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Chamath Palihapitiya Goes All In on AI, SPACs, IBM, & Politics 7/14/26
00:58:15
Chamath Palihapitiya, host of the All-In Podcast and CEO of both Social Capital and 8090, sits down with Joe Kernen and Andrew Ross Sorkin for a wide-ranging interview. The founder and investor views AI as a “great leveler,” and he argues that Silicon Valley has an AI marketing problem. A California billionaire himself, Palihapitiya discusses his commitment to the state–and his frustration with the state’s politicians. Once a donor to the Democratic Party, he addresses his shift in politics and his current relationship with President Trump. Plus, where he went wrong on SPACs, and unpacking a warning from IBM that sent the stock plummeting 23%. Stephanie Link - 03:19 Chamath Palihapitiya - 06:32 Robert Frank - 36:06 In this episode: Chamath Palihapitiya, @chamath Joe Kernen, @JoeSquawk Andrew Ross Sorkin, @andrewrsorkin Robert Frank, @robtfrank Katie Kramer, @Kramer_Katie
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- [00:00]
Narrator/Host
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- [00:28]
Sponsor/Announcer
This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Lansford for this information packed daily market Preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions and key results and statistics that may impact your trading. Download the latest episode and subscribe@schwab.com Market Update podcast or find Schwab Market Update wherever you get your podcasts
- [01:00]
Narrator/Host
Today on Squawk Pod, we're going all in with Chamath Palihapitiya. First, a sea change in technology companies value.
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Chamath Palihapitiya
If two or three companies are going to generate 2, 3, $400 billion a year and it's doubling and tripling every year, where is the rest of this money going to be made?
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Narrator/Host
The AI optimists versus the doom and gloomers. What Chamath has to say about Anthropic's Dario Imode.
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Chamath Palihapitiya
Let him scream in the sandbox about how the sky is falling. Let him do it. Let's what I and many other people will tell you. After decades of being in this industry. The sky is not falling.
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Narrator/Host
Plus the evolution of the investor. The SPAC king admits his incentives were misaligned in the SPAC boom of 2021. And once a donor to the Democratic Party, Palihapitiya has had a change of heart and wallet when it comes to President Trump.
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Chamath Palihapitiya
He's fantastic. Great person, unbelievable person. Very smart on top of it. Open minded.
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Narrator/Host
The California Billionaire On California Billionaires, our own Robert Frank joins the conversation.
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Robert Frank
The total billionaire wealth in California is about $2 trillion. Six people account for more than half of that.
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Chamath Palihapitiya
The state of California will accomplish nothing.
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Narrator/Host
It is a very busy Tuesday, July 14, 2026. A super sized Squawk pod begins right now.
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Andrew Ross Sorkin
Good morning and welcome to Squawk Pox right here on CNBC. We're live the NASDAQ Marketsite in Times Square. I'm Andrew Sorkin along with Joe Kernan. Becky is on assignment this morning, but we've got a lot going on this morning.
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Joe Kernen
There's somebody else here, but first we're going to talk about the future.
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Narrator/Host
Today on the podcast, a fresh headline that starts off our discussion with venture capitalist Chamath Palihapitiya and underscores the speed at which the AI revolution is upending the status quo. IBM shares plunged double digits early this morning after the legacy American technology company once known as Big Blue released preliminary second quarter results that fell short of expectations due to weakness in the software and infrastructure business. Why demand for memory chips that power artificial intelligence. Our Joe Kernan noted the stock slide this morning in a market discussion with CNBC contributor Stephanie Link. And that's where we'll start.
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Chamath Palihapitiya
I think it's going to going so
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Joe Kernen
sorry to interrupt but IBM, it's not may not be what it used to be in terms of bellwethers, but when you get a $40 move on a, on a warning when so that's companies haven't warned lately. They warn of better than expected results in this new world. But IBM, IBM is warning and it's had a big run up which it hasn't had in a while, but it is down today. There is a letter from the CEO to investors and the company sees second quarter revenue 17.2 billion, software revenue up 5%, consulting revenue flat and adjusted earnings per share of $2.93 and infrastructure revenue actually down 7%. Also gross margins down 70 basis points. What do you think? Steph?
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Stephanie Link
Well, I own it, so I'm not happy about it and it's a, it's a shock. So this now means it probably reinforces that AI and what is it doing to software? And that's the scare that people have had and that's one of the reasons why software in general hasn't done so well. Software at 5%, I mean, oh my goodness, it was supposed to be at least double digits, maybe even into the teens. And so that's, that's, that's very disappointing.
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Joe Kernen
Do you need to go somewhere and have a drink or cry or something or you want to continue along with
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Chamath Palihapitiya
the needs to buy some tokens?
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Joe Kernen
Yeah, worried about you Steph. I know it's a sore subject, but IBM expected second quarter infrastructure revenue decline played out worse than our expectations. Steph so that just hit as well, do you think? And we're going to ask Chamath this in a second. Do you think that this puts a question mark over AI in the building or it just basically says yeah, software is going to be disintermediated or something because of AI? So is it negative for AI or it's just what we already knew was going to happen.
- [05:18]
Stephanie Link
Well, I think it's coming to pass that AI is having an impact on software. I think that's exactly the issue. This is what we've been nervous about for a while and it's coming to unfortunately into fruition, I will say. I mean, this is an amazing CEO. He has done an incredible job at turning this company around, but the bulk of their profits are software. So if they're guiding down, obviously they're getting impacted. It says that a couple of or several deals failed to close in the quarter, so we have to get more color on that as well. But this has been a good stuff under Arvind Krishna.
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Joe Kernen
And yeah, the miss is definitely. Jeff, the miss is definitely where you're. What you're pointing to because 293 is off. You know, 301 was the estimate for adjusted earnings and then a little bit lower on revenue 17:2 versus an estimate of 17:8. So that's below. But I think it. But you can go cry in your beer. Well, not your beer. Cry in your coffee and. And we can get to Jamath. Thanks.
- [06:27]
Andrew Ross Sorkin
Okay, I want to bring in our special guest this morning. He is sitting on set watching all of this play out. Hasn't been here in a bit and we're thrilled to have him back. Chamath Polly Hapatiya is here. He's the founder and CEO of Social Capital, CEO of 8090 and host, of course, of the all in podcast. And you're wearing, you're wearing a suit, no less. And for us it's.
- [06:52]
Chamath Palihapitiya
My entire job is selling enterprise software house. That's what I do.
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Andrew Ross Sorkin
That's what you do. So actually, before we get into anything, and I want to get into all what's happening in the Valley, I, everything I'm going to go back in time. Talk sparks. Because people, yes, I know your favorite topics, but, but just your take on the IBM situation, to the extent that you think it has ramifications in any larger way or maybe it's just specific to IBM.
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Chamath Palihapitiya
I think the, the thing that we know is there are a handful of companies that are compounding revenue a billion dollars a day. And at some point the downstream ecosystem has to make money as well. And then the ultimate buyer of these tokens also has to make money. And so at some point the question has to be asked if two or three companies are going to generate 2, 3, $400 billion a year and it's doubling and tripling every year, where is the rest of this money going to be made and who is implementing it in Such a way where these profits are to be had. And I think you're starting to see a little bit of the wheels come off, like just at a very basic level. If you think AI is like oil, let's just use this analogy to make it simple. A barrel of crude is what, 86 bucks right now?
- [08:06]
Andrew Ross Sorkin
Right now, unfortunately, it's gone up. Yes.
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Joe Kernen
No, no. WTI is 80.
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Chamath Palihapitiya
WTI is 81. 81. Okay, let's say a barrel of intelligence, which is a million tokens. Okay, you can buy that barrel for 26 bucks from Anthropic's really good model. You can buy from OpenAI for 26 bucks. Anthropic's latest model costs you 56 bucks. Elon is selling you a barrel of intelligence for a buck. Zuck is about to sell it to you for a buck fifty. Demis and Sundar are trying to sell it to you for a dollar. The Chinese will sell it to you for 50 cents. So this rationalization has to happen. We have the same input that has this crazy cost. If you've made a bet very early around one of these folks that are selling extremely expensive barrels of intelligence and you try to pass through the cost, you may run into some downstream difficulty and that has to play itself.
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Andrew Ross Sorkin
And you think that's playing itself out in the IBM story, or you're saying that's just a broader.
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Chamath Palihapitiya
That's just a broader comment. I think that Arvind is. He's done a great job. I mean, look, it's undeniable, the trajectory of the business and he's been able to pivot it and oriented around cloud.
- [09:12]
Joe Kernen
Right.
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Chamath Palihapitiya
And I think he deserves a lot of credit for that. But the reality is everybody that's in this ecosystem, me included, we're all struggling to figure out how do we price this stuff so that the ultimate buyer is making more money, is growing faster. And that is still a question mark.
- [09:30]
Andrew Ross Sorkin
I think you're getting to a point that Alex Karp, who was just here about a week and a half ago, was making about the sort of token maxing conceit, which is that actually some of these companies are. This is to the anthropic open AI piece of it where you have CEOs, and I've now talked to them too, who say the math is not math.
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Chamath Palihapitiya
The CEOs and the CFOs in my opinion, probably have no idea how much token maxing is going on inside of their organizations. I suspect what will happen is one day you're going to have a miss and EPS will be off by a few pennies and the CEO will say to the CFO, what happened? Where did all of this incremental opex come from? And they'll trace it to the $50 barrel of intelligence versus the $1 or 50 cent barrel of intelligence. That hasn't happened yet.
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Joe Kernen
This is interesting. There's a software stock. What is also interesting, so it's a Dow component, IBM. So the Dow's down 500 points. Do the math. 50 points times whatever the divisor is. The Nasdaq was up more than 100. It is still. So if it is a question mark about technology in general, you're not seeing it yet in the Nasdaq. And that big 500 point drop in
- [10:38]
Chamath Palihapitiya
the Dow is because I think in fairness, the Nasdaq has a lot of other stuff which is it's not soft. All the hardware, all the memory, all the chips, that entire complex is still going to make a ton of money, Right. The question is again, eventually, right, if you buy oil, you need to put it into a new engine. That engine has to make you go faster, right? It has.
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Andrew Ross Sorkin
But it sounds like you're, it sounds like you're suggesting that the LLM complex at the high end, which basically is anthropic and open air in terms of the pricing of whatever that is and that's still in the private markets, is going to break. Is that what you're trying to suggest?
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Chamath Palihapitiya
I think that's what you're trying to get me to.
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Andrew Ross Sorkin
No, I don't know.
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Chamath Palihapitiya
I'm not very clear. The hardware and memory complex is going to run for another couple of years because there are enormous constraints in that ecosystem. So there's tremendous scarcity. Those things are going to continue to do well. NASDAQ will probably overperform the S and P. Okay. If you look at the only other pocket where there's true growth, it's the LM complex. As you said. I don't know what the long term valuation is, but if you see a bunch of public companies in the next few quarters. Ms. Because of an OpEx. Ms.
- [11:42]
Joe Kernen
Right.
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Chamath Palihapitiya
And they trace that back to runaway spending that they didn't know existed inside of their organization, you're going to take a little bit of the air out of that specific.
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Andrew Ross Sorkin
Okay, so we just talked about four of the big model makers. Maybe five of the model makers talked about OpenAI anthropic. You mentioned Gemini. We talked about, and we talked about Metta.
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Unidentified Guest
Yeah.
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Andrew Ross Sorkin
How do you see them all stacking up longer term?
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Chamath Palihapitiya
I think that you are seeing a convergence. It used to be the case that when a model dropped, it was so superior to everything else. You're like, oh my God, we went from kerosene to jet A to jet fuel. So of course I'm going to go to jet fuel instead. I think the analogy now is we've seen the nth version of the iPhone. We've all kept upgrading to it, we're still using it for roughly the same behaviors. My elbow hurts. What should I do? And you're wondering to yourself, well, why am I spending all of this money? And I think that's where we are today. So if you're going to direct all of this behavior, why not just spend 50 cents or a dollar? That's a pretty rational.
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Andrew Ross Sorkin
Then the question is, is the meta model, for example, or Grok as good as or close enough of an approximation for whatever you think you need to get done using?
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Chamath Palihapitiya
For most use cases, anthropic, the answer is a screaming yes. For some very narrow use cases, no. But in those narrow use cases, I would say spend the $50 barrel of oil. Spend it. It makes sense if you're a cybersecurity company, Apollo Alto Networks, and you can book billions of dollars of more incremental revenue by locking down all the infrastructure of big companies. Use Fable.
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Andrew Ross Sorkin
But the freak out over the weekend, even inside of Anthropic, you know, we talked about yesterday morning, Anthropic, as you know, was planning to end the sort of free use of Fable for some of the paid users, sort of end that extension so that you'd actually have to upgrade or pay more to get access. And then all of a sudden they say to themselves, and afford to do it. We can't afford to do it because if we do, people will cancel the subscription and go to Open Air.
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Chamath Palihapitiya
Exactly. And the Open Air model is excellent. Seoul is excellent.
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Andrew Ross Sorkin
Right?
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Chamath Palihapitiya
Mythos, Fable. It's excellent when you can use it. So all of these folks are hitting the same constraint. They're massively power constrained, they're massively data center constrained, and so they are usage constrained. Meanwhile, the guys that have all of that capacity, Google, SpaceX and Metta, are finally getting their footing and they're starting to consistently release model after model after model. That's 80 to 95% is good. It's a very complicated dynamic for the leading labs.
- [14:35]
Andrew Ross Sorkin
Do you see a shift, by the way? You know, there was, you know, for a long time, OpenAI and Sam were sort of under a lot of fire. There's big questions about trust and the like. And by the way, maybe even more questions given this Apple situation on Friday. But there seems to be some dings taking place on the anthropic side too. And this maybe gets to the Alex carpet at all. But people who believe that either the spending part, the math doesn't make sense of what's happening, or you look at the Figma story, for example, of them going into different businesses, really concerning.
- [15:10]
Chamath Palihapitiya
I mean, look, let's be clear. There are three leaders of lab companies who have been in the spotlight for 20 years. Elon, you've seen every facet of his personality and you can judge over 20 years of behavior. Sundar and Demis, 20 years. Zuck, 20 years. And I think those folks have shown that they basically run a relatively straightforward, well understood business, right? There aren't any rug pulling situations. Maybe Facebook had some in the past. I think they've cleaned that up okay, But Google certainly never has and Elon never has. You may dislike them for other things and then all of a sudden you have these two guys who are incredible entrepreneurs, clearly. But the amount of collectible data that you can look at, behavioral instances where they've had to make hard decisions are still relatively limited because they're only a few years into being this public and being this scrutinized. So if you look at the first few years of Facebook, messy, I don't know about Google, maybe the first few years.
- [16:11]
Joe Kernen
We're going to talk about you in your 20 years, you're going to get
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Chamath Palihapitiya
to talk about, I mean, you know, like I, you know, I was caricatured as the guy at Facebook that made everybody cry. Then you look back, it's a $2 trillion company, so the tears are crocodile tears.
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Joe Kernen
Can I just. IBM is saying that, you know, we just missed closing a couple of big deals. They always say things like that. But this is interesting. The clients that they were trying to close were distracted by industry wide cybersecurity concerns and the stuff that they were.
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Chamath Palihapitiya
If you have some, you believe that
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Joe Kernen
if you have somebody now, they're going to say the weather was.
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Chamath Palihapitiya
No, I have a real issue with this and I've said this a couple times, so I'll just say it again. You can look at a graph of the financing needs of these companies, right? And you can pinpoint when they oscillate between two different messages. Message one, we've created a super God which then the VCs are like lemmings. They run and they're like, well, I need to be on the right side of the super God. And then they flip to other two, which is, this is a complete weapon. Let's shut the world down. And why don't you regulate everything? They just go back and forth. We've had this game. Now the problem is at the scale of $1 trillion of market cap, that game has these ripple effects that touch everybody in the industry. This is why, by the way, I think what Alex Karp did, he deserves a medal. This is an incredible human being who had the courage to come here. Everybody watched that clip. All these S&P 500 CEOs called me after that clip saying, help me interpret this. And I'll tell you, he was on the right side of history, because what he's showing you is that. Hold on a second. Like, you need to have a much more predictable way of running your business. Because if you are bending to the vicissitudes of private company funding cycles or private companies desire to need to live up to trillion dollar valuations, you're taking a level of risk that you probably didn't know you were taking. That's a fair critique.
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Andrew Ross Sorkin
I think we got to take a pause for a second. Just one last question related to. Because it's on the Alex Karp topic, effectively, what he's saying is that Palantir, you are going to need some kind of layer though, in the middle. I believe that too, partially to protect you. I mean, he was arguing in some ways from the labs. Ultimately, here's the thing.
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Chamath Palihapitiya
The LMS do a very good job of a very superficial form of privacy called zero Data retention. Zdr. That's the term that they use. They say, enable this and everything's hunky dory and everything's okay. But when you look at the fine print, let's just say Joe puts in the secret formula for Kentucky Fried Chicken into the model and say, help me optimize it. That part is edr. But then if you look at a little thing like, if he just clicks the like button, is there any guarantee that that information is not stored somehow that he liked this kind of a thing? And the honest answer technically is no, because we don't know how to do that. The other interesting thing that I would point out to you is that when Alex came on, I think he said something extremely legitimate. I think it applies to companies. It also applies to countries.
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Unidentified Guest
These people are livid. They're like, I am paying for tokens that create no value. These people are stealing the weights and alpha of my business. And they're creating a wealth tax that does not help the poor. It just punishes. Starts with the billionaires. Every single person at this table is going to be paying a wealth tax only to punish us. And the reason for it is because these models have been completely over irresponsibly overselled. And the sell is. It's dangerous for everyone. Which is why I can give it to all your adversaries, but I can't give it to the Department of War or I can't safely give it to an enterprise in this country without being certain that the Alphabet business could transfer to this model tomorrow.
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Chamath Palihapitiya
And at no point did Anthropic say, you know what? He's got it totally wrong. Here's the exact technical details. And so there's nothing to see here. And I thought to myself, why wouldn't you the minute after that clip started to go viral, right? Be completely specific and repudiate the claim. And I think it's funny that we're here 10 days later and nary a word has been uttered other than Alex's version, which the reason is because we all know is the true version.
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Joe Kernen
You know, I've noticed, and it's funny you said chicken, because I've asked multiple times how long to sear. I do a reverse sear on chicken on the grill.
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Chamath Palihapitiya
I'm a reverse sear guy, too.
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Joe Kernen
Are you a reverse search on the cool zone?
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Chamath Palihapitiya
I don't like chicken, but on the cool.
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Joe Kernen
On the cool zone. And I've gone back to Claude and ask and he goes, you know, last time. And I'm like, what do you mean he does remember?
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Chamath Palihapitiya
Well, that's the consumer version, the enterprise version. My point is, in the enterprise version, they do flush the recipe. I want to be clear. Anthropic is very good about that. So is OpenAI.
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Joe Kernen
But there's certain things that they.
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Chamath Palihapitiya
There's all of these little leads I
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Joe Kernen
have to pay to have to pay tokens to get the good stuff that he has. Is that what we're see, I haven't paid.
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Chamath Palihapitiya
I pay you.
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Andrew Ross Sorkin
I pay through the nose.
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Narrator/Host
Coming up on Squawk Pod. More with Chamath Palihapitiya. The billionaire is a longtime California resident through his Democratic donor days, all the way to his current, more conservative standing.
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Chamath Palihapitiya
I will not leave, and I will keep building companies there and hiring people there. And, you know, if there's taxes that I have to pay, I'll pay these taxes. But I just think that at some point, we're better off addressing the core issue of why people believe this form of governance actually makes sense.
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Narrator/Host
Plus, looking back on the not so great track record for the famed king of spacs.
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Chamath Palihapitiya
That's a fair critique, but it's also pretty rich for folks to just sit and chirp on the sideline.
- [21:52]
Joe Kernen
Foreign
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Sponsor/Announcer
this episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Landsford for this information packed daily market Preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions and key results and statistics that may impact your trading. Download the latest episode and subscribe@schwab.com Market Update podcast or find Schwab Market Update wherever you get your podcasts. Thursday, July 16 CNBC Sport and Boardroom Join Fanatics Fest for Game plan groundbreaking ideas shaping the future of sports and entertainment. Request your invite@cnbc events.com gameplan
- [22:41]
Narrator/Host
welcome back to Squawk Pod from CNBC Today with Joe Kernan, Andrew Ross Sorkin and special guest Chamath Palihapitiya.
- [22:50]
Andrew Ross Sorkin
We are still here with Chamath Palihapati, founder and CEO of Social Capital, CEO of 8090, host of the all in podcast and we haven't seen him in a while. We used to see you quite a bunch.
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Chamath Palihapitiya
Worked on my own distribution.
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Andrew Ross Sorkin
I know I had to build my own distribution. I know you've got your own distribution now, but you did come on a whole bunch during the SPAC craze.
- [23:10]
Chamath Palihapitiya
I didn't have my own distribution and
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Andrew Ross Sorkin
I want to ask you this, or maybe I want to read you this. We got a whole bunch of people tweeting at us pretty rich that Chamath has an issue with the game when he was the spac king and playing the game. So I'm curious, when you go back and think about what does that mean?
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Chamath Palihapitiya
What do they mean when they say that?
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Andrew Ross Sorkin
I think what they're saying is there was a period of time where you sold a lot of SPACs and no no no. Let's promoted a lot of spacs as, as, as the partner in a whole bunch of SPAC projects. And the truth was that a lot of those SPACs ultimately didn't work for investors.
- [23:55]
Stephanie Link
Well, hold on.
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Chamath Palihapitiya
No no no. They did not work for speculators but they worked for the CEOs and they work for the employees. They work for the customers of those companies. I mean like I think, but for
- [24:04]
Andrew Ross Sorkin
the, but for the investor class that was buying on the other end, let's
- [24:08]
Chamath Palihapitiya
not call them an investor class. Okay. There were a ton of well heeled hedge funds that were my partners. They made money who didn't make money? Speculators. Now do I feel bad for them? Yes. Were my incentives misaligned with them also? Yes.
- [24:25]
Andrew Ross Sorkin
Well, we used to debate this.
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Chamath Palihapitiya
Yeah, but those are. And I can evolve and see, and I can say that's a fair critique. But it's also pretty rich for folks to just sit and chirp on the sideline without saying, well, how much money did those companies raise? The answer is tens of billions of dollars. How many clients or patients or customers do they serve? The answer is millions to tens of millions. How have they grown revenues and traction since that happened? And the answer is, in some cases doubling and tripling. So if you want to take a fair look at it from a 360 degree view, there were some parts of it that worked and the part that didn't work. I went out of my way to relaunch a spark just to show you how I can address the speculator class because it always worked for, I think for the entrepreneur.
- [25:16]
Andrew Ross Sorkin
And there's no question that the spark process was, was good typically for the entrepreneur and invariably maybe even good for the company and employees. I'm not arguing about that. I'm arguing that. And I think anyone who was watching at some points when we used to talk about these things, I completely agree with the point.
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Chamath Palihapitiya
I agree with that.
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Andrew Ross Sorkin
And they would say, look, didn't work for them. You told me this was a great thing.
- [25:36]
Chamath Palihapitiya
It may not stop, by the way, may not work again. But at least this time, the way that I structured this second time. Let me maybe just take a step back and talk about why do I do this? I'm running a tech company. I don't need to do it. Why do I do it? I think the through line for me is I don't like it when I see markets that are gatekept by a few people. I don't like it. It bothers me and my entire working career if you actually say, what's the through line from Facebook to now. I tend to go after markets that need democratization, whatever. That's an overused jargony term. But Facebook was democratizing information, social capital. I democratized a lot of investment. Okay? The SPAC was I didn't like the idea that two or three banks sat as the gatekeeper between companies that should be funded and exist and their ability to actually serve customers. Because what happens is, and you can see it in these banks earnings. And I'm not saying they're doing anything wrong. They're doing something totally legitimate and right. But at the end of the day. Those folks structure liquidity for companies based on their ability to embed gains to their best customers. That's the game. So if you hear that OpenAI cannot go public this year. That has nothing to do with OpenAI. That has everything to do with who is lead left and who is lead right, deciding how much embedded gain they can transfer to their best clients. My point of view is find a different way. There are many different ways. Direct listings are a way. SPACs are away. Reverse mergers.
- [27:12]
Andrew Ross Sorkin
But if you could go back in time.
- [27:13]
Chamath Palihapitiya
Yeah.
- [27:14]
Andrew Ross Sorkin
Do you think you would have done the SPACs again the way you did them?
- [27:18]
Chamath Palihapitiya
The thing that I would have changed is I would have had nary a comment on Twitter. I would have not come on CNBC and talked about them at all. That was a huge mistake. And at the time, I think I was also learning about the influence that I had and I was kind of learning to deal with it. I think six years later, seven years later, the 2021 me versus the 2026 me, the 2026 version of me would say, we don't need to say that. We don't need to say anything. In fact, let's just be very clear. Everybody stay away from. I'm doing this because I have two very specific goals. One is.
- [27:52]
Andrew Ross Sorkin
You're talking about your current project.
- [27:54]
Chamath Palihapitiya
Yeah. Well, the SPAC that I did now has two very specific goals. One is just to create an architecture that I hope people copy, which is you cannot get paid unless the stock goes up. Do it over time. Set huge goals in the out years for performance. So now there's complete alignment. The second.
- [28:11]
Andrew Ross Sorkin
And you're locked in.
- [28:12]
Stephanie Link
Yeah.
- [28:12]
Chamath Palihapitiya
And the second, which is much more practical is I look at the United States and there are these huge gaping holes where companies need capital to do very important things for the United States that they will not be able to get because they do not check the obvious box for the gatekeeping banks. And unless you fix that problem, you are going to have a serious problem on your hands.
- [28:35]
Joe Kernen
But it just sounded like you said, look, I want to raise money for the companies and I want the hedge funds to do good. And hey, these speculators, they're speculating and they lose their money all the time. They should just, you know, this. Buyer beware. They should have known they were going to lose their money. That's what it sounded like you said.
- [28:51]
Chamath Palihapitiya
I think that they. I think that I should have been much more circumspect and said nothing. Nothing.
- [28:56]
Joe Kernen
Right.
- [28:56]
Chamath Palihapitiya
And this time you'll hear me say, Nothing.
- [28:58]
Joe Kernen
Was that a way that they could have gotten a fair shake along with the head companies?
- [29:03]
Chamath Palihapitiya
I think, I think that that is again, the structural things that need fixing. So the next version after this version that I would hope somebody does is they just post all their own money. So, like right now, the way that the SPAC works is that you post a little bit of it and you still need to raise from outsiders. But I've talked to Paul Atkins about this. I'll post the hundreds of millions of dollars now. It's a turnkey ipo. It's all my risk. If I find something I like, I'll just underwrite it. I'm giving that company the hundreds of millions that they need and it should go public. That kind of stuff where there's all of these folks who could then do that and copy that. All the hedge funds could do it. All of the, you know, the big buy side organizations could do it. That could be a really important thing for what we need to happen right now, which is more companies should be public, not less. And more money should go into critical infrastructure, not less. And right now, if you put a handful of financially motivated actors in the middle of that, you are going to
- [30:01]
Andrew Ross Sorkin
see should they go public earlier.
- [30:03]
Chamath Palihapitiya
Yes, yes, yes. Transparency is better. Yes, absolutely. Performance pressure is better. It's all better. There is no version of this example where staying private forever is rewarded over the long term. Somebody will get screwed at some.
- [30:24]
Andrew Ross Sorkin
By the way, we haven't talked about the state of California and Paramount in this Warner Brothers deal. I wanted to ask you just about, frankly, the state of California and the regulatory complex these days and sort of how you're thinking about what's going on in the state that you call home right now.
- [30:39]
Chamath Palihapitiya
It's given me everything. So I will not leave and I will keep building companies there and hiring people there. And, you know, if there's taxes that I have to pay, I'll pay these taxes. But I just think that at some point we're better off addressing the core issue of why people believe this form of governance actually makes sense. Is it because they actually think it's better or is it that they're just angry about a bunch of other things? And I think it's mostly the latter. So we should fix that. Because there is no sane human being that could look at any of this information and think that we are, well run, we are completely, completely out of our minds.
- [31:19]
Andrew Ross Sorkin
So hold on. So you and Jensen and a whole bunch of others have said, I'm staying, I'm staying. I'm paying.
- [31:25]
Chamath Palihapitiya
I'll pay it.
- [31:27]
Andrew Ross Sorkin
You have a number of other friends that you know who have a very different view. They've either already gotten out or want to get out.
- [31:33]
Joe Kernen
You don't really believe it's going to happen, though, and you're hoping cooler heads prevail in this crazy.
- [31:37]
Andrew Ross Sorkin
Yeah, what's that conversation like?
- [31:39]
Chamath Palihapitiya
You know, there is a period where I definitely thought about it and I went around, I look at different places, and I thought, wait a minute, California's incredible. Palo Alto is incredible. It's given me everything. And I just said, okay, mentally, here's the number, and just allocate it and just, let's move on with our lives and get back to building things that I think are important. The reason why people are angry, it's the same reason they were angry in 1890. It's the same reason they were angry in Europe in 1930. At the beginning. It's the same reason after 2008, we've had all of this pushback. It's the same reason. So at some point, we should just fix the core problem that everybody is shouting about, as opposed to allowing these other people to pervert the frustration they have into these dumb ideas and programs that are always about, give me more money and I will solve your problems. It just doesn't work.
- [32:31]
Andrew Ross Sorkin
So what do you see is then, the core problem?
- [32:33]
Chamath Palihapitiya
The core problem is there is a large number of people that look and believe that the ladder has been pulled up above them. Why do they believe that? Right now, I think very specifically, technology has had this profoundly positive impact, but very, very few of us participated in it in the way that we all think that we've made it better for everybody. Looking at Instagram reels does not make your life better. That's not true. Being able to have a functional search is useful, but it doesn't necessarily make your life better. So we have to answer the question, how does this economically benefit more people? And I actually think this moment, you know, the different question, why did I, after 25 years of working, decide to actually get back in the seat and run a business? It's because this is the moment that I think actually has a chance to address the core root cause of what these people are saying, which is legitimate. The problem is the symptoms, and then the people that take advantage of those systems are winning. And I find that really concerning.
- [33:36]
Joe Kernen
Okay, we're going to do 5% of your. It's going to be a wealth tax view. Do you care that you're going to be out that 5%. Do you care that what it's supposed to be doing for the people that you're talking about right now? Very unlikely it's going to have any effect on them and they're going to piss it away and it's just going
- [33:57]
Chamath Palihapitiya
to not have an effect. It will be completely.
- [33:59]
Joe Kernen
It won't help the people. Right. So. But you're okay with that? They're going to do it to me. I don't need it. But I know it's not going to help the people.
- [34:06]
Chamath Palihapitiya
I am not okay with it. But what I am saying is this moment is very unique in the sense that we have the level of bottoms up awareness that we can create. Whether it's X or whether it's the Nick Shirley's of the world, whether it's you who's been very consistent, whether it's me. I think that this is a moment where if you go and you raise all of this money, every single dollar will be traced. Every single one. And the reason is because it's not how it affects the richest.001%. The reality in California is the overwhelming majority of the taxes are paid by people making less than 150,000. That is where they are going to go next. It is completely undeniable. And I think that we have to have a bulwark against that. And so you know what? You want to take a piece of flesh, fine, take it. But I think that there's a lot of us that will follow those dollars like Inspector Clouseau with, with the Microsoft.
- [34:59]
Joe Kernen
We haven't up to this point. We're finding out now about leering centers and all this stuff and Medicaid for.
- [35:03]
Chamath Palihapitiya
Yeah, but now, and now it's up to people to act. But the reason why people will not act right now is there's still more anger towards a small number of people that are winning. And I think we need to address that problem.
- [35:16]
Joe Kernen
California's billionaire Tax act Jamathis here we were talking about will go to voters in November. He's going to stay. But the wealthy and their accountants. Ah, that's why you're staying. Are already finding out ways to reduce or avoid. Robert Frank joins us now with more. Hey Robert.
- [35:31]
Robert Frank
We have an actual California billionaire to talk to about this. That's because the ballot measure. This is a one time 5% tax on total net worth over $1 billion. Accountants are looking right now at three main possible workarounds. So first, charitable gifts. That could be a good thing. Many tech founders are looking into gifting unvested shares to lower their total net worth. Others are accelerating gifts to donor advised funds and other charities. Real estate held personally is also exempt. So some people are buying property or transferring real estate from their companies or their LLCs to their personal balance sheets or revocable trusts. And certain assets held outside the state won't count against net worth. So they can buy art, planes, boats, vacation homes in other states or even other countries that won't count against their total net worth. Now, also, states cannot tax Treasuries, so some private banks are advising California clients to move a portion of their liquid investments into Treasuries for a year. Now, proponents say all of this will raise over $100 billion in revenue from the tax. Other studies show it's going to raise far less and in fact cost the state up to four and a half billion dollars in lost revenue from billionaires who have already left. Now, we should say that the total billionaire wealth in California is about $2 trillion. Six people, most of whom have already left, account for more than half of that. So the question is, what's left? And then what will the raise? And then most California billionaires are between 1 and 2 billion dollars. So they may minimize or avoid the tax through these other.
- [37:09]
Andrew Ross Sorkin
What was that? But what do you think? Their contribution was about 2 to 3
- [37:13]
Robert Frank
billion dollars a year in total income taxes, estimated income taxes paid by California billionaires. So that's what they currently pay.
- [37:24]
Andrew Ross Sorkin
And you're going to say that.
- [37:24]
Robert Frank
So you would have. That's right. If. Now, question for Chamath. Do you think Mark Zuckerberg has actually changed his residency to Florida?
- [37:35]
Chamath Palihapitiya
Oh, I have no idea.
- [37:38]
Robert Frank
Do you think we know that, Sergei, that Larry Page definitely did. Sergey Brin probably did, right?
- [37:48]
Chamath Palihapitiya
I don't want to comment on Larry
- [37:49]
Robert Frank
and Sergey, but you said on your podcast that you know for a fact that a trillion dollars has already.
- [37:54]
Chamath Palihapitiya
Yeah, yeah. Look, there's a lot of my friends. I'm not going to name who they are because I don't think it's appropriate. But yeah, a lot of my friends have left.
- [38:00]
Robert Frank
You think it's a trillion dollars?
- [38:02]
Chamath Palihapitiya
I mean, it's in the neighborhood. Do you think it. But look, it doesn't matter what that number is. And I'll tell you why. The real thing that is going to happen from here is every single kid that goes and starts a YC company is not going to do it in California. They're going to leave. Then there are going to be companies like Paramount who are just say, you know what, enough's enough. Because Again, this is not a billion dollars.
- [38:26]
Robert Frank
This is a very optimistic founder. If they think they're going to get to a billion dollars.
- [38:29]
Chamath Palihapitiya
This is not a. Not really. I mean, these valuations happen all the time. The problem with the way that this thing is written is some kid who actually has a little bit of success and is able to raise at a huge up round, still has no money, all of a sudden is going to be given a $50 million bill. He may be only making $100,000 a year. This is why this law is so dumb. It's just a way of opening the door to go after other people. So the billionaires will be able to sue. There's going to be issues of standing, there's going to be issues of tax. This will take 15 years to meander through the courts at the state and the federal level. So the state of California will accomplish nothing. But in that meantime, they will hollow out the builders and the makers. And then separately, all the upcoming builders and makers will say on the margins, I'd rather be anywhere else but here. And then separately. I don't know if you guys saw this, but there was this incredible AB study. This was Florida versus Illinois. And it's almost the same like, for like where you look at the same kind of estate, the same kind of revenue and completely different outcomes. And Florida has obviously done so much better than Illinois. And the question is these policies don't work. So more of the same will result in more of the same. And I think California will at some point be faced with some sort of quasi bankrupt moment. And then it'll be up to the federal government to decide what do I ask for if I'm going to bail out the state of California? Because California technically can't go bankrupt. So all of those bonds, all the muni bonds, all of that stuff, what will the lenders ask for? That's the real question. And I think the way that state is governed today doesn't work.
- [40:13]
Robert Frank
People have been saying that about California and New York for years. They're overtaxed, overregulated, they're dying. In fact, we're seeing California tax revenues adjusted up because of this huge technology boom. And New York the same because of the financial boom. It just. We haven't seen an impact yet from these high taxes.
- [40:31]
Chamath Palihapitiya
You haven't seen it yet?
- [40:33]
Robert Frank
You think we will?
- [40:34]
Chamath Palihapitiya
Well, I think the reality is that most people will optimize for their own earnings. They would raise. Here's the thing. I think Joe Lonsdale said this on cnbc, which I thought was a wonderful point. If I could give 95% of my wealth away and I knew that all of these problems would be solved, I'd do it. It's fine. It's not a big deal. The problem nobody wants to give even 10 or 15% away is because we know that it's a joke. It doesn't work. They're terrible at what they do. They should not have these jobs. They should be fired. If there was a for profit company, you'd fire all of these people. That is the problem. The policies do not make any sense. They are totally ineffective. They're about their own power and their own influence. And to that I would say that's completely accepted in capitalism. Go and start a for profit company.
- [41:23]
Andrew Ross Sorkin
I got to talk to you after this. We're coming right back.
- [41:27]
Narrator/Host
More with Chamath right after this break. Still to come, he says AI is the great leveler. But Silicon Valley simply has an AI marketing problem.
- [41:36]
Chamath Palihapitiya
It is the thing that allows you to concentrate all this intellectual horsepower into this little magic box and give it to every single human on earth and say, I will help you fulfill your ambition.
- [41:47]
Narrator/Host
Squawk Pod with Chamath Palihapitiya continues in a moment.
- [41:53]
Sponsor/Announcer
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- [41:55]
Chamath Palihapitiya
opinion on stocks in the Fidelity app?
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Narrator/Host
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- [42:08]
Chamath Palihapitiya
That's right.
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Narrator/Host
I am always right.
- [42:11]
Chamath Palihapitiya
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Robert Frank
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Chamath Palihapitiya
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Chamath Palihapitiya
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- [43:42]
Narrator/Host
You are listening to Squawk Pod from CNBC Today with Joe Kernan and Andrew Ross Sorkin.
- [43:48]
Andrew Ross Sorkin
I want to get back to our special guest this morning, Palihapitiya, founder and CEO of Social Capital, CEO of 8090, host of the All In Podcast. We were having a bit of a political conversation about what was taking place in California. I'm curious what you think more broadly about what's taking place in the country. Here in New York, of course, course, we have our own mayor who's clearly, clearly on the left as a democratic socialist. How do you think about that right now?
- [44:18]
Chamath Palihapitiya
I think that this has been a failed ideology for hundreds and hundreds of years. It's never worked. It never will work now. It will never work in the future. But the reason these folks are able to coalesce power is that they're able to breathe life into the ability of pointing a finger at some group and organizing people's frustration and anger. And I think it's just important to go back and fix that issue. So, you know, if you ask me, I'm really concerned about the growing antisemitism. I think that that is completely unacceptable, 100 trillion thousand percent unacceptable. The pointing to billionaires, it's actually not even pointing to billionaires. It's specifically pointing to tech folks. Because if you said you made a billion dollars in pig farming, nobody would care. And you would say, God bless you. Go off and go with God specifically around how tech people have coalesced power in a way that I think frustrates a lot of people. And then now you have the growing scourge of big government, which is like, give me more, I will take more. I will give you ubi. I will solve all of your problems. They never do. It's never worked. So you have to fix it. And so you see it in New York, you see it in California.
- [45:36]
Andrew Ross Sorkin
But how do you break the how much do you think it is about the concentration of wealth? Because that is a real issue.
- [45:42]
Chamath Palihapitiya
I think it is a real issue.
- [45:43]
Andrew Ross Sorkin
And so how do you break that concentration? That's sort of the question.
- [45:47]
Chamath Palihapitiya
Well, I think the way that I think about this problem is you've always had infinite human ambition, and what you actually saw was that capability met ambition. So I think the real question is everybody is capable of taking care of their own selves and having a decent life and taking care of their family and doing all of these very important things. The question is, have they been blocked somehow? Or said differently? Is there an unblock? Is there an unlock? This is where I think we have done a horrible job in Silicon Valley with AI, because AI is that great leveler. It is the thing that allows you to concentrate all this intellectual horsepower into this little magic box and give it to every single human on Earth and say, I will help you fulfill your ambition.
- [46:32]
Andrew Ross Sorkin
So, but are you in the Jeff Bezos camp that says there's ultimately going to be a lot more jobs?
- [46:37]
Chamath Palihapitiya
Yeah, there's going to be a lot more jobs.
- [46:38]
Andrew Ross Sorkin
So you don't believe that there's. When we talk to Tom and say, but maybe you won't be able to be an actor anymore.
- [46:45]
Chamath Palihapitiya
Well, these are. These are very specific and nuanced arguments. One is a specific kind of a job will not exist. The different argument is, but many other kinds of jobs that are harder to name right now will exist. And I think if you look through history, the answer has been that the latter has always been true. You know, there's a great example that Jeff Katzenberg, Jeffrey Katzenberg, tells about this exact thing related to, like, making movies with Pixar. When he went down there and did a deal with Steve Jobs, when he went back to Disney to get that deal done, people in Disney were up in arms because they said the animators wanted, you know, Jeffrey's head on a stake. But it turned out they got the deal done. And then it turned out 10 years later, there was 10 times more animators at Disney. That's one example. Vinod Khosla famously said radiologists were going to disappear. Lo and behold, five years later, they're like umpteen more radiologists. Because it turns out the taste and judgment of those doctors mattered even more.
- [47:40]
Joe Kernen
Right.
- [47:40]
Chamath Palihapitiya
So I suspect we're going to look back and you're going to find that AI actually creates a lot more opportunity, but there's going to be dislocation for sure. The problem is we don't tell that story right now. We're still in this, like, navel gazing part of just like underwriting our own book. If we need to raise money, we're going to prognosticate about the digital God. If we are done raising money, we're going to try to pull up the ladder by getting regulatory capture. That's the cycle we're in.
- [48:03]
Joe Kernen
So we're going to guarantee me it's never different this time, but I think this time, I think it's different this time. This is qualitatively different. This is not a. You don't have to be a stupid Luddite to try to not want, I don't know, whatever that was, the weaving machine that they were designing. This looks. How can this AI movie not possibly displace a lot of Hollywood? You think everybody becomes a creative writer or something? Truckers. How can autonomous trucks not displace all the trucks?
- [48:37]
Chamath Palihapitiya
I looked at this trucking example recently and it turned out that after all of these years of Uber cannibalizing the driving market, the number of chauffeur drivers are actually 2x more than when they were when Uber entered the market.
- [48:50]
Joe Kernen
How does that make sense?
- [48:52]
Chamath Palihapitiya
And I think the thing is that there is this nature of humanity which is that we're very entropic. Like it just kind of expands as a gas. And we generate more GDP every year, right? We consume more things every year. Now people may have an issue with that, but the point is that we are as a species, creative, ambitious. We make things and then we consume more and more things, which requires more and more people to do more and more things. And if all of a sudden this ends because you stop having emotions and an ego and need to eat and need to sleep, okay, maybe. But I suspect that most of our lives are going to be roughly the same, but we're going to have this like the way that I think about it, you know, what is 80, 90? I want to build everybody a digital co founder. I want you, Andrew Ross Sorkin, to have in your pocket a super co founder. A person that when it comes time to helping you unambiguously helps you with anything and everything related to you being able to be happy, fulfilled, have a economic life and sustain yourself. You could build a one person company like that guy. You could build a 50 person company. But right now you can't do most of those things because if you have the idea there's a huge gap, right? Ambition tends to be infinite, but human capability is finite. And I think that I will allow you to democratize that. That's a big deal.
- [50:10]
Andrew Ross Sorkin
I hope you're right.
- [50:11]
Chamath Palihapitiya
Problem is we have people that are like, you know, prognosticating doom and gloom and they're the people on the inside of the tent, which I find very troublesome. It bothers me deeply.
- [50:19]
Andrew Ross Sorkin
You're talking about these sort of AI doomers.
- [50:21]
Chamath Palihapitiya
It comes from our own camp, it's our own side.
- [50:24]
Andrew Ross Sorkin
So. But what's that about? Then? Explain to me why a Sam or a Dario has gone to Washington and said, look, this stuff is dangerous. This stuff could mean that we have half the jobs that we thought we had. Are they doing that to protect themselves? Do they actually believe it? What do you. What are you suggesting is happening?
- [50:40]
Chamath Palihapitiya
I think that they legitimately believe it. And I don't think Sam is as much as. As Dario. Dario is much more of this, kind of like he is very deeply afraid. I think Sam has toned down that rhetoric a lot, and I think Sam has much more been, you know, the glass is half full, especially in the last year. Why are they doing it? Honestly, I think at some level they believe it, but they've just been wrong consistently. And I think they're going to continue to say it. And at some point we have to say, okay, hold on. Maybe underneath this, what's really happening is an opportunity to create a monopoly or a duopoly or an oligopoly. That's the natural reaction of all the rest of us. Let's not do that.
- [51:20]
Joe Kernen
All right?
- [51:21]
Chamath Palihapitiya
Let's not do that. Let him scream in the sandbox about how the sky is falling. Let him do it. What I and many other people will tell you after decades of being in this industry, the sky is not falling.
- [51:33]
Joe Kernen
All right, all right. Well, we have more to come from you. You used to tell me we're all going to die from climate change and hopefully you don't think that.
- [51:40]
Chamath Palihapitiya
You're right. I was wrong. I'll admit it.
- [51:42]
Joe Kernen
I love. Right.
- [51:43]
Chamath Palihapitiya
I was wrong.
- [51:44]
Joe Kernen
Oh, I love you. You said I was 100% right on climate change.
- [51:49]
Chamath Palihapitiya
You're 100% right on climate change.
- [51:51]
Joe Kernen
What about Trump?
- [51:52]
Andrew Ross Sorkin
I.
- [51:53]
Chamath Palihapitiya
You're 100% right on Trump. He's fantastic.
- [51:56]
Joe Kernen
Great person.
- [51:57]
Chamath Palihapitiya
Unbelievable person. Very smart on top of it. Open minded.
- [52:02]
Joe Kernen
Great president.
- [52:03]
Chamath Palihapitiya
Great president so far.
- [52:05]
Stephanie Link
Yeah.
- [52:07]
Joe Kernen
You think you got bad mail from the SPAC stuff? What's your trade?
- [52:11]
Chamath Palihapitiya
Oh, I look. I actually look.
- [52:12]
Joe Kernen
The TDS you can cut.
- [52:14]
Chamath Palihapitiya
You know what's so funny? I mean, like, people can be lazy and reductive. There's enough people that I hear that are lazy and reductive and they're going to end up where they're supposed to end up, in a little cul de sac of their own making. The reality is that most of us were lied to by the media about President Trump. And if you just go back to the source material, you should take away two things. One, he didn't say half the things he said and two, why did these other people just fabricate what they wanted to say so that they could essentially assassinate his character? I think that that second thing is completely unacceptable in America and there's still been no repercussions really. I took the time to learn about it. I admitted where, you know, the way that I met him was I admitted on the pod which, you know, has millions of viewers, and I said I got it totally wrong. Cuz I went and I watched Charlottesville and you know, the first person to call me who was who President Trump and I got to know him and I, I put the phone down, I called my wife and I said we got it totally, totally wrong. We were lied to. And then I got to know him and he is fantastic.
- [53:19]
Andrew Ross Sorkin
Okay, let me ask you a different question. There are going to be people who are watching, who are going to say, who are on the other side of this. If you were going to be critical
- [53:26]
Joe Kernen
watching what you have as a, as
- [53:29]
Chamath Palihapitiya
a human adult, just people that are watching.
- [53:31]
Andrew Ross Sorkin
My question to you is if you were going to be.
- [53:33]
Joe Kernen
People say, it's not a sad.
- [53:34]
Andrew Ross Sorkin
People say, okay, go ahead. No, no, look, by the way, I find the President very charismatic. So this is not my life is
- [53:42]
Joe Kernen
dealing every day with.
- [53:43]
Andrew Ross Sorkin
Okay, but I'm asking a different question. I'm asking a question. If you were to, if you were to look at this president and say the things you disagree with the President about or that you, what would they be?
- [53:57]
Chamath Palihapitiya
I thought the, some of the, the ways in which some of the cuts were done in certain organizations was probably not ideal. I think it was a little too chaotic in the end. I doge made a ton of sense, but I think there was too much glass broken. You know, just, I'll give you a simple example of this, but we just published something this morning. We, meaning 80, 90, we worked with CMS and we took a 50 year old system. This is the core system. It processes half a trillion dollars a year of health care payments for Americans.
- [54:31]
Joe Kernen
Right?
- [54:33]
Chamath Palihapitiya
Nobody knew the system end to end and they put us and Palantir in a sandbox and said, can you help us decode what's going on? And in 40 days we 80, 90 produced the 500,000 rules that process half a trillion dollars of health care payments so that that team could figure out what's going on. Where's the fraud? Where's not the fraud? There are all these things that were possible. It took a little bit longer because it was a little chaotic. That's an example. Second example, maybe the way in which we funded the research budgets of universities, I didn't particularly like that as much. But on the broad based things that he did, I think that he has been way more right than wrong.
- [55:09]
Andrew Ross Sorkin
Where'd he land on the war?
- [55:10]
Chamath Palihapitiya
Can I just say one more thing?
- [55:11]
Andrew Ross Sorkin
The war in Iran.
- [55:13]
Chamath Palihapitiya
The most important thing that got me to see his point of view is he was completely binary on there cannot be nuclear war when you have a madman country that is attempting to destabilize the ability for all of us just to live our lives. I think he was pulled into a situation he didn't want to be in because he believes strongly in no nuclear weapons. I support that because I think everybody is forgetting the chaos that that kind of thing can create in the world. Now. Can I just say something else? You're allowed to disagree with the guy. You're allowed to maybe dislike the guy. But as an adult living human being that's responsible for taking care of your family, you have to get past the tds, see where he's right, see where he's wrong. But the TDS thing, that's stopping people from making a savings account for their children.
- [56:03]
Joe Kernen
Right.
- [56:04]
Chamath Palihapitiya
That can give them free money. It is insane.
- [56:09]
Andrew Ross Sorkin
Because we only got a couple of minutes. I want to talk about Space X. Yeah. Because you were an early investor in Space X. I mean from.
- [56:16]
Chamath Palihapitiya
So I was an investor in Peter Thiel's fund. That was my first exposure to Space X which I didn't even realize.
- [56:22]
Andrew Ross Sorkin
So I think the big question now is it's a publicly traded company.
- [56:25]
Chamath Palihapitiya
Yeah.
- [56:25]
Andrew Ross Sorkin
How big the TAM really is, how quickly or not. I mean there's a big debate still about this idea of data centers in space and what that all ultimately looks like. There's potential competition. There's the idea that he may want to merge or buy Tesla. How do you see all of this?
- [56:41]
Chamath Palihapitiya
Yeah. Okay, so I think it's an incredible
- [56:45]
Andrew Ross Sorkin
company and we should say you own shares of the company.
- [56:48]
Stephanie Link
Yeah.
- [56:48]
Chamath Palihapitiya
I was an LP in Peter's Founders Fund too, which may be the single best venture fund or any fund of all time. It's literally like the outlier of outliers. It's like a multi hundred approaching thousand X return his fund. And then 2011 I invested and then 2016 he acquired a company where I was a large investor in called Swarm, which is their direct to sell business. So I really believe in Elon, I believe in SpaceX. What is the interesting thing that I think is worth taking away? I think that people are probably underestimating the short term value of two things. One is the industrial logic of acquiring Tesla. There is a very obvious industrial logic to put these two businesses together, to have one capital structure, to have one balance sheet, to be able to raise money for the broad swath of things that he's doing as one vehicle. And then the second is, I think that you're going to see an enormous business in the domestic cellular market before you see a lot of other revenue streams hit. What do I mean specifically? The spectrum he bought from Charlie Ergin I think is going to get lit up. This is just me speculating. I think Elon's going to have some sort of a phone device. I think he's going to.
- [58:02]
Andrew Ross Sorkin
You think he's going to have a phone device itself or that he's going to be partnering with an Apple and a Samsung and others and he's going to put transponders in. By the way, he's going to need transponders in all these big cities.
- [58:11]
Chamath Palihapitiya
I think it makes much more sense for him with the prevalence of starlink to go direct to sell and go to consumers and say I gave you Internet access, I would like to give you an incredible new mobile phone service. It's integrated with all of these other services that you need. Would you like it from AI to payments to how your car works, all of it. And I think that there will be some plurality, tens of millions of people all around the world that will pay him incrementally for that. I think that is what's being slept on. That is the key asset. When I saw him do that deal with Charlie, I thought, oh my God, here it comes.
- [58:46]
Andrew Ross Sorkin
That is the thing ask you. To me, the big question on Starlink in this regard is the Multiple on an AT&T or Verizon or T Mobile or frankly even globally, any of those players is materially lower than the multiple that he has currently. Now maybe you could argue the multiple comes down, the earnings go up and somehow they meet in the middle. But what do you think?
- [59:11]
Chamath Palihapitiya
I think that the, the, the multiples of free cash flow of all these public companies are going to come way in. I think that as AI becomes more prolific and powerful, I don't think you can have PES price to earnings ratios that all of a sudden think about 20 years of cash flow streams. I just don't think that's possible. Why? Because a competitor with a reasonable barrel of oil, right, starting with how we started of intelligence, will be able to compete with you. And so the market will probably move all of these companies to being worth some multiple of the first five to seven years only. So I think what's happened is that when you look at Space X, it has all of the infrastructure plus its own AI. If you look at the mobile carriers, they're missing a lot.
- [59:55]
Andrew Ross Sorkin
You're making you an independent director of Tesla for a moment. How much does SpaceX have to pay for Tesla for the independent board to say this is a fair deal, given the various incentives and power that lies in all of this. And Elon obviously is at the great question.
- [60:17]
Chamath Palihapitiya
I think if you look at a, if you look at like a traditionally trading business, it's probably a 20 to 30% premium. But because of the volatility of Tesla and the number of shareholder lawsuits that may come up no matter what, I mean, if he eats a sandwich the wrong way, he unfortunately gets sued. So it's probably a 50% premium.
- [60:35]
Andrew Ross Sorkin
A 50 premium, yeah. Chamath Palihapati, everybody.
- [60:39]
Chamath Palihapitiya
Love you guys.
- [60:40]
Joe Kernen
Go take a nap.
- [60:41]
Andrew Ross Sorkin
Really enjoyed this. Come on back. This is a lot of fun. Thank you for doing this with us.
- [60:44]
Chamath Palihapitiya
Thanks, Joe.
- [60:45]
Joe Kernen
You said what, once a once a
- [60:47]
Chamath Palihapitiya
quarter I'll come up here. Once a quarter I don't try to come to New York anymore.
- [60:51]
Andrew Ross Sorkin
He's once a quarter, he's got to wake up early.
- [60:53]
Unidentified Guest
That's great.
- [60:53]
Chamath Palihapitiya
It's worth it.
- [60:56]
Narrator/Host
And that is Squawk Pod for today. Thanks to you for listening tomorrow on the podcast Warren Buffett, the Oracle of Omaha with our Becky quick. The 95 year old Berkshire Hathaway chairman has announced his annual charitable stockgiving and he intends to donate all his Berkshire shares within the next eight years. We'll hear all about it tomorrow. Squawk Box is hosted by Joe Kernan, Becky Quick and Andrew Ross Sorkin. Tune in weekday mornings on CNBC at 6 Eastern or get the best of our TV show right into youo Ears when you listen to Squawk Pod. Wherever you'd like to get your podcasts, have a great day. We'll meet you right back here tomorrow.
- [61:40]
Sponsor/Announcer
This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Lansford for this information packed daily market Preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions and key results and statistics that may impact your trading. Download the latest episode and subscribe@schwab.com MarketUpdatePodcast or find Schwab Market Update wherever you get your podcasts.