The following is a conversation with Jason Calacanis, who's an entrepreneur, investor, author of Angel: How to Invest in Technology Startups, and as many people may know, he's a fun, brilliant, longtime podcast host of This Week in Startups, and co-host of the All-In Podcast with Chamath Palihapitiya, David Sacks, and David Friedberg, who all happen to be poker buddies and self-proclaimed besties. The result is always a great listen due to both the love and the heated disagreements. Quick mention of our sponsors: Brave browser, Linode Linux virtual machines, Four Sigmatic mushroom coffee, and Rev speech-to-text service. Click the sponsor links to get a discount and to support this podcast.
As a side note, let me say that I've been learning a lot about real-world finance in the past few months. To give you a bit of context on the side, I've studied trading from an algorithmic trading perspective as a machine learning and a game theory problem off and on for a few years in undergrad and grad school. I found the distributed complex system aspect of finance and economics in general fascinating. But now I find even more fascinating the human side of the whole thing. Ideas of greed, power, freedom, and truth. Wall Street Bets, Robinhood, and the whole beautiful mess around this topic allows us to have great conversations about human nature and the systems that underlie the rise and fall of civilizations.
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I have a million things to talk to you about, but we do happen to be living through what I would think of as a historic event in terms of its impact, in terms of like almost philosophically thinking about the role of people and how they can fight power with this whole Wall Street Bets and GameStop situation. I was wondering, you've covered in your amazing All-In Podcast, you guys have been having fascinating battles over this whole situation. I was wondering if you could tell maybe from your perspective as it's unrolling, the saga of Wall Street Bets and GameStop, what are some interesting insights that you have about this whole set of events?
In full disclosure, I was an angel investor in Robinhood before they launched. And when I met the founder, Vlad, and his partner, you know, they pitched me at a bar not too far from where we are right now in Palo Alto called Antonio's Nut House. And my friend Ado, it's a really good story. My friend Ado had asked me to speak at his Founders Institute, which is kind of like an accelerator for people who were thinking about starting a company. And so I gave a talk and then he said, 'Hey, let's go to Antonio's Nut House and we'll meet Elon for a drink.' And so Elon met us for a drink there. And it's the divest of dive bars.
Like you'll take a beer and...
I love the image of all of this. You hang out with Elon, dirt on the floor, bar.
I mean, it is the worst bar in the peninsula. Like just garbage on the floor and like cheap beer and warm beer and like you'll pick up your pint glass and there's lipstick on it. It's just brutal.
Not your lipstick. You understand? Somebody else's lipstick. Yes. And so we're sitting there and Vlad walks up with his partner and he says, 'You're Jason Calacanis.' And I said, 'Tell me about your startup.' He said, 'How do you know I have a startup?' I said, 'You recognize me.' And I mean, that's the only way. And he goes, 'Is that Elon Musk?' I said, 'Yeah, it's Elon. Come say hi.' And he came over and said, 'Hi.' I said, 'Tell me what you do.' He said, 'Well, I'm a quant.' I said, 'What's that?' And he said, 'Quant analysis.' And I was like, 'Oh, yeah, yeah, I know about that. That's like you guys make algorithms and then try to beat the market, right?' He's like, 'Yeah.' I was like, 'So you're going to pitch me on a startup and you're going to sell your algorithm to other people and if it was so good, why wouldn't you just use it yourself and print money?' He's like, 'Yeah, yeah, no, no, that's not our business. Our business is we're going to create an app to get millennials to trade stocks.' And I said, 'Hm, you do realize there's no retail investors anymore. Like the dot-com crash plus the 2008 financial crisis eliminated any individual's belief in participating in the stock market.' And he said, 'That's the opportunity.' I said, 'Okay, I like it. Tell me more.' He said, 'Well, we're going to get these millennials to trade.' I said, 'The same ones who live in their mom's basement and take Uber and Lyft and are on their parents, have no money, got screwed, and you know, went 250k into debt for school and now can't get a job. Those people.' And he's like, 'Yeah.' I'm like, 'Okay, they have no interest in their future, but they're going to trade stocks.' He said, 'Yeah, that's the opportunity.' I was like, 'How are you going to make money?' And he said, 'Well, that's the best part. It's going to be free.' And I said, 'So your idea is to get a group of people who have no interest in saving for their future to trade and your business model is free.' And he said, 'Yes.' I said, 'I'm in.'
Because in almost all cases, the crazy outlandish ideas that nobody believes in are the ones that have the greatest returns. I mean, Uber I introduced to about 25 investors and three of us said yes. So, you know, a full 12% of the community who saw that deal decided to do it.
So your sense about this idea being good had to do with the fact that this guy was just crazy and ambitious and bold thinking or was it that there was something here in allowing a much larger magnitude of people to be able to be investors?
Yeah, the way to do really well as an angel investor or just in technology or in life is to not say what could go wrong, but to say what could go right and then to just imagine for a moment if it does work, what would the world look like? And so when Elon was investing in Tesla and some other guys were running it and he was trying to save the company, you know, it wasn't 'is this going to work?' It was almost positively not going to work. And he knew that. But if it does work, what does the world look like? And so that's really what you're looking for is not the chances of success, but if it does succeed, what would that look like? And so when you looked at Robinhood, it was like, well, if he does succeed, what would the world look like? And now we've seen what it looks like. You have a generation who are so financially sophisticated that they know how to do puts and calls and shorts and research at a level that dominated the hedge fund industry.
So, let's pause for a second. These traders sitting there on a subreddit in a Discord server are able to do analysis and research and then act in unison to say we're going to beat, in the Robinhood sense, this group of sophisticated insiders who have more access and more access to capital but we will figure out how to solve this problem. And you know, most things don't work. It's like the Wikipedia, like there's no way the Wikipedia would ever work.
Right. Except it did. Yeah. Like you're like, 'How is this ever going to work? You're not paying anybody,' but it's built the largest corpus of an encyclopedia ever. So I think Robinhood actually succeeded. And then what we saw was this system and a lot of the systems in our society, whether it's the political system, the Constitution of the United States, education, higher education, which you're involved in, and then even the financial system. We have not stress-tested it and we don't actually know all the edge cases and how it works. So Trump was able to just really put this crazy stress test like is the democracy going to hold? Are we going to break this 200-some-year-old experiment? And then we looked at the financial markets and it turns out there were more people shorting the stock than shares were available. I don't know how that's possible. And then I'm trying to uncover where can I see a list of people who have shorted the stock. And it's like you can't, but we can tell you sort of how many every two weeks or maybe twice a week we can create a report. Maybe we know.
I was surprised that nobody knows the list of people who were shorted and you guys are trying to figure that out.
Yeah. There's no transparency on a lot of these systems. And if you call to try to short a stock, it's almost like they'll tell you on the phone like, 'Let me see. I think I might know a guy who has shares to loan out.' So, it's like am I calling to try to find a '73 Mustang Grande in gold, you know, and you're going to call around? It's like, shouldn't this be on a ledger somewhere and be completely transparent? So, now we're seeing those things and I think the investigations will make it super clear. But, of course, in a vacuum without information, there's so many investors in these startups that conflicts can start to appear and then you know how it is with people and conspiracy theories, the mind starts to wander, right? And so in some cases there is actually a conspiracy and then in other cases people's mind will fill in like, 'Oh my god, there's some grand conspiracy here.' I can tell you Robinhood's only goal is to get more people to trade stocks and to democratize it even more. And they apparently were on the brink of seizing as an entity if they didn't get more money to cover all these trades. I mean they were on the brink and they raised $3.5 billion or something like that in a week.
Yeah. So in some sense, Robinhood enabled this very, like the magic of this distributed system of Wall Street Bets, right? You said Wikipedia, which is another, which is probably one of my favorite websites and one of my favorite examples of like a distributed system somehow coming together in a way just like you said at that crappy bar. I would have guessed it would never work, but if it does work, it changes everything and it did. And Robinhood in that same way probably enabled or was one of the major enablers of Wall Street Bets of giving power, like empowering young kids to learn about how this whole messy financial system works and take on the big elite centralized players.
Yes. And you know it's very easy when these companies get big. One thing that's changed is the footprint of these startups and the velocity at which they grow. So something like Airbnb is another perfect example of something that should really not work in practice, but it does. Like I'm going to rent my couch or my extra room to somebody like a serial killer or I'm going to stay in somebody's house like a serial killer's house and you know it's like it really sounds scary but it actually works and it has not destroyed the hotel business, it has added.
So the best startups induce a market to exist. If you look at, you know, Uber or Airbnb, people replaced their cars and Uber was not competing ultimately with taxis. They were competing with car ownership, public transportation, walking, or just not going out. And then you look at Airbnb. A lot of people who stay in an Airbnb would not be taking a trip to Kyoto if not for the fact that they could get a $75 beautiful room with great reviews in Kyoto for 3 weeks. It inspires people and it manifests a market because the product is so transcendent, right? And I think that's one of the things that Robinhood did. You can't learn how to do this options trading and puts and calls and all this sophistication stuff unless you actually do it. It's just too hard to learn except in practice. Just like poker. If you want to learn how to play poker or guitar or tennis or skiing, like you can talk about it. You can watch YouTube videos, but at a certain point you got to get on the mountain. At a certain point, you got to put some chips in the pot. And it's going to be painful.
Yeah. Like poker is going to be painful. You're gonna lose a lot of money. That's why you should play at the small tables first. And you know, even in trading, like you look at people who are doing this crazy trading in GameStop, a company that's worth, you know, maybe a couple billion dollars, but certainly not tens of billions of dollars. Of course, the people who are throwing their money in last are going to lose it. I think everybody knew that. And so it was a momentum play and, you know, they're betting against the hedge funds. So I think it's good for people to learn and become financially literate and just always understand the concept of the risk of ruin.
The good news is for a young person, the risk of ruin might be like they lose $5,000 or something and then they have to build their stack back up. But that's really the only thing I am concerned about is there are people who will play poker or blackjack or sports betting or whatever it is and lose control just like there might be people who try alcohol and lose control. But we can't build a system based upon limiting the average person's behavior based upon somebody who can't control their ability to drink, you know, two glasses of wine instead of 20.
How does this whole thing end?
Who's crying? Is everybody crying?
Exactly. Who's crying when? So, I think there were some of the hedge funds that were crying initially. Then maybe some of the Wall Street Bets people who bought last would be crying. And then eventually there's probably another set of hedge funds or even the Wall Street Bets mob and that army, some of them might have broke ranks and then shorted the stock.
So nobody knows. So everybody has to be aware of what's happening in the game. So if Wall Street Bets said, 'Hey, let's squeeze these hedge funds because they have too much short interest. Let's all buy the stock.' Then some of them might have said, 'Okay, you know, it's at $200 or $300. Maybe I'll join the short movement now that they've covered.' And they could have shorted it and been like double agents. So, people have to understand like this stuff is gnarly and it's a free-for-all. I mean, it is a literal free-for-all.
There's a kind of morality, like a big statement that Wall Street Bets made in terms of like the elites can't just push us around. They can't bully around, but at the same time, you know, they're also interested in making money, right? What's your sense? You said that some of the people in the Wall Street Bets might have broken off and shorted the stock. Are they more interested? There was an emergent like morality that emerged and said like we're not going to put up with the centralized elites, but is that going to continue? Are they going to fight the power structures that are bad for society or are they going to now, like, I mean are they ultimately going to introduce more chaos that's going to damage the economy and damage the world or are they going to continue being the good guys and fighting the evils that manipulate the market? What's your sense?
You know, it really feels like the Dark Knight series of films where like some people just want to see the world burn. Yeah, I think there is a contingent of people who just literally want to see chaos. Like, you know, that contingent on some of these forums who just want to create chaos, right? So there's certainly that chaos contingent, but I think overall what the arc will show is a group of people getting massively educated. You see it in crypto as well. There was like a three-year period where all of these failed entrepreneurs who I knew who couldn't build companies were then coming back to me after their companies had failed or after they gave up or couldn't clear market raising money with the venture capital community and they were doing ICOs.
And I was like, 'I met you before, right?' And they're like, 'Yeah, yeah, yeah, no, I'm doing an ICO now.' I'm like, 'Okay, where's your company at?' And they're like, 'Here's a white paper.' And I was like, 'This white paper with spelling errors in it that says you're going to destroy Airbnb because everybody's apartment is going to be on an immutable ledger.' Like wouldn't that be better in a regular database that was private and not public? Like why does it need to be on immutable ledgers? It can't change. I'm like, not changing the database is a feature that does not seem like a good feature. And they couldn't explain it. They're like, 'Well, just people aren't interested in ICOs.' And there was that ICO mania and what it showed was there's a global appetite for risk. People want to try new things. This is one of the great things about the human spirit. It is one of the great things about capitalism. And one of the things that concerns me most about where society is, the sort of socialism, communism, you know, entrepreneurship is bad, technology is bad, and polarization of wealth. And you know, people getting rich is a bad thing. When I grew up, I'm 50 now, but when I was a Gen Xer growing up, we kind of maybe too much idolized Bill Gates and people who are doing interesting things in the world. And we thought capitalism was a force for good. I still believe capitalism is a force for good because when a group of people builds a product or service that changes the world and it gets globally distributed whether it's Tesla or SpaceX or Google or Airbnb or Uber or Robinhood, you know, everybody gets to benefit from that product or service having to compete. And if you look at the places where there's no competition like public education or less established colleges and stuff like that, less competition for accreditation degrees, like things tend to get a little weird, don't they?
And people tend to be protected and that's not good. You need competition. Doesn't mean that, you know, people shouldn't have global health care. Doesn't mean that, you know, we shouldn't have a safety net, but we need to keep capitalism vibrant, especially because China has now co-opted capitalism and created their own version of capitalism, which is communism with capitalism. It's like this weird operating system like we still want to keep communism so we can take any of your gains at any time. But we'd like you to be entrepreneurial. And then you have somebody like, you know, the founder of Alibaba, Jack Ma, who disappears for a couple of weeks.
Who's that? Exactly. Exactly. Like who's Jack Ma?
Like he kind of disappears for a couple of weeks and then he comes back and he's really sorry about the things he said and then he disappears again and like, you know, we have to be very careful if China wins capitalism. This is going to be an existential threat for humanity. The Chinese are no joke. I mean they are seriously focused. And they are picking the winners. It's a very weird system because it is in fact, I don't know what you call it, like communism capitalism is such overloaded terms but they do encourage entrepreneurship and they do a good job of it.
But then they're like the surveillance thing and they're controlling things in a way. It's weird because it seems to work really well for them in the short term.
Yes, it's definitely got short-term benefits. So the question is like how that gets distorted and becomes worse and worse and worse which it potentially might be and I think on the entrepreneurial spirit which you have a podcast all centered around the entrepreneurial spirit is one of the magical things that makes this country great. I don't know if money is deeply tied into that. I do get bothered by people, you know, treating the word billionaire as if it's a bad word.
But in general, like all the hard things, all the difficult things we're going through in this country, it seems like the way out is going to be making the entrepreneur the hero of society, of like letting that young kid with the big dream and the guts to take the big risk and build something totally new, giving them a chance and whatever that involves. I don't think it's about taxes. I don't think it's about regulation, all that stuff. It's about us in just public discourse saying that that kid, that guy, that girl, they're bad asses. Like encourage them to do it.
We have to have people buy in to the fact that they have that opportunity. And I think one of the problems in society is there's a group of people who actually don't believe that they can succeed or they don't believe even more perniciously that other people can. And that's the group of people that I think are highly vocal but a small group of people which are generally people of incredible privilege, rich parents, white city dwellers, liberals. They kind of look and say poor people cannot change a lot. And they're battling in their minds to protect poor people and but they have this very weird patriarchal kind of approach to it which is they think that they're not capable of changing their lot in life and they're like it's not possible and then once in a while I'll tweet something where I say, you know, it's really incredible that every piece of knowledge you could possibly want is now available for free on YouTube and every course from MIT and Harvard and Stanford is available on edX or Coursera and all that information is there freely available and you can take the lectures. This is amazing. And then people will be like, 'Yeah, but people don't have access to it.' I'm like, 'They do. It's free. Here's the link.' And they're like, 'Yeah, but they don't have internet.' And I'm like, 'Here's the chart of internet penetration in America.' And they're like, 'Well, poor people don't have internet.' I'm like, 'Really? Find me any downtrodden person without a smartphone with a high-speed connection that capitalism provided for $12 a month or $15 a month.' Like it's very hard to find that and we have it so well in this country and there's so much opportunity. But people don't believe it and that's actually one of the problems. See the average American still watches four or five hours of television a day.
And often I meet people and they're like, 'I need a technical co-founder and I, you know, but all I need is a million dollars.' And I'm like, 'Okay, well what is your skill?' And they don't have a skill, right? And I'm like, 'Well are you a designer?' No. 'Are you a product manager?' No. 'Are you a developer?' No. 'Are you a sales executive?' No. 'Okay. What are you?' It's like, 'Well, I have an idea.' Well, as my friend Sam Harris, I think your friend as well, says, like, everybody has like a million ideas an hour. Like, you don't really get credit for those. Even when you're asleep, your idea is spewing ideas. Like, zero credit for your ideas. It's all about execution.
You have to believe that you yourself can be the core of that execution. You yourself can build the thing. And every, no matter what your circumstances are. I mean, we could talk about like structural racism and all those kinds of things that push things down. But from the individual perspective, when you just like are coaching or giving advice to an individual, you can literally change the world. I mean, Wall Street Bets is an indication of that in the financial space that you yourself can change the world. That's why this country is amazing.
Still the best country in the world, right? I mean, it still is amazing the opportunity provided to people. All this educational experience is online and the ability. What I tell young people who are looking for advice, I say, you know, the skill you need to refine is the ability to learn new skills.
Like if you become good at learning a new skill and Tim Ferriss, a friend of mine, has really pioneered this. Like he can get to 60 or 70% of the knowledge in a skill in some incredibly short period of time. Now, I'm not saying he's going to become a virtuoso drummer or a great basketball player, but Tim and I were on vacation together in like a group vacation in Italy, and there was a basketball court.
And I said, 'Let's go, let's go shoot some hoops.' He never shot before. And I was like, 'Okay, come on. I'll teach you.' And Tim is fabulously uncoordinated. People don't know this.
Like he tried to dribble a basketball and do a layup. And it looked like he had a blindfold on. I mean, you've never seen something less elegant than Tim Ferriss doing a layup in basketball. And then he watched me do it three or four times. And I watched him study me. And listen, I've been playing basketball in Brooklyn since I was a kid. I got a couple moves. And he was just taking notes and taking notes and taking notes. And by the end of a couple of hours of doing this, I could just watch him checking his form and figuring it out.
That's every skill in the world now. And what I tell people is like I'm like, 'Did you watch Game of Thrones?' And they're like, 'Yeah.' 'Did you watch Breaking Bad?' Like, 'Yeah.' I'm like, 'Okay, that's about 400 hours.'
How about you don't watch the next two and you put that 400 hours into learning how to be a graphic designer, a UX person, a developer, whatever it is, and learn how to add skills. That's what I did my whole life. I was a kid from Brooklyn, went to school at night, but I was very quick to get to maybe 50% of the knowledge base of graphic design or being a writer or being a sales executive, whatever it was, a developer even. And I was just good enough to not have people be able to fuck me like when I hired them. And that was a big unlock when you know enough that people can't snow you. That's a really good one. And look at yourself like you figured out how to set up an entire podcast. People don't know this, but you don't have a team around you. I have a team of like five, six people working on my podcast.
But see, even knowing enough about to set this up, you would then be able to hire a team.
And you'll be able to call them on their shit if they're not doing a good job. And that's really important. And I don't know that much about this whole thing, but I know enough to be able to then see who knows their stuff and not.
You're absolutely right. And the process of learning how to learn is essential there because like I've, I did martial arts, jiu-jitsu, and so on. And it's so funny to watch.
I did Taekwondo. Yeah, that was awesome. It's funny that there's some people that do an activity for years because to sort of elaborate on something you were saying about hours. It's not always the amount of hours, it's the quality that you put in.
It's deliberate practice versus just doing some behavior. I mean, literally, I've been playing chess and trying to get that going again after watching Queen's Gambit and I got chess.com and I realized I was just playing and I'm not getting better. And then I was like, 'Oh, wait. There's a little analysis feature here in chess.com where it will show you your blunders and mistakes.' And I'm like, 'Oh, I'm spending no time reviewing my losses in chess and I just want to play the next game. I should really review these losses and figure out what mistakes I made.' And when I started doing that, I was like, 'Oh, I'm getting better.'
Yeah. Right. So, some deliberate practice really works. And if you want to take it all the way, Magnus Carlsen, shout out to the guy, has an app, but there's a few other coaching apps where you like focus on the endgame. You focus drilling a particular, you basically don't play the game at all. You just focus on drilling the different aspect and there's different kinds of puzzles so you can really make it into a deliberate practice.
Not to make this episode sponsored by chess.com but they literally have puzzles. So I was like, 'Oh,' and it's a $100 a year for this product. I just thought to myself, this is capitalism.
They don't need to charge you $100 an hour for a lesson. They can charge you $100 and they've created the ability for you to play chess 24 hours a day against opponents who are perfectly matched against you based on your rating and they analyze every game and they have puzzles and they have tutorials and they've got everything else. It's like just think about how much value is being provided to society because of capitalism and because competition. If you want things to get better and you want to step up your game, just make it slightly competitive. It is one of these things in human existence that is so powerful. I don't know. Did you see the Michael Jordan documentary, The Last Dance?
Like half of it. Yeah. I'm still working.
I mean, he's so competitive.
It's so inspiring that all he cares about is just winning to the level of which he literally, there's like this running meme, 'I took that personally.' And 'I took that personally.' I don't know if you've seen the images of him sitting smoking a cigar looking at like an iPad or a video clip and it's like 'I took that personally' and you can make a super cut of every time he took something personally. He literally takes everything personally to give himself that competitive motivation to win. That's capitalism. And when people are competing, man, look at what Elon did to the space of cars. Like every, they were literally laughing at him in the first 10 years. Electric cars, haha, that company will go out of business. And now every single company is like, 'We're going fully electric by 2035.' And he kicked their asses so brutally that they had no choice but then to step up their game. And that's what we want, right? And this virus and this pandemic, I think the great thing that will come out of this horrible experience that we've all had is psychologically, death, learning, just so many bad things occurred. The economy, people losing their jobs. But we also got to see the human spirit with these mRNA vaccines and just how if we took out some of the regulation and people were super motivated, we might actually be able to eliminate all pandemics from ever happening again. And before that, Bill Gates was banging his fist and Jeff Skoll was doing the movie Contagion. I mean, for two decades, people have been banging their fist, 'We have to be prepared for this.' And everybody's like, 'Yeah, whatever. YOLO. It's not going to happen.' And now it's happened and people are like, 'We need to be able to destroy every pandemic and virus before it happens.' And you're, listen, you know a lot more about science than I do, but these mRNA has been around for a while.
We've just never gotten aggressive about doing it. And then you think about challenge trials. I don't know if you've been following this, but they're doing challenge trials now in the UK this month where they're introducing COVID into healthy young patients and then giving them the vaccine or, you know, and that is against all rules and regulations about, you know, do no harm. But then you think about it, we kind of celebrate people jumping out of planes and we got that one guy, Alex Honnold, who's climbing up mountains without a rope and they give him a North Face, you know, back page ad and an endorsement deal.
Yeah. And we celebrate that. We celebrate people surfing with sharks. We celebrate people doing deep welding. We pay them extra to go 200 feet underground and weld stuff. And people do dangerous stuff all day long.
Soldiers, firefighters, but we won't let people get paid to do a challenge trial.
Yeah, we're weirdly risk-averse in certain areas that completely don't make any sense.
That's, and this is where the world needs to, we could have said these thousand people, young people who we know are in all likelihood not going to have a bad outcome. But there's a possibility.
There's a possibility, but it's very low. And it's certainly lower than riding a motorcycle, right?
It's lower than riding a motorcycle. People riding motorcycles everywhere. We have ads for motorcycles. We could have just said to those thousand people, we'll give you a million dollars each to do this. Okay, there's your billion.
We're printing trillions of dollars of money to deal with this. If we had just done a thousand people for a million dollars each to do a challenge trial in March, April, May when they had the mRNA vaccines ready, we could have deployed the vaccines in the summer. We would have been done with this. It would have been over by now. So, we get to challenge all of the thinking. I think that's what the great pause did. It's letting everybody challenge that thinking is why do we have that rule? Okay, yeah, we don't want to have people, you know, like give up their organs for money. Like we obviously understand, but there's a reasonable discussion about, well, maybe there's a level of risk in a global pandemic. I mean, we fought the Nazis, right? We defeated the Nazis. That took a lot of deaths to do that, but we had to kill that evil. This is another evil which we must fight and it's going to result in, it's already resulting in thousands of people dying a day but we could have actually stopped it earlier if we just had a reasonable discussion. This is why podcasting, as I respect what you do, and this is why intelligent people are so drawn to podcast because you and I can expand on this and not cancel each other over this very suggestion. When I make this suggestion that are challenge trials reasonable or not. If I were to do that on Twitter, they'd be like, 'Oh, Calacanis wants to give poor people coronavirus in order to save rich people.' It's like no, I didn't say that. But you and I could have a reasonable discussion about challenge trials, something we should consider in an acute situation where millions of people are going to lose their lives, right? So, you know, that's an example of capitalism and competition working really well. There's one of the to me sad thing to see about coronavirus is that for example testing at scale should have, it seems obvious, I was a little clueless about it but because I thought there's no way you can have like antigen tests at hundreds of millions, like order hundreds of millions of them and make them cheap but actually I realized recently that there have been available since about like May.
Yeah. You were able to in Korea, in Finland, all over the place.
You could have done mass manufacturer. So there's a little bit of a failure of capitalism to step up. And I don't know if you agree with this, but it seems that the blame is to be placed at the regulators and the various institutions. Crony capitalism in all likelihood is what stopped it here in America. I mean, I had friends who had imported them from other countries, the testing kits, and you've probably been to parties where people had these kind of testing kits from other countries, and we're sitting here and they're just approving them now. Really, in February, month 11 of the pandemic in America, we're going to have testing online. Really, I mean even if these tests were 80% effective and they're 95% effective, mass-producing them we should have sent them, you know, in every postal, anybody with a post office box should have, you know, with a mailing address should have had 10 of them put in their mailing address just for free from the government and then everybody would be testing and we would have contained it. We don't have test and trace here in the United States. All the countries that are on the other side of COVID did it by having testing, tracing and closing their borders and masks. That's the combination that works.
The problem with the coronavirus is while there's a lot of institutions did not behave their best, it's also the case that there's a lot of uncertainty. So, I tend to give a little bit of a pass to everybody involved for the uncertainty. We were all...
I give them that until June.
I wonder how history will remember this whole period. I'd love to ask you because you were an early investor in Robinhood and you sort of, you're in a very nice place of being a huge supporter of the sort of Wall Street bets kind of distributed power of the people and at the same time because of you being an investor, like intellectually giving a chance to Robinhood in this kind of chaotic time of conversations to think about like well what did they do right? What did they do wrong? So you have a kind of a balanced view on the whole thing, which is really nice. Is there, we've talked about what Robinhood did right. I think can you sort of steel man your math's argument of what Robinhood did wrong in the last few days?
Yeah, I mean their communication is always the number one issue with these startups, right? And if you, you have to get ahead of any problem and you have to put all the bad news out immediately. And in the case of Robinhood, it seems based on what you know has been in the papers and what Robinhood said publicly is that they had this kind of liquidity crisis, right? Where they were being, because of these exchanges telling them you have to put up this amount of money in collateral and them being pinned at number one in the app store. There were so many people trying to buy five shares of this stock, five shares of this meme stock that it kind of broke their system. And then the people who clear the trades for them, they said, 'You got to put up a billion dollars, $2 billion, $3 billion.' Well, you can't do that overnight. And I think that they were in an uncomfortable situation of like going on TV and saying, 'Uh, we have a liquidity crisis.' Like that could be like a run on the bank. Everybody then logs in at the same time to Robinhood and tries to sell every share they own because they're afraid that the whole thing's going to collapse, right? So, I think there was this kind of like black swan event and they probably didn't communicate it all that well. At the center of that, this is really interesting. Maybe you can comment on the nature of communication. Uh Vlad the CEO. The guy you met at the bar was at the I think at the center of the communication. Right. So Elon is an example of a guy who also is at the center of the communication for his particular set of companies. And that, you know, on Twitter seems to be a really powerful way to communicate. And there was something, this is me saying it. There was something about Vlad that sounded like he's hiding stuff that as opposed to Elon, it doesn't sound like he's hiding stuff. It could be the nature, the beat, the timing of the conversation. Same thing with Mark Zuckerberg. He, Mark Zuckerberg for some reason often sounds like he's hiding something. And then there's like Jack Dorsey is much less so. And I don't know what that is about the CEOs that makes you trust them and not.
Might be the point in time, like in terms of escape velocity. Uh you know there might be non-disclosures in place that we're not aware of where they're not allowed to talk about certain relationships.
I see. And that results like in Vlad's case and that results in you being like acting weird and nervous and...
Or nervous. Yeah. It could just be the person is nervous, you know. So, it's really hard to be building one of these companies and you're at scale and you know, oh my lord, the entire thing's coming apart and you're the most hated person for that day. You know how the rage cycle works and the media is just so crazy when they get their hooks into something. I saw it happen with Uber. We saw it happen with Facebook and even Tesla. You know, there were times when auto people did stupid things with autopilot. And it's like, yeah, okay, somebody's watching a movie and sleeping in their car. Or leaving the driver's seat against all the rules of autopilot and somehow Tesla's responsible for that. It's like, we have people who stand on top of their motorcycles and drive down the road on a motorcycle. And we don't blame Yamaha or Harley-Davidson for some idiot standing on the seat of their motorcycle on a highway going 60 mph. We just say that person's an idiot. But when new technology comes out, we blame the technology, not the person operating it. And if you are going to operate, we basically vilify it and demonize it. And I think that that is part of it. Like when the person at, I remember Airbnb, we always thought, what if somebody trashes your apartment? And then sure enough, a bunch of methheads rented this poor woman's apartment. She left all of her stuff in it. And then a bunch of methheads had a drug party, destroyed her apartment, ripped up all her photos, and went crazy. And we knew that day would happen, but nobody remembers it now. But it was the number one story on every news channel because wow, that's an exciting story. And I just thought to myself, I wonder if there are any parties in hotel rooms where the hotel room is being trashed and people are doing drugs and crazy things. It's like, yes, that's basically every hotel in Los Angeles right now is being destroyed by some rock band that's throwing a TV out the window. Like we expected in, you know, a hotel, we just didn't expect it in somebody's house with Airbnb. And then Airbnb created rules around you can't rent an Airbnb for a party. And they learn. So I think there's a learning curve with these companies and they do get to scale at a level that is unprecedented. It used to take decades for a company to become an international phenomenon. Now it happens in 2, 3, 4 years. I mean look at Clubhouse. This thing went from being, you know, a private beta 6 months ago to being the number one app in Germany and in Japan and here. Like just like that. Boom. And it's because there's an ecosystem that has never existed, the app store. Then there's payments online. Everybody and then everybody has a supercomputer in their pocket. When we, the thing people got wrong about entrepreneurship, technology, and business, you know, over the last couple decades was just how big the market was and then how quickly you could, you know, achieve relevancy in these markets. We thought the market was like the 60 million homes with broadband and originally it was like maybe 10 or 20. Then it became 60 million. Then it was like, okay, well, how many hours are you at your desktop computer? Well, like probably at our computers for 5 hours a day, 10 hours a day at work, 3 hours a day on our own. And then it was like, yeah, nobody's on their desktop computer. Everybody's on their mobile phone. And oh, and by the way, they have it with them. So the people with mobile phones are now using this high-speed device with an app store with their credit card in it. In the early days of the internet, people were scared to put their credit card on the internet. That was considered a really dumb thing to do. If you put your credit card on the internet, you're going to lose all your money. They're going to hack you or whatever. And now it's just amazing to me how quickly when a company hits how quickly it can get to a million subscribers or 10 million or a billion users, right? And there's all these networks like social networks that allow the viral spread of like a new startup, a new company, a new app to be announced. A meme, an idea, a podcast, right? Like I mean, a single thing, just a single meme could change the world. Speaking of Clubhouse, I mean I just want to, we're saying so many interesting things, but there was a magical moment with Vlad and Elon on Clubhouse. I don't know.
That was wild.
Yes. Is there, do you have thoughts about that interaction which felt like so many aspects of this whole situation feels like totally novel, surreal, like it's defining a new era. Like it is like a billionaire, the richest human on earth is interviewing the person at the center of one of the most interesting mass scale power battles in finance ever. Perhaps it's...
And by the way, seven movies have been sold in two weeks. Just think about how fast things are moving. Lex, this thing happens.
Yeah. Like people had the idea to short the stock six months ago. They start doing their research. They build an army. They execute the trade. The system goes down. Robinhood raises three half billion dollars in four days. Elon is interviewing them on Clubhouse on Sunday after the Wednesday it happened. And now here we are. It's 10 days later. Doesn't it feel like it's been 10 months? It's been 10 days, Lex. Plus, there's like a new president, all these things, and everyone forgot. Like, and there was an insurrection. By the way, we also almost had a revolution at the capital where a bunch of crazy people who have guns and body armor and then a bunch of them who are just yoloing in cosplay. Took over the capital. Well, so and the other more dramatic thing to me is that was one month ago. That was one month and the president of the United States got banned from every major social network and which I think I'm still deeply troubled by is Parler being removed from AWS. That changed the way I, that changed a lot of things as somebody who's an aspiring entrepreneur. That changed the way I see the world. That little, maybe I'm being overdramatic but...
No you're not. I think you're paranoid for a reason. You're paranoid for a very good reason, which is as big as these companies can become, they are beholden to the mob. And if the mob says, 'Hey, this person needs to be cancelled,' they're going to get cancelled because you can't lose your entire audience. You could lose your whole customer base and you could lose all your employees. Yeah, I think what's interesting about your fear about Parler and AWS taking off is we went from being like a social network which is, you know, the software layer and then we went to like the infrastructure layer, you know, and they'll even go after like Cloudflare which is a CDN provider, right? They're just like a plumbing, you know, it's like sort of like the telephone. So we're basically holding everybody responsible on the whole chain of events here and what that's going to do is, you know, I'm not a huge believer in crypto but distributed computing where nobody and decentralized and distributed computing platforms and open standards. Podcasting is an open standard, the web is an open standard, FTP was an open standard, but Twitter and, you know, Facebook are closed. And what's going to happen is we will see a group of individuals create peer-to-peer networks for social media where nobody can control it. And the same for cloud computing where, you know, there's a crypto project where everybody will, and I invested in a company that tried to do this and got sold and it didn't work out but take your hard drive on your computer at home. You give, you know, a terabyte of your 10 terabyte drive over to the cloud and then everybody else does their terabyte and then all of a sudden you've got this virtual cloud and anybody can store stuff on it and it's all encrypted and then nobody can stop it. And that could be tweets, it could be videos. And so this idea that, you know, YouTube will be able to tell people to kick people off because they're skeptics of, I don't know, the pandemic or the vaccine or they've, you know, they'll make things that are more censorship resistant. I think that'll be the reaction to all of this.
Well, this is my question for you. Going back to that crappy bar and people pitching you, is there, do like with Clubhouse, do you see competitors? Do you think it's possible that another perhaps more decentralized or another kind of social media will emerge that will take on Twitter and Facebook and might be able to replace some if you look at the whole landscape with Clubhouse and everything else. Do you think some other company might emerge?
There'll be 10 versions of Clubhouse. We looked at social network and we thought Friendster was it, like Friendster was so good nobody would be able to compete with that. It was growing so quickly and then MySpace was a juggernaut and they hit 100 million in revenue and 100 million users and it was like well that's game over and then Facebook and LinkedIn and Snapchat and FriendFeed and countless others, you know, so there's usually 20 people who will win in a category and 80% of the category will be owned by the top two or three players.
But will those players change do you think? What's your sense of...
Oh yeah for sure. I mean if Facebook hadn't bought Instagram it would be a company in decline right now, people would be shorting the stock, right? Facebook peaked and then was sort of heading down. And Instagram saved them and WhatsApp saved them. So, you know, that's another kind of weird moment in history that they were able to accumulate that much power and consolidate that much power. Instagram should have never sold to them. That should have gone public. They had just raised money from Sequoia and they had raised $50 million at a $500 million valuation and they didn't need to sell and that was a big mistake to sell. They should have kept going and they should have taken on Facebook and if Instagram was a standalone company right now it'd be worth 500 billion. Yeah.
Do you think Facebook might buy Clubhouse? Has been...
They'll probably copy it. I mean Zuckerberg has no moral compass or ethics or anything. I mean he's a marauder. I mean he basically copied Snapchat seven times. Yeah. Like he did Poke and he just kept trying and trying and trying and part of the reason why the WhatsApp founders and the Instagram founders left is they found Zuckerberg so distasteful in terms of his ability to copy.
What do you think makes a great leader in that sense? Because okay so when I look at Zuckerberg...
Is he a great executor? I...
I don't think he's a great leader.
I was bullish on, I was excited about Facebook in the very early days. I thought it was an exciting opportunity to connect people and stuff started going wrong in certain kinds of ways and again maybe it's our human nature but I attribute a lot of that to the leadership.
Absolutely. I mean the guy started it because he was unable to ask girls if they were single and on a date. I mean that was his explicit.
That could be a good motivator. That could be a good...
Well, I mean it does. I mean listen the motivation of 18, 19 year old men is yeah pretty clear. He was just trying. He had no game. He had no game and he needed to know who was single so he could, you know, at least have a shot at getting...
A little creepy. A little creepy. Yeah. You know, he I think was so obsessed with engagement and winning. And he's kind of like one of those friends you have who's just really good at playing a video game, but maybe doesn't see the bigger picture in life. And I mean there's a reason why everybody who worked for him hates him and doesn't talk to him anymore and then actively derides him. Like so many, the people who sold WhatsApp to him then backed other projects like Telegram and said horrible things about him on the way out. These are the people he made billionaires and they really don't like him. So I think there is something that he does that does not breed loyalty but he's very successful in his focus which is growth is all that matters. He's a marauder and taking friction out of products and processes is the playbook of Silicon Valley for the last decade or two. So whatever the friction...
I'm sorry. You're speaking so fast that I almost forget that you're dropping bombs. But so removing the friction and you're saying Facebook is exceptionally good at...
He was the best at it. I mean at Uber they were like we're going to take out tipping. We're going to take out the need for you to take out your credit card and do payment. It's just going to be in your wallet. You got picked up. You leave. That's it. And I was like we should have tipping. And they're like it adds a step and we're trying to have no steps. You put your address in. You click the button and you do nothing else. And so we've been obsessed here in Silicon Valley is how many clicks can we take out of the process?
I guess Amazon is incredible at that as well.
Absolutely. One click was the start of it. And then you look at Clubhouse as an example. You open Clubhouse and you see rooms, you click on it, you're listening. So in one click, you're listening. And then in one click, if you raise your hand or you get invited and you say yes, you're speaking. So it's two clicks to speak, one click to listen. Yeah. There. I mean, the only way they could make that app work even faster is if you opened it up and your microphone was turned on and you, which is kind of scary, but that is the next evolution. And what happens when you go that fast is you get unintended consequences. And so this is why Facebook has had more fines than any company in the history of Silicon Valley, just giant fines for doing stuff like this. And one of them was, I don't know if you remember when they created groups or if you have a group for your podcast, but you know, you can just add people to a group without their permission. And there was this famous case when they first came out with it. Somebody created a fake group, National Man Love Boy Association or whatever, like pedophilia association, and they added Zuckerberg, Mike Arrington, myself, and like 20 other famous people in Silicon Valley. And I was like, and then somebody takes a screenshot of it, and they're like, 'You're a pedo.' And I'm like, 'No.' Facebook last year then Zuckerberg's response was well if your friends put you in that group you should get new friends and it was like you got put in there too. And then the sad part about it was there were a group of young men who were gay and who were in college and there was a gay choir in their college and the person who was coordinating their Facebook group added them. So Zuckerberg, it wasn't enough for Zuckerberg to make it so anybody could add anybody to any group because it will grow faster, let alone you have to confirm you want to be added to the group. What it also did was posted it on their walls to increase engagement. And what they inadvertently did was they outed a bunch of 18, 19 year olds in college to their families because they joined the gay men's choir at some college. And this is the kind of way, you know, this is where Silicon Valley needs to check itself and to do better is you have to really think well there is my incentive to grow faster and then there's what's right for society and for the individual. You got to think it through, think it through. It's sometimes very difficult. This is where vision is required to anticipate the unintended consequences and it seems like Mark Zuckerberg is not very good at that. Hey, you've talked to so many great leaders in this world privately and publicly. What do you think makes a great leader of these tech companies? Do you have an example like is Elon to you a great leader? He's also a controversial one, right? There's a love and hate, controversial in the sense that there is and I know a lot of people who work with him for him that there's also a love-hate relationship.
The hate comes from the fact that they get pushed extremely hard. It's a very competitive environment, but it's a positive one because there's a vision that's underlying. It's similar to the Steve Jobs thing and it has to do with the back to our Michael Jordan discussion as well that there seems to be this, the demons involved in tension and just anxiety, all those kinds of things. If you want to do great things, there will be some suffering and you know there'll be some pain and it's not easy if you want to change the world. And then some people have this expectation that it's going to be easy. And what you'll typically find for any great leader who's trying to do something super ambitious like if you want to be, like if you're a rich guy and you start like a restaurant and you don't care about making money and people have made restaurants before, like you could be high fives and everybody could love you, whatever. But if you want to change the world, you want to do something hard driving, there's going to be sacrifice involved. And so the problem is people are looking at something that is an Olympic caliber sport or a Navy Seals-like effort. In other words, an effort that requires massive sacrifice. We would not look at somebody who wins a gold medal like Michael Phelps and say, 'Oh my god, he had to get up at 4 a.m. every day and he had to swim and he had to do an ice bath. Oh my god, that poor guy. He suffered. He was tortured. People were super mean to him. They put him in an ice bath.' It was like no, he wanted to be the greatest swimmer of all time and he knew what the sacrifice entailed. And that what happens in work in business is that people conflate like oh well I went to work to make a living to pay my bills versus Michael Phelps approach to getting gold medals or Michael Jordan or pick the person Elon or Jeff Bezos. And when you look at the reviews of like a place like Amazon, there was this incredible story in the New York Times where people were, I don't know if you remember it. This is the worst place you could ever work, Amazon. And they we talked to 200 people and they all told us they all described for us in the New York Times a culture of cutthroateness and brutality that has never before been seen. And then you see all these people who work for Bezos for 24 years from when they graduated with their MBAs until today. And they've never left the company. And they are ride or die forever. And what you're seeing there is there's a mismatch of people going to work in an extreme sport or an extreme endeavor who should not do that. There are people who should go out into the rice fields and pick rice. And then there's another group of people who are samurai and who wield a sword and who take on missions that are dangerous.
Yeah. But if you're a rice picker and that's what you do and you feel safe just, you know, getting a couple grains of rice, put them in a basket, cleaning it, and then, you know, whatever. That's valid work, no big deal. I'm not deriding it. I'm sort of, but that is one group. And then there's people who are samurai. And you cannot conflate the two. You cannot compare the two. And that's what is happening right now in business. Whenever you see these stories about this person at this company is like a tyrant and they're so horrible and they yelled at somebody, like if you're in the field and you're taking the beach at Normandy and it's D-Day or you know you got to take the hill or you got to whack Osama bin Laden and you're the Navy Seals and like a rotor gets knocked off the back of the Blackhawk. Like this is serious. Like don't do it if you're not serious. And if you're not serious about changing the world, why would you go work for Bezos? Why would you go work for Elon Musk? Don't do it. Don't go work there.
This is, let me just sit back and enjoy the beauty of all of that. That's music to my ears, but I'm not sure what to do with it because it is conflicting to a lot of the things I hear from the way you're supposed to kind of act. And I think in order to do great things, you have to, I always admired people that lose their mind a little bit because they're so passionate. And like, you know, you know apologize and all those kinds of things but like there's a tension, there's a drama to the creative process when especially in the early startup, you know, you're not, this is not like the work life balance idea doesn't even apply.
Work life balance. It's ridiculous. It's a ridiculous concept. Like the idea that there's like work life balance in a startup is ridiculous. If you're looking for work life balance, do not go to a startup or any kind of ambitious company. There is a series of places you can work in the world where you do not need to do anything more than what's put in front of you. And you just put the round peg in the round hole and the square peg in the square hole and you go home and you get your, you know, you get your little, you know, bits grains of rice and you go heat them up and eat them. That's it. Then there's this other thing which is the extreme pursuit of changing the world and sacrificing. And we have a generation of people or multigenerations of people who are soft. They're just soft. I mean, what is the big struggle we've had to deal with in America in our lifetimes like 9/11 and we didn't have the Vietnam War and then we had this like weird Iraq wars and Middle East wars that were kind of like a small number of people went and we sent drones like we have not had to sacrifice. Gen Xers, you know, maybe the tail end of boomers experienced the Vietnam War regrettably, but you know, we've had a couple of generations now, three I guess, that just haven't had to suffer. And so, we're soft as Americans. We're soft. And then you look at people in China and we're like, 'Oh my god, these poor Chinese people are living in these tiny cramped apartments like they were living in like essentially lean-tos in northern China with no running water or like one spot of ice cold water for the entire village.' Like they're thrilled to be joining the middle class, even if it's the bottom of the middle class, right? They've taken hundreds of millions of people in China and moved them into the middle class and we're like, 'Oh my god, these people are suffering.' It was like, you know, they're up to $4 an hour, three or $4 an hour in the factories there, and they were just two decades ago at, you know, I don't know, it was probably 50 cents an hour, something crazy like that. And now they've improved the quality of life there so much, just like America did 200 years ago or 100 years ago. They've improved it so much in China that now they're getting outpriced for factories from Vietnam, Sri Lanka, Pakistan, India. And people are moving and people in China are moving the factories out of China into other countries. Because the Chinese are now outsourcing to Vietnam and other countries. So this is the way of the world. You know, people move up and they get a better lot in life for their families. And just in America, we've gotten soft and as a generation, how do people die in America now? Suicide, obesity, heart attacks, anxiety. I mean, we're suffering from things that if you told people 100 years ago that the top ways Americans would die would be overeating and suicide, they'd be like, 'What? You're literally killing yourself or eating yourself to death.' That's what's happening in America. And when everybody, not everybody, but a large number of people have become softer and softer. Capitalism creates an environment where there is people that still step up amidst that with a big dream and challenge the conventions and that human spirit just to rise above that is Elon is an example of that. Jeff Bezos is an example. Countless, countless examples. And they push, you know, the limits of those of human beings that are willing to step up. And you know, I think about sort of how to create a company that amidst all of this softness, still creates a revolution. It doesn't seem trivial. It seems like how do you build a culture that's once healthy but also unhealthy in the way that Olympic pursuit is?
It's all top down. Everybody just, you asked earlier what leadership was and I never answered the question. I think you know what leaders do is they set the example. They set the bar and if you look at someone like Elon, you know we're personal friends for 20 years. And he is indefatigable. Like I mean the guy has a stamina that is just phenomenal. Like he does not get tired. He works relentlessly and he sets that standard for the rest of the team. And I think you know Bezos is very sharp and likes to debate stuff and is very consistent, you know, and Jobs was just incredible at design and figuring out how to bridge that gap. So they just, leaders set the standard. They set the standard and you know that your time is over as a leader when you can't set the standard and that's when you have to pass the baton, right? And Bezos did that. And Bezos now is saying, you know what, I'm 57. I'm the richest guy on the planet. Depending on the week and I would like to do some other challenges, but I don't want to grind it out at Amazon for another 25 years. I want to do other things. And so he passed the baton, and that's the healthy thing to do in that regard. I do think there is a time period in which you can run that hot and then at a certain point you have to then change just like an athlete might go to be a coach right and you or a commentator and so you know being an entrepreneur is brutal it's you know 7 days a week 12 hours a day anybody who says anything differently is kidding themselves you're going to have to sacrifice if you and there's competition and America has to fight if America does not win capitalism and China does it is literally the end of the human species. It's over for humanity right now. Everything has been going really well in terms of the number of people living in poverty is plummeting. Lifespans have been rising. Science is booming. The economy is booming. All these things are incredible. The one thing that's kind of stagnant right now is the number of people living in democracy versus under authoritarian rule. It's flat. So when you look at all of Steve Pinker's charts and he's really excited. There's one you're going to see that's flat and I think we peaked with 53 or 54% of people on the planet earth being in a democracy and now it's going below 50 and it's because some of the democratic, you know, western countries don't have the population growth of some of the communist and socialist countries and authoritarian countries and we have to make sure that we win capitalism we must win economically that is the battlefield the battlefield is science technology and money and economy finance. That's the battlefield. China wins, authoritarians win. And at any time, Xi Jinping can pull Jack Ma into a room and say, 'It's time for you to be re-educated.' Or they can put three or four million people, Uyghurs, into prison camps and say, 'You know what? This religious thing, that's counter to what is productive for us. Therefore, we're going to shave your heads and we're going to have you literally pick cotton in the fields.' They have Uyghurs with no sense of any kind of arc of history in the fields picking cotton as slaves in what can only be described by every humanitarian organization as a concentration camp. And every Jewish person I know takes great offense when somebody uses the Holocaust as a metaphor except in the case of the Uyghurs right now. And every Jewish person I've talked to has said to me that is a Holocaust. That is millions of people going to genocide because of their religious beliefs. And I'm an atheist. But if people want to believe a certain religion, fine. But you know, China's approach is we need to win capitalism so bad. We need to win on the global stage so bad. We can't have any of this religious stuff going on here. That is a distraction from winning and beating America. And then in America, the people who are going to make us win are the entrepreneurs and the scientists and the technology and our education system and finance. And we're vilifying those things. It's dark, but I still believe that the vilification is just in the space of Twitter and the space of ideas. I think that's probably a good...
And entrepreneurs win out in the end. They don't listen to that and they'll build, we'll get the rock.
Some of them do actually in their darkest moments. I can tell you that they turn off their Twitter accounts and I've had to sit down with a number of entrepreneurs and say, 'Turn off Twitter. This is not healthy for you. This is not a healthy pursuit.' Because don't read the comments. If you do, it's like a full contact sport. You should just take it as like professional wrestling or something, but stay focused on building companies. And you know, advancing the human species through science and technology. I mean, as you're describing, you've hosted This Week in Startups for how many episodes?
11 years, almost 1,200 now.
1,200. So, you've talked to some of the great...
Leaders in business in general. Uh, is there a common thing that you see or uh...
Really messed up relationship with their parents. Like, just find me a great entrepreneur, I will show you the trauma. Their dad was like, you're not good enough.
In the teenage years, is that truly... is there some...
There is definitely something. Hardship at some point in their life, kind of thing.
I think so. I mean, and there's definitely something with immigrant parents. Um, that is a bit of a stereotype out here, but I've heard from many investors like that's their... oh, did your parents immigrate and did they beat into you that you have to succeed? And you feel the need to succeed because they suffered to get you to this country. Like, there is an archetype there that I hear. When I started investing, I heard from a lot of people, it's like, yeah, you want to find those immigrant founders who are coming out of Stanford because they had to fight to get there and their parents had to fight, right? So it's like two huge fights and there's so much at stake, as opposed to somebody who's fifth generation and like had everything handed to them and they were legacy and got into schools for free. But I think in general, the ability to get people to join you on that journey, yes, is so critical. So you have to be charismatic, and it doesn't mean like you're an extrovert. There are introverts who are super charismatic. Uh, and there are soft-spoken people. They don't have to be like super vivacious or rambunctious people. Um, they could be just quiet assassins. But you need to be able to get people to come on the journey with you. You have to be that storyteller, and you have to have that passion, and then you have to transfer that enthusiasm to investors, the press, to customers, to all the stakeholders. And if you're enthusiastic about it and you're engaged, then it's easier for people to come on that journey. And that's why people really start to think about, well, what is the purpose of what I'm doing?
And it sounds corny. And when I first heard that, I was like, it's kind of corny, but then I read this book by this guy, Rick something. Um, he wrote The Purpose Driven Church. And he had spoken at a TED or something and everybody went crazy about it. And he's like, a church should have one purpose, one single thing they do. And like his church, which was like one of these mega churches in San Diego, just wanted to do education for this specific country, and that's all they did, and they just benchmarked. I think it's very important to have a purpose and a mission, not everything, uh, but you know, a specific purpose of some kind of joy that you want to put into the world. You want to solve some kind of big hard problem, and then everybody knows why you're coming to work every day. And then for the founder, when you dread going to work that day and you don't feel like solving that problem anymore, that's the tell. And a lot of times I meet young founders, I'm like, why are you doing this? And they're like, well, I was looking for an idea and this is the one I came up with because I think I'll make a lot of money. And it's like, you're going to quit. Yeah.
You're going to get to month nine or ten of this and you're going to run out of money, or like your CTO is going to quit, then your CFO is going to quit, and you're going to lose your biggest customer, and you're just going to say this is not worth it. You know, and if you know, using Bezos or um, you know, Elon as examples, they just needed to see this world change in very specific ways. And Steve Jobs, you know, they needed to see a change, and it doesn't matter if they made money or they were losing or winning. They just went to work every day and they had to change it.
It's almost like they didn't have a choice. I mean, no choice. He makes it sound like his torture, his whole journey, but he can't help it. He's...
[laughter] Having been a witness to it. Um, you know, just as friends for that long. Uh, I have never seen an entrepreneur suffer more than him. And uh, you know, he's been public about that, like you do not want to be me. Um, he has suffered for those companies. He has suffered to get them where they are. It has not been easy.
Can you psychoanalyze Elon in that aspect? Like, is it just he can't help but he must see the change that he uh hopes for in the world?
He's just incredibly hardworking and uh, he's very talented as well. Uh, and I don't think people understand that he actually is a really brilliant engineer at the end of the day. He actually knows what he's doing. Um, and he asks the right questions. I mean, people were kind of amazed that he was asking Vlad such good questions, and they're like, oh my god, Elon's the best journalist on the planet. And it was like...
That's kind of... anybody who knows Elon knows he asks great questions. I mean, I've been... I used to have dinner in LA, and my book agent also was Sam Harris's agent, and Sam and I met um through John Brockman, and we became friends because we lived near each other, and I was friends with Elon, and then I used to invite them to both dinner in Brentwood because one lived in Bel Air, one lived in Santa Monica, and I lived in Brentwood. And we would go to this place, Pappo, this Italian restaurant, and every Tuesday for years, we would just the three of us, every other Tuesday or so, we'd have dinner. And uh, I'd sit there and Sam wanted to know about AI and Elon's talking about artificial intelligence because he's on the board of DeepMind, and uh, Elon wanted to know about atheism and meditation and all this other stuff that um, you know, Sam was an expert on. I got to sit there and like just listen to these two guys [laughter] talk.
And they both have piercing intelligences. But Elon, he goes straight to the gut, like the questions that no engineer wants to hear, like just the basic stuff that...
It's like, why the hell are you doing it this way? Yeah. When the obvious solution is like much easier or this or that, like why haven't you tried this?
He can figure things out. I mean, he's a problem solver. I mean, I think, and that's another thing, like I think the great entrepreneurs can look at a problem with very fresh eyes, like almost consistently. And Bezos described that as day one thinking. Right, like just pretend this is day one every day. Um, and then other people use the term first principles. But it basically means like when you see a problem, pause for a second and really think through what is the best possible solution here, what are some alternative solutions, and get from everybody like how do we solve this problem. And what people do sometimes, they get in a rut. They just come to work and they just go through their email. They do whatever they did the day before and they don't think, why are we doing this and is there a better way to do it? Now, you can get so obsessive about that that you can overengineer stuff and you can never actually ship a product. So there have to be some pragmatism and some goals and some dates associated with that. But it is a very cool thing to really think like...
I wonder if we actually made the batteries ourselves, what that would look like. Or I wonder if we could get to two-day shipping, you know, or I wonder if we could do same-day shipping. Like, you need to have somebody who's willing to say, you know what, [expletive] it. Let's set a crazy audacious goal. Uh, two-day shipping of any product anywhere in the United States. And once you throw the gauntlet down like that, now everybody knows, they're rowing in the right direction. Two-day shipping, Amazon Prime. And that's what people didn't realize about Amazon. The business wasn't the shipping of those products. It was getting you to sign up for Amazon Prime.
Mhm. They have, you know, hundreds of millions of people doing Amazon Prime for $10 a month. I think globally it's probably cheaper, but that was the driver of that business, was all of those people. 'Cause you would... you're an Amazon Prime subscriber. Do you know how much you pay?
Exactly. It started at $50, and I think they even had like $40, $50, $60, like the testing in the early days. And now it's I think $149. Wow.
$13 a month if you pay for the year. I think it goes down to $10 a month, $120, and you're like, wow. And it's like, yeah, you're paying $13 a month for the privilege of shopping at Amazon.
Yeah. Uh, but you would say it's the greatest thing in the world because anything I need, you know, if you forgot a microphone or a cable goes bad or a camera goes bad, you get it here, you know, within a day or less.
Yeah. It's pretty amazing.
You've already been dropping bombs, incredible advice on startups in general. But let me maybe uh go straight in and ask, uh, is there advice for somebody that wants to go big, to build the big startup, to help them succeed?
Yeah, it's very similar to the advice I give to investors, because now I teach angel investing because there's so many people want to invest. So I wrote a book on that, Angel, and then I do a course called Angel University that I teach six times a year, and then I have a syndicate called the Syndicate.com where I invest in companies. There's 6,500 people who are members of that. It's the largest syndicate in the world. In fact, the first deal we ever did was Calm, the meditation app. We put $378,000 into it when it was a $5 million product, a $5 million company. So we bought six or seven percent of the company. It's now worth two billion. So you can do the math on that. We still own 5%.
Uh, six years ago, so probably seven. Yeah, maybe 2015. Uh, 2014. And nobody else would invest in Calm. Yeah. But Sam Harris was the reason I did, because I asked Sam, tell me about meditation. And he's explaining it to me, and I said, what about this? Like, do you have to have like a mantra? How does it work? Exactly. I know, well, you know, you should just go to UCLA and talk to Diana Winston, and like there's this whole project there. And I'm like, UCLA does meditation? Like, yeah, there's a Mindful Institute. They're like teaching people to meditate, and they're doing PTSD and I'm doing brain scans. And I was like, oh. And then I talked to the UCLA people and they're like, it's real. Yeah. Like, we taught Phil Jackson and Kobe Bryant and Shaquille O'Neal did. You know, that's how they won their championships, they meditated. And I was like, hmm, if UCLA is doing as Sam says it's cool, well [expletive] it, I'll put money into that. And that's the second biggest investment of my career after Uber, and it will in all likelihood become the biggest. I mean, it's between Uber, Robinhood, and Calm. Um, and long story short, when I'm teaching people to angel invest, there's really two things that you cannot, cannot fake. One is a product that is built really well. So if you look at Calm, Robinhood, Uber, Tesla, Amazon, these products are transcendent. They're well-constructed. There's craftsmanship to them. They're great products.
So you're saying not fundamentally like the idea, but the execution, the actual craftsmanship of the construction.
The actual product is amazing. Then um, there's customers, and that every business has ultimately a customer, and that customer, if they are in fact delighted by that product, that's the magic, because you need a team to build the product and then you need customers to use the product. And really those three vectors are undeniable. Now, you could have great teams that build a bad product. Doesn't happen too often. Um, or you can have customers who don't like the product. But generally speaking, a great team will build a great product or a good product and iterate and then eventually delight customers. And so most people say the team is the most important. But um, there's a lot of smart people out there, and let's assume that you can raise money for your idea or you have money or you can just convince people to do it for free. If you make a great product and it connects with users, that's the magic. You look at Clubhouse, it's actually a really well-designed product. Uh, and that product is connecting with customers. And if you were to talk to the customers or look at the product, you would see a well-constructed product and a delighted customer. And you can tell the delighted customer by just the amount of time they use it. That's called engagement.
