0:00

a lot of smart people are working on something that's like virtually

0:02

guaranteed that it's gonna happen, it's just

0:04

a question of when.

0:06

Hello, everyone. The A6CZ

0:09

podcast is back, and this is

0:11

your new host, Seth Smith. I'm so

0:13

excited to explore the world of technology with

0:15

you through the lens of the builders shaping it.

0:17

And if you've been listening to the pod for a while,

0:19

I hope you'll stick with me as I take the reins from

0:22

Sonol who by the way is doing really wonderful

0:24

work at our sister podcast web three with a

0:26

sixteen c. Okay. Onto the content.

0:28

Today, we have a very special kickoff episode

0:30

to start our launch series where we

0:33

wanted to explore the age old question. why

0:35

is building the next generation of technologies still

0:38

so important? And perhaps even more important,

0:40

who is gonna build this next generation of technology?

0:43

and what needs to be done to enable those

0:45

founders and builders. And I'm a little

0:47

biased, but who better teacher versus ground than

0:49

a sixteen Z's co founder and general partner,

0:51

Mark Andresen. one who has not only

0:53

built, but also invested in the future time

0:55

and time again, especially when it was not

0:57

the obvious thing to do. So today, together

0:59

with Mark, we explore technology through the lens

1:01

of his history, including the three stages

1:03

of human psychology as we encounter these new

1:05

technologies. And we also talk about how that

1:07

process often ends in regulation, and we include

1:09

a couple examples of that which by the

1:12

way, if you've never heard of red flag laws,

1:14

you'll want to listen in. We also talk about

1:16

when to change your mind. The Cambrian explosion

1:18

of opportunity coming from distributed work the

1:20

importance of founder led companies and so

1:23

much more. And of course, we'll end the

1:25

episode by examining why there's still

1:27

so much reason for optimism. And hopefully,

1:29

this episode will also get you excited about what's to

1:31

come with the a sixty c podcast as we do have

1:33

a lot more coming. That includes coverage

1:35

of major trends like AI, space, carbon

1:37

removal, and you'll soon hear from legends like

1:40

Neil Stephenson, Ballet Chase from your boss and

1:42

even Steve Wozniak, who shared with us as the latest

1:44

venture, Privateer. By the way, that

1:46

episode is already live in the feed if you want

1:48

to give it a listen. Alright. Let's

1:50

dive in. The content

1:52

here is for informational purposes only

1:54

should not be taken as legal business tax

1:56

or investment advice or be used to evaluate

1:59

any investment

1:59

or security and

2:00

is not directed at any investors or

2:02

potential investors in any ASIC sixteen

2:05

z fund.

2:05

For more details, BCA sixteen

2:07

z dot

2:07

com slash disclosures.

2:19

So this is the first

2:20

episode of our launch series. And in the launch

2:22

series, we're going to cover several technologies and

2:24

we're going to cover them with their founders and dive

2:26

really deeply into how these technologies may

2:29

shape our collective future.

2:30

But before we do that, we're going to address an

2:32

important question. And it may sound simple,

2:35

but we need to ask why these

2:37

technologies even matter in the first place.

2:39

Why is it so essential today that we continue

2:41

to build? And today, we have Mark and Jason

2:43

talking to us about this very important topic

2:46

and who better than someone who has built

2:48

the future and invested in the future many

2:50

times especially when it wasn't the

2:52

easy thing to do. So, Mark, why

2:54

don't we start there? And why don't we start by

2:56

attacking this question with a lens

2:58

of

2:58

history.

2:59

So how may be do people view

3:01

the importance of technology today? And

3:04

how has that changed maybe relative to

3:06

how they viewed it in the past? Yeah.

3:07

So thanks. That's a great way to start. And, you

3:10

know, so many of the discussions about today's

3:12

technologies take place in this, you know, kind of a

3:14

historical frame where it's as if there had never

3:16

been any new technologies in the past. Or

3:18

that there were new technologies in the past, but those

3:20

were all the good ones. And today, we just have the bad ones

3:22

or something like that. And so the key question

3:24

to kinda start out asking on all these topics is

3:27

basically, like, why is there something and

3:29

not just nothing? By which I mean, basically,

3:31

like, what was life like before technology?

3:34

Right? Like, what was lifelike in, like, its national

3:36

state before we had all these wonderful technologies, before

3:38

we had steam power, before we had contractors, before

3:40

we had telephones and so forth. And And,

3:42

you know, there's, you know, a lot of historians have talked about

3:44

this, but, you know, the answer is life was

3:46

what was known at the time that, you know, Thomas

3:49

Hobbs famously said it was nasty British

3:51

in short. Right? And so you'll read

3:53

these fantasies from time to time about how people

3:55

kind of been, you know, older periods or historical

3:57

periods, like somehow they were living in the state embrace

3:59

of nature. and kind of everything was wonderful. And

4:01

they were just kinda hanging out and having a good time. And and basically,

4:03

like, that those are all just fantasies of

4:06

reality. But basically, everybody was miserable

4:08

all the time. Everybody was poor. everybody

4:10

was assistance farming just to make enough, you

4:12

know, be able to harvest enough food, be able to eat

4:14

that day, or to be able to hunt enough meat, to be able to

4:16

eat that day. And and for the most part, people died

4:18

young, they sick. They never got anywhere. They never did

4:20

anything. Basically, like, all of

4:22

recorded civilizations, basically,

4:24

only over the course of last four thousand years.

4:26

for the for the many millions of years of humanity

4:29

before that, like, there's basically nothing. And,

4:31

you know, basically, because, like, people had no time to

4:33

do anything other than just try to grow up with

4:35

Okay. So basically, it's a what happened to cause

4:37

life no longer being astro British in short.

4:39

You know, what happened to cause basically

4:41

the reality of human existence to go from what

4:43

it used to be to what it is today. you know,

4:45

it it's not perfect today, but it's a lot better than it

4:47

was. And of course, the answer is technology.

4:49

And in fact, LG is the only answer to that

4:51

question. Right? There's no other answer. Right?

4:53

It's not like people got smarter. It's not like

4:55

people got, you know, I don't know, like, this week.

4:57

You you you you know, DNA is the same. You have

4:59

things haven't changed. It's basically only

5:01

through technology and things have gotten better. And the

5:03

way to kind of think about that is what is technology.

5:06

Technology is tools. Right? Technology basically

5:08

has applied human ingenuity. in

5:10

building tools, and then and then those tools

5:12

basically give human beings leverage on

5:14

the world. That leverage shows up in

5:16

many forms. it shows up in

5:18

forms, you know, for sure, in some cases that are

5:20

bad, it also shows up first in the form

5:22

many cases that are that are also are are very

5:24

good.

5:25

So I

5:26

agree with you that progress continues.

5:28

And if you look at all of the important markers, we

5:31

are doing better, and that has been true

5:33

for a very long time. Why is

5:35

it then that people seem to

5:37

have this view of

5:39

where we are today in history in

5:41

terms of things being so bad? Yeah. So,

5:42

you know, look at obviously, that's a complicated

5:45

question. The technology part of it, I

5:47

think, is very clear, though, which is, you know and

5:49

and again, you've gotta think about this historically.

5:51

So So let's so let's start with

5:53

the story of, like, one of the very original technologies

5:55

that basically him had been kinda discovered

5:57

and mastered, which was fire. Quite

6:00

literally fire. Obviously, today,

6:02

you take fire for granted, you just assume it's something that's

6:04

always been with us. But, like, fire is a

6:06

tool. Fire is a technology with something that

6:08

at some point kind of early human beings had

6:10

to figure out how to master and how to take control

6:12

of. And just to give you a sense of what a

6:14

big deal it was to actually master

6:16

the technology of fire when that happened,

6:18

but the sort of core fundamental kind of myths

6:20

of human existence is is the the myth of Prometheus,

6:22

the god for Prometheus. And the

6:24

god for Prometheus famously is the know, and the

6:26

way the myth goes, you know, Prometheus delivered

6:28

fire to humanity and basically delivered fire as a

6:30

tool. And Prometheus was not

6:32

is not was not beloved as a consequence

6:34

of of delivering fire to people. But

6:36

for from atheists who was condemned. Specifically,

6:39

he was in the Math, he was chained to

6:41

a rock for and for all eternity,

6:43

And according to the math every day, a

6:45

bird comes along and checks out his liver

6:48

very painfully. And then he according

6:50

to the math, he regenerates every night I'd say the bird

6:52

tortures them again. You know, this has been

6:54

happening forever. So so, like, the

6:56

fact that there's that myth with that outcome

6:58

assigned to the introduction of fire as a

7:00

technology to human existence. Right. And and and

7:02

and of course, what assumes the mess is not literally

7:04

true, but it's symbolic. Right? Which is basically

7:06

symbolic of the fact that humanity basically experienced

7:09

the rise of fire technology and said, like,

7:11

wow. This was a big deal

7:13

and maybe not entirely positive. And

7:15

then, of course, that makes sense because if you think about

7:17

how fire was used as a technology. Obviously,

7:19

fire was used for good. Right? Which is like fire

7:21

made it possible to cook meat. Right?

7:23

Fire made it possible to, you know, to basically

7:25

we'll just find the campsite again. like wolves in

7:27

the middle of the night. It made it possible to keep people warm.

7:29

You could keep your baby from freezing to death. Fire

7:31

is just like miracle technology. Of

7:33

course, fire also got used in warfare.

7:35

Right? you know, even up to the modern day, like,

7:37

what's the kind of state of the art weapon of our times?

7:39

It's the nuclear bomb. Of course, what what does that

7:41

bring? It brings fire. And so, you

7:43

know, look, it is a double edged sword. Like,

7:45

would we wanna live in the modern

7:48

world without fire? Because it has, you

7:50

know, both the outsized as well, the the outsized

7:52

we would. But, like, Both of those are

7:54

present. And and, basically, my interpretation is

7:56

if you kind of go through the history of new technologies, basically,

7:58

for every important new technology, there's

8:00

always this argument basically, there's always this argument

8:02

of, like, okay, in theory, there are all these things we can

8:04

do with the new technology. They're very positive.

8:06

In fact, probably, there are things the new

8:08

technology will make possible that we can't even think

8:10

of today. Right? And that and that's been a very common pattern,

8:12

by the way, which is people don't people actually

8:14

have a very hard time anticipating the upside for their

8:16

technologies. But the same argument basically

8:18

always applies us with fire, which is basically like, well,

8:20

what about potential downsides. And then, you know,

8:23

say, human beings are kinda psychologically wired

8:25

to the downside. Like, we're wired to basically

8:27

detect and try to evade threats. And

8:29

so there's basically always the simple to

8:31

say, okay. You know, this is the technology that's gonna

8:33

ruin everything. And if you go through basically a

8:35

history of every new technology, like that, you know,

8:37

that argument of library repeatedly. Give me

8:39

a couple of examples. So one is outdoor

8:41

lighting. Electric lighting actually was first implemented

8:43

outdoors because they didn't know how to do it

8:45

indoors, because get bring places

8:47

down. It took a while to get get it to get it to

8:49

be safe. But the first electric lighting was rolled

8:51

out in, you know, big cities in Paris and London. forget

8:53

what it was, like something like two hundred years ago now.

8:55

And, you know, big deal, like, outdoor

8:58

lighting, all of a sudden, the city is walkable and

9:00

livable and safer right for dark. This is a pretty

9:02

big deal. And the contemporary accounts are

9:04

basically I mean, one was a sense of wonderment

9:06

that this was now, you know, basically, the life can

9:08

now be basically, wait twenty four

9:10

hours. But then there were also all of these kind of

9:12

stories of, like, this is gonna, like, completely destroy

9:14

civilization. This is against the natural order of things.

9:16

You know, this is gonna completely ruin our people

9:18

aren't gonna be able to sleep anymore, you know, all

9:20

kinds things, all kinds of illicit, you know, social activities

9:22

are gonna happen at night. Right? Yeah. In

9:24

the past, everybody just had to go to bed at night. Now

9:26

they're gonna be out of the streets at three in the morning, doing all

9:28

kinds of bad things. by the

9:30

way, there are in every major

9:32

city, they're coming all out of the street at three in the morning

9:34

doing bad things. Like, it's not like the downside

9:36

was was was completely wrong.

9:38

that obviously that the trade off is worth it. My

9:40

favorite story on this is the invention of the bicycle.

9:42

And this one is really is really great because,

9:44

you know, there's this Netflix documentary called

9:46

the pilemma that's kind of, you know, condemned social media as

9:48

this kind of unique threat to civilization. And

9:50

one of the things that one of the guys in in that movie

9:52

says is he's like, you know, social media is the

9:54

first technology like this that's had these

9:56

negative consequences. He's like nobody

9:58

nobody ever complained about the invention of the

10:00

bicycle. And it actually turns out that's not

10:02

true. Like, he just he

10:04

just didn't do enough reading. Like, it turns out people actually

10:06

complained a lot about the invention of the bicycle.

10:08

And this sort of, you know, it's sort of very

10:10

symbolic. So that So the bicycle is a

10:12

big deal. So bicycle rolled out as a consumer

10:14

product about a hundred and fifty years ago, and they kind

10:16

of got it working in manufacture to the point where we got

10:18

cheap enough for kind of normal people can buy

10:20

it. And so the the bicycle starts to roll out kind

10:22

of across the American countryside. And

10:24

and basically, there's this immediate moral

10:26

panic about the bicycle, and this is chronicles in the

10:28

media at the time. If you read the Twitter account,

10:30

pessimists spark. It's which

10:32

maybe we can link to he goes back and reconstructs

10:35

kind of the the moral panic around the bicycle. And

10:37

basically, the argument against the bicycle at the time

10:39

was the bicycle is the first

10:41

transportation tech acknowledge that young

10:43

unmarried women in towns and villages

10:45

across the US could actually afford to be able

10:47

to buy a use. Right? because cars

10:49

didn't exist yet, like, you know, whatever person in wagons are

10:51

too expensive. They couldn't get access to them.

10:53

Whatever. Walking took too long. All of a sudden, like,

10:55

I'm young, I'm married with the bicycle, which means young

10:57

and married women can go from, like, one

10:59

town into the next town, which

11:01

means all of a sudden, young and married women

11:03

can meet you know, boys and men,

11:05

not just in the current time, but any other

11:07

time. And so obviously, to the kind of

11:09

established social order of the time, like this

11:11

would say, profound threat. right, to to kinda

11:13

how things work. The assumption was you're young, a very

11:15

woman in town. You bury one of the men.

11:17

Right? In that town, all of a sudden, your world

11:19

opens up. And so The media at the

11:21

time created completely,

11:23

like, got a whole lot. They they created a new medical

11:25

condition called bicycle face. And

11:28

the idea of bicycle face was you're a young woman,

11:30

you're on the bicycle, you're pedaling to get to the next

11:32

towel, and, you know, pedaling takes exertion. And

11:34

so you're gonna have, like, your face is gonna

11:36

contort, you know, because of the exertion and you're gonna be, like, you

11:38

know, pedaling along like this. And

11:40

bicycle face is the idea that your face is going to

11:42

freeze into that contorted position. And

11:44

then, you know, then then you would never be able

11:46

to get married. Right? Now, fortunately,

11:49

it turned out by a simple face was not actually

11:51

a real thing. it turned out civilization survived

11:53

the infection of the bicycle. But basically,

11:55

like, there's just this, there's this constant

11:57

blowback. Right? And then and then

11:59

basically what you

11:59

find and we'll probably talk about this in some way. basically, what

12:02

you find is the flowback is nominally

12:04

a

12:04

response to the dangers of the technology, but

12:07

the flowback actually is

12:09

in in in almost every case. blowback

12:11

actually is it's basically a

12:13

fear, a statement, an assertion, a

12:15

realization that the introduction of the

12:17

new technology is going to change

12:19

the society. Right? And and and then

12:21

in particular, status and power

12:23

within the society. Right? Who's in

12:25

charge? Who's in power? Who makes

12:27

decisions? Who has status? Who

12:29

gets money? Right? All of a sudden, the ordering of

12:31

society is set for grabs. And that and that's why you get

12:33

this just like, you know, spectacular freak out when

12:35

things show up. Yeah. I'm

12:36

glad you brought up pessimists archive because if people

12:38

are curious, we'll bring it up on the screen. But

12:41

basically, anything that you can think of as a

12:43

prior technology or maybe even things

12:45

that you for granted as not technologies, just

12:47

things embedded in our lives. Had this blowback,

12:49

you mentioned the bicycle, but it's also the

12:51

radio trains. Teddy bears jazz

12:53

music. I know people would view Teddy bears as

12:55

technology, but the point is anything

12:57

that becomes embedded in society

12:59

that as you're alluding to

13:01

can impact society at

13:03

scale. people start to get afraid of

13:05

because they start going through all of these

13:07

scenarios and thinking, oh, who is this gonna impact? Is this

13:09

gonna impact my job? Is this gonna impact the types of

13:11

people I can interact with? it's going to

13:13

impact the power I have in society. So

13:15

Mark, why don't we dive into that? How do

13:17

you see technology and its implementation?

13:19

Or really as it's starting to be

13:21

implemented within society? How do

13:23

people react? And what specifically

13:25

about the power within society is

13:27

being upended? Howard Bauchner: Yeah,

13:28

so there's this incredible book that's it's

13:31

very short and very good. It's actually written

13:33

fifty years ago by a professor at

13:35

MIT at the time. And it's

13:37

the name Elton Morrison. And and it was great about

13:39

this book as it was before the Internet, even before

13:41

personal computers. And so it's got this kind of

13:43

timeless kinda quality to it. And it's it's the

13:45

title of the book is called man machines and

13:47

modern times. It's this topic. It's basically okay.

13:49

What what exactly is the process by which you do

13:51

technology, enter society, and then how does society

13:53

react? Basically, how does the powers that be or the

13:55

status quo of society react? And Morrison

13:57

tells this amazing story. He kinda hangs the whole thing on

13:59

this sort of very amazing story from about a

14:01

hundred hundred twenty years ago now, maybe a

14:03

hundred thirty years ago. around this guy

14:05

named Sims, and this guy named Sims

14:07

at the time working area of naval

14:09

warfare. Right? So, you know, big, big, big, you know,

14:11

battleships, seafaring battleships. you

14:13

know, firing on each other, firing on on

14:15

land targets and so forth. And of course, you know, the

14:17

the world, a hundred and twenty, hundred years hundred and

14:19

thirty years ago, we didn't airplanes, you know, sort

14:21

of military airplanes he added. So see

14:23

warfare, naval warfare was warfare, like, it

14:25

was how invasions happened and it was, you know, and

14:27

and how countries got defended. So this was kind

14:29

of the core aspect of military technology

14:32

at the time. And so since since basically

14:34

worked on basically guns. Like big big guns

14:36

on on big military ships. And then in

14:38

particular, how do you aim big guns on big

14:40

military ships? And the the way the

14:42

story goes is basically before Sims guns

14:45

were fixed in position on a ship. Right? So

14:47

you'd you'd have a big ship. You'd have, you know, some you'll

14:49

see this in movies. You'd have the guns sticking out

14:51

the side of the ship. And then basically, what would

14:53

happen is, and the gun is in like a fixed position.

14:55

Right? because it's, you know,ashing the deck, so it doesn't roll

14:57

around. And so what happens is, you know, the c

14:59

is moving. Right? And so the the

15:01

ship is kinda going back forth like this in the

15:03

water, which means the gun is

15:05

going back and forth like this, which

15:07

means that basically enable battles up

15:09

until Sims, you know, that's accuracy

15:11

rate of of guns being fired off

15:13

these ships was, like, at best ten percent

15:15

and, you know, maybe, you know, quite often below that. And

15:17

they would just miss most of the time and why they

15:19

miss most of the time. the gunner would be

15:21

you know, the gunnery officer would get a fix on

15:23

on the position that he would go to order to fire.

15:25

But by that point, right, the ocean had moved, the

15:27

ship had moved, and then he no longer had a lock, and then the

15:29

thing would fire on the the kind of ball against the other

15:32

ship. And so, you know, a lot of naval battles up

15:34

until that point where the ship's kinda sitting, he's head

15:36

besides, sorry, each other, missing all the time.

15:38

Right? And so Tim said, well, you know,

15:40

g, like, there has to be a better way to do this. And

15:42

basically, what he designed was an mechanical

15:44

mechanism that automatically

15:46

basically work in opposition, right,

15:48

counterbalance to the role of the ship. And

15:50

so if if the if the ship is, you know, if the ship

15:52

basically is going down, Right? The

15:54

the the mechanism for the gun would automatically

15:56

correct. And so the gunnery officer could

15:58

basically get it fixed. And then as long as the

16:00

ship stayed in the same position as it rolled

16:02

around, know, the sort of lock in the target would

16:04

stay intact, then all of a sudden the accuracy rate shoots

16:06

up to, like, ninety percent. Right? And so

16:08

and so what what's so great about this

16:10

example is it's like the most obvious thing in

16:12

the world, which is it's like obviously every country

16:14

in the world would instantly adopt this, every military

16:16

would adopt this, every ship would instantly be

16:18

retrofitted to do this. Right? This is, like, the most

16:20

obvious slam dunk thing you could do. It it's a

16:22

huge advance of warfare. You couldn't imagine

16:24

living without it. Like, that's what you would assume. And

16:26

and, of course, that's not what happened at all.

16:28

what happened basically was since took it took since

16:30

like a full twenty five years to basically

16:32

convince the American and British Navy to adopt this

16:34

technology. It was like a full generational

16:36

shift And and the book goes through kind of in

16:38

detail, basically, what happened? He Sturgo

16:40

Sims ultimately had actually appealed directly

16:42

to president Teddy Roosevelt at the time. like,

16:44

the entire military command structure of that era, basically,

16:47

just told told them that, basically, that's

16:49

off. You know, we don't want your

16:51

new thing. know, we're we're gonna keep doing

16:53

things the old way. And he ultimately appealed to say,

16:55

Roosevelt, and Roosevelt actually ordered the Navy to look at

16:57

it, and I mean, they, you know, they later ended up adapting

16:59

it. And so Morrison basically says, well,

17:01

okay. Like, it's like the ultimate example. Like, if they

17:03

wouldn't adopt even that technology, like,

17:05

okay, this this must be like some very

17:07

primal kind of power force. that's

17:09

happening. And his thesis was, it basically

17:11

is the following, which is every new technology

17:13

as a reordering of of of the

17:15

power and the status in society.

17:17

And then specifically in the form of this

17:19

gun. Right? It was basically like the

17:21

entire

17:21

training,

17:22

basically methods, all of the officer

17:25

promotion methods, like the entire social hierarchy

17:27

of naval vessels and how gunnery officers

17:29

were trained and how guns were,

17:31

you know, built and manufactured and crude

17:34

and managed and how military doctrine

17:36

worked. all the different things about how you

17:38

make decisions, you know, about this. Like, it was

17:40

all based on the old model. And basically, like,

17:42

that skill set became obsolete when this

17:44

gun came out. so those people became obsolete at least they

17:46

worried they become obsolete. This new

17:49

breed of kind of, you know, more advanced innovative

17:51

engineering, you know, kind of mentality

17:53

man and was a profound threat. And by the way, that's what happened,

17:55

which is he ultimately had a generational turnover of

17:57

all of the staff and and officers involved in

17:59

the naval gunnery. And so

18:02

Morrison basically derives he goes through this example, and then

18:04

he derives basically this three part process that he

18:06

says applies to any new technology.

18:08

Basically, as it is

18:11

as it is greeted and fought by

18:13

the status quo by the powers it'd be. And he says,

18:15

basically, it's a three step process. So

18:17

step one is just to completely

18:19

ignore it. Like, so just pretend it doesn't exist,

18:21

refuse to acknowledge it, don't talk about it,

18:23

don't even engage in conversations like, we we're

18:25

just not gonna do this. At

18:27

some point though, at this, you know, at some point, these

18:29

things become too obvious and they have to engage. He

18:31

said step two is

18:32

rational counterargument. Right?

18:34

and

18:34

rational kind of argument is this can't possibly work

18:36

because, you know, it's gonna be too expensive. It's not

18:38

gonna be fast enough. It's not gonna scale. People don't

18:40

know how to use it. Right?

18:42

All all the different kind of rational arguments

18:45

that you can come up with to to to oppose

18:47

something. And then ultimately, when those don't work

18:49

anymore, because you know, people are still watching this

18:51

and being like, okay, this still seems like a good

18:53

idea. Then he says, stage three. He says, stage three

18:55

is when the main calling begins. Right?

18:57

And so stage three is basically just like

18:59

a full out power status political

19:02

fight where all of a sudden, basically, it's like,

19:04

okay, these are, you know, these people who are bringing through

19:06

technology. They're bad people. They have bad morals.

19:08

They have bad intent. They're gonna ruin everything.

19:10

Right? And if and if you think about it, it's so funny

19:12

because it's like, basically, the Internet followed this

19:14

exact trajectory. like, you know,

19:16

crypto cryptocurrency blockchain, web three

19:18

is following this exact same trajectory. Social

19:20

networking followed this exact same

19:22

trajectory. Like, I I've now seen this pattern, you know, out of fifty

19:24

times in the last thirty years, and

19:26

it keeps playing out the same way.

19:29

Nobody learns anything. Right.

19:31

And it's it's this is literally what happens with every new

19:34

technology, and I I I'd become convinced that,

19:36

basically, I I was involved. Yeah.

19:37

I think something

19:38

that reminded me of is something

19:40

Balaji said recently, which he was reflecting on people's response

19:43

to social and how it's impacted

19:45

society over time. And he

19:47

He noted that maybe ten or twenty years ago social was

19:49

seen as like these silly apps being created

19:51

and like who wants to focus on this? And, you

19:53

know, why are we directing smart attention into

19:55

these types of fields? And

19:57

then now he's saying or

19:59

noting that people are framing it as a threat to

20:01

democracy. So it's kind of interesting that people

20:03

go from one angle or

20:06

one perception And then because technology particular

20:08

tends to be this force, it's very, very

20:10

hard to stop. It then turns

20:12

into something much different. And the same people

20:14

who framed it as a silly app

20:16

are now framing it as a threat to democracy. And to

20:19

your point, this isn't new. Right? We had the

20:21

same kind of dynamics happening with

20:23

the bicycle. or actually I think it would

20:25

actually be fun for us to go into these red

20:27

flag laws that you told me about quickly, and

20:29

we'll return to to the framing that that

20:31

you brought up. But could you speak a little bit

20:33

more to the red flag laws that

20:35

were implemented when cars were coming to

20:37

be? Yeah. And I'd like to I'd like

20:38

to come back to Balaji's thing on social, by the way,

20:40

because I'll interpret it a little bit I'll

20:42

put it the the sense framework. But but, yeah, so

20:44

cars. So this is another great one. So, like, cars.

20:46

It's like, okay. Like, we all live

20:48

with cars. We we all can't live without cars. Like, you

20:50

know, there's still huge fights about

20:52

how, you know, cars should be used in our society, but, like, there's cars everywhere.

20:55

Like, our society doesn't function about cars. We

20:57

just kinda take them totally for

20:59

granted. By the way, we granted that we just, like, repeatedly bail

21:01

out the big card companies. Right?

21:03

Like, at this at this point, like, the taxpayers have kept

21:05

them in business for a long time.

21:08

And so, you know, the car and and so then you're you're just

21:10

like, okay. The car must have been this obvious thing. Like,

21:12

of course, you want the car and who could have bought the car

21:14

at least for any kind of valid reason. And so again, to

21:16

your point, like, turns out, actually, the cars

21:19

were were actually a a profound

21:21

threat to the sort of social order

21:23

of that time of the era. This is

21:25

like going back a hundred hundred and twenty years. it was

21:27

basically this exact same kind of process played out with

21:29

the car. And so the the thing you

21:31

mentioned basically, the thing that happened at the peak of

21:33

kind of the anti carcass area at

21:35

the the moral panic around cars was basically basically,

21:37

what happened was cars were a threat to basically they

21:39

were the threat to, like, the ordering of, like,

21:42

from how cities were laid out. They were gonna upend, you know,

21:44

the the ability to have, like, modern transportation,

21:46

modern shipping. They were gonna upend everything from

21:48

the world of local merchants.

21:50

they were gonna upend, you know, there was an entire industry of black snips.

21:52

You know, the horse was like central to a lot

21:54

of economies. A lot of people made their living off of dealing

21:57

with horses. there were people who were, like,

21:59

trained, carriage drivers, all of a sudden, ran a job.

22:01

And so there there was this, like, all of a sudden, this this

22:03

huge backlash. And so what happened was,

22:05

a bunch of sort of state municipal

22:07

level areas both in the U. S.

22:10

like in around Pennsylvania at the time and then

22:12

also in the UK implemented

22:14

their their legislators implemented at the time what what became

22:16

known as the red flag laws. So

22:18

the red flag law looks works

22:21

as follows. which is, okay,

22:23

mister Carr owner, you've got your fancy

22:25

new car. Congratulations, you know. You're

22:27

you're very proud of yourself. You're probably a a

22:29

pretty, you know, well off person. in the

22:31

community, people probably generally are probably just to

22:33

start with. You've got this fancy new

22:35

automobile. And and by the way, in those days, like cars

22:37

broke down all the time. And so when you would take your

22:39

car up for a ride, you'd have, like, you'd be driving the car, and then

22:41

you'd you'd you'd ultimately get pretty a mechanic

22:43

with you. Right? It

22:45

basically fixed the car when it broke. I mean, we're

22:47

still getting everything to work. And so and

22:49

your mechanic or whatever your family, you'd be you'd be out, you know,

22:51

motoring along in your car and whatever dirt

22:53

road. And the law was that you

22:55

had to employ another guy. You had to

22:57

employ a guy. to walk, you know,

23:00

fifty feet in front of the car carrying

23:02

big red flags.

23:05

Right? Okay. So picture this. You're

23:07

driving along. You're out for a nice drive, get your kids, whatever, and get your

23:09

foot mechanics, and you're you're you're you're going along.

23:11

You know, cars in those days didn't go very fast,

23:13

but they did go faster than you could walk. And so

23:15

you're driving along at whatever ten, twenty miles an

23:17

hour, but According to law, you have to

23:19

have a guy in front of you on

23:21

foot, like, out in advance. And he's got

23:23

these, like, big red red red flags, and you have

23:25

to follow this guy because he has to stay in

23:27

front of And so you can only motor along at

23:29

whatever the three, four miles an hour, you know, that

23:31

this guy can walk. And this guy is, like, waving the red

23:33

flags. Why is this guy waving the red flags to

23:35

warn everybody that a car is coming? Right?

23:38

Why why was the explanation that he used to

23:40

warn people that a car is coming? Well,

23:42

because the car might steer the

23:44

horses. Right? So, like, you know,

23:46

if the car comes along, it's making noise and

23:48

scares the horses, you know, the horses that are most of

23:50

us on the road at that time, they freak out or, you

23:52

know, by bystanders freak out, people get hurt.

23:54

this would be really bad. And so so literally,

23:56

it's like, okay. That that was how the card got rolled out.

23:58

The the most advanced form of

23:59

this law that I've been able to find when

24:02

it steps further. So basically, if

24:05

you're driving along and you actually see a

24:07

horse coming at you, you see somebody in a horse

24:09

coming at you in the direction. You

24:11

have to pull over to the side of the road. You

24:13

have to disassemble the car. You have

24:15

to take

24:15

a part. Right? You and

24:18

your

24:18

mechanic, take the car apart and you have to hide

24:20

the parts of the car so that the horse can't

24:22

see them. Right? because the horse

24:23

might get scared. Right? Get scared by the

24:26

appearance of the car. And then when the horse goes by, you

24:28

can then reassemble your car. Right? And

24:30

and keep going. Right? And of course, you look back

24:32

today and you're just like, okay. This is like incredibly

24:34

comical. Like, how could they ever do then, of

24:36

course, you'd exactly your point of my social network. And you think

24:38

of exactly the technologists. And then you're like, oh, yeah.

24:40

You know, they're putting in place laws that, you know, a

24:42

hundred years from now, you know, the laws that are being put

24:44

in place now on a lot of modern l g top

24:46

I sort of want just a silly thread, flight loss. But since

24:48

nobody ever learns anything, you know,

24:50

it's pretty well. Yes, sir. We'll repeat.

24:52

me just hit real quick with the biology point on social networking.

24:54

So this is a really interesting one because he described

24:57

the overall art or you described him as saying

24:59

the overall art was from harmless. You know, who cares what your cat

25:01

had for breakfast? Kind of these are so trivial things

25:03

too. It's like the fundamental threat to

25:05

democracy. It was actually

25:06

a three step process. Right? It was it was step

25:08

one was ignore. Right? Step two in

25:10

the case of social networking. Actually, we went through the whole

25:13

argument. But there was this other step, maybe call it step

25:15

two and a half, which basically is

25:16

like, this is the best thing ever for democracy.

25:19

Right? And you you may remember around about ten

25:21

years ago, around twenty twelve, basically, two things

25:24

happened. One was Obama got reelected and at

25:26

the time this is, like, referred to us, like, the first

25:28

Facebook election. it was when Facebook kinda hit on

25:30

really mainstream. And so, like, they're amazing

25:32

covers newspaper stories talking about

25:34

literally the story was Facebook saved

25:36

democracy. Right? And was Facebook saved democracy, big data,

25:38

you know, saved democracy, all of a sudden, like,

25:40

you know, politicians gave up their messages, their

25:43

voters. you know, the correct candidates can

25:45

get elected. You know, this is, like, the most wonderful thing for

25:47

democracy ever. By the way, that was

25:49

also during the Arab spring. Right? And and the

25:51

social networking, of course, got a lot of credit. for the

25:53

time the Democratic revolutions of the, you know, of

25:55

the of the of the of the spring. And so there was this, like,

25:57

overwhelming sensation. Like,

25:59

when social networking

25:59

executives, you know, in ten years ago, would go to tender

26:02

Davos or Aspen or any of these places with fancy

26:04

people or with important titles. Like, they just hit

26:06

lavage with praise about how wonderful this new

26:08

technology is for democracy. to

26:09

Balaji's point ten years later in

26:11

the story, has done a complete one eighty. Right?

26:13

Now it's the absolute worst fundamental possible

26:16

threat you could have to proceed

26:18

because, of course, it turns out. Not just

26:20

one side from win elections, it turns out the other side

26:22

can too. And it turns out the other side

26:24

also uses social networking and runs ads social

26:26

network thing. And and and to your point, basically, what's

26:28

happened is if you track

26:29

the people involved, the exact same people

26:31

have held every single position.

26:33

Right? So the exact same

26:36

experts, professors, you know,

26:38

pundits, commentators, analysts,

26:40

think tank people, magazine

26:43

publishers, political

26:43

activists. The exact same people have held every

26:45

single one of these viewpoints all the way through

26:47

this, with no

26:48

attempt at any point to reconcile

26:51

their their previous points of view. And so, you know, Elsie

26:53

Morrison, I think, is no longer with us, but he is smiling

26:55

back from having saying, yep. That's exactly

26:57

what I predicted would happen.

26:59

I

26:59

mean, it is fascinating to

27:01

look at history because you can see

27:03

these things repeating. And I think this three step process

27:05

is something that people should apply

27:07

to technologies of today and ask like where is

27:09

that technology or the way the

27:12

people are reacting to this

27:14

technology? Where are we in that cycle.

27:16

And then I think another fascinating thing for

27:18

people to spend time with is this idea

27:20

of the way that we view red

27:22

flag laws today, what will we view

27:24

or what will people view in a hundred years the

27:26

same way. Right? Like, what are the laws that we're

27:28

applying to social or AI or robotics or

27:30

space that regulation

27:32

has its importance, but what laws

27:34

are we influencing today that will seem

27:36

just as outlandish as someone

27:38

literally walking in front of a car to

27:40

make

27:40

sure that we don't scare

27:41

horses. So I would encourage people to think about

27:44

that. But Mark, I wanna ask you because you

27:46

have had a track record of being

27:48

early and right. And that's a

27:50

combination that not many people

27:52

can say about themselves. And I think it's

27:54

important, again, taking this framing

27:56

of people throughout history, being scared,

27:58

always looking things from this pessimistic

27:59

lens, how

28:01

have you been able to kind of see through that

28:03

noise? Like, what are you paying attention to when

28:05

you are introduced in your technology? It's

28:07

really, really easy to say, Well, these are

28:09

all the ways that this technology can go wrong. It's

28:11

not that easy to say, oh, I see

28:13

this light of how this could go right. So

28:15

how

28:15

have you been able to mold that

28:18

more optimistic lens

28:20

on technology? And how have you

28:22

also maintained that over time? Because I think that's an

28:24

equally hard problem to solve. Yeah.

28:26

So start by saying, like, I have the same instincts as

28:28

everybody else. Right? So when I when I read the scenes book,

28:30

I was like, yep. That's also describing me.

28:33

So I have the same, you know, same instinct. It's like somebody brings something forward. Yeah.

28:35

And by the way, like, right, new technologies in their

28:37

earliest stages, like, they're really half baked. You know, they're

28:39

sort of this concept, but the same to Lab

28:41

talks about tinkering it's usually

28:43

somebody in a garage or a metaphorical garage door door or

28:45

something or a computer lab somewhere who's basically working on

28:48

something. It doesn't quite work. You have to, like,

28:50

really squint and see why this would

28:52

ever be than a normal person could could ever

28:54

even understand, much less use, much less get value

28:56

out of. And so, you know, especially if

28:58

you're early, you know, if you're if you're doing, like, early stage

29:00

investing, like, we are really kind of, really advantaged acknowledges.

29:02

Like, you do see these things when they're early and they're

29:04

just not they're doing not ready yet. And so you have

29:06

to you you you basically the natural impulse is

29:08

very clear, which is the step one of the sim cycle, which

29:10

is basically just ignore. I have the

29:12

same instincts as everybody else. I think based on what happened to me.

29:14

It's basically this whole cycle kinda got beaten

29:16

into me, which

29:17

is basically, like,

29:19

a

29:20

very large number of times

29:22

over the last thirty years now when I have

29:24

had that reaction and that it turns

29:26

out that whatever the new technology was turns out

29:28

to be a really big deal. You know, it's

29:30

got like, if you if you go through that

29:32

loop enough times, like, at some point, I

29:34

don't know. It's, like, the tenth time or the fifteenth

29:36

time or something. Like, at some point, you're just like, okay. Like,

29:39

I need to stop. You know, at some

29:41

point, you realize that, basically, the cycle is a form

29:43

of self harm. Like, if

29:45

you wanna be a leading edge of new technology, you

29:47

basically have to break out of the cycle. You have to basically

29:49

stop holding yourself back.

29:51

Now, There's a

29:52

couple of nuances to that. Right? So one is,

29:54

you do have to swims. Like, you do have to

29:56

look at a new unformed thing.

29:58

Right? And then that and this

29:59

goes to the step two of the sentence. cycle.

30:02

But basically, like, rationally, like, has all

30:04

these problems. Right? And,

30:05

you know and, again, these problems usually in our

30:07

era, these problems are, like, it's too slow. It

30:09

doesn't scale. It's too expensive. you

30:11

know, whatever. It's too confusing, but doesn't whatever work

30:13

with the existing systems, like, whatever it is. Or it's

30:15

like a network effect thing, but nobody's using it yet. So

30:17

it's got the cold start problem. And

30:19

so you've of reasons why these new things get worked. And

30:21

you basically have people in a sprint to kinda look

30:24

through that and say, okay. Basically,

30:26

like, you

30:26

know, what if those things all get fixed?

30:29

Right? And and and, basically, the way that that the tech industry works is

30:31

is very helpful on this. If you spent a lot

30:33

of time with engineers, what you notice basically

30:36

is that list of kind of rational reasons why

30:38

something can't work. That list is also the same list

30:40

of all of the technology and

30:42

business opportunities with that technology.

30:44

Right? So I always felt that it's the

30:46

punch list of all the things for founders

30:48

to do. So, yeah, it's

30:49

a good example. Crypto web three has been going through this for

30:51

the last ten years. Right? Which is, you know, Crypto web

30:53

three bitcoin was was read

30:55

it early on. Ethereum was read it early on as, like, this can't possibly work,

30:57

all these different reasons. And basically, you

31:00

know, incredible engineers,

31:02

entrepreneurs, and the crypto web three space now

31:05

are basically fixing all of those things. By the way, today is

31:07

actually a great day to bring that up, right, because today's

31:09

the day the the sort of Ethereum

31:11

merge, what they call, the merges took place. And so

31:13

Ethereum actually just today

31:15

switch from the old method of proof of work to the new method of

31:17

proof of stake. Right? One one of the old

31:19

arguments against crypto, right, including Ethereum, was

31:21

basically the proof of word, but it's all this energy,

31:23

like that necessarily. proof of state doesn't

31:25

have that problem. And so, like, quite literally, the Ethereum

31:28

developer community has basically taken one of those

31:30

rational objections, like completely off the

31:32

table. And and that's just like a great example of how these things

31:34

actually do come to work. Like, here's the other thing. And

31:36

this this also an important one. Like, you're

31:38

not always right. Like, So

31:40

this way, just

31:41

because every successful new

31:44

technology is greeted initially as a

31:46

joke, right, does not mean

31:48

that every new technology that's created is a joke

31:50

is going to be successful. Right?

31:52

And so

31:53

and so you're not always

31:54

right. Like, sometimes, you bet on an early you know,

31:56

we do this all the time. We're an invention capital. You bet on

31:59

an early stage technology,

31:59

and it actually doesn't

32:01

work. It actually it actually doesn't happen. It

32:04

doesn't take. It doesn't become real. Right? And I'm

32:05

not even talking about, like, I'm not even talking about

32:08

fraud. I'm just talking about, like, we thought we had

32:10

the idea. We thought we had direct working on

32:12

it. You know, it just they just couldn't get the thing to

32:14

work or they just couldn't get the thing to work at the

32:16

price point if the market needed. Or by the way, a

32:18

lot

32:18

of the times, it's just it was ten or twenty or thirty

32:20

years too early. Right?

32:21

So virtual reality is a good example of this. Like, I I remember

32:23

when there was the first VR wave, I actually worked on

32:25

AAA bit when I was in college in the

32:27

in the late eighties. Like, there there was this big thing

32:29

around virtual reality time. And it just turned out that,

32:31

like, you just could build VR headsets that worked

32:34

properly twenty five years ago, thirty years

32:36

ago that the technology wasn't ready yet, and and and,

32:38

of course, today you can. And

32:39

so so a lot of times it's just being early, but, of course, being being

32:41

thirty years

32:41

early is the same as being wrong. It doesn't help you anyway.

32:44

Everything you're working on fails and then you have to wait

32:46

thirty years. And so you

32:48

have to be well, you know, if you're gonna kinda think in these terms, you have

32:50

to be willing to be open to the idea that you're only gonna

32:52

be right part of the time. Right? And

32:54

you have to be willing to take the chances anyway.

32:57

is kind of the way I think about it is. The way I think about it, like, for

32:59

our firm is, for every

33:00

new technology that we're exposed

33:03

to,

33:03

right, It's like, okay. Does it pass, like, the basic sniff test of,

33:06

like, okay. If this work, would it be a big deal?

33:08

Right? And then it's, like, are there really smart

33:10

people working on getting it to work?

33:12

And then, basically, if it passes those two sniff tests, then

33:14

we should probably be betting on it today

33:17

because we will be wrong some of

33:19

the time Right? But we will also

33:21

be right early some of the time. And then, you know,

33:23

the way venture capital works, startups work

33:25

is you if they sit there and make more money after

33:27

winners, then you then you lose on the things that

33:29

don't work. So you have

33:30

to kind of be willing to kind of tilt into the

33:33

risk. By the

33:33

way, some people shouldn't do this. Right? Like,

33:35

you know, there there are people for whom, you know,

33:37

ever being exposed failure is just, like,

33:39

too psychologically damaging to them or there's, like,

33:41

large companies, you know, that maybe shouldn't necessarily

33:44

completely reinvent their entire business on the

33:46

basis of a new improve and start up your calendar or something.

33:48

But, like, this is like a time and placement

33:50

for some people and not for other people. But for those of us

33:52

who want to be on the leading edge of new technologies,

33:54

we have to be very open minded. Howard Bauchner: It's also

33:55

a function of Venture capital. Right?

33:58

The the business or the industry that

33:59

you're in

33:59

naturally requires some level of risk so

34:02

that you get the reward at the end

34:04

of the table. But on that

34:06

note

34:06

of timing. I

34:07

wanted to ask you about this because, of

34:10

course, there are examples of specific

34:12

companies. Like, I'll just use a simple one segue.

34:14

Segue didn't work out. A bunch of people thought

34:16

it would. Okay. So that was truly something that, you know, we probably

34:18

won't see in the future. But when we're talking

34:20

about larger industries, you use

34:22

VR as

34:24

an example, Are there

34:26

really examples of technologies

34:28

that a bunch of extremely talented

34:30

people are working on? Again, really foundational

34:32

technologies, whether it's AI

34:34

or crypto, insert other foundational technology here

34:36

that eventually doesn't work out.

34:38

And I'm asking you this because actually several

34:40

of us on

34:42

editorial team. We're trying to think of an example and

34:44

someone who has been investing in technology

34:46

for so long. I was wondering

34:48

if there has been a case where so

34:50

many people have been

34:52

wrong? Well, the

34:52

big probably famous example was Alchemy,

34:55

which is

34:55

AAA term at two eleven. It's AALCHEMY

34:58

So Alchemy was the technology to transmit

35:00

lead if gold. And there

35:02

was this concept that you'd be able to that you'd be

35:04

able to build some form of machine or discover some material that

35:06

they actually and this is, like, you know, three

35:08

hundred years ago now. they actually had this training called the philosopher's stone.

35:10

And there was and basically, all these smart people

35:12

trying to figure out how to basically venture discover

35:14

the philosopher's stone. By the way, Sorry about

35:16

smart people. Isaac Newton spent twenty years trying to figure this out.

35:19

Right? So, like, maybe the smartest human being

35:21

in history of the planet spent twenty

35:23

years on this. So at at the time, you know, they were

35:25

serious. The and the dream of course was, you know, transmitting light into gold.

35:27

Why do they wanna do that? Of course, let us

35:30

plentiful and and and worthless in

35:32

gold. And scarce and and incredibly

35:34

valuable. And so, you know, they they were searching for

35:36

kind of the magic formula for how it basically essentially,

35:38

right, create wealth, you know, basically kind of turbocharged

35:40

economy. kinda make society better in

35:42

one step, and they never figured it out. By the

35:44

way, it's an interesting question. If you happen to know

35:46

any material scientists, I don't think there

35:48

are any active research programs today. literally

35:50

turning red into gold, but it it would be an interesting question for any material

35:53

scientist, you know, whether, oh,

35:55

there is actually an example of this.

35:57

There are now synthetic diamonds. And

35:59

there's now technology for actually turning carbon

36:02

into diamonds. And so, you know,

36:03

what what one could argue, we didn't we didn't get gold at the

36:06

other end, but maybe maybe they got the diamonds

36:08

hard to work. But I cite

36:10

that example because, like, you know, that was, like, three hundred

36:12

years ago. And, you know, it wasn't usually back now

36:14

and it's, like, that wasn't really science as we understand

36:16

it even even for noon at that point. It

36:18

was kinda there was, like, a lot of religion involved and they they were still, you know, figuring some

36:20

really basic thing. I mean, this is when

36:22

Newton was still working on his, like, three laws of, like, how

36:24

the universe works. And so they were they were still trying to

36:26

get the basics

36:28

figured out. You'll look more recently,

36:30

you know, look, there there's a lot of things people

36:32

talk about today that aren't working yet. And,

36:34

you know, we we could have a very long discussion

36:36

about those. obviously, we can't

36:38

see the future. You mentioned segue as an

36:40

example, like, I would guess that that comes back.

36:42

You know, I I would guess that there will come

36:44

a time when people will realize that that actually was a really good idea. But

36:46

I'll I'll actually spend a second on segue.

36:48

Right? So the the theory of segue

36:50

actually was a two part theory. The third part one was the

36:52

the device

36:54

itself. And, you know, it it greeted it got the backlash right up front for

36:56

a variety of reasons just like the car did. And so it

36:58

it became kind of this running joke, and if you

37:01

if you like the very funny TV show arrested

37:03

development, they take the goofiest, you know, kind of

37:05

biggest asshole character in the show they put him on a

37:07

segue. So it became kind of this running joke at the

37:09

time, but But the device itself was only part it was only part

37:11

one of the theory. Part two of the theory was that cities

37:13

would get redesigned around the device. Right?

37:16

And so the theory basically

37:18

was like why are cities laid out the way they are? Cities are laid out the

37:20

way they are because of the car. Right? I'll

37:22

give you an example. Like, there are I think the

37:24

number is, there are something on the order of two

37:26

billion parking

37:28

spots. in the United States. Right? So there's, like, mass in

37:30

the total amount. If you're parking lots, it's something like there's

37:32

the parking lots. I think if you put them all together in the US,

37:34

it's something like the car they would cover the entire state

37:38

of Connecticut. Right? It's

37:39

just this, like, massive amount of space devoted to basically roads and then

37:41

parking, you know, for cars. And then plus there's all

37:43

the issues, there's all the safety issues of

37:45

cars, there's all the evolution

37:47

issues for cars. You know, there's all the noise issues

37:49

and so forth and so on. So, basically, with

37:51

with the segue guys, the time thought was really

37:53

what should happen a city should get redesigned. A city should get

37:55

redesigned, assuming that there are no cars. But, you know, you don't just

37:57

want people walking around,

37:58

you want people to go move faster

37:59

than that. probably

38:02

don't wanna bring horses back. They have

38:04

other issues. And so if you re if

38:07

you design a city from scratch, you could basically design

38:09

it with sidewalks and pass that

38:11

you could have, like, lots of different segue

38:13

powered style right things, including, like, you

38:15

know, single passenger ones, but also maybe, you know, a little,

38:17

you know, cards be four people, six people.

38:19

you devices and so forth. And so, you know,

38:22

it may be that just what hasn't happened yet

38:24

is nobody's actually trying to build

38:26

that city. Right? May maybe

38:28

there just needs to be a new kind of city. And by the way, maybe

38:30

at some point somebody will do that and all of a sudden it'll be

38:32

like, wow.

38:32

Those segue guys whatever forty years ago were

38:34

actually under the right thing. And so If

38:36

a lot of smart people are working on something, it's like virtually guaranteed that it's

38:38

gonna happen. It's just a question of when. And

38:40

and like I said, the when might be forty

38:42

years out, and so it it might

38:45

not be, like, it might not be those people who get the

38:47

benefit or who kinda harp us the gains from

38:49

doing

38:49

the new thing. But, like, it ultimately will

38:51

happen. And and If you

38:52

go back across many is something we can spend a lot of time on. But if you go

38:54

back across a lot of historical technologies, you know,

38:57

it took, like, fifty years to

38:59

get the TV to work there

39:01

were optical telegraph systems fifty years

39:04

before the telegraph systems that we

39:06

became familiar with.

39:07

They they have, like, optical telegraph systems working in Paris

39:09

in, like, the eighteen twenties, eighteen thirties. The fax machine was

39:11

invented in the

39:12

eighteen seventies. It wasn't commercialized

39:14

until the nineteen seventies. It took a hundred

39:18

years. Right? The computer, you know, the computer took,

39:20

like, fifty years to get into

39:22

consumer form and another twenty years after

39:24

that to get into

39:26

your pocket. Right? And so the history here is these things often just do

39:28

take a long a long amount of

39:30

time. And my conclusion for that is basically, it's all

39:32

gonna happen. It's just this this sort of

39:34

massive question

39:36

of timing. Yeah. And on this idea of timing,

39:37

sometimes all it takes is a change in regulation,

39:39

a change in another technology becoming mass

39:42

market that

39:44

allows you know, a follow on Something heard you about before

39:46

are kind of like these unlocks

39:48

that happen throughout history that again

39:50

have follow on effects. And

39:53

one of them that you've mentioned from way back is the ability for

39:55

people to own land and how those incentives really

39:57

spurred a wave of innovation because people

39:59

had the incentive to build

40:02

on top. Are there other unlocks that you're paying attention to

40:04

today that you've noticed, let's say, in the last five or

40:06

so years, it could be COVID that allowed a

40:08

bunch of people to work online

40:10

and that's the next industrial

40:12

revolution, are there things that you

40:14

think are really, really meaningful from the

40:16

last, again, let's say,

40:18

couple years? Yeah. So

40:19

the big one is sort of the post COVID world. So so the big one is kind of, you know, the

40:21

rise in kind of remote work, virtual work. And the

40:23

reason I

40:23

I say that's the big

40:24

one is because it seems relatively straightforward. Well,

40:28

you know, like you and I are recording this more in different locations where you're coming in across webcams.

40:30

So it seems like it's just like a new way

40:32

to work, but it's actually deeper than that. for

40:35

the following reason,

40:36

which is basically the economic

40:38

role

40:38

of cities for basically all of

40:40

recorded human history, again, going back

40:43

for a thousand years, the

40:44

rule of cities basically is what it's what economists think they call

40:47

it agglomeration. So the rule of cities is

40:49

to basically get a critical mass of people

40:51

in a single place. where

40:53

those

40:53

people are able to come together and basically do things

40:56

that are greater than than those people can do as

40:58

individuals. Right? And that ultimately led to the creation of

41:00

companies and led to the creation of, like, you know,

41:02

all these technology and science and all all

41:04

these other things happen kind of as a consequence of

41:06

kind of culture culture came out of cities

41:08

like almost everything today that we would consider to

41:10

be kind of good about kind of giving kinda came out of the that

41:12

people got into cities. Like, all the invention basically

41:14

takes

41:14

place in cities. And so the rule

41:16

of the

41:16

city was basically, okay. You wanna basically

41:19

track the sort of smartest, most ambitious, most

41:21

innovative, most creative people anywhere in society no

41:23

matter where they grow up, whether it's something like a

41:25

small town or on a farm or, you know, by the way, in

41:27

another country or whatever. and

41:29

you wanna basically bring them to a city.

41:31

The

41:31

economists also have this term they call super star

41:33

cities. Right? And these are the cities that

41:36

basically turn out to be, like, ground zero

41:38

know, a fundamental kind of revolutionary kind of thing. Right? And

41:40

and become kind of a permanent hub. And so,

41:42

historically, the San Francisco Bay area has been

41:44

the superstar city

41:46

of technology. Right? The way that works is if you're a ambitious

41:48

technologist, you want to go to

41:50

the San Francisco Bay area, you want to be

41:54

small fish and a big pond because you wanna be around all the other smart people because collective effect

41:56

is gonna be so powerful. Los Angeles is

41:58

a superstar city

41:59

for film

41:59

and television. New York is a superstar city

42:02

for finance for fashion and, know,

42:04

arts and all kinds of things. London, Paris,

42:06

these big cities have played this kind of outsized role in

42:08

economic history. But they they've all been based on this

42:10

idea that you have to get off

42:12

smart people together in one geographic place so that they can actually meet each

42:14

other and talk to

42:15

each other and work together and do projects

42:17

together, bounce ideas off each other,

42:19

challenge each other. again,

42:21

this is like

42:21

four thousand year history of how progress

42:24

has happened. All of a sudden, for the

42:25

first time in four thousand years, we

42:27

now have both the technology and the form of

42:29

the Internet and

42:31

Zoom and

42:31

webcams and remote work and collaboration tools and Slack and

42:34

all these, you know, amazing technologies we have

42:36

now. And we now have this,

42:38

like, sudden proof right,

42:40

that during the very, you know, kind

42:42

of bad, unpleasant dangerous, COVID

42:44

lockdowns, it turns out basically the

42:46

companies were basically able to just

42:48

keep running. any company with

42:50

knowledge work was able to just keep running, you

42:52

know, all the way through COVID. To to a level

42:54

of success that, like, nobody envisioned was even

42:56

possible before COVID. And so now, of course, you got

42:58

this massive societal changes underway. And by

43:00

the way, I think this societal changes from though that are

43:02

just starting, you've

43:02

got this massive societal changes underway where all

43:04

of a sudden people can say, like, wow,

43:06

don't have to be in the San Francisco Bay area

43:09

or in New York City or in Paris or wherever it

43:11

is in order to be part of the computer

43:13

industry or the music industry or the

43:15

movie industry or, you know, financer,

43:16

like, whatever it is. By the way, my kids are not gonna

43:18

have to be there. Right? So even if I'm raising kids

43:20

and I'm worried about their future, like, they

43:24

don't really have to be there. So all all of a sudden, like, the potential fundamentally

43:26

disconnect where people live, from where people work

43:28

has basically

43:28

been open. And then, of course, if you can

43:30

separate the where, you can also separate the

43:34

how. Right? And

43:34

so what kind of community,

43:37

right, would be the best for for example,

43:39

for kids to grow up in? are

43:41

the communities that we built in the last hundred years

43:43

where it's been assumed that you have to kind of be

43:45

part of these specific locations to fully

43:48

participate in economic life. are these the actual

43:50

kinds of communities you wanna raise kids in? Or is there actually a

43:52

completely different kind of community you would build

43:54

if you didn't have to be on a specific place

43:56

to be able to have great jobs? we all probably know

43:58

people like this, like a lot of people are

44:00

fundamentally reexamining. Like, whether they wanna do

44:02

their lives? Like, do

44:03

they wanna work? Do they wanna work in

44:05

the industry that we're getting before? they wanna

44:07

work at the employer they're working at before. Right?

44:09

Do they wanna move to, you know, another

44:11

country, like, they're, you know,

44:14

completely rethinking Right? How many kids do they wanna have? Like, whether they wanna have kids, like,

44:16

all these things? You know, do they wanna get

44:18

reconnected

44:18

back to the extended families that they were forced

44:21

to move away from? all of like,

44:22

fundamental questions are are being asked. And and

44:24

this, I think I think fifty years from now, I

44:26

think we'll look back. It'll be, like, basically, the Internet

44:29

and then this. we're basically the two big things that happen. Howard Bauchner:

44:31

Yeah, I I have to agree with

44:32

you. I've been working remotely for probably seven

44:34

years now. So a little bit

44:38

before COVID, But something that I'm finding fascinating

44:40

is this idea of remote

44:42

work, in my opinion, being a

44:44

technology or at least there's technologies that

44:46

enable it and similar to

44:48

many other technologies as we've talked about throughout

44:50

this conversation, there is a substantial

44:52

backlash. And also, you know, I

44:54

have to give credit to the people

44:56

who are pushing back on remote work because there are things to be

44:58

fixed just like we talked about. Every technology

45:00

has problems to fix and those are

45:02

business opportunities. But

45:04

I wanna hear from you from the perspective

45:06

that you mentioned before of this power balance

45:08

being messed

45:09

with with every

45:10

new technology and as more people

45:13

start to work remotely and reconsider all of this. How

45:16

would you frame the pushback of

45:18

remote work with this

45:20

idea of a power shift? Or

45:23

society reshuffling? Howard Bauchner: Yeah, so

45:25

this really comes up I mean, there's a whole bunch

45:27

of angles on this, but like the one that's the one that I

45:29

hear about all the time right now is when I talk to

45:31

big company CEOs. Right?

45:32

So you talk to CEOs of, like, big banks or big

45:34

software companies, right, big whatever, you know, companies. You know, this

45:37

basically is the

45:37

conversation. Right? because because what

45:39

happened is basically you're the CEO

45:41

of a big company today, you came up

45:44

in an environment where everybody was in physical

45:46

proximity. Right? The whole way that you came up,

45:48

the whole way that you played politics

45:50

and, like, got yourself in position, that got yourself exposed, and important people, and got

45:52

promoted, and, like, all this stuff, you know, did

45:54

work with your teams. Right? The way that you

45:56

did deals, the way that you had relationships

45:58

with other people industry

45:59

with customers. It was all based on in person

46:02

proximity. Right? And and which meant either in the

46:04

office or by the way, it meant on the road. Right?

46:06

Doesn't travel. And that's true

46:08

basically of, like, the entire management hierarchy of,

46:10

like, every existing big company. Like, they're they're all

46:12

like that. Right? And so all of a sudden, now

46:14

you have this incredible kind of phase

46:16

shift happening And so now it's like, okay. Like,

46:18

a

46:18

whole bunch of questions open up. Like, how does the company

46:20

organize? You know, what is the

46:22

balance between between person and and remote?

46:25

one

46:25

of the implications of that for the org chart.

46:27

Right? You know, job roles change.

46:30

Geographically, worship companies be located. Right? I'll

46:32

give you an example. I talked to the head of one

46:34

one big company that has based on Manhattan,

46:36

they've got about twenty percent of their employees are the

46:38

super advanced knowledge workers. About eighty percent are

46:40

kind of back office, white collar

46:42

clerical workers. know, the SEO is like, look, like, the eighty percent clearly don't need to be in

46:44

Manhattan anymore. Like, we can put them in, like, South

46:46

Dakota, you know, we can pay them, like, half as much.

46:48

They'll be their standard of life will be twice

46:50

as high. that,

46:52

you know, that'd be a lot happier. And, you

46:54

know, we we can do that. Right? Now

46:55

he says,

46:56

I think we still need to keep the twenty percent of the creatives

46:58

together. But, like, by the way, the creatives

47:00

get a vote too. And if they decide to leave the

47:02

in person job and go remote and work for

47:04

another, you know, company that industry that's one hire remotely,

47:07

like, they have the ability to do that.

47:09

So Like,

47:09

a lot

47:10

of these companies, I think, are gonna, like, really dramatically restructure

47:12

over the course of the next five years.

47:14

A lot

47:14

of these CEOs, basically, the big

47:17

company CEOs are like, well, we could never go forward mode. Like, that's impossible. We can't do

47:19

it. You could talk to startup CEOs and they're

47:21

like, well, maybe we can.

47:24

Right? And

47:24

so here, I'll I'll talk our book for a second. I'll kind of you

47:26

know, I'll get as close as I can to kinda say that we

47:28

might have something figured out. Look, it may be

47:30

that the remote work revolution is just really

47:32

bad for big company. Right? It just may

47:34

be that it takes existing systems and models for how big

47:37

companies operate, and it basically breaks them. And it

47:39

may be that remote work is

47:41

the kind that you need to build a new company to be able to know how

47:43

to do properly. Right? because you need to kind

47:44

of build a culture from scratch. You need to build systems

47:47

from scratch. You need to build processes

47:50

from scratch. need to build it may just be remote companies just need to get built

47:52

differently. And it might actually not be possible

47:54

to reconstruct a big old company that's

47:56

done things, why do I have to just restructure it so

47:58

that they can do things a completely different

47:59

way. And so, you know, this may

48:02

accelerate the process of turnover where

48:04

some big companies go way faster and some new

48:06

companies get much bigger faster. Like,

48:08

that's

48:08

a possibility. or

48:10

by the way, you know, maybe

48:12

I'm full of it. Right? And maybe the opposite is true.

48:14

Right? Maybe it turns out remote work just isn't good enough.

48:16

Or maybe maybe it turns out we actually don't have

48:19

remote Maybe we don't have the technologies yet. Right?

48:21

Maybe we need holographs.

48:24

Right? Maybe we need, you know, big

48:26

teleconferencing rooms. Maybe we need I'll give

48:28

you an example. maybe every

48:30

company in a certain site should own it. So, like,

48:32

literally, it's on hotel resort. Right?

48:34

And and so maybe what happens is

48:36

basically, like, every team should be basically in residence that are really cool

48:38

and tell a resort location for, like,

48:40

you know, a month in the spring and a month in

48:42

the fall. in a resort, and maybe

48:44

the company should just be running their teams through that.

48:46

And unless they do that kind of thing to

48:48

be able to have critical mass to bonding, like,

48:50

maybe this won't work. And, like, maybe that's a new kind

48:52

of real estate at if it has to happen,

48:54

you know, to

48:54

be able to have basically sort of think about this

48:56

sort of corporate resorts. In other words, to be

48:58

an attractive enough place to come where you're willing to

49:00

actually be away from home for a month maybe you can even

49:02

bring your family with you. Right? But everybody gets to

49:03

work together. Like, you know, those don't exist today.

49:06

And I'm just speculating. But, like, maybe there are

49:08

things like that that we have yet to

49:10

figure out. I just

49:11

have, like, a very strong sense that on the other side of

49:13

this, the the world's gonna work very differently.

49:15

I

49:15

do too. And what you're saying reminds me

49:17

of something that when I had a chat

49:19

with Neil Stephenson, we we talked about

49:22

which is when electricity was invented, it

49:24

was very easy to think, okay,

49:26

electricity can can be applied to lighting. Okay? That makes sense. People can see

49:28

that line. But the example he gave

49:30

was electric guitars. Not many

49:32

people when electricity was first being

49:34

invented could think, oh, okay. Well,

49:36

we're gonna have electric guitars from this. And I think

49:38

and when you have these really foundational shifts like

49:40

remote work, it's very hard to think about their

49:42

second, third order effects, but you do know

49:45

they're gonna happen you don't you just don't always know exactly how

49:47

they're going to manifest. But I wanted

49:49

to ask you quickly because a sixteen z has

49:51

moved to the cloud recently Was

49:53

there an aha moment or was there a

49:56

specific thing that got you to

49:58

change your mind? Or were you always kind of,

49:59

you know, coming

50:01

around to this idea because a lot

50:03

of people say strong opinion is weekly

50:05

held, but not many people actually operate that way.

50:07

And so I think that it was interesting to see a sixteen

50:10

z actually make a shift of previously being in the office

50:12

to moving to the cloud. So was there

50:14

something that kind of

50:16

unlocked that? Yeah. So I

50:17

was very people who know me will confirm this.

50:20

I was very anti remote work basically

50:22

before COVID. I was probably

50:23

pretty far on the on the

50:25

end of, like, a spectrum of people thinking about this and not not being open minded on it.

50:27

And that was true of us as a firm. Right? And so we historically

50:29

ran as a firm. We ran in actually a single office. We had

50:31

a single office, excuse me, at

50:33

MMO Park. actually even refused to

50:36

open an office in San Francisco for for ten years

50:38

because we just we wanted my critical mass in the

50:40

office. And by the way, people who

50:42

actually worked or visited our office between, call it, two

50:44

thousand ten and two thousand twenty, they will tell you, like, it

50:46

was a high vacuuming. It was a really cool

50:48

place. There was always all this all this amazing stuff

50:50

happening and always amazing. People walking around and, like, you

50:52

know, we wanted that a hot house

50:54

environment, and and we got it. But that man,

50:55

everybody, like, had to be in the office. And then the

50:58

other

50:58

thing I always maintain was I was like, look, like, there's

51:00

this theory remote work but, like, it hasn't yet worked for any company

51:02

at any level of scale. Like, the only companies that

51:04

have made it work are very small. And then I

51:06

said, look, just look at the data. Right? And

51:08

what the data basically says is this

51:11

superstars anything I mentioned is basically

51:13

in full effect. And with the database that they

51:15

said was venture capital, you know, the funding

51:17

for technology was actually concentrating more and

51:19

more into the Bay Area. Right?

51:21

Between between twenty ten and twenty twenty. If you look

51:23

at just like the money was flowing more and

51:25

more into the single place, the people

51:28

were flowing more and more into the

51:30

single place. I

51:30

mean, the the and to clear, bursting the seams

51:32

and housing became crazy expensive and transit

51:34

to disaster, and our politicians hate

51:36

us. Like, there's all these issues.

51:39

But this Hot House environment,

51:41

this agglomeration Hot House, you know,

51:43

kinda thing was real. Right? And it's and

51:45

it's the thing that traditionally made the value so

51:47

special and it's why was always third of

51:49

the hub for, you know, this has been a hub for forty years where almost all the great breakthroughs in in

51:51

in technology that's happening. And so I was

51:54

very much kind of on

51:56

that page. So for me, it

51:58

was literally going through COVID. Right? And again, we were

51:59

looking at this a couple different levels. We were looking to look at

52:02

this level of, like, how's our firm

52:04

gonna operate? you

52:04

know, under lockdown. We were also thinking about, like, how our our company is going

52:06

to operate under lockdown. And then we were also

52:08

thinking about, okay, how is the industry as

52:12

a whole? right, going to operate under lock down. Like, for example, like,

52:14

how will new companies get started? If a new

52:16

company starts under conditions of lock down, like, how will

52:18

that actually

52:20

happen? And

52:20

then basically, we we, you know, on a

52:22

completely involuntary footing, we we basically

52:24

ran this experiment for two years. things

52:28

we did is we did surveys the entire time. So we

52:30

did we did repeated sampling of the of the different constituencies

52:32

and kind of ask, you know, to try to get

52:35

that data kinda handle on what was happening. And so it was

52:37

really interesting because it's, like, six months in, like, people are,

52:39

like, super nervous and it's, like, are these companies

52:41

even gonna continue working? And then it's

52:43

like twelve months in, people are like, well, actually, it turns out remote work. At least for now,

52:45

it works just as well. If anything, maybe even

52:47

better because people don't have anything else to do.

52:49

So they're actually working

52:52

more. Right? So the new problem is burnout, you know, eighteen months later, it

52:54

was, well, you know, actually, we're gonna start hiring

52:56

remote people now that we can do

52:58

remote work. We can now

53:00

people who don't live, you know, near near the campus, so we hire more broadly. Right? And

53:03

and and so forth. And so you can

53:05

actually see in the data. You could actually see

53:07

basically the sort of beliefs moving.

53:10

And then and then basically what what Ben and I decided with our, you know, with

53:12

our colleagues with the firm basically is like, look,

53:14

the firm is built to live in

53:16

the future. The firm is built to

53:18

to fund the best new companies and work with the best entrepreneurs build in the future. We wanna

53:20

be able to lead the industry. This is such a

53:22

big change for the

53:23

industry that, like, we have to limit. Like, it doesn't

53:25

make any sense to try

53:28

to do a model where we're basically finding the new model. Like, we have to live the new model.

53:30

I think it's going very well.

53:31

Like, having said that, like, we're still figuring it

53:33

out. Right? So true you're experiencing this. It's just like,

53:36

we're still figuring

53:38

out, like, So

53:38

for example, in our firm, we we we put a big premium on having off-site.

53:40

Like, we we now take off-site really seriously. We

53:42

really take getting people together on a regular

53:45

basis very seriously. we

53:46

have, like, whole teams inside our firm now that are devoted just, like, orchestrating all that and

53:48

making all those happen. But, you know, do we have

53:50

the right balance of, like, remote versus off-site? Do we

53:52

need to have you know, people have

53:56

more some time. Do we have the right tools? And since it's in place, are we running

53:58

the first and we have the right management practices? And

53:59

so, you know, we're we're certainly still figuring it out,

54:02

but we're definitely on

54:04

that path. And

54:04

like we talked about, that comes with time. But the reason I asked you how

54:06

you made that shift or almost in in some

54:09

way changed your opinion as you

54:11

got new data, is because I wonder how

54:13

perhaps we might be able to that within the framing of how people view

54:16

innovation and technology, kind of returning to what

54:18

we talked

54:20

about at the very beginning of this conversation,

54:22

it does feel like there is this perception of technology. Of

54:24

course, not everyone holds it, that

54:27

we're in a bad place or, again, the world's getting worse

54:30

or or negative thing about our current

54:32

state of affairs. And I

54:34

think

54:34

it's really inspiring at at

54:36

least at a sixteen Z to see that people do hold this very optimistic view.

54:38

And I wonder what you

54:40

think maybe we can do as

54:43

a collective, as a society to maybe

54:45

orient more around this more positive

54:48

view of technology because from

54:50

my understanding and I'd actually love for you to go into

54:52

this history, it doesn't sound like this was

54:54

always the case. That technology I

54:56

mean, specific technologies were

54:58

viewed quite negatively, but a sense

55:00

around innovation, I think, has

55:02

been different in the past. Is that

55:03

right? Yeah. So that's

55:04

a good point. So technology has always kinda gone through

55:07

the cycle, and I I would go so far as

55:09

to say, like, the technology

55:10

adoption cycle resistant cycle, like, I'm

55:12

not sure actually gonna change. Douglas Adams, the the the science fiction novel, Douglas

55:14

Adams, who wrote the hitchhiker's guy to the galaxy,

55:16

had had another take on this. of

55:19

Yeah. both very fun, very funny, very serious. Right?

55:21

So he said, basically, it's, like, any

55:24

technology that existed before you were, like,

55:26

fifteen years old is just, like, the natural order

55:28

of things. any technology that

55:30

gets invented between the time when you're, like, fifteen

55:32

and thirty five is, like, new and exciting and

55:34

cool and cutting edge and, like, maybe you can make a career

55:36

in it. And then

55:37

any new technology that arrives after the age of thirty five is unholy and against, you

55:39

know, against the against the natural order. Right?

55:41

And it's gonna bring doom

55:44

to civilization. another way to kind

55:46

of putting the putting the same cycle. So so,

55:48

like, the the the the most kind of I don't know. The most negative

55:50

thing you could say or something would be like, there's just

55:52

this, like, permanent generational psychological thing

55:54

this cycle where another famous quote

55:56

I think it's a great physicist Max Planck once said

55:58

science advances one pug

55:59

girl at

56:02

a time. Meaning that, like,

56:02

you know, in science, you need, like, the old senior scientists who have,

56:04

like, one paradigm that, like, quite literally die off so

56:07

that the young scientists of the new paradigm

56:09

can actually, like, take over. you know,

56:11

that sort of view be is so deeply baked into the

56:13

mentality of how people operate psychologically, that it's

56:15

it's just like the permanent

56:17

state of affairs.

56:19

By the way, like, I don't know if that's

56:22

optimal for society. I will tell you that state of affairs

56:24

is very good for entrepreneurs. Right?

56:26

Because if more people

56:28

in positions power, we're more open to new technologies. Right? The

56:30

the opportunity, especially for the young entrepreneur

56:32

with a breakthrough idea, would actually diminish. Right?

56:34

because the big gold companies already be doing all the

56:36

new things.

56:37

So it it may be, like, what one

56:40

response to me would be, like, Mark shut

56:42

up. Like, stop talking to

56:44

people about this because we

56:46

actually want everybody in position of power to just assume that all new technologies are stupid

56:48

and evil because we want all the opportunity to be

56:50

available to all the kids who are starting all the

56:52

new companies. So so,

56:54

yeah, so that's one side of things. And then, yeah, the what

56:56

you mentioned, so there's broader societal things. So then

56:58

there's this broader societal things happening, which is

57:00

basically this the

57:01

sort of society's different

57:04

societies have sort of different

57:06

ethics and belief systems around, even

57:08

just like the fundamental idea

57:10

of progress. Right?

57:10

And so I I won't pick on. I won't I won't name names. But let's just

57:12

say there are certain societies in global history

57:15

that, you know, at different

57:18

points in time have decided, like, we're just not gonna do new things.

57:20

Like, we're not gonna talk to outside people,

57:22

we're not gonna adopt new technologies. I mean, there

57:24

are societies on a planner, you know, there I

57:26

mean, to North

57:28

Korea. You know, there are societies like

57:30

that today. Well, another example, you

57:32

know, the Amish, like, have a in entire

57:34

religion and belief system right around the the the fact that they don't have not

57:36

new technologies. By the way, like, I'm a

57:38

I'm a free market, free mind sky. I think people should live

57:40

how they want it. If they wanna live that way, I

57:43

think that's fine. it's a choice. You can choose. Right? To not like,

57:45

think progress is a good thing. To not think that your

57:48

technology should be adopted. I would argue in

57:50

the fullness of time that,

57:52

you know, it's it's it's hard to have your quality of life be at

57:54

the same level as if you're you're more open into

57:56

technologies. But, like, you know, societies do

57:58

decide that

57:58

they don't want

57:59

new technologies. if you kind of

58:01

look historically at the US and more

58:04

broadly kind of the west, you do

58:06

basically see this pattern where there was

58:08

a lot of resistance in

58:10

new you know, call it from the end of the Robin Empire through to, basically, the

58:12

Renaissance since they're called dark ages. Right? So

58:14

there there was, like, a whatever, twelve hundred year stretch

58:16

or something where not

58:18

much happened. And then basically, you know, over the last five hundred years, like, in the west,

58:20

there there's sort of this ethos of progress that kind

58:22

of emerged, you know, since the total

58:24

enlightenment, the scientific revolution, and

58:26

industrial revolution. Right?

58:28

And so forth, and then the rise of protestantism, which was very important because it

58:30

meant that people can seek out the answers to life mysteries on

58:32

their own. Right? And then the rise

58:34

of what was called philosophy that

58:36

became science. And so there was sort of this

58:38

system that was developed to basically go uncover

58:40

basically scientific truths and then

58:43

and then build allergy is that that basically builds, you know, what we

58:45

consider to be like a modern capitalist economy on

58:47

top of that. If you asked

58:49

people in eighteen eighty or

58:51

nineteen hundred or twenty or even

58:54

nineteen sixty. If you ask

58:56

most people if they thought that that whole set of

58:58

things was a good idea, most people would have

59:00

said yes. This is

59:00

a sort of the era known as modernity. Right? So this was, like, basically, this

59:03

is the era of, like, you know, we want

59:05

a progress of civilization. We want higher

59:07

standards of living. wanna be able to

59:09

look back and say, like, yes, we, like, we advanced

59:12

civilization as compared to what our

59:14

forefathers had. And if you

59:16

read, like, get books written in those eras. They, you know, they only take great

59:18

pride in in in all the progress that's been

59:20

made. In the west, in the last fifty

59:21

years, that's kinda

59:24

gone sideways. there's

59:24

an ethos in the west that kind of started in the sixties and into our era, which

59:26

basically says, well, maybe, you know, a lot of the stuff

59:29

is not so good, maybe it's like bad food

59:31

environment, maybe it's bad for whatever

59:33

whatever like,

59:34

there's, you know, there's a whole bunch of different arguments like this

59:36

and, like, maybe we've had enough progress, maybe

59:38

we've had enough science, maybe we've had enough technology.

59:41

the sort of classic example of this is, like, nuclear

59:43

power. Right? Like, you know, we invented a way to

59:45

basically have a limited clean energy, and then we just,

59:47

like, decided we don't we don't wanna

59:49

QTL people in nineteen ten that they could have

59:52

nuclear power. Like, there would be, like, ten thousand

59:54

nuclear plants, like, in the United States

59:56

running today. but you tell people in

59:58

nineteen seventy five or nineteen, you

59:59

know, ninety eight or, you know, whatever, twenty

1:00:02

twenty two, they can have nuclear power. They're like, yeah. Let's not

1:00:04

have any of that. And so

1:00:05

I I think there there has been this sort

1:00:07

of negative cultural shift. Tyler Cohen

1:00:09

calls this the complacency, raw

1:00:11

raw stat, that calls this a

1:00:13

decadence there's shift to, like,

1:00:15

things are good enough. We

1:00:16

don't need more of this. You know, or or the

1:00:19

more extreme form, which is, like, all

1:00:21

progress bad. Like, all these new technology. Like, they're just flat out bad. It's all

1:00:23

bad. It's all bad. It should all stop. You know, kind

1:00:25

of the the Univar kind of

1:00:27

argument. Right? Yeah. But

1:00:28

people weren't born

1:00:30

with that mentality. Right? Like, people weren't

1:00:32

born with progress as bad. Right? They've they've learned

1:00:34

that. And I do wonder, is it just because things

1:00:36

have been so good? Right? Like, that we've we've done

1:00:38

so well. You mentioned specifically this mentality within

1:00:41

the west that people

1:00:44

no longer have something

1:00:46

to strive for even though they certainly do. But

1:00:48

is that just a reality that things

1:00:50

have gone so well that people have obtained

1:00:53

this mentality? So that's a

1:00:53

theory. That's a theory. Some people are calling out in this sort of

1:00:56

upper income trap. So, basically, it's like

1:00:57

the theory basically is, yeah, once people hit, like,

1:00:59

an upper middle class

1:01:02

standard living, where they're

1:01:02

kinda like, you know, they got a house, they got a car, you know, they got whatever, they got, you

1:01:04

know, college, they got, you know, a hospital nearby. And,

1:01:07

like, they got Netflix. got,

1:01:10

like, whatever, you know, the good restaurants

1:01:12

nearby, whatever. Like, at some point, they're just like,

1:01:14

damn. Like, it's fine.

1:01:15

You know, it's it's good enough or

1:01:17

anything beyond this. It's probably excessive. some

1:01:19

people are joking right now that this explains what's

1:01:21

called the Fermi Paradox. So the

1:01:23

the the Fermi Paradox is this question of,

1:01:25

like, why do we not know of other civilizations

1:01:27

in the galaxy? like,

1:01:28

why do we not know of any, like, alien civilizations? Like, you know, billions billions of

1:01:31

planets, like, throughout the universe and, like, we should be

1:01:33

able to, like, pick up signals be

1:01:36

able to get, like, TV broadcast or whatever for the civilizations traveling

1:01:38

across space and, like, basically, why why is it

1:01:40

still after all this time with all these radio telescopes? It's

1:01:42

just still, you know, humanity on planet Earth.

1:01:45

so this this argument basically goes, it's basically the

1:01:47

the same thing. It's just like, yeah, other

1:01:49

species of aliens develop the same level of

1:01:51

upper middle class lifestyle that we have, and then they all

1:01:53

just kinda shrunk its you

1:01:55

know, well, you know,

1:01:58

look, you

1:01:58

know, here we sit, like, so mankind, you

1:01:59

know, we went to the moon. Like, we went

1:02:01

to the freaking moon. We went to

1:02:03

the moon a lot. We have to move a bunch of times. I think the last time we went to the moon, I

1:02:05

think the last thing humanity went to the moon was in,

1:02:07

like, nineteen seventy two or

1:02:10

seventy three.

1:02:11

Right? And so I'm pretty sure that's nineteen seventy two.

1:02:14

Nineteen seventy two. Right? So it's been fifty

1:02:16

years since we went to the moon. And, like, our

1:02:18

answer to

1:02:20

that is, Right? And, like, you know, Elon comes out and he's like, let's go to Mars and

1:02:22

everybody's like, wow. You know, I I guess we

1:02:24

could. Like, nobody

1:02:26

ever really

1:02:27

you know, nobody's you

1:02:29

know, like, in eighteen seventy two, it was, like,

1:02:31

the obvious next step is, of course, you go to Mars. Right?

1:02:33

because first, you go to the moon, then you go to Mars. Right? Then

1:02:35

you go to Jupiter. Right? then at some

1:02:37

point, you're going other places. Like, you're going other solar systems. Like, of course, this is like the arc that you

1:02:39

wanna be on. And, you know, we

1:02:42

in

1:02:42

our advanced era just decided,

1:02:46

yeah. like, let's

1:02:46

not do it. So, yeah, I think there's I think there's something to

1:02:48

that. You know, this this gets into

1:02:51

theories of social change

1:02:53

and societal forces, political forces,

1:02:56

religious forces. I mean, I've got I've

1:02:58

got theories for hours on kinda how we we got

1:03:00

here and what the problem is. But it it it

1:03:02

say very rapidly gets political. It's

1:03:04

hard to talk about kind of societal structure without

1:03:06

getting into politics. And so I try not to

1:03:08

get kind

1:03:08

of too kind of kinda kinda

1:03:11

fully say what I think on some of these topics. But

1:03:13

it is just

1:03:14

this, like, prevailing ethos. So, like, one way to

1:03:16

think about it is that if you think about socially, it's like

1:03:18

there basically, there are three errors in human access

1:03:20

there was like pre modern, which was basically like caves

1:03:22

all the way up through like kings. Right? And then

1:03:24

there was modern, which is like

1:03:27

science technology, democracy, you

1:03:30

know, capitalism and then in progress. And then now

1:03:32

you could argue, like, we're in this post modern phase

1:03:34

where we're just gonna, like, sit around and argue

1:03:36

all the time instead of actually doing anything.

1:03:39

you know

1:03:39

Yeah. May may

1:03:42

maybe, like, III would like

1:03:44

to believe that this is not you know, I would like to believe

1:03:46

Netflix and chill is not the terminal point of humanity.

1:03:48

Well,

1:03:49

I I think this this picture that

1:03:51

you're painting of a bunch of other alien

1:03:54

species getting so complacent

1:03:56

that they just decided never to venture out

1:03:58

or maybe they discovered VR or just went into their screens the way that a lot

1:04:00

of people are going today. But I I

1:04:03

wanna just quickly ask you

1:04:06

about what you're

1:04:08

excited about because you are someone

1:04:10

amongst there still is a

1:04:12

large cohort of people who are excited to

1:04:14

go to Mars or to take things

1:04:16

further than we ever have before. So I think that's exciting. And I

1:04:19

think many people take inspiration from that.

1:04:21

So within that

1:04:22

dimension, like, what

1:04:23

are you excited about?

1:04:26

We already talked about this like kind of next industrial revolution through

1:04:28

remote work, but are there other things where you're

1:04:30

like, wow, this is really game changing and

1:04:32

this is really exciting. And I'm glad that

1:04:34

us as a society smart

1:04:36

people working on this? Yeah. There's a

1:04:38

bunch of

1:04:38

things. I mean, there's a bunch of, like, specific technologies. And

1:04:40

so, I mean, the easy ones to bring

1:04:42

up kind of the cuff. It's it's, you know, AI. Like, it's

1:04:44

just like, it's amazing what's happening with machine learning

1:04:47

right now. And then biotech, like, the

1:04:49

genomic revolution is, like, a really big

1:04:51

deal. there's all kinds of questions. I mean, we're just saying

1:04:53

mind blowing concepts now on that front. I won't reveal it, but

1:04:55

we saw one the other day where, like, I literally had to

1:04:57

stop my tracks. My jaw hit the floor. I had to spend,

1:04:59

like, the next hour like, process what I

1:05:01

just seen. It's one

1:05:02

of those literally like this can change everything moments. And

1:05:04

so biotech's

1:05:05

going through a lot of really kind of profound

1:05:07

change and then crypto web three we've talked about

1:05:09

it, like, before as a firm, but, like, it's it's I think, know, very profound. And then there's

1:05:11

a bunch of others. So there's really three big ones,

1:05:12

but, like, there's a whole bunch of other spaces

1:05:15

that are like that. you know,

1:05:17

actually space, you know yeah. Elon, god bless him as, like, reinvigorated, you know, the the whole

1:05:19

idea of space. He's what did he do? The other

1:05:21

the other day he tweeted is, like, he said the other

1:05:23

day on Twitter. He said, they

1:05:26

have not yet discovered an upper limit on how many launches they can do

1:05:28

with the same rocket. And and it's just

1:05:30

like like rockets went from, like,

1:05:34

disposable, which is, like, one and done. Right? All the

1:05:36

way to, like, he's not sure. You know, he just doesn't know.

1:05:38

It's, like, they got fifty times, five hundred times, five

1:05:40

thousand times. you

1:05:40

know, we'll see. And so, like, you know, really, really revolutionary things happening

1:05:42

on that front, which is exciting. You know,

1:05:44

a couple of the big things

1:05:46

I would highlight. So

1:05:48

one

1:05:48

is just like the long term kind of implications the Internet, I think, are still

1:05:51

in the early stages. And and one that that's in

1:05:53

the background, but it's like really important relative to everything

1:05:55

we've been been discussing is

1:05:58

that, like, Most people in most of history have not had

1:06:00

access to the leading edge. Right? No. No. No. No.

1:06:02

No. No. No. No. No. No. No. No. No. No. No. No. No. No. No. No. No. No. No. No. No. No. No. No. No. No. No. No.

1:06:04

No. No. and

1:06:06

super curious and super ambitious and willing to work hard. Most of

1:06:08

them have not ever gotten to one of these,

1:06:10

you know, cities that I was talking about. Most of

1:06:13

them never worked in an event. feel

1:06:15

like most of them were doing subsistence farming or they were

1:06:17

working at other kinds of, you know, whatever. They were doing whatever

1:06:19

was the local thing to do. They never got an

1:06:22

opportunity. You know, most even you said just like

1:06:24

music. Most of the people who could have composed great

1:06:26

music never got the chance. They never

1:06:27

got the training, they never had access to the culture, they

1:06:29

never had the ability to produce music like they just could do it.

1:06:31

And you could say that's true everything from music

1:06:33

to like, every every field of human

1:06:35

activity. And, you know, the Internet really is, like,

1:06:37

the great equalizer leveler

1:06:40

opportunity machine. right,

1:06:42

for basically anybody in the planet is curious with Internet connection to

1:06:44

be able to learn and explore and start to

1:06:46

create and start to join and meet

1:06:49

like minded people. So there's

1:06:50

a collective effect, like, like, in my in my optimistic moments, I kinda

1:06:53

think of

1:06:53

it as, like, humanity as sort of

1:06:55

a group organism, like, like, it's just like

1:06:57

the through global society. like,

1:07:00

is is actually just waking up for the first time as a consequence of

1:07:02

being, you know, all connected online. And and,

1:07:04

of course, there's there's good aspects of that and

1:07:06

maybe bad aspects of that, but it it

1:07:08

it is sort of the this this this final thing

1:07:10

is happening. And so, you know, hopefully, we will discover that there are

1:07:13

I don't know what the number is, but ten or a hundred

1:07:15

or a thousand or ten thousand or a million

1:07:17

more people around the world. who

1:07:19

could be doing a really original creative work, who just never had the chance

1:07:21

in prior generations, and all of a sudden, you know, you can imagine

1:07:23

things progressing much faster as a

1:07:25

result of that.

1:07:27

Yeah. I

1:07:27

I think even another aspect of that is

1:07:30

more people who are coming online, you

1:07:32

are having them get access to remote work and, you

1:07:34

know, another second order effect of that is

1:07:36

that remote tends to be

1:07:38

more asynchronous. So certain people

1:07:40

don't always benefit from the nine to five as

1:07:42

an example. And, you know, I saw this

1:07:44

infographic today of just like the

1:07:46

schedules of all these

1:07:48

luminaries from back in the day who had created

1:07:50

wonderful things, and they were all over the

1:07:52

place. So that's just, again, one

1:07:54

example of as more people get access to this information, as more people

1:07:56

have access to different types of schedules or different types

1:07:58

of companies or people

1:07:59

facilitated through the Internet,

1:08:00

I think we're gonna be really surprised. by

1:08:03

what comes

1:08:04

out of that. That's right. One

1:08:06

thing

1:08:06

I really want to ask you about is

1:08:09

how society values certain things.

1:08:11

And I've heard you talk about this to an extent

1:08:14

before, but society will fluctuate throughout

1:08:16

time and different people

1:08:18

within that society will value different The society as a whole to

1:08:20

find virtue in in certain things at

1:08:22

certain times. So for example, you mentioned

1:08:24

before, in history, maybe

1:08:26

entrepreneurs were valued more. So

1:08:29

as people built things, society rewarded that type of achievement. How

1:08:31

do you view that changing today? What do you think society

1:08:33

is valuing today?

1:08:36

And perhaps If you're willing

1:08:38

to share, what do you wish society valued more? So basically, there's this theory, the sky james articulated

1:08:40

this theory back

1:08:41

in the actually the nineteen forties

1:08:43

that that I think applies he

1:08:46

called at the time he called the managerial revolution. So basically, what

1:08:49

he what he said was there basically

1:08:51

two phases to capitalism. There was basically

1:08:53

what he called the the phase

1:08:55

of bourgeois capitalism. which

1:08:56

is sort of famously the sort of phase that, you know, the Robert Berens

1:08:58

and then, you know, the phase that the communist hated and, like, I'll I'll I'll, you know, the the rise to

1:09:02

kind of my culture. And and this is the, you know, the capitalism era was the

1:09:04

era of, like, Henry Ford and top of Edison

1:09:07

and then the Carnegie. JPMorgan and and all of

1:09:09

these kind of comic Henry Ford, all

1:09:11

these kind of business builders. who

1:09:13

built the companies off often named the after

1:09:16

through kinda sheer force and

1:09:18

personal kinda animal agatism at force.

1:09:23

And then he said, basically, there's an evolution that takes place, and

1:09:25

it kinda started in the thirties and forties and

1:09:27

extensive to our our period. And and

1:09:29

he called out the era

1:09:31

of managerial capitalism. or just more generally, you

1:09:33

call it managerialism. And basically, the the idea there is it's

1:09:35

it's sort of the second phase of capitalism.

1:09:37

And it's basically the phase

1:09:40

at which you

1:09:42

can no longer just have a guy. You know, you can no longer just have a Henry Ford or whatever who's just got a

1:09:45

car

1:09:46

company called Ford

1:09:48

just like orders everybody around and

1:09:51

tells everybody what to do. Like, that

1:09:53

basically modern business, modern technology. Right? Modern society. It's

1:09:55

too complicated for that. And

1:09:59

so you're not

1:09:59

basically, the the model of capitalism goes

1:10:02

from basically sole proprietorship in the bourgeois

1:10:04

era. Right? To basically what you

1:10:06

consider to be like the modern,

1:10:08

multi correctional, you know, Delaware, C Corporation with,

1:10:10

like, a Board of Directors and an executive management team and a CEO and

1:10:14

the CEO is probably the founder, in fact, the CEO was probably trained in

1:10:16

a business school, like and Richard

1:10:18

never went to business school. Right? But,

1:10:22

you know, Jim Farley was running kind of check, but I'm sure Jim

1:10:24

Farley was running forth today. I'm sure that he did. Right? So,

1:10:26

like, all of a sudden, it's basically like I said, you

1:10:29

had the rise of sort of the managerial class the

1:10:31

rise of basically these people who are sort of

1:10:33

technocratic experts who would never start

1:10:35

their own thing. Like, they would

1:10:37

never invent the car or they

1:10:39

would never start the power company, but they

1:10:41

are necessary to run the large scale industrial organization that is

1:10:43

like a modern, you know, giant power company

1:10:45

or a modern giant electrical

1:10:47

grid or a modern telephone

1:10:49

network or a modern giant. Whatever. You name it. Chip company, like, whatever it is. And it's a little bit

1:10:51

of you think about it. It's a little bit of

1:10:54

like, basically, founder led

1:10:56

companies to basically pro

1:10:58

quote unquote professional CEO led companies. You know, it's basically top down kind of dictatorial management

1:11:01

versus kind of bottoms

1:11:03

up consensus management. It's

1:11:06

basically the principal running the

1:11:08

company. Right? With his like, often with his name

1:11:10

on the line and his entire network is

1:11:12

in the company and, like, his name is

1:11:14

on the line. to what, you know, you refer to as the principal agent problem,

1:11:16

which is, okay, these companies are run by people,

1:11:18

but, like, you know, are these people really

1:11:21

gonna be with the company for

1:11:23

the next thirty years? you

1:11:24

know, get paid annually or their incentives

1:11:26

more annual as opposed to long term. And what Bernie basically said was,

1:11:28

this is an inevitable process

1:11:30

to go from bourgeois capitalism to

1:11:33

a drill capillos if it's inevitable because of scale and complexity. Right? Henry Ford today could not

1:11:35

run for a company like it's too big and

1:11:37

complicated. You need you need a different

1:11:40

skill set. But

1:11:42

he said,

1:11:43

look, it it it is a very different it is

1:11:45

a very big social cultural change. It's a

1:11:47

change basically from valuing

1:11:50

sort of individual aggression individual individual individual accomplishment,

1:11:52

individual force of will, right,

1:11:55

to a much

1:11:56

more

1:11:59

collective right, way of operating.

1:11:59

Right? Groups groups operating at sort

1:12:02

of consensus collaborative form. You know,

1:12:04

people haven't come to

1:12:06

agreement on things, committees, bureaucracy.

1:12:09

Right?

1:12:09

And he basically said it sort of, you

1:12:11

know, stage stage one, stage two. The way I view kind of what we do, like, in what we do is

1:12:13

we basically are we're

1:12:15

basically the throwback. So the

1:12:19

startups that we fund are being funded we fund startups that

1:12:21

fit that old model. Like, we're trying to find

1:12:23

the

1:12:23

next generation of Henry

1:12:24

Ford's. Right? in in your carnegies

1:12:27

and so forth and, you know, live in Stanford, you

1:12:29

know, the railroad guy who, you know, ultimately founded

1:12:31

Stanford University was a was a Robert Baron in

1:12:33

the eighteen eighties. we're trying to basically go find

1:12:35

those sort of modern bourgeois capitalists who are

1:12:37

kind of throwbacks to the old model. Why

1:12:39

are we doing that? because, like, that's the

1:12:41

only way to do something new. Right? That that was the model for

1:12:43

doing new things. All these things used to be new.

1:12:46

Like, if you wanna do anything new today, that

1:12:48

is the model. You do need to

1:12:50

bring back this model of booth like capitalism. And

1:12:52

then, basically, we work with our companies to

1:12:54

try to basically keep them from basically just turning into sort of

1:12:58

this workflow managerial capitalism kind of outcome on the other side becoming just

1:13:00

like every other big company, which, by the way, many

1:13:02

of them kind of follow that path,

1:13:04

and many of them just become like big companies just

1:13:06

like all the rest of by That's that's disgusting. So

1:13:09

I was gonna quickly ask, how do you

1:13:11

stop that? I don't know that you

1:13:13

do. Well, so Bernard would

1:13:15

say that you don't. like, Bernum would say that it's

1:13:17

inevitable process. Basically, he's like, what what Bernum would say if he was talking to me, he's

1:13:19

like, okay. Look, smart guy. You're

1:13:22

you're just gonna keep repeating history. start you're a Ford kind of clerical

1:13:24

in charge of them. At some point, they're gonna reach

1:13:26

a level of scale and complexity where,

1:13:29

like, one guy just

1:13:31

can't, like, run everything. and

1:13:32

you're gonna need to bring in

1:13:34

the the experts. Right? The experts, the technically trained experts, the managers. Right?

1:13:36

The people with white business school degrees,

1:13:38

the people

1:13:39

with white, you know, the

1:13:42

people who have grown up basically getting trained

1:13:44

to run large scale systems. And,

1:13:46

you know, these companies are naturally

1:13:49

going to evolve kind of in

1:13:51

that direction. I go close. Okay. So

1:13:51

there's there's all that. And then and then and then Bernad made the the following point is

1:13:54

he said, look, the the transition from bourgeois capitalism

1:13:56

to managerial

1:13:58

capitalism. is not just happening in business. It's

1:13:59

happening everywhere else in life. It's happening

1:14:02

everywhere else in our society. So for

1:14:04

example,

1:14:04

it's also happening in the

1:14:06

government. Right? And so the government

1:14:08

Right? Just take the federal federal government as

1:14:10

an example. Like, there's basically been three different forms of federal government in the last

1:14:13

hundred years. There was sort of

1:14:15

the pre FDR era which

1:14:17

the federal government was just basically

1:14:19

small and basically not very irrelevant. And then there was the FDR era he basically

1:14:21

appointed

1:14:24

himself king like, he

1:14:26

made himself basically essentially, the headroom for the government or something. And then he basically just, like, told everybody what to do, and that was, you know, the

1:14:28

new deal and world war two and,

1:14:30

like, all this stuff and serving four terms

1:14:32

and and

1:14:34

certain this this model of Imperial presidency. And then there's sort

1:14:37

of the model of the government we have today, which

1:14:39

is it's just basically democrats. It's

1:14:41

politicians and democrats as far as the I can

1:14:43

see. oh, that's not how these this that's not structurally how anything is supposed to be running

1:14:45

anywhere. You're not supposed to just have a guy who

1:14:47

just tells people what

1:14:49

to do. You're supposed to have process. You're supposed to have managers. You're supposed to

1:14:52

have experts. Right? You're supposed to have professors. You're

1:14:54

supposed to have think tanks. You're supposed to have

1:14:56

the press. You're everybody's

1:14:58

supposed to weigh in. You're have this big conversation. Everybody's supposed to get

1:15:00

along. Everything has to be negotiated. Right? And

1:15:02

so basically, what

1:15:03

Bernie would say is, like, the

1:15:05

entire society transition from

1:15:07

kind of individualistic to

1:15:09

basically collectivist or let's call it bureaucratic or is he would

1:15:11

call it managerial. And, like, basically, that

1:15:12

that that's happened to

1:15:15

basically all of society. Right?

1:15:17

And

1:15:17

and this is kind of the experience that you have is that if you think about this

1:15:19

as an individual, this is a kind of experience that you have because, like, everywhere you go at life now, you're,

1:15:22

like, dealing with synbureaucracy.

1:15:24

Right? It's

1:15:26

like you've got a problem with your cable Internet

1:15:28

hookup. You know? You're gonna talk to the cable company's

1:15:30

bureaucracy. Like, don't you can't call the CEO of

1:15:32

the cable company. And by the way, if you did,

1:15:34

you can't do Like, it's gonna be somebody deep at the balls of the organization that's gonna get

1:15:36

your Internet to work. You know, you need to get

1:15:38

your driver's license renewed. You can't go

1:15:42

to DMV. Right? You it's just, like, everything you you

1:15:44

know, you go out to eat and, like, the place where you

1:15:46

go out to eat is, like, one of three thousand, right,

1:15:48

restaurants that that company manages

1:15:50

that are all identical. Right? everything

1:15:52

you do, mass manufacturing, everything you buy,

1:15:54

right, has been manufactured by

1:15:57

a company's manufacturer

1:16:00

for scale. all of your entertainment, you watch a movie.

1:16:02

It's the same movie, a hundred million other people are watching. You know, it's like, you know, the actors don't come to your house anymore and,

1:16:04

like, after the play,

1:16:06

you're watching a mass produce production.

1:16:09

built by this tribe, you're obviously in Hollywood. So and then

1:16:11

you're like, wow, this movie. It seems like I've seen this movie like eighty

1:16:16

times before. know, why aren't they making, like, more creative movies?

1:16:18

Well, it's because it's movie making is a machine now. Right? It's a, you know, movies cost three hundred million dollars and there's,

1:16:22

like, a whole process and a whole bureaucracy. making And what Bernie

1:16:24

would say basically is the whole country, the

1:16:26

whole society, has evolved into this kind

1:16:31

of bureaucratic managerialism. And,

1:16:32

you know, in other words with that, it's

1:16:34

just stagnation. Right? It's just, like, the whole the whole system is on autopilot. Like, the the whole society

1:16:36

is not autopilot.

1:16:39

The government's autopilot. it's

1:16:40

all an autopilot. And and then, you know, every once in

1:16:42

a while, you get a new one must. Right? Or, you know, you get

1:16:44

the kinds of founders that we deal with that they

1:16:46

they kind of step forward. They say, well, actually,

1:16:49

I have a different idea. And then

1:16:51

they have the temerity to, you know, build a new piece of software or to start a new kind of company or to

1:16:54

propose some other creative

1:16:56

idea. So anyway,

1:16:58

you you see kind of all these kind of, you

1:17:00

know, perturbations in the force where these kind of creative individuals pop up.

1:17:02

And then, you know, like society freaks out and everybody's got

1:17:06

opinion on the whole thing. But if there is to be progress, right?

1:17:08

If there if there are to be new ideas

1:17:10

in the world, new concepts, new forms of art,

1:17:12

new forms of culture, new ideas, by

1:17:14

the way, new forms of politics, Right? By

1:17:16

the way, new ways to think about how you raise

1:17:18

kids, you know, basically anything new. It's gonna come from some unusual individual basically stepping

1:17:21

up and saying, I think that

1:17:23

the system is wrong. so

1:17:26

that's kind of the fundamental battle that we'll probably spend the rest of our, you know, probably spend the next years of our civilization to balance

1:17:31

between. Yeah.

1:17:32

I mean, I can see the example with a company.

1:17:34

Right? These companies stagnate, and then new startups come and replace them. And that's that's

1:17:37

something we've seen over

1:17:39

and over and over. also happens

1:17:41

at the individual level. Right? You see celebrities become popular and then they

1:17:43

just go and do the same movie over and over and

1:17:45

over because they're trying to

1:17:47

retain, they're following, and

1:17:49

then people move on to the next new thing. Something that we talked to Balaji about

1:17:51

because he came on to talk about the network state is the need for

1:17:53

this kind of revolution or

1:17:56

innovation at the

1:17:58

government level or the state level. I'm just interested

1:18:00

in your perspective on that because we

1:18:02

have seen it at the individual

1:18:05

level, the company level, but we are seeing

1:18:07

stagnation at that higher government level. So

1:18:09

are you also thinking that

1:18:11

we're going to see some

1:18:13

of these smaller nations or

1:18:15

completely new nations come up

1:18:16

as we see the stagnation in the

1:18:18

Western world? Yeah. So it was this great word that gets used,

1:18:20

well there's this great word against used

1:18:22

reforms reform. Right? Referring

1:18:24

one of those words or my my ears always per company when

1:18:26

I see the word because I kinda know the game is

1:18:28

being played. And so I'll give you

1:18:30

an example. I have all these are very

1:18:32

into this thing. They call it education reform. Right? And so

1:18:35

they're, you know, philanthropists,

1:18:35

you know, they've been successful. They've got money

1:18:37

and they're they've got

1:18:40

a foundation and they wanna, like, make the world better. And

1:18:42

so what do they do? They look around? They're like, what are the big problems in the world? And they in other ways, a lot

1:18:44

of times, they

1:18:44

end up looking at public education.

1:18:47

And they're just like, wow. like,

1:18:49

public education is like this huge force in our society and all these kids, you know, legally, you, like,

1:18:51

have to send your kids to basically, you know, most most people legally are

1:18:53

required to send their kids to a

1:18:56

public school. And

1:18:59

it's like, wow. Like, the outcome seem like really bad. And we

1:19:01

keep injecting more money into these schools and get

1:19:03

the results don't get better. And then,

1:19:05

by the way, there's all these problems and there's all

1:19:07

like, you know, child abuse, you know, that takes place, and there's all this, you know,

1:19:10

these, like, features sexual animals, and then

1:19:12

there's all these controversies over the curriculum

1:19:14

and, like, her kids being taught the right

1:19:16

things. And it's

1:19:18

just like, wow, this thing just seems

1:19:20

like a giant mess. And so therefore, we need education

1:19:22

reform. Right? We need to, like, go

1:19:23

into the bureaus see. And

1:19:25

we knew, like, re you know, we need to retool it. We

1:19:27

need to we need to improve it. We need to make it better. We need to reengineer you know, the

1:19:30

story

1:19:30

is kind of always

1:19:32

which is they go in, they do all this work,

1:19:34

they spend all this money, and then basically nothing changes. There have been many famous cases of this. I won't pick

1:19:39

on people I will say the Gates Foundation has done a lot of work in this area. And they actually

1:19:41

to their credit, they actually came out with a public

1:19:43

report about four years ago

1:19:45

where

1:19:46

they did this retrospective They did a

1:19:48

retrospective of the last fifty years of education reform efforts and all of

1:19:50

the different work that has been done, all the different ideas that

1:19:53

people have had to,

1:19:55

like, make schools better. and

1:19:56

they did this big report. And as the result of

1:19:58

the report was nothing has worked, like, nothing has worked for fifty years. Like, there has not been a new

1:19:59

idea in fifty years that has

1:20:01

been, like, tried in large scale education that's

1:20:03

had any impact at all. basically,

1:20:06

the

1:20:06

whole the whole the whole effort has just been,

1:20:08

like, a complete a complete zero. And

1:20:10

I'd become convinced that's basically universally

1:20:12

true, which is basically things don't get

1:20:15

reformed if you have a problem with XYZ existing institution existing system for

1:20:17

the reasons we discussed earlier. Like, it's

1:20:18

it's just it's not going to

1:20:21

get better. It's not going to get reformed. you can go

1:20:23

spend an arbitrary amount of time and money trying to reform it and improve it.

1:20:25

It's not gonna happen. Why is it not gonna

1:20:27

happen? Because it doesn't, you know,

1:20:28

it doesn't have to happen. The people running

1:20:31

it don't want it to happen. this

1:20:33

this so called principle agent problem, the people in charge aren't actually responsible for

1:20:35

it. You know, there's the incentives problem, especially when people with

1:20:37

large

1:20:37

geographies, people are much more focused

1:20:40

on that fired

1:20:42

than they are on improving anything. And so they'll

1:20:44

basically well, a lot of presidents encountered this.

1:20:46

Right? A lot of presidents come into the White

1:20:49

House, right, for the time, and they're like, wow,

1:20:51

I have all these ideas on how to

1:20:53

make the government better. They issue all these orders, and then the bureaucracy just

1:20:55

ignores them. Right? You know, because -- Right. because

1:20:58

the federal the government employees, like, what do they know? They know

1:21:00

the president's come and go. Right? Like, the president's

1:21:02

gonna be gone in four years or

1:21:04

worst case, eight years. Nobody's

1:21:06

even remember what that guy tried to do. Right? And so all they they just, like, they just wait out Right? And

1:21:09

then and then

1:21:12

nothing changes. And so, anyway, so,

1:21:14

like, by default, it's it's like stagnation as far as the I can see. I've reached the conclusion. This is kinda how I spend my

1:21:16

time. This is why I I continue to do what I

1:21:18

do, and I I think I'll basically do it forever.

1:21:23

is I really no longer believe in the concept of institutional reform. Like,

1:21:25

I I think fundamentally, it it doesn't happen

1:21:27

or it's so rare as to, like,

1:21:29

be be basically something that you

1:21:31

can't ever count on. I think, basically, progress happens by

1:21:33

starting new things. Right? And so, like, if if you wanna like reform the school system, the thing you

1:21:35

need to do is build new

1:21:38

schools. Right? From scratch, like, built the correct way. If you want

1:21:41

to have, like, a new car company, if you're Elon Musk and

1:21:43

you wanna have a car company, you don't spend your

1:21:45

time trying to go get whatever existing car company

1:21:47

to build a better car, You just,

1:21:49

like, start the car company. And then our friend biology extends it one step further,

1:21:51

which is, like, okay. You don't try to reform the country. You

1:21:54

just start into country.

1:21:56

Now, The

1:21:57

obvious problem, the challenge right, is there was an era of human history where people were starting to countries like all the countries that we have today

1:21:59

countries at some

1:22:02

point that somebody started. Unfortunately,

1:22:05

in the modern era, the real estate of the planet's kind of been divided up. And the

1:22:07

world's not really that amenable to,

1:22:11

you know, changing which

1:22:13

country controls their territory through conquest. Like, that's really kind of frowned upon these days. And so, you know, starting a

1:22:15

new country in the modern era is probably not

1:22:18

a process of life going and taking out

1:22:20

a bunch land

1:22:23

and then, like, clearing yourself a new kingdom and then, you know, it's lending a bunch of new

1:22:26

whatever your own legal system. It's probably something else. And, of

1:22:28

course, Balaji's

1:22:30

book kind of explores the something else. with with this idea of the network state.

1:22:32

So, you know, as usual, I analogy pushes it to a

1:22:34

to a level that, you know, probably beyond where I would.

1:22:36

But I think, look,

1:22:38

I think everything he says everything

1:22:40

like his situational analysis, I think, for sure, is a hundred percent correct. Overall,

1:22:42

you could say, like, this is a very depressing analysis in the state

1:22:45

of affairs, and, like, this

1:22:47

basically means the world segued on how much

1:22:49

is gonna happen. I I and there's a lot to that. There is

1:22:51

always this concept of arbitrage, which is like if

1:22:53

most of the world is not

1:22:55

doing new things, then the person

1:22:57

who can do something new has an outsized opportunity. Right? And and this is the thing that kinda gets me up

1:22:59

every morning, which is like, okay, because

1:23:02

most of the world will not

1:23:04

change, because

1:23:06

most existing companies won't change, because most

1:23:08

existing geographies won't change, systems won't

1:23:10

change, people won't change. Because of that,

1:23:12

the person who has the genuinely new idea who

1:23:14

is willing to put themselves in line to build something

1:23:16

new, because they're really big outsized opportunity. because if they succeed, right,

1:23:19

they'll they'll just they'll get all the benefit.

1:23:22

They'll get all the gains. Like, they'll all of a sudden be the person who's,

1:23:24

like, building or running everything. Right? Because it's not

1:23:26

going to be the status

1:23:27

quo that's going to

1:23:29

adapt. Right? So so therefore, like, all opportunity in the world is still

1:23:32

off, but basically available to all of these,

1:23:34

you know, kind of disruptive entrants. And so,

1:23:36

basically, the more

1:23:38

the sort of older world stagnant the bigger the opportunity on entrepreneurial side.

1:23:40

And honestly, like, I think that's what keeps

1:23:42

us in business basically in perpetuity is

1:23:44

the model of kind of

1:23:46

entrepreneurial capitalism or or more generalized

1:23:49

five different neural isn't that, you know, having new

1:23:51

ideas and putting them in the world. Like, that that model is the only source of Yeah. I love the way

1:23:53

you put it of not counting on

1:23:55

the status quo to innovate. I

1:23:59

think that by nature allows the really

1:24:01

intelligent, the really creative, the really

1:24:03

innovative people to have an opportunity.

1:24:05

Right? Because of these companies as

1:24:07

an example, if smart companies

1:24:09

that became big, stayed smart, then we wouldn't have opportunity for new smart

1:24:11

people to innovate. Right? There

1:24:14

there wouldn't be room. So

1:24:17

think that's a wonderful place to end because

1:24:19

I think this you've so opportunities people get involved and for

1:24:22

new businesses to be

1:24:24

built I think most

1:24:26

importantly, as we started off this conversation, you've really highlighted why it's still important. As the ladies sounds,

1:24:28

it's still so important

1:24:30

for us to build because

1:24:34

things do stagnate, and there is so much more

1:24:36

to be built. So thanks, Mark.

1:24:37

Thank you so much for talking to us

1:24:39

today. Thank you, stuff.

1:24:41

Thanks for

1:24:41

listening to the a sixty z podcast. If you like this

1:24:43

episode, don't forget to subscribe, leave a review,

1:24:44

or

1:24:48

tell run. We also recently launched on YouTube at

1:24:50

youtube dot com slash A6CZ underscore video, where

1:24:52

you'll find exclusive video content.

1:24:54

We'll see

1:24:55

you next time.