Netflix co-founder Reed Hastings: stories, schools, superpowers

29:28And so it's like a novel where the novel as an art form has really stayed constant. And so there's something about, you know, the size and the capability that people are used to it. Sure, there's short stories, and sure, there's epics, but almost all of the business is novels and what people read. And I think there's a lot of that with film and TV series that they're not artifacts. They're really reflections of human attention span and stories. I feel like people have been complaining forever about, you know, you have one superhero movie hit, and then you have 25 more superhero. Or like Barbie hits, and then all of a sudden you have toys, like toy stories.

30:06like you're not we're not getting sort of the diversity of hits because people are looking at an algorithm or they're well you know you got to put this star with this story and then and so you don't maybe get a k-pop demon hunters which like you said was the 28th and no one could predicted it obviously we're in sort of the the time of heated rivalry when no one could have predicted that do you think ai will will flatten things like will ai lead to people just you know betting on past success because the algorithm told it to and so they'll take less chances or that's already happening? Like how does AI affect it from a data perspective?

30:39You know, very, very little. We're really predicting for a kind of that human conflict and something, you know, you want something that's both familiar, but also fresh. So those are our tensions. In terms of like over-sequelization, if you look at the amount of new content that Netflix is producing, that's really gone away. In other words, sure, we'll have some sequels and think of season two of Wednesday was, you know, season three, et cetera. So that's always been a part of the business. It's very enjoyable for people because it's a story they already know and you see more of it, but you don't want it to be the only thing.

31:14And that's certainly not true today. Today we have an incredible set of new films coming out all the time. Yeah. And do you, like, how well do you think Netflix can predict a hit? Like sometimes things come by surprise, but you're like, no, no, no, we got it. We know, or you're like, sometimes we don't. Yeah, it's a mix of both. Okay. So season twos, we have much more. Sure. Sure. You have more data there. All right, fair enough. One of the many smart things that Ted Sarandos has said is that there's a much better business in increasing the upside, the quality, the volume of the reception of content by 10 % than cutting costs by 50%.

31:55and it was a way of kind of lensing to why is AI potentially really amazing. What are the kinds of things in terms of thinking about how AI can be additive that you think that the entertainment industry should be thinking about broadly, given obviously there's a lot of concerns and uncertainty around it? You know, in entertainment, there'll be a lot of work on special effects and sort of things that didn't fit in a budget before can now be done. using AI. So that's a good example. But more or less, I think anything that lives in the emotional realm will be impacted not as much by AI because we humans react to these things emotionally.

32:39And so again, I think we'll not watch robots playing basketball. And so it's the easiest example for people to get that things that are emotionally pleasure, emotional stimulation, will still do. So, you know, you like to give and get real flowers, not fake flowers. So it's like, I don't think that's changing just because of AI. So where AI is very good is that thinking and logic, like coding. Wow. It's really, it's breaking through. So I think there's just, think of it as tremendous excitement in medicine, in biology, in things that are very factual, logical, hard, and complex. And things that are emotional, you know, will be, it's not that it won't eventually be able to add value, but that's certainly not the big thrust of the AI world.

33:28All right. This is something I'm very excited to talk about. You and I share a deep passion for education. And I feel like education is like at the center of AI. It's like, is it going to usher in a new era where everyone has amazing tutors and education is supercharged? Or are public school students, especially perhaps, just going to have AI slop constantly? Like as a philanthropist who's invested a lot here and sort of studied the education, especially in the United States, how do you think AI is going to affect education? Well, there's two kind of big questions, which is one, what are we educating kids for?

34:04What kind of society are we educating them for? Or what skills should they have? So the kind of goal state, you know, in the past was pass a lot of AP exams. Sure. Okay. And that's probably not the right goal state for the future world. So there's a big discussion to have, which is what are the skills that you're trying to target for your kids? And then second is implementation, which is can we use AI tutors to whatever we decide is important, to teach more of that, to make teachers' lives better, to have kids learn more. So they're two different discussions that get kind of mushed together. I would say on the second, like how to teach more, then there's some relatively clear paths of doing different kinds of AI tutors.

34:50And just like we're going to have AI doctor, AI lawyer, there'll be AI teacher. And that will come along. And it'll be easier in private schools. It'll be easier in charter schools. It'll be harder in school district schools. because of all the regulations they have. It'll be easier outside of the U.S. where they're more willing to do some of these things. So, you know, that will happen. It's unclear, the first question, which is, if you have a three-year-old or a five-year-old, what do you want them to learn? Totally. Because the hard skills, like, that we used to value STEM, okay, that's probably like coding.

35:30Like, you know, we spent 25 years saying, learn the code, learn the code. Oops. Don't learn the code. Don't learn the code. So it's probably true that like all the hard facts of, you know, biology, chemistry, physics will be extremely specialized and not necessary general knowledge. And, and probably not that valuable. Let's say if you had an AP result in this, the things that are more emotional, how you read people, how you work with them probably are quite valuable because they're much harder for the computers to do, and humans like doing them with other humans more often. So I think we'll see a kind of shift of the value.

36:15STEM practically took over Stanford University. And now maybe what we'll see is a rotation back to the humanities into understanding combination of history and literature, but also kind of the physiology of the brain and how we interact with each other. If I had a three-year-old today, I would be like doubling down on the emotional skills. There's some great middle schools. One's a charter school, Valor. Another's a private school, Flourish. And they really focus like in seventh grade on these emotional circles where you sit around and talk about your feelings. And because they feel like this kind of skill, knowing yourself, interact with other human beings is going to be the thing that sustains those kids, you know, through their working life.

37:04I feel like when people talk about AI in education, alpha school always comes up. We had McKenzie on the pod a few months ago. And I feel like some people are like, the criticism is like, they're not even using the cutting edge AI. Other people say, look at their test scores. They're doing, you know, twice as well as anyone else. Some people complain about equity,$40 ,000 a year. $60 ,000. It's fantastic. If you can afford it, go. So the thing I love about it is actually less about the AI, but more just about giving agency to kids, focusing on other things. Why do you think Alpha School is so great?

37:39Well, it starts with McKinsey and Joe's philosophy that the kids have to love school and they love vacation. So the number one goal is the kids don't want to go on vacation. and they want to stay in school because they love it so much. Then they start from, okay, if we want them to love it and we need them to know the basics up to do well on tests, what are we going to do? And so they do two hours on software a day where it's relatively practice and drilling and these kinds of things, but they have a coach really motivating and helping, and then they get the reward for that is they get to spend the rest of the day doing stuff they want, either a set of the schools are for athletes and people for sports, Or they spend the rest of the afternoon doing like watching TED Talks and talking about them or a range of things.

38:25But I would say they're kind of like the Tesla Roadster. That was the first Tesla over$100 ,000 sports car specialist thing. But it set electric cars as the aspiration. And they were cool because the first electric car was this extremely fast, accelerating thing. So that's Alpha School is our Tesla Roadster for AI schools. And you think it can be done, we can go down the cost chain and we can do it at a lower amount? 100%. Model 3 will be coming. I love it. There'll be more and more innovation at that end. Cool. So Reid, we talked about education and how there's enormous opportunity for change.

39:05Alpha School, which is operating within the United States, how is education going to change outside the United States with AI? Well, I think what we'll see is tremendous flourishing of AI teacher in an international situation. So we have pretty good teachers in the U.S. and pretty high satisfaction and rich countries generally. But in lower income countries, the education budget might be$300 per kid per year. And the class size might be 50 to 70 kids. And there's just not a lot of learning going on. And I think the combination of a Starlink on every school and tablet for every child and then really good AI software will close the gap.

39:44So think of the way mobile phones are ubiquitous in the developing world. I think AI learning will be ubiquitous, and that will help. I don't know that they'll leapfrog the advanced countries, but they'll certainly close the gap that we've seen historically. And in places, they may leapfrog. I feel like lately there's been breathless articles everywhere about how one laptop per child was the hope, and then it was really a failure, and we put so much money into it and it didn't work. And then other people are saying like, well, that's really nice that you want that, but the cost of compute is too much.

40:18What would you say to those people who think that we've heard tech solutions in education before, but it's not going to happen this time? Yeah, there's always the crash dream phenomena. Like in the 1980s, I was in the AI wave that was expert systems and they were public companies and the fifth generation and the Japanese were going to be this big threat and that AI didn't work. but this one is. So just think just because it failed before it was too early, it doesn't mean it won't work. So I think the one tablet per child around the world is very scalable, builds on the mobile phone platforms. And it is some of the same ideas that one laptop per child had, but that was just 20 years too early.

41:01Yep. And I assume you think the cost of compute is just going to go through the floor and so that it won't be a barrier to entry for folks in the developing world. That's right. The costs are really driven off the phone market. So, you know, we have$800 phones in the U.S., but in most of the world, you know, there's$50 phones are quite usable. And so think of it as$50 phone and a Starlink per school and some solar panels, you know, so it's very scalable. Fantastic. So one of the things you said earlier, which I completely agree with and one of the things I think I would partially reframe and it's kind of a question leading into education I think our human skills how we collaborate getting into humanity, understanding these things I do think will amplify up and the skill of learning coding obviously goes away because it's like oh this does the code but I think the various two things that I think will still be pretty deep in what we're doing is one is a good systematic understanding of what truth in the world is around.

42:06So like biology, physics, chemistry, etc. Because that kind of iteration of understanding the nature of the world we're in, I think is pretty familiar scientific thinking. Like the patterns of thinking, I think, are important. The patterns of strategy are important. And I think actually even coding will go that way. Because part of the thing is, while people say, well, should I stop studying computer science? Well, no, you should study computer science. not coding right like more of the kind of the thinking about the the system of the pattern of it in terms of how we operate and i think that will become more general i'm curious what you think of my modest reframing of your earlier statement i think i'd just study math um you know if you want to get to like well alums are terrible accounting so yes so you know whether it's a algebra i mean there's so many interesting things in math yeah if you want to help people like kind of learn abstraction or search for truth um you know look there's gonna be some role for science and a few people will be drawn to it but think of the last 20 years we've been as a society stem stem stem learn to code stem stem stem so i just think that as everyone sees that coding is overdone.

43:26My guess is we'll see that STEM is overdone. And the kinds of things that you do with a biology background will be done so much better and faster by AI that it'll be hard to compete for jobs in that space. So shifting to another thread, one of the things I think AI will do is it will break us a little bit of the industrial model, which is the industrial model tends to be the, you know, go to high school, go to college, learn, now go work. And learning then, now work. And I think ongoing learning will be one of the key things. Do you think that will also be part of, not just like, I have this one learning period, but it's like, I'm constantly interweaving learning with what I'm doing?

44:08Absolutely. So, you know, trying to think through the ongoing skill acquisition, you know, by learning things has probably, you know, been important for a long time because the stuff you learned in high school changes so much and the knowledge in the field changes so much and that's only going to continue. So certainly learning will need to be for people who want to make a living intellectually constant. But I don't think that's like a more of the past because that's been true for a while. It's just going to be even more true, you know, in this new world. So we learned earlier that you were the one that said, Stone Age, Bronze Age, Iron Age, we define entire epics of humanity by the technology that they use.

44:53And so we're entering the AI age. Do you think even more than previous ages, that now, if you are left out of the AI age, either personally, or sort of as a country, like that now is the time that some folks might actually fall behind, and there's going to be a bigger divergence between those who embrace the AI age and those who fall behind? well i don't know that just embracing it like if you're a small country in europe that has a glorious past i don't think it's whether you embrace it or not that it's going to change the outcome i mean you know you got to try to figure out a strategy because um you know it's going to be dominated you know by china and the u.s okay how does the middle powers like canada you know thrive.

45:39And I think we owe, you know, we're part of that thinking and solution to be able to build a world that we all want to live in. And so what would you do for these middle powers? Like they don't want to live in a world where it's just China and the U.S.? I don't know that they have much of a choice. So I think it's, I mean, what they're doing is linking up together, you know, and I think that probably makes sense. And certainly, you know, they'll embrace using, you know, American AI because they'll need to. And, you know, maybe they will be able to get some local things going or they'll do it by treaty where, you know, they're not going to get shut off.

46:19But think of it as AI is going to accentuate income gaps both in the U.S. and between the U.S. and other countries. So, you know, it's going to create tensions just like it does in one society. It does between societies. I do think that one of the things, and I think you would agree, that actually having an active AI strategy for the countries, for the industries, et cetera, is actually, in fact, really important. I think it's less important to be going it isn't that so-called digital sovereignty isn't also important but the most important thing is to actually be modernizing your kind of industry your countries, your companies, your workforce because it's a little bit like the industrial revolution, like one of the things I put in super agency is that England, quarter of the population of France 10th of the population in China, multi-century industry, and did not invent the Industrial Revolution, but multi-century empire because they embraced the Industrial Revolution most robustly early.

47:28Would you also think that when you get to thinking about this from a country's or industry's or company's perspective, that they should adopt that same thing of like, we have to have an active strategy in being there early? Well, your example is interesting. So you said the UK, which led industrialization, So that's kind of the equivalent of America today, right? So you didn't really phrase it as, you know, what should Argentina do about industrialization, which is a very hard challenge because the UK did everything in its power to keep Argentina from being able to industrialize, to maintain their strength of their power.

48:06So if you are a middle power like Argentina, should you have an industrialization policy? Sure, probably that makes sense. Will it work? not clear at all because the power imbalance in the UK was so high. So they were laws preventing looms and various things from being in India. So the cotton from India had to come and then get processed in the UK and they enforced those laws of their military. So it sounds all great that Belgium should have an AI policy. And Estonia is a small country that's done a lot on say digital ID and do good government tech. So I guess that's better than not doing it. But I don't know that it's actually much of an answer for a middle power country.

48:54I mean, I think the challenges for a middle power country are quite substantial. And I don't have a good solution. But I think, you know, in them linking up and doing things and working well, and I hope that the US, as the Western leader of that is, you know, embracing in a very, in a very important way, which is not the current America First policy, but I think it's much more in our long-term interest to have long and strong allies. So earlier you said that you think AI is going to usher in this great era of abundance, and whether it's 10 years or 20 years, when AGI gets here, what are the things that need to happen for that to be true?

49:34Are there conditions that need to be met now for that to happen? And did you mean just in the US in terms of the abundance, or could it be global abundance too? Depends kind of how the IP is shared or the rewards of it, but I think it'll be pretty global. So just like you saw in the industrialization, it really did lift all boats. You know, it's at a different level than in the host country. But so let's take nuclear fusion, you know, and if we can actually make it work, you know, which will be assisted by AI, you know, then we've got a tremendous energy source. If through it we're able to bring down the cost of solar, you know, or invent new types of batteries and storage, you know, it could really revolutionize energy usage and production, which then brings us to, you know, age of abundance.

50:23So in early nuclear, we were a little bit naive and we thought electricity would be too cheap to meter. Okay. So, you know, we're probably not going to get to that. But, you know, that's the kinds of thinking for abundance that we want to do. So if you think about housing and, you know, it's very expensive to build. What if it was robots building it, you know, 24 hours a day? So then you got, okay, you've got carpenters not working, so that's a negative. But you've got, you know, low cost, very custom, beautiful housing. So that would be, you know, another example. So I think in each industry, we're going to see much lower costs for doing things.

51:06And then incredible amounts of inventive energy, because maybe we don't need to build a house that way. Maybe you just print it in some giant 3D printer. So there'll be both tech revolution in that way, which, again, would be like nuclear fusion. I'm going to shift to one other zone of subject, because I think this is something that people frequently misunderstand. What do you think are, why is so much of this innovation happen in Silicon Valley? What are the things that make Silicon Valley kind of a unique creator of these kinds of technologies? Why is it half of the NASDAQ is within 30 miles of where we're currently sitting?

51:43Well, I think if you look at the financial city of London or you look at New York or you look at Detroit for cars, this is not something specific about tech. You get very positive reinforcement when you've got a whole lot of talented people that can switch jobs and not have to move. And then they move the ideas. So in the U.S., we don't have very high protection against the ideas walking out the door. So it can be very hard for a given company because they feel like, oh, my secret spread. But it makes it very productive for the economy and for the ecosystem that those ideas do spread. So I think of it as liquidity and employees changing is probably the key ingredient, which is a combination of things like LinkedIn of I wish we had non-employer based health care.

52:38So if you had it, you know, some other ways that employer based it, you'd have more liquidity. The less we do non-competes, the better. It's one of the things I think that the Biden FTC had right. Making it easier to compete with existing companies by eliminating non-competes. So that liquidity of movement, I think, is the most important thing. So one of the questions, maybe a last question before we get to rapid fire, on jobs is, obviously the general discourse is loss of jobs and kind of other sorts of issues. But there's way insufficient discussion on wages. because even though, in fact, you know, actually, in fact, I think there will be a lot of creation of jobs, a lot of transformation of jobs and so forth, but what will happen, a little bit like the earlier comment in radiology, is there will be a, okay, which of these jobs are super valuable?

53:31Compensation goes up. Which of these jobs become less valuable? Compensation goes down. Have you had any thoughts, because you're a systems thinker, on the wages effects, what countries, companies, industries, but specifically also individuals should be doing and kind of navigating what will be happening within wages? Well, let's see. You describe as some jobs as valuable, but like teachers are very valuable and not paid very much. So I don't think pay follows value very much. It follows shortages in demand and supply. So the question is, for wages, what jobs will be in shortage? and I think it's all those jobs that are emotional that computers are not very good at because we'll have a lot of need in those and the jobs that are more administrative you know those are going to have lower wages because you're competing with computer who could do that job so again it's really where AI does a job well it's cost done by a human or its pay will be less and where it's super hard for the AI to do.

54:37It'll be, you know, continued high wages. I feel like a lot of people are telling people that the solution to that is trades. Everyone's like, oh, become a plumber, HVAC, electrician, because those are in shortage right now. Obviously, like the big question there is like how soon robots will catch up? Like what do you, like it matters if that's going to be five years or 20 years or 40 years in terms of people getting wage premiums from the trades. Like what would you tell people in that respect? Okay. So let's look at electric cars. So 2007, we had self-driving, sorry, I should say self-driving cars.

55:092007 was the DARPA challenge and it was like, it actually did work in self-driving cars in a limited lab. And now 20 years from now, it pretty much works. Okay. But the percentage of miles driven, self-driving by the machines by high-end teslas and by waymos it's got to be less than one percent of global miles easy that's after 20 years so we're not even to the stage of that darpa challenge that is we don't have a demonstration in the home okay that can do all these things so think of it as in 20 years robots will do maybe one percent of the plumbing at most right okay so it just takes a super long time to build, deploy, and then to get them to be lower cost, higher safety than others.

55:56But I think over 50 years, it will happen. So that's still going to be a great field for the next 20 years, if we're talking plumbing specifically. Thanks. So now rapid fire, unless there's another question. Let's do it. All right. Is there a movie, song or book that fills you with optimism for the future? There's a cool movie I watched recently, the Queen of Chess. And it's about an Eastern European 1980s guy family who raises his three daughters to get out of poverty via chess. And they all three become grandmasters and get to a middle class or better living through this dedication. And so it's a situation where there's no reason they should have had hope being in 1980s, you know, Romania.

56:41And yet they did. and they worked towards a future that has been great. So I love a documentary like that. All right, I got to check that out. What is the question that you wish people would ask you more often? I think people focus a lot on business success, which I've been super fortunate on, and less on joy. And so I think the question would be, what gives you joy? How do you increase joy in your life? All right, how do you increase joy in your life? Let's hear it. I would say that I'm trying to do more on the mindfulness and on the appreciation, noticing much of my work life was relatively frantic, kind of lots of email short burst stuff.

57:25And I think I could have integrated more mindfulness into that busy time. But certainly now that I'm retired, I can. Love it. So where do you see progress or momentum outside of your industry, let's call that tech entertainment, that inspires you? Definitely medical work. I mean, the amount of improvement in cancer therapies, health, understanding, insulin resistance. I mean, it goes on and on. What we're slowly learning of the body and then the brain's even slower, but making some progress on that. All right. Our final question. Can you leave us with a final thought on what is possible to achieve in the next 15 years if everything breaks humanity's way and what's the first step to get there?

58:11Well, if everything breaks humanity's way, it's because AI has unleashed human flourishing. And we find the political mechanisms to share that across within our country, across different income groups, and then between countries. The world as a whole is enhanced. And a first step for that would be to realize how interconnected we are between people in our country and then between countries. and trying to get away from win-lose to win-win. Totally. Amen. Thanks so much. Reid, always a pleasure. Indeed. Possible is produced by Pallet Media. It's hosted by Ari Finger and me, Reid Hoffman. Our showrunner is Sean Young.

58:55Possible is produced by Tanasi Delos, Katie Sanders, Spencer Strasmoor, Imozu, Trent Barbosa, and Tafadzwa Niemorundwe. Special thanks to Surya Yalamanchili, Sayida Sebieva, Ian Alice, Greg Beato, Parth Patil, and Ben Rallis.