E112: Is Davos a grift? Plus: globalist mishaps, debt ceilings, TikTok's endgame & more

Podcast Origins and Moderation:

• Jake Calacanis assumes the role of moderator for this episode, allowing David Sacks to recover from a respiratory illness.
• Sacks and Calacanis engage in a debate regarding the genesis of the show's format:
  • Calacanis claims he conceived the show as a modern "McLaughlin Group" style debate and named it "All In."
  • Sacks counters that the "all in" name and the specific concept of recording conversations at a poker table originated from Calacanis's background at CBC and his spontaneous collaboration with the others.
  • Sacks references a Tim Ferriss video titled "The Origin of the All-In Podcast" as the catalyst for their current dispute over the show's history, noting a legal agreement originally recorded by Ferriss.
• Sacks describes the group's dynamic as taking "three misanthropic malcontents" and making them palatable, while Calacanis and Sacks trade barbs about each other's worldviews and happiness levels, with Sacks characterizing Freeberg as "anxious but happy."

US Politics and the 2024 Election:

• Ron DeSantis:
  • The panel discusses the backlash against DeSantis's ban on AP African-American Studies in Florida, which critics argue violates the "Stop Woke Act."
  • Calacanis predicts this move will politically advantage DeSantis, citing a historical pattern where 70% of Florida supports his restrictive social stances (e.g., the "Don't Say Gay" bill).
  • Sacks identifies Donald Trump as DeSantis's primary threat, while also noting a new poll placing Trump at the top.
• Nikki Haley:
  • The hosts discuss Haley as a potential contender, with Sacks praising her as a "moderate, reasonable person" who governed effectively in a red state (South Carolina) and secured climate-related economic growth.
  • Sacks notes her ability to navigate Trump's influence, though he acknowledges her prior statement that she would not run if Trump runs.
  • Calacanis expresses interest in her, citing her background as a former small business owner and her success as a woman of color in a southern state.
• Glenn Youngkin:
  • Identified as the third-tier Republican candidate after Trump and DeSantis, Youngkin is praised for winning a blue state (Virginia) despite Biden winning it by 10 points.
  • Sacks warns Youngkin faces significant attacks regarding his lack of experience (only 18 months in office) and notes his term limits in Virginia force his hand for a 2024 run.
• Voter Preferences:
  • Calacanis, self-identified as a lifelong independent/primarily Democrat (75% Democrat, 25% Republican), states he would vote for a Republican candidate who prioritizes fiscal responsibility and spending cuts over social issues.
  • Calacanis expresses a willingness to support Republicans in a budget showdown and hold the line on the debt ceiling, citing "fiscal responsibility" as an existential risk.
  • The group agrees on the necessity of "stopping the spend" as a platform to counter populism, noting that voters are currently feeling economic strain (variable interest rates, mortgage hikes).
• George Santos:
  • Calacanis and Sacks unanimously decline to host George Santos for dinner, citing his dishonesty ("whack job") and potential for theft, with Calacanis noting he wouldn't even return an email.
  • Calacanis would prefer to host Alexandria Ocasio-Cortez (AOC) for a conversation, valuing the intellectual engagement despite political differences.

Fiscal Policy and Austerity:

• Sacks argues that fiscal responsibility and a strong national balance sheet are prerequisites for addressing climate change, social issues, and infrastructure.
• Sacks posits that austerity measures are more effectively implemented by female leaders (citing Margaret Thatcher) than male counterparts.
• Sacks notes the difficulty of electing politicians who campaign on "taking things away" rather than giving things, suggesting this structural flaw leads democracies to "eat themselves" through unsustainable spending.

Davos and Globalization:

• Reputation of Davos:
  • The World Economic Forum (WEF) is increasingly viewed as a gathering of "global elites" attempting to control the world, with a shift from excitement to a "somber mood" of anxiety regarding global management failures.
  • Criticisms include mismanagement of the pandemic, energy policies (e.g., organic farming in Sri Lanka causing economic collapse), and the "Davos Man" ideology (globalism over national loyalty).
  • Calacanis dismisses the event as a "membership-driven, revenue-generating effort" where attendees pay up to $250,000 to feel important, describing it as a "grift."
  • Sacks notes the term "Davos Man" was coined in 2004 by Samuel Huntington to describe globalists with little national loyalty.
• Globalization vs. Deglobalization:
  • Trade Dependencies: Sacks argues that unfettered free trade created dependencies, specifically noting that opening US markets to China enriched the country but also turned it into a geopolitical competitor by hollowing out US manufacturing.
  • Economic Trade-offs: Calacanis argues that deglobalization leads to higher prices (inflation) and slower growth but suggests the "equilibrium" point involves longer upgrade cycles (e.g., phones every 2-3 years instead of 1) and more resilient local economies.
  • Affordability: Sacks questions whether the US can afford the transition to deglobalization given 350% global debt-to-GDP ratios. Calacinis counters with "How can we afford not to?" arguing that economic vibrancy at home is necessary to quell populism.
  • Investment Horizons: Calacanis argues that current discount rates used by Wall Street (6-8%) make long-term infrastructure projects unviable; changing the discount rate (e.g., to 10%) or time horizon could make these investments profitable.
  • China's Advantage: Sacks highlights China's massive nuclear build-out (450 plants) aiming to drive industrial power costs below 4-5 cents/kWh, shifting the competitive base from labor to energy.
  • Strategic Response: Calacanis outlines a strategy of "playing hardball" with China by restricting inputs (e.g., semiconductor equipment exports from the Netherlands and Germany) and subsidizing domestic production in countries like India and Australia to balance the playing field.

Immigration and Talent:

• Calacanis identifies immigration and the freedom for entrepreneurs as the primary drivers of US prosperity, arguing the US is losing the "immigration of talent" race to China.
• The "Recruitment" vs. "Immigration" Distinction:
  • Calacanis proposes separating "recruitment" (highly skilled talent, PhDs) from "immigration" (unskilled labor).
  • He advocates for a points-based system (like Canada and Australia) where unskilled workers enter based on a "compassion" quota, while elite talent is recruited and granted citizenship.
  • Sacks argues that the "open border" reality and chaos at the southern border create a political backlash that prevents the implementation of rational, points-based systems.
• Political Polarization: The hosts agree that both parties conflate these issues for political gain, using extreme narratives (e.g., "desperate migrants" vs. "streaming across the border") to drive voter bases, rather than adopting the pragmatic, two-track approach used by Australia and Canada.

TikTok and Geopolitics:

• Security Risks: The group discusses the ban of TikTok on US campus networks and government devices.
  • Calacanis asserts TikTok is "spyware," citing its access to location, camera rolls, and address books, and notes a New York Times report where ByteDance employees accessed reporters' data.
  • Sacks and Calacanis agree that the Chinese government's "golden vote" and board seats in Chinese tech companies create a risk profile unlike any other nation, enabling potential state-sponsored disinformation and surveillance.
• Capital Implications: Calacinis predicts the enterprise value of ByteDance could drop by $70-80 billion due to regulatory pressure, advising investors to sell now.
• Structural Solutions:
  • The panel discusses a potential restructuring where "TikTok US" becomes a separate C-Corp owned by a US consortium, with ByteDance holding passive, non-voting shares.
  • Calacanis notes that a sale to a US private equity consortium would likely happen at a steep discount (e.g., $10 billion vs. a previous $120 billion mark) to account for regulatory risk and CFIUS (Committee on Foreign Investment in the United States) hurdles.

AI in Biotech and Pharma:

• BioNTech Acquisition: BioNTech acquired InstaDeep (a machine learning firm) for $600 million to accelerate drug discovery using AI for "in silico" testing rather than "in vitro" lab experiments.
• Business Models:
  • Sacks notes that traditional "seat license" models are insufficient for AI value capture; successful models may involve revenue sharing or royalties on drug outcomes (e.g., "Royalty Pharma").
  • Calacanis argues that the value of AI-driven M&A is decreasing because the technology hasn't yet proven it can significantly improve the "hit rate" of drug candidates.
• Vertical AI Applications:
  • Sacks highlights the potential for AI in dentistry (Pearl) and computer vision (RoboFlow) to outperform humans in diagnostics.
  • Calacinis suggests high-value opportunities in verticalizing open-source AI models for specific fields like accounting (preventing errors like the $20 billion loss at Americanas in Brazil).

Alec Baldwin and the Rust Shooting:

• The panel discusses the manslaughter charges against Alec Baldwin, with Sacks and Calacinis expressing skepticism about his liability.
• Both hosts agree the primary responsibility lies with the armorer, whose job is to ensure guns are safe and unloaded.
• They argue that the presence of live ammunition on a set is a fundamental safety failure and that Baldwin's producer title is likely a "red herring" regarding his legal liability for the physical production.

Science Corner (Aging):

• Sacks briefly introduces a Harvard study linking aging to the loss of epigenetic data integrity.
• He notes that Yamanaka factors and partial epigenetic reprogramming have demonstrated the ability to reverse aging in mammals.
• The detailed scientific discussion is deferred to the following week.

Closing Remarks:

• Calacinis concludes by emphasizing that the US must prioritize recruiting the "singular individuals" (innovators) who drive economic growth, suggesting a policy shift to focus on talent acquisition rather than open borders.
• The hosts wrap up with a humorous exchange about merch, a "big huge orgy" of ideas, and the recurring sign-off "Let your winners ride."