I'm going E o Wait. Hey, wait! Hey, everybody! Welcome to the all in podcast. It was a slow news week. So we decided we give you a special episode, we're gonna go around the horn with our special picks. We're each gonna pick three picks, everybody, we're gonna pick our favorite recipe, our favorite new hobby and our favorite streaming guilty pleasure. Because there was no news with us today. The dictator Tomato Palihapitiya, Grain man David Sacks with his new track from Young Spielberg just ripping across the charts. Ah, young Spielberg at it again, this time with a track

focused on the Rainman himself and the queen of kin Wah who? Everybody says we should upgrade to the King of Qin Wa So sexist. Why? Why is that an upgrade? The Queen of Queen was But I don't know. People just felt I was being I don't know how people could say that anointing him as queen would be derogatory. I think these people are not woke and they need to be canceled. Jason, here you go again. Making a lot of assumptions about people's pronounce They they create a good walk. They e take no offense your insults to me. Today. I'm having the emotion of excitement, and I am ready for the conversation. Good. We got the firmware upgraded. All right, so I think we might as well start with I don't know if you guys caught this, but there's a subreddit called Wall Street Bets, and what they do on Wall Street bets is they find angles and thesis, and then they bet on the stock. The stock

they picked for the past couple of months has been Gamestop and boy Jason, hold on a second Rabbit's. That's not true. So do you? I had actually a guy on my team put together to really important documents, and I'm just going to read them because it's full of so much interesting shit. And then we can talk about where these doctors you're saying from the Wall Street bets. No, no, no, no. I had a guy go in one of my team members, one of my colleagues, and go and summarized the entire saga from the beginning. And then we can talk about the the corporate scumbags of Robin Hood, another fucking people over. So let's let's do that. Okay? This is why they call him the dictator. Let's zoom with biased and uh no, no! Shut up! Uh, you're an idiot because you just want to defend people because you blindly stumbled into a fucking trade that actually made a little money. Lo and behold

, you actually invested in a company that literally they got on television yesterday and they fucking lied to Americans, right to their face. This is a company that was insolvent because now let's just put a pin in the following data point, which I believe to be true. I know more about this than you do because I live in these markets. Okay, so I understand what it means to be putting on trades to being short to being gamma squeeze Tohave longs to do all of this risk management. You're in early stage, investor. So I know the intricacies of this stuff and what's happening in your this'll company was insolvent. They did not have the capital requirements to post the margin that was being asked of them by their partners. And so this was a platform level decision to ban and blocked people from trading securities. It cost individuals hundreds of millions, probably billions, maybe even tens of billions, and these motherfuckers should go to jail. Now, let me give you the timeline before we get into that June 2019

in June of 2019. Ah, Wall Street bets user named Deep Fucking Value began buying long dated January 21. Calls. What that means is, in June of 19, this person was betting that the stock would go up. By January of 2021 he spent $50,000 which, by the way, today is worth about $25 million. By the way, we should just highlight that there are forums were individuals that are trading stocks, talk to each other and share tips and promote things to one another. That's where this was taking place. Yeah, and by the way, those forums exist in the professional organized world to amongst hedge funds. You know, I've been invited to idea dinners where we all get together and we talk about the ideas that we have, and we're all expected to do fundamental analysis. But some of those ideas air actually, momentum driven ideas and a lot of the biggest dislocations in the market, just as a set up here have been because of momentum driven trading by organized capital. Okay, so we've we've been stuck with this for a while. So So

this guy. Deep fucking value post this. And every month since, he's posted a screenshot of his position and he's titled it G M E. YOLO Update. August 22nd of 2019 Michael Burry Who is this guy famous from the big short? Who is the guy that caught the mortgage thing? He discloses a 3% position in the company, and he highlights that 90% 90% of game stops. 5700 stores are free, cash flow positive. That's like pretty good. He urges a buyback, and he notes that the company was trading at or near net cash levels. So he's making a deep, value oriented, fundamental thesis is Well, I think also, it's worth saying what Gamestop is because even my wife asked me, What the hell is Gamestop Last night? Gamestop is a retail store where people buy video games. I used to go to the mall all the time consoles, consoles and headphones and other stuff your games. And so the stock got beat up over the last couple of years is people stopped going to malls and stop buying stuff

in stores, and everyone thought the company was going to die. And so these guys observed that Maybe there's real value in this company, and it's making money. No one buys deep DVD, Ron's anymore or anything like that. So and and The chewy founder, who is very successful at e commerce, came in todo eso. June 19 was the original post August 22nd of 19. Michael Burry comes in and says, I'm long. Then a year later, August 31st of 2020. Ryan Cohen, who is the founder of Chewy, takes in almost 10% position in Gamestop about two or three weeks later, on September 19th of last year. Ah, member of Wall Street bets right? Supposed on Gamestop, and he notes that Gamestop has 120% short interest, which I'll get to in a second. So hold on. What does that mean? 120% short interest? And he defends the company as a result of a few things, he says. Number one. There's

a new console cycle coming just as Jason mentioned. Number two consoles are are not going all digital immediately. Gamestop loyalty programs have 55 million users. They have a strong balance sheet. Ryan Cohen just bought a stake and the shorts were underwater and would be forced to cover if the stock ran up, He predicted. The convergence of all these factors would lead to a big squeeze. Now November 16th of 2020. Ryan Cohen writes a letter to the Gamestop board, and he urges the company to conduct a strategic review and share a credible plan to capture market share in the gaming industry. He said that they need to evolve into a technology company that delights gamers and delivers exceptional digital experiences. I'm just quoting here, Not remain a video game retailer that over prioritizes its brick and mortar footprint and stumbles around the online ecosystem. November of 2020 Someone in Wall Street bets highlights that a hedge fund called Melvin

Capital was going long. Gamestop puts what does that mean? That they are synthetically shorting the stock by buying the right to sell it at a different price in the future? Okay, um, and that they had been long that position for more than four years, so all the way going back to 2016. Fast forward to now 2021 of this year, January of 2021 games Thought, strikes an agreement with Ryan Cohen and add them to the board of directors and gives two of his affiliates his former CEO and CFO of Chewy, also two board seats. They collectively, you know, bring their experience in e commerce, online marketing, finance and strap planning. The stock goes up 13% on that day and closes it about 20 bucks this year, one day later and then over the next day after that. So for January 12th and 13th of 2021 there's a ton of activity around Gamestop in Wall Street bets

and now in discord and in stock twits, claiming that Brian Cohen is going to be the savior and then by January 14th. So three days later, the stock closes at 40 bucks, so now it's up 125%. So now comes to set up the pros versus the Jos from January 12th two. Today, there has basically been a battle by institutional investors on one side, shorting Gamestop and retail investors on the other, buying the stock and also buying the right to buy the stock or what's called call options. And this is what has created things. Crazy nonsense. We've seen. So on the institutional side, after you know, retail drives a stock up, the institutional guys are like, Hey, wait a minute. You know Ryan Cohen's an idiot. You know, this company is fucked, fucked these guys, they have too many, you know, cyclical and secular tail winds. And they become so

massively short that the infrastructure that's supposed to even count all the shares can't keep up. And now they are short mawr than the actual number of shares that actually exists. So now there are 140% short the Joe's retail. They start to aggressively purchased all these Kabul options, and on January 13th and 14th, um, this price keeps ticking up. Then a bunch of quant funds and momentum hedge funds notice all this activity, and they also participate on the long side on. Then, over the past seven trading days, we have traded over $100 billion of stock and game stock, which is well in excess off what retail can support. So here's what's crazy to realize, ah, bunch of value oriented, non computerized, non quantitative hedge funds. Short retail notices, a dislocation initially, fundamentally. But then momentum oriented buys other hedge funds realize also by, and this

is what's created this massive short squeeze. On January 19th, Citron Research, a research firm that basically tries Thio you know, find shorts in the market, announces that they were short game stop, and they gave five reasons why it should go to 20 bucks. The stock was at 35 50 on January 19th. Then, over the next two days, Gamestop calls hit an all time high, and it runs a two day rally of almost 70%. And this is what really starts what's called a gamma squeeze. Okay, which is what we saw in the first part of this week. So January 25th, Ken Griffin, Stevie Cohen. They inject almost $3 billion into Melvin Capital, the firm that was short two billion from Citadel in 7 50 from from Stevie Cohen. Stevie Cohen had a billion in it from before, and then now all of a sudden, the squeeze keeps happening, the squeeze keeps happening, and then it starts to spill over to the rest of the market. Now, all these hedge funds, these original hedge funds bear getting called by

the bank saying, Hey, wait a minute. You've run over your collateral limits. You need to post more collateral. We need more money in your bank accounts. So now not only do they have to cover Gamestop, they have to cover all their other shorts. So those go crazy and they have to sell their longs. So now they're selling, you know, Facebook, Netflix, Ali Baba. So those things are going down. That accordion is what's been happening in the market in the last couple of days, and then the coup de Gras is what happened on January 28th of 2021 brokerage firms. And this is where Jason. We should talk about this like Robin Hood and interactive brokers, because, in fairness, it wasn't just Robin Hood prevented their users from buying Gamestop in a handful of other stocks they were only able to sell, which resulted in such a one way pressure. It caused a 44% sell off yesterday. Now that's been reversed today, and so what? It speaks to his a bunch of questions. Their questions as to whether or not this was mandated by the platforms

or the regulators. Given the fact that it didn't impact all the brokerage accounts, it was a platform level decision. So some organizations like Robin Hood bandit. Some organizations did not. And it could be that some of these platforms that bandit is likely because And this is where we get to the insolvency question didn't have enough margin. And so they knew that if they open the doors, there would be a run on the bank and there would be a run on Robin Hood. And that's why they basically, I believe, had to stop, um, allowing people to trade. And it just shows how how fragile. Um, the whole system is the last thing I'll say, And then we can talk about this is how does Robin Hood make money? Which I think is also important to understand that this Robin Hood makes money through a mechanism that's called payment for order flow so they don't make money from consumers right. What they do is they

watch and monitor your orders. They create a data file about that, and they give it to thes prime brokerage prime brokerage institutions like citadel milliseconds before you do the trade. What that allows citadel to do is if they see a lot of people buying milliseconds before you buy vacant by and that allows them to make money. So to be clear, Citadel is responsible for 47% off all the payment for order flow volume. They paid Robin Hood almost $60 million in the third quarter. Okay, um, plus another, I think you know, 7.5 million for S and P 500 stocks and 31 million for non S and P 500 stocks. They paid them almost 100 million in the quarter or a $400 million run rate. So if we had to summarize all of this in a nutshell, that's what we know. We know that it started out as people debating the true fundamental value

of Gamestop, and it morphed into a momentum trade where a bunch of folks got dogmatic about a short ah, bunch of folks got dogmatic about being long and belongs one and in the middle. What happened was a bunch of firms basically decided at some point to gate the ability for people to transact in all of this, which I think caused a lot of economic disruption, and that was because they didn't have the margin requirements. And I think it's because they were insolvent. I e. Robinson Jason over to you. Okay, I think we probably agree on a lot of things here. Thank you for the concise over. We agree that Wall Street bets and retail investors are incredibly, um, powerful now and we agree that that's a good thing. We also probably agree that there are shenanigans going on with shorting of stocks. I e ah 120% or 100 30% short. And we agree. I think that some of these hedge

funds do manipulate the markets with ease. We also agree that it's unfortunate that, uh, in order to stay solvent Robin Hood. Apparently, if this is the information, we don't have complete information right now. So the thing I do think that you're being tremendously unfair about and I'll try not to make it personal team up is that you've been unconnected and you're attacking people without with partial information. I'll let you respond to that in a minute. Andi, I think we agree that Robin Hood is responsible. Robin Hood is responsible for this revolution in retail trading, they created the platform and they created the innovation that got millennials to on mass embrace trading stocks. How did they do it? They figured out a clever innovation of how to make it free and friction free. They did that because they did this selling of the data in the order flow. Okay, we can debate whether that is fair or not. But Facebook did the same thing. They created a data business. They provided amazing products and services that you yourself built for five

years and made a billion dollars off of in order to make it free for consumers. Now there are unintended consequences of any company at scale, whether it's uber Robin Hood, Tesla etcetera and they will all have to weather the storms. And I think that there are pieces of information that you do not have trauma and for you to say that their criminal and for you to say they're scumbags and to act this way is I think unprofessional does you a disservice and does your argument a disservice. And you did this as well with uber another one of my investments and that company, whether the storm and they've done great things in the world and they and I'm very proud of that investment on. And I will be very proud of what I believe that there will be, Oh, God, And who cleaned it up? Agreed, Agreed. But they got there. And so I believe what happens. So what do you know that I don't know? Well, I haven't talked to Vlad. He cares about glad he lied on. He lied on television, hits CNN. He lied on Fox. Where did he not like? What is

that? Well, Jason hey was confronted. He was confronted about whether there was a liquidity crisis and he said to their face, No, that is not true. I think this is being misinterpreted and there'll be a clarification that'll car, I think because they were able to draw down 600 million and because they were able to take down a billion dollar investment from the top investors in the world that they resolved their liquidity problem. Nobody in history has ever created this many retail investors. Then Robin Hood. They are responsible for the movement when they pitched me the company. They wanted to create this revolution. It is paradoxical that they are now the enemies of the Revolution because they actually created and enable this and I pray and they have been number one in the APP store since this whole fiasco stuff Nothing you're saying this is that they are the Lehman Brothers or Bear Stearns of 2000 and eight. To me, they

will not be. They will get through this. And there has. This is an unprecedented black swan event. I think we would all agree Nobody. Exactly what Lehman and Bear said. That is exactly what they said. And this and they will. I believe Robin, who will ride it out because they throttle the number of people coming to platform. Las Vegas is not designed for everybody in America to come to Las Vegas in the same weekend. Will you admit happened? Will you admit that that the tens of millions of people that had their hard earned money inside of Robin Hood was prevented from participating in trades that could have been executed other places because of an arbitrary decision by Robin Hood that they ended? It was an arbitrary. They want to stay insolvent. How is that? How is that Jason? Arbitrary decision? Do you think they want to make that decision? Jason, That's me telling you that they were insolvent. That's not them saying it. That's what I'm saying right now. Communication was not perfect. I agree. The communication is not perfect. They should have just said we had no choice but to stop this or we would have been solved it. We cannot take

this many traces that. But is that what we call lies? When people's money gets fucked over, just it's inconvenient. Let me just say one thing I'm gonna enter. Interject your vigorous debate. Um, the important thing, I think to note, is Robin Hood makes money effectively. It's Jamaat pointed out, through arbitrage of pricing in the markets and by providing leverage to their clients so the clients can trade beyond their means. I used Thio Be an investor in a forex trading company, was the largest forex trading platform in the world for retail investors, and 60% of those accounts went bankrupt over time, so there was a lifetime value on account because the customer would come in. They trade foreign exchange rates up and down, they would ultimately just get burnt up, and that was it. Robin Hood makes money when the market is non volatile, when there isn't a lot of swings. Suddenly when there is a swing and that's how they're able to provide their free pricing to people they're making, ah, spread. But suddenly, when there is a swing and the spread start to widen

, their actually exposed to losing money. So Jason, it's true what Tomatis saying, like they did face a liquidity crisis to some extent, that's why they got a great capital. But it was a function of their business model, right? Their business model provides great benefit and valued in some extent during good times. But when times get bad, it's like, Oh, shit, things are at risk And that's very similar to kind of the Lehman. And you know, there's a Model E I. I think this is an unprecedented situation with the number of participants. It reminds me of surge pricing with uber during snowstorms, and that also was an unintended thing that you know, who knew that it would go up to $400 to take a ride and that's something that companies will be faced with, and they will have to then adjust and then make it work. And I think, you know, in the case of Robin Hood, they should've just came up on Wednesday and said, We can't take any more orders. We can't take any more New customers were pausing Sign up to be on a wait list because we will be insolvent if you guys make any more trades and that would have

. I don't know if you believe that would have its communication for the rookie Jason. It's beyond poor communication. People were blocked out of their accounts like there was hundreds of million calculable amounts of economic loss. I don't know if they could wind up being true, because all these trades are occurring now and the stock is rock is a rocket ship. Who's to say that? No, I mean look, I mean, are the shorts all covered by now? That's what they've been saying that CNBC No, there are still people. How do you know how many people are short right now? How many shares? Because it's the primes. Put the data together and they send it to us do you have it handy? Because I've been looking for it online, and they said 10 times the number of shares short have traded hands in the last 10 days or five Jason s. So I don't have it literally in front of me, But I could get it in the next. Just text one of your people. You got all these researchers there? Um Okay, look, I'm gonna try and thread the needle here. I think Jake al is right that we shouldn't in Pune people's motives without having all the information

. And furthermore, you know, building these rapidly scaling startups is really tough. And it could have just been, you know, a function of, you know, not knowing how to deal with unprecedented growing pains. So I don't think I don't wanna be too judgmental. Can I just Yeah, that's not what? No. But David, that's not can. But you guys were not being accurate. They have known for decades. For years. Sorry. Deer's how this business works. When somebody buys a call option, they are legally obligated. When they send that order through, they have to post margin on behalf of that person. So they saw this building. This happened in March of 2000 and 20. They went through this liquidy crisis. They've had to draw credit lines before They saw it building in the system. So this was nothing except negligence. Yeah, so? So I was about Thio. Hadn't gotten to the point where I was about to agree with you. Jamaat. I mean, look, all I'm saying is, even if it was negligence, I'm not sure I would imputing all the motives

to them. That's all I'm saying. I'm trying to find some common ground with Jake on that point, but where I totally agree with you to meth is with respect to the effects of their decision. I mean, the effects of that decision they made to stop trading. And specifically, they didn't stop people from selling. The only stop people from buying. So they shut down one side of the trade. And the effect of that was we had these hedge funds from Wall Street. They were on the ropes, right? I mean, let's discuss who these guys are. These air, the apex predators of Wall Street. They are in the business of shorting companies to destroy them. I mean, that is their business model. And they're not academic traders. Okay? Who are just speculating on outcome? They engineer the outcome, right? Look at their tactics. Just watch the show billions, right? They hire PR people, they hire private investigators, their purchasing on these message boards spreading disinformation. Look at the the year of hell that Ellen went went through, right. They tried to destroy. Yeah, exactly. They try

to destroy companies to engineer that outcome. They create nothing there in the business of destruction. Now, the beautiful thing is, you had these reddit kids, these pirates who published this manifesto right on Reddit. Basically being the heirs to occupy Wall Street, they recognize look, occupying like a like a physical space Does nothing to these guys were gonna hurt them. Where accounts in their pocketbook, we're going to get together. And we're gonna basically create a trade mob that's even bigger than their cartel. And they did. They got 2.7 million people taking the other side of this trade. And then when the hedge funds double down, they said, Fuck you, we're gonna double. We're going to triple down. And the guy on Reddit said, Listen, he paraphrasing John Maynard Keynes said we could be retarded longer than you could be solvent. And they were winning. That was what they said, right? And they were winning the trade. Okay? And Melvin was dead, busted, and Citron was on its way to being dead busted. And they had to go to Big Papa, Stevie Cone, Okay

, And Ken Griffin to get to get their re buys to buy their re bites to get back into the game. Okay? And then they had these guys on the ropes. They had them felted. Okay. And then what happens just at the moment where they're gonna, like, basically bust him out of the game for good? Robin Hood shuts down the buy side of the trade. And so what does that do? It gives these hedge funds time to regroup toe unspool the trade to reposition and save themselves and to get out of the trade if they want to get out of the trade. You could never take that 24 hour time period back, no matter what Robin Hood does now. And so I agree with your meth. This was like, don't you? This was tremendous. But on that point, I think it's I am in agreement that the hedge funds deserve to get their ass kicked 100%. I also, as I said, we don't have complete information of why, um, you know, Robin Hood had to prostrating and the other platforms, and it was like five platforms, by the way that had to stop or else they would be insolvent because nothing like this has ever happened before. This is a

run that nobody's ever seen. And now we're back in the game. And don't you think all this attention then drives Mawr people to buy Gamestop, which is what's happening today and that they're still going to get crushed cause it's still gonna have to cover. I mean way. Look, I don't like Like I said, Look, where I agree with you is I think the consequences of this decision by Robin Hood where I mean, they were really bad, right? I mean, finally had these shorts on the ropes where they deserve to be. Finally, they're getting a taste, their own medicine. And it was really bad to pull the plug on the radio, I'm sure. Okay. Exactly. And I don't know what went into that decision. But here's the thing that I think kind of stinks about. It is the point that trauma is making about who is doing the trade execution for Robin Hood. Those trades are flowing to citadel. What? Who is? That's part of it. But 40 47% But who is now on the short side of the trade Citadel went in

and bailed out Melvin and Citron. And so there on both sides of this trade. Now, how does that make sense? Yeah, but what I would like to know specifically okay, is did anybody from citadel reach out and touch Robin Hood? Did anybody at Citadel put in the fix and saying a Robin Hood, We're gonna tell you off. We're gonna We're gonna cut you off, you know, unless you freeze out the buy side. Now, look, 99% chance that didn't happen. I don't know, but that is a legitimate question. We can I just tell you the question is important. But the way that you phrase it is, you call them and you basically say, Listen, you need to post $500 million of margin. Why? Oh, well, these trades You know what we're gonna arbitrarily changed the margin requirements. Okay? Oh, you need to raise. You need to post. So then what they did was they pulled all the credit lines. Okay, they post margin trades are still happening. Like crazy, right? All these people are buying Gamestop calls

. They have to go because look, when you buy a call when you as a user with David Freedberg Keen wah buys a call, Robin Hood becomes synthetically shorted. Right? Robin Hood doesn't have to share to sell you, but it's giving it to you, so they're technically short. They got to go buy it. Okay, so this is what creates this dynamic where Robin Hood knew they knew every second of every moment what was happening. And mawr importantly, what could happen At a minimum, it's negligence. And at a maximum, it's the fix. Well, it was. It was it was fine to do it before the market started to swing volatile, right? And And so when the market wasn't high volume and when it wasn't volatile, it didn't matter because they had appropriate levels of surplus capital or statutory capital or whatever the definition is in this market, uh, to be able to cover the quote unquote var or the value at risk of their portfolio of their customers. Worst case outcome. But as soon as that spiked, as soon as the var

spiked, they have to go get more capital. And so what do you do if you're the manager of Robin Hood in that situation where your clients who have been making you a bunch of money by trading stocks over the last couple of years, Suddenly they all get themselves in a bind where the bar on the portfolio is mawr than the cash Robin Hood has to clear, assuming all these people go bankrupt. That's where Robin Hood had to scramble. And so in that circumstance they drew down debt and they had to go get a billion dollars of equity. But if you guys were running that business and I'm not speaking for Robin Hood's, I'm not making the case for Robin Hood, but what would you guys have done in that circumstance? You know, suddenly all your and by the way, I'm saying they created the problem for themselves because they allowed people to trade on margin with low bank with low account balances and volatile stocks. Prior to this, it got away from them. In this way, you cannot run a business like that and be selective and arbitrary. You can't say some stocks on certain days, Some stocks on other days. Some options over here. Some puts over there. That means you're a fucking moron. And

you stay Wednesday when all of a sudden it's not Tuesday. Wednesday, this. If you were a reasonable manager of a business like this, this conversation would have been happening at a board meeting quarters ago. Hold on a second. Let me finish, please. Okay. It needs to happen quarters ago and in quarters ago, what they would have said is, Hey, guys, we've run some scenario analyses. We've done some sensitivity analyses. Here's what happens if all of these things can go against us. That's a typical stress test that the bank has to do right When you're a structurally important bank, you have legislation that forces you to be under these conditions where you have to make sure that that you can understand some of these scenarios and then you have any any trading entity or insurance company. They all have to have that analysis of what's the worst case scenario and how do you plan for it? And you have to you. And by the way, coming out of 2000 and eight, we actually legislated that we needed to have these two and three Sigma. You know, events scenario, planning, and you needed to have proper credit. So here's what happened, really. Number one. It was under equitized

, right? At a minimum, the business was massively relative to what they were letting their customers dio exactly that. That's really important because the point is they let people trade with high margin and they let people trade in volatile stocks. And it was working until not just talks, but options. What? Which is what creates the rial spin up the feedback loop that blows this whole thing up. And the and the number two is they don't know what they're doing. I think one thing that's really important, I just want to say this. We should stop pretending that trading in stocks is investing in businesses and this is something we've said for a long time on Wall Street. But stocks shorting margin and derivatives those those four things no longer look like what the capital markets were originally set up for, which was to help capitalized businesses and allow people to exit their investment. In helping to capitalize that business to another investor that wants to come along, it has effectively become a synthetic

casino or a synthetic gambling model that lets people trade things up and down. And this has been the mainstay of Wall Street for the last couple of decades. And as you pointed out, sex, it really is a leech on the system because the amount of money that trading firms and traders and hedge funds make doing this ultimately is taking away from capital that could be invested in actual businesses. That could drive job growth, drive, economic prosperity, drive innovation and the volatility that I think we've seen is the ultimate feedback loop that emerges from when you allow a casino toe operate that sits under the guise of being business capital and investing in businesses. It's not. I'll give you guys a statistic. I downloaded the data from CBO E that analyzes how much volume was traded across all the equity markets last year in the U. S. Stocks traded a total volume. Last year, you guys ready for this? $121 trillion of notional across

2.7 trillion trades. Do you think that $121 trillion of notional equity value trading provided capital to businesses anywhere close toe 1% of the total amount of trading volume. It really is a synthetic instrument that allows people to participate in. I bet that something is going to go up. And I bet that something is going to go down with other people of of a similar ilk and one person makes money and one person loses money. And at the end of the day, the underlying business entity doesn't benefit whatsoever. And you see it when shorts go against businesses like happened with Elon and Tesla. And you see it when derivatives like CDOs blow up the fucking housing market where people basically trade these derivatives that sit on top of housing and that capital did not find its way into homes to help people buy homes. It ultimately led to the collapse. Of the only. The only reason that Lehman and Bear Stearns was shut down was in 2000 and seven and eight when they were in a liquidity crunch in the same thing and they basically had all these trades blowing

up against them and they couldn't collateralize them was that the people on the other side were hedge funds. And that's why you know, they were put into the Fed and that's why we were able to basically, like, you know, come out relatively unscathed. And but I mean by relatively unscathed is like a global calamity. Um, the tragedy of this is that this is the tragedy of the Commons. It's like, you know, there is no organization of people that can say, Hey, listen, I'm really rich and wealthy, and what happened here was wrong, even though it's probably on the same scale on DSO. Everybody that was a participant in it is, in my opinion, I think is guilty of all of this. They were they were complicit in the robbing of America. Do you think calls and put should and shorting should be allowed should those markets exist, I I do have a sense of common sense solutions. And let me, uh, let me kind of give you them and then you can tell me what you think. So the first is we need to use modern technology. Let's just start with that right to ensure that you know, one share of stock, right? Isn't loaned

out multiple times so that you can't have a scenario where you have more than 100% short. That's a no brainer. You still support shorting? Come up. Yeah. Let me let me just go through the list and then you can tell me what you think. If if high frequency firms can trade tens of millions of shares per day, there's no reason why we can't reconcile who the beneficial owner of every share is. So maybe that's ah, you know. Now maybe we found the first obvious use case for a Blockchain. Right? Um, like you can't borrow a share unless you can prove beneficial ownership in a, you know, nanosecond, which can only be done on a, you know, decentralized ledger. But the point is, number one is we need to rebuild this infrastructure. You can't have 136% of a company be short. That makes no sense. The second, what we've learned is that again this it's like, are we gonna basically have these blowups every 10 years before we actually address the elephant in the room, which is leverage like you need tohave leverage limits. So, for example, banks coming out of 08 have super strict oversight and

leverage limits because they're dubbed systematically important. We don't do that for hedge funds, and I think we need to, and I think that we need to have the ability to realize that these guys can cause systemic risk. Right. So, um, just on this example, I don't know if you guys have ever heard about Long Term Capital Management LTCM this guy John Merryweather, the Asian currency crisis, the whole thing collapsed. There's a there's a good book on it. Well, so it's it's funny, but if you guys think this is the second financial calamity, it's not the first. It's the third because the first one happened in 1998. So in 1998 it was a It was the whole The whole economic system was going to collapse if the bailout. So listen to what these guys did. Long Term Capital Management borrowed, they had $4.8 billion of capital that limited partners and investors gave them okay, these fucking crooks were able to then borrow $125 billion 125

billion on the 4.8 billion of notional. So they were able to lever themselves up 26 times. By the way, synthetic margin, right? No, actual capital was allocated to these t This transaction set. It was all synthetic that no, no money moved accounts when no money accounts. So it was literally just writing stuff against debt that couldn't have existed. Yeah, So they so they built 60,000 trading positions and those individual positions represented again 1.4 trillion U. S. Dollars. Eso you took these guys in a room took 4.8 billion, um, got knuckle head over here to give them 1 25 and then got these knuckleheads to sell them positions. And all of a sudden, 4.8 billion equaled 1.4 trillion. And so then U S U s regulators had to step in. They had to orchestrate a bailout from a consortium of banks because they were concerned that if if ltcm

collapsed, the whole system would collapse because they didn't understand. So right, So we have thio. We have to put leverage limits on top of hedge funds. The third is we need to improve disclosure. The rules that the SEC right now is to discourage disclosure. That doesn't make any sense. We should force everybody to publish what they own on a weekly or monthly basis. You have the ability to do it. The technology is simple. So you need thio improve disclosure because then watchdogs and other people could basically be looking at it all day and identifying these risks faster, not slower. Um, the third is we need to do something around open trading, like, Why is it that you're, you know, people allowed to go to casinos? Why can you, you know, buy lottery tickets? But all of a sudden, like we're going to decide who's financially literate? Ah, platform like Robin Hood can decide what spot and what's old. I don't think that's fair aan den. The last

thing is, I think that we should have a short term trading tax way, tried to pass one in 2018 10 basis points. If you had passed this 10 basis point tax in 2018 on short term trading, it would have created a trillion dollars. Almost. I did the math on this because I actually the reason I ran all the equity numbers was to figure this number out. So in the US, we generated $160 billion in capital gains tax last year. And if you look at the volume I described earlier in terms of notional traded of equities and number of shares traded, if you charge 0.1% every time someone sold a share on the value of the share they sold, it would equal the capital gains tax. So what you could do is you could charge 0.1% on every trade. It would reduce all of this high frequency nonsense where people trade in and out of stocks. It would force people to trade for the longer term or basically invest in companies, and you could get rid of the capital gains tax. Think about that. If we didn't have to pay capital gains tax and we were on Lee Tax when we traded out of a stock

0.1% you could see an incredible amount of capital making its way into businesses, and this would fuel economic growth and jobs and prosperity on DSO. I think if you could pull that off, put the two together 20.1% sales tax on every share sold and get rid of capital gains tax. The lobby Incredibly powerful. The lobbyists got to that bill, but that 10 basis point tax on high frequency trading it just means, like, Look, if you're gonna trade a whole bunch of shit every eight seconds, you just have to pay 10 basis points in and out, $777 billion of incremental revenue to the federal government. And it was lobbied out, and I agree with you. And by the way, the more money goes in, more money makes its way into companies, right? And that's the best. You stop all the nonsense where people are basically trading to bet that something will go up in the short term and you get people to make investments in the business as opposed to the momentum. Lowering the capital gains rate is genius, because I think that if you if you are a retail investor and you could for every year you hold, if you could decrease your cap gains rate by 20% by the fifth year. Now, all of a

sudden, retail folks aren't necessarily gambling. They're owning and their cap gains rate would be zero after five years. That would be amazing. I have, ah, basic question. I'm interested in your position sacks and maybe even around the horn. What happens to the short positions Get covered, Which they're going to be At some point in Gamestop, I would think, or some large amount of when the short squeezes off. What happens to the people who are buying in, you know, to the meme stock as a retail investor, let's say over the next 10 days, are they gonna be left holding the bag? Is there any way this company could be worth 20 billion or 25 billion? Because, as Freeburg points out there, people are not buying Gamestop there, there, trying to destroy a hedge fund who made a stupid, manipulated bet. Great. We all love the Robin Hood story of that, not Robin Hood tm but the generic term Robin Hood. Um, what happens to those people? Are they gonna be the last people holding the bag? Probably this is not gonna end Well, there's no question about that. I totally agree with

you that people engaging in this kind of speculation and buying at these prices it's not gonna end. Well, now, I do think that the red editors actually had a brilliant strategy right when they noticed that these hedge funds were over short, overexposed, and they seized on that vulnerability they did to the hedge funds. What the hedge funds, usually due to everybody else, which is find the Achilles heel, right and pile in. So I think the strategy started. Brilliant. Now, anyone who is piling into it, I'd be real careful because I think the hedge funds have regrouped, you know? And you know, the the idea that you're gonna be beat them at their own game, You know when look, I mean, Citadel is executing your trades. I mean, right that the trades air, the order flow is going from Robin Hood to Citadel. They're not gonna be caught flat footed there on the other side of this trade. And so, you know, I just think the house always wins. I'd be real careful about getting into it at this point, I just just You guys know Robin Hood, Robin Hood just tweeted that now the list of restricted

names is now up to almost 35 or 40 e Think it's worth, um, they're randomly picking companies, guys. Rlx What is rlx? I think that Z Ralph Lauren. Nope. You're not allowed to trade. That s N d l. I don't know what that is, but you can only buy 10 shares. Would a better solution Chamot be for them if they can't handle this and they have the risk of ruin to just say we're not adding any more accounts until we can digest all this and raise enough capital to float all this And do you think there's a chance the SEC is telling them you gotta pump the brakes on this because we can't have a market crash two questions tomorrow? Um, I I think that the issue isn't Robin Hood, uh, its ability to grow its that they don't have their ability to run their business, and so their incompetence is going to cause them to, I think, have to deal with if they had Well, if they had $20 billion in cash right now, this would not be an issue, right? I think you're right. Okay, so assuming they could line that up because that's probably what's going on right now is a $10 billion. Uh, investment

is gonna go into this company pre I p o. So that they can actually take advantage of the situation and grow. So despite the fact that you have an ax to grind with them because you have Sofia competitors, that's very far behind them. That had its own colossal problems. Let's put that aside for a second. You're talking your own book without even mentioning it. Do you think that if they had that 10 billion, they would just open up all the doors? Or do you think maybe they just say, Hey, we're not gonna add anybody else? I think that what's gonna happen is they're going to get sued into oblivion. I think that the class action lawsuits here when people talk about the implied losses that that they that they had over the last 24 hours, David Sacks is right. You can't undo it. The thing is like what in all of these other situations, like in the uber fiasco, you know, you can't claim much damage, right, because you can't measure it. You could have taken a bus. You could have taken a taxi. You know, you could have taken a lift. Um, maybe you could have walked. Who knows what it is? But the point is that the the economic impacts, um, I think we're much less than maybe the psychological impact, right? Like you were angry

here. It's the exact opposite, which is that you prevented people from transacting in an open market. And when people signed up to use the service, that's what they thought they were signing up for. And they thought that that the risk on the back end would be managed. You have to remember, it's not that the individuals did anything wrong by buying or selling. It's that Robin Hood did something wrong by not being able to manage their business accurately, and then that then impact at the users to the tune of tens of billions of dollars that has to get adjudicated. And so, yeah, I think the right thing to do is to stop the business, hit the pause button, allow people to elegantly transfer their money out. Do you have to remember on the back end of this whenever that you have one of these market failures. The clearing houses are allowed to instantaneously close your account and transferred to another broker instantaneously. You have that right. And so the market does understand this systemic risk. At some level, they just didn't push it all the way through to the end of retail. And so we're gonna have to unwind this and unscramble this egg

because it's a really it's a really big problem. Yeah, growing growing willy nilly Because everybody's infatuated with valuations and blah, blah blah, and you move into a regulated market where you needed to understand capital constraints, you needed to understand modeling. You needed to understand three and four Sigma events. It just means you're under prepared, which means at a minimum, you can't be doing business until you get that shit under control. Yeah, I actually think we're almost in sync on this. You have a little bit an ax to grind because of your other portfolio company. I think that you still won't recognize that you have a better way. Let's talk about horse in the race because so far, just the day do they finish resolving all of their harassment lawsuits eyes that all resolved now Or is that still open way that you took them public? So did did you work all that out before you took in public? Yeah. Jason, we transition the CEO. We completely hired a new team. Um I mean, it's incredible. So you so your company that you took public

can resolve issues and you can give them time, and then you can in fact become their mentor. And you could become their savior to get them public and save that company. Jason, Robin Hood Can't Robin, who can't can't talk about his company That's going public right now. So just as his lawyer, I'm going to step in and okay, no point out. Make sure you don't go into saying something. He should companies, all of our companies and I don't mean to create a lot of collateral damage here. But Sacks had a company that had challenges Temasek companies of challenges. We all have companies have challenges and I think focusing on what is the role of an investor. When your company faces challenges, I think the role of the investor should be and I take umbrage to you, chum trying to dunk on me because I'm supporting an investment. I think it's a low blow on. I take it personally. I'll be totally honest. I am trying to work with the company to help them resolve the issues. And I need to be loyal to my founders. And I need to say, Hey, how do we resolve this? How did we get here and work with them? And you say that I'm right or die? But that's how I

approach this is I should be trying to be helpful as a shareholder. Could you? I think you try to be, too. But could you make the argument that someone dunking on your company is the equivalent of a hedge funds shorting a company? I'm talking about my personal relationship with Hamas, which you know is different than you know, the public markets, right. But what I'm saying is like, I think in the private markets we hear a lot about venture investors. Um, you know, often speaking good about their own companies. Where people really get irritated is when venture investors speak bad about other companies. It's the equivalent of the hedge fund short and I mean e. I mean a month maybe dunking on Robin Hood. I don't hear him dunking on you. I mean, I just said I stumbled into the investment at the opening. Well, you stumbled into a bar. I mean, you told you, Jason. You told the story, Jason. You told the story to me in a bar and came up Jason. But you told the story flippantly on television that you ran into man Antonio's nuthouse. What do you want us to think? You didn't tell us? Listen, I had

I had systematic scouts reach out based on traffic growth. I sat down They That's not how I get fined by doing a podcast. Jason Jake, how If you want me to apologize for saying it's Jason Jason, if you want me to apologize for saying that you stumbled into it based on your public description on television, that I'm sorry, but it doesn't. But it doesn't take away from what we have. I think the investors responsibility. This is what I think is fundamentally wrong with Silicon Valley. We are people that basically do this like hero worship around founders, and it's stupid. I think we have a job as fiduciaries to the users and to the employees and to everybody else that doesn't have a voice. And most investors are incapable of actually pushing people to do the right thing. Okay, I'm pushing to do the right thing, and I always have learned the hard way. And in this example, what I'm saying is this problem should have been solved three and four quarters ago. And that's it? Yeah. I mean, look. Yeah. So your mouth, you're you're right about that. But, I mean, just give Jake how little support here. I mean, the

reality is, you know, we've all been on the inside of these hypergrowth companies and, you know, like, mistakes happen all the time because you're moving so fast. And yes, it should have. It should have been fixed, you know? But, you know, stuff happens now. The question is when bad stuff happens, is it an integrity issue, or is it negligence, or is it just people running too fast? And I don't think we know that this was an integrity problem. I mean, it could have just been people running too fast, but David, you knew what the rules were. Meaning? I don't think I think it is an integrity issue. The rules were not like all of a sudden in a crystal ball and all that. There is a magic eight ball that spits out a rule when you do a deal with DTCC. When you did a deal with your holding company for clearing you sign contracts, those contracts should have been model herbal. This is an Excel problem. This is not. I hear what you're saying and I'm saying I don't completely know. I want to get to the bottom of the relationship between Citadel and Robin Hood and I want to understand if there was any undue

influence there, OK or whether this was just a case of hypergrowth catching a company by surprise. I'm not defending them. I'm just saying, I don't know. And therefore, I think it's a little bit premature to be talking about giving this company, and I also don't think Is there even a possibility that this has ever happened in the history of the stock market or the modern stock market? That 10 million new and hold on, I even say what it is? 10 million new retail investors came into a stock. You know where millions of them a day and that the stock trading intent. I don't think that we've ever had social media collide with finance like this. And it's very reminiscent of our discussions with democracy and journalism, censorship and politics. We were having weird behaviors because of vier ality. I think that I think this is the most important learning from this experience. Forget about the fiduciary and the governance responsibility of these companies. Whether they were good or bad will be resolved over the next couple of weeks and months. I'm sure as more information comes to light. But what super interesting about what happened this week and I think

is the most impactful societally over time, um is that we're seeing this phenomena where individuals in aggregate can believe something to be true and make it true. And we saw this with Tesla, and I don't think Tesla got this level of notoriety because it was such a longer play out cycle. But l on, you know, was not hitting numbers that people thought he was going to hit margins, production volume, etcetera. People were shorting the stock, but enough people believed in the story that Ellen told about what he wanted the future to look like that they bought the stock and that gave him the ability to do shelf offerings, raise additional capital and ultimately build the business and make it manifest in reality. That, he said, would happen. And the same is true of Bitcoin on the same is true of Trump, and the same is true of storming the Capitol. In all of these cases, there was a belief in something, and there was an aggregation of individuals using social media as a mechanism

for sharing and talking and engaging and creating a collective outcome that wouldn't have happened through a centralized system or a centralized process and wouldn't have happened in the traditional way where history defines the future. And I think that is what's so powerful about what's happening right now. Onda. We're seeing it in financial markets, but we're also seeing it play out in politics, and we're seeing it play out in the real world in a remarkable way. And it goes back to this notion that, like a stock is worth the underlying value of the company and that that's not true. People can dream a stock to be anything as they did with Tesla's at the time that people were buying Tesla's stock. The historical performance of that business was not what hedge funds considered to be a you know, a profitable good business. It shouldn't be worth anything. But the belief in what it could be is what drove the value of that stock and ultimately, that value enabled that business to become true. Andi, it's just it's amazing to see it happening. And I think the the counter, which is really what makes this so

striking, is the centralized institutions that are trying to block this from happening. And the shutting down of parlor and the shutting down of Robin Hood trading are equivalent. From my point of view, um, or at least equivalent, I think, will be perceived to be equivalent broadly, which is if a group of people get together and try and use an online service to make a change in the world by sharing and talking with one another and communicating a belief, a collective belief and that gets yanked away from them. That institution that has the ability to yank it away from them is evil, and it will force people to decentralize. It will enable new ways of trading new ways of communicating new ways of building Andi. That's the profound change that I think this decade is going to realize, and we're just seeing it start now. I agree. That parlor or Wall Street bets is parlor two point No, right. And what happened as soon as Wall Street bets started, which is the Reddit kids. They started threatening, and they wounded these powerful insiders. Thes rich, you know, hedge fund

magnates. What happened? They started getting banned off of discord. They got discord. Is a tech company to kick him off? How did that happen? They've been talking on there for months and all of a sudden does magically right the critical moment where they're also not allowed to trade. Their free speech gets cut off. That's the that it was deliberate. I'll tell you how it happens is I guarantee you what these hedge funds did is they went through the discord room and they screen shotted, You know, any post that they could plausibly characterize, as you know, hate speech or what have you and, you know, and by the way, I mean those there's a lot of raunchiness in these rooms, but it's not hate speech, and it's not organized for the purpose of hate. It's organized for the purpose of trades, but what they do is they weaponize the censorship rules and they go in and they screen shot and then they give it to discord and they get these guys kicked off. And this is exactly what I've been talking about with censorship. It starts something you like and then becomes something you don't. How many of the people who support

these? You know, Reddit kids were in favor of deep platform ing Trump and parlor, and now they can see where it goes. This is slippery slope, and we've only had to wait three weeks to see where it goes. It goes to the same place, which is when the people in power get threatened. They use these rules. They weaponized these rules to shut down the outsiders and the upstarts. That is the problem with censorship. That is why you cannot let the beast get started. I completely agree. And I think this is exactly why how I think where we came out was you know, the deep plat forming of Trump made no sense I think the the economic censorship of Robin Hood makes no sense. Yeah, and you can argue it's the right thing to Dio with a narrow context. But when you take the broader point of view of the implications, that's where this becomes really shaky and really scary. And I think really enables a decentralized movement that is gonna be a lot broader, Um, than folks are really realizing at this point. You know, folks don't want to be trading on a system that tells them how to trade, and folks don't wanna be

communicating on a system that tells them how to communicate. If I gave, if I was running Robin Hood and I said, we're gonna have two options, there's gonna be a Robin Hood diamond membership and you pay by the trade and, you know, you get the special features and then the Robin Hood free. You know, you get your data is sold or however it works. Would that be a possible solution? I think to the optics issue here, where consumers could basically pick, just like if Facebook or Instagram woke up one day and said, for 9 95 a month, you can have none of your data. No advertising ad free like Huludao Yahoo, Ruler Premium s. So here's the thing, Jake. Uh, I hope you're Robin Hood. Investment is successful. I just think that there are now three moments in Robin Hood's life. There is pre this week, and it is what it is. It's an $11 billion unicorn. God bless them. Then there was this week where we have to frankly hold people accountable for the economic damage that they created this week because it

is measurable. Okay, it's not that it's not like missing, you know? Um uh, it's not like, you know, surge pricing and uber it's not, you know, Facebook growing too fast and allowing, you know, pictures of breasts getting posted and not have to catch up. It's not that, okay? It's not a bunch of like this information that we can't really judge. This is very discreetly Judge Herbal. And so in this week, Robin Hood existed as a different company, and I think that there's an implication for that, then, to your point, honestly, I agree with you. It's what happens from here, and I and they should survive, but they have to learn and I think what they have to learn is you have to stop the account growth. You have to massively shore up the balance sheet, take the delusion, get the capital you need. Because let's be honest. I'm sorry, but nobody's gonna show up with five or $10 billion at 11 billion pre, they'll show up with five or $10 billion of three billion pre, and they should take the money. And then they should allow the platform toe work as intended, or at least as perceived to be intended to their users. And then they should reopen to everybody. What

would you do, David, if you were in charge? And then let's move on to our next topic. Well, I mean, I feel like we probably talked about Robin Hood enough, and I kind of want to go back to the point that Freeburg was making just kind of up leveling this a minute, which is? I definitely think this is part of this ongoing populism versus the elites. War and social media is now the tool that the people use toe organize themselves against these powerful elites. It's why we cannot allow censorship because it always comes down, uh, to benefit the powerful. The elites against the people are trying to organize against them. That was to me one of the biggest takeaways from this week. And look. The reason why people are organizing is they're asking the question. What is the societal benefit of these big hedge funds in relation to the enormous sums of money they make Every year you go to like the Forbes rich list or whatever. And every year these guys were taking down the most money. They're not creating companies, you know, And and tomatoes, right? We

can't have founder worship because they make mistakes, too. But at least founders air creating things right. They're taking big risk that they're not providing risk capital like what we do. Okay, we're investors, but we're funding people's, you know, we're taking the risk of writing checks toe to start. The guy who's got nothing, right or gal, you know, they they them it's all all good. Eso eso todo s. But But what exactly is a societal value of these hedge funds? And I know that they provide some price discovery and they provide greater liquidity to markets. But is that really worth them, really being the richest players in the game, it doesn't make any sense. And then when they lose, like in 2000 and eight, they get bailed out. And so something. It makes no sense. Something is wrong here now. Is this a right wing view of left wing view? It feels to me like there's a political realignment happening here, where the left and the right we're all getting on board with this idea, and it's got to get fixed

. Yeah, this This might be the legacy of Trumpet Away Sacks that he created so much disruption over those four years that now we're actually finding out where the actual breaking points are in society and this is one of them. And the health care system is one of them, and freedom of speech is one of them, and we need to address each of these and their complex. But there is common ground. I mean, when AOC and Ted Cruz air both agreeing on the same issue with something's going on here, like, I think we have to fight the real enemy trauma, and I should not be fighting over this because I could tell you of trauma did the series A and this he would be backing up Robin Hood like this to the end of the end of the Earth. And that's totally fine. And I agree with Jason. I just I just want you to know Number One. I love you with all my heart and I and I hope you may. I hope you. I hope you make hundreds and hundreds of millions of dollars. But there's a It's just like, you know, you were You just got upset with me because you thought I was kind of saying that you stumbled into it. I didn't mean it that way. I was just repeating the way that I heard this story. But something that touches be equally ferociously is this idea of like

the little guy getting run over by some like, you know, objective thing over here that makes a decision that's arbitrary, you know, 100% agree with you, and so, like the idea that, like, you know, somebody who's on an app all of a sudden get censored. Somebody that you know makes a post, gets canceled. Somebody that tries to make a trade can't. It feels unfair it feels that each individual is suffering some pretty deep in equity. Yes, and I can't. I just can't stand that. It really just touches me in a way that tilts me and I get very And you know what? It's interesting. I think the reason I made the Robin Hood investment is because my belief in the underdog and my belief in people's ability to come up from being poor, middle class to middle class or affluent Friedberg you haven't chimed in yet. Azzawi rap here and then move on to our second topic. I think we're at an hour. So it s so I just want to say, you know, we talked about decentralization, and, you know

, we all feel the emotional response to the little guy getting screwed by the big guy that controls the system. And we want to fight the system. That's the basis of every great movie. Um, it's the It's worth highlighting, though, that decentralization and what I would kind of characterized as swarming behavior. Uncontrolled swarming behavior can actually have negative consequences. And there's a reason systems exist. You know, when you put a bunch of people in a room, let's see about 100 people in a room and every time and someone says the word door, and every time you hear the word door, you're supposed to repeat it. Within 30 seconds, the entire room will be like deafening with everyone screaming door, door door. Suddenly everyone will be screaming it. That's a feedback loop that occurs in an uncontrolled social system. And that's what's occurred with Gamestop. And it's what occurred with Bitcoin. So there are, as we've seen, remarkable outcomes when you allow systems to operate without centralized control and without centralized brake pads that that kind of slow them down or put in place, um, rules and some obligations

to how that system operates. The problem with decentralization and this swarming approach to resolution, where lots of people basically worked together individually, is you end up with things like cancel culture, where before a judge and jury determines whether or not someone did something wrong, the community decides that person should be punished and shut them down in the real world and their career and their life is ended and ruined, and we saw the same and we saw the same with the capital riots. You know, people basically died because of the swarm that occurred where this idea that there was fraud in the election became an echoing, deafening noise for these people, and they swarmed and killed people. And the system by which you can actually have vigorous debate and the system by which you can actually have controls and processes and judges and Juries and trials is what needs to be improved for this toe work. Otherwise people will go to decentralization and you will have a Lord of the Flies moment

that engulfs civil society because the tools are there today, and so centralized systems can work. But they have to adapt and adapt quickly to be fair and to enable and to not discriminate. Otherwise, we're going to see Lord of the Flies, and we're gonna see decentralization being the solution to getting out of the system that's inhibiting us. And we're gonna end up having really fucking ugly outcomes. There's a psychological term for what you're describing. It's the diffusion of responsibility when also known as my behavior. When a group of people collectively do something, their individual morality can evaporate, and the larger the group and the, uh, more intense the behavior, the less responsibility each person takes for it. So five people on the steps of the Capitol, you know, one person breaks the window. Maybe somebody breaks it. But once you have 500 or 5000 and one person breaks the window, now you've got a much higher percentage of people start breaking windows, and that's when tragedies happen. Of course, World War two was the diffusion of responsibility. With your totally, you're totally just

just one quick point. Then we could just move on. So I think he's like viral tools, the social networks. They enable two things. They enable mobs, but they also enabled movements. I think the mobs are bad and the movements air good. Or they can be good, depending on what their manifesto on what their mission is. And so I think we want to enable the movements. But we want to be really careful about the mobs. And, you know, one of the things that's kind of disturbing about Twitter is I generally find that, like the tweets that seemed to go the most viral are the ones that are full of rage and anger, and the ones that are trying to make more nuanced points, just kind of get lost. And so there is something a little bit disturbing about the mob behavior. But but the movement, the enabling of these new movements, I think is really powerful. And that's what Wall Street bets waas, at least in the early stage. And they did not deserve to get shut down like that. Social social networks are a collective amygdala. They're not a collective cerebral cortex. And I think if someone can solve that problem and get people to think about the rational, objective outcomes in a social way, in its engaging a fashion as it is to kind of be excited

by the negative shit that excites the amygdala, um, you know, it could be really powerful. But that's probably we're gonna need politicians who we're gonna need some level of politician who has some integrity and some expertise on Lee. Don't you think? Don't you think J conditions e making a transition E. I was going to say, Don't you guys think that what this means is that entrepreneurs now can really think about decentralization as the key feature, like in many of these markets or these systems where we have these centralized authority, we have to move to a much more decentralized, democratized way of doing things, whether it's stock trading or whether it's health care records or whether it's, you know, education systems and degrees and accreditation. There has to be a way where you can can really yeah, but with morally and ethically inclined and or legally inclined systems that ensure that the behavior of that system doesn't run amok. And you know, that's really where things can can go go awry. A zoo we've seen lately

. Um, but it's a hard problem to solve it. I don't think we're going to solve it here today. Just ah, Final update Fifth. I don't know if this is exactly correct, but I just asked on Twitter how many shares of Gamestop we're still short. Apparently, there's still 55 million shares were so short of the 70 million or so share total shares in 47 million in the float eso something very bad could still happen here. I mean, these shorts have not been covered, so this is going to be an ongoing saga where I think every single platform if if consumers keep buying these shares. What is the end? Does anybody have an idea or a prediction on the end game here? And then we'll move on. What is the endgame? If another five million people buy the shares or 10 million people buy, it goes to 1000 or 2000. What happens if Gamestop is worth $100 billion? It could happen. It could happen. Well, can I tell you, Jason what that means? There's a great article in the information which Sam Lesson wrote. I don't know if you guys read it, but it basically said, Why did Tesla win

? Now? This is not accurate, but I think his framing is relatively accurate, which is? People were buying Ellen like they would buy a trading card. Andi Tesla's a manifestation of Ilan Andi. It actually is so visually, it makes a ton of sense to me. Like then I think you know why have, like Richard Branson's businesses work? Or why is the Jordan brand work or trim off all the You know, in a smaller level, Yeah, at a smaller level, because we're brands and we have these values and people can imbue their their collective decision making and support to the person versus the institution. It's a belief. It's a belief in what that person represents to, you know, I can Why did, uh, NBS by that freakin painting that wasn't even a Leonardo painting for a billion dollars? You know, there was some belief there, you know? Is it really worth a billion dollars? It doesn't matter. At the end of the day, most assets are most assets are purchased under the premise that I believe the price will be higher tomorrow than it is today

. And if we all believe that, then we will all buy it today, and we will all find more people buying it tomorrow. That's what Bitcoin is. Do we all agree, though, that Gamestop is not Tessa? I don't agree with your premise. I don't think that stocks necessarily need to be reflective of the underlying business, and that's what's so. But don't just think about it. That's That's what's so shocking about this week because we've all been taught in these freaking economics books in these financial analysis books. Oh, the stock is worth X dollars. This kind of cash flow, what company has ever paid out dividends that equal the amount that you paid to buy the freakin stock unless you lived in 1926. It hasn't happened. So everything we've been taught about DCF's and future cash flows and everything is nonsense. At the end of the day, every stock trades based on the assumption that someone will pay more for it than I am paying for it today. That is it. That is entirely what a stock is. And so if everyone's belief is completely uncoupled from the underlying asset that that stock is meant to represent, it doesn't freaking matter, and it highlights what's really going on

. Trading stocks is not investing in businesses. And can I say something else on top of this? Jason, What was the name of the Remember when we were talking about censorship? What was the name of the the left podcast that got canceled on Twitter? Red Scare. Red Scare is Gamestop Red Scare or at the real Donald Trump? And by point is, who the hell are we to decide? How does it out? Three. Cancel all three. Cancel. What's your prediction were sitting here a year from now, Full year out. What does Gamestop January 2020 to look like? What does the stock price look like? What does the business look like? What? How does this all resolve itself? You know, I'm not a public stock market trader. I'm just not. I just feel like it's I'm not a day trader. I don't I don't buy public stocks. It's just kind of like to me, it's a distraction, E you know, just by Vanguard funds like guys, if you're listening to this program, you're wondering where to put your money just by Vanguard Funds and stop worrying about

it. Index low fees, low fee index. Yeah, yeah. I mean, if you want to bet specific companies because you get enjoyment out of it, do it. But yeah. Okay, so nobody has any idea what happens if it hits 100 billion around this. And so I think that's that's illustrative of my point. Is that for some what intelligent people who have some degree of expertise in this area. We have no idea how this ends. But this is the back. No, but this is the point. It is a It is a collective wiggy board moment. Everyone's got their hands on the wiggy board and they're going to craft the sentence. Any one of us individually cannot predict what a collective group of three million plus people are going to dio and we you know, we try and struggle and think about the underlying value of a business, which is what these hedge funds have done historically. But at the end of the day, this thing is gonna be worth what the market tells you it's worth and what the market chooses to dio. We wouldn't know because we're not the collective three million. Jason. Yeah, yeah. Eso Look, Jason, there's two questions, right? There's always this question of, like, what should the price be and

then who gets to decide? And look, Do I personally think Gamestop is overvalued? Yes, of course. I think it's gonna end very badly, But the question is, who gets to decide? And is the game gonna be rigged by powerful insiders against outsiders? Just It's just like the same question with parlor. Okay, which is who gets It's not about which. Look, we can say that there's certain views that are bad, okay, but the question is, who gets the power to decide that? And it's and and that's what. That's the thing we have to ask. Is that second order question of who has the power to decide? Is there any outcome Amazon got to decide and Robin Hood got to decide and the victims were parlor and Gamestop. Okay, so this would be a good segue to move on. Apparently, we had a discussion on the last episode about running for governor, and I bought the domain name governor Chamot dot com. I had governor Jason dot com. I got Governor Saxon governor friedberg dot com, and I redirected him and you guys owned them and their redirected

to your Twitter handles. And lo and behold, we wake up one day and che meth for CIA is life. Chamakh everybody wants to know jumped the gun. We were gonna have a vigorous debate and decide which one who's gonna run. But somebody jumped in and I'm not saying other besties might not jump in other best, he could jump in. They have domains, Stadio No way! Do not want to split the best devote. I think we got all the best thing is this is the Four Musketeers. We're all behind your mouth now. We do not want to split the best devote. Tomasz, it's on. You tell us what's gonna happen now. What's gonna happen way are going to do an emergency pot and talk about exactly that. So if folks want to know, they're gonna have to tune in midweek. But way. Well, let's talk about the Web pot coming up with it. We'll we'll wrap

on this website. You put out a platform with action been And though these reactions in a way, you guys wanna be I wanna be very clear Midweek, Midweek. But I'll just tell the quick stories three young people through these three amazing guys just built they built it and I just retweeted it. Um, I could say that tens of thousands of people have signed up for updates. I know that much. Um, all these three guys, though, here's the Can I just If I could tell a shout out to these guys um Rodel Samir in among all these three guys, um, they don't live in California to did but had to leave. One wants to move, but can't because you can't afford it. And it's just such a microcosm of, like how beautiful California's the place is and just what people think about when they think about the state is just so It's so lovely. So for another time. But anyway, shoutout to those guys for building the website. Thank you. So essentially the entire market has now been

driven by a group of all in off the oil in army built a website. You retweeted it and that's what this is all about. So there has been no paperwork filed. There is no action committee. However, it has traction, so it makes one wonder. And you know, I mean, there may be a shooting cabinet meeting. Maybe she may or may not. There may be a shadow cabinet meeting. What is the chances? Well, I think Jamal, by publishing that website, just went down the escalator. A golden escalator. He's gone down the escalator and who knows what could happen Now I'll tell you this. I went on, I'll do a plug. I went on Bloomberg this week. It's on YouTube. We can put the late show notes. Yeah, put put the link in the show. Notes. Nick. People need to watch that I went through all the ways in which California is hurting Newsome hasn't done a very good job. And I made my case for Jamaat, so that's a prelude to

what we'll talk about in the next pod. But the amazing thing is the outpouring. I mean, the number of people who texted me email me and tomato and all of us like there's a groundswell happening now. 100%. So, you know, I would say all the fans of the pod who are now behind this You guys are making it riel free bird Manifest destiny Here. What's going on? Is this another wisdom of the crowds or a mob or a movement? Who am I to say? Are you are you in as chief science officer? Will you be our doctor? Fauci, You know, here I think we should have a good debate on our next pod and hear the platform and discuss the platform. And, you know, make sure that we all feel like this is, uh this is where we should be. Andi, I think this is going to take a little bit of time Thio to build Andi. I think you know, the more we kind of built towards it, the more likely we are to

have that groundswell that we're gonna need. Uh, e I will tell you it seems pretty likely that this recall effort is going to get the signatures it needs. So we can kind of put that in the sand that it's very likely we're gonna end up seeing a recall election. Okay, So if people want to participate in recall Gavin Newsom, what do they do? Because that is the first step towards absolutely mammoth governorship. You gotta go. You gotta go to rescue California dot org's rescue California dot org's go to that website signed the petition. That is the first step. We are very clearly a few 100,000 more signatures. We have 1.2 million. We need 1.5 million. Go there, sign up, and then go to Shamas website, which is Jamaat. Foresee a dot com and some first man. Jason, I'll make one more point. And I think, um, and I made this the other day on that clubhouse that sacks, and I did I think I made it before you joined. If you think about the difference between a leader and a manager, a

manager is someone who typically delegates responsibility and authority, a leader is effective at synthesizing multiple people's points of view and creates an opportunity. Defines a vision, defines an objective that is the synthesis off all the people that report to him and for which for whom he is responsible. Or she and I think what we've seen in California in particular and really across leadership positions or governing positions across the country during this pandemic is a failure of leadership, because when times are predictable, if a then B, it is easy to manage and it is easy to look successful. I delegate down to the person who knows best, and they are responsible for the outcome. And they do it well, Great. All I'm doing is pointing to the right person to run something. The pandemic is difficult, and it is unpredictable. It requires a synthesis of economic information, social information and health information, and more often than

not, ah person who typically acts like a manager points to the person they think should be in charge under the circumstance to make a decision. And that person is not equipped to synthesize the economic and social ramifications of the decision. So what we have seen during the pandemic is most often people in a governing position have pointed to the health officer or the medical person and said, You make the decision and that person does not necessarily account for the social and economic ramifications of the decision they're making. Ah, health person knows how to save lives. The best way to save lives is shut everything down. And so the test of leadership during this pandemic has been a test of synthesis and recommending an action that's associated with the understanding of the social, economic and health implications off What's going on and that's really where so many governing bodies and individuals have fallen apart during this pandemic is an inability to do that effectively. And I think that is what is needed. Going forward, it is a It is a moment of test. It is a It is a

moment of truth about the difference between a manager and a leader, and we're seeing across the nation who is what. And I think it is highlighting why some folks may not be best suited to do this. The second thing I'll say and I know I'm on a little bit of a diatribe, but the second thing, I'll say it's career, probably waiting for your career Career politicians, I think, simply should not exist. If you go back to the origins of this country, right, having your place in government, and we talked about this over email, having your place in government was meant to be something that everyone was supposed to take their turn doing and the people that were sitting in political seats. It was supposed to be the merchant and the local farmer and the banker, and we were all supposed to take our turn representing our communities representing our people in government. And what we've seen is people who have made a career out of being a politician, and the result of that is that their job depends on them getting reelected in order to remain in their career. They have to get re elected, and they ultimately end up making trade offs that don't necessarily represent the best

long term interests of their community. And this is broadly true across nations across centuries. But it's particularly acute in the United States, where we've seen such wealth creation over the last 250 years, and what's happened is when you have career politicians sitting in these seats for so long in the environment of severe wealth creation, you end up having governments that are ineffective and creating systems that fail us. And here we are. And what we need is to have someone go on that's not dependent on the traditional folks that get people elected and fund elections and result in re elections. We need someone that can go in as an outsider and make a change. And so my advocacy for what's needed in California and I think nationally and that's a longer conversation is to find those types of folks to come in and lead and be politicians that could take a leadership role, synthesize information and not be worried about the re election cycle and not have anything to lose related to a career in politics. So I'm gone on that note. I want to say, I love all of you on Bond. Let's do our emergency

pod on Tuesday. Um, did you guys wanna play poker tonight? I'm still in E. Was playing that original graduation. Ugo, my mom's and my parents got vaccinated. E Oh, wait, you guys that I want to play Just just one note. One note If you do fill out if you take If you go to rescue California dot org's that the name. So if you go there, you print out the petition and you hold it up and take a selfie with your signature on it and you at the best. These we will like it, possibly retweet it and possibly follow you. So go and take a picture of your print out with your name on it. And that proves that you're part of the all in army and we will like it. We might follow you and we might even retweet you. You could get even four besties love you, and we'll see you all next time on the all in pocket. A. C had couples therapy tomorrow Everyone, everyone

welcome A three billion here. A million there. Pretty soon you're talking about real money. Thes air Really big numbers is spread the opportunity that technology represents. We're probably gonna have four Kardashians on their four best cheese on there