SpaceX-Cursor Deal, SaaS Debt Bomb, New Apple CEO, SPLC Indictment, Colon Cancer Spike

Jason, you are the—

Yes, ma'am.

—the unique person at the intersection of both the likely Epstein and the SPLC files. Do you have a comment?

No comment.

Do you have a comment, Jason?

No, I'm not in the SPLC files.

Yes, you are. Yes, you are. You're adjacent.

I'm adjacent on the vice files.

You're SPLC-adjacent. What does that mean? In the Venn diagram—

I thank you, though, for putting me in the crosshairs of all the weirdos.

He's got a really good way to self-select. I mean, it's great.

There's a reason why I'm carrying this, guys. Oh my God. What the fuck is going on? There's a reason why I carry a stiletto and a P365. What the fuck are you doing? There's a reason. If you want to jump the feds, feel free. JPal is ready.

What's going on here? You let your winners ride.

Rain Man, David Sacks.

What's going on here?

And I said—

We open-sourced it to the fans, and they've just gone crazy with it.

W. Wesley, queen of Kennebunk.

What's going on here?

All right, everybody, welcome back to the greatest podcast in the universe, episode 270 of The All-In Podcast, your podcaster's favorite podcast. With me again, your sultan of science, David Friedberg, the Dick Tater, Chamath Palihapitiya. And yeah, the Rain Man is back. Yeah, it's definitely David. David Sacks. He's definitely in D.C. with POTUS. POTUS lets him drive in the driveway. Sacks, what's going on? You pushed back, you big-shotted the entire crew, and pushed the show back an hour.

Simple text. He's like, “With POTUS. Start at—”

It's unbelievable.

“Start later.”

Okay. We'll just wait.

Okay, okay, Daddy. Look at him. All right, all right, big shot, what's going on?

No, look, I was in D.C. today—

Mm.

—and I was at the White House, and I just asked if the president had time, and he made time. We did have a little meeting, and so we did push back the pod for that. One thing I just want to say is what a pleasure he is to deal with. When I read in the media, they're always describing him in a certain way—that he's yelling at people, or he's moody, or something like that—and that's never, ever been my experience with him. He's always pleasant to be with. He's always genial.

Super charming.

He asks questions. He's interested in the subject matter. It's just a completely different portrayal. I don't get where the media's coming from at all on this.

He's charming AF. Let's just call it what it is. He's charming.

Totally.

He's charming.

Totally. I mean, maybe if you double-crossed him, maybe. I don't know. But I've just never seen any evidence of how they describe him at all. And I think on our issues of AI, we're really lucky that he's the president who's in the White House when this AI revolution is happening.

I mean, do an alternate history, Sacks. What would happen if Kamala Dingdong was in right now and we'd have no data centers?

We'd have no data centers, and they'd be using AI to censor us. They'd be promoting DEI values through AI. That was in the Biden executive order. President Trump just wants the country to win and be successful, and he doesn't have these doomer neuroses about it.

That's not to say we don't support any regulation at all, but we should have specific solutions for specific problems, as opposed to cowering in fear over this and just trying to halt all progress. I think a really good example of that was his idea around data centers, where he said over a year ago—before data centers even became a hot political topic—that we should let our AI companies stand up their own power generation behind the meter. That's a much better approach than the Bernie Sanders approach of just shutting everything down.

So I think we're very fortunate that he's the president during this critical time in developing this technology. Like I said, he's always been interested in it. He talks to a lot of business leaders. I'm always impressed with what he already knows. He listens to all the top guys in the industry, and he synthesizes what he hears. I think he's very good at that.

He was talking about the Anthropic guys, and he was like, “These are brilliant guys.” He was giving them credit for how genius they were and saying that they were working on a deal. Any insights there about the relationship between the White House and Anthropic?

I thought what he said was very balanced and accurate. Like you said, he said that they were very smart guys. They do have a great product. I've certainly acknowledged that. He also said that they were very left-wing, but that was something we could work through.

Mm.

It didn't have to be a deal killer.

Yeah.

He said they tried to tell the Pentagon what to do, which the Pentagon didn't like. But in any event, he wants American companies to be successful, and I think he genuinely really does like high-IQ people. He says it all the time, and people think he's joking, but I actually think it's one of his core convictions: He just really likes smart people. He likes being around smart people.

Loyal people, smart people, people who are good on camera seem to be the three circles. And hey, Sacks, you fall into two of the three. All right, let the audience figure that out.

1. SpaceX Partners With Cursor

Topic 1: SpaceX has signed a huge deal with Cursor. You know Cursor—that's the AI coding startup. They really define the category. xAI and Cursor are building and collaborating on a new AI coding model that would, quote, “be the world's best coding and knowledge-work AI.”

Here's the deal as it's been explained. SpaceX will either buy Cursor by the end of 2026 for $60 billion, which is $10 billion more than they were rumored to be raising at, or it will pay Cursor $10 billion for their collaboration. Bloomberg says you can think of that $10 billion essentially as a breakup fee, so I think it's fait accompli that this deal is going to get done.

Cursor's run rate was $2 billion at the end of February. This is a money-printing machine. They expect to end 2026 with a $6 billion run rate. They're going to triple it. SpaceX's projected revenue is between $22 billion and $24 billion in 2026, so this is quite accretive to the revenue story at SpaceX and at the IPO of SpaceX, which is now targeting a valuation of $2 trillion.

That would be trading at roughly 80 times top-line revenue, which people would say is a high valuation, but you could also measure it against the opportunity. Cursor's valuation would be 30 times, so this is a good deal, I think, for everybody at the end of the day.

Cursor started, I think, by being built off Anthropic's LLM. You could previously use any LLM on it, but in March, Cursor released the second version of its proprietary model, Composer 2. It's ranked pretty high right now. It's between GPT-4.5 and Opus 4.6, as you can see on the screen.

The key part of the story here is that Elon has 550,000 GPUs in Colossus. He's scaling up to 1 million, and then, of course, he's going to bring it to space. So if you believe that infrastructure matters—and it's pretty clear it does—this is incredible for Cursor, which has been compute-constrained. This is peanut butter and chocolate if you put these two together.

I predict that this is going to move SpaceX, xAI, and Cursor to the front of the coding leaderboard within 12 months. That's my prediction. Chamath, a shareholder in SpaceX via the acquisition of the Starlink company that you were a backer of, what are your thoughts?

The acquisition was essentially negotiated, and the way that it's structured is so that the S-1 doesn't go stale. So I think the way that it was announced has more to do with the fact that they don't want to slow down and have to rewrite parts of the S-1, redo the disclosures, or redo the risks. And so I think what you're going to see is that this will get done. In fact, the deal is effectively done.

Mm.

But what's so smart is, where is SpaceX today? Let's call it $1 trillion. Where could it be? Just for the purpose of this argument, let's say $2 trillion. So when the deal gets done on a stock-for-stock basis, it's going to be—if, again, it's $60 billion in tomorrow's dollars, effectively Elon has gotten a 50% discount.

And what has he bought? He can issue $60 billion of stock at a $2 trillion valuation and get a model and a service that I think is extremely compelling in coding, which is where we know all of the immediate and short-term revenue gains are. It's also patterns that are hard-fought and really valuable in reinforcement learning.

He gets all of that, and then he gets a very crack team. We've known for a while that the Cursor team is absolutely excellent. If you look at the Groq usage, it shows why he had this excess capacity. There was a moment when Grok had a very steep and very aggressive discount on its output tokens, and in that moment, there was a lot of experimentation and usage. Over time, that sort of went away.

So there was a lot of capacity and relatively low utilization, I think, inside Colossus. He was able to turn the whole thing around in a jiu-jitsu move and basically acquire the most interesting and valuable third-party wrapper service in AI right now.

So, the fact is that they got it, effectively, I think, at this price for $30 billion. I think it was a really good deal. Really smart deal.

Okay, Sacks, your thoughts, if you want to unpack it a bit. Under that framing, I think it'd be interesting for you. If we were sitting here 3 years ago, the Biden administration didn't invite Elon to the EV summit, and the SEC and other organizations—Delaware—they were explicitly involved in lawfare. They were trying to put Elon in prison, and here we are: the most important companies in the history of the United States—SpaceX, xAI, and Tesla—now on the verge of creating the greatest products in the history of humanity, between SpaceX's clusters in space and Optimus. Your thoughts?

Well, you're right. I do remember a press conference where Biden said, “We gotta look at the sky.” On the heels of that, the DOJ brought a lawsuit attacking the company for not hiring enough—

No, SpaceX.

…asylees. Remember that?

Yeah, exactly. SpaceX, which they can't under ITAR.

They couldn't, exactly, under ITAR. Anyway, that's all ancient history, so let's put that behind us. Look, I agree with your guys' analysis on this. I think these 2 companies are very complementary.

Cursor obviously is very strong in coding. That's what it brings to xAI. xAI brings compute, and they bring a foundation model. The problem that Cursor had is that even though coding is the white-hot area of AI right now, when it got started, it was really competing against generalists in the form of OpenAI and Anthropic. But now those generalists have decided to vertically integrate in this area of coding, right?

Hmm.

And so Cursor's now competing against Claude Code and OpenAI's Codex. They were dependent on foundation model companies that were getting into the business of competing with them, which was just not a good place to be, right? So now they have this new alliance with a different foundation model company, which also brings the compute. It just makes a lot of sense.

Cursor brings to xAI the training data, a lot of enterprise clients, and the experience in coding, and I think this will accelerate xAI in this area.

Sacks, do you think they're going to dump Kimi K2.6? I think Cursor Composer 2 uses the Moonshot model. There's no reasonable way that Elon is going to pay $60 billion and not run on top of Groq. I gotta think.

It seems like it.

Yeah.

Likely, but I don't know.

2. The IDE Becomes The Moat

I think it might be tough depending on the users. One of the things that makes Cursor so good is they've got—

No, wait, wait. Say more on that. What do you mean?

I think different developers want to have choice in that sense. There's a toggle. One of the things that's really good about Cursor is they've got this very well-built-out IDE, this application layer that puts them, probably from a UX perspective—meaning developers are using the tool—above Codex, above Claude, above anything else.

You can use a third-party IDE and integrate the models or integrate whatever other third-party service you're using. But I would imagine that developers are going to want to continue to have at least some choice on what's actually writing the code for them. The thing that people are waking up to in the last 120 days is just how much of the value of AI is being realized by writing software. We've got this wrapper term; we call them agents, but agents are fundamentally just quickly spun-up applications.

But for all of them, as we're realizing very quickly, you end up making too many agents. They end up being super inefficient, they need to be engineered, and you still need to have a strong software engineering capability and competency to fix all the agents, to build all the harnesses, and to make everything work well together. That's why having a strong developer environment, a strong IDE, actually solves the biggest problem.

So eventually, all the enterprises that are getting hot and heavy on agents are going to be like, “Whoa, wait a second. We've actually got to fix how this is all being done,” as we saw this week in that story with Amazon, where there's, like, a million agents being spun up inside, and everything's wasting resources: redundant data creation, redundant data stores, redundant API calls, et cetera. Tons of money is being wasted.

So you still have to centralize; you have to have good software engineering talent that's making good infrastructure and good use of these agents. That ultimately will require an integration of the AI tooling with a standard software engineering front end, which is the IDE that Cursor has. So I think that's probably where everyone's waking up to the fact that having the software engineers may end up winning you the arms race here, and it seems pretty smart for Elon to buy Cursor.

Well, another piece of it: you mentioned Kimi K2.6.

K2.6, yeah.

Yeah. I think one of the things that's going to become a priority over the next several months is this idea of optimizing, because enterprises' token bills are going through the roof right now. I mean, month over month, they're spending increasingly large amounts because their employees are just building more and more software, but I'm not sure that anyone's been incentivized yet to be efficient about it.

It really only makes sense to go to a frontier model for a frontier task. More mundane things could be done using an open-source model or a less—

Totally.

—expensive model. And I think, like you're saying, whether it's the IDE or something else, there needs to be some sort of middleware that determines which model you go to, how much you're willing to spend, and what the most efficient way of getting the tokens is going to be.

I am deep into playing with xAI's suite of products, and I would predict we're going to be sitting here in 6 to 12 months and they are going to be dramatically, dramatically improved.

3. AI Cybersecurity Enters The Race

Let me just flag one other area that I think is maybe the white-hot center within this red-hot area of coding, which is cyber. I think Mythos has woken everybody up to the potential of frontier models to be a weapon that can be used by either cyber offense or cyber defense.

Now, the issue with Mythos is that it's very large and expensive. It's something like a 10-trillion-parameter model, and there's a lot of reports that Anthropic just doesn't have enough compute to be able to serve it. I'm not sure it was ever built to be a commercial model, to be honest, because I just think it's so big and expensive. But I think what'll happen is these companies will start training dedicated cyber models.

Let's say Mythos-comparable models, but with a lower token cost. I think there's a real race on right now to get those products to market because I think IT departments and CISOs are very worried about the risk of hacks right now—AI-powered hackers. This may be the hottest part of the market over the next 3 to 6 months.

Mm.

Polymarket says all this is fait accompli. SpaceX acquiring Cursor: 74% chance. SpaceX IPO by the end of August: 80% chance. So this is happening, folks. All right, let's keep moving.

By the way, I think that deal structure is smart because, I mean, to Chamath's point, yeah, it prevents the IPO process from being disrupted. Also, it kind of gives a huge motivation to these Cursor guys to bust their ass and make it work over the next, I don't know, 6 months. Yeah, they have a $10 billion breakup fee, but I'm sure they want the deal to be successful.

Well, the $10 billion breakup fee will go back to SpaceX anyway, because if they actually run the compute and they're not owned by SpaceX, they're going to have to pay for it. That is not cheap.

I mean, we saw a bunch of these xAI co-founders leave after the acquisition by SpaceX. I don't know if that was the reason why, but all of a sudden they're sitting on SpaceX stock and they may have felt like they had it made, you know?

Yeah.

Which is always a problem. It's always a problem with M&A.

This Cursor thing came about pretty quickly because—

Okay.

Let's just say friends of ours who were supposed to wire into that round were like, “Where's the wiring instructions?” It all just evaporated.

Here's a tweet from Elon. We don't have to speculate too much here. Sacks, he was very clear that xAI wasn't built right the first time around. The quote: “xAI was not built right first time around, so is being rebuilt from the foundations up. Same thing happened with Tesla.” That tweet is from about 5 weeks ago.

How crazy is it that when he tweets he gets 50.8 million views? It takes the 4 of us 7 months to get 50.8 million.

It's unbelievable, the distribution he has.

Well, also, how many CEOs—

Oh my God.

—would just fess up like that and say, “Yeah, we didn't do it right the first time. Now we're rebuilding it”? Most—

It's really incredible.

He's a magnet for talent. He's a magnet for the right kind of talent, and the SpaceX talent has his philosophy. He inherited, I think, a lot of maybe people from xAI or Twitter that were not in his mold, and they're clearly getting aligned. It's also going to make his day-to-day life much easier when all of these things are occurring in the same building with the same team.

The continuity of not having to task-switch between companies is going to be great. We talked a little bit about the possibility of Tesla and SpaceX merging.

Even Walter Isaacson is now on the Tesla–SpaceX merger train.

Hmm. There you go.

He just did a pod. Everybody's confirmed it. It's going to happen. We called it here first.

4. SaaS Debt Bomb Hits Private Equity

Okay, topic 2: Is there a SaaS debt bomb in private equity? Thoma Bravo—we had Orlando Bravo at the 4th All-In Summit last year—is nearing a deal to hand its portfolio company, Medallia, over to its creditors. This is a SaaS customer-experience company. Thoma Bravo acquired it in 2021 for $6.4 billion, all cash, at the top of the market.

As part of the deal, they incurred $3 billion in debt. For background, in 2021, this company had $470 million in revenue, growing 20% a year. Earlier this month, Bloomberg reported that Thoma Bravo's debt-servicing costs for Medallia were about to triple, from $100 million a year to $300 million a year. Blackstone and other firms refused to extend a lifeline to the SaaS company, so it looks like Thoma Bravo just handed the keys back and wiped out $5.1 billion in equity.

Chamath, your thoughts? We've been talking about the SaaS headwinds for a bit. You've been quite vocal about it.

Well, first of all, I think Thoma Bravo is an unbelievably well-run organization. Their returns are bonkers, and Orlando's a really, really, really good investor.

So what do I think happened? I suspect that they probably got enough of their equity, if not all of their equity. There's probably a decent chance that they did at least 1 or 2 dividend recaps in the last 5 years. If I had to guess, I suspect that they have a positive return. It may not be the return that they would want, and so turning the keys over becomes easier.

Because you have to remember, in private equity, the entire playbook is for transformations of assets that are at some point not working. It's very rarely that they're buying the same kinds of businesses that the 4 of us would buy, which is this clean, white-sheet, de novo, grow-at-all-costs kind of business. They have operating partners and all of these other people waiting in the wings to unfuck situations. That's the whole playbook.

Hmm.

So to turn it over, I suspect, means that there is a core rot that people couldn't fix, combined with the fact that they have probably gotten enough downside protection that it's not a huge thing for them.

This is an issue for the bondholders, and that may flow through to the borrowing cost that Thoma Bravo has to pay, maybe, for a subsequent deal. I don't know, but I doubt that they would just walk away from a business. I suspect they probably got most of their money out.

I don't know if that's true. There was someone who published some internal data showing that the sales team was at 18% of target at Medallia. Do you guys know what this company does, Medallia?

Customer support is the general arena, and customer experience.

No, customer-experience management.

Yeah, it's like surveys.

I don't know what that means.

Yeah, they'll basically send—like, you go on Caribbean cruise ships, and you get a survey afterward. Then they use that survey data to provide management insights and operational insights to the leadership team and the operating team on how to improve the quality of their product or their service. So it's sort of like this feedback-surveying loop.

If I were to tell you guys, "Hey, you want to build a feedback-surveying loop to run your business better," are you going to buy SaaS today, or are you going to ask your AI to spin up an agent for you to do that? I think that's a big part of what's happened: all these sorts of companies where the alternative to buying a SaaS product is to spin something up internally, and it's much cheaper and easier to spin it up internally. You get a custom workflow.

No, I agree with that.

Yeah.

I'm just saying—

And so I think—

In the last 5 years, you think they sat on their hands and didn't take a dollar out? They're not that dumb.

Maybe they took cash out, maybe they didn't, but there was still a big debt overhang, and the debt's clearly gotten impaired, which means that the equity—

No—the debt holders—

Yeah, the equity—

The debt holders are clearly screwed here.

Yeah. And—

The question is: Is Thoma Bravo screwed? I would say that if they sat around for 5 years, that's not their style. They generate too much money.

Hmm.

They're too good.

So they may have taken cash out and covered some of their costs, but the equity got fully impaired, and then the debt is clearly impaired, because you can see how the debt and the CLOs are trading, which indicates that this business is just not doing well.

Then someone else on Twitter posted some internal information from Medallia saying the sales team is just not hitting its targets. They're way, way off their sales targets, which I think speaks to the underlying problem here.

Yes.

Which is that all of these—

No, unpack that. Yeah, please.

5. AI Deflation Breaks SaaS Economics

Yeah. So the underlying problem is that these businesses in the SaaS space, where you're driven by net-new sales every year—how many new customers are you signing up?—then you're trying to manage retention, increase sell-through, and retain customers, they're just having a really hard time sourcing new customers, and there's probably higher-than-modeled attrition.

That's right.

When you have a historically predictable business where you can say, "Hey, I've got a net revenue retention of 118%," or what have you, meaning I'm selling into my install base by 18% over what I'm making last year, and then I'm signing up new customers, you can lever that business. You can borrow money against those cash flows because it becomes predictable.

What's happened in the last year in particular is that agents have become so good, so fast, and so cheap that many enterprises can simply spin up an alternative to a vertical SaaS solution, and that's crushing the sales team's ability to sell in. That's who you're competing against.

Now, I want to make one point and link this with something else that happened this week, and that's Kevin Warsh's hearing for Federal Reserve chair. Kevin Warsh went and talked a lot about the deflationary effect of AI. I actually think we all talk about the SaaSpocalypse as if it's this isolated business phenomenon where these SaaS companies are getting blown up.

I think another lens to look at what's going on is the incredible deflation in how much it costs to successfully run a business, and you don't have to pay a premium price for SaaS products anymore. Meaning that that piece of the business—

That's right.

—can suddenly get much cheaper. AI is delivering on its deflationary promise.

That's right.

I'll just say one thing about what Warsh said. Warsh spoke a lot about the deflationary evolution promised by AI, and that he expects it will drive productivity growth like we've never seen before. But he said, "I don't know what that's going to do to the job market," that there may be a dislocation between that productivity growth being realized and how the labor markets are going to be able to respond to those things.

Fundamentally, he's saying that we're going to see economic deflation. The problem with economic deflation is that when it occurs, it means some businesses are seeing their revenue go down. If that segment of the economy is levered—if they have debt sitting on top of that piece of the economy where it's supposed to always, always, always grow, like a SaaS company's top line is always supposed to grow—suddenly that debt gets impaired, and that can have an adverse economic ripple effect.

But what he's pointing out is that, as a result of deflation, because it's not coming from some cost-cutting or economic contraction, the deflationary forces ultimately lead to economic expansion because other parts of the economy will now grow. So if I can suddenly cut, call it, 50% of my SaaS budget, and I can reinvest that capital in other ways of growing my business instead of managing my expenses, all of a sudden my enterprise will grow and the economy will grow.

He also said, as an aside—and I want to make sure I cover this—that the way we've been measuring inflation is wrong. He doesn't agree with the way the Fed has been measuring inflation, because you can do a survey of any household and they'll tell you, "My God, everything's so expensive." So all of the indices and bullshit that are being used to calculate an inflation index are completely misrepresenting what the average American is actually feeling.

He wants to rethink how the Fed is addressing inflation from an interest-rate perspective, but he does think that the overall economic picture is one of deflationary pressure and productivity gains coming out of AI.

Sacks, I'll drop this off to you. I think it's pretty clear what's happening here: SaaS's loss is the token dealer's gain, right? Startups are now—and we always see it—they're the tip of the spear. They're writing their own tools. They're making their own dashboards. I see that every day.

If you look at the SaaS Product Index, here it is: Salesforce is down 32% in the past 6 months.

Shout-out to bestie Benioff, the best guest we've had at the summit, huh, Sacks? ServiceNow is down 54%, Snowflake is down 43%, Adobe is down 33%, and Figma, which had a huge IPO pop, is now down 67%.

So what is the role of venture capital and then private equity in addressing the software market? Software was eating the world. Now tokens are eating the SaaS business and the software business, yeah?

Well, I'm of 2 minds about this. I'm going to talk about the opportunity for private equity. Let me back up and just say that, historically, we only had 2 good exits for software businesses. One was an IPO; the other was M&A.

Then these big private equity shops came along and gave us a 3rd potential exit, which is that you would sell to them, and then they would raise the capital based on, I don't know, 1/3 equity and 2/3 debt. So it was debt-financed buyouts.

That's something that's been around in, let's call it, the non-tech part of the economy for a long time, but it was a relatively new entrant into the world of technology. The reason for that is that if you're going to debt-finance a purchase, you need to have very stable cash flows, because if your cash flows miss and you can't pay your interest on the debt, then you're going to lose all your equity because the debt holders will foreclose.

So, in order to do a debt financing of any kind, you have to have very predictable cash flows. It was believed for a long time that software did have those predictable cash flows, at least for the mature businesses—the ones that were at the stage where they could IPO as a potential alternative. So it was a very attractive thing.

Like I said, I think it was great to have that 3rd option. I'm of 2 minds about where the private equity business is today. On the one hand, the pricing now has got to be super attractive for them. I mean, we're seeing public SaaS companies that are—

They're free.

—doing $1 billion—

They're free.

—of ARR—

They're free.

—with 80% gross margins, and they're trading at 3 times ARR.

Yeah.

You know?

You can buy a dollar for 50 cents. So is that an opportunity, Sacks? Do you think we've hit rock bottom? We should do a roll-up?

Well, that's what I'm thinking—

Well, on the one hand, I do think that the pricing has never been more attractive if you're a private equity shop looking at a business like that. I mean, those companies used to be valued at 13 times ARR; now it's 3. I'm talking about a category leader. Now, the downside of that, just—

By the way, Salesforce is off 9% today. I don't know if you guys saw this, but the market's absolutely tanking today after the Medallia announcement came out.

Right. Okay. So I said I'm of 2 minds about it. I would be bullish for private equity just based on pricing, but the bearish part is that, in order for their business model to work, you have to have predictable cash flows.

You can't have a SaaS company go from, I don't know, 120% net dollar retention one quarter to 80% net dollar retention 6 months or a year later because a big part of their customer base has attrited to using tokens, right, or to basically creating some bespoke software.

You just said the absolute critical thing in all of this, which is that you have to have predictable cash flows. I think what happens is, when you're a startup, you typically have to figure out how to price disruptively to enter the market. So you're like, “Okay, if I deliver $10 of value, I'm going to charge $1.” That's the normal playbook, a 10% ratio of price to value, right?

The problem is, when you start to stack venture capital into it and then stack growth equity into it, what you're effectively creating in the preference stack of your company is a higher return hurdle. You've got to clear $300 million, $500 million, $1 billion of pref, and then you have to return 15% or 20% on top of that.

So what do people do as they raise more money? They increase price. But the problem is, at some point, when you increase price, you engender a ton of competition and put a huge target on your back.

Private equity is the last stop because when they come in and layer in billions and billions of dollars of not just equity but also debt, that has to then be completely predictable and paid back. Their only lever is to raise price. They can never cut price to take share; they can't underwrite that to pay back their debt holders.

And so, Sacks, part of the big problem here and why nobody wants to touch these companies is that they are overpriced. Yes, they're making $1 billion of ARR, but the unit cost has gotten out of control. It used to be 10% of value. It's probably now 30% of value, and everybody's looking at their contracts thinking, “Well, when it comes time to a renewal, I'm going to just cut this in half, or I'm going to cut this by 2/3, or I'm going to cut this by 75%,” because the value isn't there anymore.

Or they can threaten to leave and negotiate a better deal.

And it becomes even worse because the minute you make these products headless, right, and say, “I'm just going to communicate with these products via MCP and with agents,” you can't charge on a per-seat basis. What do you do then?

Friedberg doesn't need 50 seats of Workday. He needs 2 seats because the agents act as the way to write in and out of Workday. So he wants to pay for 2 seats, not 50. And then if you multiply that by 1 million companies, that's what gets us to this place where it just feels like a falling knife.

I think it comes down to these unit costs. The unit costs and the price-to-value of these products are out of whack with what the market needs and wants. Until they reset that, or you find new products that can do it cheaper, we're not going to get a cleansing and a clearing here.

Yeah, I think it's—

By the way, Salesforce today is down 9%, with a $140 billion enterprise value on $15 billion of free cash flow. This thing is trading at less than 10 times free cash flow. It's unbelievable.

I think it might be a bargain, to be honest.

Yeah.

It sounds like bargain hunting. What if Benioff, who's the king of acquisitions, just starts cleaning up and buying some of these?

Well, we didn't put this on the docket—

Well, he's been buying his own stock.

Yeah, and we didn't put this on the docket, but did you guys see his headless product announcement?

Yeah.

Did you see this? It's actually very decent.

It's very smart.

Yeah. I mean, there are ways that that business can maneuver, right? I think they're pretty unique. It may be that, of all the businesses in the landscape, the ones that have that scale, that have that multiproduct platform, that have a lot of your data, there's a lot of opportunity for them to maneuver their way into an evolution of the business.

Benioff's the first one. If you look at it and compare it, for example, to other companies, I think the Workday response was to say, “You can't have an AI interact with us without paying some kind of toll.”

You're exactly right.

Whereas Benioff is the exact opposite, which is—

Totally.

He's like, “Okay, we're going to go headless for the whole thing,” which is brilliant.

You're exactly right. I think that's going to be the distinction between the winners here and the losers. Are you on the wrong side of this?

The problem is that we have to figure out what the bottom clearing price is, and that has nothing to do with business quality. Is Salesforce a good buy at 10 times free cash flow? Historical artifacts would tell us a screaming yes.

The problem is that if you cut everybody's cash flows off at year 5 or 6 or 7, then all of a sudden I think you see the natural compression to between 3 and 5 times free cash flow. And that has nothing—

Dude, that's crazy.

—that has nothing to do with business quality. That just says you literally mathematically take year 7 through N of the future and discount it to 0.

And having free cash flow in a war chest gives massive optionality. We've seen this with Salesforce. We've seen this with Apple. We've seen this with Meta, with Google, with Uber. Just having massive free cash flow—when you've got tens of billions of dollars, you can put it to work, and you can weather these storms.

By the way, JCal, I think another—

Well, assuming you're not in debt.

—another way to think about this is, to the question about maneuverability and who has the gumption to make the hard choices right now—

Yeah.

Look at Benioff. He's the founder of the company. He's run this thing since its founding, decades ago. He is willing to bet it all. He's willing to make the change, and it may be that the index you buy in this era of AI transformation is the index of founders—that the founders who are still running their businesses are going to be the ones who are most likely to see the future.

They can burn the boats.

They'll burn the boats. They'll maneuver. They'll make the changes.

They can call code red.

All of the guys who have hired managers to run the business are going to do the things that Chamath is talking about, which is try to charge fees and try to maintain the old way of doing things, as opposed to reinventing for the new future.

If you look at the 10-Ks, if we could figure out what the unit price, cost, trend, and inflation are of a per-seat license for these products, I will point to the ones that are going to die first.

Can I make 2 quick points?

Yeah, wrap us up.

Yeah.

One is, yes, I fully endorse what you said about Benioff. He's made every previous wave work to his benefit, whether it was social, mobile, big data, all that kind of stuff. What are the odds he's going to make AI work to his benefit? I'd say pretty good, so his stock might be a bargain right now. That would be point number 1.

6. Venture Debt Becomes Debt Prison

Just a quick thing about venture debt: I think it's fine when private-equity guys use it because they know what they're doing. But I've always hated when founders take on—

Ugh, the worst.

Venture debt, and I know, JCal, you agree with me. Part of it is that founders forget they have to pay it back. They treat it like venture capital, and they forget about that, and then they get surprised. But the other thing I've never liked about it is that it makes you more fragile. It subjects you to a bunch of business covenants, and it makes it harder for you to do an abrupt shift in your business because now you've got a bank looking over your shoulder. They want to make sure they get paid, and they have to review your financials and all the rest of it.

And to your point, JCal, the companies that have free cash flow right now are the ones that have the most maneuverability. I hate taking away maneuverability from founders, and that is what debt does because it subjects you to a fixed schedule of payments. This is always a thing to remember, whether you're a business or an individual: when you put on that debt, it makes you more vulnerable to big disruptions in the market.

Yeah, you become incredibly brittle. Founders who are listening, in peak markets, peak ZIRP, you're going to have venture-debt people offer you tons of cash. The problem Dave and I saw up close and personal in many different companies was that the founders would look at it like, “Well, I'm extending my runway.”

If you're a hot startup, there's always more venture capital. There's always more people who want to own equity. The equity sale gives you optionality, and you have more people on your team, more people rooting for you, and people aligned with equity interests, as opposed to now having a debt instrument. They have a different goal. They have different downside they're trying—

No bank wants to be your last 3 to 6 months of runway. That means that in a high percentage of cases, they're going to lose their money. So they're built to try to avoid that.

I have never seen venture debt work well to improve the quality of a business.

No one has.

Never. It doesn't work.

I have only ever seen venture debt lead to crap that damages companies. And if you get venture debt, you can never actually use it.

100%.

So the venture-debt investors that ultimately make money do so because they put money into a company and the company never actually used the money they gave it. I hate this business. I think venture debt is the worst, vulture-like business in Silicon Valley.

Right.

It's terrible.

And if the last money in the bank is the debt you owe to the bank, they're going to rug you. That's when you get rugged. You think they can afford to lose 100% of their money when they're getting an 8% return or something like that?

100%.

No way. That's not how it works. VCs can afford that because we have the opportunity for a 10X, 100X, or 1,000X moonshot, so we can accept a bunch of zeros. The bank can't accept a bunch of zeros.

Well, when they do get scared, and when they do think they're going to lose their money, wait until you see what they extract in terms of value—what they ask for. They'll double the interest rate. They'll ask for warrants. It's basically like being in debt prison. Chamath, you can talk a little bit about your experience when you were in debt prison. It's not going to be pleasant.

I've been in debt. I've had a $420 million credit line. I had a moment when it was reflexively collapsing inward because the assets I was using to secure it shrank in value during a moment of market disruption. I was scrambling, and at the same time, there was a risk. It was the worst moment of my professional working life.

I had a couple hundred million dollars sitting at Credit Suisse, and they were about to implode. On a weekend, I was trying to figure out whether my money was still there.

Oof.

I've always had this rule: don't have debt. Then I violated it to try to run the number up. I almost got run over. I almost lost everything. I will never do it again. If I ever do it again, if you guys ever hear me do it again, please come and punch me in the face.

We will. We've been waiting for an excuse.

Yeah. Can we punch you in the face for other things, too?

Yeah, please.

Buffett has this line about—

Yeah.

This is how—

Absolutely.

Smart guys go bankrupt: They take on debt.

Debt equals prison, bitch. Keep it in your mind, guys. You will be a bitch.

Unless you socialize the debt, and then everyone thinks it's okay, which is what we do with governments, and that's the problem—

Okay, take it easy.

With governments. Don't get started.

He's going to start going off.

Yeah.

Ooh, don't push the button.

Yeah.

All right. Listen, we gotta talk about Tim Cook—

By the way, another quick aside on that. In the 1950s, all the corporations in America had pension plans where you would get some guaranteed payout at the end when you retire, and they were all like, “We're all gonna go bankrupt,” because a pension plan is either significantly overfunded or underfunded. If it's underfunded, you're bankrupt. If it's overfunded, you've wasted all this money. You can't do anything with it.

So they all moved to 401(k)s, and everything got moved to defined-contribution plans, except governments.

Yes.

And that's because government employees formed public-employee unions.

Bum, bum, bum.

They're like, “We wanna keep the pension plans.” And now the pension plans, it turns out 70 years later, are gonna bankrupt all the governments in the United States. That story—

That guy Spencer Pratt, who's running for mayor, started uncovering all of the salaries of the union folks and their pensions in Southern California. It's bonkers. They're making $400,000 or $500,000 a year right before they go on pension, then they double their overtime and they get 2/3 or 1/2. The pension doesn't work. You gotta go to a superannuation fund. I don't know how many times we've talked about it here, but—

You don't need a superannuation fund. You just need a 401(k). Let people have an account, and they've got their money in their account.

Sure.

Yeah.

Yeah, but it's just a way to force people to contribute to it. So a forced 401(k) is different than a 401(k). You gotta force people, and you're not allowed to force—

Yeah, I get it.

People into the 401(k), as you know.

Listen, as we've seen in California, everything related to the government is a giant grift. It's a giant scam. There's tons of fraud going on. We've talked about the homeless industrial complex: $12 billion a year to homelessness, but the number of homeless keeps going up. There's a million examples like that.

The racism industrial complex.

Yeah.

We'll get to this topic.

Maybe it's a good time to shift to the SPLC, because I think that's a good example.

We'll get to it. But you know what's even better? You can just pass a law like the Nick Shirley Act, and you can put your fingers in your ears, cover your eyes, and say, “La, la, la, la, la,” and just pretend the fraud isn't happening, which is their reaction in California.

How much fraud has Nick Shirley uncovered so far in California?

Billions.

It's gotta be billions. Where's his—

He should be a billionaire.

He should be doing it privately and then getting the whistleblower awards. I think that actually would be a better strategy for him. Do it privately.

We told him that was the business model, remember?

Yeah.

No, I think he's addicted to the views, but he could literally raise money on that concept.

Well, he's making thousands when he could be making billions, to Friedberg's point.

No, whatever.

Well, but it's better for the public that he's doing what he's doing.

Thank God.

So thank you, Nick Shirley.

Let's just leave it at that.

Yeah, true.

Whether you could be making more money or not, what you're doing is—

Well.

—God's work.

And you know what he also did? He shamed the mainstream media, who's forgotten about investigative journalism, who forgot the ability to knock on a door and just ask a basic question. And now Bari Weiss with CBS has deputized one of her reporters, and she's doing the exact same playbook and meeting him punch for punch.

Where's CNN? Anderson Cooper should have a Nick Shirley on his team. The New York Times should have a Nick Shirley. The LA Times should have a Nick Shirley. Why don't they? That should be the number-one hire.

Because you're talking about old media that does things one way, and the point about Nick Shirley is it's new media. It's citizen journalism. It's people on the street distributing fact-finding, distributing information gathering, and old media, in order to survive, became an opinion organization.

But didn't the media used to care that the Pentagon was paying $900 for a hammer or what have you?

Yeah.

I mean, 60 Minutes used to do things. Now it's like the media just wants to protect the waste, fraud, and abuse, no matter how egregious it is.

Yes.

Do you remember that guy Dennis Kozlowski, the CEO of Tyco, who went to jail, and they had a field day because—

His umbrella stand.

The umbrella stand, the—

Yes, the umbrella stand.

The $6,000 umbrella stand—

Made out of ivory from—

Uh, Bari—

—a bison or elephants.

Sachs, you're so—

I know you bought that at auction—

You're so right.

Didn't you, Chamath?

No. Sachs, you're so right.

No, you're right. If it's a CEO, if a CEO basically engages in some misbehavior, and I'm not defending it, the press will be all over that.

All over it.

But when the government does it, they don't do anything.

Free pass. Free pass.

And in fact, we had one of the most successful, probably the most successful entrepreneur of our generation donating his time to the government to find waste—

Yeah.

—and the media basically drove him out of that.

Drove him out. They vilified him and drove him out. Yeah, they made it untenable.

Whoever comes up with a way to eliminate waste, fraud, and abuse like DOGE did, and productizes that and makes that their platform, that's the way to win in 2028 and going forward: convince the public that they don't need to have their taxes raised. They could have their taxes reduced just by eliminating the minimum of 20% or 30% of waste, fraud, and abuse there is in the system.

7. Apple Chooses A Product CEO

All right, listen, just rapid-fire here on the Tim Cook resignation and moving on. This guy, John Ternus, is a 25-year veteran. He did lots of hardware, worked on iPad and AirPods, and he was the favorite on Polymarket since day 1. He's a bold decision-maker, according to reports, and unlike Tim Cook, who did a great job of squeezing every last nickel out of Steve Jobs' product line, which lasted for a decade—the iPhone, Apple TV, Watch, I don't need to repeat them—but here we are.

We got a product person in the seat, which is what we all know they needed because these tools are getting a little bit stale. Siri, disgraceful. AirPods, disgraceful. The whole system is not built on innovation anymore. It's built, Friedberg, I think you would agree, on just wringing more profits. What's your hope here? They missed so many great swings at bat. They didn't get the Oculus or the Ray-Bans that Meta did. They canceled their self-driving car.

What would you hope that this new CEO of Apple focuses on, Friedberg, in terms of innovation? They don't have a problem selling phones still. They don't have a problem selling laptops and making a ton of money, but if you were in the seat, if you were on the board of Apple—which wouldn't be a bad idea for them, if I'm being honest—what would you tell the new CEO to focus on, David Friedberg?

I mean, I don't know. The software layer of the future is not the software layer of the past, so it's pretty obvious. I don't know how much there is to talk about, but you just need the Siri equivalent that's ubiquitous in all of your devices, knows who you are, personalized to you, sees your email, sees your calendar entries, knows what kind of music you like, and has a connection to your home.

Basically, build that AI layer for your life and make it ubiquitous in all of your Apple devices, so that no matter what device you're using, it knows who you are. You can engage with it using a natural-language method, and it's pretty obvious.

Yeah. They should buy Wispr Flow.

I don't know how they're running the business, but—

Well, they're running it for profits, obviously, Sachs. I would say buy Wispr Flow and just replace the Siri team with that. The fact that Siri can't spell Palihapitiya or Calacanis after 20 years of us giving them $20,000 for iPhones is just disgraceful.

Sachs, if you were on the board of Apple—which, again, is not a bad idea—what would be your hope for the company? What would be your sage advice for the new CEO?

Well, everybody is going to be asking the same question: What are you going to do about AI? I don't know that they needed to be on the bleeding edge of it, but they are going to need an answer at some point, and Siri is going to need to be AI-empowered.

Probably the way it should work is that you get to choose your model. I don't know that they need to pick just 1 model provider. It could be a setting where you go in and set up your account with whatever—ChatGPT, Grok, Claude, or what have you—and you can choose your own model provider. Then you'll have more customization and more ability to control your storage.

Let me just say, on Tim Cook's retirement, he had an incredible run as CEO of Apple. He ran it very effectively for 15 years. The market cap of the company went up by over 10X. The revenue grew from roughly $100 billion a year to over $400 billion a year.

He also improved the quality of revenue by moving the mix into services—

Yeah, that's been a big win.

—which is partly why it got a higher valuation. People say that they never did any innovation under Tim Cook, but I've seen people tweet lists of products that were released under him, and there were a lot of them. Now, it's true, nothing as big as the iPhone, but they did release a lot of products under Tim Cook.

And then, just finally, you look back over the last 15 years, and there really weren't any public snafus, scandals, or imbroglios with Apple. It's one of the few tech brands that is still, I think, beloved by the population.

I think a major part of that was Tim Cook's dedication to privacy and keeping the company on the right side of that, which I think users do appreciate. And Tim Cook even got praise from the president. I think it was unsolicited, where the president talked about how Tim Cook didn't call him up that often, but when he did, it was something important, and therefore the president tried to help them out.

Seems like he nurtured a good relationship with the president over the last decade or so. So you just have to say that he navigated what could have been a turbulent period with a great deal of grace and aplomb.

Clearly, Chamath, he was a great steward of the brand, even though all of those products were developed under Steve Jobs and were just executed well. But he didn't bring in a lot of new products or services. Any final take there, Chamath?

But actually, let me ask you a question.

Yeah, please.

What do you think, other than AI—AI-powered Siri, let's say—what do you think he missed? I mean, what should Apple have done that they didn't do?

They would have had, by now, a pair of glasses that weren't 1.7 pounds like the Apple Vision Pro. They would have gotten glasses that pair perfectly with your phone and take videos for kids, and they're coming out with them. It's just on a really broken timeline. They would have had a killer Siri. They would have had a search engine-ish, Perplexity-like product. They would have had a self-driving car. When you went to the Apple Store, you would have been buying 2 or 3 very important products: glasses, a car, and probably a television set.

If you look at what they actually did that was innovative under Tim Cook, I think they have great taste, and Apple TV produced a lot of great programming. He was working on a television set, not an Apple TV clunked onto the back. I think those 4 products—Siri, glasses, car, and television set—would have been extraordinary, and who knows what he would have come up with.

When they lost Jony Ive, and obviously Steve Jobs passed away, they lost the soul of the company. They lost the innovative, groundbreaking soul of the company, and they just went into profit and iteration mode. But no acquisitions of note, nothing important was acquired, and nothing important was released. Vision Pro, you can give them maybe the sixth-best product or something, but it obviously hasn't hit the mainstream. Chamath, any final thoughts from you?

Yeah, I have 3 specific things to say. The first is that he had, honestly, an impossible job. It's sort of like you play basketball with Michael Jordan, and then you're asked to be Michael Jordan, and I think that's an impossible task. On that dimension, I think he has done just an incredible job. He has been an incredible steward of the business. Sacks is right: no major snafus.

I think he did a really smart thing around doubling down on privacy. Just as a practical matter of being a great CEO, I think you can categorize CEOs in 2 buckets. One is the innovator, the person who's pushing the envelope, and the second is just a great steward. He's at the top of the top of that second category.

I sent you a couple of charts to show this, and he found a lane that allowed him to separate himself from Steve Jobs. As an example, what does it mean to be a steward? When you're a steward, you're allocating resources, and the 2 most important resources you control are capital and people. I think on that dimension, if you just look at this, what Tim did was invest appropriately in R&D. They completely eliminated their need for Intel. They spun up their entire new line of silicon. That silicon, it turns out—and this will be important in the future—is very useful in AI with all of this OpenClaw stuff, and some of you guys are completely addicted to it. They've kept the acquisitions light, so he was very capital-efficient.

If you look at the next chart, what's so interesting is that it is the exact opposite of what Steve Jobs did. Look at the amount of money that Steve Jobs returned to shareholders during his tenure at Apple. It's easy to count: it was 0. He loved to keep that money on the balance sheet, and he probably—or maybe, I'm guessing—would have directed that at some huge shot on goal. In the Tim Cook era, it was very different. He shrank the share count by almost 50%, and I think it's 44%.

That's insane. Is there any—

He was—

…corollary to that, Chamath?

No. He's been a prolific shareholder-friendly CEO, finding ways to give us money back, which I think everyone who's owned the stock has very deeply appreciated.

The last thing I'll say, though, is: what is the future for John Ternus? I think it's in this final chart. We talked about the problematic nature of increasing per-unit pricing in SaaS. What I would say is, if you look at the iPhone, the unit price has gone up, and people would say, yes, but the capabilities have gone up in turn, and I acknowledge that.

But the problem with the per-unit pricing being as high as it is, is what Friedberg says is going to happen. AI rips open the canvas of the devices that we will use to interact with information and knowledge. We are going to live in a much more heterogeneous world in the future. It's not going to be 2 devices and 2 different operating systems that get you to knowledge. There's going to be all kinds of stuff: pens, orbs, who knows, Jason—your glasses, whatever.

The problem is, if you get too addicted to a single thing that has an incredibly juicy profit margin and great stickiness and the ability to raise price, it's a hard drug to get off of. I think what John Ternus really has to do is figure out how to move to this world where everybody will be launching umpteen devices via MCP or otherwise. All of these services will be open; it'll be agentically talking to everything. I think the moats decay. If that happens, that's problematic if you're too reliant on a single thing to keep it going.

Yeah, and expanding on what you said, wearables are where they really made some good inroads in terms of getting people to use them, whether it's AirPods or the Apple Watch. The next wearable—this is a Plog pen that I use to record—you can put it here, put it on your wrist. That AI synchronicity of having your eyes, having your ears, having your watch, having your phone, and your desktop all sync together with AI could be a huge product line.

I'll also add a fifth: robotics. I think Steve Jobs, if he were alive today, would have been looking at Roomba; he would have been looking at Optimus, and he would have said, “Hmm.” Consumer robotics, in addition to a consumer car, are 2 things I think he would have absolutely executed on at a high level. Okay, let's keep moving here.

Can I make one last point on—

And we'd love to have you on the pod, John, so just come on the pod when you're ready. We'll have you come sit in. Go ahead, Sacks. You get the final word.

Just one last point on this: I think the succession at Apple is reminiscent a little bit of the succession at Disney. Apparently, Steve Jobs and Tim Cook had this conversation back when Steve was alive, and Steve told Tim, “Don't do what Disney did,” where, after Walt Disney died, the company languished because it felt so beholden to Walt's vision that they never really iterated.

Now, when Walt died, his brother Roy took over, and Roy was already in the business. He was the business co-founder, a COO type, a little bit like Tim Cook, and he kept the magic going for about 5 years. Then he himself died; I think it was around 1971. Then you had this string of CEOs who took over and were uninspired, and it wasn't until Eisner came in in 1984 that he revitalized the business.

As I understand it, Steve and Tim had this conversation, and Steve told him, “Don't be too beholden to my vision. You need to figure out your own and extend it.” You could argue that Tim was like the Roy figure here, a very effective business partner of Steve. He got a 15-year run. Roy only got 5, and I think, again, he added a 0 to the value of the company.

Crazy.

The market cap—

It's crazy.

…went up over 10×. So you'd have to say it was a fantastically successful run as CEO. I think the question now for John Ternus is: okay, you're now past, let's say, the Walt Disney and Roy Disney part of the business. Is it going to be like 1970s Disney, or is it going to be more like the 1980s? Do you figure out a way to revitalize it, or do you have to go through a funk first?

Hmm. Yeah, I think Eisner and Iger are really illustrative of this discussion. Eisner's innovation was that he realized Disney had what I think he called the vault strategy. He would re-release all of their IP into theaters every 7 years. You couldn't get some of those Bambis, whatever, Snow White and the Seven Dwarfs. You couldn't get those products except in theaters, and he figured out a cadence to keep publishing.

Then Iger came in and said, “Hey, what if we use this balance sheet and this distribution at the parks, along with their brand, to buy Pixar, Marvel, and Star Wars?” So there are multiple ways to do it. There might be something there in terms of acquisitions. Bold acquisitions with Apple's balance sheet could be super-accretive to shareholders, as opposed to lowering the share count and just distributing a ton of cash. All right, listen, we're going to talk about the Southern Poverty Law Center.

Racism Corner. Let's go to Fake Fake Racism Corner. I want to know how the SPLC managed to accumulate $822 million in offshore bank accounts.

Yeah. This is incredible. These are big numbers.

How is that possible? What is going on?

All right, let me tee it up here for the team.

This is one of the biggest grifts of all time. Anyway, JCal, I'll let you have it.

8. SPLC Faces Wire Fraud Charges

This is a big one. The SPLC has been indicted—not found guilty yet—on 11 counts of wire fraud and money laundering. Keep that in the back of your head: wire fraud and money laundering.

Here's the core allegation: Between 2014 and 2023, the Southern Poverty Law Center used hidden bank accounts to funnel $3 million in donor money to paid informants. These are confidential informants, like the police or FBI might use. They used them as a nonprofit NGO to infiltrate hate groups.

The official mission of the SPLC is, quote, “To be a catalyst for racial justice in the South and beyond, working in partnership with communities to dismantle white supremacy, strengthen intersectional movements, and advance the human rights of all people.” Okay, sounds great on paper.

Examples of organizations they were trying to infiltrate include the KKK, Aryan Nation, neo-Nazi groups, and the Unite the Right organizers. The Proud Boys were labeled as a hate group by the SPLC. The Oath Keepers were not listed as a hate group, but were part of the militia movement. My friend Sam Harris was not listed as a hate group, but he was also tagged by the SPLC as hate-adjacent in their Hatewatch headlines.

This is something I had a major problem with this organization over: They would very loosely label people as hate speech and try to get them canceled. All of this came to a head. The revenue before Charlottesville—you remember the incorrectly clipped Charlottesville hoax where they said Trump said “very fine people on both sides,” but they didn't give his full quote. Very unfair to President Trump, we found out later, and that was the reason Biden, of course, ran. He said the Charlottesville “both sides” thing was his inspiration.

The revenue was $58 million in 2026, to your point, Chamath. It doubled and spiked to $136 million, more than double, and has remained elevated ever since.

Here are some images from the indictment, and I'll wrap on this and then get everybody's feedback. They had F37 as one of their confidential informants. He was a member, and this is according to the indictment, quote: “Member of the online leadership chat group that planned the 2017 Unite the Right event in Charlottesville, Virginia, and attended the event at the direction of the SPLC. F37 made racist postings under the supervision of the SPLC and helped coordinate transportation to the event for several attendees. Between 2015 and 2023, the SPLC secretly paid F37 more than $270,000.”

That's the legal case here. Let me pause there.

Can I add 1 thing?

Sure, keep adding. There's a lot of detail to this case, yeah.

You're right that the SPLC allegedly did fund $270,000 to help plan Charlottesville. In addition to that, they secretly funneled more than $3 million to a bunch of violent racist extremist groups, including the Ku Klux Klan, the American Nazi Party, Aryan Nation, the United Klans of America, and it goes on from there.

I think don't forget about the $3 million. This group that was supposed to be fighting racism was, in fact, fomenting racism by paying these groups to basically organize protests that the SPLC could then point to and say that America has a huge racism problem: Donate to us. That's basically what happened after Charlottesville.

They increased the amount of money they were able to fundraise by $81 million. So that $270,000 investment led to an $81 million return. Pretty good.

This is the whole point of the story: These guys are basically running a grift. One of the ways you know this is a grift is because, according to the indictment, they opened bank accounts under fictitious entities to conceal the payments they were making from their own donors. If their donors knew they were funding the KKK, they wouldn't be getting all these contributions from Hollywood celebrities and everyone else. It's just this unbelievable story.

Unbelievable.

It really boggles the mind.

Just to clean up a little bit there, these are allegations. They haven't made the jump from planning these events to proving guilt, and the SPLC claims they were not planning these things; they were monitoring. That's going to be their argument on the other side. I'm not saying I agree with that.

I know.

I'm not taking their side.

You're right that the SPLC's cover story is that they were simply paying informants. That's what they've claimed, but there are 2 problems with that story.

Number 1 is that they were paying the actual leaders of these groups, not just moles who were infiltrating the groups. And 2nd, these leaders weren't paid to inform; they were paid to foment the activities. I'm just saying that's the flaw. I understand they have this cover story that they were just paying informants. I'm saying, in my view, that does not hold up.

Again, if they were just paying informants, why the extraordinary efforts to conceal the payments from their own donors? If they were proud of these efforts to infiltrate these groups, they should have informed their donors what they were doing. In fact, they hid it.

Here's the reason it was hidden, according to them. Again, I'm not taking their side. The SPLC is not an organization I'm endorsing in any way.

Their version of this is: “We didn't plan any of this. If we put SPLC bank accounts together for informants, that would be like the FBI sending a check to an informant from an FBI account.” That's their explanation of it.

They're not a law enforcement agency.

That's actually the question I had about all this: What is a nonprofit doing hiring confidential informants, Chamath, to infiltrate these organizations? To what end?

If you show me an incentive, you're going to see an outcome. The outcome here is, “Hey, we'll get more donations if there's more racism.” Your thoughts, generally speaking, here, Chamath? Again, all of this is alleged.

These NGOs have completely run amok. They're cosplaying as overlords and power brokers in our lives, and it needs to stop. They should all be dismantled.

The people who donated to the SPLC should sue them, rip open all of the documentation, and get their money back. Just so you guys know, if you are listening or watching and you have donated, there's $822 million of your money sitting in an offshore bank account waiting for you to get it back.

Separately, if you're thinking of donating to any of these organizations in the future, unless there is a full, transparent audit of it, you may actually be doing the opposite of what you thought. If you are against racism, you may be supporting racism. If you are against discrimination against gays, this could actually be promoting discrimination against gays. If you are supportive of trans rights, this may be pushing back against trans rights.

The playbook seems to be: Do the opposite to create the narrative, give it to your friends in the media who will look the other way and just amplify it, tell the lie, create the craziness, and then raise a bunch of money, make a bunch of stink, and try to curate power.

Friedberg, does your gut tell you this is arsonist firefighters—that they're lighting things on fire so they can go put it out? Or do you think this is lawfare, as some people are claiming, because there hasn't been, to Chamath's point, any donor action? They don't have donors taking this action. They're being accused of wire fraud on behalf of donors who haven't shown up yet to take legal action.

What's your take on all of this, Friedberg? Again, all of this is alleged.

The IRS definition of what a 501(c)(3) nonprofit organization is meant to be doing is to engage in exempt activities. The definition of exempt activities is charitable, religious, educational, scientific, literacy, public safety, fostering amateur sports competition, or preventing cruelty to children or animals.

You tell me how 90% of what we call nonprofits today fall under that definition. We have completely closed our eyes to the fact that organizations, regardless of political affiliation or social interest, have fundamental commercial and probably misaligned interests with the definition of a 501(c)(3), and we've allowed them all to get away with it for far too long.

I don't think this is a blue or red thing. I think this is a thing where we let these organizations make it easy to get money, hide the money, and do whatever the hell they want with the money, and we need to stop it.

I think this is an amazing opportunity right now for everyone to reset the decks by cleaning all this up, flushing all of these organizations, and making sure that any organization that wants to do whatever nefarious things they want to do, by all means, does it—but it's not a nonprofit, and they shouldn't get a charitable donation deduction. The government should not be putting money into these sorts of things.

This is an entirely different sort of activity in the social order. As a libertarian, I'm all for it, but I don't think they should be tax-exempt, I don't think they should be getting government money, and I don't think individuals should be benefiting from giving them money.

If we could fix all that shit up, I think a lot of these problems are going to go away. I think this is a major problem.

I think the theme of this episode is “audit everything,” whether it’s government waste and abuse, these NGOs, or people like Dow making chemicals that, 30 years later, perhaps are correlated with cancer. We need to audit everything. We need to take a fresh look at this, because it’s not red versus blue. It’s green.

This is clearly a monetary incentive, and it is incredibly disruptive for society not to know the truth about what’s going on with race in this country. You guys might not know this, but this was part of the cancel-culture moment in time when they tried to take people having reasonable discussions about race in this country and cancel them. They tried to do this to me in 2014. Very famously, you guys may not know this, but I have won a couple of awards in my career.

VICE’s “Most Offensive Tweet Ever” in 2014 was my alleged racist tweet where I said, “Hey, if you want to get into tech journalism, there’s no racism in tech journalism. All you have to do is publish for a couple of years, and nobody can stop you. There’ll be a ton of jobs available to you.”

Then what they did was try to cancel me, cancel all my media properties, and cancel my investing. This stuff had a modest impact on me for maybe a year, and now it’s obviously all being—

Whoa, wait.

I’m not sure I understand. JCal, you’re saying the SPLC put you on a cancellation list?

No, they put Sam Harris on it. VICE put me on a cancellation list. It didn’t get picked up by the SPLC, but I experienced the same thing: They said it was because I said race doesn’t play a role in hiring.

You’re so careful about your virtue signaling, I’m just shocked that anyone would try to cancel you.

Well, that’s what’s shocking about it. I know. I was very clear. I said, “In journalism,” like, a very specific vertical that I have a lot of experience in.

You’re a very skilled virtue signaler, so—

They tried to cancel me, guys. I don’t know. They tried to cancel you too, Chamath.

Jason.

Go ahead. You have a question for me.

I’m uncancelable because I don’t give a fuck.

Yes.

No, you care about what all these idiots think, but—

No, I don’t. I never have.

Jason, I have a question for you.

Go ahead.

What percentage odds do you now keep in the back of your mind that your petite, little, illustrious Human Rights Watch is actually creating human rights abuses to try to—

This is actually a very good point.

—to whip up the—

You know, a lot of the human rights organizations from back in the day that had a—

What is the organization that you were—what is it called?

Amnesty International.

Oh, yeah. Okay.

When I worked at Amnesty International, it had a very fine mandate. The mandate was to address human rights abuses as described in the Universal Declaration of Human Rights, created by Eleanor Roosevelt and the United Nations—

This is like Science Corner. Wait until Mrs. Dunn speaks.

—in 1950. No, but they— It was torture. It was people being put in jail and being tortured. It was people being censored because of freedom of speech. That’s what I worked on when I was at Amnesty International.

These groups went adrift in order to get money, Human Rights Watch included, and then they started taking on things like transgender rights, this right, that right, and censoring people. They went after Sam Harris because he had Charles Murray—

You haven’t answered my question.

—from The Bell Curve.

Stop with all this. I’m asking you a very specific question.

No, I think it’s a 50/50 chance that all these organizations are involved in shenanigans.

Okay. So you think there’s a 50/50 chance that—

Depending on the organization.

—Amnesty—

SPLC, I’m going to guess 95%. Yeah.

Amnesty International—you think there’s a 50/50 chance that they’re engaging in nefarious activities to try to whip up people’s belief that human rights abuses are happening when they’re not? You’re saying it’s a coin flip.

I think it’s probably a coin flip, yeah. That’s what I would say today, because these organizations all got co-opted. The SPLC might have had a great origin story, but now it is—

I admire your intellectual honesty.

Of course.

And I appreciate you saying that.

Well, just based on fact. So let’s see what this legal case brings about.

Well, let’s be clear.

I am all for—

This is not—let’s be clear.

—them investigating the SPLC, 100%.

When you bring a grand jury indictment, you’ve already previewed the evidence. This is not like some guy’s trying to whip up lawfare, okay?

Actually, you don’t have to bring all the evidence, but that’s a side thing, and they’re very frisky about allowing you to indict somebody, as we experienced with Trump.

Grand juries are a whole different animal.

Yeah. They will indict a ham sandwich, is the line. So we’ll see. Let’s give them their day in court. That’s always my position.

Regardless of what happens in court, if it’s true that the SPLC is funding the Ku Klux Klan and the American Nazi Party—

They stopped, by the way. Just so we’re clear, they stopped using confidential informants.

That’s good enough for me.

But when you say it out loud, it’s insane.

It’s good enough for me. Listen—

Oh, my God.

9. Nonprofits Lose Their Feedback Loop

Here’s the systemic problem with nonprofits and NGOs. Let me just contrast it with business.

In business, you set up a company. The company has to make revenue, it has to make profits, and if it doesn’t, it’s going to go out of business, right? Because it’ll lose money. So there’s a feedback mechanism from the market. The company has to create products that people are willing to buy, and those products have to make money.

With an NGO, a nonprofit, or what have you, they raise money. They don’t sell things. They fundraise from donors in order to engage in an activity. But what happens over time is the actual activities may stop mattering, and all that really matters is that they’re able to keep fundraising, right? They’re just trying to figure out a justification to keep going back to donors to get more and more money out of them. That’s what perpetuates the organization. And then if it’s—

And they’re trying to keep their job.

That’s right. Exactly. And then if it’s an NGO that gets money from the government, then it’s even worse, because all they do from that point forward is try to lobby the government to get more money, and it doesn’t really matter whether the program is working or not. All that matters is whether they can spin it as working.

Why wouldn’t the Southern Poverty Law Center focus on Southern poverty, which is an issue that actually still exists 100 years later?

Shouldn’t it be a broader thing?

Why do you call it one thing, focus on racism, and then all of a sudden whip up fake racism?

I’ll tell you why. Here’s my theory on it: I do think that at one time in this country, civil rights was a noble cause, a very legitimate cause.

Of course it was.

Of course.

Of course it is.

We had the legacy of segregation and Jim Crow, and there were groups that were set up to basically change that, and they succeeded. But again, no one in an NGO or a nonprofit—

Wants to admit it.

—ever declares victory.

Exactly.

They’re never going to say, “You know what? We addressed this problem. We solved it.” I always thought that in 2008—

Yeah, fire me. My job’s done.

Yeah. When Barack Obama got elected in 2008, I thought that regardless of whether you liked Obama or not or agreed with his politics, at that point most people could see that this was not a racist country.

100%.

Whatever else you could say, the fact that the highest office in the land was not denied to anybody showed that this country was not holding people back based on their skin color.

Instead of just packing up shop and saying, “Okay, we’ve achieved our goal,” the goalposts all got moved. Remember, that’s when the whole anti-racism thing started—

Right.

—it was around Obama’s second term. What anti-racism meant was that it wasn’t good enough just not to be racist. You actually had to be anti-racist. But what anti-racism meant was basically that all the distributions had to match the population.

Basically, it meant equality of outcomes, not equality of opportunity. So, effectively, a whole goalpost was moved from equality of opportunity to equality—

You’re right.

—of results.

Once you see it, you can’t unsee it. It’s like they sat around and they said, “Now what?” And one person was like, “I got an idea.”

Right.

Well, and make racism again.

Exactly.

Right, but if they had just said at that time, “You know what? We’re going to move the goalpost from equality of opportunity to equality of results. We’re going to basically make everyone equal at the finish line,” which is to say, I guess, communism or some sort of identity socialism, people would have said, “Eh, no, we’re not on board for that.” So instead, they created this whole new terminology to justify it, and it’s taken us years to unpack that and realize what’s really going on.

Gosh, I don’t want to put myself in a position of defending the SPLC. They were partners with the FBI for a long time, to your point, Chamath—or Sacks’s point, rather. There was probably a time when it was important to infiltrate the KKK and the Nazi groups.

But it’s not in 2026. I don’t think it’s necessary to be doing this work. I think law enforcement can handle it in 2026.

Okay, I’m going to give you guys a news flash. I just got this. This just hit the wire.

This is really important.

America is profoundly less racist than you think, okay? Wake up.

There we go. Breaking news.

Friedberg wanted to do a surprise science corner. This is a first. We don’t know what he’s about to talk about, but David looks like he’s been working really hard and needs a nap. So, Friedberg, you have the microphone. Let’s go.

10. Pesticides Link To Colon Cancer

There was a really interesting paper published this week trying to elucidate the underlying cause or predictor of colorectal cancer. I don’t know if you guys know any young friends, but colorectal cancer—or colon cancer—has now become the third-leading cancer. Nick, if you could just pull up this first image. Over the last 20 years or so, there’s been a scary rise in the number of young people, generally under 50 years old, who are getting colon cancer. That number has climbed by over 80% in just the last 2 decades.

Historically, it’s been an age-related disease, so as you get older—over 70 years old—your probability of getting colon cancer shoots through the roof. But this rise in young people getting colon cancer has been pretty alarming, and there’s been a real question about what is causing it and what the underlying trigger is. So this research team out of Barcelona, in Spain, did an amazing study where they looked at the difference in the epigenome, or the gene expression in tumor cells, of patients who are under 50 years old and those who are over 70 years old.

This sort of data will show you what different environmental triggers are associated with those changes in gene expression. Whenever we’re exposed to something in the environment—whether it’s some food, some drink, or some chemical in the environment—the cells in our body that are exposed to that chemistry or environmental trigger have genes that get switched on and off. You can see which genes are on and off by looking at the RNA of those genes, which tells you whether those genes are expressing RNA to make protein or not. You can look at that gene expression to determine what is changing when a cell is exposed to a particular environmental trigger.

They were able to get these samples of colon adenocarcinomas from The Cancer Genome Atlas, which is funded by the federal government. They were then able to look at these cancer cells from patients with colon cancer who are under 50 and patients who are over 70, and compare the difference in their gene-expression profiles and what environmental triggers are associated with those profiles. That will tell you, “These environmental triggers are more likely to be the cause or an underlying driver of the risk of getting this colon cancer.”

One thing rose to the top. They looked at a whole bunch of things: lifestyle factors, an eating index, how much you ate, how overweight you were, alcohol, and birth weight. They adjusted for gender and all these different factors. As you look down this list, you’ll see the difference between people who got colon cancer when they were over 70, when you typically have a very high chance of getting it, and people who were under 50, when you don’t, and what is going on with people under 50.

You can see there’s this one row here that’s all orange. That row is a pesticide called picloram. Picloram is a pesticide that was developed by the Dow Chemical Company in 1963. It’s related to auxin, which is a plant hormone. In the 1960s, there was this big rush to try to make synthetic plant hormones that you would apply to a plant, causing it to overgrow, and the plant would quickly die.

Picloram became a very widely used herbicide in our environment. It’s used to manage weeds in rangeland and pastureland where cattle graze. It’s used to control weeds near roads and railroads, and on industrial sites to clear weeds away from highways and utility corridors. The problem with picloram, one of the things that’s been known about it, is that it’s very persistent. It doesn’t biodegrade very well. Picloram sticks around for well over a year, stays in the water, moves into groundwater, and remains persistently in the environment after it’s been used for some period of time.

I went back and looked at the EPA data on this chemical. The last time there was an EPA safety study done was in 1995. This was before we had the capacity to do epigenomic studies like the one that was just done, which elucidates that even though a chemical might not be causing cancer immediately, and you can’t apply it to a cell and see it trigger cancer, long-term use or exposure to certain chemicals in our environment causes a change in the epigenome. That means these genes are being turned on and off.

When certain genes are turned on or off in the wrong way, it can trigger cells in the tissue to start to malfunction and go haywire, ultimately leading to cancer. I think this paper shows a pretty strong effect of picloram in driving colon cancer in young people. It will very likely lead—and it should lead—to an EPA review of whether this should be legally allowed. It should also lead to a new mechanism by which we assess the chemistry we’re using in our food supply, in our environment, and in our industrial applications, because we can now look at all of this epigenomic data to try to figure out what these chemicals are doing to us before we see them cause a problem.

I thought this was an amazing paper done by this team. They did a lot of work to make sure the statistics were sound in the studies they conducted. It really elucidated something pretty scary.

Is this a Monsanto thing where one company makes it, or is picloram broadly available?

It’s off patent now, and although I haven’t looked into this, my guess is that most of it is made generically in China. It’s probably packaged up under lots of different brands in the U.S. and all over the world. It’s one of these chemicals that has just become ubiquitous in our use and shows up everywhere.

But I think it really speaks to the fact that historically—think about 1995—you could look at what the immediate chemical application of something does to a rat or a human cell and say, “It didn’t cause cancer. It’s good to go. Let’s go.” It didn’t cause, quote, “toxicity.” But there’s more to it than that.

Can I ask a question?

Yeah.

In that study, are you exposed to picloram based on where you live? Because if you’re—

Yeah, sorry, that’s a great question, Chamath. I was going to talk about this. They then took that picloram exposure and looked at all the counties across the United States. They were able to gather enough data in California, Connecticut, Georgia, Iowa, New Mexico, Utah, and Washington. They looked at picloram-use estimates from the Pesticide National Synthesis Project and tried to determine which places had high picloram use and which did not.

Once again, it elucidated a signal: when picloram was used more frequently in the environment in a county, there was a much higher frequency of colon cancer in that county.

And that R-squared—is it weak or strong?

Reasonably strong. The odds ratio is about 3×. It’s very strong.

This is accomplished, Friedberg, through a combination of big data and this science to study these—

I think it’s important—

And then increased testing as well, right? So you have this confluence of increased testing, increased data, knowing where these instances are occurring. If you add a layer of AI onto this, Friedberg, this is a really positive use—going back and looking at all these compounds and figuring out which ones we need to eliminate, yeah?

Yeah, so I’ll put my PCAST hat on. Thank you, David Sacks, for the role. I think this speaks to one of the important roles that government has in doing fundamental science and fundamental research. The National Cancer Institute and the federal government stood up The Cancer Genome Atlas with $100 million a couple of years ago.

They spend only a few million dollars a year now to maintain it, to get cancer tissue samples, and then make those cancer tissue samples available to scientists to do this sort of epigenomic analysis and study, supported by government grants or, in this case, by a foreign university getting funding to do it.

And so there's an important role that fundamental science still has in elucidating this that we would've otherwise not been able to see if we didn't have this resource available to us from the federal government and federal funding of scientific programs like this. And that leads to this discovery.

You don't need fancy AI for this, to be frank, JCal. There's an incredible amount of data that's available, or resources that are available. What's happened in the last couple of years is what's called RNA sequencing, where you can actually look at which genes are on or off—not just what's in the DNA. Remember, we've talked a lot about the epigenome: what genes are on or off and how that changes when you have different cancers or when you have different chemicals.

And when you have a certain chemical like picloram, your colorectal cancer goes through the roof, and you can see that relationship in those tissues. Then you can put all the data together and say, “Oh my gosh, there's a lot of evidence here that points to this connection.” Very powerful.

I think it's important that it opens up the window that this shouldn't just be a one-off research project conducted by a team in Spain, but maybe should be a fundamental role that some of the government agencies play, which is to stop Americans and the world from getting frigging cancer. Let's figure out the things that we got wrong in industry and go back and delete them out of our food supply and out of our industrial supply. And I think this is a really good example of that.

So, Sacks, how does Friedberg's focus on Uranus inform your co-leading of PCAST here? Are you gonna go deep into this colon research? How deep do you plan on going, and how will you get through 8 of these presentations a day at PCAST?

It's all good. This is why we hired Friedberg.

Yes.

He's gonna handle Mars, Neptune, and Uranus.

Absolutely. He's gonna go deep into Uranus and clean it up.

That was good, actually.

We need to clean up Uranus. Great work, Friedberg.

Anyway, I think this is important.

Yeah.

And I don't think there's any news attention on this since it came out a couple days ago, so I thought it would be worth bringing it up on the show—

Absolutely.

—and making people aware.

All right.

But thank you guys for sitting through it.

Well, no.

Yeah.

I think it's great work you're doing there.

I just read the paper, but yeah.