted

1496
01:31:05,840 --> 01:31:12,119
to wrap it up as far as basically here, here's

1497
01:31:12,159 --> 01:31:16,239
what I'm hearing is we want to have patronage networks.

1498
01:31:17,359 --> 01:31:21,479
People who have money want to make money. Yet there

1499
01:31:21,560 --> 01:31:24,600
are people who are like, there may be some people

1500
01:31:24,680 --> 01:31:27,680
out there who are like, well, if you really believe

1501
01:31:27,720 --> 01:31:30,359
in the if you really believe in the cause and

1502
01:31:30,399 --> 01:31:33,479
you believe in the person, maybe that should be secondary,

1503
01:31:33,520 --> 01:31:36,680
and maybe loyalty should be. Loyalty to your people should

1504
01:31:36,720 --> 01:31:40,760
be It seems like to me listening to the listening

1505
01:31:40,840 --> 01:31:45,159
to the conversation, that's where the stressor is happening. That's

1506
01:31:45,199 --> 01:31:47,640
how this conversation got to we're going to have to

1507
01:31:47,680 --> 01:31:48,960
agree to disagree.

1508
01:31:49,800 --> 01:31:52,920
Speaker 1: Yeah, it's like the green investing, right, they couldn't get

1509
01:31:52,960 --> 01:31:55,800
anybody to buy into the green shit until they gave

1510
01:31:55,840 --> 01:31:59,319
them enough incentive mechanism to do it. Everybody, all those

1511
01:31:59,600 --> 01:32:04,159
all those fagots that are going to going to Davos

1512
01:32:04,239 --> 01:32:08,319
or whatever. They all want to feel good about themselves

1513
01:32:09,000 --> 01:32:13,039
right to where they will take a lower return. But

1514
01:32:13,119 --> 01:32:16,840
there needs to be some return, right, So you're not

1515
01:32:16,960 --> 01:32:24,039
going to and you're not going to My relationship to

1516
01:32:24,079 --> 01:32:28,560
my people does not supersede my relationship to my family.

1517
01:32:28,600 --> 01:32:32,720
It is an extension of it. Right, So I will

1518
01:32:32,720 --> 01:32:39,479
want to help you. But what I see is people wanting,

1519
01:32:40,039 --> 01:32:43,800
at least from what I've been approached to, like, hey,

1520
01:32:43,840 --> 01:32:46,640
do you want to invest in this is like for

1521
01:32:46,720 --> 01:32:51,079
me to do it for you, right, Like, I guess

1522
01:32:51,119 --> 01:32:55,560
what would be very helpful is to describe what I'm like,

1523
01:32:55,640 --> 01:32:58,760
the type of founders that I'm used to, right, Like,

1524
01:32:58,800 --> 01:33:01,720
what it actually takes, who you're up against.

1525
01:33:02,199 --> 01:33:04,039
Speaker 5: Yeah, that was kind of take away I got from

1526
01:33:04,039 --> 01:33:06,199
this as well as maybe the first step is, uh,

1527
01:33:06,560 --> 01:33:08,600
we got to teach people how to write pitch decks

1528
01:33:09,039 --> 01:33:11,439
and just get like, yeah, here here's a base version

1529
01:33:11,479 --> 01:33:14,520
of you know, if you're gonna make a value proposition,

1530
01:33:14,960 --> 01:33:18,199
this is how you're going to attract people. And then

1531
01:33:18,960 --> 01:33:20,920
you know that we do give them access to the

1532
01:33:20,920 --> 01:33:23,720
people have money and that they get at least five minutes,

1533
01:33:23,880 --> 01:33:24,079
you know.

1534
01:33:24,159 --> 01:33:27,159
Speaker 3: So look, if it's not even get if you've got

1535
01:33:27,199 --> 01:33:33,159
the idea, man, money will find you, right, this is

1536
01:33:33,199 --> 01:33:35,159
what this is what I mean some having this conversation

1537
01:33:35,199 --> 01:33:35,680
with dimes.

1538
01:33:36,319 --> 01:33:39,520
Speaker 1: Right, if you're going to have a couple of vcs

1539
01:33:39,560 --> 01:33:41,520
that are floating around the space because they're here for

1540
01:33:41,560 --> 01:33:44,279
the ideas. That's why. That's why I'm here, right, That's

1541
01:33:44,319 --> 01:33:47,439
why Mark Andriesen is here, right, That's why Peter Deal

1542
01:33:47,520 --> 01:33:52,960
is here because it's an intellectually interesting space right Nowhere

1543
01:33:53,039 --> 01:33:57,439
else has that. So it's the ideas that brought us here.

1544
01:33:58,359 --> 01:34:03,520
Right now, it's up to like, so we came and

1545
01:34:03,560 --> 01:34:07,279
found you, right, like so like the you know, the

1546
01:34:07,319 --> 01:34:10,159
spurg on Twitter that you know has been reading esoteric

1547
01:34:10,279 --> 01:34:12,840
you know, he's actually one of these public he's actually

1548
01:34:12,880 --> 01:34:15,560
one of these like eight customers that exist for the

1549
01:34:15,680 --> 01:34:21,279
thousandth right wing book publisher of you know, long pergotten texts. Right,

1550
01:34:21,319 --> 01:34:26,199
he's one of those guys, and he's been, you know,

1551
01:34:26,319 --> 01:34:31,600
diligently putting out ideas and I heard them and they

1552
01:34:31,640 --> 01:34:37,119
excited me, and I came. So now you have my attention, right,

1553
01:34:38,560 --> 01:34:43,039
pitch me something right and actually put the amount of

1554
01:34:43,279 --> 01:34:48,600
work right. So, like you your autism and your beliefs right,

1555
01:34:48,800 --> 01:34:55,039
the the ideological drivers right, all the reasons why I

1556
01:34:55,079 --> 01:34:59,079
should pay attention to you right because of people, because

1557
01:34:59,119 --> 01:35:03,560
of now legacy and interest, that's what got me here.

1558
01:35:05,079 --> 01:35:10,800
But I don't manage all my money. I have a

1559
01:35:10,840 --> 01:35:17,520
fiduciary relationship. I am responsible for the money of others, right,

1560
01:35:17,560 --> 01:35:22,319
So but if I see a good investment, I'm going

1561
01:35:22,359 --> 01:35:27,760
to take it. So yeah, I see is a thousands

1562
01:35:27,760 --> 01:35:31,600
the thousands people guys in our sphere are so fucking

1563
01:35:31,680 --> 01:35:35,079
in their own end zone. They want to do.

1564
01:35:36,760 --> 01:35:41,600
Speaker 4: The machines. And I got a lot of money, okay,

1565
01:35:41,640 --> 01:35:44,079
And nobody with the business plan to say, here's what

1566
01:35:44,119 --> 01:35:49,319
those CNC machines could make domestically worthwhile company.

1567
01:35:49,000 --> 01:35:54,640
Speaker 1: With a fucking CNC machine idea, Right, It's all they

1568
01:35:54,680 --> 01:36:01,319
don't understand what they are interested in. A very small

1569
01:36:01,319 --> 01:36:04,960
group of people are interested in, right, And unless you're

1570
01:36:05,000 --> 01:36:08,680
going to sell that very small group of people things

1571
01:36:08,720 --> 01:36:11,680
that cost millions of dollars, which you can't because they

1572
01:36:11,680 --> 01:36:14,880
don't have millions of dollars, you need to come up

1573
01:36:14,920 --> 01:36:20,880
with an idea that everybody and not just niche weird.

1574
01:36:21,079 --> 01:36:23,600
Speaker 5: So to figure with this too, it's the Chick fil

1575
01:36:23,600 --> 01:36:26,600
A model. You know, the people that they hire and

1576
01:36:26,640 --> 01:36:29,600
the people that they franchise for Chick fil A are

1577
01:36:29,880 --> 01:36:33,960
generally based, but they sell chicken sandwiches to everybody, and

1578
01:36:34,000 --> 01:36:38,000
they make money from that, whereas uh, you know.

1579
01:36:39,279 --> 01:36:43,720
Speaker 1: Feel it's beneath them, like, oh fucking Norman, the losers.

1580
01:36:44,039 --> 01:36:46,720
My ideas are too esoteric and cool for that.

1581
01:36:47,079 --> 01:36:50,199
Speaker 5: Well, whereas the other I'm gonna throw Glenn Beck under

1582
01:36:50,199 --> 01:36:54,560
the bus here, you know, running ads for Patriot gold

1583
01:36:54,880 --> 01:36:59,560
and dehydrated food buckets made in China is taking money

1584
01:36:59,600 --> 01:37:02,000
from our eyes and giving it to our enemies.

1585
01:37:03,079 --> 01:37:04,800
Speaker 4: It's backwards. You know.

1586
01:37:04,840 --> 01:37:07,079
Speaker 5: The way this has to work is to your point

1587
01:37:07,159 --> 01:37:09,199
that you have to sell to everybody. But then the

1588
01:37:09,199 --> 01:37:11,800
ones who you bring into the fold, where you pay

1589
01:37:11,840 --> 01:37:14,800
them salary, you hire them, you promote them, you let

1590
01:37:14,800 --> 01:37:15,720
them be owners.

1591
01:37:16,319 --> 01:37:17,920
Speaker 4: Is our guys.

1592
01:37:19,520 --> 01:37:22,760
Speaker 1: Pe How did you like zero to one?

1593
01:37:23,800 --> 01:37:27,399
Speaker 2: Well? I liked it because it changed the way I

1594
01:37:27,439 --> 01:37:32,359
thought the idea how monopoly is described in that and

1595
01:37:32,399 --> 01:37:35,279
the benefit of monopoly. And I know that there's a

1596
01:37:35,279 --> 01:37:37,399
lot of guys out there. I mean, there are billionaires

1597
01:37:37,399 --> 01:37:40,760
that that I listened to their podcasts and stuff. They

1598
01:37:40,880 --> 01:37:44,720
disagree with the idea of monopoly. They think that monopoly

1599
01:37:45,439 --> 01:37:49,359
causes people to be stagnant, causes innovation to be stagnant.

1600
01:37:49,760 --> 01:37:52,039
But that's not the way I saw it. I understood

1601
01:37:52,039 --> 01:37:55,399
exactly what they were I understood the points that he

1602
01:37:55,560 --> 01:37:58,119
was making in that, So yeah, I mean I liked

1603
01:37:58,119 --> 01:38:00,920
it because it caused me to think. It caused me

1604
01:38:00,960 --> 01:38:05,680
to think differently, and it basically broke some of the old,

1605
01:38:06,399 --> 01:38:09,600
stale libertarian kind of thought that was in my head.

1606
01:38:10,039 --> 01:38:18,680
Speaker 1: Yeah, it's it's the Blue Ocean idea, right that I

1607
01:38:18,720 --> 01:38:25,279
don't see I the one difference, I would say, in

1608
01:38:26,479 --> 01:38:30,199
the type of companies and stuff that i'm I have

1609
01:38:30,239 --> 01:38:33,479
to look at and the type of ideas that I

1610
01:38:33,520 --> 01:38:36,359
get pitched on Twitter or stuff like that. They're all

1611
01:38:36,479 --> 01:38:41,199
like the based version of this thing that already exists, right,

1612
01:38:41,439 --> 01:38:44,600
and I can't stand it. I want somebody to show

1613
01:38:44,680 --> 01:38:47,520
me something that I've never fucking seen before, never thought

1614
01:38:47,560 --> 01:38:52,279
of before. Right, And you know, you how you know

1615
01:38:53,600 --> 01:38:57,000
when you've encountered a good idea that's a company, or

1616
01:38:57,079 --> 01:38:59,079
like a good idea that's like a pitch deck. I

1617
01:38:59,159 --> 01:39:02,760
want to get read. When I read your deck, I

1618
01:39:02,800 --> 01:39:06,199
want to be so fucking angry. I can't see straight

1619
01:39:06,840 --> 01:39:09,399
because I want to read your deck and I want

1620
01:39:09,439 --> 01:39:11,520
to think, why the fuck didn't I think of that?

1621
01:39:12,479 --> 01:39:17,640
God damn it, this makes so much sense. It's like,

1622
01:39:17,920 --> 01:39:20,920
how did I not like the best ideas are the

1623
01:39:20,920 --> 01:39:26,560
ones that anybody like when you see them and somebody

1624
01:39:26,600 --> 01:39:29,239
else has them, they get you angry because you're like,

1625
01:39:30,079 --> 01:39:31,640
this was sitting right in front, like this was in

1626
01:39:31,640 --> 01:39:34,239
front of people the whole time, Like why of course

1627
01:39:34,600 --> 01:39:38,279
this makes a total sense. And when an investor sees that,

1628
01:39:39,399 --> 01:39:45,279
it triggers like I'm gonna I'm cutting a check because

1629
01:39:45,279 --> 01:39:48,159
that means I know that whoever else sees this company,

1630
01:39:49,399 --> 01:39:52,840
it's going to get it immediately. It's going to get

1631
01:39:52,840 --> 01:39:55,640
why it's important, and they're gonna it's gonna get why.

1632
01:39:55,880 --> 01:40:04,600
Like right wingers describe businesses like fucking leftists, meme right,

1633
01:40:04,800 --> 01:40:07,279
I don't want a fucking like. I want to look

1634
01:40:07,319 --> 01:40:09,119
at it and I want to get it, because that

1635
01:40:09,239 --> 01:40:10,720
means if I can look at it and I can

1636
01:40:10,760 --> 01:40:15,399
get it, that means anybody right wing not right wing right,

1637
01:40:15,640 --> 01:40:17,479
everybody that looks at it is going to get it,

1638
01:40:19,000 --> 01:40:20,560
and they're going to look at the way they were

1639
01:40:20,600 --> 01:40:23,079
doing it before and go why the fuck was I

1640
01:40:23,159 --> 01:40:26,600
doing this before? Like this is so much easier, right,

1641
01:40:26,680 --> 01:40:30,640
And when that happens, all of the things like blue

1642
01:40:30,640 --> 01:40:33,800
ocean stuff, that's all that's baked in, right, I know

1643
01:40:33,920 --> 01:40:37,079
nobody else is doing it this way because I had,

1644
01:40:37,479 --> 01:40:40,760
you know, a violent reaction when I saw this deck,

1645
01:40:40,800 --> 01:40:44,680
because you know, it was right there in front of

1646
01:40:44,720 --> 01:40:46,880
my face, And how did how has no one done

1647
01:40:46,920 --> 01:40:50,520
this before? Like how how are you the asshole that

1648
01:40:50,520 --> 01:40:53,000
that bought this up? Like how come I'm not that guy?

1649
01:40:53,960 --> 01:40:58,159
That's what we want to see. Like I've seen enough bookstores,

1650
01:40:58,199 --> 01:41:01,560
I've seen enough publishers. I've seen enough magazines. I've seen

1651
01:41:01,680 --> 01:41:05,079
enough ship that's for our own guys.

1652
01:41:05,520 --> 01:41:10,119
Speaker 5: There's thoughts on paulmar Lucky and andrel going after the

1653
01:41:10,600 --> 01:41:13,680
military market kind of doing the Elon Muss thing, except

1654
01:41:13,720 --> 01:41:17,279
it's uh, you know, rockets to kill enemies as opposed

1655
01:41:17,319 --> 01:41:20,640
to rockets to mars.

1656
01:41:20,680 --> 01:41:27,239
Speaker 1: The amount of drama like that happened because right before that,

1657
01:41:28,279 --> 01:41:36,359
right right before that, there was a massive like George

1658
01:41:36,439 --> 01:41:40,640
Floyd level I want to call it a riot, he's

1659
01:41:40,720 --> 01:41:44,119
called protest whatever at Google. It's shut down the campus

1660
01:41:44,159 --> 01:41:51,560
for like a week because Google employees, fucking Chinese communists

1661
01:41:51,640 --> 01:41:58,600
that work there and black people that shouldn't work there.

1662
01:42:00,119 --> 01:42:05,840
Found out that the A division of Google was working

1663
01:42:05,880 --> 01:42:11,279
on something called Dragonfly for the Pentagon. And this is

1664
01:42:11,319 --> 01:42:13,880
a company that at the time was working on three

1665
01:42:14,000 --> 01:42:18,479
different things for the Chinese military, by the way, but

1666
01:42:18,800 --> 01:42:21,680
the fact that we were working on that, Google was

1667
01:42:21,720 --> 01:42:25,600
working on something for the US military. I mean, like

1668
01:42:25,680 --> 01:42:30,199
if you had said, what Peter Theal Palmer lucky and

1669
01:42:30,319 --> 01:42:32,199
really because it's not just Peter theal was all founder's

1670
01:42:32,239 --> 01:42:35,560
fund and it was founder's fund first, and Mark indreason

1671
01:42:35,600 --> 01:42:39,520
shortly after, I think within a day or two, Like,

1672
01:42:39,600 --> 01:42:42,199
I can't describe to you how much of a social

1673
01:42:42,279 --> 01:42:46,920
taboo that was. Right, So after this thing happened, right like, oh,

1674
01:42:46,920 --> 01:42:49,279
we're gonna shut down Google because we're going to protest

1675
01:42:49,359 --> 01:42:51,560
you work for the fucking Defense Department, like you're in

1676
01:42:51,600 --> 01:42:59,079
America and we're gonna like basically hold a fucking sit

1677
01:42:59,159 --> 01:43:03,199
in at Google because you don't like the idea of

1678
01:43:03,239 --> 01:43:06,800
like Google doing something for the Defense Department, but we'll

1679
01:43:06,840 --> 01:43:11,319
do stuff for the Chinese military. And Peter Thiel stepped

1680
01:43:11,399 --> 01:43:16,079
up and goes like, no, founder's fund will invest in defense.

1681
01:43:17,479 --> 01:43:21,399
We're only going to invest in defense in space. That's it.

1682
01:43:23,000 --> 01:43:26,920
And it was a brilliant strategy because at that point

1683
01:43:26,920 --> 01:43:31,439
in time, all of tech was doing the fucking right

1684
01:43:31,479 --> 01:43:34,640
wing publisher bullshit, right like I'm going to be the

1685
01:43:34,760 --> 01:43:37,920
Uber of X. Like, basically, it had gotten so easy

1686
01:43:38,520 --> 01:43:42,319
to do a software based startup, right like, oh, I'll

1687
01:43:42,359 --> 01:43:45,680
just grab my hosting infrastructure from AWS. That will take

1688
01:43:45,720 --> 01:43:48,680
ten seconds. Oh I'll just grab this mapping engine from

1689
01:43:49,079 --> 01:43:52,399
It's just a bunch of APIs stacked together like Legos

1690
01:43:52,760 --> 01:43:56,439
fast thing. Yeah. Yes, So basically, the barrier to entry,

1691
01:43:57,159 --> 01:43:59,479
the amount of skills that it was required to start

1692
01:43:59,479 --> 01:44:06,520
a app, got dropped so low that every fucking retard

1693
01:44:06,640 --> 01:44:09,880
had an app. So they were diving down narrower and

1694
01:44:09,960 --> 01:44:13,159
narrower and smaller and smaller niches, right like, this is

1695
01:44:13,239 --> 01:44:15,800
the app that's kind of like Uber, but it's only

1696
01:44:15,880 --> 01:44:20,079
for Indians that only eat Chinese food, Like, okay, well

1697
01:44:20,119 --> 01:44:25,399
what about all Indians? No, that's this other guy's app, okay, right,

1698
01:44:25,479 --> 01:44:29,199
like they were it was it had become nonsensical because

1699
01:44:29,560 --> 01:44:32,079
it was so easy to do startups.

1700
01:44:32,159 --> 01:44:34,039
Speaker 4: Just that AI to the end of the company's name.

1701
01:44:34,800 --> 01:44:39,880
Speaker 1: That'll get your next round. The hardware stuff, the stuff

1702
01:44:39,880 --> 01:44:42,159
that depending on actually wanted to do, nobody was doing.

1703
01:44:43,000 --> 01:44:46,000
And Peter feels like, but the Defense Department pays his shipload,

1704
01:44:47,039 --> 01:44:51,119
and that whole system's fucking broken. And he had a

1705
01:44:51,239 --> 01:44:56,359
rockstar success with Palanteer, and he's like, I guess I

1706
01:44:56,359 --> 01:45:00,079
imagining what his thought process was be like if I

1707
01:45:00,359 --> 01:45:03,319
like Peter Deal is like the Jamie Diamond of the

1708
01:45:03,319 --> 01:45:07,439
West Coast, right, Like, whatever Peter Deal says he's doing,

1709
01:45:08,239 --> 01:45:10,960
everybody else is just going to do because they can't

1710
01:45:11,000 --> 01:45:14,760
afford to bet that Peter Deal is wrong. So you

1711
01:45:14,920 --> 01:45:18,279
just do it right, Peter, Like.

1712
01:45:18,359 --> 01:45:19,239
Speaker 4: Everyone reminds me.

1713
01:45:19,560 --> 01:45:20,920
Speaker 5: You know, the thing I feel all the time is

1714
01:45:20,920 --> 01:45:23,079
that nobody wants to do their due diligence. That's how

1715
01:45:23,119 --> 01:45:26,960
these scams like FTX happened. Is oh, well, so and

1716
01:45:27,000 --> 01:45:28,880
so invested in them, so they must have done their

1717
01:45:28,960 --> 01:45:31,239
due diligence, so we don't have time to think. Let's

1718
01:45:31,279 --> 01:45:34,000
just ride on their coattails. And then it's turtles all

1719
01:45:34,039 --> 01:45:36,720
the way down until they realize that like nobody's actually

1720
01:45:36,720 --> 01:45:37,399
done the research.

1721
01:45:37,720 --> 01:45:40,840
Speaker 1: Maybe for cryptoshit, but also FTX. There's a there's a

1722
01:45:40,920 --> 01:45:47,439
backstory to FTX that's a lot more covered in spooks.

1723
01:45:47,880 --> 01:45:55,079
But then that was the real reason that exploded because

1724
01:45:55,119 --> 01:45:58,720
maybe it got caught washing a bunch of phentoyl money

1725
01:45:58,800 --> 01:46:03,399
for time, so they would definitely do that must not

1726
01:46:03,439 --> 01:46:06,439
have come up in the due diligence, but it wasn't

1727
01:46:06,439 --> 01:46:10,159
because they weren't smart, that they were, but they were

1728
01:46:10,159 --> 01:46:15,479
also criminals for a foreign nation. So hey, and that's

1729
01:46:15,520 --> 01:46:17,840
why I think it's very funny that the other criminals

1730
01:46:17,960 --> 01:46:23,079
for a foreign nation, Silicon Valley Bank, also got assassinated

1731
01:46:23,079 --> 01:46:28,359
by Peter Diel. But yeah, what Palmer Lucky is doing

1732
01:46:31,039 --> 01:46:35,880
something anybody could have done, right, Like, wait, we're just

1733
01:46:35,880 --> 01:46:41,640
gonna make drones but for the military. Okay, Well, how

1734
01:46:41,640 --> 01:46:45,760
come no one's doing that? Well I don't know, because

1735
01:46:45,800 --> 01:46:50,000
who else was like lackeyed and a Pregniort drone that

1736
01:46:50,079 --> 01:46:53,359
cost like twenty million, But the drones were seen on

1737
01:46:53,359 --> 01:46:56,279
the battlefield cost like ten bucks. So who's making those

1738
01:46:56,319 --> 01:47:01,479
for the Pentagon? Well nobody. We don't have it, right,

1739
01:47:01,520 --> 01:47:05,720
Like everybody should have thought of that, right, Like the

1740
01:47:05,800 --> 01:47:10,239
drones we see on the battlefield cost ten dollars and

1741
01:47:10,439 --> 01:47:14,359
will fly right in your face and kill themselves, the drones,

1742
01:47:14,399 --> 01:47:18,439
not the operators. But we don't have drones to do that.

1743
01:47:19,079 --> 01:47:22,159
Where are where are comic House and drones? We don't

1744
01:47:22,159 --> 01:47:22,479
have any?

1745
01:47:22,840 --> 01:47:26,760
Speaker 5: Well, and that I think, you know, because software was

1746
01:47:26,800 --> 01:47:30,680
so cheap to make and people got habituated to that.

1747
01:47:30,680 --> 01:47:34,439
That again, the idea of investing real cafex in making

1748
01:47:34,520 --> 01:47:39,600
real physical hardware things was intimidating. People did not want

1749
01:47:39,640 --> 01:47:42,479
to take the opportunity. Cost to take on that much

1750
01:47:42,560 --> 01:47:45,760
entrepreneurial risk did not seem worthwhile until somebody did the

1751
01:47:45,760 --> 01:47:48,800
math and said, well, yeah, but the Pentagon pays crazy money,

1752
01:47:49,159 --> 01:47:52,439
so the risk is justified. But when you're used to

1753
01:47:52,760 --> 01:47:56,439
a low risk entrepreneurial environment, it's very easy to get

1754
01:47:56,800 --> 01:48:00,439
stuck in that valley.

1755
01:48:01,920 --> 01:48:05,279
Speaker 1: Yeah, kind of, It's kind of like that. Also, the

1756
01:48:05,319 --> 01:48:10,840
Pentagon provided a very safe place to incubate these technologies, right,

1757
01:48:12,239 --> 01:48:18,039
And that I think was the differentiator, because Palmer Lucky

1758
01:48:18,119 --> 01:48:19,960
isn't just throwing a bunch of shit on the wall,

1759
01:48:20,520 --> 01:48:24,439
going maybe the Defense Department wants this, maybe they want this,

1760
01:48:24,920 --> 01:48:31,520
maybe they want this. What he's doing is collaborating, right,

1761
01:48:31,560 --> 01:48:34,560
So what we've basically got all the way back to

1762
01:48:37,119 --> 01:48:39,600
is Star Wars. This time we got the Internet. I

1763
01:48:39,600 --> 01:48:41,239
remember Pete, you and I were talking about, like they

1764
01:48:41,239 --> 01:48:44,960
don't like the government. The military has the ability to

1765
01:48:45,000 --> 01:48:49,000
look thirty years down the road when it invests, right,

1766
01:48:49,079 --> 01:48:54,039
and it has the ability to take much greater risks

1767
01:48:54,079 --> 01:48:59,399
with their capital and make really long term investments that

1768
01:48:59,439 --> 01:49:02,319
may or may not pan out. So it looks like

1769
01:49:02,479 --> 01:49:07,840
VC is doing it, but it's not. It's collaborating.

1770
01:49:08,399 --> 01:49:12,680
Speaker 4: This is kind of right where, you know, where we began.

1771
01:49:12,800 --> 01:49:13,079
Speaker 1: Though.

1772
01:49:13,359 --> 01:49:16,319
Speaker 5: Is that kind of incubation where they're willing to take

1773
01:49:16,319 --> 01:49:18,960
that kind of risk over a thirty year time horizon

1774
01:49:19,600 --> 01:49:25,199
historically has been proven to pan out. I mean, maybe

1775
01:49:25,199 --> 01:49:27,399
it's just that the right needs to have its own

1776
01:49:27,479 --> 01:49:31,399
state and that's what will satisfy that level of risk taking.

1777
01:49:33,279 --> 01:49:35,039
But that's what I was trying to get at with

1778
01:49:35,039 --> 01:49:38,560
the patronage thing, is that clearly that model does work,

1779
01:49:39,600 --> 01:49:42,399
but it tends to be state actors who make it work,

1780
01:49:42,760 --> 01:49:45,800
and especially for military purposes. You know, it's Abishu was

1781
01:49:45,840 --> 01:49:49,680
making air conditioners and they were also making zeros.

1782
01:49:50,960 --> 01:49:53,399
Speaker 2: Well that was That's a point that I've been making

1783
01:49:53,439 --> 01:49:57,800
for a while now, too, is the whole Samuel Kunk

1784
01:49:57,920 --> 01:50:05,359
and ag thing about building building a parallel society. It's like, well,

1785
01:50:05,399 --> 01:50:09,119
how do you do that with heavy industry? And I

1786
01:50:09,119 --> 01:50:12,079
guess the way I look at it is in nineteen

1787
01:50:12,159 --> 01:50:15,680
ninety one, when a lot of these guys could have

1788
01:50:16,159 --> 01:50:18,640
been working for the government, they decided to do it

1789
01:50:18,920 --> 01:50:22,760
on their own, but use the government's money to do it,

1790
01:50:23,119 --> 01:50:25,399
use money that they took from the government in order

1791
01:50:25,439 --> 01:50:30,000
to build their parallel society. And that's what they've done now,

1792
01:50:30,800 --> 01:50:33,399
and that's really that's the only way you're going to

1793
01:50:33,439 --> 01:50:35,560
do it. You're not going to get away with the

1794
01:50:35,600 --> 01:50:38,840
biggest problem with agorism was always heavy industry. Well, how

1795
01:50:38,880 --> 01:50:40,960
are you going to have parallel heavy industry when you

1796
01:50:40,960 --> 01:50:44,239
have regulation and YadA YadA. Well they found their way

1797
01:50:44,239 --> 01:50:47,159
around it. Work with the government until it's the time

1798
01:50:47,239 --> 01:50:51,640
to try to destroy the government so that you can

1799
01:50:51,680 --> 01:50:52,760
take their place.

1800
01:50:53,159 --> 01:50:55,239
Speaker 4: Which is where I brought banking into it, right, Only

1801
01:50:55,279 --> 01:50:59,520
a bank really, you know, spends money that they don't have,

1802
01:51:00,119 --> 01:51:03,560
is why they don't feel the risk. The way that

1803
01:51:03,640 --> 01:51:05,760
if you had to earn your money in order to

1804
01:51:05,800 --> 01:51:07,840
invest it, you'd be much more cautious with it.

1805
01:51:09,680 --> 01:51:12,239
Speaker 1: Well, So the way that the good to Pete's quest

1806
01:51:12,520 --> 01:51:16,439
to Pete statement, the way that the government is doing

1807
01:51:16,479 --> 01:51:20,479
it now is the government before you had like bell

1808
01:51:20,640 --> 01:51:26,600
labs and ship and now you have incubators, which are

1809
01:51:26,640 --> 01:51:30,640
basically the little baby bell labs. Right, So basically the

1810
01:51:30,680 --> 01:51:34,600
same thing is happening, right, it's just happening in a

1811
01:51:34,640 --> 01:51:39,720
more distributed sense. Because well, so if we're gonna talk

1812
01:51:39,720 --> 01:51:44,079
about if you're gonna talk about a state Pete, I said,

1813
01:51:44,239 --> 01:51:46,079
I said this to you, I think the other day

1814
01:51:49,720 --> 01:51:54,520
about a mutual friend that was thek about getting a

1815
01:51:54,600 --> 01:52:00,279
job in infrastructure, right a manufacturing plant or something, and

1816
01:52:01,159 --> 01:52:03,880
I was very excited about it, and I told him, like,

1817
01:52:03,920 --> 01:52:07,359
I think you should do this because you have a

1818
01:52:07,399 --> 01:52:13,399
shot at being management at the same time as so like,

1819
01:52:13,520 --> 01:52:17,520
right now, let's just say, I don't know, X Y

1820
01:52:17,720 --> 01:52:24,560
Z production company isn't very exciting? Okay, why isn't it

1821
01:52:24,640 --> 01:52:28,600
very exciting? It's exciting. It's not exciting because ninety percent

1822
01:52:28,840 --> 01:52:31,640
of production of X, Y and Z happens in China

1823
01:52:31,720 --> 01:52:35,760
and we're just a small guy. Well what happens if

1824
01:52:35,800 --> 01:52:39,000
all that production in China stops? Then you're not a

1825
01:52:39,000 --> 01:52:42,439
small guy anymore, and you're going to be a very

1826
01:52:42,439 --> 01:52:44,680
big guy. And now you're very close to the top

1827
01:52:44,720 --> 01:52:48,479
of a very big thing. The more guys that we

1828
01:52:48,520 --> 01:52:52,520
can get working at power companies. See, I don't believe

1829
01:52:53,239 --> 01:52:56,600
in the competency crisis. I don't. I think it's bullshit

1830
01:52:56,960 --> 01:53:02,359
and it's cope and before everybody like pillaries me if

1831
01:53:02,600 --> 01:53:07,680
Fortune five hundred companies have only been making two percent

1832
01:53:07,720 --> 01:53:11,279
of their hires less than two percent of their hires, right,

1833
01:53:11,319 --> 01:53:13,560
I get you know, more than one percent. I guess

1834
01:53:14,840 --> 01:53:23,560
straight white guys the most talented, highest propensity, like the

1835
01:53:23,680 --> 01:53:28,880
highest number of geniuses. Sorry, Jews, that's not you know

1836
01:53:28,960 --> 01:53:32,560
that you're not The a Q stuff is bunk. So

1837
01:53:32,800 --> 01:53:36,479
we're like the straight white guys, the smartest, hid we

1838
01:53:36,520 --> 01:53:39,960
have the highest number of geniuses. So you're telling me

1839
01:53:41,039 --> 01:53:46,119
that all of the major publicly traded companies won't hire

1840
01:53:46,359 --> 01:53:49,520
straight white guys like you know, the genius demographic. Okay,

1841
01:53:49,880 --> 01:53:54,840
well what about private companies? Well, private companies they don't

1842
01:53:54,840 --> 01:53:57,319
get to just issue bombs. They can't just you know,

1843
01:53:58,039 --> 01:54:01,079
borrow money from themselves and sell it to the market.

1844
01:54:01,079 --> 01:54:05,600
They can't raise money instantaneously, right. Private companies have to

1845
01:54:05,640 --> 01:54:11,520
go to big funds like you know, Larry Fink's Got

1846
01:54:11,600 --> 01:54:16,439
Get Shot or any of these other you know, Fidelity

1847
01:54:16,560 --> 01:54:20,359
or whatever. Right, And because they can't sell their own

1848
01:54:20,399 --> 01:54:26,199
bonds to the market, these institutions like Fidelity write black Rock.

1849
01:54:26,680 --> 01:54:29,720
They have much more leverage because a publicly traded company

1850
01:54:29,800 --> 01:54:31,319
like oh Black Red don't want to give me the money.

1851
01:54:32,000 --> 01:54:34,760
Black Rocks got five percent of my shares and is

1852
01:54:34,880 --> 01:54:38,039
being a count on my board. Okay, well, how much

1853
01:54:38,079 --> 01:54:41,880
is five percent of our shares worth? Susan? Okay, all right,

1854
01:54:42,920 --> 01:54:45,560
Well write that number down and go take that to

1855
01:54:45,640 --> 01:54:49,600
accounting and have them split up that many bonds to

1856
01:54:49,680 --> 01:54:52,039
equal that amount, and let me know when you're done.

1857
01:54:53,039 --> 01:54:55,640
And tomorrow, first thing, I'm gonna take that bond money.

1858
01:54:55,760 --> 01:54:58,479
I'm gonna buy all Larry Fink's shares and I wanted

1859
01:54:58,479 --> 01:55:03,720
my company more. Right, that's a possibility. But a private

1860
01:55:03,760 --> 01:55:07,239
company doesn't get to do that because he can't just

1861
01:55:07,279 --> 01:55:10,439
go tell Susan to go spit some bombs out to

1862
01:55:10,479 --> 01:55:12,840
the market and raise money to get Larry Fink the

1863
01:55:12,840 --> 01:55:13,920
fuck office cap table.

1864
01:55:14,159 --> 01:55:17,079
Speaker 5: But this is where Michael Milkin creating the junk bond

1865
01:55:17,119 --> 01:55:19,119
market is.

1866
01:55:19,119 --> 01:55:22,880
Speaker 1: It's much worse. If we think that two percent of

1867
01:55:23,560 --> 01:55:29,680
white guys being hired in public companies is bad, it

1868
01:55:29,760 --> 01:55:34,600
is probably worse in large private companies, and there are

1869
01:55:34,960 --> 01:55:38,000
five times as many of them as there are publicly

1870
01:55:38,000 --> 01:55:44,039
traded companies. So I would wager that the amount of

1871
01:55:44,319 --> 01:55:51,479
high value human capital that has been deliberately sidelined, right,

1872
01:55:52,359 --> 01:55:55,640
is way more than anyone's factoring, because only other stat

1873
01:55:55,760 --> 01:55:58,319
is that fucking fortune five hundred company one. All those

1874
01:55:58,319 --> 01:56:01,079
companies are public traded. But like Pete, like, let's just

1875
01:56:01,079 --> 01:56:02,760
say like two or three of the mutual friends that

1876
01:56:02,800 --> 01:56:05,880
we talk about, right, I bet you I could take

1877
01:56:05,920 --> 01:56:10,279
any one of those kids a right mid twenties. And

1878
01:56:11,279 --> 01:56:14,119
I don't care whether you're a fucking engineer at a

1879
01:56:14,199 --> 01:56:19,760
nuclear power plant, right or you make you know X,

1880
01:56:19,920 --> 01:56:22,119
y Z. You know, I don't know. I'm trying to

1881
01:56:22,159 --> 01:56:27,560
think the most high you know, risk type infrastructure things.

1882
01:56:27,720 --> 01:56:30,239
So let's keep using nuclear power plants. Let's just say

1883
01:56:30,239 --> 01:56:33,399
you're the guy that builds the reactor, right. There is

1884
01:56:33,479 --> 01:56:37,239
not a fucking job in that nuclear power plant, right,

1885
01:56:37,399 --> 01:56:39,840
or the manufacturing of the pieces that went into that

1886
01:56:39,880 --> 01:56:43,720
plant that I couldn't teach one of our mutual friends

1887
01:56:43,760 --> 01:56:46,960
in a year, right, Like, hey, go sit underneath this guy,

1888
01:56:47,159 --> 01:56:48,199
whatever his job is.

1889
01:56:48,680 --> 01:56:49,039
Speaker 4: Learn that.

1890
01:56:49,840 --> 01:56:52,920
Speaker 1: Every single one of those guys can learn whatever that

1891
01:56:53,000 --> 01:56:58,079
fucking job is in a year. So I don't see

1892
01:56:58,279 --> 01:57:03,600
a competency crisis. I see a misallocation of human capital crisis. Right.

1893
01:57:03,640 --> 01:57:08,279
But they're not dead, they exist.

1894
01:57:07,920 --> 01:57:08,600
Speaker 4: Well, So yeah.

1895
01:57:08,720 --> 01:57:10,520
Speaker 5: I mean, this is what I've been saying too, is

1896
01:57:10,560 --> 01:57:14,560
that somebody has to act as matchmaker between there's a

1897
01:57:14,600 --> 01:57:17,319
glut of weaponized autists who don't know what to do

1898
01:57:17,359 --> 01:57:20,680
with themselves and can't make any money, and then the

1899
01:57:20,800 --> 01:57:24,079
capital that wants to invest in those kinds of people

1900
01:57:24,399 --> 01:57:27,880
but can't find them.

1901
01:57:28,159 --> 01:57:30,520
Speaker 1: I think that capital exists, they just need to be

1902
01:57:30,560 --> 01:57:31,319
allowed to hire them.

1903
01:57:31,359 --> 01:57:37,840
Speaker 2: Again, we're running up on close. It's been going for

1904
01:57:37,880 --> 01:57:44,880
about two hours so and I mean we could pick

1905
01:57:44,920 --> 01:57:46,520
this up at a later date and I'm sure we'll

1906
01:57:46,560 --> 01:57:52,800
have a lot to talk about. So yeah, you guys

1907
01:57:52,800 --> 01:57:55,640
happy with a Happy with the conversation we've had so far.

1908
01:57:57,239 --> 01:57:58,840
Speaker 1: No, we didn't fix everything.

1909
01:58:00,079 --> 01:58:02,039
Speaker 4: It's still more to do, but it's a good start.

1910
01:58:02,119 --> 01:58:10,439
Speaker 2: Yeah, yeah, bastards both of you. All Right, I'll I'll

1911
01:58:10,680 --> 01:58:15,920
make sure to promote your your Twitter account, Sean like

1912
01:58:15,960 --> 01:58:19,720
I did last time. And do you want me to

1913
01:58:19,760 --> 01:58:22,119
point people to your Twitter account Stormy?

1914
01:58:22,399 --> 01:58:22,640
Speaker 4: Yeah?

1915
01:58:22,680 --> 01:58:27,000
Speaker 2: Sure, absolutely, all right, we'll do that because you've been

1916
01:58:27,039 --> 01:58:29,439
having some banger threads lately. I mean some ones that

1917
01:58:31,399 --> 01:58:34,159
you know, someone's putting out a good thread when like

1918
01:58:34,840 --> 01:58:39,600
people either love it or hate it. And yeah, I

1919
01:58:39,600 --> 01:58:42,479
think you're seeing a lot of that lately, so I'm

1920
01:58:42,520 --> 01:58:45,520
gonna sign off, thank you. We'll pick this up at

1921
01:58:45,560 --> 01:58:47,319
a later date, all right.

1922
01:58:47,359 --> 01:58:50,399
Speaker 1: You take care of no substack to shill or anything else.

1923
01:58:53,640 --> 01:58:55,920
Speaker 2: All Right, y'all take care of a good night.