Balaji & Benedict Evans: When Tech Breaks Industries

25:14And so if you're in a workflow, as opposed to just a blank screen, it's one thing if you're in Photoshop or Excel. Yeah, it can prompt you on the prompt. But if you're in a workflow in Salesforce, then there's a decision taken that says, I'm going to offer the user these five options here and not 750 options. And with a prompt, you don't have any of that. So you've got to shut your eyes and think for a minute of like, well, what would I do here? And you don't have that help. This is, you know, Karpathy has talked about this also, but I do think there's room for AIOS, right? Like, in a sense, and we can talk about crypto in a second, but I think AI and crypto are both actually operating system level innovations.

25:58And, for example, it may be someone who just does it as an app or like a downloadable thing and just does it as a layer on top of the Mac. but if you have the full context of all the actions that are happening on your Mac you can suggest which apps to use suggest which apps to download suggest hey you probably want to change these keyboard settings and so like there's you know it's funny to put it this way but Clippy is finally vindicated Clippy but for everything right and because Clippy can now be really really really really smart right like you know it was Anderson's line and it's like everything in tech works, it's just when, right?

26:38And even the thing that's interesting about the Clippy thing is somebody also made a point, which is that you actually want to put faces on your AI avatars, on your AI agents, so you could pick from Clippy or 10 other kinds of things. And the reason you want to do that, this is counterintuitive, but people, like you and I can use ChatGPT and Claude and what have you because we're familiar with interfaces. But the reason they're actually intuitive to 100 million people is they're used to chatting with another human on the other side. So they're already modeling the chat box as being a human-like response because they've been using WhatsApp or Facebook Messenger or Instagram chat or something like that for a long time, right?

27:20But when it's outside of that chat box environment and it's like suggesting on the screen, you kind of want a face to pop up so they can associate, okay, this person is suggesting this because that's who they are and they kind of map that personality onto the AI agent. And so you can choose from different kinds of clippies that would give you prompts on what to do. Or it just does it for you. That's another possibility. But I don't think people like it when it does it. They want to be able to approve it before they do it. I think there's a sort of sense in here of how people conceptualize what this thing is and how it works.

27:53I remember John Prothero at Google showing me a chart, a Google Trends chart of best versus cheap. Best versus cheap. So the best does this and cheap does that. And what are the axes? Crossing over time. So Google Trends, so what's the frequency of the word best? So it starts with like cheap phones and then it goes to best phones? Yes. And so the thesis was that this was shifting from the internet as price comparison where you'd already knew what you wanted and that's the bottom of the funnel to the internet as recommendation, curation, suggestion, where you're looking for suggestions. That's so interesting.

28:33So let me see if I can understand the psychology. So it starts from 2004. In 2004, you go on the internet and you already know what you want and you look for the cheap, what is the cheap X, and then you put in a scoop or you put in a product or something. Whereas over time, that goes down. And best goes up. And best goes up and crosses it. It's a perfect X on the chart, unfortunately. And the thesis is, you're going further up the funnel, you're looking more and more for, I want someone on the internet to tell me the best X or Y. Where previously you'd have got that from a magazine or a newspaper or something.

29:09There's two things about that. The first is, you know Andy Grove's thing about the paired metrics? So Andy Grove, whenever anybody's optimizing like sales, for example, they will usually start recruiting, they'll start by optimizing quantity. but there's a, you know, you can sometimes optimize quantity and then quality drops off, right? So quantity is easy to measure. It's like just the number of people we hired or whatever but quality is how good were they, right? And so that's, the second paired metric is usually a quality metric that, and so quantity is cheap, right? And people start with cheap and then quality is best and they go to best.

29:46So that's another lens on this. A third lens, what I thought, my explanation, maybe it's different than what actually happened was when people are just trying out a space they just want the cheap version to try it out. And once they've committed to a space, like, for example, the cheap digital camera, cheap drone or something like that, they want to try it out, right? And they want to try it out at low cost, try it before you buy. And then once they're committed to a space, then they're like, I want the best drone out there now because I want to... Well, the analysis then would be cheap drone versus best drone.

30:16Right. But I think the... That's what I thought you were saying. You're saying cheap versus best overall. Yes, overall. rule. But I'd love to see it category by category. I wouldn't be surprised to see that happen category by category, but maybe not. Well, there's a different point there, which is sort of what I was talking about in our panel this morning, which is this infinite product, so how do you know what to buy? And it used to be that you'd start with a magazine, and then you'd go to the internet to find the cheap place to buy it, or you know what you wanted, and now you go to the internet to figure out what's the right place to do this.

30:47So the internet has become much more kind of a default. But actually, the thing that prompted me to that was, you can also go and play with Google Trends. And I did a chart played with like, how, why, where, what, like more kind of basic questions. And you really need to be inside Google to do that analysis. But it's that sense of how much are people doing conversational queries into Google, as opposed to typing keywords into Google. And things that are not really a Google query, like what is a is not, probably doesn't. It doesn't help Google, but that's still how people use it. People were trained for years to remove all prepositions, to remove all that stuff and just do keywordese.

31:27And now we're trained the opposite, to write full and complete English sentences. Prompting is the new searching, but it's a completely different behavior, right? Go ahead. Well, there's a sort of tangential point to that. One of the early, easy, obvious things that people have deployed with LLMs on the internet is sort of natural language queries, not so much natural language, but different kinds of query. So the canonical one people talk about is Walmart saying, now you can search for what should I buy to take on a picnic, which isn't a database query. And for Walmart or for Amazon five years ago, that search just wouldn't work.

32:08Because unless there's a product that's tagged with picnic, it's not going to come up. Whereas now there's an LLM with a world model that has some sense of how you might answer that question. Yes, is it a world model? It's at least a web model. It's a different kind of query. You're not doing a SQL query. You're doing something else. That's right. And I think one of the things that's interesting is computers are, we knew they were, very good at that first kind of deterministic computation, the SQL query, the calculation. That's what they're built for, doing math, right? Yeah. And now they've gotten good at probabilistic kinds of things, right?

32:44So this would be like system one and system two thinking, right? Probabilistic is like the quick impression. And then, you know, this is like the logical calculation. So it's actually good at the heart. The thing that's harder for humans is the, you know, like long involved mathematical calculation can do that errorlessly. And now it can also do the other kind of thing. And so it does suggest that there would be some synthesis of that eventually where an AI can, I mean, this is like AI tool use or what have you. It detects that it needs to go to system one and it starts invoking Python for that.

33:16And this is getting better. But it's surprisingly not amazing two and a half years in, right? When it needs to go deterministic. Well, so the last long thing I wrote about this was about looking at deep research, which OpenAI launched. And one of the kind of traps in looking at the news thing is to test it based on what was important to the old thing. So, you know, to look at the Apple II and say, does this match the uptime of a mainframe? No, so it's useless. Well, no, but that's not the right question. Can you build an Excel model on an iPhone? No, but that's not the point. It can still replace PCs.

33:55And the reason I mention this is, so deep research, open air launches thing, and it's whatever it was,$100 a month or whatever. But then you look at the marketing page, and the marketing page shows it doing a research project about mobile, which as we said I know a lot about. And it got the answers wrong. That's verifying. See, you could tell that it was wrong. But it looked positive. Exactly. So this is the thing. And it got stuff wrong in several levels. People are remembering now what I wrote like two months ago. And so there was a specific, it was make a table which shows mobile smartphone adoption in a bunch of countries and then the operating system market share.

34:35And then this is like an intern teaching moment. because first of all, what does adoption mean? Does that mean unit sales share, installed base, app store sales? Like what metric specifically are you asking me for? Then it had given a source for the number it had come up with, which was Statista. And Statista is an aggregator that steals other people's data and repolishes it. And when you jump through a bunch of registration hoops, you discover that the actual source was, I think, Cantar. It's an ad agency. It's part of GroupM. It's consumer survey data. So it is a proper company. So it was actual proper consumer survey data.

35:17But the two things, so then when you go to the Canton chart page, you discover that deep research had got the numbers the opposite. So it had flipped percentages. I see. And then it had also said... Right, because it was an app actually said it had copied them from the website wrong. I see. And then the other source it gave was StatCounter. Was just using the CMRong data. Which is a traffic measure. So that's not going to tell you adoption. Because high-end phones get used more and iPhones get used more. And there's a bunch of things in here where you'd like, this is what I'd expect from an intern.

35:52I would go back and say, no, this is what I mean by adoption and this is a good data source and that isn't. And it's like a great first version. The problem is A had to copy the number out wrong, which is not what I would expect for an intern, or at least not a good intern. But secondly, I'd have to be a mobile analyst to know any of these things. And that's a verifying thing that I was getting at. This is kind of the core of it. All these people were looking at deep research and saying this is fantastic for researching things you don't know anything about. And I was like, no. No, it's not. It's fantastic if you need a bunch of material about something you know a lot about.

36:27Exactly. So that's why I think AI in its current incarnation is better thought of as amplified intelligence. because the more you know about a field, the better you are at prompting because you've got better vocabulary and the better you are at verifying because you know more facts about it and you have more cross-cutting checks. And that is less true for the visual area, but just identifying that is a very important limitation where you have a completely different system you can use for the visual stuff, which is just your eyes, right? You don't have to use the, you know, we have just different hardware for quickly seeing, you know, this way the hands or something like that.

37:01Whereas if that was - It's a monkey brain. It's a monkey brain, exactly, right? Now, an interesting question, this is, you know, Karpathy and I were discussing this, is there some way to turn some or a subset of the non-visual things into visual cues where you could see it was wrong immediately? So I'll give you a small, simple example. Let's say it generated an audio file, right? You know, like a spectrogram of an audio file, right? You could maybe immediately see if there's some artifact there, right? That's a trivial example. So I think it's a fascinating quote. concept, I would wonder whether that's the right split.

37:38Okay, it's at least one split I found useful for now. But what are you thinking? Well, so the split I was thinking was that the natural language generation to make text is perfect. So the text is always grammatically correct. That is true, yes. But the model underneath, like the facts presented by the nut in the text might be wrong. Yes. And that's sort of deceptive to us because we see the text is correct and it looks confident. Yeah, that's right. Whereas in an image, like you ask it for a picture of somebody and everything's perfect except the person's got six hands. I'm not sure conceptually what, is it that that's flattened?

38:18Is that you're seeing two things in one layer? Or is it that, do you see what I mean? I see what you mean. Or is it that it's a different level? Well, maybe there's a different point here, which is if you ask for an image of a car, and the car, I actually do this, ask for a fantasy 1960s French sports car, it will look French. It will look like a sports car. It will have four wheels. It might have two steering wheels. Yes, that's right. The two steering wheels is the equivalent of a grammatical mistake or spelling mistake in the text generator. Yes. However, it may also be that the balance of the car is all wrong and it would flip over if it tried to go around a corner.

39:00But you'd have to be an automotive expert to know that. So I'm saying there's different levels of error. That's right. What you're saying is the two steering wheels is like a spelling error, but spelling errors are very rare for AI, whereas the two steering wheels is a common error. And I think that has to do with just the way diffusion models work versus how transformers work. That'd be like one high-level answer I'd give, where it's doing like kind of, it's more local with the diffusion model and you can be locally correct with the steering wheel, but globally incorrect, whereas locally correct with spelling is usually correct.

39:39That's like maybe one. That's useful, yeah. That's one answer. The second is that there's only a small space, I think. For example, we are optimized to recognize faces, So we can detect very subtle differences in faces. But if I gave you five different sheets of static noise, even if there are very clear patterns, like mathematically, these are all Fourier transforms of the same object and this is the one eye out, they just look like total noise to you. A computer would be like, these 12 are the same and this one is the odd one out. So in a sense, our eyes are optimized for a very low-dimensional set of things, which are the things that occur in the real world.

40:20Those are the things we can pick out. Which is also that dogs are better at motion than us. Yeah, exactly. So even eyes are different depending on the species. That's right. So because of that, we actually have a, because they can't detect patterns in static, that's like too high dimensional in space. I think text is kind of like that because it can describe, one of the most surprising things to me about how AI has evolved, we were talking about this question before, is I was surprised you could get so much mileage out of pure text. The reason is... So much what, sorry? So much mileage out of pure text, right?

40:57And the reason I was surprised by that is, you know, you'd think... You mean like reasoning and all stuff that looks like reasoning? Reasoning and also spatial manipulation, like picking, like having cameras, having eyes, seeing the world, reasoning about it, like a baby, and so on and so forth. It is amazing how much of that world humans have assigned machine-readable labels to with text. And the way that, you know, it's just very surprising how well that worked. Like language, what I'm trying to say is, in a few, in like 40 words, you can describe, it's like code, you can describe many, many, many different kinds of things in like 40 words, right?

41:40And it's just more general. It's one of those things where if you're, sometimes when you're really close to a space, you're actually more surprised by a breakthrough than if you're farther away. And I should say, like, you know, even seeing all the style transfer stuff in the mid-2010s and seeing ImageNet and seeing the benchmarks and so on and so forth, I was surprised that it got beyond, you know what a Markov chain is? Well, if you saw the stuff before GPT-3, right, it was, like, semi-coherent, but it didn't look like it was converging on something, you know? It just looked like, you know, it repeated itself many times and what have you.

42:20And the fact that it broke through to what it did just based on language was so counterintuitive. And I think it's because it's such a high dimensional thing. It captures so many different aspects of the world. Like anything you can perceive in the world, there's a word for it. There's many words for it. And then we also have billions of people who've been typing those words for two decades, right? So in a sense, like the entire internet, the video games and social media were like this bootstrapper for AI. Anyway, so on the other hand, AI is very bad at spatial stuff. You know this thing called ARC?

42:55Francois Chollet has this benchmark. Oh yeah, I know Francois. Yeah, and so he has a benchmark that actually got beaten by the recent, you know, ChatGPT release. And he's got like a new one. and it's almost like a Tetris-y kind of thing that's got some degree of logic and spatial type stuff that AI finds it hard, but humans still find it easy. It's kind of like maybe the next generation, CAPTCHA. And it's visual more than it is verbal, right? So for whatever reason... Is it something that would be hard to explain in words? Yes, I think, kind of. It's about like this is here and it's almost like Minesweeper, You know MindStreeper where you click and it expands and so forth?

43:45I think AI, because it started with words, it doesn't do well with the spatial side of things. Now, on their hand, what the Chinese are working on in particular is physical robotics. Obviously, Elon's working on it and so on and so forth, but China's way ahead on the physical supply chain. So, like, physical AI is robots. And those definitely have cameras and XYZ and spatial and rotation and so on and so forth. So there's some eventual fusion. You know, like the self-faring cars have gathered hundreds of millions, billions of miles at this point. So there's some fusion of the web, which is words, and the world, which is, you know, spatial, that will get you like a completely, you know, maybe a fusion set where it can reason about the world as it is.

44:29It knows how tall Everest is because someone, some robot has hiked it. You know, like Google Street View, you might eventually imagine a bunch of humanoids walking the world just like that, you know? I wrote a thing years ago about Street View and Yahoo. And the sort of thing I was kind of poking away at is that basically every big internet system is a mechanical Turk. And the question is, where do you put the people? Where's the humans, yes. And with Google Search, the people are, A, everybody making a link on a webpage, and B, everybody using Google. That's true. Whereas with Yahoo, they tried to have a bunch of people in an office.

45:07Yeah, doing it in the middle. Making a hierarchical list of all the websites on the internet, which became impossible. And with Street View, you just pay a bunch of people to drive down every street in the world, which is actually not impossible. It's just expensive. It's just expensive. It's an interesting computation. It's not obvious that it would be feasible to... It's funny, you know, the Yahoo thing, Yahoo, you know, I think got started in like the early, mid-90s, right? I think 94-ish, 93, something like that. And the thing about it is, it, like, Yahoo had to kind of get to its limit before it was obvious that you needed something like Google.

45:43Because webpages had to be suffused with, at the time they put on-page spam and so on and so forth, you had to get enough webpages that the hierarchical model broke down. You had to get enough economic value that people really incentivized to game the system and so on and so forth before, maybe Yahoo could have self-disrupted, But before something like Google was there, Yahoo almost built out enough of the web economy to make something like Google necessary.

46:14Anyway, so one thing I wanted to talk about, I want to go through various other areas, but what is AI disrupted? What is AI going to disrupt? So what is it already disrupted? So search is taking points off of Google share. Like Stack Overflow, their queries are down. image search because now image search is image generation obviously video obviously many different kinds of specialty apps will you know things that are for example like various sales tools that make templated emails and things like that those all you know change I'm not sure Salesforce I mean Salesforce is certainly they're using AI, but the entire Salesforce model of spamming people with email, I'm not sure that's going to last in the age of AI because you can spam so many of them now.

47:12So those are some of the, obviously robotics, obviously protein folding and whatnot. What is it going to disrupt that people haven't thought about yet? I can give some ideas as well. Well, one answer is we don't know. It's like trying to ask that question about the internet in 1994. Sure. And the joke is always that newspapers thought the internet would be great because they'd save on printing. At first, probably it was good for them, yes. At first, they did, yes. I did a slide in the last presentation I did because it struck me that people would always say, well, you know, Uber didn't sell software to taxi companies and Airbnb didn't sell software to hotels.

47:45They redefined what those things were. So I went and did a chart of, well, what happened to taxis versus what happened to hotels. And actually, rather unsurprisingly. What happened? Taxi medallions crushed. Uber demolishes taxis, mostly. Airbnb is mostly additive to hotels. Why is that? I think Airbnb is a different kind of experience than a hotel. It's not a substitutional experience. Yeah, it's complimentary. Half of hotels are business. There's another whole bunch of conferences. There's a bunch that's about like, I mean, just, you know, okay, so two examples, like my fiancee works for a kid, goes to fly to Milwaukee.

48:20She arrives in town at 10 o 'clock at night. She needs a gym. She's got a client meeting the next morning and then she's got her flying back to New York. She doesn't want to go and stay in some random stranger's hotel, which she's got no idea what it's going to be like. She wants a very specific brand promise from a hotel company. You mean random stranger's Airbnb, she wants to stay in a hotel? No, she will stay in a hotel. She's not going to stay in an Airbnb. The other side of this is, I think there's a more general point, and same thing, I arrived in Singapore at two o 'clock this morning, I'm not going to go and work out whether this Airbnb is any good, I'm going to stay in a hotel.

48:49Sure. I think there's a more general point, which is that everything is probably disruptive to someone at some point in the value chain, but it kind of depends on the industry quite how much and in what sense. So the iPhone demolished the existing cellular industry and really having an effect on telcos. Telcos kind of hoped that they were going to do all these services, but that was never going to happen. But mobile operators today are basically the same companies that they were 20 years ago with more basically the same share price. Because their business was not in anything that the iPhone changed, except that they're providing massively more data than they were in the past.

49:32The business is basically owning sites and owning Spectrum and connecting them up and selling that to consumers. The same thing was like online travel booking. Completely demolished the travel agent industry. It didn't really change the airline business. Airlines had to do a bunch of stuff around loyalty and pricing and maybe pricing became much more transparent and so on. But at the end of the day, their business is owning or leasing airplanes and buying fuel and owning landing slots and maintaining the aircraft. And so now, of course, the counter-argument would be you could have looked at taxis and say, well, clearly that's not going to get changed by the internet, except maybe you'll be able to book a taxi more efficiently until it becomes long and changes it.

50:14But the point is, there's this sort of very naive view that says, oh, well, the software will just destroy everything. Right, right. And the answer is, well, it kind of depends. It's Pat's opponent. That's true, yeah. And one of the ways that I sort of think about this is that the tech industry kind of comes and changes everything in an industry and resets how it works and then leaves and goes off and works. You know the joke about how consultants are seagulls? Yeah, they come and pop and leave. They fly and crap everywhere and make lots of noise and fly out. Right. And so as you think about what happened to books or music, no one in the tech industry cares about music anymore.

50:47Right. Well, yeah, Spotify does. Yeah, Spotify. It's not the main event. Yeah, recorded music is like$20 billion a year. It's like a rounding error in the scale of the tech industry. It has no, streaming means it has no strategic leverage for Apple or Google. Suno is interesting, though. So the AI created music, yes. But for the last 20 years, 20 years ago, the internet completely screwed the music industry. And since then, it left and doesn't care. Same thing in books. Like all the conversations around books right now, some of which are about Amazon, are book industry conversations. I think there's something similar happening now with video generation and Hollywood.

51:21Like everybody in Hollywood got over the panic and now everyone is sitting and looking at this and thinking, okay, well this saves a bunch of second unit stuff. All the questions for what does this mean are questions for people in LA. So one way of thinking about it is conversation is proportional to derivative rather than absolute value. So let's say you have a sigmoid that's going like this and then it flattens out, right? So when it's like a nullity or ubiquity, when it doesn't exist or when it's everywhere, when 0 % or 100%, it's just not notable. It's not worth talking about, right? People use Uber or Dropbox a lot more today than when they were talking about Dropbox and Uber a lot, right?

52:06So the conversation is maximum at the time of maximum growth, and then it's just much less because now it's not notable. is just a feature of the environment, right? So you can do Google engrams that show exactly this. I think that'd be a great graph to make. So you can do them for like steel or, and some of these. Oh yeah, railroads. Yeah, railroads steel, because it starts in 1800. And of course, some of them, you look at it, you go, oh, I'm actually seeing a chart of World War II in some ways where you see steel suddenly does that or shipping suddenly does that in World War II. And that's not obvious, right?

52:41Because conversations or attention is focused on change rather than absolute value. Well, I always used to be fascinated by elevators. I get these kind of autism spectrum fascinations about things. And there's a chart I did of the number of people employed in the U.S.'s elevator attendants, which is a perfect bell curve. Oh, interesting. It's all curves up and down. And this is because first half of the 20th century, you deploy a lot of elevators. Second half of the 20th century, they become automatic. You have a button. And you can go and find all this advertising. Why were they at the beginning?

53:16Was it just like switchboard operators? That was how it worked. Was it technical enough? There was no button. Well, if you think about what it actually takes to have an automatic elevator system in a building, you've got to have all the dispatching. Uh-huh. You've got to have the dispatching and the queuing. I see. There's an interim stage where you have an elevator attendant who would just stand in the elevator, and you would say, I want Buffalo 5, please, and they'd press the button for five. But if you get in, you know, and originally, elevator... What was it originally, before the buttons?

53:44There was a lever that's an accelerator and a brake. Oh, so it was like a car almost. Exactly. It's a streetcar. It was a vertical streetcar. I didn't know that. So there's a fantastic book I have called Cultural History of Elevators, which is all about how weird this was. So it was a vertical train. Yes, it's a vertical train. Wow. That's how people thought about it. Yeah. And so an elevator attendant, you can kill people. And there's this wonderful story I tell everybody, which is that you press the buzzer to summon the elevator, but it's literally you're just ringing a bell and a light goes on in the elevator car.

54:23And there's this story from the war department. It's like hailing a taxi. Yeah. There's a story from a war department or ringing for a servant. There's a story from the war department in DC, which is that you would buzz more based on how senior you were. So imagine you're like a lieutenant and you get into the elevator on the second floor and you want to go to the 10th floor. But on the way, the buzz ring rings four times. That's a general. So you have to stop on the 6th floor and go down to the 1st floor and then a major gets in. So theoretically, this call of 10 could spend the entire day in the elevator going up and down.

54:56So interesting. And we don't see any of this now, which is your point about conversation. You don't get into an elevator now and say it's an electronic elevator. It's automatic. Right. It's just an elevator. It simply said something like, there's a phrase which is, civilization advances as you can do more things without thinking about them. Like they quote just work, right? The classic one is light people always think about. Yeah, electricity. Light gets cheap. Yes, that's right. I think, you know, the age of internet, now sometimes what happens is these things get really ubiquitous and they're out of the conversation and then there's this, now that you can treat them as like at 100 % adoption, then the new thing arises.

55:41For example, all of the craziness of the last 10 years is in part a function of the fact that social media got such ubiquity in the early 2010s such that it was no longer the novelty was, oh, I'm on social media, I'm using it, how do I use this Twitter app or whatever? Everybody knows what Twitter is, everybody knows how to use it, they know what a like is, whatever, whatever. and then you start getting the second order effects. The second order effects, that's right. It's like installing a device driver and then you can install the next one and the next one, but it's like the device driver is the percentage of the population that has adopted something and once it gets to 100 % or 90-something, then you can I'll give you an example.

56:20During the pandemic, there's just the assumption that everybody had a mobile phone. And they could QR code scan this, that, and the other. In Asia, that was a really big thing. that's how you'd show your health check. Yeah, that made QR codes work in the West as well. Yeah, that's right. But basically, obviously 10 years ago, you know, 10 years beforehand, they wouldn't be able to do that. They would have to have some other paper system or something like that. In 2010, you couldn't assume everybody on the planet had a smartphone. It was getting big, but it wasn't yet there. Certainly 15 years ago, nobody would have it, right?

56:50So that was something where the ubiquity of something, maybe sometimes the next step comes from that ubiquity. Or you could have two or three things at the same time. Yeah, I mean, you could think about TV and radio, all forms of mass media in the past. And, you know, the growth of pop music requires recorded music and requires radio. And, you know, the growth of mass democracy kind of goes hand in hand with literacy and cheap newspapers. Right. But you need newspapers before you can have... A whole lot of other stuff has to happen. Right. For that to come. And then, of course, you have backlash.

57:30I sort of think there's something interesting in looking at stuff like the arts and crafts movement in the late 19th century. Because here's a bunch of people who say we hate all this mass manufactured stuff, handcrafted things. And that's not a statement that would make any sense in 1800. Well, it's funny because there's this, what you're talking about, like people were farmers that are artisans and are like, oh my God, this automation is disrupting us. We hate it so much. We want to go back to the old ways. And now what's funny is those manufacturing jobs that all these workers were so mad about in the late 1800s and early 1900s, all the strikes, all communism and so on.

58:04Those are now the things that are looked back on romantically by a lot of MAGA types where they're like, oh, that was such a great job. I wish I had that. I hate this information job kind of thing. I hate this, you know, these desk jobs and so on and so forth. So it's interesting because there's a romanticization sometimes of the past thing, even as millions of people are exiting that for the next thing. Now, this is a little more complicated, obviously, by the fact that China has a lot of those, quote, manufacturing jobs, but yet a lot of them are being automated in China as well with robots.

58:36So it's funny, the thing that people were so mad about that they were getting seemingly pushed into, which was manufacturing, out of farming, into manufacturing, are things that at least some fraction of this generation wants to go back to, or they think they do. I think that's interesting. Some of those things, I mean, the Luddites are one of these sort of misunderstood movements because a lot of what the Luddites are about is self-employed high-status artisans losing that status and being pushed into low-status commodity jobs. So this is going to be the big thing with, I think, have you seen the elephant graph?

59:10So the elephant graph, and some people dispute the graph, but I think it's probably gesturing at something that's right. It shows percentiles or deciles of the world in terms of income, and it shows over the last 20-something years, I think from 91 to 2008 or something like that, where the growth went, like whose incomes rose. And basically, most of the world, so the lower 10 % in Africa didn't gain that much, but like maybe from the 10 to 20 % through the 70 to 80 % had huge growth. Then it drops off in the 80 to 90 % to almost zero, and then it picks up again at the very top, right? And so that means is the global elite in every country did great.

59:55And so did China, India, Vietnam, Eastern Europe. All these countries are no longer socialist, communist, etc., right? But the Western middle class didn't. And that is a big part of, I think, the silenciability now. One way of looking at it is, in America, they have obviously red versus blue. But one way of thinking about it is starting in, you know, certainly in 2008, there's a ramp where China flips U.S. manufacturing. And so China puts all this pressure on Red America, and that leads to Trump and trade war. And you've seen that graph of print media disruption, right? That's the internet suddenly rising after 2008 to flip Blue America, and it takes all the ad revenue away.

1:00:38And it's not just ad revenue, it's also Craigslist's classified ads, a bunch of other things. So the internet disrupts Blue America, and that leads to wokeness in the 2010s, I think. And also tech clash, right, which is the anti-tech movement. So we look at it as red and blue, but there's also China and the internet over here where the internet is disrupting blue and China is disrupting red. So the thing I think that's coming next is AI disrupts blue America and robots disrupt red America. And so Chinese robots and internet AI. And so that artisan movement kind of thing is going to accelerate where people are going to be mad about that happening.

1:01:12I think on balance, there's going to be a lot more productivity in the rest of the world, but it's possible, for example, that a job that's at, let's say, 200K or something like that in the US, and there's somebody in India or Mongolia or Vietnam or something who's at$2 ,000 a year, that that equilibrates at like 20K, right? For like somebody supervising medical results or something like that, right? Where the licensure is no longer as important. The Western licensure, the Western state, can't really protect it as much because it's all on the internet. And that's a boon for everybody who's a customer of that.

1:01:47Like healthcare costs go down around the world. You've got a great doctor on tap at any time. Most people benefit from it, but those people who lost relative status, relative money and that get super angry. And I think the burning of the Waymos and the extreme anti-AI sentiment that I see among some people is kind of a precursor to that. Let me know your thoughts. So... I think this is a general observation that when Europeans live in Europe, probably something similar in Asia, when Europeans live in Europe we all feel different. So like Germans are very different to Italians and different to British people, different to French people and so on.

1:02:31And when Europeans live in America, they all feel European. And America is in a different place to the aggregate of Europe. And the US has its own sort of political culture and political questions that are different to the questions in France or Germany or Britain. And I do think some of what's happened, and I wouldn't call myself a political analyst, but I think some of what's happened is that certainly in the US, to some extent the UK, there were coalitions, particularly on the progressive side or the left side, there was a coalition of urban upper middle class, highly educated people with a certain set of social attitudes and working-class blue-collar people in a different part of the country, often with rather different social and political attitudes.

1:03:31Yes. And the same thing, I think, in the U.S. and the Republican Party on the right, there was a coalition of sort of... Wall Street Journal reading capitalists. Yeah, like Mitt Romney and... Military guys. That has split apart completely. And all of those, you know, center-right, economically conservative, socially liberal people who are Republicans kind of don't have a political party anymore. And equally, people who were sort of – Bloomberg central – Yes, sort of Bloomberg centralists, centrists, kind of don't have a political party anymore. And there's a lot of – those coalitions have kind of broken apart.

1:04:15Now, what you have in a bunch of European countries, partly because of proportional representation, is it's viable to have half a dozen different parties. And the US and the UK, because of the first-past-the-post system, you don't have multiple. It's never been viable to have five different political parties at different points on the spectrum in the same way. The UK has got this kind of weird hangover, the liberal party, which no one's ever been quite clear what it was for, sort of in the middle, quote unquote, called the liberal party. there's an interesting sort of sideline there which is the liberal party in the UK in the 19th century was one of the two parties of government and it was socially liberal and economically conservative but in the 19th century what we now call economically conservative in the 19th century meant pro-free trade and against regulation whereas now economically conservative is the other way around so all of those labels kind of shift and move and change in different things at the time it's interesting I would say MAG is certainly against free trade but they're also against regulation.

1:05:15So it's like half, right? But it's, finish what you're saying. I agree with you, of course, the labels do change. The labels change, the coalitions break apart. I think there's always this tension in looking at progressive ideas and saying, because if you look at the last 100 years, the progressive ideas have always won. Mm-hmm. Like, nobody today says, like, being gay should be illegal. So, you know, a little bit like what we were saying about AI a while ago. Today, you could deterministically say that what is woke today in 30 years' time will be what every far-right conservative agrees with.

1:05:59Yeah, people have said that kind of thing. Theoretically, in 50 years, you know, maybe, maybe not. Yeah, it's interesting. You also have these kind of overreaches around this. It does strike me that one of the differences between the US and UK politics is that what happened in my lifetime is that the right, for want of a better term, won the economic argument that state ownership and government control of the economy is bad. Right. And the left won the social arguments that like gay marriage is okay. And so on. And what happened in the UK was the right embraced that, and the Conservative Party is the party that brought in gay marriage in the UK.

1:06:40Whereas in the left, in the US, it's kind of the other way around. The Republicans kind of never... And Tony Blair sort of brought in kind of capitalism. Yeah, and he brought in liberal economics. Whereas what happened in the US is that the Republican Party in the US never kind of accepted that it had lost the social arguments. Well, it's interesting. I think from 1950, like the moment of 1950, you do have something where because communism fell, basically because Nazis was defeated, the world moved socially to the left. And then as communism was defeated, it moved economically to the right. And so thus, for example, like the immigrant billionaire or gay billionaire is like in a sense - Can be white wing.

1:07:22Well, they're far to the left of 1950 socially and they're far to the right, in an economic right, in a sense, of 1950 economically. Because 1950, yes, the Soviet Union had 100 % taxes because of communism, but the U.S. had 90 % marginal tax rates. And you really couldn't get rich mid-century in the U.S. You could be a corporation man. You could work for NASA or GM, General Motors, General Mills, General Electric, but you were sort of funneled, channeled into like these gigantic things. You had more freedom in the U.S. than other places, but you're still very stultified. It was too capital-intensive to be an entrepreneur and so on.

1:07:56And then gradually with, you know, I think the transition was the mirror moment where that's begun a decentralization arc. And history is running in reverse since that moment. But, and so I think a lot of things are happening this century that are like a reversal of things in the past, you know. I think it would be interesting, and I have no opinion about this at all, but it would be interesting to ask what is behind the growth in billionaires? Oh. Is this an unlocking of a new kind? Is this a wave of company creation? So I have to say. You see what I mean? Yeah, I do have a thesis on this. Which is, to your point, is why are there new billionaires?

1:08:31Is that because there were a bunch of new companies and there are first-generation owners? And where did those come from? And certainly some of them came from Google and, you know, global winner takes all effects, and some of them didn't. I don't know, I mean, I'm not sure how much value I can kind of add to that conversation. There's a bunch of statistical questions where I've just not spent the time looking. I can give some thoughts on that, which is that has a U-curve, right? Where, for example, like who is the richest guy in the Soviet Union? Like, didn't exist. Communism, you know, basically Stalin, you know, didn't need money because he could just requisition anything.

1:09:10Well, the Soviet Union is kind of a bad example of creating billionaires. No, no, no. They just cut the country up and gave it to 20 people. Well, no, it's right. But that's starting in the 90s, right? Then it wasn't, that was Russia then, right? But basically, the number of independently wealthy men who could do things. In the U.S., for example, a lot of the great fortunes, the robber barons and captains of ministry, were forced into foundations. That's why you have the Ford Foundation, Carnegie Foundation, Mellon Foundation, Rockefeller Foundation. Because in the 1930s, Roosevelt didn't want any other powers besides him.

1:09:38So he went after Andrew Mellon, all these people. Ida Charbel went after Rockefeller. And those fortunes were corralled and basically controlled by the state in these foundations in the Soviet Union, in communist China, they were just seized, right? So basically, let me give the normal way of talking about this is inequality is rising and that's terrible, right? Another way of thinking about it is, what is the state, right? The state is, in a sense, it's like all the people who are its citizens and they kind of crowdfund the state, right? And the question is, do they have a choice in doing that?

1:10:13Can they opt out of that? Like, what set are they part of? you know, for example, if they're on the Franco-German border, can they call themselves part of the German side or the French side? You know, how about the Polish, the Polish-German border, that kind of thing. And how much does the state take and how powerful is it? And mid-century, because of mass media and mass production, the states were more centralized they've ever been in history. I can show a bunch of graphs on that. That's not just, that's a quantitative thing. So you had these geiga states, you had fewer sovereign units on the planet than at any time before or since, like only like 50 UN countries.

1:10:46Say there's like 196. So things have decentralized since then. If you go backwards in time, you go to like Germany under Bismarck, you've got all these principalities. You go to France before the revolution, you have all these things. Italy before Garibaldi, you have all of these little, you know, city-states and so on, right? So you go backwards in time and forwards in time, it's decentralized. And the same thing happens where you've got lots of fortunes. You've got lots of, you know, individual potentates and what have you, right? So in a sense, like the world is sort of returning to what it used to be with the big exception being China.

1:11:12I think China is the like the 20th century centralized state that will keep scaling into this century. So anyway, the reason I just say that is I think there is something real going on, which is that the state is just capturing less of the wealth of its individuals. People are sort of breaking away on the borders of it and then being able to do their own thing. And so it's like Elon, not NASA. It's like Travis, not taxi medallions and so on. And there's a good to that where there's a lot more room for individual initiative. But there's a bad to that as well, which is then people don't feel as bought in on the collective project, and they're not included in it.

1:11:51It's some guy's thing. It's not their thing. It's not like America lands on the moon, or it's Elon, okay, fine. And they don't feel as bought in, right? So it's a complicated kind of thing. I think we're going to have to renegotiate all that stuff in the future. I think there's a lot of this outside, again, outside sort of US politics, which is that partly because the US, you know, partly the nature of the US economy, partly because the US is a big domestic market, partly because the successful internet companies are in the US and have global winner-takes-all effects. People outside the US, for the fact of the first time, think, well, we've got all these giant US companies that are running stuff in our country.

1:12:27And that was kind of true for like General Motors or Coca-Cola. But it's much more direct. But not really. Yeah, yeah, right. You know, General Motors sold cars, but you had a lot of your own car companies as well, and IBM didn't decide how you built roads or anything. And there's certainly a sort of a, you know, you go to European events now, and there's people saying, well, do we need our own Google? And at one level, those are like dumb questions. But they're dumb questions about like a real issue, which is you have this other layer of stuff that you're using, which didn't used to be globalized and used to be subject to local democratic control.

1:13:01And now, well, it's not quite clear how that works. Yeah, yeah. So actually, it's very important. I mean, what you're hitting on there is, I think, one of the core questions, and I'll actually ask it in reverse, which is, are those American companies? basically is the internet American, right? Now, on one level, you'd say, that's a weird question. Of course, there's two parts to that. Is, are they American? But also is, they're not in our country. If you're Swedish or Italian, it's not a Swedish company. That's right, that's right. So, like, you know, my view is the internet is to America, but America was to Britain.

1:13:34It is like the version 3.0. And because the early Americans actually considered themselves, as you know, British, right? all the folkways and stuff came from Britain. And the American War of Independence is essentially a civil war. Yeah, exactly. That's right. So they had a people and they had a land, but they didn't have a government, right? Because the government was in London, right? And when they had all three, they became Americans. They had a sense of self. And I think with the internet, we have actually a lot of tribes that actually have a people and a government, but not land. And the reason they have a government is they have a blockchain.

1:14:10They have a social network. they have with moderators or forums. And now increasingly they have like an AI agent or like a central oracle or something like that where it almost takes the role of like a god, which they all ask questions to, right? So you think of every large enough online community that has its own social network, whether it's a Discord or a forum or something like that, its own cryptocurrency, which has its smart contracts and currency, and its own AI, which is sort of like its oracle or search of all the community's knowledge, right? And that's like a digital community that actually has a fair amount of strength.

1:14:44And then, because, you know, where are your communications happening? They're happening online, whereas your transactions are online. More and more of your wealth is stored online, like crypto's at trillions of dollars now. It wasn't that 15 years ago, it was at zero, basically. And so the significance of these cloud communities, I think, is underappreciated. And eventually they're going to be able to have enough money to crowdfund territory. And so, because the tension between your primary identity is online, your social network is online, your currency is online, your information is online, and then not being grouped offline, that'll resolve, in my view, in terms of the descent of the clouds of the land.

1:15:20So, it's interesting. I mean, I probably take a sort of more prosaic view of this, but listening to you talk, I am reminded of distant memories of being at university and looking at social history. And, you know, there are a lot of social history is about the kind of the joining intergroups. And so the joining, why you're joining and what is the sort of form of self-expression. Why do people want to fund monasteries? Why do people form lay brotherhoods around the church? Why do people, like there's a whole 19th century British thing of like all sorts of social joining. Why do people want to join militias?

1:15:59and, you know, why do they want to form all these kind of former guild? Why do they want to form all of these kind of different social groups and social clubs and ways of getting together? And what are they trying to achieve? And some of it is about, you know, self-defense, you know, or not in a kind of military sense, but about, you know, forming your group to protect your group's interest. Some of it is about establishing status. Some of it is about, you know, self-expression and self-actualization, you know, kind of classic Maslow hierarchy stuff. But it's not new to have lots of communities.

1:16:31What is new is that they're not necessarily kind of physically co-located. Yes, exactly. And they're not necessarily centered around, I mean, things like women's suffrage, you know, they're not necessarily centered around a movement or some specific political objective. I think they will be. I think they will be. Well, they may be, but we've had those in the past, you know, the Cornwall League or women's suffrage, all of those. Yes, veganism. Slavery, anti-slavery movements and so on. So those senses of, you know, social organization and joining and grouping in clubs in different forms, in different aspects of society for different reasons is kind of a recurrent pattern of human society.

1:17:08And now it gets expressed, which is the sort of thing we always talk about, is, you know, the internet is human behavior. And it expresses and channels it in new ways. and that's everything from people being horrible on Twitter or doing terrible things on the internet through to people forming groups, clubs and societies on Discord or Reddit or whatever it is. That's right. By the way, I have an explanation, which you might find funny, as to, I used to wonder, why are people so crazy on Twitter? Why are they so crazy on social media? Because, you know, like starting fights and stuff, just as a sidebar, I was able to explain it in the following way.

1:17:41You know the Unabomber in the early 90s? Yeah. So he blew up all these people. But the reason he did that was to get an op-ed in the Washington Post. So he killed all those people for the distribution. He killed all those people just to get his message out there. So when you realize there's people like that, then it actually makes it more understandable how many crazy people there are on social media. If someone is willing to kill all these people to get just his message out there, a lot of other people would be willing to be very nasty on social media to get their message out there. Yeah, I always thought a lot of it was about context collapse, which is sort of actually a buggy word that doesn't mean anything.

1:18:14I felt like some of it was you don't know who that person is and you haven't understood what they've said and what else they think and you presume they think X. It's like it's lossy compression. You kind of compress three paragraphs. There's no subclause. There's no nuance. You can't say, of course, I'm not a Nazi. And some of it is also... And in fact, they can't take that for granted because you're not in their tribe. Because maybe you are. Yeah, or basically they're like, they have no context on you. They can't read 5 ,000 posts. they don't know where to trust you and so and so. Yeah, some of it is also just, what is Morgan Housel, I think?

1:18:48Yeah, Morgan Housel. Yeah, he wrote a book that quoted me and that gets endlessly re-quoted. Where I said something like, the internet means that basically you're confronted with people who disagree with you. Yes, all the time. And you didn't realize there were all these people who like, the particular thing I always found was weird, was there were people who were like very, very far left. There were people who were communists. And they're like, you'll say something that isn't communist and they'll be like amazed. They were like, the thing I always thought was weird is like, I think it's weird that you're a communist because at this stage you have to be an idiot to be a communist.

1:19:19Yeah, yeah, right. But it's even more weird that you don't know that most people aren't. Yeah, yeah, yeah. They're like shocked by it. They're like amazed that anyone doesn't agree with their tiny minority opinion. Yes, that's right. And a lot of Twitter was that. It was like, you're amazed that I don't think everybody should own a car. You're amazed that I don't agree with, I don't necessarily share your opinion on every possible matter. Yes, that's right. And I think the way that it's going to reconcile is you're going to get a lot more, I think, smaller. I mean, in a sense, Twitter doesn't exist anymore, right?

1:19:52Twitter is fragmented. Exactly, it's a tower of Babel moment, right? So Twitter no longer exists. There's X and there's Truth and there's Gab and Blue Sky on the left and Mastodon and Threads and then the crypto ones like Farcaster, Lens Nostra. A lot of stuff went to things that didn't look like that. So stuff went to LinkedIn. TikTok. Or it went to TikTok. Yeah. Or it went to Instagram. And people make fun of LinkedIn like there isn't a bunch of bullshit on Twitter. But, you know, I realized that an awful lot of corporate people were sitting quietly using LinkedIn when they didn't feel that they could use Twitter.

1:20:26Yeah, because basically, the funny thing is, it's interesting. Something about LinkedIn means people are artificially polite. And something about X or Twitter, especially Twitter, I think, even more than X in some ways, meant that they were artificially negative, hostile, right? And the funny thing about it is, artificially hostile reads to people as more sincere. Like, that's to say, of the two, there's something about the artificially polite. Like, for example, a good review is not a rave review. A good review is, I love, you know, Ben's book, it was great, but he could improve X, Y, and Z. That's like the best review you'll get.

1:21:05You know what I mean, usually. whereas a hater will be like just complete crap on you, right? So the negative is generally much more negative than the positive is positive and so when you see a LinkedIn style post it's often like super positive and it feels fake immediately but people don't apply the same filter they think negative is real but they don't think negative could also be fake There was a thing that went viral a while ago some surgeon who got a review and it was like he saved my life he's the most wonderful surgeon in history it's amazing, it's wonderful four out of five stars. Yeah, yeah, yeah, yeah.

1:21:40Yeah, exactly. Wow, what did I have to do to get five stars? Yeah, exactly. That's right. Like, you know, I forgot to give the mint chocolate under the pillow or something, yeah. Okay, so, like, you know, let's do, let's change gears. Let's talk about just survey of tech, just things, you know, and you can tell me you've been thinking about this, you had me thinking about this. So, we talked about, like, gadgets. So, we talked about, you know, the glasses. We talked about... Did we talk about glasses on the podcast or in the car? We talked about glasses a little bit on the pod, but basically, tell me your thoughts on glasses.

1:22:11Oh, so... AR, VR glasses. Yeah, XR glasses, yeah. So I've made this point a bunch online. As far as I can see, you have the VR experience, you think it's amazing. It's not clear to me that this... My base case of VR is that it may end up like games consoles in that you see a games console, it's amazing, most people don't buy it. there's a portion of people that don't understand that games is actually quite a small industry in terms of number of people it's a lot of money there's like 200 or 300 million people who play games, console games and so it may be that VR you have the experience it's amazing you put it down you walk away most people don't buy it no matter how good the hardware gets I think it's much easier to see something like what I'm wearing now being a universal device at the level of a smartphone clearly we don't have the optics for that yet we may have it's improving every year though It is.

1:23:03Yeah, it is. The question is, is that next five years' time? Is that two years' time? Is that 10 years? It's not clear yet. Yeah, there's a few people I know who just, like they almost subscribe to this space in the sense of they're constantly just getting the latest glasses, usually out of China, and they're just trying them out, right? Or getting prototypes. There's various prototypes people are making. And this is something that I feel there's some value in tracking. because it's almost being ignored by the world right now. It is because it's like it's one of those S-curves. It hit that Gartner hype cycle thing.

1:23:40It's the S-curve that's bumping along the bottom and hasn't quite happened. Yeah, or it's a trough after the hype of metaverse. And there's a subset of that which is, okay, clearly you want a wide field of view. Do you need to have something that looks like it's 3D, like it's really there? So do I need to have glasses that could put something on the table in front of us that looked like it was there? And that's radically harder than having a really good heads-up display that could put an iPad display hovering in front of me. I think it helps a lot with things like repair. Like, for example, you open the hood of a car.

1:24:14But that's still a HUD. That's still like a hovering label over the thing. Versus, does it need to work in broad daylight? Does it need to have black? Does it need to be able to occlude a bright white table like this? Maybe, maybe not. I think there's a range of outcomes there where maybe it ends up like a watch? Clearly, to begin with, it'll be a smartphone accessory just to have the computer and the battery. But does it end up like a watch where there's hundreds of millions of people who have it, but the smartphone is the main device? Or does it end up, no, actually, a couple of billion people are wearing this?

1:24:45Let me ask you another question. Does a watch top out? Because the thing is, wearables are another thing that has huge traction. And it's kind of like, there's a lot, a lot, a lot. We could fill this table, this whole room now, with IoT health stuff, right? Because there's watches, there's rings like the Oura Ring, there's, you know, wristbands. It depends on the question. Mark Zuckerberg bought Oculus because he thinks this is the next smartphone. He didn't buy it to be a games device or to have 100 million people using it. He bought it because he thinks this is the next smartphone. Yeah, because also he had been hit by the platform so hard.

1:25:30Yeah, he wants to own the platform, for sure. It makes sense. So my base case is that VR might crap out at 50 or 100 million people. And I've struggled to see it being 5 billion. I can see glasses being a couple of hundred quite easily once it works. The optics are there. I can imagine it being 5 billion. I think that's harder, but I can't know. Yeah, AR slash XR is probably bigger than VR. But as we were talking about, VR is very, you know, the new thing they're doing for controlling military drones. There's loads of vertical stuff where absolutely that's going to nail it. Definitely. No question.

1:26:06That's right. So all the telepresence. Yeah, and you know, the guy at the telephone pole, the guy in the oil with wearing glasses, yes, absolutely, that is a thing already. That's right. And I think, have you ever seen this movie? It's called Surrogates. It's actually, you know, a pretty good sci-fi movie from like almost 10, 15 years ago. And essentially, like, people are like, they stay at home and they pilot a good-looking version of themselves as a surrogate walking around outside. So you can take more risks and so on because if that thing gets in a car crash or whatever, nobody cares. And then they could just do another surrogate and run around that, right?

1:26:38So I do think, what are the use cases for like a proper, the VR control of a remote thing? So it starts with, I think, drones. And have you ever done a VR headset with a drone? It's an experience. You should definitely try it. It's a wow moment because it really does feel like you're flying, right? which is very cool and an interesting experience. So I think it starts with drones, but I think it eventually gets to something where you've got gloves and maybe an omnidirectional treadmill or something like that. There's various kinds of things like that. And you are able to control a humanoid anywhere, right?

1:27:14So you control a humanoid and you can, I don't know, clamber up a telephone pole and fix something. And you're training the AI as you're doing this, right? You could have a maintenance worker with skill in the art and we're not there yet. It'll be years before we're there. But eventually you have all these humanoids around where you can just go into this, like animate the suit and start doing things. So that's a pretty important use case for VR, like physical telepresence. You have to nail a bunch of technology for that, but I could go through the gloves, I could go through the haptics. A lot of those things are moving forward, right?

1:27:49And a lot of people are pouring money into this. That's something I give a lot of credit to Zuck for. He's just continuing this. I don't know how many tens of billions of dollars are going to put into this. He's probably put the thick end of$100 billion into that. Something along those lines. Like$75 to$100. Yeah. I mean, they are actually selling a fair number of units now. It just hasn't come close to keeping up with the spend. The sales are just bouncing along. It's like it's not good enough to break out of VR enthusiasts. Yeah. And it's funny, you go back to what you said about Twitter. There's almost like a test which is if you say that something probably isn't working yet and you get a bunch of people shouting at you on social media, then that proves you're right.

1:28:30Because if it was working, they wouldn't care. Yeah, yeah, yeah, that's right. If you went on social media and said nobody uses TikTok, then people would just say this guy's an idiot. If you're on social media and say, there aren't actually any consumer use cases for drones, you'll get like the 10 people who love their drones. Okay, there's the one exception, which I will argue with you on, which is crypto. Yes, right? So that is something where people will say there's no use for crypto. You will say there's no use for crypto. Yes, but there's just a huge number of idiots on every side. That's also true.

1:28:56That's right. So, okay, so we did. So I don't say there's no use for crypto. I have the most unpopular position possible, which as I say, it's kind of useful, but not completely useful, which means I get both sides screaming at me. Yeah, that's funny. That's the perfect position. So, actually, what is Ben Evans on crypto? Then I'll tell you biology on crypto. There's several answers to that question. One of them is, and this is sort of more an observation, which I hope you won't tell me I'm wrong, is like there's a bunch of clever people working away, building, like all the tourists left. Like the whole NFT thing was all nonsense.

1:29:28And that all there, that all, all the tourists left. The tourists and the grifters basically all moved on to AI. Yeah, a lot of them, yes. And all the kind of people trying to build content brands saying this is all wonderful or this is all bullshit. They all moved off to AI. There's a bunch of people sitting and doing like abstruse, very clever, very technical stuff. There's a bunch of stuff working or being built that may work around a financial, the finance industry, around finance rails, around stable coins, various kinds of financial instruments, most of which is storing money or speculating in money or moving money around.

1:30:03There is a thesis that you could build Instagram on this, that this is sort of an open source computer in which you could write software that consumers would use. And I have a bunch of questions about how that would work, whether that would work, whether you would need to abstract the crypto stuff away so that the consumers didn't see it. And if you did that, then why would they care? Totally. But none of that's kind of there yet. Like there are billion scale consumer apps built on blockchain yet. So there's a sort of watch this space around that. and then there's the finance side, which I think is sort of theoretically very interesting, but I struggle to get very interested in it just personally.

1:30:54It's not what I'm interested in. And I struggle to see ways that I could add value in talking about it. So I kind of pay attention to it, and every now and then I point out, like my newsletter on Sunday, I pointed to the Shopify and Stripe announcements and said like, there's stuff happening here and you should pay attention to this and there's people still interested in trying to build things so if you've just written this off as all bullshit you're kind of wrong but as a writer and an analyst I haven't moved it on to something that I feel I should write about totally so that's very helpful it's always helpful for me to triangulate on an area so here is my basic view you may have heard me say this 12 years ago I think this is still true crypto is good for transactions that are very large, very small, very fast, very international, very automated, very complex, or that need to be very transparent.

1:31:58And the reason for that is, like for example, a Starbucks swipe, like a credit card is none of those things. It's not very large or very small. It's like a mezzanine transaction. It doesn't need to be very automated because you can just talk to the cashier and see your receipt. It's not international. Both you and them are in the same room at the same time. It doesn't need to be transparent. You don't need a receipt on the blockchain for everybody to see and so on and so forth. So the reason people think about the coffee transaction when they think about crypto is it's one of the most common transactions people do.

1:32:27They pay for their coffee every day. So it's like, I don't know, 10 % of your transactions, 20 % are maybe coffee because there's very few things you buy every day. Coffee is one of those things people buy every day. So where crypto really shines is the alternative forms of traffic. Actually, let me take your mobile example, right? The internet can do telephony, but that was actually the thing that was best served by the existing system, right? We still have like local telephone calls, right? You can still use a telephone network to place telephone calls. Where the internet shined was, and telephone calls were sort of like mezzanine amounts of information, right?

1:33:07Especially local was like between people in the same country. It wasn't very international. Where the internet shined was, for example, moving really large files like Dropbox or very small files like tweets, right? Being very international, like across borders, being very automated so it wasn't a human on both sides of the call, right? It's shown for, you know, being very transparent. You're broadcasting the webpage to everybody. It's not a phone call just between two people and so on and so forth, right? So that, I think, is a good analogy where, like, yes, now today, eventually the internet took over long-distance telephony because that was Skype and then WhatsApp and what have you.

1:33:43But even still today, telephony is well captured by the current system, right? And like the existing phone lines still exist. That I think is a useful analogy for crypto, where crypto, for example, if you're a power user of money, right? If I want to receive or send a wire to a startup in Japan, USDC, I can do that in seconds. And then I can refresh the page, they can refresh the page, and they can see it's cleared, right? That is a real use case. that's international wire transfers from anybody to anybody. And by the way, the bank account setup also is instant, right? So think about what we've done.

1:34:18We've taken it from days to get a U.S. and Japanese bank account setup to seconds. We've taken it from paying money to do that for the transfer itself to free. We've taken it from taking multiple days for a wire transfer to clear to seconds. And we also, by the way, the uptime, it's not nine to five banking hours. you can do it 24-7, and you can do it on any device, right? That's a lot of improvements just for the important use case of international wire transfers, right? Then you also have the digital gold use case. Yeah, it's also, I mean, a digital gold, I think it's also something that there's a kind of country mapping here.

1:34:56Because some of what you're talking about is a much bigger problem in, say, in the US than it is in countries with different banking systems. Some of it is also... Yeah, CEPA, you guys have CEPA in Europe, and it's not terrible. I mean, you send the money, it arrives for free. Also, this is a point about PayPal. But the CEPA works within Europe, though. CEPA would not work for a wire transfer to Brazil, for example. So you still have the same issue. There's another point, which is like, I remember reading about people in Argentina literally keeping their money in bricks. Exactly. That's right.

1:35:26So it's Argentina, Nigeria, Lebanon. So there are places where you actually can't trust your government. Yes. And there are kind of places... There's a lot of places like that, unfortunately. There's also a bunch of places. where nobody's worried about that for 100 years. Exactly, that's right. So the more middle class, stable, and so on you are, basically crypto is for the power user of money and the powerless, right? The person who's reinventing what a bank account even is and the person who's just trying to hang on to a bank account. So it's like a U-shaped coalition, right? Similar to the people who actually benefited most from the global economy.

1:36:01Remember what I said is like the elephant graph, right? You had the basically 10th to 80th percentile of the world who grew, and you had the top 1 % who grew, and the Western middle class didn't. That coalition is actually also the crypto coalition. It's like the people who are just, you know, intranet, as Tim Ferriss put it, James, what's his name? Jason Bournes of the intranet, like just intranet hackers who are just trying to move money. Like, for example, I'll give a concrete example. So Brian Armstrong, you know, my friend, CEO of Coinbase. One of the reasons he got into crypto, he had a few different life experiences that led him there.

1:36:41One was actually lived in Argentina for a while, so he saw like what a failed state would be like. The second though was actually being an Airbnb engineer. So the thing is Airbnb, even still today, has the problem of transactions that are very large, very international, right? And also very one time, low trust, right? Because you've got like somebody from Denmark staying with someone from Japan, and it's a one-time transaction of maybe on the over$1 ,000, which is actually a fair amount of money. And the wire system is simply not set up for that frequency of use between unrelated parties, and so there's a lot of friction on something like that.

1:37:21And to a surprising extent, Airbnb had a lot of forex risk, because they had to hold currencies and all these different things. And the thing you thought was a solved problem, like just moving money from one country to another, it's like, well, Airbnb has to do its accounting in USD, but it's got income in, you know, if they're an American company and they've got somebody transferring money from Denmark to Japan, there's three currencies in that transaction just right there, right? So there's at least three currency pairs which fluctuate and you've got at least two or three banking systems and all the delays and fees.

1:37:57You start to see if people are like, wow, this sucks so much. We need an internet first banking system, right? We need something which is payments as packets. So that was the second thing that motivated Brian to do it. There's other things as well. So where would I put crypto today? I'd say there's at least three applications, there's more, but I'd say at least three, that are at the trillion or multi-hundred billion range. And those are a digital gold. Whether you believe in gold or not, that's there. People do. Even if you're just concerned an insurance policy. It's a thing that people are doing.

1:38:31It's a thing that people are doing, that's right. B is, it's like, even if you didn't believe in luxury cars, that's a market, right? So there's a market for it, right? Okay. B is international wire transfers. I think stable coins are now there at this point. They're now 1%, 2%, it's$250 billion. There's trillions. Stable coins have passed Visa, they passed MasterCard, right? And then third is actually crowdfunding, right? So if you look at the largest crowdfundings of all time, most of them are crypto. And the reason is that capital formation online, if you think about something like Kickstarter or what have you, it's actually more geographically limited and more limited by the credit card rails than you might think.

1:39:08For example, it's not that easy for somebody in Brazil and Japan and India to put $5 ,000 into your Kickstarter. The credit card rails may not accept it, it may be fraud hit. Go ahead. I wonder with some of the, there's a certain amount of swapping paper for paper in some of that. Go ahead. Well, in the sense of here is a new crypto project. Yes. A bunch of people who've speculated and made a bunch of crypto money put their paper games in Bitcoin into this new crypto project. Yes, that's right. But I'd say you're right. A bunch of it is like that. Which is what a lot of NFTs was. Yes, that's right.

1:39:48But even if you're totally right, what was funded off, just the mechanic of crowdfunding shows that mechanic for capital formation. What they spent it on, I would agree with you, many of those projects didn't go somewhere. Some of them went really far, like Ethereum was a really, that paid for all the rest in a sense. If all the ones went to zero, that was so successful. But just the mechanic of capital formation, where you have, so that gets me to number four, right? If you look at, now you may start disbelieving, so at least those three markets, gold, wire transfers, crowdfunding, those are very large markets.

1:40:23Those are$100 billion, trillion dollar markets. So then you go to like other cases. Now, if I just look at trade volume, right? Crypto today is actually the number four stock exchange in the world in terms of volume. Number one, NYSE, number two, NASDAQ, number three, Shenzhen, number four, crypto. And it's rising fast. The thing that has held it back for almost 15 years is doing the obvious things was pathologized, meaning like literally yesterday or like a day or two ago, we finally fully legalized, very clearly legalized putting a dollar on chain, right? Now that we can put a dollar on chain very clearly, such to the point that Amazon and Walmart are like, okay, congressional legislation is perfectly good.

1:41:06Let's go time, right? Now we can finally put an equity on chain and we can put a fund interest on chain. We could put every paper kind of thing on chain. That is a very big deal, right? That means that crowdfunding thing I talked about says that an internet company can issue internet equity and anybody in the world can be part of that cap table. Whether you choose to accept them or not is another thing, but the capital formation mechanism, it's now possible for somebody in Japan or Brazil or Mexico to invest in your company once you have intranet equities, intranet capital markets. That is now within sight.

1:41:40Now that we have the stablecoin thing, boom, done. There's nothing, you know, now it's just a mechanical thing to get the legal system going to make the on-chain equities work, and there's already work on that. So that is a big deal, right? Because the U.S. doesn't want to be the center of a global financial empire anymore. It's very conflicted about this, but with the tariffs and the trade war and tourist visas, work visas, student visa bans, and so on, it is very conflicted about whether it even wants foreign money coming in to America. And they've got remittances, taxes coming up, like one for 5%.

1:42:16So U.S. financial markets, I don't think, are going to be there in the same way by 2035. I think Chinese markets are rising. Chinese stocks are rising. That's going to be one thing that's there. But I think the internet capital markets will take over from American capital markets. And that's a very, very big application. Let me go through a few more. Is this interesting so far? Yeah, no, it's interesting. I mean, I think about... I mean, we've got numbers now. Yeah, go through. There was a thing that I was... So I'm leaning away from the microphone. We were chatting about it in the call this morning.

1:42:45I have a sort of a mental Venn diagram of like stuff I feel I can add something to. Sure. Stuff that I feel I understand and stuff where there's an audience. Yes. And the challenge I always had in writing about crypto, there's like a kind of a practical question as an analyst, is all AI, all kind of crypto questions, it felt like they were either very, very technical conversations about, it was kind of like writing about Linux. I should always think that crypto reminds me a lot of open source. Yes. It is open source. But just in the sense of the general movement around it. Yes, yes, yes. It reminded me a bit of either I write something about the new kernel memory management thing in Linux where I don't understand it and the people who do aren't interested in what I'm going to say and no one else cares.

1:43:37Yes. It gets better. Right. Or it was like, imagine what will happen when it's like talking about open source in the early 90s imagine what is going to happen when software is free and I've struggled and actually it's a thing I've also had writing about AI because it's not specific about what you think about this what I'm most good at I think or the stuff that I write that people seem to like most is kind of talking about the product strategy of how is this going to work who's going to win, who's not going to win? How is a corporation or consumer going to buy this? What would you do with it? And I struggled for a while to write about LLMs on that point because it was either like, what are the 30 new papers this year?

1:44:24Or like, this is going to transform humanity. And it was kind of hard to find anything in the middle. It was in the weeds or super macro, but the mezzo is hard. Or super kind of messianic, but not much about like product strategy in the middle. and I have the same challenge in writing about crypto in that it's either very, very technical. Okay, I've got something for you then. Or it's, imagine in 30 years. Okay. Or it's about finance where I don't... You don't care that much about it, yeah. It's not just that I don't care. It's like I would have to spend six months to get to the point that I know what all the acronyms for moving money between banks are and have an opinion about them.

1:44:58Totally, totally. So I've never like seen, well, is that, in a completely different analogy, it's also like talking about chips. Should I get to the point that I understand what's going on in chips? Is that a good use of my time? Would I be able to say anything of value there? And so far I've kind of felt, no, there's a bunch of people who know way more about it. Like the semis analyst guys have got it. So let me actually empathize with you in a certain way, which is I was actually a very late user of social media. I only got on Twitter in like December 2013, Okay. Which is like a decade. Like a heli-boomer.

1:45:37Huh? Heli-boomer, exactly. That's right. No, I mean, the thing is I got onto Facebook very early because it just was like moving around universities or what have you at the time. But I didn't really use it. And the reason is that until 2013, I essentially believed that there was absolutely, I was just a very private person. You know, I was just like, you know, it's weird because I now post a lot or what have you. I was just a very private person. And I didn't give any public talks until late 2013 and so on. And I just thought social media was a complete waste of time. And all that mattered was genomics and math and, you know, like what people call hard tech now.

1:46:20Like I was doing genomics and robotics. And I'm proud of that work. I think it was important stuff. And I didn't see the utility in tweeting my breakfast. And I didn't see the utility in just, you know, petting each other's fur, which is a lot of what people do on Facebook or whatever, you know, right? So I didn't see the value in any of that. And it was only once all of that was what bootstrapped the space. All of the fur petting got hundreds of millions of people on there, all of the breakfast tweeting and so on, until, you know, what actually made it useful and interesting to me was I saw somebody tweeting a summary of a genomics conference at Cold Spring Harbor that I didn't have the time to attend.

1:47:00and they gave a much better account of it than any layman would have. It's like, you know, like someone tweeting a mobile thing and you're like, oh, those are really great details and you're skilled in the art, right? And then I was like, oh, wow, I can get like really detailed information here. Okay, now this is valuable to me as a reader, right? What's my point? My point is, I think the parameter that you want to track when you're looking at crypto is block space. Have you heard that parameter before? Okay. That is the most important parameter in crypto that people outside crypto don't realize governs crypto.

1:47:31block space is to crypto what bandwidth is to the web. So if you think about the early internet or the early web, I should be more precise, in the 90s, it was very bandwidth constrained. It was 288, 576 modems. And so that's why Google was 10 blue links. And I think Amazon even had many images at all. And in fact, you remember Six Degrees? It was a social network, right? So that was a text-based social network. It didn't take off because without images, people didn't really... Yeah, you got nothing to share. You got nothing to share, exactly, right? But ICQ was a chat app that did work. AOL and some messenger worked because that was just text that could be sent and that low bandwidth thing.

1:48:06It was only in the 2000s that you started to get more graphical things when bandwidth increased. Like Facebook, the reason it took off at Harvard, everybody had a T1 connection being at Harvard. And they finally had digital cameras so you could have photos. And as digital cameras propagated out, so did Facebook, right? And you go further and further and like, you know, the internet only, or Internet Explorer only got disrupted by Firefox in like the late 2000s, right? It was only really by the early 2010s that you had the full JavaScript stack of like jQuery and then only later for React and what have you.

1:48:39So this concept that we have today of like a mobile web app where you can download JavaScript and run an app in the browser on a phone was a vision in the 90s, but it took a long time together because bandwidth had to increase for that, right? So what's the analogy here? Block space. Basically, block space is the amount of storage that you have on a blockchain. Think of a blockchain as like an armored car for data, because this is data that people want to corrupt. In a sense, if it's a file on disk, it's important to you. If it's a file online, it's important to others. And if it's a file on chain, it's really important to others.

1:49:15And it's so important that they might try to screw with it. And so Bitcoin came up with like an armored car for data where you could guard the minus one or plus one of who had what Bitcoin. And over time, that block space increased so that you could do some basic smart contracts on Ethereum. And now it's increased enough that you can blast millions of stablecoin transactions a day on like Base and Solana and so on and so forth. And so you should conceptualize it as, oh, why hasn't this happened yet? And instead think of, okay, these applications are gated by the amount of block space. And so they're coming online similar to the amount of bandwidth.

1:49:54You had text-only apps, then you had images, then you had videos. And Netflix only did streaming video in the early 2010s, right? I mean, we think about all that as reset. That's the way of thinking about it. I don't have a problem with the idea that you couldn't build Instagram on this because the infrastructure isn't fast enough. BlockSpace wasn't done, yes. I think there's a bunch of interesting conceptual questions around what would happen when we got there. Yeah, so here's a few things. There will be also kind of, you're sort of speculating five years in advance. Yeah, so my view is, I'm not sure if it'll be exactly Instagram, you know.

1:50:33Well, I think we can be sure it wouldn't be exactly Instagram. Right, right, right. But just kind of conceptually, you could build consumer applications, you could use, I mean, this is the phrasing I remember you using years ago, that one should think of a blockchain as a distributed virtual machine. Yes. And it's another layer of abstraction. That's right. And every layer of abstraction is always slower and crapper than running on the bare metal. Except that it allows you to do a bunch of stuff that you can't do if you run on the bare metal. That's exactly right. That's exactly right. And the thing is, blockchains are, in a sense, one of the frontiers of operating systems research.

1:51:11Like in the same way, there's an operating system like Windows, there's a browser, which is itself an operating system because you can run apps in it, it's got a full programming language. That's how Chrome layered it. Were you at A16Z when Martin Casado was there? Yeah, we overlapped just a bit. We invested a bunch of things together, yeah. Martin had this great observation. You remember when YC said that for a quarter of their companies, 90 % of the code was written with AI? And he responded to this by saying, yes, but if you write an iPhone out, 90 % of your code is written by Apple. Yes. So there were all those levels of abstraction.

1:51:44Prompting is just a higher level of programming, that's right. Yeah, exactly. And so there's a, I suppose the, you know, another way of answering your question is like, the finance stuff is there, I can see it, I get it. I'm not sure I can add any value to that. It's interesting, and I will tell people it's kind of interesting, but you pay attention to this. I think you'll be a leader. Go ahead, sir. The building more generalized consumer applications on it is conceptually more interesting to me as something that I could make money telling other people about. Yes. Except that it isn't happening yet.

1:52:16and it probably will at a certain point, the curve will curve up, the block space will expand, the stuff will get faster and cheaper and can store more stuff and people will be able to build stuff on this. Deterministically, it won't be exactly Instagram. I think that's just kind of a useful mental model for thinking that you could build something like that. You could build consumer network apps like that on this. At that point, then I think you have a bunch of kind of new interesting questions like, well, is it a good idea to have a social network where all the users have a vote, what would that look like?

1:52:48What problems does that look like? Right, right, right, right. Yes. Well, DAOs are that already. Yeah, exactly. Which struck me the other day that all the arguments against that are basically all the argument and saying, no, you need a CEO in charge. They're basically all the same arguments to say, no, you don't want mass democracy. You need a king. And you can have some balanced representative democracy, right? So you have the vote and they vote for somebody for a term. You can make constitutions, which again, like look at Africa to see how Latin America to see how mixed constitutions look out.

1:53:14Well, I'm saying, But it's represented democracy where you have a leader, but they've got a fixed term and there's a vote for them, for example. All of that stuff is fascinating. It's like we don't have it yet. And no one's going to pay me to go to a conference and give a presentation explaining it. So it's kind of tough for me to write about. Yeah, totally. I will say, all I'll just say is to put it on your radar. If you go to like snapshot.org or Vote Agora, there are actually very large treasuries where all that voting stuff is happening on-chain cryptographic voting and so on. So that's growing like stable coins.

1:53:45People that ignored stablecoins for a while just kept compounding, so the on-chain voting stuff is there. But what I will say is that I think, just like I was a late adopter of social media, it had to get to a certain level of significance before I cared about it for the kinds of things I care about. I think the kinds of people interested in crypto are either A, they're engineers, and they just like the developers, they're power users, B, they're financiers, or in some sense financiers or day traders, whatever it is, both the high and the low. and then C in the part we didn't say is just like they're political, right?

1:54:16It's like a political motivation. It's like kind of being like being a Protestant or a Catholic. They have a certain worldview. Which is also very open source. Yeah, that's right, exactly. So like I have that, you know, we both like enterprise SaaS type stuff, product type stuff, that kind of discussion. But I also like a bunch of other things and you like art museums and things like that, which I'm like, okay, that's cool. You know, go have fun, right? And so we have our own Venn diagram kind of thing, right? So, okay, so switching gears, I think you'll be more interested in crypto as block space increases.

1:54:45And once crypto wallets, let me actually give you an example of something which it's useful for right now where the block space increases enough. You know Open Router? That allows you to try a bunch of different AI models and it just uses crypto to pay for all of it. So this way you don't have to have 500 different accounts at 500 different, because there's so many different AI models. You don't necessarily set up accounts and all that stuff, right? So it just takes all that account setup process and you just have one account, you pay crypto and it settles it with all these other guys. Here's a completely tangential thing that just occurs to me as you were speaking.

1:55:17You know, Alamarina has this distributed voting system. The thing I always thought would be interesting would be to flip that and say, can you pass a double-blind test? If you take a model that's on the top 20 on Alamarina and give me a bunch of responses, how many people would pass a double-blind test to know which is which? There's probably some kinds of question you would tell very easily. But an awful lot, I bet, most people probably wouldn't. So the most fundamental one would be what is the private key to this? Basically, what is the private key to this wallet? That's something that, depending on how it's set up.

1:55:54We were talking about this in the car, but basically another major use case for crypto is AI makes everything fake, crypto makes it real again. Because AI can fake all kinds of stuff and give you this very convincing thing on the deep research thing where it said 40 % of the phones or whatever you're saying. But it cannot fake the private key, so it cannot show a non-zero Bitcoin balance or non-zero Ethereum balance without actually having the cryptographic solution there. Yeah, but it could probably just tell you that the balance is zero, because it might be. Yeah, sure, sure. It could make it up.

1:56:23But what I mean about that is, for example, all kinds of, let me give you a thing, you know CAPTCHAs, right, websites? So AI can bust a lot of CAPTCHAs now. It can get through, it can, am I a robot? It can figure it out, get through. But if you had to log in with a crypto wallet that had$1 in it, or$10, or$100, AI can't fake that. It cannot fake the possession of that cryptography, right? Like, to give you one, here's one motivating example for why crypto will get, maybe this argument will convince you. Maybe not, but it's fine, you know. Google login, you agree is at billions of users, right?

1:56:55But Google login, when you log into a website, you only can log in basically with your email address and the permissions to your Google account. There's something very obvious that somehow even Google with all of its strength has not been able to implement, which is an international balance. a spendable balance, right? Google login could not have, for whatever reason, a spendable balance across different countries. They've solved that for Google itself, where everybody can pay Google and subscribe to Google with a zillion credit cards in all these different countries, but somehow they couldn't make it work so you could log into a third-party site with a spendable balance.

1:57:27Crypto did solve that. Just that alone means that every Google and Facebook login will eventually be either augmented or replaced by a crypto login. So I'm going to pick up something you said, which I mentioned in the car, around what's fake and what's real. Yeah. So if you're buying an apartment, and well, so going back a step, I think most of what most people follow on Instagram is no longer their friends. It's interest graph. Yes, that's right. And so do you care if that photo is a photo of a real thing or not? Sometimes you really do, and sometimes you really don't. Exactly. Yes. And I think that's kind of interesting.

1:58:10It's not so much generative search as generative content. Exactly. If you're decorating your apartment and you want a mood board and you can specify some styles and you can say I like this and this and this and this and it gives you more and you look and you say more like that or more like this it doesn't necessarily matter at all if those images are real it does if like maybe you want to buy that table and that table doesn't exist it just looks like those kinds of tables or it looks like those kinds of chairs or whatever but if what you're looking for is no I want to be more like this or more like that and you keep going until you get a mood board of exactly what you want, it may not matter at all whether those images are real.

1:58:51That's right. So if it's Pinterest on the one hand, then it's just inspiration or what have you. But if it is... If it's shoppable, then maybe it does. There's an extreme case here, which is they'll just send that to Shein and Shein will make it for you. That's right. Or let's say there's some photo of a fire somewhere, right? And quite a lot of times people will post photos of fires and it's from like some... A concrete example, the Brazilian fires from a few years ago, there was like a fake photo that Macron tweeted out because he was told it was a photo of the Brazilian fires. But someone was able to show that it was actually like a, I think it was like a Reuters image or something, but from a photographer who had died years ago.

1:59:31Yeah, it wasn't that image. Well, this is the funny thing about people complaining about deep fakes. It's like we don't, the problem isn't the picture, the problem is the label. The label, exactly, that's right. So the thing is that with crypto, you can do what I call chain of custody, blockchain of custody, where you can have a camera. And by the way, this is also important in scientific work as well. There's this huge replication crisis with all these labs and data. You'll fight the data. Yeah, exactly. Or something, right? So you could have, you know, there's something called pre-registration of studies where like if you're doing a study, you have to describe in some places who you're doing it on, what you're doing, it's like monitored to make sure that people report the results, whether they're positive or negative, right?

2:00:12So let's say it's a study or it's a camera. You can have either crypto software or hardware in there such that when the frames of images are recorded, they're instantly hashed and put on chain, either directly or as a digest of some kind, right? That basically is like tamper-proofing such that before the data is even collected or analyzed, this internet-connected thing is doing something. Now, it's possible maybe to hack the firmware and mess with that, but it would be pretty hard. Depending on how you do this, it would be pretty hard to do that. We also have this on Google and so on, trying to watermark generated images.

2:00:50The challenge is, if the image isn't watermarked, that won't stop people believing it. True, that's right. But I think over time, this type of stuff, where it'll gain traction at first, are crypto oracles for prediction markets. Because if you're making a financial decision, I don't know if you've seen that stuff. Alex Tabarrok has talked about this. When people have money on the line, their partisanship reduces and they actually get a different chip in their head where they're like, is this true or not? They're trying to dispassionately figure it out, right? They're not just cheering my tribe, your tribe, whatever.

2:01:23And the is this true chip basically means, okay, I'm going to double click into this. I'm going to verify this. I'm going to look at this. And that's where like oracles come in. They're like feeds of data that have some degree of verification. And right now they're like mostly price data, but people use it for weather data. They use it for this, that, and the other, right? All these different feeds of information that people trade on. And over time, I think those feeds, once you can guard price data, weather data, you know, health data, et cetera, eventually you can guard any kind of data. And then now you've got like a chain of custody for data, like the scientific data rough off it.

2:01:57Anyway, why don't we, we should wrap, but this is actually an awesome conversation. Anything, you know, what's your latest stuff? What should people go and check out, anything? Well, I've been publishing a newsletter every week since 2013, and I always welcome more subscribers to that. You should write, is there going to be a Benedict book? Google Benedict Evans. My parents had good SEO. Book is interesting. I've had publishers approach me every now and then about doing a book. I have to work out what it would actually be and why it would be worth reading. Honestly, if you just, I don't know, maybe a history of tech.

2:02:26Because all your slide decks are very good, right? And there's, one of the things I learned from, you know my friend Novel, like the Novelmanac, right? That sold a million copies. Why did it sell a million copies? I was surprised, but he was surprised by that. It was Eric Jorgensen went and curated Novel's old content and turned it into a book. And I was really surprised. I was like, wait a second, isn't that all available on Twitter for free? Didn't people already see it? They did. However, if you say, what is the one work that represents the best of Novel's thought over years? Just to see his latest tweets is not the entry point for that.

2:03:03You want to kind of collect all of them, sort them, filter them, organize them, thematically style them, and so on and so forth. And I think you could have a pretty good book. If you do that, let me know. Well, that's one thing on the list. And yes, the other thing is I used to do an annual presentation. I've now shifted my cadence. So I did a new AI presentation last month that I published, which I was just in town to present. And then I will do another one in the autumn, the fall, for American listeners. Great. on sort of e-commerce, advertising, marketing, brand, like all the other stuff that's being transformed by AI right now.

2:03:38And in general, what do I do? I try and work out what's going on and how to explain it and how I can explain it. And then I go and do presentations and speak at events and talk to companies and I do slides for money, basically. Well, that is similar. I do a lot of slides too. I do a lot of speaking. So, you know, I've mentioned the cloud communities thing and materializing those cloud communities. so that's what I'm working on at NS.com, like Network School. So if people are interested in this kind of stuff, we talk about that there. So subscribe to Ben Dick's newsletter at, is that benedictevans.com?

2:04:09Ben-evans. Ben-evans.com. Okay, great. And then if you want to check out Network School, come to NS.com. Sure. So benedictevans.com is another Benedictevans. No. Who is a photographer. Really? And so my profile picture is taken by him because I used to get his email. This is obviously a blockchain use case. There's a contact form on my website And he won't sell it to you. And I redesigned it. I don't need to ask. I redesigned my website recently, so it's clear who I am. But it was quite generic. And people would go to the contact form and they would say, hey, Benedict, we really liked your work photographing Harvey Keitel.

2:04:42Would you like to go to Mexico next week and take pictures of Robert De Niro? And I would look at it forward. That's so funny. Well, you know what's funny? You know what's funny? There's actually probably, maybe even more, Balochie Stream of Austins than our bit. Because there's like 12 people last I checked in like the SF Bay Area alone with my first and last name, you know. So just, I feel your pain. Okay, well, this is great. Really great seeing you in a while and we should do some more. Yeah, great. Thank you.

2:05:12Thanks for listening to this episode of the A16Z Podcast. If you liked this episode, be sure to like, comment, subscribe, leave us a rating or review and share it with your friends and family. For more episodes, go to YouTube, Apple Podcasts and Spotify. Follow us on X at A16Z and subscribe to our Substack at a16z.substack.com. Thanks again for listening, and I'll see you in the next episode.

2:06:05Thank you.