E28: Public & private markets update, Archegos debacle, US debt issues, wealth tax & more

Chamath Palihapitiya (0:00)

My name is David Sacks, and I have a broomstick in my b***h.

That is why my voice is so deep. I have never had friends in my life. Somebody be my friend who I don't pay.

David Friedberg (0:17)

What a mood we're in today.

Chamath Palihapitiya (0:20)

What a vibe.

Jason Calacanis (0:40)

Hey everybody, hey everybody. Welcome to another episode of the All-In Podcast. With us today, the rotating cast of characters that you've come to know and love and follow on the Twitter, the Queen of Quinoa, David Friedberg is here. And the Rain Man, David Sacks calling in from one remote location that is undisclosed. And the dictator, Chamath Palihapitiya with us again.

Gentlemen, how's everybody doing?

Chamath Palihapitiya (1:09)

I'm punchy.

Jason Calacanis (1:10)

You're punchy?

Chamath Palihapitiya (1:13)

I'm punchy.

David Friedberg (1:13)

Chamath is in a mood.

Jason Calacanis (1:15)

Is he in a mood? What's happening, Chamath?

David Friedberg (1:18)

Nothing.

Chamath Palihapitiya (1:18)

I just finished a workout, so I think I'm high on endorphins.

David Sacks (1:21)

How much money did you lose in the market today?

Sacks comes in and just a flagrant foul on the first play of the game. He said he wasn't happy, so I was just hypothesizing what may be the cause.

Chamath Palihapitiya (1:37)

I am happy. I'm about to go on Easter vacation, so I'm happy about that.

Can I just tell you, March 2nd or whatever that day was, was an absolutely ludicrous day. We've kind of clotted all back. We're doing pretty decently for the year again, but I got to say, my gosh, I've really learned to deal with drawdowns in the last 30 days. It's been an amazing learning process. I'm a better person for it.

David Sacks (2:05)

You did look pretty shell-shocked that episode.

Chamath Palihapitiya (2:09)

Dude, I mean, I lost more money than I ever thought I would make. I could bail out a small country, you know, and it just vanished. It just evaporated in a day. It was incredible. Then it came back and then came back.

That's okay.

Jason Calacanis (2:23)

Well, what do we think is happening in the markets right now in terms of retail investor participation and the number of SPACs that are coming into the market? I saw a statistic today that in Q1, there were 245 SPACs raised in Q1 or 250 That's on top of the 250 that were raised last year.

David Friedberg (2:47)

More capital was raised in Q1 than 2020, 2019 and 2018 combined in SPACs. And just in Q1.

Chamath Palihapitiya (2:56)

Just to put some further color on this, you had all these folks raise money.

You had some really questionable sponsors, to be completely honest with you. I'm not going to call any of these guys out because I don't want to give them any airtime. But you literally had people who ran companies into the ground, people who were kicked out of their companies for sexual impropriety. It didn't matter. Any random dog and cat was able to raise a SPAC in Q1. And now on the backend, you're going to start seeing some real difficulty. So deals are getting re-traded constantly, which means that IPOs that should have been done at price X is getting discounted by 20% and 30% to get the deal done. There are all kinds of side deals getting cut left and right.

And this is just the beginning. And the reason is because that, Friedberg, how much did you say, 265?

David Friedberg (3:51)

There was about 110 billion raised in Q1, it looks like.

Chamath Palihapitiya (3:54)

But how many deals? 260 deals?

Jason Calacanis (3:56)

298

David Friedberg (3:57)

Yeah, almost 300

Chamath Palihapitiya (3:59)

So those 300

Jason Calacanis (4:00)

248 in 2020

Chamath Palihapitiya (4:01)

So we're still in the first inning, right? If you think about it, these Sacks have two years to put the money to work. So we're only max 90 days in to a two-year shot clock, a 700-day shot clock. And so you're going to see some really crazy behavior, I predict, in November of 2022

Like the last six months leading into the expiration of all these Sacks in between now and then, I think the market is really going to hold people accountable. So like when we see a pipe opportunity now, we're incredibly firm on like, hey, listen, the 2025 projections, we're going to back off of those. We want to see 2023 numbers. We're going to price it to that. We're going to price it with a margin of safety. And so these people come back and recut the deals constantly. You know, there's a situation where this one deal retraded three times before a price cut.