Roger McNamee Says Replace Alfalfa Fields With Marijuana(Audio)

last month. A DP said private companies added one hundred fifty six thousand workers in April, falling short of economiss estimates which I can markets every fifteen minutes throughout the trading session. DOWL Industrial Average narrowing earlier losses, currently down seventy four points four tons of a percent at seventeen thousand, six hundred seventy six. SMP five foundered down ten points, a loss of half a percent at two thousand fifty three.

The NASTAC is down thirty points at two thirds of a percent at forty seven thirty three. West Texas Intermedia crude oil twenty five cents a very spot gold is up is down ten dollars thirty cents announce at and the tenure treasury is up five thirty seconds with the yield of one point seven seven percent. And that's a

Bloomberg business flashy. It's the anthem for marijuana legalization. And the man who helped put this song together moon Alis, the band singing and playing it together, is Roger McNamee. He's joining me here at the Hoover Institution at Stanford University.

He's the co founder of Elevation Partners. They have many claims to fame, early investors in Facebook, another very success full companies and Rogers joining us today to talk about tech and also talk about the cannabis industry some of the latest political developments which which could have huge implications for the industry, for farmers, etcetera. So a very definite business angle there as well. Roger, welcome back, Kathleen. It's

a pleasure. It's great to have you here, and it's great to be here in Palo Alto, Stanford, such a gorgeous part of the world. You're very smart to live here. Roger Mcamie. I do my best. So let's start with Apple, because they've had some announcements that weren't so great today they've got to revamp the music service. They've lost that fight to keep the iPhone protected that brand name in China. So the thing to remember is that we are in a year where I think investors are going to struggle

to get great returns from tech stocks. And there are lots of reasons for it, but the important one is the issue that's driving Apple today, which is their success in the last five years has been about the iPhone. It has been about smartphones, and the smartphone was for the whole industry, mother of all product cycles, and it's much much larger than we have personal computers, larger than

anything that came before it. And so it's no shock that now that we've hit saturation that we're going to see a very different environment going for it because there is nothing available coming along that is of anything like that scale. So Apple is a value stock today. And I think, Kathleen, the last time I spoke with you, which is about a year ago, uh, we we're already very cautious about the outlook for tech because of the saturation in the smartphone market, and I think Apple reflects

all the challenges that are there. The thing to understand is it's not going to be a high growth stock from here. It's just not. It's the law of large numbers gets in the way. But that doesn't mean it can't be a good value. It pays a nice dividend. It's a brilliantly managed company. There there are no competitive issues driving them right now that are unrelated to the saturation of the industry. So, you know, I think it's a good value stock. I think this is actually pretty

reasonable entry point because everyone is so pessimistic. But you know, again, you should not anticipate that's going to return to the old growth rate. Facebook tell us that Facebook and their outlook what you see for them in this US so. So the thing that Facebook that is so amazing is that this is a company that when it began, the product was it was very simple, very simplistic. It is now evolved to be the most important media company in America.

With all due respect to Bloomberg and everyone else, they are the ones Facebook is capturing all of the growth in online advertising. So they first dominated mobile, now they're moving on to video. I think the outlook for them remains outstanding. The stock is not cheap, but it has a unique position in the list of available stocks. And that it is the largest, most stable company with which continues to have a very high rate of growth. I think that will persist. I'm not sure what causes it

to end. I think we've got several more years of really solid numbers coming from from Facebook. Uh. You know, if you're uncomfortable with the market, as I am, you might want to be cautious about entering here. There will be days when people do get pessimistic, and I do think you want to buy the stock on dips, But it is I think the single best position company in all of it. And Roger, of course, putting his money where his mouth is, he owns both faces, own both

of those stocks and have for a long time. Notwithstanding my concerns about the market, I have a very very high t build position, but my equities have been focused in those two stocks. You wanna talk to us about unicorns in the corraps, you know, corn bubble yikes sound scar No, not in the least. Here's the really the cool things. So unicorn is the term of art that has been applied to these private tech companies which have received private market valuations of a billion dollars or more.

And there were at one time more than two hundred of those UH since the end of last year, we have seen UH, gravity and reality rear their ugly heads and the unicorns are coming back down to earth. The whole thing was essentially bologny from the word go, that the transactions that were being done had a high notional prices, but the terms associated with penalized the companies for any kind of set back, so they weren't real prices. And the good news for public investors is you're going to

be a beneficiary of this. The public market has been very smart. It said it didn't want to take these companies private or public excuse me, at the prices people

were asking. And the result is that Fidelity and tiro Price, the two biggest mutual fund companies that were participating in this space, have marked down their portfolios, bringing the whole sector down, which, oddly enough, because they were small positions, didn't harm those funds, but they've set up an opportunity where those funds are going to get a chance to participate in the recapitalization of these companies and then when they go public, because many of them are real businesses.

So the unicorns, there were some that were silly, but many of them are real, and you want to keep your eyes open because their company in their like Asana, which I'm a sureholder of um that isn't yet officially a unicorn because they've been smarter than that, but they look like I'm rapidly growing enterprise software company. And you'll see a lot of those coming over the next couple of years. And the ones that do a good job, we're gonna make you money. And the ones that don't

are going to disappear before you ever see them. The November election November eight, many people will be voting for president. There will also be many people in the state of California voting for the control, regulation and tax for the adult use of marijuana. Tell us about this initiative. So they're going to be nine states that vote in this presidential election cycle, so nearly a fifth of the states in the country will be voting either on medical or

adult use recreational. And the reason this is so important is that we've now got forty years of the history of the War on drugs to reflect on and have discovered one the War on drugs didn't reduce crime. It actually increased violence. It didn't you reduce drug use. It just made a lot of people miserable, and it was enforced in a way that created huge civil rights violations.

What they now know because testing has been done, is that cannabis is not the same class as the drugs that people have been about, things like heroin or cokinge. It is a natural product that it has many positive medical benefits. The result is that twenty four states have now made it legal for medical use. In California and three others are going to vote this year on adult use for applications other than medical. It's really important to California,

where the largest agricultural country state in the country. The illegal business in marijuana and California is between twenty and fifty billion dollars a year. It's totally outside of taxation, it's outside the environmental rules, it's outside the labor rules. And in the state. There are three compelling reasons to vote for approval of this. One is you get to bring a portion of that black market into the daylight. This is good for labor, it is good for taxation,

it is good for the environment. Uh. Secondly, marijuana maybe the only available thing to the state of California that generates huge tax revenues for which there is no opposition. And then thirdly the environment. There are currently literally billions of dollars of illegal cultivation in state and national parks, causing huge environmental damage. To get rid of all that, another benefit you make is uh water. It's true in our state, California has been in a drought for many years.

Believe it or not, fifty percent of the state's water is effectively shipped to China in the form of alfalfa. Alfa is a crop that is used for dairy cattle and it has essentially no value. It's just the California farmers get their water for free, so they have no incentive to apply it intelligently, and the result is our drought is effectively the result of this one crop. And because alfafa has a low value, marijuana is worth at

least a hundred times per acre. You could take nine of the alfalfa crop out of line, saving nine of the water, and have the farmers grow marijuana instead. They would have ten times the economic value in ten percent of the acreage. Now, this state's not ready to do that yet, but that kind of thing is there, and for California it's important to embrace this industry because there are the liquor industry is trying to corner the market.

They're trying to monopolize it, using their very powerful lobbying to do that, and people like me are saying, you know something, Agriculture is too important to California. Technology is too important, travel and vacations are too important to California. We need this to be a highly fragmented business with lots of small businesses. And that means there's nothing wrong

with the liquor guys participating. They just can't control it and take all the rules and tilt them in their favor and block everybody from being in Roger mcam thank you very much for spending time with us. Co founder Elevation Partners as band member fan leader Moon Alice, joining us from Stanford University along with n colleague and co host Kathleen Hayes. This is taking Stock and perhaps we'll leave you with a little of Roger McNamee's music. Gold Production