E54: Spread trading big tech, capital allocation, Zillow's misfire, Progressives suffer losses

Chamath recommends a spread trade of long Google and Microsoft, and shorting other big tech companies, stating Google is the safest company on the internet and a pure money-making machine due to its platform and payment to Apple for search.

Microsoft received internet backlash for corporate presentations where employees described their physical appearance, pronouns, and ethnicity without explanation, which was later claimed to be for visually impaired people.

Alphabet was an initial partner in funding The Production Board, indicating its support for a long-term, patient capital approach to building companies.

CompuServe is cited as an early company that captured consumer imagination, incentivizing further infrastructure development in the internet's evolution.

Zillow's iBuyer program led to a significant misfire, dropping 37% in shares and $9 billion in market cap, after buying homes indiscriminately and acting as a speculator rather than a market maker, cannibalizing its core business.

MultiCoin Capital is mentioned in the context of Vinnie Lingham's discussions about DAOs for early-stage investing following some events related to Solana.

AOL is cited as a company that captured consumer imagination, enabling further internet development.

Redfin is mentioned as an iBuyer company that was more careful and considered in its home buying strategy compared to Zillow.

Google pays Apple $10 billion to be the default search, protecting Google's position even though Apple is a platform competitor. Apple also faces headwinds with inflation, margins, and supply chain issues.

Facebook is recommended for shorting in a spread trade due to regulatory oversight pressure. An earlier spread trade of long Google, short Facebook returned 80-85%.

Sears is cited as an example of traditional commerce companies that would be part of a basket to short against a long Amazon position in a spread trade.

United Airlines is presented as a potential short candidate against Airbnb in a spread trade, but Chamath argues against it due to the lack of correlation and liquidity compared to big tech.

IBM is listed as one of the big tech companies recommended for shorting in a spread trade.

Macy's is cited as an example of traditional commerce companies that would be part of a basket to short against a long Amazon position in a spread trade.

Kmart is cited as an example of traditional commerce companies that would be part of a basket to short against a long Amazon position in a spread trade.

Airbnb is proposed by the host as a potential long candidate for a spread trade against airlines due to its high-margin business model, but Chamath rejects it for being too random and not highly correlated.

Lucid is mentioned as a potential long candidate in an auto sector spread trade alongside Tesla and Rivian.

Sutter Hill is cited as one of the few funds that successfully implemented an evergreen fund structure, an idea Chamath considered before starting Social Capital.

Chamath almost merged Social Capital with Kleiner Perkins, and recalls how legendary investor John Doerr managed his Google and Amazon shares.

Netflix is included in the 'rest of big tech' recommended for shorting in a spread trade against Google and Microsoft.

Amazon is recommended for shorting in a spread trade due to headwinds related to pricing power and competition. A historical spread trade of long Amazon and short traditional commerce companies was very profitable.

JCPenney is cited as an example of traditional commerce companies that would be part of a basket to short against a long Amazon position in a spread trade.

Slack was acquired by Salesforce as a long-term protective solution to better compete against Microsoft's bundling strategy.

Tesla is mentioned as a potential long candidate in an auto sector spread trade, alongside Lucid and Rivian, against traditional auto companies.

Bird, a company David Sacks invested in since Series A, went public on the NYSE with a $2.4 billion market cap. It pivoted to a fleet manager model making it nearly profitable after a setback during COVID-19 lockdowns.

Allbirds is mentioned as having taken the ticker symbol 'BIRD', which is why Bird the scooter company used 'BRDS.'

Tiger Global is presented as an example of a well-run organization with separate superb investors for public and private equities, highlighting the difficulty of context-switching between the two market types.

David Friedberg setup The Production Board as a startup studio, aiming for a permanent capital structure to build and hold companies long-term, rather than chasing quick exits, initially partnered with Alphabet.

Rivian is mentioned as a potential long candidate in an auto sector spread trade alongside Tesla and Lucid.

Robinhood appears to be referred to as 'Switchback' which was the SPAC name for Bird's IPO.

Kraft Ventures, David Sacks' firm, led Bird's Series A round and is now confronting a significant distribution decision after Bird's IPO.

Chamath founded Social Capital and decided against an evergreen fund, finding it easier to wind down and distinguish between his capital and LPs.

Sun Microsystems is cited as an example of a foundational plumbing company from Web 1.0 that built critical infrastructure for the internet.

Glenn Youngkin's background as co-CEO of Carlyle, a successful private equity firm, is highlighted to portray him as a rational, reasonable person, not an extremist.

Cisco is cited as an example of a foundational plumbing company from Web 1.0 that built critical infrastructure for the internet.

Yahoo, with its directory-driven business, was unable to compete with Google's technical capital and PageRank invention, serving as a classic example of disruption.

OpenDoor is highlighted as a successful iBuyer with a distinct software-driven model for accurately forecasting prices and selling assets with defined margins, achieving an average margin of 10% compared to Zillow's 3%.

AWS is used as an example of how consumer demand for Amazon commerce justified the development of underlying infrastructure, analogous to the needs for Web3.

Microsoft bundled Teams with other software, making it difficult for single-product companies like Slack to compete due to distribution and discounting advantages.

Slack found it difficult to compete with Microsoft's bundling of Teams, eventually leading to its acquisition by Salesforce as a protective measure.

Microsoft took a 'broadside attack' against Notion, a productivity app, by leveraging its distribution and bundling power in a strategy similar to how it affected Slack.

Syndicate is building distributed compute infrastructure and simple building blocks like remote procedure calls (RPCs) for Web3, which are foundational plumbing.

Sergey Brin, along with Larry Page, created the first version of the Google search index, leading to Google's dominance in search.

George Floyd's death triggered calls to defund the police, but even in Minneapolis, voters rejected proposals to disband the police, showing a limit to policy extremism.

Elon Musk publicly offered to sell Tesla stock to solve world hunger if a concrete, credible plan for using $6.8 billion was provided, which did not materialize.

Larry Page, co-founder of Google, is credited with inventing PageRank, which made it impossible for Yahoo to catch up to Google in search technology, showing the power of compounding technical gains.

Trump's behavioral extremism was repudiated in 2020. The current political shift suggests a repudiation of policy extremism with Trump not as present on social media.

Nancy Pelosi was called out by Abigail Spanberger for the Democratic party's stance on 'defund the police,' indicating internal party tension over progressive policies.

Chase Coleman runs the public markets book at Tiger Global, demonstrating the specialization required for public equity investing separate from private investing.

Rich Barton, CEO of Zillow, is considered a Silicon Valley legend but made big mistakes with the iBuyer program, acting as a speculator rather than a market maker in residential real estate.

Elizabeth Warren is cited as a progressive figure whose policy extremism is not aligning with the current temperature of America, mirroring Bernie Sanders and AOC.

Randy Weingarten, head of a large teachers' union, campaigned for Terry McAuliffe, which backfired due to public discontent with teachers' unions.

Van Jones, a CNN commentator, exhibited introspection by calling the election results a 'five alarm fire' for Democrats, advising Biden to triangulate against the woke left like Bill Clinton.

Einstein is used as an example of an exceptional individual whose potential could be stifled by de-tracking policies in education that aim to level performance rather than foster brilliance.

Patrick Ruffini, a pollster, created a chart illustrating how the Democratic Party has moved significantly further from the center of the country compared to the Republican Party, driven by its progressive base.

Greta Thunberg's critical comments about COP26 as 'corporate nonsense' are mentioned, contrasting her view with the optimism surrounding the CO2 to starch breakthrough.

Scott Schleifer runs the private markets book at Tiger Global, exemplifying the distinct expertise needed for private equity investing.

Eric Wu, the CEO and founder of OpenDoor, is described as 'special' for leading a successful business that rapidly innovated in using software to accurately price and sell homes.

John Doerr, a well-known investor, famously never sold his Amazon shares distributed to him, and only sold a handful of Google shares to fund future capital requirements at Kleiner Perkins.

Glenn Youngkin, a Republican, achieved a major upset victory in the Virginia gubernatorial election, seen as a 'woke lash' against progressive policies, focusing on economy, education, and safety.

Terry McAuliffe, former Democratic governor of Virginia, lost the gubernatorial election despite Biden winning the state by 10 points. His campaign was hurt by a gaffe saying parents shouldn't tell schools what to teach and aligning with teachers unions.

Ed Durr, a truck driver in South Jersey, famously defeated Democratic State Senate leader Steve Sweeney after spending only $153 on his campaign, serving as an example of the anti-progressive backlash.

Abigail Spanberger, a Virginia Democrat, won reelection in a historically blue county that flipped red, and has been outspoken against the 'defund the police' slogan, advocating for moderation in the Democratic party.

AOC is mentioned as a symbol of behavioral and policy extremism that many voters are rejecting in favor of moderation and centrism.

Bill Clinton is cited as an example of a Democratic president who successfully triangulated against the progressive left, a strategy now recommended for Joe Biden.

The 'Sister Souljah moment' is evoked, suggesting Biden should publicly distance himself from Bernie Sanders and the progressive left to shift the Democratic party toward the center.

George W. Bush's presidency is cited in the context of a pollster's chart showing the Republican Party's position relative to the center, indicating their electoral success in the mid-2000s.

Phil Murphy, the Democratic governor of New Jersey, barely won reelection by 1.5 points in a state Biden won by 16 points, demonstrating the 'woke lash' against progressive policies, specifically his tax policies.

Mitt Romney introduced carbon tariffs to the Senate, which is now a serious consideration for economic incentives in climate change.

Bill Gates is an investor in The Production Board, sharing its mindset of recycling capital and building long-term value rather than seeking quick exits.

Vinnie Lingham discussed DAOs for early-stage investing and syndicates, brainstorming ways to decentralize investment decisions.

Joe Biden's presidency is criticized for governing like Bernie Sanders, leading to a 'woke lash' against Democrats in recent elections. Voters elected him for normalcy, not to be an FDR-like progressive.

Jason Miyares, a Hispanic Republican, won the Attorney General position in Virginia as part of a Republican sweep, further demonstrating the shift away from progressive policies.

Bernie Sanders' influence on the domestic agenda is criticized, with calls for Biden to triangulate against the progressive left to save his presidency and align with voter desire for normalcy.

Eric Adams, the mayor of Buffalo who was reelected, is cited as an example of a normal, moderate political figure whose success validates the shift away from behavioral and political extremism.

Gavin Newsom's playbook of running against Trump, effective in California, did not work for Democrats in Virginia, indicating a shift in electoral strategy requirements.

Allen & Company is mentioned as an investor in The Production Board, sharing a similar mindset of patient capital and long-term value creation.

David Sacks reports from the NYSE floor, noting it's primarily a movie set for broadcasts now, as most trades occur in machines.

Sequoia Capital is discussed for its new evergreen fund strategy aiming for longer-term holding and reinvestment, contrasting with traditional VC distribution models.

The head of the UN World Food Programme retweeted an article claiming Elon Musk's wealth could solve world hunger, prompting Musk's public challenge for a credible plan.

GCP is mentioned alongside AWS as an example of the kind of infrastructure that needs to be built for Web3.

The NBA's G-League developmental system is used as an analogy for how a flexible education system could allow students to move between different tracks based on performance, promoting excellence rather than rigid de-tracking.

Web 3.0 is characterized by decentralization, composability, and democratization/governance (DAOs), with foundational infrastructure like remote procedure calls (RPCs) still needing to be built.

Web 2.0 is used as a reference model, alongside Web 1.0, to illustrate the need for foundational infrastructure before widespread application development, and where RPCs already existed.

Zestimate, Zillow's home valuation tool, is described as having accuracy as a 'bug' with inflated prices driving traffic, which made it unsuitable as a basis for their iBuying risk assessment and contributed to their failure.

DAOs are discussed as a Web3 feature for democratization and governance, particularly in early-stage investing, though their boundaries and practical application for fund management are still being figured out.

Web 1.0 is used as a reference model for how underlying infrastructure (like Sun Microsystems, Cisco) needed to be built before application-level innovation could flourish.

The OSI reference stack is mentioned as a good reference model for Web 1.0, translating into trillions of dollars of value creation by following its substrates and transitional layers.

The 1619 Project, incorporated into school lesson plans, was a focus of parent anger regarding education in Virginia, contributing to the 'woke lash' against progressive policies.

Terry McAuliffe's statement that parents shouldn't tell schools what to teach is described as a 'Kinsley gaffe,' an inadvertent truth that ultimately harmed his campaign.

Solana (blockchain) is referenced in the context of discussions Vinnie Lingham had regarding DAOs for early-stage investing after some 'Solana stuff' related to MultiCoin Capital.

CRT in schools was a 'sleeper issue' in Virginia, with parents of all races objecting to lesson plans that incorporated it, contributing to the Democratic electoral losses.