Bill Gates has a problem (E)

0:00Bill Gates has a problem, a big problem, billions of problems. Hey, this is Emily in the Bronx, and you're listening to a special archived episode of Akimbo.

0:18So what's his problem? His problem is that he did something brave and generous and powerful in 2010, about nine years ago. He and Warren Buffett, at the time the two richest men in the world, invented the giving pledge. And the idea is that if you have more than$100 million, you can join their exclusive club. And what the club says is that every member pledges to give at least half of their net worth away to charity now, before they die, or in their will. When they began, they had about a dozen members. Quickly, it grew to 40. Now it's more than 150, with most of them being billionaires. This is great news.

1:12It's great news because it means that talented, leveraged people are playing a second game, a game that's about weaving our culture and leading there, helping those in need, instead of only seeking to make one metric go up. So what's the problem? The problem is that Bill Gates has more money now than when he started this project. That as much good as the Gates Foundation has done, as much money as he has given away. Billionaires make money from their billions, and he has more money now than when he started. In fact, if we look at the charitable spending of the men and women who have signed up for the giving pledge, we see that they are almost all falling behind.

2:10They are falling behind because on average they're giving 1.2 percent away, while the money that they have in their assets is earning 8%, 9%, or 10 % a year. So at that rate, it will take infinity years before they have given away half of their net worth. The gap gets bigger year after year. The collected group of billionaires, as measured by Bridgespan, has given away about$45 billion a year. You can see all the stats from some fascinating reports on the show notes at akimbo.link. The problem is that unless they get close to 90 or 200 billion dollars a year given away, they're going to keep falling behind.

3:06So what's the problem? Why don't we just wait till they're dead? Well, for a few reasons. First of all, when they're dead, we're not sure where that money is going to go. And second, the earth has problems now. And many of the problems are compounding, which means that solving them yesterday is significantly cheaper and easier than solving them tomorrow. So how do we explain this lack of giving? Because the people who aren't giving have signed up publicly to give. The people who aren't giving, they're not the selfish ones who are hiding in the corner. These are people who raise their hands, put down their names.

3:49You can see them in the Wikipedia article and have agreed to make this commitment. Well, if you ask them, some of their complaints will be things like lack of rigor in the nonprofit space. Things are hard to measure. Timeframes. It's very difficult to know what to invest in because it might take 5, 10, or 50 years before you discover if the intervention is working. A fear of side effects that maybe putting money into the problem will actually make the problem worse. The list goes on and on. Here's the thing. Over the last few years, more than six billionaires have put more than$100 million each into college sports.

4:42hundreds of millions of dollars to support a college football team. Nothing near that for river blindness. Nothing near that for mental health care for people who are homeless. Nothing near that for fixing school systems that desperately need help. So yes, we have a disconnect here. And in the Bridgespan report, in Callahan's review of what to do about it, we see some interesting ideas. Perhaps, they say, there should be a fund of funds so everyone, instead of starting their own foundation, can lump their money together, committed to a group foundation that might have more leverage. Or perhaps we need better data reporting.

5:33Perhaps nonprofits need to work a lot more like corporations. Maybe we need a better way to measure a win. And I agree that effectiveness ought to be increased and measurement ought to get better. These things matter a great deal. Sasha Dichter is doing great work on this with lean data. But here's the thing. When I look at the list of the top donations via the Chronicle of Philanthropy, year after year after year, the question is, where do the$50 million gifts go? That when a billionaire gives away a chunk of money, where does he or she send it? First, a small aside, a billionaire. What's a billionaire?

6:23Well, I want you to imagine a millionaire. A millionaire is imaginable. A millionaire is somebody who probably needs to work, but not a lot. A millionaire is somebody who owns a house outright, who can fly where they need to fly when they need to fly there. Now, imagine 1 ,000 millionaires. That's a billionaire. And if you're talking about somebody like Elon Musk or Mike Bloomberg, Mike has$55 billion, according to the 2017 numbers, probably more now. That's 55 ,000 millionaires in one house. So that's a billionaire. When we look at the list of where their biggest donations go over and over again, year after year, they go to colleges and hospitals.

7:20There is not a lot of discussion about the cost effectiveness of hospitals. That if you compare a hospital in the U.S. in New York to Aravind, the eye hospital I talked about a bunch of episodes ago, there's no comparison. That you can get fine quality cataract surgery at Aravind for 150 bucks if you pay for the private room, whereas you'll pay 10 or 100 times that for a similar intervention in New York. So we're not giving money to hospitals because they're the most efficient or transparent. And famous colleges, well, Malcolm Gladwell has famously pointed out again and again, that Princeton has enough money to do anything it wants for a very long time.

8:11Harvard could have every single student go to Harvard for free for a hundred years. So why give your money to these institutions? The answer is really simple. Because you get a building. Because there is scarcity. Because scarcity leads to status. And what we heard in one of the very first episodes of Akimbo was a rant about status roles. Truman hates Baxter and vice versa. Which dog is up and which dog is down? Status. A lot of this was created by Forbes magazine. Years ago, the billionaires didn't know who the other billionaires were. There weren't very many of them, and perhaps you bumped into them at a party.

9:01But Forbes started the list. And famously, people lied to get on the list. Famously, people hid to get off the list. But the list did something magical. What the list did was, for people who were keeping track of a number, it created a published list of the number. And if you are only measuring one thing, because they weren't measuring health or happiness or impact, just one thing, then having a way to keep score of that one thing became something that drove folks to make that number go up. And once you're on the hook to make the number go up, making the number go up feels like a good game to play tomorrow.

9:52Lots of prizes, lots of applause for making the number go up. So I am super excited and proud of Warren and Bill for coming up with the giving pledge because what it did was it added a second number. Are you on the list or not? Status accrues to people who cared enough to put their name on the list. It's a very special club. In Billions, the TV show, when Axe wanted to buy an NFL team, he reached out to get on the list to show that he was a good person. Status roles, competitiveness, scarcity, who's better than who? And then we come face to face with the problem, which is you're not really sure what you're buying when you start to invest your money in philanthropy.

10:47If you want to build a company to send a rocket to Mars, you can make progress every day. And when you get to Mars, you got to Mars, and everyone knows you got to Mars. On the other hand, if you commit to getting plastic out of the ocean, you're not going to get all the plastic out of the ocean. It's not going to happen. It's a hard one. Nick Hanauer has spearheaded the work to get the minimum wage raised to$15. His organization won a big win in Washington state. Now, the working people of Washington state have a floor. They make$15 an hour minimum, he can own a contribution to that cause, and it cost him a lot of time and money.

11:35It's possible to do that with something like polio, which the Gates Foundation is getting closer and closer to eradicating. It's not clear we can do it for homelessness. It's not clear we can do it for river blindness or atmospheric cancer, the warming of the earth. So the question is, what are we selling when we're selling philanthropy? It's one thing to say to a human being face to face, didn't you see that person face down in the puddle when you walked by? They're going to drown unless you save them. In that situation, everyone except a sociopath is going to wade into the water and save that person's life.

12:19But as Peter Singer has pointed out. If I can tell you with certainty that$400 will save the life of someone just like that, who's not sitting right in front of you, it's a harder sell. In a recent blog post on Slate Star Codex, our host Scott points out that in a typical election in the United States of America, in total, counting direct contributions, soft money, advertising, and the like, Americans spend less on politics than they spend buying almonds. I'm assuming he's counting almond milk, but still less than we spend on almonds. How do we justify that? How does that make sense? Well, the simplest answer is this.

13:08When you spend$2 on almonds, you get$2 worth of almonds. But when you spend$2 throwing some money to your favorite candidate, it's not clear you get anything. And so the giant challenge philanthropy has, if it's going to be measured on the short-term give-and-get math of capitalism, is that we don't get$2 worth of almonds. On one hand, capitalism is a miracle. It has completely rewired the way we go to work and the world in which we live. But applying those rules relentlessly, the short-term return on equity mindset, to things that don't respond well to them, isn't always the best way forward.

13:58300 years ago, 200 years ago, 100 years ago, as capitalism was being perfected, the people who started industries that today are insanely profitable didn't have to answer questions about what was your return on equity today. That if you were busy building a car company in 1912, you were focused on staying in business day to day, not how is this going to be worth billions of dollars. That when the internet was young and people were building the very first websites, these were hobbies. These weren't attempts at multi-billion dollar industries. What happened is a ratchet showed up. Things got better over time.

14:49The same way, so much of what we take for granted in our civilized world evolved over time. The thought that going to the doctor or taking a medicine is almost certainly not going to cause you to die is a pretty new one. It was super risky to eat food when you were on the road traveling. Now, not so much. We can certainly thank the industrial system for a lot of food safety, but a big part came because the culture changed over time, bit by bit. Things got better because people worked to make them better, not because they were going to make a profit doing it. When someone was investing$5 ,000 in a car company or$10 ,000 to lobby a politician to get a road built.

15:45They didn't say, will this make me a billionaire in a year? That in Silicon Valley, when people were making crazy investments in speculative internet bubble companies, they didn't say, show us with transparency exactly how you're going to make a profit. that, in fact, market thinking, status seeking, led to a rush. And that rush brought in new people, and those new people tried new things. And most of those things did not work. Most of the ideas that capitalists have had over the years did not work. And the ones that did work took decades, and they never turned out the way the original business plan said they would.

16:34And so to show up at a small nonprofit and say, show us to the penny what your efficacy is, there are very few entrepreneurs who could withstand that scrutiny in the first 5, 10, 15 years of their entrepreneurial journey. That we need to keep track of a second thing. We need to move the money that's been promised because we're offering people status. How much of your pledge have you fulfilled? How much can you move over right now? Not with questions about today's efficacy or today's transparency, but how instead can we create a new game here? And the new game is about the patient, gentle weaving of a different kind of culture.

17:22What we do is we give traditional, status-oriented nonprofits a pass. We don't challenge the efficacy of the opera or the museum or the hospital or the college. But when innovators show up, we grill them. We demand that they count the paperclips. We don't leave any room for the tremendous innovation cycle that got us the capitalistic pillars that we so count on today. That it is entirely possible that we're going to solve yet another problem. It is entirely possible that we can take a vaccine and make it free to the masses. It is possible that the next Wikipedia will educate millions and millions of people.

18:14that the lessons of one laptop per child will spread from one place to another. All of these things are possible. We have seen them happen before. We will see them happen again. But the way we get the money there is either take a deep breath and figure out that it's all of our responsibility and do it with an organization that's been practiced at doing it, the government, the one that built all those roads, the one that built the internet you're hearing this on, or if we're going to still rely on philanthropy, turn it into the status game that billionaires demand. Create enough social pressure that it is better for your status as a billionaire to give away money than it is to see it grow.

19:05Not because it is a rational, altruistic investment of the highest yield per dollar, but simply because you're a human, the kind of human who wanted to give money to a sports team, the kind of human who wanted to have a wing of a hospital named after you or your cousin, that human beings do human things. We are not rational altruists. Instead, we are people who are seeking to deal with the fact that we know we're going to die and that until we do, we would like to live in a place where we are welcome, where we think we have made a difference, where our work matters, where we have woven a culture that we can be proud of.

19:50All of us get to do those things. Billionaires get to do them more loudly. But we need more innovative nonprofits. We need nonprofits that are willing to show up and say, this might not work and we're going to do it anyway. We need fast-moving, fast mistake, generous thinking in order to change that part of our culture, not because it's going to make a profit. Some people say it's a shame that nonprofits are named after the things that they are not. But in a culture that's so dominated by what do you make, maybe that's exactly what they should be known for. The fact that they are not seeking to make a profit, but that they are merely seeking to make a difference.

20:39Thanks for listening. We'll see you next time.

21:03Roberta Perry. My question is... And that completes my question. Thanks for listening. We love to hear from you. If you've got a question, I hope you will visit akimbo.link. That's A-K-I-M-B-O dot L-I-N-K and press the appropriate button. While you're there, check out the show notes. Hi, Seth. This is Spencer from Amsterdam. I was listening to the question you answered at the end of the Perils of Mind Reading episode about the benefit of the doubt. You were talking about changing the culture through actions, creating opportunities and acting as if. I'd like to propose that maybe we can take it further.

21:48I was lucky enough to meet an amazing woman recently who heads up a large engineering organization. Now, remember, the average amount of women in the engineering profession is somewhere around 7%. We hear many people in positions of power saying that when they advertise for engineers, they will hardly get any female applicants and then perpetuate this myth about there being a pipeline problem. Yet this woman I met, her organization tested doing a recruitment campaign that advertises for a female only recruitment round. And yes, you guessed it, the applicants went through the roof. I'd love your thoughts on this kind of idea if you think it could spread in hope of changing the culture.

22:30As always, thank you for being a much-needed voice and presence in the world. Thanks for this question. It's certainly current and relevant to what so many of us are facing. And I'm going to begin with this. Most humans don't like doing things they think they're going to fail at. That seems really obvious. However, we have structured many of our institutions to imply to some people that they're going to fail if they show up. And then we're surprised when they don't show up. So you are absolutely correct in talking about the pipeline problem. If we keep doing what we've been doing, why are we surprised that the very same kind of people keep showing up in our pipeline?

23:20If we want to change the people we get to choose from, if we want to change who gets a seat at the table, it helps to create a different sort of pipeline. And while your example is an extreme one, there are plenty of ways that we can do this. So on to cerebral garbooning. Cerebral garbooning is a make-believe sport invented by Jimmy Cantor. And in this sport, people who are 9 years old have a significant advantage over people who are, say, 15. For example, if the sport requires shimmying on the ground underneath a piece of wood, a little kid's going to do it better than a big kid. If you've got to actually literally jump through hoops, it turns out little kids are better at jumping through hoops than big kids.

24:10If you start a cerebral garbooning competition, I think you will discover that little kids are way more eager to sign up for it than big kids. And so now we think about the jobs and the positions of authority. Because what we decided a long time ago is that being good at interviewing in a high-pressure situation in which the interviewer is likely to be a white male is a good indicator of whether or not you will be good at your job. Well, unless your job involves being interviewed, it's not clear that being good at interviewing is a good way to find out if someone's good at a job. One thing that we have found is that many jobs benefit from having people interview in writing.

24:59Send them the questions and have them send back the answers. Because if that's the sort of way they're going to do their job, you've just discovered a good way of finding out if they're going to be good at their job. or consider the idea of changing the pipeline. If you want more diversity in your engineering ranks, well, why not go run some hackathons at historically black universities and colleges? Why not show up where people you are looking for already hang out and create activities and interactions where the ones who are ready to shine and do work with you are more likely to show up. So we need to change how we are filling the pipeline.

25:46We need to change the game you have to play before you play the game if we are hoping for other players to be part of what we are building. Thanks again for listening. We'll see you next time.