Marc Andreessen & Jack Altman: Venture Capital, AI, & Media

21:23The relationship with the founder is just so deep. So it's too deep. And if you as a venture firm invest in a direct competitor. It's just a giant issue. The founder you're already invested in will be extremely upset with you. By the way, do you think that's practical? Do you think it's all emotions? Like do you think it's correct that firms shouldn't do conflicts? I would say when we were startup founders, we felt this very deeply. It's just, it's okay. So when you're a startup founder, I'll channel the other side of it. When you're a startup founder, the whole thing is so tenuous, right? It's just like, is this thing gonna work?

21:50There's like 18 ,000 things in go wrong. People are telling you know, every day, no, I'm not gonna come work for you, no, I'm not gonna invest in you, no, I'm not gonna. And then your board member invest in a competitor and you're like dagger to the heart. Dagger to the heart. And then you literally what happens is the founder is you have to go into the all hands meeting and explain why your investor has given up on you. Yes. And you go in there and you do some song and dance about it out of that. And they're just and your employees are just like, you're employee, basically your employees look at you and they're just like you the founder or so we can lame.

22:14Yeah. Right. You can't even get your board member to not invest in a competitor. Exactly. What about the marginal stuff though? Because like, you know, all these companies are near each other. They blend. They evolve over time. So like how does this how does this play out on a practical level for firms? It almost never plays out the way that the founders think it's going to play out And I say that in two dimensions number one the company is this historically what we've seen is that the founders who think that they're directly competing with each other generally end up not doing so could be because one or the other of them Change of strategies and they diverge which which by the way is natural because it's like species specialization I mean the company specializing up not competing But the other thing that happens is two companies that were not competing that you're already invested in pivot into each other Yeah, and then they're mad at you.

22:52And then they're very upset. And you have to remind them that like that, you know, you didn't know that that was going to happen in a spatter fault. And then they're still upset. And so I would say the founders are not the founders and also we have very low predictability of terms of where the Catholics are going to be, but that doesn't really relate any of the emotion at the time. So it doesn't actually help. It doesn't help for us to explain to the founder, oh, don't worry about this guy who you think is directly competitive because he won't be any year. Yeah, because you can't prove that and the issue was the issue was in the moment.

23:22What did that leave your How does that impact your strategy meaning like if you know conflict or this huge issue and you've got you know a big Aggregate fund and so it's very important to catch winners and then you invested in you know Blue origin, which is really good, but SpaceX is you know bigger or whatever happens Yeah, what does that imply for your strategy when it comes to like should we you know doing seeds and nays and things like that? versus like say, you know what, let's just wait till like the D. Let's have D be our early stage. That's right. So the most obvious thing you do is you just like, always just need to wait.

23:55Because we need to wait for clarity. Just don't deal with this whole issue. Right, just wait, just wait. Just keep, just keep, to keep delaying and keep delaying until it's obvious what the answer is. If it's big, it's gonna be really big so we can buy later. But then the problem with that is all right, now you're out of the venture business. Right, because now you're doing as you're doing, as you said, now you're basically doing series D. So now you're a pure growth investor. And by the way, there are very good pure growth investors, but like our determination is to stay adventure investor because we think that's kind of the whole point.

24:17Why is it so important? Is it just because that's what you like or is there a strategic reason that it's important to stay doing early? So we've always wanted, I mean, that's the way we've always thought about it as we've always wanted to kind of be the founders best partner and like to be the one who's like the closest end, the one that can really be relied upon, the one that's gonna be around for the longest amount of time, the one who they can really trust. And it only happens early. Yeah, like it's, yeah, it's your really guys. And so it's hard to insert after that. Yeah. And then look, the other thing is like, there are great growth firms that do invest later and have done very well, but we just think there's so much information at the early stage.

24:47So for example, when we make a growth investment, because we have the active venture business that we have, at the time we make a growth investment, we have either invested in the company for several years or at the very least we've met with them repeatedly over time. So we just end up with just enormous amounts of information. And then the other thing, by the way, is there's kind of time arbitrage, which is sometimes the right answer is just like, okay, just invest in SpaceX or whatever. later on, but sometimes the answer is no, there's actually a new thing, you know, totally. Do you invest in the MySpace growth round at the Facebook, Facebook, Seed Round?

25:17And if you're not in the early stage, you won't know that because you won't see the early things. And then by the way, the other thing I just say is financially, one of the things people say that is inaccurate, as they say, if you're running a big fund, you're not going to have the time to spend on the early stage opportunities because you can't justify it before you're putting the money. But that's actually not true in venture because the aggregate dollar return opportunity on early stage is just as high as any growth investment, right? because if you get the right venture investment and you can make $10 billion on the upside case, it's definitely worth my time to spend with your...

25:45So I spend as much time as I can with the early state founders for that reason. So the barbell, there's big on one end, there's something sort of like me on the other end, selfishly, I'd love to know, like, I would assume you think it's better to be the big version, but if you were conditioned on needing to be me at the small end of the barbell, how would you approach it? No, they're both good. This is the thing is they're both good. They're both good. If I were for some reason not doing this, I would immediately do what you're doing, right? So that's good to hear. Yes, 100%. And then I would say I actually invest this way.

26:14So my liquid assets are basically tied up in either a 16z funds on the one side or I run a very aggressive personal investment program in early, early, basically, Angelin and early stage seed funds. It is because I believe in the barbell. I believe in the barbell so much. And so, but the conflict thing I wanted to explain because that's the issue. So the big part, like we do seed investing is just we have this problem every single time. We're looking at a seed investment, which is like, Are we really fully convicted? If this is going to be the winner. Even at seed it creates a conflict. So for a board seat, there's debates.

26:43There's always debates on this. Is like, do the seed ones care as much? Do the growth ones care as much? Do the growth ones care as much? What I tell you is it's not a logical question. It's an emotional question. And we're just very sympathetic to the founder that needs to be able to justify their, you know. So we also definitely can't ask while you're making. Like if somebody asked you while they were making the investment, hey, is it okay if we invest in a conflict in a couple years? I'd be like, what are you talking about? You know, we've done these things. We've tried, we used to have this thing.

27:06we usually have this separate branded thing called A16C and we were like, well, we have a different conflict policy on this and it's a great in theory, but it's like, no, it's A16C. So the way I think about it basically is like the more successful you are as a as a venture firm, the bigger the issue this is going to be because the more the people that you were investing in are going to care. Yeah. And so it's just it's just like the downside of success, but like success, you know, right? Right. Right. The only people who like the only investors you don't care, or they just know is if they're literally if you don't care what they think about anything, right?

27:32If they just don't matter at all and everybody knows that they don't matter at all. So, so, so, so, so, so, so, so, so, so, so therefore it can be simultaneously both of these things are true. Number one is we still we definitely do lots of early stage investing and we will do we will do we do make seed beds, but it's just also true that we can't structurally for this we cannot do all of the seed investments that we would like to do. In fact, we can't even do a tiny fraction of it. It's just like it's strategically we just structurally we just we just can't do it. And so and again, and it goes back to the barbell.

27:59So that means structurally, it's the same reason why Amazon can't give you the champagne experience, right? It's the same thing, they're not set up for it, they can't do it, it's not a scale strategy. And so what has to happen is there has to be the other side of the barbell, there has to be the specialization and intense focus and deep relationship at, right, thing. And that's the role of the angel investor and the seed investor. And that's, and of course, in startups, that's incredibly important because that's the most formative, right, they fought time in the life of these companies is when they're first getting started, right?

28:30And as you know, right, half the time these are people who haven't, they haven't started a company before, they haven't run a company before. Some of them haven't had a job before. And so like they need to learn a lot and they need people to work with them on being able to do this and they need to figure out how to actually do these things. And so there have to be, and there are, like in credit, a high quality seed investors, ancient investors on that side of the barbell. The big firms presumably, if we succeed, we succeed by generating large numbers of aggregate dollars and a very good, you know, percentage return.

28:58The seed investors have this perpetual opportunity to just absolutely shoot the lights out. Yep. Right on upside. And you can, you know, you know, there are seed funds that generate like 200x, 300x returns, right? Yeah. And so these are both good strategies. They're both adapted to the current reality market. There's just two things that fall out of that. One is the death of the middle, which is it just doesn't make sense to have the old -fashioned, you know, series A, series B, six GPs, 300 million dollar fund, sitting on a Santa road waiting for people to walk in the door. Like those days are over and those funds are, you know, those funds are shutting down, like that model is going away.

29:28And then the other thing that happens that causes some of the tension is this, what is a successful seed investor do, right? He raises more money and wants to become a venture investor. Right. Right. But then he goes, but then you're going from one side of the barbell back to the middle and you're creating that same problem. And I think that's where the tension is coming from. I also feel like the mechanic that happens a lot of times is when you grow the fund, the only, you know, you raise a huge fund, And then you start deploying it into things just because you've got to play at some pace. And so the threshold for, you've got to deploy 400 million this year.

29:59And I only see $700 million worth of investable things. I'm going to do four sevenths of them versus presumably if you only had to do one seventh of it, you would, you know, you'd pick better, hopefully. Which I think is a huge, we can't do it. So I think that's part of it. But I think the related thing is your competitive set has changed. And what we find was seeing investors who migrate up and then regret it later. What we find is that they didn't realize was their competitive. So right because now they're going for bigger more competitive rounds against the new in Sequoia. Yeah, all of a sudden.

30:23Okay. Now you're competing for $15 million. Be good luck. Right. Right. Exactly. And so it's just like and look like like the market fundamentalist, if you have a better value proposition than Sequoia, you should go you should go off for that. But I just I would not I would not accidentally end up competing with Sequoia for Series Ace. Like I would just say that's a bad way to live. Yeah. And I think that's what happened. That is what has happened to a bunch of the seed funds that have gotten larger. Why is it so rare for somebody to break through and get I mean, And you did it, and that's one that happened in the last 15 years.

30:49Maybe there's a couple others maybe, but why is it as rare as it is? It seems like almost more rare than a new big company in a way. That's true. In fact, our analysis actually when we started was there actually hadn't been, I think there had been two firms, Andy Rackliffe actually. In Thrive also. So Thrive was, yeah, they were after us. Yeah. I mean, they've been great. But in the 30 years before us, we think that there were only two new VCs that actually punched through to become top tier. In other words, VCs that were not either firms that were built in the 60s and 70s or firms that weren't derivations of those firms.

31:20Founders fund? No, no, no. Founders fund started actually around the same time we did. They were a little bit earlier, but they're around the same time. I mean, over the preceding like 50 years, seven rows. You won't even arrive. No. This is the thing. You won't even recognize. You need to read a book or something. Seven rows was the venture firm, the famously funded Compact Computer, the big winner, and then they went on to become a successful firm, Skype and a Rosen, early leader in and there was a firm called Hammer Windblad, which was the software specialist firm in the late 80s, early 90s.

31:45Those are the only two that punched into the top end while they were operating. Wow. Neither one of them, you know, sustained it, but they got there for a bit. But that was like the success case, right? So there's a little bit like Elon looking at the history of the car industry and some Tucker automotive in the 1950s. So it's so rare. It's very, very rare. Okay, so two reasons I think it's rare. So number one, there's the intimate reason for it and then I've sort of macro reason for it. Intimate reason for it is just, It's like you're gonna have this incredible, as the founder, you're gonna have this incredibly intimate experience, you know, very close -trust relationship with whoever you're working with.

32:18And it's like, can you reference them, do they have a history of interact record of the kinds of behavior that you need and the kinds of insight that you need? And it's just like it's very hard to do that. It's very easy for an existing firm that has a long track or success to prove that. It's very hard if you don't. So that's like the close -in reason. But then the other reason goes back to the way the world is changing is we always believe the thing that you want from your venture firm is power. So the thing is a startup that you want is you want them to like fill in all the missing pieces that you don't yet have when you're starting a company that you need you need to succeed.

32:49And so you need power and so you need power. I mean, it's like you need the ability to be able to like actually go meet customers and have them take you seriously. You need the ability to go get publicity and like you know major you know channels you know if used to be media and I was podcast and be able to like get taken seriously. You need to be able to be taken seriously by recruits right because there's thousands of startups recruiting for engineers what makes your stand out. I sometimes describe it as venture firm is providing a bridge loan to provide. As you say, until you have your own brand that's big or big or real, you know, for your own space, then the VC, you're borrowing your VC's brand.

33:18Exactly. And that has been very effective for a long time. And that was how we looked at it when we were founders. That's why you did media from the beginning. Yeah. Oh, one of the reasons. It's one of the reasons, yes, but a very, very powerful one. Yeah. A very, very major one. Yeah. And then by the way, you also need ability to raise downstream money, right? You're, you're, you're, you're gonna have to need to raise money again. And so they either need a lot of money or they need to be connected to a lot of money. Yeah, exactly. Right. Exactly. And so you just had it if they just have it. Yeah.

33:40I mean, full stack. Well, then by the way, now you're getting also like, again, you think like tools companies just never got into like, for example, politics, right? Or just let's just like global affairs, global events, like what's happening with, you know, like what's happening? How do you navigate the world? Right? How do you navigate? Why should you know the the regulator show up and I want to kill you? Like how do you navigate that? Or you're like, it's again, in some, you know, giant fight with the EU or what? Like so, so the, especially these full -stat companies, they're getting involved in very complicated macro political, geopolitical situations much more early.

34:11And they have to, in some cases, they have to escalate up to senior government officials as a state. Major heads of sovereign wealth funds, they need to get to CEOs of major companies. How do you get to the CEOs? You're a new AI company and you're trying to redefine visual production for movies. How do you get to the studio heads? Yeah. The studio heads just don't have time to meet with a thousand startups. So where are they going to meet with you? So basically it's projection of power. And this has been one of our theories how we built our firm is you optimize for maximum amount of power in order to be able to give the startups access to it.

34:44Both the startups that are already in your portfolio and but also the startups that don't even exist yet. And this goes to why the scale thing matters so much. It's just like, all right, there's a scale aspect of power. There's a big difference between being able to get to everybody who matters and not. Why is it rare for people to be able to accumulate power even if they were, let's say everybody was trying to do it. It's not like everybody could do it. What's the cause of their rarity to be able to build enough power in that sense? In the sense that it was you have to want to. So we met with all the GPs of all the top firms, basically, when we were starting out, because we wanted to see who we could be friends with.

35:16And it worked very well in some cases and not well in other cases. But one of them told us this is a GP at a top firm in 2009. And he said, yeah, the venture business is just like going to the sushi boat restaurant. All right. And so the sushi boat restaurant, so sushi restaurant where they've got the boats. It's got like a water gun. Like a conveyor belt. conveyor belt, right? And the little sushi boat comes out. Like a bottle. And there's a tuna roll. And there's a shrimp roll. And there's a this or that. And he said, basically, you just sit on Sand Hill Road. And you're like, we're going to crush these guys.

35:42And the startups are going to come in. And he said, you know, if you miss one, it doesn't matter. Because there's another sushi boat coming up right behind it. And he's just like, you just sit and watch the sushi go by. And every once in a while, you reach into the thing and you pluck out a piece of sushi. And we walked out and said, like, what the hell? That's funny. Like in what industry? Is 2009 or something? 2009, yeah, like that was a very common this again as the mid this was the mid size venture It wasn't the reason when I when I when I came like look in 1994 I mean it might have kind of been like that it was it was when I came to Silicon Valley I had never heard the term venture cap right I didn't even know the thing existed And then as my business partner Jim Clark explained it to me and I was like there are guys like they're just sitting there waiting to give you money And but you see this and you're like this is gonna get this isn't alive of course This is observed like it admit it anybody takes this seriously it's all gonna change yeah, right?

36:24And so it was this very clubby cartel, you know, basically kind of thing And again, it was fine as long as the ambitions of the industry were constrained. And then again, look, the tools companies, they didn't need all the power. They needed some of the power, right? But they didn't need all the power. You know, they weren't dealing with like governments, right? Or, you know, these sort of big macro issues, you know, at least, you know, in the early years. Well, okay. So here's another thing that's happened. It's just the world is globalized. Like, so startups 30 years ago, you would spend your first decade just in the US.

36:50And then you would start to think about Europe and global expansion. And now you just, you have to think about being a global company upfront because you're going to, if you don't, other people are going to do it. And so you just, you have to chin up as an entrepreneur. Like the expectations are much higher than it used to be. Maybe one final question on this topic of fund size, and then I want to go to AI. What do you think, and then you thought about this a lot, what do you think is the limiting factor for the creation of a lot more really big companies? Do you think it's founders? Do you think it's capital?

37:22Do you think it's market maturity? Do you think it's underlying tech stuff? If you had to pinpoint the one or two things that you think would allow for there to be way more big companies, what is it? So there's the holy trinity of venture startups, which is people market and technology. And I think the answer is all three. And the way I would describe it is there's some limiting issue with just how many markets are there? How big are they? How ready is the market to take something new? Then there's the technology question, which is when is the technology actually? For the venture perspective, technology moves in stair steps, right?

37:55And so things become possible in the world of smartphones that just weren't possible. You couldn't do Uber when everybody had a laptop, you had to wait till they had phones. And so technology moves in a stair step, you get these paradigm shifts, platform shifts. And those just, they come when they come. And until they come, you can't do it. And then the people side, this is the one that I say, you know, dexies me the most, which is like, okay, like how do you just get more of great founders? Yeah, right. And I think part of that is, you know, you I think there is definitely a training thing that is real and getting people into the right scene in the right way and like the thing that like commentator does is the deal follows that like those are real things.

38:31And those help a lot, but also, you know, there is an inherent, you know, they're just certain. They're not infinite number of people running around who have the you probably figure there's a lot of people who could have built big companies who haven't though and hopefully a lot. Yeah, a few. Yeah, I don't know. Some number. But there must be people who are just like in academia or government or education who are just doing something completely different who if they were attracted to startups would have built a big company. So yes, but then the other question is like, well, okay, why didn't they?

38:58Why didn't they do the things required to get themselves in that position? Well, it could have been then like 2001. It was just like too many people were too scared to do it or didn't know about it or whatever. But what does that tell you about the people who didn't do it? Yeah. They were heard. I can tell you who didn't listen to that, right? It was Mark Zuckerberg. Are there more good? Let's just press this point harder for a moment, which is like, I always described this as like, I always call this the test with the capital T, which is like, okay. Like if you're not in position to do the thing, it's the fact that you're not in position to do the thing, that you've already flunked it.

39:25Well, I guess the question would be, is there a subset of people who could build Facebook, who other than being too scared to do it, would have had all the other ingredients, and so when everybody's not scared, you get more Facebooks. You know, there's a line in the movie. I actually never saw the movie, but there's a line in the movie. If you could have built Facebook, you would have built Facebook. Yeah, yeah, yeah, yeah, that's right. That's a good one. Right. And so this is the thing. It's like, you know, are there more great founders today than when you were, let's say, and like, do you think there are more now than there were 20 years ago?

39:56I believe there are, but like, I maybe there's, how many more are there, right? Is it five times more? Is it like 50 % more? Or is it? Well, so like the number of wins is increasing. Like so, so we used to talk about the 15, 15 year that matter. It's, that's up. numbers probably if you do the analytics, probably uplet 10x. You can go like 150 ,000. 150 companies a year that like really matter. And the reason is because there's so many more sectors now. Right. So you get the industry maturation. So kind of by inference, they're kind of have to be like. You're saying the markets are better, more than you're saying the founders are better.

40:22Well, maybe a little bit of both. Also, I think the founders are getting better. Part of the founders getting better is they have better training. They're all on the, well, start with, they're just all online. Yeah. So when I showed up here in 1994, like literally, there's like three books in the bookstore. Right. Which were that great. Yeah, it's not that the DNA is better. it's that they're now the ecosystem is matured to teach people better. Yeah, and like people command and they watch every video, you know, they're watching every episode, you know, your podcast. I'm like, right. And they just walk in knowing all this stuff.

40:45And then, yeah, look, and then look, the white comment didn't exist. And, you know, that definitely helps. And, and, you know, Tiel Fellows didn't exist. And that definitely helps. There's, you know, Brian, you know, has this great term, seniors, seniors, you know, seen plus genius. Right. And so it's just like, you know, the individual genius on his own is always, it's always, you know, it's hard to get things done. Yeah. Some people do, but it's difficult. It's more often in a profession where you're seeing creativity happen. There's almost always a scene, you know, there's, you know, Silicon Valley is definitely a scene in that way.

41:11People come here and they just, they kind of get, I don't know, they just get better. They just, you know, they meet more people who are like them. They're able to aggregate together. They learn from each other. So, yeah, so look, the founders are getting better. There's more of them. But is there, does that mean there's now 10 ,000 as opposed to 1 ,000? Yeah. I don't know. There's, and there's eight billion people on planet Earth. Why are we debating whether it's 1 ,000 or 10 ,000? Yeah. Right. And so I just I that I don't know yeah I would hope over the next you know years and decades will all figure out a way to go make sure we get everybody who can do it Yeah, that's a good segue into AI Do you feel that we're now at the beginning of what is like the new next important?

41:48You know paradigm like is this cloud but on steroids? Oh, yeah much I think much larger and I'll explain why so Yeah, so so I described you know I described it described before right now that the triangle people technology market that the technology is ultimately the driver is the technological, for venture, the technological step function changes drive the industry and they always have, right? And so if you talk to the LPs, you can see this. It's like when there's a giant new technology platform, it's an opportunity to reinvent a huge number of companies and products that now had become obsolete and create a whole new generation of companies.

42:20Often, generally, end up being bigger than the ones that they replaced. And the venture returns map this. And so it come in waves and the LPs will tell you, it's just like, yeah, there was the PC wave, the internet wave, the mobile wave, of the cloud wave, like that was the thing. And then by the way, when inventor, when you get stuck between waves, it's actually very hard, right? You've seen this for the last five years. Like for the last five years, it's like, how many more SaaS companies are there to found? Like just, we're just out of ideas. We're just out of categories. Yeah, yeah, yeah. Right.

42:46And so it's when you have a fundamental technology paradigm shift that gives you an opportunity to kind of rethink the entire industry. It would have been very sad, by the way, if the AI breaks. It didn't happen. The state of venture would be sad, I think. Three years ago, this was, I mean, so when we were talking to our LPs three years ago, We're just like basically like, you know, we're in, you know, we're, so, uh, Christchurchson has this, uh, framing he uses, he calls it your adventure. You're either in, uh, uh, search mode or hill climbing mode. And then search mode, you're looking for the hill and then search mode.

43:10Right. And in three years ago, we were all in search mode. And that's how we described it to everybody, which is like, we're in search mode. And there's all these candidates for what the things could be. And AI was one of the candidates, right? It was like a known thing, but it hadn't broken out yet. Yeah. And then the way that it has now. And so we were in search mode. Now we're in hill climbing mode. Thank goodness. Yeah. Yeah. time. Yeah. And then, and then, you know, look, like I, I, I, as I say, on the technology breakthrough itself, I think a year ago, you could have made the argument that like, I don't know if this is really going to work because LLM's, you know, hallucinations can, you know, it's great that they can write Shakespearean poetry and hip -hop lyrics can they actually do math, you know, can they do, can they write code?

43:41No, obviously. Now they obviously can. And this, this, I think for me, the turning point moment, the moment for certainty for me was the release of a one. So a one from OpenAI, the reasoner, and then, and then deep -seek R1, the minute I, the, the, the, the, the, and those happen kind it back to back and the minute those popped out and you saw what's happening with that and the scaling wall that was around that, you're just like, all right, this is going to work because reasoning is going to work. And in fact, that is what's happening like it's, you know, and I would say to say every day I'm seeing product abilities, you know, I'm seeing new technologies I never thought I would live to see, like really profound.

44:09I actually think the analogy isn't to the cloud or to the internet. I think the analogy is to the invention of the microprocessor. I think this is a new kind of computer. Being a new kind of computer means that essentially everything that computers do can get rebuilt, I think. So we're investing against the thesis that basically all in companies are going to get nuked. Yeah. And everything is going to get rebuilt. Just across the board. Just across the board. Now, we'll be wrong. And a bunch of cases, because some in comments will, it's not. But power a lot of the things that are right will be super right.

44:34We'll be super right. Exactly. And then look, the AI makes things possible that we're not possible before. And so there's going to be entirely new categories. By the way, is your mindset there that you should just bet on like, obviously in Cum Bence, are going to win some percentage in startups, are going to win some, but it's basically the dominance strategy as a venture capitalist. to just plan to bet that startups are going to win it all and go for the parallel. Yeah, that's right. That's right. And again, the reason is you can remember two customer sets. The way the LPs think of us, the way the LPs think of us is as complimentary to all their other investments.

45:03Yeah. And so our LPs all have like major public market stock exposure, like they don't need us to bet on incumbent healthcare, you know, whatever company, right? They need us to fit a role in their portfolio, which is, you know, to try to maximize alpha based on, you know, based on disruption. Yeah. And then again, and then just again, the basic math adventure, which is you can only lose one X, you can make a thousand X, and you just like slam that forward as hard as you can. So when you have a moment in time world view like this, do you, you know, as a firm leader, do you give a directive that's basically like, hey, everybody, we need to deploy in this kind of way right now?

45:38Or do you just build a system that's always picking birds out of the flock from like the bottoms up and you just like, like, well, they're smart. They're going to see that every opportunity is good. Like, how much is it like a top -down guidance versus, you know, the market's just obviously good all around. Yeah, so we don't do, like I said, we don't do top -down investment decision -making. So Ben and I aren't sitting saying, you know, we need to invest in category X, we need to invest in this company versus that company. And we don't run, we have a legal investment committee, but we don't run a process where they come to us to get approval.

46:05Because you're letting the leader of each group sort of make those. Yeah, and often in those groups, it's actually delegated further as delegated to the individual, individual, superior, check writer. And the reason for that is we just think that the knowledge of knowing what's going on and which one's likely to win is going to be Focused in the mind of the person who's closest to the specific thing But do you have like a risk slider or are you like hey guys? Yeah, you get a nine right now. So this this is the funny thing So venture is the only asset class in which the leaders of the firm are in the position of trying to get the firm to take more risk Not less risk on a regular basis exactly because right because the the natural orientation towards any kind of Anybody who's in an existing business.

46:38There's a natural organizational center to try to reduce risk because you just want to hold on to what you have and not upset the apple cart. So Ben and I are generally on the side of taking more risk. One of the applications of this is the old Sequoia adage, which is they say, went in doubt, lean in. So for example, you see this, I'm sure when you do it, it's just like, okay, there's this thing, there's this company that is potentially very interesting, but they're these issues. It's just like it's too early and this and that, and guys got a weird background and this and that and you see whatever, I don't know, issues and we have a hair.

47:09You know, there's hair on the deal. There's no hair on the GP. That's funny. But there's hair on the deal The founders tend to have have have really good hair They stand the deal and it's just like all right like what do you what do you how do you calibrate that right and and and the And again the history of entry is when you see something's very promising and there's a lot of hair on it Sometimes when you invest it's gonna go to zero. Yeah, because the hair is gonna kill it And then sometimes when you invest it's gonna be the next thing but it's like something where you're like I love that. I hate that is much better than yeah, everything's fine 100 % and this is the way we describe this is invest in strength not in lack of weakness or another way to think about it is it's not good versus great.

47:43It's very good versus great. Differenciating good from great is very straightforward. Differenciating very good from great is actually very hard and again the risk reducing way to try to do that is you kind of alluded to would be kind of the checkbox thing which is like very good team, very good market, very good this, very good that and then you have this other one where it's like they've got six great things and nine like horrible things, right? Yeah. Okay, which is the better bet, totally. Usually, usually it's the thing with the greater strengths. Statistically, by the way, this shows up in the return data from the LPs, which is the top desial firms have a higher loss rate than everybody else, which is called in baseball called the Babe Ruth effect, which is the whole run hitter strike out more often.

48:23So the top performing venture firms statistically tend to have a higher loss rate than the mediocre firms. Right. And it's for this reason. They're willing to invest in the thing that just looks like completely nuts, but has that magic something. And so when Ben and I think about trying to get the team to take more risk, it's almost always, it's basically either that kind of thing, which is like, look, and what you're doing, is you're telling the person closest to it, go with your gut. If your gut tells you there's something magical here, like go ahead, it's okay, because we're going to have some losses, so it's okay to make the bad if it breaks because of the hair, that's fine.

48:55But then the other former risk we try to do, and I do this a lot, it's just, you know, I am trying to push the firm, cos I was like, go earlier. Yeah. Right, because again, that for as we discussed earlier the natural inclination is to wait right and it's like no No, no go earlier like we do actually want to make these these you know We make some seed bets, but we definitely want to make like a lot of a bets Yeah, and again, we're gonna lose in a bunch of those like we're gonna screw those up and miss the winner or whatever But like we have to do that because we have to get into some of these things early We have to you know get get the level of percentage you get in the a yeah That kind of relationship.

49:22Yeah, I mean I guess there's risk that's of the flavor of like do things that are more asymmetric where there's hair, but also brilliance. There's also the flavor that's just like, well, sometimes something I struggle with is the deals where I just barely said yes, and just barely passed. I'm like, I don't actually have that much confidence that I can tell the difference between those. There's another flavor of sort of be more aggressive, which would just say, like, just do a higher percentage of those ones where you're like right on the line. Do you give that kind of guidance, like do you think like that too, where you're like, it's not just do the more out there things and we're swinging for the fences, but it's also like, let's just do a little bit more right now in general.

49:57Yeah. So we used to run this process we call the anti -portfolio and the shadow portfolio. And so the shadow portfolio was we used to track this statistically for like the first five years exactly on this point which is every time we do an A, every time we do pull the trigger on an A round, let's put in the shadow portfolio the other company we were looking at at around the same time that we didn't end up pulling the trigger on. Yeah. And then let's build up representative port, build up the, you know, the earth to portfolio. I'm so curious. Well, so and the good news is it turns out generally the main portfolio did better than the shadow portfolio.

50:26But the shadow It was close. It was a good book. It did really well. Yeah. Right? Exactly the point. And then you're, okay, so then you're just like, okay, you're not that smart, but you're just like, okay, obviously what does that mean? It means do them both. Right. And then again, this goes to the thesis of like, how big should these firms get? It's just like, well, if you had the opportunity to do both, the portfolio and the shadow portfolio should do them both. What's the constraint on that as we discussed is complex. But generally speaking, you should try to do both. And by the way, this is the, I don't know if it was Joshua or the other podcast that they were talking about this, but you know, at least I saw a reference to like a statistical going to ounces of like wind rate or whatever, return a percentage returns or whatever, or percentage of winds.

51:00It's just like it doesn't, adventure math. It doesn't matter. It doesn't matter. The thing that matters is where you end the next big thing as early as you could get in and buy as much as you did. Like that's the only thing that matters because if you don't do that, you miss out on the thousand x gain. The one x losses don't matter. They wash right out. And so this idea that somehow there's some virtue to being like a, you know, small, you know, we only make a few bets, we have a higher percentage. It does. Yeah. How much is that? I'm glad people think that that's a, I would like to encourage people too to think that that's a virtue that they should shoot for.

51:32It seems like it's very hard to assemble lots of, you know, very good productive GPs into the same firm. It's just objectively rare. Yeah, that's right. You've done it, but it's like doesn't happen very often. Yeah. Do you, I guess my first question on this is, do you think of just finding greatness and then you can't really teach it much. So you're basically just going to hire people and see how it goes. Or do you think that it's about creating the system and conditions in which people do great work and you can actually create good investors? So I think it only works if there's a point, like if there's a reason why you would have an aggregation of GPs in the first place.

52:08And our answer is power, right? The R -pitch to GPs is to why they should join us as opposed to go to a smaller firm or start their own thing is, if you come here, you just plug into this engine. This is just like massively powerful. And so everything that you do, the effects of it are going to just be blown completely out, which is much more satisfying, and you're going to be able to actually help the companies a lot more. And you'll probably see more companies anyway. Yeah, so everything probably gets better. Yeah, that's right. That's right. And by the way, some people want to have colleagues.

52:31Some people don't want to have colleagues, some people do want to have colleagues, and you'll be working with people you like and who care about the same things you do. So, but there has to be a point to it. And of course, it's on us to keep proving that, because the devil's in the details of whether they'll actually buy that, but so far a lot of really good great people have. And then the second part of the question is like, okay, who do you put in those roles? Historically, our old model was basically only higher GPs. We were not developing and we could go through why that was the case. We changed that like eight years ago.

52:59We now develop our own GPs. We've evolved to where I think that's working quite well. I think the answer to your question is it's a two -part question. Is there some level of just objective? Are they good at doing the job? Here's a big thing we focus on when we evaluate them, which is, It's fine to invest in a category like five years early or whatever, something goes wrong. That's fine. What's not fine is you invest in the wrong company and you could have invested in the right company. Like at the moment you made the investment, you made the wrong decision in that moment with which one you should invest in and you could have known.

53:33And so it's like, did you do the work to fully address the market? How do you handle the fact that you don't know that until six years later and now you're going back and you're like, hey, you made this mistake six years ago. This isn't going to work out now. So it's general, so could that is a giant problem? And I would say that when we started actually when we talked to our friends in the business, what they said basically was they said number one, you don't know if somebody's a good GP for 10 years because you don't know their return data. And then they said number two is nobody ever wants to admit that they made a mistake.

53:56And so they never actually fire anybody. Yeah. So what they do is they just keep them on the mast at them. They just kind of gently like, you know, retire them out. They they sit and pollute. One of the guys running one of the big firms, 2015 years ago told me he's he said they hired a partner is that they heard the partner is an older I heard a partner in 1984 who was like a big deal at the time in the industry and you know, the LPs were very fired up about it and he said he then proceeded to just like nearly ruin the firm over the next 20 years. That's crazy. Because he said he wanted, he said all of his investments were bad, but then it was even worse that he talked them out of all the other good investments they call it.

54:25And he said we couldn't get him out, you know, the refutational damage was too great. So, so this is a long run. And then by the way, a lot of these firms are partnerships. Yeah. The problem with the partnership is, the partnership sounds good. Yeah. The problem is you end up with lots of internal dissension and then you can't make decisions. So this is a big issue. I guess what I would say is, for example, the thing I talked about, it's just like it's not a, it's a, what I just described is a process issue, not an outcome issue, right? Which is like, are you doing the work? Yeah. Right? Like, it's an actual job.

54:53Like, are you doing the work? If you're not doing the work, it's relatively clear not doing the work. And you're probably not doing the work, not just on one thing. You're probably not - So you do try to really look at the inputs. Oh, yeah, very much so. Yeah. We value it with the inputs just as much as the outputs. What do you do with an investor? I'm sure you've had this at some point where the inputs are not particularly good. They hit this one outlier thing. The outputs are objectively now good. And so you're looking at that situation or the inverse. So this is the other part of it. The other part of it is I think there's just a subjective criteria for venture, which is just, are you good at it?

55:22And like, do you have taste? Which is unquantifiable. There's one of the nice things about your model too, where like you somebody gets to make a call versus in these partnerships, I think it would be very hard when nobody gets to and it calls like this, because at some point someone has to just like make a determination on the stuff. Yeah, that's right. And then even, you know, even who even made the call gets lost. Yeah, so I think there's a taste thing and then look, I think there's also just like a network cohort branding thing, which is these startups come in waves. And it's not just new technology, it's also new people.

55:53And they're these new scenes form and like, are you in the scene or not? Right? And if you're not in the scene, like, I can't fix that for you. There's also a ton of paths, depending on what it seems like. like you make an investment that gets you in the scene. Now other founders wanna work with you cause you invested in this really cool company. And then it just snowballs. And you're like, well I can't go back and change history and get you into the snowball. Yeah, yeah. And again, this is what I was gonna call this. This is the test with the capital T. So it's just different versions of the complaint, right?

56:20So you're right off the one of the founders who's like, well I could have done this but I was in a position to do it, right? That's your own fault. Yeah. There's another version of it which is this is sort of anti -VC narrative. These VCs are so arrogant, they don't see my unique genius. Right? Right, you know, the VCs are only as I get it critique, they apply against Paul Grammys, you know, he wrote this post on pattern matching and he always gets attacked. It's like, you know, he pattern matches. He's not looking for quality. He's just looking for pattern matching. And like, you know, it's like, and it's like, it's a founder's not match to pattern.

56:43It's like, it's like, it's like, at least, Raisa is very important for Founder's Center. Raising money from venture capitalists is the easiest thing you will ever do as a startup founder. We are sitting here with checkbooks waiting to write checks. We are dying for the next person to walk in the door and be so great that they convince us to write the check. We don't care where they come from. We don't care where country they're from. We don't care what, like, doesn't, none of it matters. It's just like, do they know what they're doing? Are they gonna be able to do it? We're just dying for that.

57:11Everybody else they're ever gonna deal with, candidates and customers and downstream investors and everybody else is gonna be much harder to deal with than we are. And so if they can't pass the test of raising money, like, they're not gonna be able to do it. And it's the same thing with the GP. like if you can't network your way in and make good investments, that's the job. That's totally. Okay, on that point, because I completely agree with what you just said about how it's the easiest part of building a company. There's going to be a lot of frustrated founders hearing that, who are like, why can't everybody?

57:42What's going on here? One of the things that I'm really, you've done this for enough time now, when founders, you don't get a pass note, it's usually about something that's really to the market or the product or whatever. And a lot of times it's what you just said, which is that like, I just want the founder to be great. Right. But nobody says that. Nobody says that. And so they don't get the actual feedback. And so I guess this whole dynamic of people aren't giving yet, because what they're saying is not, you're not great, but I didn't perceive you as great or something like that. Is there some way for there to be a more honest, useful back and forth around this?

58:19Or is it just one of the impossible structural things and founders just have to go around frustrated that people are saying their markets too small or it's too big or whatever, and really what it is, is they're just not landing as great. I mean, it's like, yeah, I mean, I think you think your baby's beautiful, but I think it's really ugly, right? Yeah, yeah. Yeah, yeah. This kid's gonna have a really hard time with life, man. It's really, really unattractive. And it's really hard. It's really difficult. And by the way, you embedded two things in there. One is like, you know, one is, do they come across as good, which in theory is fixable, but the other is like, yeah, some people are better than other people at doing this.

58:49Definitely. And some people should not be start, some people should actually just like, on a team. Yeah, sometimes it's a correct assessment. Sometimes it's an incorrect. Yeah, there are some people who in the early days can't read it. You know, there's a lot of great people who now we all know are really great, but they couldn't raise a lot of money, so they must have shown up in 60 VC meetings as not great or whatever. And look, VC's made... And yeah, exactly. It's like, we don't know. Yeah, we make lots of mistakes of a mission. You know, so we, like I said, even the great VC's most of the time are screwing up.

59:14And so that's all true. The thing I always tell founders is the... It's the Steve Martin was asked this question about becoming a great stand -up comic, like any Rothes old book, a great book called Standing Up, which he talks about this. It says, the secret to being a great, he said, the secret is, be so great they can't ignore you. Right? If your business gets good enough and you prove that you're really good, you don't have to show up in the one hour with the VC and you're aggressive, you just proved it on the field. We're dying for people to come in and just be like, wow, right? And just be like, I cannot believe how good this is, I can't believe how good this product is, I can't believe how much the customers love it.

59:43I can't believe how much this person has gotten done in a very small amount of money. So it's the same thing about my talent, I'm just dying for the young community make up a stage and make me laugh. I also think the founders who really struggled to raise a round or two and then the business got working, I think there's a real strength that comes out of that. So it's not the worst thing that ever happened. No, like having said that, there's breakage along the way. Also it sucks, it's really unpleasant. I had to have it, it sucks. Yes, yeah. So I just say, having been a founder, it's an incredible privilege to be in an industry and in a world, in a country at a time, when you can actually do this.

1:00:17Yeah, like so you know most of history and most places you just it's kind of thing can't happen and then you know We are genuinely trying to find the anomalies right like it our businesses to find by anomalies It is true the thing you said about it's like an audience that wants to laugh. Oh totally true. So desperate Can't wait for somebody to finally tell a good joke so on AI I want to talk about not just the startup side But maybe like I'm just some of your takes on like the broader lens of AI I guess my first question is around AI going wrong and I know this is like a very hard thing but I'm just sort of for fun, really curious what you think.

1:00:49You know, the downside case that people are very afraid of would be something like AI embodies humanoid robots and now we have a terminator situation on our hand at its agency, we have a big problem. You know, that's one end of the spectrum. The happy path is that it's just like the sickest software that anybody's ever seen and like, it's a tool that humans use and everything's great. Do you think about this? If so, do you have any opinion on it or you just like it's gonna be what it's gonna be? Just start by saying it's an important new technology. any important new technology is what they call dual use.

1:01:18It can be used for good things, it can be used for bad things. The shovel. It can dig a well in savior life. You can bash somebody over the head with it and kill them, fire the computer, the airplane. The airplane can take you on a most marvelous vacation with your new spouse. It can also bomb, you know, Dresden. Right. And so it's just a top, I mean, a top power was the big one. Because the atomic power could be unlimited clean energy for the entire world or it could be nuclear bombs. Right. It turns out there we just got the bottles, we didn't get the unlimited clean energy. And so that's just generally true.

1:01:49These things are double -edged swords. The question is like, all right, what are you going to do about that? And are you going to somehow put it back in the box or are you going to somehow try to constrain it and control it? The nuclear example is really interesting because there was a very big concern around obviously nuclear weapons and then nuclear, there's a big moral panic that developed around nuclear power. We kind of messed up with that. We very badly messed up with that. And what happened was the green movement in the 60s and 70s created something called the percussion area principle, which is now there, which the same kinds of people are not trying to play to AI, which basically says unless you can prove that energy technology is definitely going to be harmless, you should not deploy it.

1:02:23And of course, that literally rules out everything, right? That's just like no fire, no shovels, no cars, no planes, no nothing, no electricity. And so, and that is what happened, a civilian nuclear power, which is they just, they killed it. The story I tell on that is President Nixon in 1971, the year I was born, he declared, he saw the oil crisis coming in the Middle East. He declared something called Project Independence. He said the American used to build a thousand civilian nuclear power plants by the year 2000 go completely clean, carbon zero, completely electric, cut the entire, you know, they had electric cars a hundred years ago.

1:02:55So it was just obvious you just cut over to electric cars at some point and basically we need to do that. And then we're not entangled in the Middle East and we don't need to go, you know, do all this stuff there. He then created the EPA and the Nuclear Regulatory Commission which then prevented that from happening. They absolutely killed the nuclear industry in the US, right? And then the Germans are going through the new version of that with Ukraine, which is they keep shutting, you know, Europe X France keeps shutting down their nuclear plants, which just makes them more dependent on Russian oil.

1:03:20And so they end up funding the Russian war machine, which invades Ukraine. And then, you know, they were worried now it's going to invade Russia. And so the social engineering, I would say the moral panic and then the social engineering that comes out of this, the history of it has been quite bad, like in terms of its thinking and then in terms of its practical results. Yeah. I think it would be a very, very, very big mistake to do that in an AI. And then to like regulate early. Yeah, yeah, yeah, absolutely. 100%. Just try to offset the risks in order to like, and then cut off the benefits. So start with that as number one.

1:03:50Number two, I just say, look, we're not alone in the world. And we knew that before, but especially after Dvesique, we really know that. And so there is a two horse race. This is shaping up to be the equivalent of what the Cold War was in the, in the, it gets the Soviet Union in the last century. It is shaping up to be like that. China does have ambitions to basically imprint the world on their ideas of how society should be organized. Another world should be run and they obviously intend to fully proliferate their technology, which they're doing in many areas. And the world's 50 years from now is going to be running on, 20 years from now, is going to be running on Chinese AI or American AI, like those are your choices.

1:04:25You think that's how it'll basically play out. Yeah, yeah. It's going to run on one or the other. How will that play out? Like, let's say it's one or the other. So AI is going to be the control layer for everything. So my view is AI is going to be how you interface with the education system, with the healthcare system, with transportation, with employment, with the government, with law. It's going to be AI lawyers, AI doctors, AI teachers. Do you want your AI teacher, you want your kids to be taught by a Chinese AI? Really? Yeah. Like, they're really good at teaching in Marxism, and she's in pink thought.

1:04:55like it's like the culprit is another way to put it is the culture is in the weights. Right. And so like how these things are trained and like you're they're trained by like really deeply matters. And so and by the way this is already an issue in lots of countries because they're like number one they may not want Chinese they have it number two do they want you know super woke northern California AI is another open question right yeah there there are big questions on this and so I just think like there's no question like if you had a choice between AI with American values versus the Chinese Communist Party values I mean for me it's just crystal clear where you you'd want to go.

1:05:23By the way, there's also going to be military version, national security version of this, which is, okay, do you want to live in a world of all CCP controlled robots and drones and airplanes and cars? Yeah. I mean, is it really what you want? Warfare and defense, I guess, just is going to fully go AI over the next 20 years or something. I think that's very much true. And I think this, you know, robots plus AI basically. There's these signal, these signal may probably saw the Ukrainian attack on the Russian airplanes. So, you know, so there's our autonomous drones, and then they were doing AI targeting of structural, the right structural points, to be able to attack the planes and destroy the planes.

1:05:55Yeah. Right, and so yeah, 100 % that's happening. You know, this is a major issue with our defense doctrine with respect, for example, to, you know, potential invasion of Taiwan, you know, if an aircraft, Ukraine has been fielding AI -piloted jesskeys. So they take a jesskey, take a jesskey, put an autonomous pilot on it, and they strap with explosives. And, you know, you could send out 10 ,000 of those against an aircraft carrier, right? And by the way, and you could just keep sending them, right? Because there's no, there's no loss of what you just keep sending them until you get through. And so, yeah, so the entire, I think the entire, the entire supply chain, the entire defense industrial base, all the doctrine of warfare, all changes, you know, the idea of human beings and planes are on submarines just doesn't make any sense.

1:06:34It's all going to change. And then the symmetry or asymmetry between defense and attack is going to change. You used the word dual use. And obviously with like previous technologies, you know, they got used. At some point I'm wondering, does it blend from getting used to being the user? Like a business example would be if you could tell an AI, I want you to, hey, prompt, I want you to build me a software company, make it roughly do this, serve these users, and run that for the next five years, and just wire me the money to this bank account. Go. And if that worked at some point, in the middle of those five years, is like, you know, is it doing something or are you telling them what to do?

1:07:18Does that also happen in like a warfare scale? I guess that's maybe like the thrust of, to me, where it turns into something scarier, particularly when you get into the embodied version in warfare, where it's just like, you know, the prompt is like, hey, just fight this war for the next year. That's right. So the good news, the mystery version of it is straightforward, I think, which is we We have, you know, US law, Western law has a concept of responsibility, accountability. If you use a machine to do something, it legally is your fault. It's your problem. But by the way, the machine goes wrong for reasons to have to do with not with you then it's a manufacturing, it's a product liability issue.

1:07:55The manufacturer is liable. But if you use it, you know, if I buy a shovel and I bash you over the head with it, right, it's my, you know, yeah, the shovel killed you, but like I'm to blame. And so I think that your example of the autonomous corporation, I think legal, legal, the legal system is perfectly prepared to deal with that, which is, yeah, you, that was, it was your, your bot, you set the whole thing up, it's your fault. Yep. And so there's, there's a natural, there's a natural constraint. I think there's a natural constraint on that. The, the most obvious version of the military version of the question is autonomous targeting and trigger pulling, right?

1:08:24And so, and this has been, this has been an issue in drone warfare for the last like 15 years, which is, is there a human in the loop on pulling the trigger? Right. So predators flying overhead, da da da da da da, sees a bad guy. Okay. How is the decision made for the predator to launch the missile on the bad guy. And by the way, the way that worked for a very long time was, it actually had to be an Air Force combat pilot who would actually pull the trigger on the drone very specifically. Even if he was otherwise responsible for operations of the drone, you'd still get somebody who's job at West to make those decisions in the loop.

1:08:53There are a lot of people in the defense field who are like, it's absolutely mandatory that in all cases, it is required for the human being to make the kill decision. And maybe that is the correct answer. There's a very powerful argumentous toy that should be the case, because it's the biggest decision that anybody can make. And even if you don't believe in the sky net scenarios, just the idea of a human being not being responsible for that decision sounds ethically morally very scary. There is a counter argument, which is human beings are really, really bad at making those decisions. Yep, right?

1:09:22And so any... It's all a seven car's thing. If it's safer than a human driver, than like who's, you know, yeah, there will be accidents, but there's still. Correct. And so every post analysis of any combat situation that you read or any war later on, you discover all these shocking things. So one is friendly fire. Like there's just huge mass of dust cause where friendly fire people shooting at their own troops. You see they're confused. Number two is fog of war is just like it turns out the commanders have very little idea what's going on. They had some battle planted immediately go sideways. They don't know what's, they literally don't know what's going on.

1:09:50They don't have the information to be able to make decisions. Everything's confusing. Number three, the physiological impact of stress. Adrenal, it's like one thing to be on a shooting range, making these decisions is another thing to be like, you know, have like a severe lead wound coupled with, you know, adrenaline overloads, coupled with two hours of sleep tonight before and like is even the highly trained person making the decision right? And then there's just like a more basic thing, which I think this is like a world where too retrospective is something like in a lot of combat situations.

1:10:17It was estimated only like 25 % of the soldiers even fired their rifles. Like just generally a lot of people just like don't act. Right. And so anyway, so the more you look at this, you're just like, wow, the human being is actually really bad at this. Yeah. And then all these other issues around collateral damage, you know, they should, you know, actually only shoot the civilian. And so, yeah, you're back in the self -driving car situation, which is like, all right, if you had, if you could, if you knew you could get better outcomes by having the machine make the decision, better, safer, less loss of life, less carotal damage.

1:10:43And so I would say I don't believe I have an answer to this, but I think that is a very fundamental question. I guess this kind of actually feeds into the next topic, which to me is, I think, like, tech has now gotten to a place where with the government and politics, like it's sort of now undeniable that used to kind of be an underdog, but now for reasons like this and a bunch of others, it's just like too important to like not be in the mix at like the national stage now, which I think has really like changed the dynamic even in solarally for Silicon Valley, because now you know, people are, you know, looking at what people are doing, not just like in tech, but pretty broadly now.

1:11:19Yeah, that's right. Yeah, so I say I deeply agree with that. I believe it is mostly our fault. Like the current situation is mostly our fault in tech, which is there's an old Russian, It'll still get joke, which is you may not be interested in politics, but politics is interested in you. Yeah. And so I think we, we, we, and I would include myself in this, I think we all got complacent, or a lot of us got complacent between like 1960 and 2010 that basically just said we could just sit out here, we can do our thing, we can talk about how important it all is, but like it's never gonna, you know, these are never going to be big social or, you know, cultural or political issues.

1:11:49Yeah. And we can just kind of get away with not being engaged. And then I, for all the reasons we've discussed, you're saying and then once it was undeniable, we weren't prepared. And then we weren't I was saying remotely prepared and then they're using metaphor, the dog that caught the bus and the dog is being dragged behind the bus. Tailpipe in his mouth doesn't know what to do with the bus. And look, geography I think has a lot to do with this, where 3 ,000 miles away, it's just hard to get there. They don't come here very often. And yeah, so I guess I would say like it worked. Like we actually, we always wanted to build important things.

1:12:18We actually are building important things. There are obvious political cultural social consequences to them. If we don't engage, nobody's going to. And then by the way, the other thing I'll say is, you know, it's not like there's unity even in the industry on a lot of these issues, right? And so there's, you know, I would say two giant divisions right now, big companies versus small companies. Yeah. You know, there's often do not have a line incentives right now and a line of genders. And then the other is, you know, like just on AI, obviously there's a big dispersion of use even in the industry.

1:12:45I guess this probably goes to why it's important for, to some extent, at least some VCs to have relationships with the government because big tech has the resource to do with themselves. Small tech can't. And so if this is the state of the world, we actually, as an industry need somebody to be doing that on behalf of little tech. Yeah, that's exactly right. That's why we're doing what we're doing. Yeah. On media in particular, I thought it was really interesting. I can't remember how many years ago, but biology many years ago started talking about like some fracturing, about the sort of relationship between tech and the media was going downhill.

1:13:20I think this was mostly talking about media and inside tech, but I think probably also at the major publications and at sort of a larger scale. From my read as often, you know, I think this was right and from where I said it seems like it did kind of continue to degrade the relationship. What's interesting to me recently is I've seen a little bit of life, you know, in the sort of tech publication stuff, but it's actually been from the inside. And so like, Eric, who you just brought on as GP is awesome, and he's been really good at doing this. TPPN's really cool, and I don't think I've seen something like that pop up maybe ever inside tech.

1:13:56What's your read, I guess, within our bubble of the sort of tech media relationship and where it's been? So my background in this is I have a weird kind of history because of what happened in the 90s, but I started dealing with the National Press and the Tech Press business press in 1993 and 1994. And I did an annual press tour to the East Coast, probably a week out of each year, usually in the spring. and what that means is you go around and meet with all the publishers, editors, and reporters, you know, cover everything. And I would say basically, this stretch from 94 to 2016 was generally, like I thought it was like a quite healthy, normal productive relationship, you know, like they would run, you know, they would do investigative reporting and they would rest or as they don't like, but generally they, you know, the major publications in each of those categories were trying to understand what was going on and were trying to kind of be, you know, honest brokers and trying to, you know, kind of represent what was happening.

1:14:46And so that's a, so to me, it's really super interesting, they always wanted to learn, they always had tons of questions, they were super curious about everything that was happening. That was great until 2016. It was the spring of 2017 that I went on the press tour and it was like somebody had flipped a light switch and they were like across the board like unbelievably hostile, like unbelievably, like completely and across the board like 100 % sweep. Do you know why? Absolutely hostility. I think the obvious answer is Trump, Trump got nominated and got elected and then they blame tech for both of those.

1:15:16Now, by the way, there are a bunch of other factors including that was when the, that was when it's actually the, there's a business side to it which is there was the fear that the internet was going to eat the news business in the 90s. It actually didn't happen. And actually 2015 I think was the best year in history for like revenues to like newspapers. And then it was really after 2015, social networking went big and then their businesses started to collapse and they started having lots of layoffs and so that didn't help. And then, you know, look, they would say, look, that was also, you know, they would say, hey, smart guy, that's also when you started doing all these things that actually matter more, right?

1:15:47And so, you know, everything we've been discussing, like, the tech industry changed. And so, you know, you're going to get a different level of scrutiny because you deserve it. You're doing different things now. The political thing was just a giant swapping factor. And, you know, this is a big, you know, I don't want to get into politics per se, but if you just, you know, it's this whole thing ran in parallel with everything that's like and Jake Tapper's book about, you know, like, so it's just like they just, they got locked in on a mode of interaction. They just became very polarized. And very polarized and very locked step.

1:16:16And you know, from the outside, you just, you're, you're, you're, you're just like, wow, these two people, but they're all like, really wrapping themselves around on actual. But I think one of the other hard things is as, the truth has become more accessible by other people. You more often see something in the news that you know about and you're like, wait, that's super backwards. And then somebody posts about how backwards it is. and now you see a clip of some major publication, and here's the truth, and everybody can tell, and it's like, okay, so should we just believe the rest of it or not?

1:16:44I think the truth fact checking went way up to a social media. That's right, and I would say there, the cliche has been, and there's some truth to the cliche that social media is rely spread, and there's some truth to that. There's a lot of lies to spread on social media. But the other side of it is what you're saying, which I think is right, which is the truth spreads on social media. And so the way I describe it is, social media is an extreme machine. And exactly to your point, like any time there's a, and you see this in any domain of activity right now, is any time there's a thing. And there's just like evidence that it's just not the way it's being portrayed.

1:17:11It is going to show people are going to see it. Yeah. And that is there's a guy Martin Gurry who wrote this book called Revolta the Public in 2015 and he was a CIA analyst who did what's called open source analysis for 30 years, which was studying basically what was in newspapers and magazines for the purpose of political forecasting. And his prediction in 2015 in his book was that basically social media was going to completely destroy the authority of all incumbent institutions. And the way that it was going to do that was it was going to reveal through this x -ray effect that basically none of them deserve the credibility.

1:17:37Do you think that's kind of happened? I think that's exactly what's happening. Yeah. And I think there's statistical evidence that's happening. Gallup polls, they do an annual poll now for 50 years on trust and institutions of every different kind of major institution, including the press, and all the numbers are collapsing. In light of widespread social media, what would be the correct sort of function or role of like journalism? I mean, I'm a believer in the original idea, right? I don't know, I'm a romantic. I like what journalism says that it is. I would like it to be like that. I like what the university said that they are.

1:18:10I would like it to be like that. I like what the government says that it is. I would like it to be like that. Which should be just to name it. Yeah, well, for journalism, it's just like, all right, number one, tell us correctly and accurately what's happening. Actually, there's a conflict at the heart of the journalism question, which is that journalists say two different things. There's one is they say, you know, basically be fair and objective, right? And then the other thing they say is, they say like hold power to account or they'll sometimes say they have this phrase. They'll say a comfort, they afflicted and afflicted and afflicted and comfortable.

1:18:36And like there's inherent, like are you are you are you an objective truth telling? Well, yeah, it's because they had nothing to do with the truth. It's just unrelated to the truth. Exactly. So there was already a conflict at the heart of the industry and there's a selection process where the people who go in a journalism tend to be critical by nature, right? They tend to want to be on the outside looking in to be critical because they wouldn't be journalists. They would, right? And so there is an issue there, But look like do we need people to tell us the truth? Yes. We do. Do we need people to hold the powerful account?

1:19:01Yes, we do. Like I would like them to do that. Do you think they can be like for profit corporations? And it worked. Because I mean, I think another problem is they're getting all their distribution on social media, eyeballs or what drives the revenue. People want to, you know, stay in pull. You know, so that also is unrelated to the truth. In fact, it's an ethical to the truth a lot of times. Yeah. So there's two, two mentalities come out of that. One is, yeah, the profit incentive warps it. you want it to not have a profit incentive, so it could be true to itself. The other argument is, if you don't like for -profits, you're really not going to like non -profits.

1:19:32Because at least for -profits have like a market test. At least there's like some discipline. Non -profit just becomes somebody's sort of like, this is my agenda, I'm going to do what I feel like now. Arbitrarily crazy. Arbitrarily nuts. It does sound worse. Yes, and they're completely unaccountable. They're completely unaccountable, right? In fact, in fact, it's the opposite of accountability because of the tax break, you were actually paid as a donor to invest in the things that are the most unaccountable. Interesting. And so, and then they can span into like crazy land. Yeah. And they, and they don't come, they don't come back.

1:20:04Yeah. There's a history here. Yeah. They don't come back. And so it's weird because like the citizen journalism thing is like a helpful fact check. It's like good to have. And sometimes it, but it does feel like it's not quite sufficient to tell the full story on everything all the time. So I do think that there's an important role. I just feel like it's, it still feels like it's very in limbo right now. So here is a theory that would be a reason for optimism, which is the last eight years were basically, it was basically the human animal adapting to the existence of social media. It was basically the assembly of the brain and you slam eight billion people into a chat room together and like it's just like we're not used to it.

1:20:40We weren't wired for it, we're not evolved for it and just like oh my god, everything goes bananas. Marshall McCluen, actually the great media theorist, he talked about this, he had this term called the global village is what happens in everybody's network together. And actually what people miss about it is he didn't mean in a good way. is because the nature of a village is basically gossiping in UNDO and yeah, in fighting and reputational destruction and and you're civil war yeah like that's what happens in a village yeah right um and so which actually functions at a certain size yeah like 150 people you can kind of deal with that yeah you know you know at at the size of like New York City it actually gets quite complicated at the at the scale of the world it's like disaster disaster yeah right yeah but you could say look like we went through this eight -year period where like we everybody went just say everybody went nuts everybody went nuts in like a thousand different ways And then, but maybe that was just we had to get used to it, right?

1:21:22Maybe we just had to adapt to it. And like if you talk to, I don't know, if you talk to like young zoomers now, you know, a lot of the time, I'll tell you, yeah, we don't take any of that stuff seriously. Yeah. Like I just, of course, you don't believe what you see on, you know, whatever to talk to. Yeah, which is wild. It's just all ops, like, of course, it's all ops, like whatever. Yeah. And they just have a, like, they're, they're at the end. I'm glad people know. Yeah. It's just like that's a crazy state of the world. Yeah. Yeah. Yeah. Exactly. probably how people feel about like the news too.

1:21:43Well, so this is the thing on the news. So then this is the other thing on the news, which was the news ever as we were told that it was. And so my favorite example of this is people always cite Walter Cronkite as being the great truth teller and the thing that they cite for you young people he used to be on TV. For the mag to have not. He was this guy where you would show up on TV, everybody would say, oh my god, he's gonna tell you the truth. Like he was like the voice of the truth. And the way that he built that reputation is because he went negative on the Vietnam War in 1968. 1968 and 1968 he came out and he said the Vietnam War is unwindable and we need to pull out of this and they they air all these reports That show that that was happening everybody said he's the guy who told the truth and hold power to account Tell you know tell the truth Well, it's just like the problem with that is he went negative the fact that he went negative on the more in 1968 Right, he was positive on it before that right exactly right what did he know the day before he said that that he wasn't sharing Yeah, and like and then by the way what else happened in 1968?

1:22:30Which is the White House went from a Democrat to a Republican so the Vietnam War was created by Kennedy and Johnson and then it was inherited by Nixon in 1968. And isn't it convenient and interesting that he went negative on it when it began Nixon's war as opposed to being Kennedy's, Kennedy's and Johnson's war? And so then it's like, all right, like what was actually going on there? What was happening in the preceding five years? And was he actually on side the whole time? And then there's just the reality of it, which is I grew up in rural Wisconsin. We always thought the press was out to get us.

1:22:54Yeah. Like we always thought the press was like the coast's basically passing sneering judgment on the center of the country. Like we never believed like the stuff to start with. And we were always like very people, where I grew up, people are super resentful of the stuff in the media and how it portrays them. And so I think there's also a more fundamental underlying issue here, which is, you know, objective truth is a hot. Like, objective truth is a high bar. Yes. People have agendas. Like, maybe we just need to get all this out of the table. Particularly in politics, objective truth is not really how a lot of, like, people like, oh, that's a lie.

1:23:21I'm like, well, it's not a lie. It's just like an interpretation of a situation that, like, I wouldn't characterize, but like, sure. These are like that. Complicated means are complicated, a topic, you know, or a society is a complicated topic, Yeah, right? And the function economy is a complicated topic. And it's just not so easy to understand. And so I think part of it might the optimistic view would be humanity adapting to being in the global village is basically just taking on a little bit of a more humble attitude. Basically saying, all right, look, there's not going to be, we're not going to have a lot of objective to toes running around.

1:23:48We're not going to have, but also at the same time, we don't want to be in a complete panic about everything all the time. And we need to kind of be able to, you know, take a deep breath, touch grass, be a little bit more skeptical, be a little bit more open, be a little bit more understanding. Right. And so it's a maybe we're starting. And by the way, I think that's happening. I mentioned that Jake, without getting into partisan politics, but the Jake Tapper book, I would happen. I went to an event that he did this weekend out here. And like it's like that book and the reaction to the book. And if you watch the interviews on YouTube and the crowd response to that book, like it feels like people are just like, oh, like if we just take a step back for a moment from like all the intense partisanship of it all, like there's actually some, yeah, Maybe we can get back a little bit more.

1:24:28That book is a very positive step forward. It's just a little bit of a callmer approach on these things. And then by the way, the other book I'd promote on that is the Ezra Klein book on abundance, which I think is, I think is somebody who's supported a lot of Democrats for a long time. I think it's the most positive, kind of manifesto that's come out basically saying, whether you're on the right or the left, we need to actually build things. And I think that's also a healthy moment. Sort of related to this topic, a little bit adjacent, but I saw you talking about preference falsification recently.

1:24:55And I think this is like a super interesting topic in general, but particularly in the last, I don't know, five -ish years, I think a lot of preference falsification became made apparent. So I'd be curious first to hear a little bit about what you think happened over the last some number of years where these changes happened. Maybe we can start there and then I've got to follow up on it. Yeah, so the preference falsification, just a sketch and outline, it's when people, it's actually there's two different elements of it. It's when people are required to say something in public that they don't actually believe, or they are prohibited from saying something in public that they do believe.

1:25:29So again, so commission omission issues. And then the theory of it, there's this great book by Timor Karan on it. The theory of it basically is it's easy to think about what this happens in the case of a single person, which is, are you telling the truth? Are you public statements mirroring what you actually think are not? The thing that is complicated is when that happens across a group or across a society. And the thing that happens is if there's widespread preference falsification in society, you not only have people lying about what they actually think or hiding is, but you also, everybody loses the ability to actually know what the distribution of views are.

1:25:59Yeah. Right? And he says, basically, if you look at a history of political revolution, political revolution happens when a majority of the country realizes that a majority of the country actually agrees with them, and they didn't realize it. So whatever system they were in had convinced them that they were in a very small minority. And then you get, at some point, there's the boy who won't be like, There's a catalyst, there's a catalyst catalytic moment, and then basically there's a preference cascade. Right. And then all of a sudden, it's like the correct prisoner's dilemma's box to live in all the sudden flips.

1:26:27Everybody realizes that it wants. Yes, exactly. And he said, you can see this in a crowd, with like a speaker, controversy will speaker, where basically you'll have a controversial speaker, and then there'll be silence in the crowd, and then one very personal start clapping. And that person is like a severe peril, because if they're the only asshole standing up to clapping, that's the way they might get killed. But then if the if a cascade is then a second person starts clapping and then a third and a fourth and a fifth and then you get the snowballing effect and then the entire auditorium is clapping and then and then that's everybody realizing that they actually are on the side of the majority which they didn't realize before.

1:26:59By the way, this is what comedy. This is actually why comedy so it's what comedy does well because people can't control the involuntary response. Yeah, exactly. And so when you get in a terrible group of people in a room laughing out loud, it's something that individually they will all swear. They can't help it. It's not funny. They can't help it. That's a great point. And then the stress relief from that, because they all know that they're part of a community. They've rebonded the community, right? You're actually back in being a part of a community. And it's just such an incredible, powerful feeling.

1:27:22Yeah. Yeah. Okay. So it's very easy to apply this theory to like the Soviet Union, right, or like the, you know, the Eastern Europe, you know, in the Cold War or whatever. Yeah, you know, Mao is China. It's a lot, you know, trickier to apply this theory to, you know, your current society. I believe that, you know, we've lived in an era of like intense preference falsification. I think the last five years, probably the last 10 years were like way more intense preference falsification than the preceding. Yeah, 40, at least, you know, probably going back to, I don't even know. I mean, you have to go for sure back to the 60s, if not like the 1920s or something, to find out an analogous period.

1:27:57I think this period is characterized both by people who were saying things they didn't believe, but critically not saying things they didn't believe. I think there are many reasons this happened. And look, this has happened many times in history. And so a lot of people want to say this is caused by social media. Right. Well, when you phrase it the way that you said, it actually makes a lot of sense when it's just if people are going to be in a part of this prisoner's dilemma matrix, it actually just gets caused by nothing other than itself. Like, it doesn't really need an outside catalyst for people to get into their own box.

1:28:25That's true. Although there needs to be a good question. There needs to be some kind of oppression. There needs to be some kind of motivation for the cascade to have started where people end up in that box. It's a social pressure. So, specifically, I think the thing that happened the last five years was, I guess it needs to be a high stakes enough issue for it to matter. Otherwise, it's just like who cares whether you think like the clouds are pretty or not. Yeah, that's right. So at least has to be that. Yeah, and the way I think Team Reconnaissance described it is it needs to have like political, social, cultural salience.

1:28:53Yeah. It needs to get to something fundamental about how the community is organized. You know, we call that politics, but you know, this predates even the concept of politics, right? And so, by the way, look, you don't even necessarily want to say that all preference falsification is bad, because I don't know that you want everybody out telling the truth about everything. I don't think you do. I think at least in a lot of social graces come from people saying it's great to meet you when I didn't feel like saying it was great to you. I believe your baby is very different. Exactly. So some of it is good.

1:29:18Yeah. So, yeah, but yeah, as your point you get wedged in this box. And so I think this specific thing that happened. So the good news is, preference falsification in a lot of totalitarian societies was administered at the point of a gun. You say the wrong thing, they shoot you. Yes. That, for the most part, is not what happens in our society. What happens in our society is the sort of nonviolent version, which is ostracized, canceled, ostracized, reputation has ruined, fired, become unhierable. Lose all your friends, lose all your family, can't ever work again. Still really bad. Still really bad.

1:29:48So you said it's not pretty bad. Very bad. And so, and it just turned out, I think part of, you know, the optimistic view would be part of adapting to these instances, social media was social media, it just turned out to be among other things, a very effective channel to destroy people reputationally. Right? And this is the social media mobbing effect, right? We're not all familiar with it. And you think that helped create basically more false preferences? Yeah, big time. Big time. Do you think it also unwound them? Well, so this is the thing. And this is maybe the thing that happened in the 2024 election, right?

1:30:15Which is just like, oh, okay, like we don't have to live this way anymore. You know, certain certain views become safe to say out loud. Also, the censorship regime, like we lived under, I mean, the censorship regime. even in tech for 2024 election, verse 2016, regardless of what you think, who you wanted, at least everybody can agree that it was taboo to support Trump in 16, and it was not taboo to support Trump in 2024 in tech, and so something changed there. Something changed. Peter had this great line in 2016, he said, because he was one of the only people, maybe the only person in tech who was actually pro -Trump in 2016, and he said, he said, this is so strange, he says, this is the least controversial contrary and thing I've ever done.

1:30:49He's like half the country agrees with me. He's like, I've never had a point of view You want anything else in my entire life or half the country agrees with me. And yet somehow, this is such a heresy that I'm like the only one. Right? And so there was that, that definitely changed. And then I just think in general, like I said, I think they're optimistically, you can just say there's a process of adaptation. Where it's just like, all right, we're just like, if we all just decide that we're just not gonna like live life by mobbing and scapegoating and personal destruction, and just because somebody's offended by something doesn't mean it's gonna destroy it.

1:31:19Somebody says one thing, it's gonna destroy their lives. like we don't have, you know, you don't have to do that. Do you think it's basically been unwound now or do you think there are still a lot of falsified preferences? I would say it's radically different than it was two years ago. I would say there's still a lot of falsified preferences. I would, but again, I would say, and I think probably in any healthy society, there's lots of falsified preferences. So do you have any guesses for something that is currently falsified that will become unfalcified or is too hard to call it? Sure. Yeah. Sure.

1:31:46Okay. Great. But it's far too dangerous to say. All right. Let me move on. Yeah. Yeah, dang, gosh. But again, when you ask that, that is a very key question. Here's what I encourage, I'm break the fourth wall. Yeah. Here's what I would encourage people to do. Here's the thought experiments to do. Just write down two leads in middle of the night with nobody around, doors locked. Write it down, a piece of paper, and let's pull it out into a nearest. Write down a piece of paper, two lists. What are the things that I believe that I can't say? And then what are the things that I don't believe that I must say?

1:32:13And just write them down. Yeah. And I bet, you know, if you're a reasonably introspective person. The quote, unquote, NPCs can't do this. If you're reasonably introspective person. Yeah. You know, most of us probably have 10, 20, 30 things on both sides of that ledger. Right? And again, most of those are things where you've got, you know, I don't know, like, don't want anybody ever see that piece of paper. Maybe five or 10 years from now we'll be back and everybody can reopen their papers and we'll see and it'll be safe to say whatever people wrote down at that point. Exactly. Okay. A few final topics I wanted to ask you about.

1:32:42One is, You're probably in a spot to be giving just sort of life or career advice to young people a lot now. Both in general, but also maybe specifically with like AI and like the current side of tech, you know, changes right now. What do you most often find yourself repeating to a really smart, you know, recent grad about, you know, if they're like, but should I be doing with my career if they get the chance to ask you that? To start with, I never took any advice.

1:33:13So... like that was like, you know, if you could build Facebook thing. Maybe, yeah, maybe maybe the best people probably shouldn't take any of that. But, um, I would just say, so especially for young people, you know, and again, I say this, like, people are very different. Like I, I believe very deeply. Yeah. Some people, some people are very happy being the middle of chaos. Some people are very unhappy. I mean, some people are very unhappy being middle of chaos. And they will actually get themselves out of a chaotic situation as fast as they can. Other people love chaos so much that they don't have any.

1:33:39They will create it. Right. And so like you, you have to, you know, there's, there's a level of understanding here. you know, like not everybody should be in like a high growth high risk tech company because it might just be two nuts. Yeah. So I don't think there's one one size fits all, you know, kind of thing at all. Having said that, let's narrow it. So the young person who wants to kind of be in tech, I think a big part of it is I think it's I was saying, like it's like run to the heat, like or the the the seed thing we were talking about, like where where are the interesting things happening and that's a conceptual question and it's also like a place question and the community question and network question.

1:34:11And so, you know, run to that as fast as you can. And it doesn't mean running to the fads, but it means trying to identify. Trying to get into those hot network or ideas or projects, basically. Yeah, yeah, yeah, exactly. And look, there's a geographic component to that. And I think we all kind of wish it wasn't the case, but there really is. And AI, I think, has very successfully unwound the geographic dispersion of what was happening in tech. In a huge way. Huge way. It's kind of slammed everything back into the California. I don't think that's good really for a lot of reasons, but I think it just is the case.

1:34:42And so I would say, if you're going to do AI, get here. Yeah, and then the other thing is, it's the Steve Martin thing. Be so good they can ignore you. Like time spent on the margin, getting better at what you do, is almost certainly better than both of the other uses of time. The old adage of you are the average of the five people you spend the most time with is also true. You want to do that. So you want to pick that carefully. And then I guess what I would say is, when I talk to people about what kind of company to go to, There are certain people who should only be in a raw startup. There are certain people who should only be in a big company.

1:35:09I think the general advice is the high growth companies. It's the companies that we would describe as between like being between like Series C and Series E probably or something. Yes. Where it's like they've hit product market fit. They've hit the knee and the curve and they're on the way up. On average, that's going to be the best way to go because you're not going to have the downside risk of a complete wipeout usually. And then people who get into that position like at those high growth companies, if you're talented, you can pick up new responsibility very quickly. Yeah, okay, next is your Andrew Heberman thing that I see on Twitter like what's I actually can't completely pass what it is What's going on with that?

1:35:42So we have a completely fake beef we're good friends. We're very good friends Um, and there were actually neighbors neighbors in Malibu and I've been on his podcast and like we're very good friends But but you don't follow his protocol. I don't do anything that he says I don't do a single thing that he says I with one exception. We'll talk about but yeah I don't I don't do any of it. You know, he says maintain a regular sleep schedule I you're all over the place. He says always get up you know, you see, you know, see sunlight as you can. I'm like, no, I don't want it to see something. I want to do it.

1:36:08I wake up to see sunlight. You don't drink caffeine for the first two hours of the day. It's like NFW. It sounds like torches. It sounds like being in a North Korea. That sounds like I can't even imagine. You're doing a lot of coffee? A lot of coffee. Hot plunge, cold plunge thing. I'm not just... The cold plunge is miserable. I'm not doing any of that shit. You think it's good for you though? Oh, I'm sure it's good for you. I'm just not, I'm not going to do any of it. It all sounds just completely miserable. It's good. The one thing that he says that I do is stop drinking alcohol. And I would say I am physically much better off as a result and I am, but I'm very bitter and resentful.

1:36:39It is, for its him specifically. Why'd you do that one? Because it's much better for you physically. It really is. It fixes sleep and energy problems. So is the most tolerable of all of these and you're like final do one? Well, notice completely intolerable. It's horrible. I don't recommend it. But I think it's a horrible way to live. Like I'd much rather be drinking alcohol. Does he think even like a glass of wine at night's bad? He does, yeah. Just all of it. He did one of the great. He's actually had a, I think, big influence on the culture. And this is very, in seriousness, this is very positive, I think.

1:37:04At least for health, see, did this big thing out. There's all these, so what happened is there's all these alcohol, there's all these fake alcohol studies. Basically, you know, this is like red wine and then it's like all out, you know, heart protective and all this stuff. And it basically, it basically turned out that really sick people either drink a lot or nothing. And then, and then healthy people tend to drink a little. Yeah. Right. So, so, so one is healthy people tend to be very well -deserved. Right. And then I guess is that correlation or causation is that it's all in the sample set. So so it turns out there's no health beneficial alcohol.

1:37:30Yeah, that was all completely fake. In other words, just because I see healthier people drink a moderate about alcohol does not mean that drinking a moderate amount of alcohol makes you healthy. I see Michael Crichton call this wet streets cause rain. Okay. Wet streets rain. Yes. Right. So for some reason unhealthy people stop drinking. Healthy people stop drinking because they're like in the hot. They handle this. They can't their doctor says if you just keep drinking you're going to die. Yeah. Or by the way, they drink a lot, right? Because they're, right. And then there's this, there's this fundamental thing, which is healthy people tend to be very disciplined.

1:38:00But discipline is not, discipline is, there's like a big inherent component to it. Yeah. Right. And so people who are disciplined, who drink modern amounts alcohol, also do modern amounts of exercise, also experience modern amounts of stress, also, you know, you go to the doctor on a regular basis, they take the medication they prescribed. They live, I'll ask them, they're health in it. I guess it'll take a while to see, but it feels like it should be a good thing that Andrew and other people have gotten and so many more people interested in health. It's good for, it's good physically. Right, yeah.

1:38:27Might have a good mentally. No, I'll try, I'll be funny again. It's catastrophic emotional. It's made me a much less happy person. You think, are you actually, you think that? Well, so I really, so it's the alcohol is a time, thousands of years people have been using it number one to fundamentally relax. Yeah. And then there's a very important social lubricant component to, you know, it's like, and the de -stressing could be healthy. Let's just say maybe it's not accents that the birth rate is crashing. Right? That's the same time that we've all stopped breathing. I don't think Andrew would argue.

1:38:57You should not live your life purely maximizing for just physical health. It would be a miserable way to live. I mean, it's like, what are you going to do just like never leave the house? Yeah. Never take the risk across the street. And so, you know, he certainly doesn't judge people for drinking modern -ross alcohol. He just says, look, scientifically, you have to understand it as a poison. Yeah. Now, having said that, as you know, speaking of scenes, as you know, the displacement thing that's happening is people are in, in our world, they're not drinking alcohol, instead they're doing hallucinogenic Jans.

1:39:22Why is he, I'm not necessarily an improvement. As you Jack, you're very well. Yes, yes, yes, tell us about your latest animal. Yeah, exactly. You're so much different than you were last time, I suppose. Your personality has clearly completely changed. Yeah, I do feel different. So the other theory would be there's a law of conservation of drug use, which is every society's going to pick some drug. Probably right, and abuse it. And apparently, in our case, it's going to be LSD and mushrooms. Which is a good one. No, no, no. OK. Okay, my last question. When I tweeted out a request for questions, I got almost ratioed by one question, so I'm gonna ask this one like nearly verbatim.

1:39:57It was by a non named signal. If you were frozen for 100 years and you woke back up and you looked around, what would be the piece of data that you'd wanna know that would tell you whether or not your dominant world view turned out to be correct in the fullness of time? Yeah, so I will pick a very unfashionable answer to this, and I would say United States GDP just like straight out US GDP because I would say embedded in that is the question of technological progress which is if you have rapid technological progress you'll have rapid productivity growth which means you'll have very rapid GDP growth.

1:40:30If you don't you won't have rapid GDP growth so you'll see that in the GDP numbers immediately. You know number two is you know well number two would be just like our markets a great way to organize and the US is the best market and so you know is that is that going to keep working? And then third is the US is gonna be a great country. And you are along all of this? I am very long all three of those. Yeah, I am very convicted on all three of those. But you know, if I'm wrong about something big, it's gonna be something in there. And it will show up in that number. Mark, this is amazing. Thank you so much again.

1:40:56That's awesome. Thank you, Jack. Thanks for listening to the A16C podcast. If you enjoyed the episode, let us know by leaving a review at ratethispodcast .com slash A16C. We've got more great conversations coming your way. See you next time.

1:41:19We're going to be doing a lot of work.