Stanford’s Silicon Valley pipeline, investigated

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1:23Stanford likes to think of itself as an underdog. That's not what Stanford is anymore. Stanford is this sort of huge, powerful, institutional juggernaut with a reputation to protect. This is more like a business than it is a school. And students are the product. I watched one friend go on to fake a launch demo. And she's feted by all of Silicon Valley, and she's put up in a mansion, and she's celebrated for technology she doesn't have and didn't create. These kids are taught that this is the path to success, that the way to assume their place among the rightful ruling elite is by trampling on everyone else's shoulders to get there.

2:03I stayed at Stanford. I love Stanford. And I think if you love an institution, you want it to be better. And that starts by acknowledging that the same set of incentive structures that have allowed Stanford to get very, very, very wealthy have also allowed for some of its corruption. Theo Baker just graduated from Stanford. I first came across Theo through his New York Times op-ed, What AI Did to My College Class. And it was so interesting because he gets to reflect on being the first cohort of college students to experience chat GPT all four years of school. During his freshman year, he reported for his school newspaper, And his stories led to the resignation of Stanford's president, and he became the youngest recipient of the George Polk Award.

2:50He's also written a book called How to Rule the World, where he pulls back the curtain on Stanford's culture, its deep ties to Silicon Valley, and the ways AI has become an accelerant to Stanford's ethos of winning at all costs. I'm Rana El-Khalyubi, and this is Pioneers of AI. A podcast taking you behind the scenes of the AI revolution.

3:21Hi, Theo. Hi there. Welcome to Pioneers of AI. Thank you for having me. I read your op-ed article in the New York Times, what AI did to my college class, and I sent it to my kids. I sent it to a lot of people in my network, and I loved it. So thank you for writing it. Well, that's very kind of you to say. Thank you. And I want to dig into it. But first, we want to talk about the book and your experience at Stanford. So what got you into Stanford in the first place? Like, how did you become interested in Stanford? Well, I mean, I came out here thinking I was going to be, right, a techie, a complete diehard lover of technology, just because that was what I had spent my whole life doing.

4:01I was the kind of kid who would like, you know, spend a Friday night working on a machine learning model and call that fun. I remember seeing like, you know, these kids in their Stanford T-shirts and their flip flops lounging in the shade of a palm tree, leaning up against a self-driving car they had just helped to build. And I thought this was the coolest place on earth. I have to admit, as I was reading the book, so I founded my company out of MIT, not as an undergrad, as a postgrad. And I was doing my postdoc at MIT and saw this opportunity, started a company. And now I invest in AI. And we find a lot of our founders on campuses like Stanford and MIT.

4:38And so I would love to have a conversation with you where we almost share our experiences of that ecosystem, you representing what you kind of experienced at Stanford, and I'll share my experience at MIT. So, you know, we have two data points kind of thing. I was really struck by the secret class that you found at Stanford, and then this unlocked this whole kind of world of a Stanford within a Stanford. Can you tell us more about that? Yeah. Like to bring it to life. Yeah. I mean, look, the title of the book is not a metaphor, right? That there is literally a secret class at Stanford that is called How to Rule the World.

5:18And so these 12 students a year are being, you know, plucked from the crowd with this cloak and dagger admissions process by the Silicon Valley CEO who sort of styled himself a professor, right? Because you're not actually getting course credit for this, although it meets once a week in the winter quarter and there are discussions and lectures and guest speakers. It's sort of more like a skull and bones for like the aspiring tech elite. And this guy, you know, Justin, what he teaches students, in their words, is how to extract value from people, right? That that's the lesson you're learning, to extract value from those around you.

5:51And I just find that so fascinating. I think it's sort of a great expression of what has come to roost here at Stanford, all of these people who are trying to, you know, network with the teenagers they think will be useful to them in the future. Yeah. Yeah. And so bring this to life. So you've got all these like potential founders on campus. You've got all these like VCs, right? Like an investor's kind of roaming around like, well, how does that manifest? And by the way, I think if I was at Stanford, I would not have been invited to this class. You ended up not being selected to take this class, correct?

6:24I was not. No. At that point, I'd already sort of started becoming an accidental journalist. Do you have FOMO or not really? From the secret class? Not particularly. But I ended up interviewing seven people who were in it. And they have really interesting things to say, right? Because it is like a really interesting cohort, you know, shockingly, like you take the most insider kids at the school who have, you know, the highest ambitions possible. And, you know, it's a pretty interesting mix of people. And one of them was Phoebe Gates, like Bill and Melinda's daughter, who just raised her$31.5 million round.

6:55You know, a lot of kids who gone on to do really interesting work. But the class is sort of like just a really fascinating thing for me, right? Because, you know, on the one hand, like some of what this guy, Justin says, like exceed the limits of your conceivable ambition, right? That's not necessarily a bad message, right? But when people start to get into trouble at Stanford is when you have this massive unconstrained ambition and it is not tethered to a culture of accountability. And so people are taught to make very, very, very big promises, are shown they will be rewarded for it. And then they learn that if they cut corners or if they start to deceive, you know, they're not going to get called on it.

7:36And so that's sort of how the culture of fraud ends up developing from sort of this route, I would say. Well, it's a lot of this fake it till you make it mantra, right? Yeah. Well, look, Silicon Valley has taught people that the only thing that matters is if you win in the end. I feel like as journalists, we think of Reddit as one of the like better governed social media companies. Like the Reddit founders admitted that they faked all their user data for the first two years of the company. And, you know, it doesn't seem to matter because they did make the great company or whatever. In sort of the immortal words of one of my colleagues while we were working on running the campus hackathon freshman year.

8:14And so, you know, we had hundreds of thousands of dollars from corporate sponsors, zero contracts or oversight, and, you know, predictable Mishigas results. And she says, we're talking about this and she says, is all just a little bit of fraud, is her word. Just a little bit of fraud. And I feel like that is what has gotten sort of baked into the system. Just a little bit of fraud. And I think what you're saying in the book too is that this has become the culture. And I, you know, my son, Adam is 17. He's a rising senior in high school. And I want my kids to be very ambitious, but I also want them to have integrity.

8:47And I am worried that if you end up, if a young person ends up in a culture where there's so much pressure to achieve and almost a precedent for not sticking. I don't know what the word is, like fudging the facts. What would you call it? Like this kind of loosey-goosey culture that you talk about? Yeah, no, I mean, look, I watched this happen with people I arrived with freshman year, people I knew who were brilliant and idealistic and I believe genuinely committed to technology. And I watched them learn, in the words of one of them, It's sort of like you're taught how to lie to VCs, you know, and to misrepresent yourself.

9:25And then, you know, I watched one friend go on to fake a launch demo and she's feted by all of Silicon Valley and she's put up in a mansion and she's celebrated for technology she doesn't have and didn't create. Right. You see it happening. Right. That these kids are taught that this is the path to success, that success. Right. Is about winning at all costs. The ends justify the means. Right. And that is, you know, the classic tale of exploitation that people were taught, you know, that the way to assume their place among the rightful ruling elite is by, you know, trampling on everyone else's shoulders to get there.

10:03I'll be right back with more of my conversation with Theo after this short break.

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11:08you know i'm i think back to the time when i spun out of mit my company affectiva and i actually feel very lucky like once we determined that we were sitting on very interesting technology that was commercializable and i didn't have anybody in my family who was a previous entrepreneur or anything. It was not on my mind to start a company. But I will say, like, immediately I got connected to fellow founders. I got connected to a lot of mentors and a lot of investors. And I actually feel very lucky and privileged. I know that this is a privilege that I had this sort of access, even though if MIT had an MIT within an MIT, I was not in that inner circle.

11:49But I still feel Like I was lucky enough to have doors open for me. And you talk a lot about that almost at an extreme, like the wining and dining, the yachts. Give us a few examples of what that looks like. Yeah, well, it's, you know, students learn, I think, pretty quickly that like self-presentation is the thing that governs all. If you learn how to say the right words and you speak the right lingo and you know the right people, you just sort of get plucked from the crowd. And it ends up not being about your talent because nobody's actually then going to check up on it. It's like, do you know the right person?

12:23They will refer you to the next one. And then so on and so on. It's referrals all the way down. And that's how people end up at the yacht parties with the slush funds and the quote unquote pre-idea funding, which I still find just such a shocking concept. Talk about that. I see a lot of these, but tell us what pre-idea funding is. I mean, right, that if you're one of these really promising teenagers, like a VC will hand you money before you even have the glimmer of a concept of a company in mind just because, you know, they're so desperate to network basically with the people they expect to be the next trillion dollar company founders.

12:59And it all makes sense by the logic of Silicon Valley mythology, right? If you're getting in on the ground floor of the next Google or Instagram, you've made your own career. But the way that it works in reality can be very, very just silly in so many ways. And it's not that, like, this system doesn't work or can't work, right? At many points, these kids are brilliant, and the technology they are producing is very impressive. It's just that, you know, we only ever talk about the good side of the story, right? Stanford is very, very good at its sort of self-presentation. It's showing the version of itself that it wants to in the world.

13:35And I think what my reporting has shown is that there are, you know, a lot of things that the school would sort of rather sweep under the rug and not talk about. And that's why we see, you know, the Elizabeth Holmeses of the world or the Sam Bateman Freed's, you know, coming to be. So, you know, the book is very much focused on your freshman year. And you came to this place with a lot of admiration and a lot of hope. Was it quite shattering to see this other side of the school? it was definitely interesting stanford likes to think of itself as an underdog right that this is the place where renegade outsiders are building for the hell of it and that it's this quirky you know sort of unique place that's not what stanford is anymore stanford is this sort of huge powerful institutional juggernaut with a reputation to protect and it It acts that way.

14:28And this is more like a business than it is a school. And students are the product. And so you see that reflected, you know, time and again in the book. Something, you know, as theoretically quaint is like the war on fun, which ends up being the first story that I report about for the Stanford Daily, all the way to what I see with reporting on the Stanford president, Mark Tessier-Levine, and the work I'd done to uncover the allegations of research manipulation in papers that he had co-authored. Which ultimately ended up with him resigning. Yes. Well, and as I report for the first time in this book, he was unanimously ousted by his own board of trustees, right?

15:04That this guy who starts the year opening Stanford's first new school since 1948, right? A billion dollar donation from John Doerr enables the Doerr School of Sustainability. He starts the year with maybe his greatest success as the president of Stanford. He ends the year ousted unanimously by the board who fault him for a few different things, for the dynamic that he created in his labs. There was an incident in which a younger female researcher apparently generated results that challenged some of his previous research. And he effectively tried to destroy her career for it is what the trustees learned from their investigation.

15:38It was the highly aggressive public posture that he and his lawyer began to take in response to my reporting and his failure also to correct the scientific record at various points. those were the reasons that they cited when ousting him from the board. Yeah. I want to flip it a little bit because I'm an investor now, right? As I said, I think there is a very interesting relationship between academic innovation hubs and the source of capital like venture funding. I'm on the hunt for people who are like me, who spent time innovating at schools and creating IP, and then I want to back them and support them.

16:13So that's the story I tell myself, but am I evil? Have I like switched to the dark side here? Well, no, I don't think investing in a company is evil. I think that, you know, things can become predatory very quickly. And there are VCs who take that even further. I mean, like there are, you know, the number of like sexual misconduct allegations that are just sort of hovering around is not super pleasant. But that's sort of like the logical end result when you have adults who are spending more time with teenagers than their own families, right? And who see them basically walking around with a dollar sign hanging over their head, right?

16:50It's like a pretty interesting thing to see a teenager and think, oh, that person who is about to go to his first party is going to make me a lot of money. Or to see it the way that some VCs, you know, I've talked to, right? The calculus is so cold that when you're doing these really, really early stage investments, you know that only one out of like a thousand investments or whatever is actually going to pan out. And so any individual teenager is sort of useless to you. They don't actually matter to you. It's just if you can get one of them to work. That being said, like, it is an amazing thing to be told as a teenager, like go out and build what it is that you want to build.

17:29And there will be someone there theoretically to support you without it being coupled with the culture of transparency and accountability, things just go awry again and again. We meet a lot of founders who they're raising millions of dollars without a pitch deck. Maybe they do have an idea. Like often, you know, they will have an idea, but sometimes there's no pitch deck. There's no slides. There's no product. There's no revenue. Talk about some of the examples you've referenced in the book and maybe some examples you've seen as well. Well, and this also gets us to the AI thing, right? So I arrived on campus right at the zenith of the crypto craze.

18:07And it was just about a month in when Sam Bainton-Fried comes tumbling down. Well, Sam Bainton-Fried, notoriously the head of FTX, crypto wonderkind, advocate for EA, effective altruism. Turns out that he has been misappropriating customer funds in the nine-figure range, maybe 10-figure range, to basically make his own investments on the side. He is now in prison for that. And this is a guy who grew up at Stanford, right? So both of his parents were professors at the law school. They taught, among other things, legal ethics. And I learned that he actually was invited to give a lecture to a Stanford tech ethics class that he couldn't give because he was on house arrest a thousand feet away from the auditorium, which was just very on the nose.

18:50And so right after that, I'm at a dinner with some teenagers and an investor, right? The kind of thing that happens all the time for these certain cohort of Stanford teenagers. And I'm talking to this one guy who's like a big crypto booster. And he's like, yeah, building is paused right now. Everyone's just worried about legality and trying to figure out how do we get around to this, he says. And then within less than a month, ChatGPT comes out and suddenly everyone knows exactly what they're going to be doing. They're going to make their fortunes off of AI. And lo and behold, it is very easy to do so.

19:22You know, like the guy who taught me how to shotgun a beer freshman year dropped out six months after he starts his company with AI and the name is valued at over a billion dollars, which is, by the way, more than 80 million dollars per employee of the company because they're so small. We see this reflected in like perplexity was literally started the month I entered at college, right now valued at over 20 billion dollars. I think it's 22 billion dollars is a rapper startup that appears to have no particular technological edge apart from the fact that it has put it in a search like format. Why is that a 22 billion dollar company?

19:54Like, I really struggle to explain that to people on the East Coast who are asking me like, hey, what's going on there? Like, I struggle to explain why that is worth$22 billion. Yeah, I hear you. There's a lot of examples of that. And I do wonder what's going to happen to some of these companies. I mean, the numbers are just sort of bandied about in this sort of meaningless fashion, right? Like, okay, Ilya, right? Ilya Setzkever, you know, brilliant, brilliant AI engineer. No, literally no one will dispute that, right? And incredibly talented and probably will do something amazing. But he starts his company SSI with a 300 word placeholder statement, right?

20:29No articulation of a product, much less revenue, much less a working product, and no promise to release a product anytime soon, valued at$32 billion, which is higher than Hyundai, which makes 4 million cars a year. So they're making 4 million cars a year. These guys have made nothing yet. Now, they might make something, but$32 billion is a hell of a lot of speculation, in my opinion. I'm not so worried about the fact that AI will be transformative. I know it will. It's just all of these sort of associated companies that are glomming on to the craze. It seemed hard for me to imagine that this sort of limitless spending and limitless valuation trend continues on forever.

21:11Don't go anywhere. We'll be right back after this short break.

21:37Okay, so ChatGPT arrives on campus. What was your experience using AI, both in the classroom and outside of the classroom? I mean, I'd always been interested in AI. This is the kind of thing that I worked on in high school. I came here thinking I was going to work on like NLP of some kind. Natural language processing, yeah. Yeah, yeah. And ChatGPT, you know, I think that was the moment, right, that it becomes a product. You know, it goes from a research experiment into something that people start relying on. I find it so fascinating that people anthropomorphize it, right? They call it chat, which is the same word that streamers have been using for years and years and years to refer to their anonymous video chats full of people, you know, commenting on their video games.

22:20And now we're literally treating life like a video game, right? Because what is the difference between the nameless, faceless people you'll never meet over the internet and a statistical approximation of the same thing, right? People ask chat, like, you know, how to get a date and what to do on weekends. And they feed their class readings into it. And you'll literally see people in a seminar, like, asking chat GPT what to say out loud to the class. which is just like so self-defeating because by the way, the sticker price to attend a university like Stanford is nearly a hundred thousand dollars a year, which is so maddening, but it makes more sense when you understand the logic, right?

22:57That these universities have embraced where education is actually not the first priority. It's getting wealthy for a lot of students, right? And so people come in here and actually the classes are far from their own priority. learning is not really the goal. And so this, you know, cheating wave with AI, which is really omnipresent, it sort of makes sense, I guess, when you think about it from that standpoint. You know, you have a statistic in that article, 49 % of the 849 computer science majors who responded to an annual campus survey said that they would rather cheat on an exam than fail. And that really shocked me.

23:36Yep. Yep. At Stanford. You know, but that's the right win at all cost mentality. You have to do what it takes to get ahead because students know that the rewards can be extraordinarily lucrative. That the frat bro who wanted to send disappearing nudes to a girl drops out and becomes the world's youngest self-made billionaire by creating Snapchat. That the two guys who get food delivered to their dorm become billionaires by creating DoorDash. The kids know that this is the mythology that they're stepping into and the rewards can be really, really high if you figure out the right self-presentation.

24:10Yeah. Do you use AI at all? And actually, did you use any AI to write the book? Not for writing the book. I will use AI for coding mostly. I find that to be the most sort of indisputably useful attribute. I also find it useful for like data analysis stuff. You know, it can speed up the process there. I think of AI as a sort of great accelerant, right? It takes all of these trends that are already brimming beneath the surface and it accelerates them to an extraordinary degree. And we talked about that with the cheating thing, right? You know, how it makes sense because this attitude has already been inculcated on campus that education is the second priority, right?