E45
E45: Theranos & VC fraud risks, China bans video games, Texas SB8, Apple app store, CA fires, RIP Rabois' hair
2021-09-04 spoken.md · speaker-labeled ▶ watch ← E44 all episodes E46 →
1
ideas born
5
ideas moved
15
captures · 4 voices
4
dissenting
+74.3
conviction added
-84.9
decay · 81 silent
Every number here is replayed from score_events — the same ledger the pool ranks on. Decay is what the 81 ideas nobody mentioned gave up this week; it applies only when an episode is processed.
Tier crossings
conviction thresholds crossed by this episode — 65 / 45 / 15 · ideas born here show where they landed. why 65 isn't always green
▲ +19.7
⚡ Brutal 2021 western fire season plus grid brownouts
watch
→
green threshold
50.6 → 70.3
still ember — green gate not met
▲ +13.0
🏛️ Antitrust breaks Apple's App Store gatekeeping and 30% take rate
ember
→
watch
35.6 → 48.6
Who moved the board
each voice's force on conviction this episode — supports and opposes, weighted exactly as the replay applied them · share = % of this episode's movement
What got argued (5 ideas)
ordered by how hard each idea moved · quotes are verbatim from the transcript, timestamps deep-link into the episode
NEW
▼ IPO
📈 Low-diligence capital breeds a fraud wave in the venture-backed cohort
closed 49
▲ +61.7
0.0 → 61.7
Money flooding into private tech at zero-diligence speed (crossover/PE funds writing $100M checks hours after a first meeting, treating fraud as a modelled cost of doing business) structurally raises the incentive to lie about the past, so fraud incidence in the recently-funded cohort keeps climbing and eventually reprices the listed end of that pipe — recent IPOs and SPAC de-SPACs, where diligence was thinnest.
plays
IPO ·primary
NKLA
evals 2022-09-04
This is only going to get meaningfully worse. ... the amount of money that's trying to get into Silicon Valley is going exponentially up. And as that happens, you guys now see it every day where there are firms whose entire business now is just to literally write a check every day. They're closing deals every single day. They're doing zero diligence.
In our diligence now, we have seen a spike in what I'll call massaging or painting the picture in a way that I'm not comfortable with. We have maybe tripled the amount of time we're putting into diligence now because I really care about my reputation. ... In recent history, 20, 30% were winding up backing out during the diligence process because their revenue was not software based.
So we have seen this trend in our industry of the private equity money coming in in greater volumes, in greater, you know, earlier and earlier and faster and faster, right? ... But to Chamath's point, it's just they're applying a financial model where they're not in the diligence business. They're just, and I think they just see like fraud is a cost of doing business, right? Something they can model out with a portfolio. ... So no one's doing the diligence. So that is a risk, I think, because it might actually change things.
right now in Marin County in California, it's nearly impossible to get fire insurance. This is becoming a predominant factor in California, particularly in all the areas with lots of forest land. There's 100 million acres of forest land in California. If a trillion dollars of real estate is actually exposed to fires and you can't get fire insurance, ask yourselves the question, what's going to happen when hundreds of billions of dollars of real estate literally goes up in smoke or gets sold off? ... And ultimately the federal government is going to have these like Katrina events four or five times a year that we're going to be underwriting losses for people's real estate that's valued in a way that doesn't account for the effects of climate change. This is the massive shift in economic value that we're going to, someone's going to have to pay for over the next decade. And this is just the beginning of it all is my strong belief.
I co-founded an insurance company called OTT Risk. And we've been trying to build models and price this kind of insurance, climate insurance ... I think what it means is that climate change is going to ravage suburbs and it's going to ravage these sort of like far-flung communities because nobody's going to want to step in there and ensure the parametric risk
▼ AAPL
🏛️ Antitrust breaks Apple's App Store gatekeeping and 30% take rate
closed 25
CONTESTED
▲ +13.0
35.6 → 48.6
The Apple thing is really big news because it kind of goes to show you that you had you had a pretty progressive legislative framework in South Korea. ... they basically just seeded the market and by deciding to basically conform to this law, then they started with these reader apps and allowing payments. ... It's a beginning of the beginning for the app stores to be deconstructed and opened.
I think the root of this is the fact that Apple has this 30% rate on any in-app purchases. And like Bill Gurley said, it's a rate too far, right? Just because you can charge 30% doesn't mean you should charge 30%. ... So I think this 30% rate has ultimately backfired on Apple. It's created a huge backlash, and now they're paying the price. They've already had to roll it back for these so-called reader apps. ... But this now opens the door for this type of thing to apply to games as well, where there's a lot more in-app purchases like Fortnite, right? ... Apple has been a hog and now it's getting slaughtered.
Doesn't it introduce the risk of the retail investor? We're seeing more retail participation via syndicates, via one-off investments, online marketplaces, and also SPACs, where the retail investor relies on Chamath ... is there not some inevitable kind of SEC backlash and consideration around how are private companies ultimately raising money and how much they are disclosing? We face this regulatory threat.
▼ KWEB
🏛️ China goes for the jugular on its own tech founders
closed 25
CONTESTED
▼ -9.8
76.4 → 66.6
This is the only thing I've ever said that would make me want to move to China. This one rule is the most incredible thing I've ever heard, and they're so smart. By the way, what's so beautiful is they send Fentanyl and TikTok to us so that we get addicted to that shit. And they're like, no, you guys are going to learn STEM so that you can take over the world. It's beautiful. It's brilliant.
I'll be a dissenting voice here. This is like if we had given Tipper Gore dictatorial powers. I mean, this is insane. They're going to determine how many hours a kid can play video games. I mean, look, I get the potential benefit, but this is incredibly intrusive into the lives of citizens. ... And how many other insane policies will they foist on people with this mentality of you don't get to live your life individually?
you can overplay a hand and by squeezing people too tightly, you can't play video games, you can't run your own companies, you're going to get replaced, you can't practice your own religion, you can't say what you want, be a journalist. ... So you could see this, actually, I think, you know, maybe it's a small chance, 5% or 10%, you know, creating a lot of social unrest.
Episode digest
written during extraction and stored in data/extractions/ep045.json — the auditable source of truth, including everything market-adjacent that did not earn a capture
Chamath's 45th birthday episode, recorded 2021-09-03 with Sacks joining late after a running Callin-app bit, and it produced three new tradeable threads plus two mentions on live ideas. (1) Theranos/VC fraud: the jury was seated this week and the besties turned it into a structural claim rather than true-crime. Chamath's is the scorable one — 'This is only going to get meaningfully worse' because the money trying to get into Silicon Valley is going 'exponentially up' and there are now firms whose entire business is writing a check a day with zero diligence, so founders whose backs are against the wall get an incentive to lie; Sacks half-disagrees on the framing (no real VC firm or VC board seat was in Theranos, Tim Draper's seed check was a neighbour favour, 'show us the VC firm that was hoodwinked') but fully agrees on the mechanism, describing crossover/PE money arbing the last-round-to-IPO markup and marching earlier and earlier until 'no one's doing the diligence' and fraud is a modelled cost of doing business — and he wants Holmes to do time, handicapping conviction 50/50; Jason brings the only hard receipt, tripling diligence time at the syndicate and backing out of 20-30% of deals he'd already offered on, and puts Holmes at 80% guilty with the over/under at 32.5 months (Chamath takes the under). New idea low-diligence-capital-breeds-fraud-2021, bearish the listed end of that pipe (IPO, SPAK, NKLA — Friedberg names Trevor Milton and Nikola himself). Separately, Friedberg's retail-exposure question — SPACs and syndicates put retail behind someone else's diligence, so 'is there not some inevitable kind of SEC backlash' — is logged as an OPPOSE on chamath-spac-complex-2020, which is four days from its 2021-09-09 kill date, so this is the last word that idea gets. (2) China's three-hours-a-week gaming ban for minors (effective 2021-08-30) attached as four mentions to china-purges-tech-founders-2021 (born E33, window open to 2022-05-22) rather than a new slug, and it split the table 2-2 on whether Beijing's heavy hand is a discount or an edge. Chamath is loudly pro-ban ('the only thing I've ever said that would make me want to move to China... they send Fentanyl and TikTok to us so that we get addicted... and they're like, no, you guys are going to learn STEM so that you can take over the world') and Friedberg backs him from the Politburo-as-optimiser angle — every big decision is data-driven toward longevity and economic prosperity, and this is 'another tool that China will use to outcompete this century' — both of which read as OPPOSE on the risk-discount thesis. Sacks is the dissent ('this is like if we had given Tipper Gore dictatorial powers'), adds a one-child-policy incel theory for the ban's real motive, and lands the thesis-relevant line about how many other insane policies follow from this mentality; Jason supports with the overplayed-hand case — you can't play games, 'you can't run your own companies, you're going to get replaced' — and puts 5-10% on real social unrest. Worth noting Chamath also said the flat quiet part out loud early in the segment, 'The consequences is to the Chinese Internet companies,' i.e. he sees the equity cost even while cheering the policy; no gaming-specific instruments (TCEHY/NTES/ATVI) were named so nothing narrower was created. (3) Apple: Chamath opened on the reader-app concession, credited South Korea's legislative framework (transcript says South Korea, not Japan), and called it 'a beginning of the beginning for the app stores to be deconstructed and opened.' Sacks is the table-pounder — Gurley's 'rate too far', the 30% has backfired, reader apps already rolled back, 'this now opens the door for this type of thing to apply to games as well,' sideloading and alternative app stores are 'coming for Apple,' and 'Apple has been a hog and now it's getting slaughtered.' New idea app-store-take-rate-cracks-2021, bearish AAPL/GOOGL. Friedberg supports the direction but reframes it as a free-market win that needed no regulator; Jason is the lone OPPOSE — he thinks losing the partner pretence frees Apple to compete directly across music, video, games, news and podcasts, so this is bullish AAPL for him. (4) CA fires produced the episode's densest new thesis and it is a Friedberg special: $8T of California real estate, call $1T of it in the dense fire zone, fire insurance already 'nearly impossible' in Marin, Tahoe real estate now selling off like crazy the way Napa/Sonoma did after their fires, and — because the past data has no bearing on hot-year-after-hot-year — insurers throw their hands up, so the federal government ends up underwriting 'Katrina events four or five times a year' as 'the massive shift in economic value... someone's going to have to pay for over the next decade.' Chamath backs it with disclosed money: he co-founded an insurance company, OTT Risk, with David Soloff to price exactly this parametric climate/civil-unrest risk, is negotiating multi-hundred-million-dollar corporate policies, and reports it is effectively impossible to underwrite — so climate change 'is going to ravage suburbs' and force people into major metros. Friedberg's receipt is Climate Corp, his own parametric weather-insurance company. Jason agrees the market has priced in that it can't insure the risk. New idea ca-wildfire-uninsurability-2021, bearish PCG/MCY/ALL. Not captured: Texas SB8 got the longest legal segment of the episode (Sacks predicts the law gets struck on standing grounds and boomerangs on conservatives, Chamath argues the opposite — that it was methodically engineered for years and could hold as a state's-right issue, and complains that corporate America has gone 'complete radio silence' in the ninth-largest economy in the world) but nobody attached an instrument or predicted a relocation reversal, so per the market-edge rule it produced zero captures; Friedberg's 'million person march within 45 days' is dated but untradeable; the Newsom recall polling call has no instrument. Also skipped: Friedberg's mood-lightener at 1:12:06 ('The market is ripping. There's lots of money coming into climate change. Investors and entrepreneurs are more optimistic than they've ever been') is a real bullish lean on climate capex but a single aside with no thesis, so it seeds nothing. Joe Rogan/ivermectin and the media-narrative segment closing the show is pure media criticism — no market edge. LABEL CHECK: clean, with one cosmetic anomaly. Turn counts are Jason 119 / Chamath 85 / 'Nick Friedberg' 65 / Sacks 54 / Unknown 9. The Friedberg label is printed as '**Nick Friedberg**' (producer Nick's name fused onto the label string) but the content is unambiguously David Friedberg every time: he hosts the TPB/Production Board symposium, says 'This was my last company, right? Climate Corp,' declares himself 'extremely pro-choice,' and moved house two weeks ago with the basement-wine bit. The swap detector passes on every addressed-by-name test — Jason's 'Sacks, is this an example...', 'what are you doing to protect Crafts LPs?', 'Chamath, what would you do?', 'But Friedberg, Friedberg, you have thoughts?', 'What do you think, Friedberg?' and Friedberg's 'Sacks, what do you handicap her likelihood of conviction at?' are each answered by the correctly labelled speaker. Independent receipts confirm the roster: Chamath's actual birthday is Sept 3 and he says 'I'm 45, bitches'; Sacks launched Callin in 2021 and is called Rain Man in the outro. Two minor merges worth noting rather than fixing: Jason's 31:18 turn contains its own question and answer ('You're taking the under at 32.5 months?'), and the 31:40-31:43 exchange around 'The consequences is to the Chinese Internet companies' looks like two short adjacent turns whose labels may be crossed — that line is not used as a captured quote for exactly that reason. Nine 'Unknown' turns are short interjections, most likely producer Nick or overlapping crosstalk, and none carry market content.