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Hello boys and girls, ladies and germs. This is Tim Ferriss. Welcome to another episode of the Tim Ferriss Show. I'm going to keep my preamble short because we are going to run out of time well before we run out of subject matter with today's guest. Balaji Srinivasan, and I'm sure that that pronunciation could be improved. Balaji, that's B-A-L-A-J-I, is an angel investor and entrepreneur, formerly the CTO of Coinbase and general partner at Andreessen Horowitz. He was also the co-founder of earn.com acquired by Coinbase, Counsyl acquired by Myriad, Teleport acquired by Topia, Topia perhaps, and Coin Center. He has been named to the MIT Technology Review's Innovators Under 35. That was in 2013. Is the recipient of a Wall Street Journal innovation award, many others, and holds a BS, MS, PhD in electrical engineering and an MS in chemical engineering, all from Stanford University. Balaji also teaches the occasional class at Stanford, including an online MOOC, that's massive open online course, in 2013, which reached, as I understand it, more than 250,000 students worldwide. You can find him on Twitter, Balaji, I'll get it right this time with J-B-A-L-A-J-I-S. And you can find much more about him on his website, balajis.com. Balaji, thanks for coming on the show.
And I thought we would start with a number and that number is 1729. And as I understand it, that's not in reference to a date, but you use that number quite a bit. Could you please provide a bit of context for how you've used that number and why you've used that number?
Sure. So, I'm actually going to be launching something at that domain, probably by the time this podcast is published, hopefully. So, it's a domain 1729.com. What does it refer to? It's not a year. It's the first number that's the sum of two cubes in two different ways and what that refers to is basically the Ramanujan number. You know, so Ramanujan was India's greatest mathematician and kind of like India's Einstein but has kind of a romantic story in the sense that you know he was extremely poor and wrote these letters to mathematicians around the world. He had just self-taught math from a textbook. He wrote these letters to mathematicians around the world and most of them ignored him, just thought he was a crank. And one guy brought him out to England, this guy G.H. Hardy. And who thought this guy has to be a genius because no one would make up these equations. And so then Ramanujan began a rampage through mathematics and you know has people still to this day going through like a page of his notebooks for an entire mathematical journal issue because he just wrote down all these results that were true, but he didn't provide the proof. He just wrote down the result. So where does 1729 come from? Well, unfortunately Ramanujan died very young, very very young from people think it's because he was away from his food and the warm weather of India and so on. But basically on his deathbed Hardy came in to try to cheer him up. He said you know Ramanujan I came in on a taxi and the license plate it's very boring. It's 1729. On his deathbed Ramanujan still had the wit and faculty to say oh that's not boring. It's the sum of two cubes in two different ways because he's on a first-name basis with every number and that's that's kind of the legend of Ramanujan. And so if you've ever seen Good Will Hunting...
Yeah. So Good Will Hunting was kind of based on that. So was there's actually a recent there's a book that was turned into a movie called The Man Who Knew Infinity.
It's a very fun movie to watch. I mean it's it's engaging. I don't know how factually accurate it is but...
There's pieces actually the numbers in there and so on. But to me, you know, for many years actually before joining Andreessen Horowitz, what I was going to do is turn the MOOC course that I had done in 2013 into like a global talent search because just like you have the Hubble telescope looking for dark matter around the universe, I thought of the mobile telescope, the telescope provided to us by mobile could help us find the dark talent in the global south and you know the undiscovered talent and basically you know, that's not just the global south, that's Eastern Europe, that's Russia, that's all the former Soviet countries, that's basically the the world that all these people who didn't have a chance. And I think of that as something that I've wanted to do for a very long time. That's what I was going to do prior to joining A6 and Z for a bunch of reasons. You know, I joined A6 and Z instead in 2013. And now I'm kind of coming back to the path not traveled and doing this quote global talent search. And the idea is that basically we who have been fortunate enough to have some resources or winnings, we can offer a hand up to all these people, bring them into the global economy, level them up, give them what we know in terms of education or teaching or what have you. And all this stuff can be delivered. I know it sounds like a cliche, but at scale over the internet, right? You produce it once and you can replicate across millions of people. So this is what I'm what I'm doing next. And hopefully by the time the podcast comes out, this will be this will be live. Knock on wood. Okay.
Amazing. So there are these seeming pillars of of influence. Pillar may be too strong a word. And I I think we'll want to explore a few of those including Lee Kuan Yew perhaps.
And we'll get to that. And for people who don't know who that is, we'll we'll explain because good god I mean what what a figure and what an influence. Before we move it further ahead, what was the subject matter and the intent behind the MOOC that you taught?
The subject matter it was the title was startup engineering and the concept was that it was basically the class that I wish I had had before doing my first startup. And so it's kind of like a time capsule back to somebody who was into math or into just technology in general but was just completely naive about how to actually run a business or anything like that. When doing my first startup I actually this is a first approximation but I thought that the primary difficulty would be calculating difficult integrals and I was like okay that's that's the hard part and everything else is kind of kind of basic whatever we can knock that out before breakfast. And of course that's not the case.
As often turns out that's right because the thing is as you know I was a career academic for many years and in academia there is a high premium placed on novelty of results technical difficulty and you know there's some some good aspects of this you do you know in math you learn how to think rigorously and go premise premise premise conclusion really interrogate your results. There's seemingly obvious things that aren't actually true mathematically when you actually go and work them all the way through famously like you know the parallel postulate you know Euclid is not something you can just take for granted you get different geometries if if you assume a different condition there and you think rigorously in academia and then you think okay well that's that's the entirety of the world it's just technical difficulty and it's not and so this course was meant for teaching the philosophy and all the nitty-gritty details to go from a command line up to a website with payments with JavaScript and all that type stuff all the because you learn computer science in academia you don't really learn software engineering and there's a thousand details in how that works which are useful to get number one like git and and stuff like that and of course the reason you don't learn those things is they move fast you have to keep updating it so that was one piece and the second piece was the philosophy of startups meaning what is the difference between a startup versus small business or why is this happening now? There's piece of recent history. For example, do you know what the NSF AUP is?
I do not. I'm not even going to try to pretend.
Sure. Sure. Sure. So, National Science Foundation had this thing called the acceptable use policy in place for many years and it prevented commercial traffic on the internet. How about that? So, the dot-coms that we know and love were actually not feasible until I think about 1991, plus or minus one or two years, but I think it was 1991. They repealed the AUP and the reason people fought it, they said there was going to be spam and porn and malware on this commercial internet and it was all going to be broken because before that it was like an academic and military internet. Everybody was sort of a quasi-trusted user on it. You had to have a mil or edu domain, right? And then they were like, 'Oh my god, all these crazy people are going to get on. There's going to be and you know what? They were right. All that stuff did did happen. But the benefit was worth it. You know the the downside was mitigated by I think the upside that was the birth of the commercial internet and that's something which most people don't even know how that came about it really was something where one rule was was holding back all this innovation that's something that's made a deep impression on me so so like stuff like that was kind of stuff that I tried to convey in the course alongside the the nitty-gritty I think most of the time that kind of stuff is not taught in the same place from the same person you know with one coloring the other I think that's part of why the course was popular.
Thank you. It was a very comprehensive answer. I love comprehensive answers.
Been looking forward to this conversation. You're very good at at teasing out the the details and we may end up teasing out the details on all sorts of things in this conversation, including some of what one of our mutual friends described as one of severalisms, including the line immutable currency, infinite frontier, or maybe frontiers and immortal life. I'm giving teasers to people. So, this is a bit of a cheap it's a bit of a cheap trick if you'll excuse it. Another one. This is from, we'll just say anonymous, although I think this sentiment has been echoed by a few people I chatted with, which you may enjoy, which is something along the lines of, you know, quote, 'Balaji will end up on one side of a firing squad, but I'm not sure which side.' End quote.
Okay, that's funny. I'm very peaceful. I'm extremely peaceful. I just want I just want to put that out there for the record. Go ahead.
He's very peaceful. And I I think that part of what fascinates people about you is how often they would consider you prescient. And often that comes with a degree of fear, not of you, but of the consequences of you being right. And I'm thinking of, for instance, a quote, I think it was on January 8th by the co-founder of Roam Research. You probably remember this one. I think it's Conor White-Sullivan if I'm getting that right which was something along the lines of the most terrifying words in the English language are Balaji was right. Okay. So I'm I'm planting those seeds just because we're going to come back to why some of the things you've predicted accurately have in fact been terrifying. Before we do that we we can if you want to say something first we can we can certainly we can dive into it.
I I will offer just a little bit of color there which is so what he's referring to is specifically my predictions on COVID and and the pandemic and so on but then also more generally a bunch of unheeded predictions or things that I've said and that people would be like ah that'll never happen and then this kind of happens and so it's not so much that it's always bad predictions it's not always just Cassandra I like to think that I look for large deviations so that you can actually get large upside as well as large downside and so folks who I think who followed me on investments have done reasonably well. But there's both. We'll see.
There there are both. And Cassandra, for those wondering, that is a mythological reference, correct?
Is that the right gift given the gift of prophecy, but with the condition that no one would believe her?
So we we will come back to some of these predictions. And is it I want to say I just heard you say COVID. Most people would say COVID. Does it matter? Is one correct and one not?
I mean, it's an acronym. I've heard it pronounced both ways. COVID or COVID-19 or COVID. So, I I like...
Yeah, I'm gonna roll with it. We'll come back to that. Now, before we started recording, and you and I have chatted before. we were chatting, but I thought it would be kind of fun to kick the ball around in the conversation about podcasts because you have opinions about the state of media or mainstream media and perhaps even the future of media, which I'd love to dig into at some point, but you had some perspectives on the podcasting world relative to perhaps other ecosystems. Could you just provide your first... I don't want to say postulate that's me trying to get fancy but...
All right please go ahead.
Yeah so basically let me give some definitions first so here's a one-liner that took me a very long time to understand so product is merit and distribution is connections for example a great blog post that nobody sees is a great product with terrible distribution conversely a really dumb article or whatever that you know that is a piece of content that is in a feed that is seen by millions is a terrible product with great distribution. And these are actually essentially disjoint things. Sometimes you can build products that have distribution built in like social networks or payment apps where they're inherently viral. That's why people like them. But most of the time, these are disjoint things and you have to put as much thought into the distribution of the product. You know, if you're selling chairs or something like that, it's not enough to make a good chair. You need to think about, okay, how do you get to Walmart? How do you get to this distributor? How do you get on Amazon? All all those kinds of things are are critical parts of of making it work. And Peter Thiel has this good line which is that distribution is a thing that just engineers don't get. Part of the reason I think they don't get it is that it's based on quote connections. So it can't be just reduced to math or at least parts of it can be like your contribution margin and so on. But it is something where a lot of it is quote networking or knowing somebody. And people don't usually put thought into this, but when you walk into a convenience store, why are some energy drinks pulled up all the way to the front? Like 5-hour energy, why is it in the checkout aisle and why others at the back? That is not an accident. That's a bunch of distribution relationships and deals because people are hyperconscious, the store owners hyper conscious of the fact that being upfront near the checkout is a great spot to move inventory and that's actually more valuable to be there than at the back. So, it's a negotiation with them. Okay. What's my point? Point is that I think an enormous amount of our media ecosystem today is actually something where the product is terrible but they've got a lot of great legacy distribution. So again a software analogy think about Microsoft or Oracle. Oracle which makes a database any engineer you know who's listening to this the database is okay but most people if you're starting from scratch you'll use Postgres or an open source database or combination of some kind. So Oracle has kind of a a bad product or a declining product in many ways, at least relatively versus the open source competition, but has great legacy distribution because it's got its hooks in all of these enterprises. The sales people know them. It's also hard to extract it to pull it out. How does that relate to the podcasting thing? Well, if you think about distribution, not just for sales or or for companies, but for ideas. Media creators can have great content, which is great product, or they can have lots of followers or lots of influential followers, which are the quantity and quality respectively of their distribution. And podcasters, when two people tend to do a podcast together, they tend to have comparable distribution because they have comparable distribution, x hundred thousand, y hundred thousand or x million, y million followers across platforms, not any one platform, right? That actually is it's almost like the wild west where both people come to a saloon armed an armed society.
An armed society sounds like something that should be put on the license plates here in Texas. Go ahead.
Yeah. And and what what I think it's done is it's changed the culture of podcasting. The thing is when everybody's kind of comparable in distribution, the culture has changed to one of politeness, back and forth, give and take, as well as the long form nature of it. The contrast to this is like a journalist versus a subject. Podcasting is peer-to-peer. Journalist subject is hierarchical. There's a journalist, a corporate journalist, an employee of a media corporation, and then there's the subject as in you know the subject under the microscope or the subject and there's a king and their subject. And that word or subject to that word subject is such a revealing word. It gives away so much the journalist and the subject under the microscope. And the thing is the journalist subject relationship when the journalist interviews the subject, the journalist can edit. They can they can pull whatever quote they want. And they have the distribution that the subject doesn't. They have millions of folks who will read their thing. The subject can just squeak and can't get a word out edge-wise. You know, they can they can yell all they want, but it doesn't do anything. No one will listen to them. It's just boom. That's why people used to say, 'Never argue with a man who buys ink by the barrel.' You're writing a little letter to the editor and they've got, you know, they're rolling off the printing presses, right? It's as if you've got millions of drones that you can just hit enter and boom, just push software updates to and this person can just talk to the people around them because that's what media is. Media scripts human beings. If code scripts machines, media scripts human beings even in ways that we don't fully appreciate. You know, that's why people spend so much on advertising. You might think advertising doesn't convince you of something, but it just sort of reminds you that Coca-Cola exists. And then you're at the store, you know, maybe I'll get a Coke. That's how words are picked up. That's how vocabulary is picked up. A small example. If I said postulate like eight minutes ago or nine minutes ago, you might say postulate two minutes ago, right? That's a small example, right? That's not bad. It's just how how we should think about it. Point being that once we are equal on distribution, then we can actually speak to each other as peers. And it's futile to try to argue with someone who has way more distribution and is hostile. You just need to build your own distribution, which is much more possible in the internet age.
I agree with that. I agree with the if we were to put it in indelicate terms the sort of mutually assured destruction element of civility. I think there are also a few other contributing factors. One is that many journalists working under a masthead have the air cover right? They have the air cover of not only the reputation whatever that might be. It doesn't need to be the most prestigious publication, but the they have the reputational cover. They also have the insurance cover, right? The errors and omission policies in in actual insurance, those clauses within actual insurance policies and some degree of legal protection by their employer would be one. Another is that very often podcasters have experienced having their quotes cherry-picked or have been on the receiving end of a hit piece and therefore I think are just more sensitive to inflicting that on other people. Not to say...
Yeah, they're more empathetic. And I would say that you see that very clearly. You see a shift sometimes, not always in journalists. And there are many spectacular, wonderful, diligent, ethical journalists out there. Some of them are very close friends of mine. In those who are say tending towards the kind of cynical, cherry-picking side. Once they launch, this is how it usually or often happens their own book. And now suddenly they are at the whim of other media and other reviewers and other critics. They really for the first time sometimes get a large dose of their own medicine. And often that can can stem the tide a little bit. I would say last not to give podcasters too much ethical credit although certainly some of them and many of them are ethical. I think that it's very difficult to cherry-pick when you're interviewing in long form.
Not only that, but both sides can very easily record. So, there are a lot of a lot of factors that make it a friendlier format. Although, I will say I have had podcasts that are highly produced try to pull a fast one on me before. And not that this is terribly relevant, but that was how I learned to listen and pay attention to my dog very closely because it was one of the few times that this woman walked in, this is pre-COVID, this is many years ago to interview me with a producer and so on and my dog growled.
Molly growled and that almost never happens. And I apologized for her growling and continued the interview and very quickly realized that I was being led into a trap and I just I just stopped the interview. I said, 'Yeah, I think that if this is how you're going to approach it, we're done.' And it turns out if they're on deadline and they have a highly produced piece and they have a lot of employees and mouths to feed, that that is actually a reasonably strong move, assuming you can afford to do it.
Mhm. Is just to not play ball, just to walk off the field.
And so lot to be said about media.
Oh, absolutely. I mean, the thing is actually the non-answer, the ignore, the block is actually quite effective as an individual and even more effective if practiced by a large group of people. Like there's the site blocknyt.com that if you saw you know actually did like quite well on Twitter and is like a minor hit and I think you're going to see much more of that where essentially the issue is that a journalist versus subject it's almost like a traveling salesman who goes town to town and and runs a con on this person and the next person and the next person. There's this great book called The Journalist and the Murderer that actually documents this. Have you heard of this?
No, I have it. But that's a hell of a title.
Hell of a title. It's actually in the modern libraries like I think top 100 books of the 20th century. It's called The Journalist and the Murderer. It's by a former journalist. And essentially it talks about how there's like this really brutal killer and a journalist who interviewed that killer and then you know published a story that was like huge misrepresentation and the killer was like so mad they sued the journalist and the jury actually ended up sympathizing with a murderer over the journalist once they understood what the journalist had done. So it's a phenomenal book you should read it actually you know I'm gonna I'm just going to read you the opening of it because it's so good. It's by Janet Malcolm of the New Yorker. Okay, ready? Famous opening. Every journalist who, this is her quote, okay? It's not mine, but it's all right. Every journalist who's not too stupid or too full of himself to notice what is going on knows that what he does is morally indefensible. He is a kind of confidence man preying on people's vanity, ignorance, or loneliness, gaining their trust, and betraying them without remorse. Like the credulous widow who wakes up one day to find the charming young man and all her savings gone. So the consenting subject of a piece of non-fiction writing learns when the article or book appears his hard lesson. Journalists justify their treachery in various ways according to their temperaments. The more pompous talk about freedom of speech and the public's right to know. The least talented talk about art. The seamiest murmur about earning a living.
Okay. So I want to offer but...
By Janet Malcolm of the New Yorker. So I want to just say that's that's a journalist on corporate journalist basically.
For those who want to there are two sides to this coin and I I want to say for those who want to further educate themselves on the dark arts and those gambits they might fall prey to. There's also a book called Trust Me, I'm Lying by Ryan Holiday which covers a lot of this including the tactic of getting an email 20 minutes before a piece is going to be published asking for comment which of course is intended to not elicit any any comment or panic you...
Or other tricks you know I'm going to be commenting on you whether you provide a quote or not therefore you should do A or C but that's a good book on some of the dark arts. And don't lose your place. I don't think you will because you seldom do. But this also lends all the more testament to those journalists who can withstand and methodically counteract these powerful incentives and motivations to actually do good work where they don't get sucked into this this vortex of perverse incentives. So I I do want to say that the people who are actually able to stand in the eye of the hurricane and do that I give a tremendous amount of respect because it's hard.
I understand what you're saying. I do think that the structural incentives in the profession now are such that you've got someone who's literally just swimming against the stream. And I think actually part of the issue is that it's a profession in the first place. And what I mean by that is, you know, like the the founding fathers talked about how a standing military was a bad thing because you'd have this Praetorian class that was armed to the teeth and there would be again subjects and that Praetorian class was in drills. It had its own esprit de corps, its own sense of self and would increasingly go contemptuous of these civilians who they watched over, you know, and that was a recipe for for bad things. That's what they preached against a standing military. Now, the US basically didn't have a standing military for a long time until essentially the permanent wartime mobilization of the 20th century, especially post World War II. You know, before it was like, you know, the ideal was to have citizen soldiers like if you've seen the movie 300 where all the Athenians come out and it's like, you know, I'm a potter and I'm a baker or whatever and they grab an axe and go to war, but they're not permanent military. Now whether we can get back to a standing military or rather away from a standing military to a citizen military I think that's going to have to wait till mid-century when it's all drones at which point then it's all computer programming and actually so that's I know that's just a castoff remark.
So within the next 30 to 40 years once we get to the sort of asymmetrical warfare where the cost of offense is much lower than the cost of defense with armies of drones. Is that what you mean?
Yeah. I think I think basically sometime mid-century maybe more you know I don't know if you followed the just as a footnote on a footnote but the Armenia Azerbaijan conflict right which was heavy on drones you know that's a glimpse of the future warfare you know the future's already here but it's not evenly distributed kind of thing so I I do think that eventually once you get full automation of everything it'll actually be just drone on drone and then you know people will surrender rather than have the civilians killed it actually might be more ethical in some way there'll be obviously a transitional phase. The transitional phase of human versus drone will sort of be like early in World War I there cavalry charges versus machine gun nests. The cavalry were just kind of this outdated way of war that quickly went away. Human versus drone, human versus robot will be like that, I think. And then people will quickly be like, okay, we just need robot versus robot. Anyway, so leaving the standing military bit aside because I don't think that can be solved in in the short term. By analogy, there's a concept of a standing media. A standing media is again like a Praetorian class or a select class, a quote elite that among themselves practices certain behaviors that the average person can't. And what's interesting is NY Mag, you know, had this thing a few years ago like the media on the media and it was let's see if I can find it. Here's it the survey, right? Okay, I'll find you the exact thing. The media on the media July 24 2016 9 p.m. One of the biggest things that they all agreed on is journalism's biggest blind spot in its coverage is group think. We draw from a limited pool of people who generally have a similar background class or simply unable to see the perspective of people who are not like them and tend to drive out those who don't fit in. Now, I actually understand this coming from academia. I could see how that epistemic bubble happens. It's ironic that the people who complain often most about filter bubbles are actually complaining about the plural because there was just one filter bubble that they controlled and now they're annoyed that there's more than one.
They have competing filter bubbles.
It's competing filter bubbles. Exactly.
So the way I I kind of think about this is the answer is not reform. The answer is not to tell these professionals, hey, go in journalism better, or hey, you're doing a good job. This guy's doing a bad job. I think that's been tried for a very long time. I think the answer is radical decentralization in several ways. One critical way is everyone a journalist. So, citizen journalism as opposed to corporate journalism. So, this way you don't have a media corporation that's literally running billboards declaring itself to be truth incarnate. Lest I exaggerate, that's literally the slogan of one large media company that shall go unnamed. It runs a billboard saying it's the truth. And yet these media companies are basically the big ones are nepotistic endeavors. They're passed down from father to son. They are everything that they castigate technology for being, which it isn't. You know, they're these kind of inbred sort of things, right? And no one ever points this out, right? No one points out that the owners of these papers are actually like just literally father-to-son kind of endeavors, which is not happening in tech, right? You don't get father-son people found their companies in tech. So the alternative to you know like sort of this hereditary dictatorship running these media corporations is everybody writes and you have local expertise. You have chemical engineers writing on chemical engineering and you have biologists writing about biology and you have computer scientists writing about computer science and they do it as a duty not for profit. Meaning that it's actually the fact that there is this corporate business model there basically currently incentivizes them to go for popularity and the number of clicks as opposed to truth. Now you might say are you against profit etc. No I'm saying that the citizen journalism part is one important component. Let me give two or three more. A second important component is decentralized cryptographic truth. And this is a big concept. I'm not sure I'm going to be able to do it justice in a few sentences, but I'm going to try. Which is to say, it is now possible with cryptocurrency for an Israeli and a Palestinian, a Chinese person, a Japanese person, a Democrat, and a Republican to all agree on the state of the Bitcoin blockchain. Regardless of your political views, your geography, people agree on how much Bitcoin someone has, okay, globally, this is an incredible triumph because, you know, a trillion dollars, forget it. I mean, a million dollars is the kind of thing that people will fight over and disagree on and so on. There's essentially no dispute on who owns what BTC. And that's the kind of thing that people tend to have large disputes over a trillion dollars. People tend to fight over. They tend to try to fake history, to forge things, all that type of stuff, right? The point is that once you can develop consensus algorithms that can get people to agree on what Bitcoin someone had at what time, you can extend them as we're doing to get people to agree on what property somebody had at what time. So, what stocks, what bonds, what real estate, what this, with that, which is again another huge component of the kinds of things people fight about. And then less obviously, you can extend that to what events happened at what time. So, what device recorded this temperature in Kansas on this date? Or what hospital uploaded this medical record to the blockchain at this time? Or what was the price of this house that was sold in this area? Or what crime was reported by this victim or this police officer in this area. All of these feeds of data right now that are happening in these kind of disparate silos, you put them together into something I call the ledger of record, which is a global feed of cryptographically timestamped history, undeleteable history. And this it's kind of like Twitter in the sense of when people are referencing whether something happened, they're like, 'Was that tweet real?' And you go to the permalink and you want to see whether someone actually did it. That's imperfect for many reasons. One of which is that Twitter can man in the middle it. Another is that the person's account can get hacked and they can post to someone else's account, you know, last summer. With cryptography with digital signatures not going into all the details that offers not a perfect set of checks but a much greater set of checks on this becomes much harder to falsify history you can't delete the tweets as Twitter can do there's a lot of things that come into it where that feed becomes incorruptible it becomes an indelible ledger and it becomes cryptographically validated and so what I think in crypto this is called crypto oracles the point being that you're no longer relying on just pure humans, fallible humans to tell you what is true. You rely on decentralized cryptographic truth rather than corporate truth. And this is already the kind of thing which is the input to smart contracts handling millions of dollars. I think we're going to scale this out over the next 10 years. And this is actually the alternative to a few folks in Brooklyn trying to determine what is true for the entire world, which simply doesn't scale. Not that it ever did, but it's very obvious that it doesn't. All right, let me pause there. A lot lot to digest. There's more.
That is a lot to digest. So, it'll be very interesting to see what happens to long-form journalism. That is pieces that would take possibly weeks or months of time, dedicated time to produce, but putting a bookmark in that. We can always come back to it. Just a quick thanks to one of our sponsors and we'll be right back to the show. This episode is brought to you by Wealthfront. Did you know if you missed 10 of the best performing days after the 2008 crisis, you would have missed out on 50% of your returns. Don't miss out on the best days in the market. Stay invested in a long-term automated investment portfolio. Wealthfront pioneered the automated investing movement, sometimes referred to as robo advising, and they currently oversee $20 billion of assets for their clients. Wealthfront can help you diversify your portfolio, minimize fees, and lower your taxes. Takes about 3 minutes to sign up and then Wealthfront will build you a globally diversified portfolio of ETFs based on your risk appetite and manage it for you at an incredibly low cost. Wealthfront software constantly monitors your portfolio day in and day out so you don't have to. They look for opportunities to rebalance and tax loss harvest to lower the amount of taxes you pay on your investment gains. Their newest service is called Autopilot and it can monitor any checking account for excess cash to move into savings or an investment account. They've really thought of a ton and they've checked a lot of boxes. Smart investing should not feel like a roller coaster ride. Let the professionals do the work for you. Go to wealthfront.com/tim and open a Wealthfront investment account today and you'll get your first $5,000 managed for free for life. That's wealthfront.com/tim. Wealthfront will automate your investments for the long term and you can get started today at wealthfront.com/tim.
There are a few things that I would love to get your opinion on, perspective on. Uh, and I'll give kind of a preview of the two. One will be current forms of self-defense, whether preemptive or reactive. While we're waiting for the future to be evenly distributed, what can we do in the meantime to protect ourselves or counter punch if we're being potentially mistreated by members of the media? That's one. And then after that I'm going to ask you about for yourself keeping a ledger of predictions much like you've recommended people to write out the bull, bear, and base case of joining a company and then checking themselves say a few years later. But let's first talk to any particular strategies or tactics for self-defending oneself. Exactly. For self-defense. Do you have any thoughts there?
Sure. So I have several. The first is maybe the least obvious which is you should radically reduce your expenses if possible because financial independence is upstream of individual independence and ideological independence. If you're in lots of debt, if you're not in debt, but you're just spending every dollar you have because you live in an expensive area, then you are extremely conformist because oh my god, you lose your job and you have no savings and you've got this high consumption and so you just have to stay in line for everything. Now, if you want to live like that, go ahead. Okay? But if you don't, the first thing to understand, I think, is that it's much easier to reduce your costs by 5x than increase your topline by 5x. Um, it's possible to do both, but it's almost deterministic to reduce costs if you're willing to do it. And how do you do it? You go to nomadlist.com or teleport.org and you do a spreadsheet and you optimize your personal runway. And your personal runway is what it sounds like. There's a concept I developed. It's very obvious, but just extends concept corporate runway to individuals. It's your savings divided by your burn rate. And here's the thing. The moment that you move to, let's say, Bali or some very inexpensive local and start living like a grad student, and of course, this is most applicable for people earlier in their life. It's harder for folks with families and what have you, right? So, I recognize that, but even then, it can be done. There's a Reddit group called, I think, Lean Fire, financial independence, retire early. There's Mr. Money Mustache, folks who do this kind of thing like household budgeting. But as an individual, it's actually relatively easy. What you do now, and this is actually even easier in 2021 than it was when I first started recommending this. You get a remote work job at a good tech company. It could be any company of course, but you know, let's just say, you know, tech is it's because it pays well or whatever if you can get it. But a remote work capable job, you move to the cheapest place that you can tolerate that's good. And actually, there's actually some really great places that are cheap and warm, especially now that remote is feasible. I mean, basically all of Latin and South America if you have to be in an American time zone, for example, and big chunks of Canada if you like the cold, you know, and of course the Midwest and what have you. There's huge areas of the map that have opened up thanks to remote. And if you do that and if you cut your expenses 5x, now you go from just as a thought experiment, let's say you're making, I don't know, 100,000 a year as an engineer and before you were in San Francisco and you were burning like 90,000 of that a year or something. That's actually not insane. A lot of people do exactly that, right? Because the rent is so high and what now you go to some rural local or even overseas and now you're actually only burning let's say 50k a year, 40k in tax or what have you and then like 10 or 20k let's say it's 60k okay 20k in expenses because you just cut it all the way down. Well now every year that you work you have basically built up because if your income goes away your tax goes away as well. every year that you work up. If you're spending 20K a year, you have 40K in savings. If you just do out the math, earn 100, spend 60, bank 40. If your spending is 20, then you have two years of runway, personal runway added for every year that you work there in this simple toy example. And that means that you don't need to accept angel financing. You can self-finance. You can just for every year you work, you can take two years off. It's basically a way of getting personal financial independence, like a deterministic path to doing that. Now, of course, you're no stranger to this. you've been talking about this stuff forever, you know, with the 4-hour work week or what this is not this is not unusual for your audience. But I think that the perhaps somewhat novel is connecting this to ideological independence because it means you can't be cancelled. You know, you can just write it out like you know the square jawed Chad. Yes. You know, from you know the memes I'm talking about.
No, I don't. What is square jaw chad?
Okay. Okay. This is very very online. If you Google the Chad Yes. It's like, you know, someone being like, "Oh my god, I can't believe you believe this." Or whatever. And the guy's like, "Yes." And that he's just not backing down at all. Just totally firm, square jawed chat. [laughter]
Okay. No, it's all right. I didn't know who Taylor Swift was until like four years ago, so I'm a little sheltered, it would appear.
Yeah. It's like It comes from, you know, Yes, Chad. Know your meme. Here, I'll send you the thing. I'll [laughter] send you the thing. Anyway, I bet 99% of your audience has I this is maybe it's obscure. Maybe or maybe it's not. I don't know. But we'll have to see. Anyway, point is how do you do the square jaw, Chad? Yes, it means you have to be able to, you know, you're not backing down. You accept what consequences may come because you have planned for the future. you know conflict may come and you have essentially banked up and so so that's let's call that one piece right financial independence
Right and it requires not not to state the obvious but it requires or may not even require courage the less fear you have
Right if courage is acting in the face of fear if you have minimized the risk or the damage of being cancelled or any type of media retribution you have less fear to overcome it just makes it easier like you said to have that ideological freedom
That's right. The second thing is if you read books like Beautiful Trouble, do you know what that is?
I feel like I'll be saying I don't and I do not a lot in this conversation. Please continue.
No, no. It's so so beautiful trouble is an awesome window into another world which is it's sort of like you know how it's it's a handbook for activists and uh so you sort of learn when you read it you'll be like whoa I recognize that from this event and I recognize that from this event and you start to realize actually how much stuff you read in the paper. Some part of it is sort of from corporate PR, but another big chunk of it is from activist PR. For example, taking um a laser pointerish thing and and shining a logo onto the side of a building. There's various kinds of stunts like this, but the one that's relevant here is there's this concept called spectrum of allies where you've got people who are at let's say there's five categories. Strongly supportive, weakly supportive, neutral, mildly opposed, and strongly opposed. And your goal as an activist is to recognize you can't just move people from plus two to minus two right away. What you do is you try to find some incident or thing that is bad and then you go and you put a microphone to everybody and you force them to comment on this person or this incident be like can you excuse this horrible thing and you try to force them from a you know a plus one to a zero or what have you. Right now that is actually a very premeditated thing. One way of visualizing it is it's an attack on your social network. Okay, this is a premeditated thing. It's not like a organic thing and it's spectrum of allies and uh one way of thinking about this is you have a social network supply chain. Okay, so visualize yourself. You're a node at the center and you have your employer. Let's say you're CEO, you have your investors, you have your employees, you have your customers, right? There's all these nodes around you. I'm talking about from like a tech startup context, but you can of course generalize this to something else. And those nodes can be colored, you know, let's say they're gray or blue or red. They can be colored according to their ideology. And the most important thing about your social network supply chain, and this is not obvious, it is what periodicals they read and respect because those periodicals have root access to their brains. If a periodical suddenly says, you know, let's say the Wall Street Journal and you've got a bunch of Republicans surrounding you, for example, right? The Wall Street Journal suddenly says, you are bad. All of those people who read and respect the Wall Street Journal will suddenly like zombie-like turn their eyes glowing red and start excommunicating you or they'll move in the spectrum of allies. So the guy who is on on the fence may quit. The person who's really strong and and strong supporter might move to what the minimum contractual obligation is. And so the attack it's like a mortar that lands in somebody's social network neighborhood. That's that's what negative press is. Negative press is an attack on your social network. Now, how do you mitigate this? Well, first, as I mentioned, you are you're like a quote sovereign individual. You're financially independent. So, if people pull away, it doesn't matter. But second, and more important, you need to actually identify where likely attacks are going to come from and make sure you actually choose your friends, your employees, everything such that that's actually robust to foreseeable kinds of attacks, right? You robustify your social network supply chain. In the same way that a judicious person who runs a manufacturing plant is thinking, okay, China has some supply chain risk. You are thinking, okay, that person has social network supply chain risk. I think they would go south in this event. And then you might want to get them off the board or you might want to not hire them as an employee or have them a contractor. And that's actually better for them as well because they may or may not know it, but they're basically like the Manurion can't. They've got like a remote chip in their brain and they're just like this when when you're denounced. Okay. And now we have it actually relatively good in, you know, the West in, you know, the term canceled, by the way, is actually very juvenile. It kind of comes from like TV shows being cancelled, like cancel cultures, like teenagers complaining about it. And this sort of elliptical way of complaining about has made its way up to 30 and 40 and 50 somethings discussing this topic. But the original term for being canceled was being purged. That's what they called it in the Soviet Union and the People's Republic of China and so on. Right? And it could well be said that in the Soviet Union or the PRC, an editorial was a prelude to an extrajudicial execution. You wouldn't just, you know, quote get cancelled and lose your friends. You would lose life, liberty, and or property. you'd be shot or jailed or certainly expropriated or all of the above
Sent to a labor camp in the cultural revolution.
Correct. And the other nodes in your social network might be as well like if you were, you know, a member of a family that had a known capitalist rotor in China not really very good. It was possible just like people come back from being canceled. Deng Xiaoping was actually purged three times. his son was thrown through a window and you know like during the cultural revolution and was in a wheelchair for the rest of his life. So I mean this is the kind of stuff that happened in other countries. It got even more violent than it has so far in the US but we'll see what happens you know with that. Anyway point is that you know so that's a second mode of defense. First is personal financial independence and second is collective independence. You want to really think through who the nodes are that are associated with you. By the way, one interesting consequence of this if you flip it around is if you have a monochromatic supply chain, there's basically nobody for example at the New York Times company who reads and respects Breitbart. So Breitbart has zero effect on the New York Times company. No node there can be Manurion candidate by them. But the New York Times company absolutely on if you go to Breitbart's like extended social network supply chain, there's absolutely folks, you know, whether it's ads or other kinds of things that read and respect NYT. So A can publish article has no effect on B but B can publish it and it has an effect on A. Another example is if Xinua Gininoa daily and by the way I'm not saying anything pro or con about Breitbart NY. I'm just making an observation of fact there. Another example is Xinuaet you know in China the Chinese you know people's daily. Uh if you're Chinese and they denounce you your whole social network supply chain is like whoa the government just denounced this guy. You're in trouble. If you're in the US nobody even reads Chinese or even cares. Hey these guys are totalitarians. who cares, you know, or at least that's that's what folks you'd be able to brush it off. And so so it's more than just quote red or blue or whatever. It's it is there's other colors to it, right? Whatever you'd assign the color to the CCP or what have you. And so, you know, another one might be if Al Jazeera denounces you or Russian state media denounces you. You've got vulnerabilities to different kinds of things. If you were a Russian expatriate, you might be much more concerned if you know RT suddenly started going after you than if you were just some random, you know, American or or even a Chinese person. Go ahead. Let me pause there.
Well, I was thinking we could I'd be curious to hear what else you have thought about for yourself in terms of of self-defense. If there are any tactical recommendations and just also to come back to one of the examples you gave with reducing your expenses by 5x, would you not So, it's a combination of questions. We can you can take them in either order but if you were employed by a tech company whether that's a Google or Facebook or otherwise is that not a significant vulnerability in the system while financially if you maintain your job you can uh withstand say public denouncement or media denouncement but the company may not have the same willingness.
Absolutely. Absolutely. So let me get to point number three. So point number three is I gave a whole series of talks on this and I've been thinking about the technology for it as well. Something I call the pseudonymous economy. So the thing is that real names weren't built for the internet. Real names are actually a technology. In fact, real names are a stolen base in many ways. Even the term real name is a stolen base. It's better called a state name or a social security name because it's a global identifier. It's an identifier that anybody can type into a database and pull up all kinds of information on you. And this is something where historically past cultures understood that giving out someone's real name was actually very bad you know or knowing it you had power over that person. The reason is that if you read read this book seeing like a state
Yeah. Seeing like a state. So this is a great book by Yale University Press that essentially talks about how names were developed to among other things simplify the process of conscription. So rather than, oh, that guy over there with brown hair, which is an analog identifier that could refer to a bunch of folks and that was imprecise, instead you'd say John Davidson. And that first name, last name was a it's not perfect. It's not quite as good as a number, but it's a reasonably good digital identifier where you could go down a list and cross it off. And the thing is that would not just be conscription. You couldn't have even executed like Leninist redistribution of property very easily without those lists. It was all about the lists. literacy is what actually enabled a big big chunk of that. Um you had lists of names, that's guy's rich, that guy's not rich, take his property, etc. So the the point being that the alternative to real names or like a single global identifier and everything is pseudonyms, search resistant identities, which people are already using at large scale. There's 400 million pseudonyms, you know, or synonymous users on Reddit. And by the way, there's a distinction between anonymous, pseudonymous, and real name. Anonymous is totally disposable identifier. That's like the culture of 4chan that actually is kind of a pit synonymous like Reddit is a persistent pseudonym that accumulates reputation but that is at a distance from your global identifier in general. What I think is the you know the piece of Westphalia at the end of our 30 years internet war is going to be
Hold on pause for definition. If I could click on a do you say Westphalia?
Yeah. So from 1618 to 1648, Protestants and Catholics slugged it out over religion but also over power. You know, who's going to rule the Catholic Church, you know, or or you know, Martin Luther's guys, the disciples of Protestants. Very bloody war, lots of killing. And it was basically centralization versus decentralization, you know, among other things. And eventually the truce that came about was the so-called peace of Westphalia, which established the modern nation state.
I was just thinking how how happy it makes me that you thought I might even know that. I I'm so uh honored. [laughter] So, thank you. But no, please please continue. I don't I don't want to I don't want to take us off track, but that just that just it made my day. That just made my day.
I don't mean to drop an obscure reference, and there's lots of lots of areas of history that I don't know about, but this is one that I think about a lot because it's highly relevant, I think, to the present day in many, many different ways. Arguably the 30 years war arose out of the introduction of the printing press um because you could go and mimograph you know all of Martin Luther's stuff and spread to people and that's how you know you did the software installed boom into people's brains and that's Protestant Reformation distribution you know took off. So this technology gave rise to this huge fight that essentially redrew the map and the concept of the nation state was born out of that which is okay you don't have these transnational entities that just can have influence everywhere. Instead we're going to have these sort of geographically defined areas that have a sovereign government with a monopoly of violence and a religion can't just walk in there and just start bossing people around. There's like a lawful government. That was the truth that people came to. You stay in your lane, I stay in mine, just out of all the bloodshed and to stop the bloodshed. So, I think we've just began hopefully there's not bloodshed or not much of it. I think we've just begun people think we're we're ending it, but I think we've just begun the global internet like cold war where all of these social networks, currency networks compete for ideological and economic dominance around the world because they can just spread virally back and forth like this. and um everyone will be trying to cancel each other and whatnot, it's going to be this crazy crazy thing. You know, for example, one thing I anticipate will happen sometime in the 2020s is I think in some country, probably the US for lots of reasons, I think the cloud will burst. And what I mean by that is some, you know, like Treasury was just recently hacked with the Solar Winds thing. People don't know what they got. They could have gotten every tax return. They could have gotten all kinds of very sensitive stuff.
It was hacked with with what? I'm sorry.
Oh, solar solar winds is sort of the name of the hack and
And the scope of it is not fully understood. It's like this total ownage of all kinds of government systems. And this is not the first time this has happened. It's also happened at the government of Texas and and so and so forth. I'm not pointing at any particular entity. The main thing is when there was a recent hack of Ledger, the crypto company, their database was just blasted on the internet and you could actually, you know, I wasn't a customer, but people could see their name and their home address on the internet and they're like a crypto fanatic who has a hardware wallet on there.
What a nightmare. What a nightmare. Oh my god.
And and so it is like this thing where you know, you don't um you can't easily change your home. I mean, some people can.
Yeah. Suddenly you have guys in track suits showing up at your house
Potentially. Exactly. It's like a rankordered list of who holds crypto. Really, really, really sucks. May lead to home invasions, other kinds of things. Very bad piece of information to have out there. It's an enriched list. So, it's hard for, you know, the thing is even discussing it, I hate bringing more attention to it. On the other hand, it's also something which has important consequences. And one of the consequences is that shows it's not a theoretical risk to think about what these hacks could be. So far, people have talked about hacks kind of in the abstract, but once a government database is hacked and all of this surveillance on us is just blasted out on the internet. The cloud bursts, you know, whether it's fake,
What what does that mean by the cloud burst?
All Facebook DMs rain down. All Slacks rain down. Something like that happens.
Rain down meaning are suddenly searchable and available.
Suddenly searchable and available
Wikileak style. Exactly. Now, when that happens, the defense that people are going now, it'll cause all kinds of crazy stuff. Basically, it's not so much that you'll see fires and and electrical outages and so on, but like all kinds of social damage will be caused, low trust, relationships broken, all that type of stuff, like the the tearing of the social fabric. Go ahead.
Well, I was just going to say not to mention that even if you feel like you have nothing to hide, and this is an issue with a lot of uh surveillance act bills and things like that. If suddenly every lawmaker, every member of Congress has dirt on them, I mean, the destabilizing effect.
It's non-trivial. Now, now [snorts] there's an argument that when everybody's naked, no one is. Some people may make that argument. [laughter]
Right. Right. Sure. But it doesn't all happen at once. That's the thing, right? It's not all discovered simultaneously nor distributed simultaneously.
Exactly. That's right. And if you look at what happened during the Sony hack and so on, this is like a preview of that. And so the answer I think is we're going to need to build a pseudonymous economy where over the medium to long term you separate out your real name, your earning name, and your speaking name. And in fact, you have multiple earning names and multiple speaking names just like you have multiple usernames at different sites. Crypto is a crucial component of this because it allows you to earn synonymously. and with a recent innovation that you know I haven't coded it up but I've got like the white paper level description of it would let you transfer reputation from one pseudonym to another. So one issue right now just to frame the problem is you may have a bunch of reputation followers or karma for example under a username even a synonym. If you boot up another pseudonym it starts at absolutely zero which is one of the big things that stop people from doing it. Let's say you know for example you have a large Twitter following and you boot up a new pseudonym. That synonym starts with nothing. And so it takes you time to boot up like a new following. That's a whole effort that deters a lot of people from doing it. are starting all the way from scratch. And you know, I thought about this problem and how to because the thing is that with cryptocurrency, we've actually solved this where you can set up a username and another username and you can use Zcash to transfer money from one name to another synonymously. So money can be transferred. Reputation though didn't seem to be until I realized that actually you might not be able to do it for followers which are nonfungible. that is say one person is not like the same as the other, but you could do it on a site like Reddit where you had karma that was accumulated. And so someone who had 10,000 karma under one pseudonym, just like you use Zcash to transfer digital currency, Zcash is basically like the truly anonymous version of Bitcoin, truly private version of Bitcoin. Just like you use Zcash to transfer cache from one name to another, you could use Z Karma to transfer karma from one username to another and thereby reboot under a new username. Okay. And that username would have no comment history, but people would be like, okay, that's a 50,000 karma person or whatever the number is. Clearly that's somebody who our community esteems to some extent, you know, has been upvoted a lot. Perhaps we should listen to what they have to say because they felt they had to go into a pseudonym for this. And of course, you could do this with not just a global karma, but subreddit specific karma. You you accumulated all this karma in the I don't know the historian subreddit or the mathematician subreddit or something like that. You have something controversial to get off your chest. You can say it this way. That's one dimension of the synonymous economy. I think another dimension is basically that people just like you don't give out your password. You know, I think it's going to become less and less and less common for people to give out the mapping between their physical body and their usernames online. Like you may not even tell your wife, you know, just like, you know, people often
When you mean physical mapping, that just means you you're not going to correlate those two things for someone.
That's right. Exactly. Right. So So essentially, it will be considered a phauxa and we're already moving towards this, right? Like there's this uh this YouTuber uh whose name I forget who's like shick is that he's like a faceless guy like faceless horror or something like that. What's his name? Do you know what I'm talking about?
I don't know but we'll we'll put it we'll find it and put it in the show notes.
Okay. Yeah. So this guy's name corpse husband.
Corpse husband. So this guy with this super deep voice who sounds like this, you know, like like like a like I can't even I can't even mimic it. This guy with the super deep voice has never shown his face. So Corpse husband basically, you know, he's quasi anonymous. He's given away his audio but not his video. And you know, I think that stuff like that, I mean, what's I think what's going to happen soon, sooner than we think, probably by 2025, 2030 latest, is you'll have filters on your Zoom that are not simply like, oh, my background is San Francisco or whatever, but audio and video filters so that you sound and look like a different person. And that will be like the equivalent of clothes,
The FBI informant filter, something like that.
Or or just just something where people don't need to know who you are. And here's where I think why I call this a piece of Westphalia. I think at the end of this rainbow is not the right metaphor, but this journey pseudonymity stops both discrimination and cancellation.
So it is it's not ideal, but it is accepted and widely used by people of all political persuasions. And so it's sort of like a mutual disarmament where you can't cancel somebody. The only thing you can do is judge them by what they're saying. You can't discriminate against somebody. You don't even know what their immutable characteristics are. And so that's actually, I think, an acceptable truce to many parties. Not a great one, but it's the total opposite of bring your full self to work, Google stuff, or whatever. It's actually the total opposite trade-off, which is minimum necessary self. And I think this goes handinhand with a future world where there's more tasking, more microwork, less full-time jobs, and so on. Some of the stuff obviously you've touched on many times.
All right. So there there are lots of questions I could ask including what are we've talked about what it stops but not what it produces or what uh side effects or perverse incentives could could come into play with a pseudonymous economy. I think we might get into that but I I just want to ensure that I don't miss asking a question and this is really a meta question of sorts and if it's a shitty question you can tell me and we'll do something else. Sure. I had for context as you mentioned or maybe as I mentioned I think it was on January 30th of 2020. This is a week after the lockdown in the city of Wuhan. You posted a tweet. What if this corona virus is the pandemic that public health people have been warning about for years and you ended up predicting accurately many things related to co. You have certainly been a participant and in some respects by participating a predictor of many developments in blockchain and cryptocurrency. And for that reason I had a a laundry list of questions related to different types of possible predictions that you might have. But but I thought a broadstrokes way of checking all of those boxes might be and tell me if this makes any sense or if you're game to try this is to actually talk about investing and just to say if someone handed you $100,000 or $100 million today and you had to invest it, how would you even think about that? because I think by answering that it might it might actually begin to speak to some of your predictions in the upcoming years.
What do you think about that framing?
Sure. So basically I mean like I never give financial advice,
Right? I was just going to say right this is important as a as a disclaimer. What would you do? This is not financial advice. We're not registered investment advisors. Caveat emptor this is forformational purposes only. No minor or minotaurs allowed etc etc. Please continue.
Sure. So the question is if I was given $100,000 or hundred million dollars what do I do with that? Like how do I maximize returns? So the dumbest thing but that I think is the most obvious thing to do is put half into Bitcoin and half into Ethereum.
The dumbest meaning the simplest or the most ill advised.
No. No. D the simplest. Like the simplest thing that I think is you know guaranteed to produce really exceptional returns. I think you could probably do I mean in retrospect from I don't know 2030 looking back there'll probably be something you could do that would be bet not probably there will be almost certainly something you could do that would be better than that but that's going to do extremely well.
I think it's a global strategy also.
Is that what you is that what you would do now understanding you've you've sold multiple companies you've had multiple exits. you are post-economic in uh I assume in that respect
But you you said to maximize returns and I'm not I'm not sure if that is how you would think of the objective at this point.
So is objective to make the maximum difference to humanity or is it to maximize returns or what what was your
It's whatever you would do with it.
Oh okay. Well what I would do is something very different. So I thought you meant invest on behalf of somebody else. Okay.
Well you you well in a sense you answered that. So I I I'd love to to hear your your personal take.
Sure. Okay. So I'll tell you what at least I'm I'm planning on doing which is pouring money some of some of my own and maybe you know some from investors if I decide to raise money into bootstrapping talent around the world through 1729. So just return to that because we were talking about that at the beginning. This is going to be the first newsletter that pays you. And so that's to say daily at least $1,000 in Bitcoin prizes for doing tasks. Okay? So for example, here's an essay. The best 10 responses to it get 100 bucks in Bitcoin. Here is a a scientific article. The best 140 second video on this gets $1,000. That explains it to the masses. Here is a a textbook or or a chapter of a textbook. Please generate 10 exercises for this chapter that are fully open source that anybody can do. I'll give you $100 in Bitcoin each. So that's cumulative like an open source Coursera, open source Wikipedia in a sense. And the goal here in doing this is severalfold. First is I want to actually build up those citizen journalists that we talked about those content creators. Second, I want to invest in like a cumulative form of education, open source education, you know, where these folks are doing tutorials. So, for example, those 10 questions I just mentioned, they could be on science, but they could be on video editing or other kinds of things. And it's all just open source so that that people get paid for creating that the educational tasks that others can do. How are those two things related? By the way, I know that seems a little vague, but let me let me explain. So, you have these tasks that people are completing and you have educational content that people are creating. The reason they're related is there's global tasks that anybody can do, but you might be able to get paid more if you know Figma or if you know Python or if you know chemistry. And so the educational tasks that I also pay people to do are like a curriculum that if you solve these tasks, you can level up and get higher value remuterative tasks. The basic idea is Go ahead.
May I pause you for a second? Yeah. So if you have a task like create 10 exercises based on this textbook or this material, can multiple people perform that or complete that task? If so, do you pay all of them? How do you decide who to pay?
That's a great question. So the review process actually we allocate as much of a budget or a good chunk of the budget just to review because review is its own thing. And there's various ways of doing review. And we're going to experiment with a crowdsourced aspect like a Reddit style leaderboard of up and down voting and then a manual, you know, review on top of that. And then there's like 50 different things that you can do to kind of make this more sophisticated. In a sense, this is like earn.com 3.0. You know, there was earn.com, there's Coinbase earn, which earn.com was actually doing extremely well before we sold to Coinbase. It was essentially pay people to reply to emails and complete tasks. And then Coinbase earn was asset issuers like uh you know creators of new cryptocurrencies and digital assets would pay users to do tutorials on their asset to learn about how it worked you know like filecoin or orchid how to use decentralized storage or decentralized VPN and this is like a third iteration which also combines a bunch of ideas that I've had for online education. So, just to summarize it again, A, a newsletter that pays you with at least $1,000 a day in Bitcoin prizes for completing tasks and tutorials. And then B, what this does is hopefully it bootstraps talent all over the world. Anywhere there's a phone, there's a job, right? We can give this skyhook to people and you can just start with nothing, absolutely nothing, other than this phone, which people have made really cheap. and you can do the tutorials, you learn some skills, you level up, you get more tasks, you start leveling up more, you get digital currency. So, anywhere there's a phone, there's a job and there's an education. And uh this is what I plan to do with, you know, what I've been fortunate enough to to make. And that's my contribution to humanity, I think, or hope it to be. And uh and hopefully this helps find also like the next Ramanujan out there. Who is this kid in Brazil or the Middle East? You know, somebody in some war torn area like Syria. it's all bombed out, but hopefully that kid has a smartphone and we can like kind of airlift them out, right? Give them a shot if they're willing to put in the work and, you know, be all free. So, let me pause there. That's that's at least what I'm thinking about doing. And I know it's an idiosyncratic use of capital, but I'm not the type to spend on Ferraris or whatever.
Yeah, I I would expect no less. So, let's just say that there is a bright kid in Syria who I I'm struggling so much cuz I'm accustomed to saying Ramanujan, but I'm getting that incorrectly. So, Rammanagen and he's performing or she is performing various tasks at a high level. What do you then do with that talent? So presumably they develop some type of reputational score or they acrue some type of reputation. How do you airlift that kid
out or encourage them to airlift themselves out? Is it the capital? Is it that they now have the resources to in greater optionality to perhaps improve their situation or is there another approach because they could be brilliant and continue to complete these microtasks.
Right? So three thoughts there, right? So first is of course you know Syria is an unusual case because it's actually a war zone. But we could use another example if it's easier. So let's say you know it's Nigeria or it's India or it's a place where maybe the kid doesn't necessarily want to leave. If they don't want to leave now they have their cake and eat it too. They can have home-cooked food. They can have their local culture and local language, but they can also get into the internet fastly and they can contribute pseudonymously ideally, you know, to a community that will neither discriminate against them nor cancel them because accent doesn't matter, their age doesn't matter, skin color doesn't matter, gender doesn't matter, none of those things matter. Can't matter. That's at least my ideal, the true global meritocracy. And that's international, of course. And so the concept here is yes, they would start earning. And the thing is a thousand bucks even once in a year is actually a lot of money for people in a lot of places. So that's like quite a lot of people that we can airlift out that way. And when I say airlift, as I said, I don't necessarily mean remove them from that location unless they want to leave. They might be able to stay there. I mean more like airlift them from whatever situation they're in. At least give them the opportunity.
And what does that mean in practice? Well, one of the most important things it does, I think, is this is the if again if this works, it's ambitious and it's crazy and so on, but let me try and explain it anyway. This is actually the digital native solution to education. Here's what I mean by that. So, you can think of a piece of paper and then you can think of a scanner and then you can think of a text file, right? So, you go from physical to this hybrid physical to digital scanner and then digital native. Another example would be you got a face to face meeting, you've got Zoom, and then you've got virtual reality. Zoom is also like a scanner. It's taking the offline and putting it online. But then VR is like digital native. Third example, physical cash, then something like PayPal or fintech, right, which is just basically the scanner taking that and putting it online. And then you have crypto, which swaps out the back end is just now natively digital. It doesn't have a physical form. And with education, you at least higher education offline, you've got the physical college. Then you've got the scanner, which is like Udacity and Coursera and so on, which are fine companies, good companies, billion-dollar companies, you know, but they're basically taking the college experience and putting it online. And then there's this really interesting terrain incognita of what is digital native education look like.
So, let me kind of motivate how that works and then you can see how maybe that links in with the tasking piece. And I say this as someone who's taught a lot of courses whatever and you know so this at least it may be a mistake but it comes from my experience of mistakes whatever. So let's say you take a Stanford degree in computer science there are on the order of 25 courses you need to complete the degree give or take and that's in addition to so-called graduate education requirements and each one is roughly each course roughly 10 weeks and say on the order of 10 problems per week sometimes more sometimes less. So that means about 2500 problems. 25 * 10 * 10. You need to solve 2500 problems before you get your one degree. So it's like you have zero degrees at problem 2300 and then you have one degree after problem 2500. I carry it but not by much. And after you have your one degree, you go and now you can actually get paid and you can work and so on and so forth. That's a historical thing. Get your degree and then work. Now of course this isn't only an idealization. People will do paid internships and so on during college. So after you know 500 problems they have enough qualification to go and get some you know job or internship. That's true but to first order this is how this the system is still meant to work right get your diploma before you get a job.
Now what one of the things people used to say as sort of a caricature or attack or whatever of a Udacity these nano degrees they say oh you're getting a nano degree well you better expect a nano salary you know oh haha right it's crap whatever. So the thing about that is what if you take that seriously? What if you say all right rather than this step function, this discontinuous thing where you have to solve 2500 problems before you get a job that's paying 100K, what if you solve five problems and I give you a job that pays you 10 bucks a microtask and we see how you do on that. That radically reduces a risk for both sides. your risk in terms of you know spending all this time learning something and the employer's risk and frankly you know the difference between a person who solved five problems or one problem in JavaScript versus zero is actually a big difference it's surprising you know that's actually a big difference so the idea here is that if you could show proof of skill somehow right if I could demonstrate that I have some skill in JavaScript or I have some skill in chemistry or skill in Illustrator or whatever then I could qualify for more skilled microtasks right as opposed the Mechanical Turk style lowest common denominator, which is fine, but that's just like labeling something as a cat or a dog. All you need is a pulse. It's the recaptcha style thing that you see, you know, label the cars. That type of stuff is fine, but that's like just all you need is a pulse. You don't need any skill.
The question then becomes, how do you actually do proof of skill? And I think the answer is something, and I've got a post coming on this, which I call the crypto credential. And the idea is every time you solve one of these problems, we don't give you karma like on Hacker News, we give you a little badge that says you solved that problem and that's held in your digital wallet just like your cryptocurrency. Think of as an NFT if you know what NFTs are. So it is an NFT basically, right? Except it's non-transferable. And just a side note for people who are interested in learning more about NFTs or non-fungible tokens, if I'm remembering correctly, Katie Haun and I discussed this at length in that podcast episode which you can find elsewhere. So just Google her name H A U N and my name and it'll pop right up. So please continue.
Awesome. Okay. Yes. No, Katie's awesome.
So the idea is this would be this is not something you can resell. So it's not an NFT. It's not like a piece of art in that sense. It's a third application or nth application of crypto. It's not cryptocurrency. It's not art. It is a crypto credential. It's awarded to you and the first version of those are just you solve problems on a website and you earn these crypto credentials just like you earn badges at Stack Overflow just like you earn badges in a video game. You earn these crypto credentials. The difference being they're on-chain and because they're on-chain you can log into any site with them and now you can qualify for instant jobs microtasks.
Now, here's what's cool about this. There's a lot of details in how we implement this, which I can get into, but what's cool about this is it levels it all out. You know, yes, absolutely there's smart people at Harvard, MIT, or Stanford, but there's smart people in the middle of Brazil and, you know, in Hungary and India and Nigeria and the Philippines. And I know there's smart people there because I could see them in my class. And I could see that many of them were the equal or the better of, you know, some of the more pampered kids at these expensive schools, especially nowadays where there's less stress on just getting the right answer and more on cancelling people or whatever, right? Like undergrad is much more screwed than it was, especially in the US than it was, you know, even 20 years ago, 10 years ago. Plus, because the pandemic, lots of colleges are shut down and they're having economic problems. There's a huge desire to do something better. And the concept is, you know, if we do this right, it's like Wikipedia for education because every course is open source. The problems are out there. It's like an open source curriculum. We're going to build it on the Exercism framework. At least that's my thinking right now. I might change my mind, but exercism.io.
This is an awesome site, by the way. It's got a funny name, too, like exorcism, but with an E. And Exercism basically has something where you can learn Python by doing like 50 Python problems or you can learn JavaScript by doing like 70 JavaScript problems and it's recorded on the site. It's like you see this counter go up. And just think about how much better that is than typical social media where all you're doing is fighting for clicks or whatever, you know, fighting for hearts on Twitter or likes on Facebook, whatever it is. And that's something where you're just incrementing numbers on somebody else's server. I'm not saying it has zero value. There is some value to it, but it's not value that you can easily quantify or extract from the system. You know, you built up your followers there. You can't import them or export them. It's not really building up yourself. So, the idea behind 1729.com would be you would constantly be pursuing your improving your knowledge and your bank account. You'd constantly be learning and earning. You'd be learning and getting these crypto credentials and then that would allow you to earn cryptocurrency.
Now, the third thing actually, and this is something I've been also thinking about, flirting with the idea of, and it maybe we'll do this, is you may think this is crazy, but you're also the 4-Hour Body guy. So,
I'm already crazy. I think I've crossed that Rubicon a long time ago.
All right. So, the third thing I was also thinking about is actually putting up a third kind of daily post, which is burning. That is to say, just post something of you working out and we give the hundred best each day like $10 in BTC. And that's it's a varied health task, not just working out. Maybe it's show your fitness tracker or what vitamins are you using or something like that with a goal being that people who are at 1729 are focused on truth health wealth learning true things and leveling themselves up that way like gaining knowledge health like improving their body their physique but also you know like staving off aging you know thinking about transhumanism measuring themselves and then wealth as important but third truth health and wealth in that order because you know determine what's True. Make sure to maximize your health and then accumulate wealth, but don't do it at the expense of what is true or what is good for your health. Go ahead. You're smiling.
I love that. I love it because I mean, not to bring this to the 4-Hour Body, seems like a downgrade, but the I mean, look, I'm very proud of that book and I'm happy with it, but the and a lot of what was in there that seemed highly speculative at the time has only gained more traction and support and literature and so on. So I'm very pleased with that. A large component of that and especially the 4-Hour Chef which can very confusingly is about accelerated learning and behavioral change. The disproportionate impact of small incentives and stakes is I just think so under-discussed. And one of the stories that I tell in the 4-Hour Body, I believe, was of a Google engineer who hoped to get in shape and he created a pact with a fellow engineer, which was we're going to work out together, whatever it was, three days a week, and if either of us misses a workout, we're going to pay the other person a dollar. Now, these are Google engineers. They make more than a few dollars a year. And it was incredibly effective. And the fact that it's a micro incentive leading to a micro behavior should not be minimized because ultimately our life is largely comprised of longitudinal accrual of these micro behaviors. It's a big deal. So I love that idea. I love that idea. Let me back step if I could.
I knew this was going to happen. So no surprise here. But I realized that I did not deliver on the promise of one of my questions. And that question was related to so we're going to focus on the earning component here for a moment just because I want to ensure that I provide what I promise to the listeners. I asked the what would you personally do in this case to maximize return with 100K or 100 million and then we didn't dig into the predictions or assumptions underlying your answer. Ah, so the answer was half in BTC, Bitcoin, half in Ethereum. And I'd love to hear you comment on number one, the assumptions of what's going to happen or not happen that makes that a rational investment. And number two, and maybe you can answer this first, if you could paint a picture of what you consider the risk profile to be in doing something like that. And again, this isn't investment advice. Is part of the calculus an assumption that this is a 10 or 100x or it's a zero or something else? If you could just speak to that.
Sure. Sure. So, I mean, look, it's crypto. So, you know, crypto is crazy and it's very difficult to predict exactly what's going to happen with any but you know the two things I said that I would do with the money are, you know, there's return on investment and there's like return to society. And what's interesting is actually when you talk about the you know so return on investment is 50% BTC 50% ETH return to society is the sort of open source education tasking truth health wealth thing and you know by the way truth health and wealth I think of as the next liberte egalite fraternite it's the slogan of the next state which I'll come to okay or one of the next states but coming back up the stack so both of those things actually have common premises underneath them which is that I am simultaneously very bearish on the US specifically and the west generally but very bullish on the internet technology crypto Asia and you know future progress and those are not normally often somebody is very positive on one and positive on the other or vice versa now they're actually separated out they're separated out things because for a long time people associate technological progress with the USA and now technological progress is something that doesn't benefit the US establishment they don't win a game the east coast establishment does not win a game of free speech and free markets and so that's why they're clamping down on free speech and free markets because if everybody has a voice especially around the world go ahead
why do they not could you just say a few more lines on why that's the case
why they don't win that game why those things are bad for the east coast establishment
well so you know a small example of not winning a game of free markets whether it's the bailouts whether it is all the regulations that protect them or the whole GameStop thing you know where it definitely looked like some strings were pulled somewhere. I'm not saying the Robin Hood thing, you know, because I think Vlad gave a pretty good, you know, explanation of that, you know, for people who follow that whole scenario. But certainly Discord going and just shutting down GameStop discussion out of nowhere based on, I think, a pretext seemed like someone pulled some string somewhere to make that happen. And that's something where truly free markets, maybe Wall Street doesn't win, right? There's a rigging that's going on.
I see. So by East Coast establishment, just to be clear, you mean specifically in the financial sector. Do you also mean DC
media DC, Harvard, like basically the legacy kind of entities in the US, right? Like the pre-internet establishment. Then like free speech, that's even more obvious. Every single day you have some new editorials saying something like free speech is killing us or critical thinking is bad or whatever. And you know, oh, I can't believe people are having unfettered conversations, right? That was like the latest meme. And for many people, this is like this weird thing where how is it that the US that they grew up in has suddenly just done a 180 on this. And the answer is that those folks have legacy distribution, but they have a terrible product. They can't win the argument. And because they can't win the argument, they're trying to use their distribution to shut off other people's distribution because they know they'd lose the argument if distribution was open to all. So they're against free speech, against free markets. And crypto is actually truly free speech and free markets. So that's actually the true inheritor of the Western tradition. It's sort of like the internet is to the USA what the Americas were to the UK. It's like this new world that will eventually give birth to the successor. And crypto is like a huge huge part of all that because it captures, you know, the part of the West that's actually globally admirable, you know, unambiguous rule of law except in smart contracts, protection from search and seizure through encryption, you know, all that type of stuff.
Coming back up, you ask the why why did they not win this game, right? Because first is the empirical observation. What's the underlying thing? Well, they basically become these inbred folks. They are not selecting on talent anymore. They are selecting on connections. They're selecting on whether you are the son of the son of the son or the daughter of the daughter of the daughter. It is not something where they are actually taking the best folks. They are taking the folks who can just repeat a party line. I think that's one huge component of it.
Just for sake of clarity, do you mean within corporate entities? Therefore, contrasting sort of
East Coast Media for example, take a look at how many of those folks went to private school. How many of those folks have a trust fund? How many of those folks inherited a fortune?
Just for me, how does that tie to the BTC ETH?
Those folks, they lack the skills to win in a fair competition. So, there's various rigging that was done most obviously with the bailouts of 2008. There's so many other, you know, items of this. That's just a very high-profile one. And in response to that, technologists developed Bitcoin and Ethereum and these free systems. I mean, like if you look at the Genesis block, it says it references the bailouts in the genesis block of Bitcoin where it's essentially the counter to the sort of nepotistic East Coast establishment. And you know to me that's like super obvious but you're right that it's actually useful to kind of lay out the full logic of it because one of the consequences here or one of the medium-term things is you can only use force to kind of clamp down on global free speech and free markets for so long. It's like a jack in the box that will just pop out somehow. One way I think about that is after the financial crisis basically you know the way that they decided to like stop the next crisis is they made it almost impossible to get a banking charter. So you punish the banks by eliminating all of their competition.
Now somehow fintech and crypto found a way different threads coming to the same thing where basically like working above doing partnerships working below like despite the front door being closed technology came in through the windows in the chimney or what have you and is actually sort of reforming the system against their will like Dodd-Frank did not reform the banks it just sort of enshrined them. It was a coronation in the name of a regulation, right? Yeah. It did reduce some of their profit levels in some ways, but it made them look more invulnerable. Go ahead. You're going to say,
No, I'm just smiling. I'm enjoying. So, and for those who can't see us because we're probably not going to be publishing video, we are currently on video so we can watch each other's facial expressions. Please continue.
I like the coronation disguised as regulation.
Right. Right. Exactly. Right. you know so it is literally picking winners because you're writing the regulation that assumes a certain structure and capital requirements I mean like the concept of a smart contract was not contemplated in Dodd-Frank you know like a contract that could be executed independently of a judge or a person okay what's my point is as faith in the pre I mean I don't think many institutions that predated the internet will survive the internet it is this universal asset and the reason is because it connects people peer-to-peer and so what that does is it I mean one of my laws of internet physics is the internet increases variance okay why that first that's let me give the observation right the observation is you go from 30 minute sitcoms to 30 episode Netflix binges or 30 second YouTube clips you go from a stable nine-to-five job to a 20-some billionaire or a 40-year-old failed son who has made nothing of themselves. You go from a taxi ride, you know, standard taxi ride to Uber, which actually has very long trips and also very short ones. Like the whole thing is spread out relative to the ride time of a normal taxi. And the reason for this like this is a very common thing in every area like in every I've seen hundreds probably thousands of companies at this point. I've seen all these graphs, right? So you'll have to believe me that this is a synthesis of a lot of different graphs that I've seen. When the internet disruptor comes in, variance increases. There's more downside and more upside, more amazing outcomes and more really bad outcomes in all kinds of ways. Why does that happen? Because it connects people peer-to-peer entities peer-to-peer. It removes the middleman. It removes the mediator. It removes the moderator. It removes the mediocrity. Now, each of those words has a different connotation. Getting rid of the middleman, everyone cheers. Yay. Getting rid of the moderator, people are like, oh, I'm not so sure. Getting rid of the mediocrity, again, everybody cheers. So those are all kind of similar words but they mean somewhat different implications but they're all true at the same time.
So what happens is you have these communities that then arise where nodes that can never connect to each other boom they form some bizarre subreddit or some amazing thing like ETH research you know which is put you or Y Combinator. So it's like a I don't know if you've ever centrifuged anything. Have you ever centrifuged anything?
This is I can finally say yes to something. Yes.
Okay. All right. Great. So you centrifuge and you get these different layers out, right? This, you know,
