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So we have Balaji here. And obviously, Balaji is an expert
in everything. But Balaji, you’re used to being
interviewed. One on one. I’ve had you on my podcast a couple
years ago, we had some major great discussions. You’ve been
on a bunch of other people’s but today we’ll see how you do on on
the squad here with five people passing the ball. You’ve listened
to the pod before.
Yeah, I’ll pass. So 20% each or whatever. It’s fine.
Okay, perfect. Well, we will have all in stats. We’ll do
trying to get 20% with this moderator. This says the guy who
has the largest percentage.
Look, you’re you’re supposed to be a non shooting point guard,
Jason. Nobody wants to see you brick three pointer after three
pointer. Just bring the ball down the court and pass it just
pass the ball.
Just pass it out of the way, Jason.
That’s coming from the guy who has 24% of airtime David Sachs.
Yeah, exactly. I fit exactly what I’m supposed to be doing,
which is one quarter. It’s statistically proven.
Rain Man, David Sachs.
We open source it to the fans and they’ve just gone crazy.
Love you guys.
Hey, everybody. Welcome to another episode of the all in
podcast with us again this week. Chamath Palihapitiya, the
dictator in just a great sweater. And David Friedberg,
you should touch this, you have no idea the material that is
made from it’s made from like the, the chin hair of like a
baby goat, baby goat, that’s then really locked by a Tibetan
Sherpa, who literally is forced to use lotion and camphor to
keep their hands soft so that they don’t disturb the innate
properties of the thread.
It’s amazing and available right now two for one at Kmart 1495.
I’m just going based on the aesthetics of the look. David
Friedberg is back the queen of quinoa recently having his
office hit by a skunk. Are you okay, David? Are you gonna be
okay for the show?
Be alright, just getting getting used to the condition.
But you’re on. You’re on Benadryl. And you did you get
hit by the skunk or just your office got hit by the skunk?
Well, my windows were open. Apparently it’s baby skunk
season here in Northern California. So there were some
baby skunks playing around.
God, sorry, I’m sure it’s not your returns.
Oh, my God.
Way too soon. And let’s move on from definitely too soon. And
from a nondescript motel eight somewhere in Texas, in Texas,
Texas. David Sachs, a coastal elite in Texas.
On mute. You’re on mute, David. We’re this is episode 48. You
can Yeah, I happen to be in Texas. That’s correct. I had
happens to be a tax free state. No coincidence.
happens to be a state where you can carry a gun now. Yeah,
exactly. And women are no longer allowed to make decisions for
their own body. So two out of three ain’t bad. What a great
place to live. Ridiculous. David, are you considering
moving to the great state of Texas?
Well, I’m open to the possibility. Let’s just say I’m
open to it. You’re open to it. But I you know, I recently ran a
Twitter survey where I asked Miami or Austin and Miami one by
about 52% Austin got about 48% with over 10,000 votes. So it’s
pretty interesting. And do you have a preference yourself
between the two? I personally like Miami, I already have a
place in Miami, but I’m checking out Austin to serve
you know, just for how close are you to 11? due diligence, just
for complete due diligence. So I think at this point, we should
just go through the cities that sacks doesn’t have a home. We
just that might be easier for us to narrow it down. possible
location. Alright, listen, people started haranguing us on
the Twitter to have some bestie guesties on the program. And so
we decided we were bringing Balaji Srinivasan Balaji
Srinivasan. Did I get it correct? I mean, I’ve been
pronouncing your name wrong for five years.
I mean, it’s a fucking ignoramus race. You are such a fucking
racist.
Listen, Greek names are hard to pronounce. I mean, it’s fine.
It’s fine. Balaji Srinivasan names. Balaji. Everybody gets
that.
Balaji. Balaji. Balaji. Balaji Srinivasan.
Moon Moon attides Srinivasan.
Balaji you’ve you’ve listened to just figure it out how to say
Polly hop at Tia. So
I have been training the world how to say Polly hop at Tia for
years.
Sri Lankan names are the only names that are harder than South
Asian names, or South India. Although Tamil names are pretty
brutal. I mean, yeah,
Tamil names. Basically, you guys add like maybe one or two more
syllables. So I actually have to train and
hours end in a vowel. The Tamil always ended a consonant, which
always says then you can just they take liberal license to go
on for another 20 minutes.
Can you guys just drop a few syllables from your names?
Like we could. We could. Yeah. But we don’t.
Ball Street. No, I Matt Polly.
All right, there’s a big tech backlash. And it’s not just
because of David Sachs comments, a new poll shows that 80% of
registered voters, wait a minute, wait a minute, wait a
minute, wait, before we go there. I have a question for
apology.
You are, in my opinion, but I think a lot of people would say
one of the most incredibly well read, thoughtful, you know,
commentators, commentators that we have, frankly, like, you know,
not just in tech, but I just think generally, in our society,
I would give you that I think you’re incredible. I’m curious,
how did you become such a polymath? Was this just one of
these things where you’ve always been curious about
everything? Like, just tell us about I’m curious about like how
you grew up, first of all, and then second, how do you spend a
normal day? I just want to know those. And then then we can just
jump in. I’m just curious, because I’m sure extremely well
read and extremely knowledgeable.
Well, thank you. I appreciate that. Um, you know, I try to
learn from from everybody. What do I do? I think normal people
go to the club, or they they go out and have fun. And I read
math books and history books and science books and stuff like
that. That’s how I have fun. I find that more interesting.
Nothing wrong with with going out people do that I go for
walks and stuff, I work out. But so I do a lot of that. And I
have I mean, other than that, I just, I just read a lot. And I
think I remember a moderate amount. And so I cite that. And
for me, I think it’s something really much more complicated
than that. But that’s it.
I think we call that a polymath. The TIA.
The only difference is Chamath would be you, if he could stop
going to the club. And he lost that last 40%.
I will make an observation, which I was actually talking to
sacks about this, which is, there’s some people who are
great at business and learn the tech because that part is
necessary to put it together. And there’s some people who are
fundamentally like scientists or academics, and then get into
business in order to advance technology. And there’s nothing
wrong with the first group. And I think that’s totally, you
know, fine and legitimate, like business people first, and then
they get tech. I’m really part of the second group, I think
where, you know, I’m fundamentally an academic at
heart, you know, I spent almost the first three decades of my
life meditating on mathematics, and just kind of got into tech
relatively later in life than many others.
All right. And you spent your career building companies,
everybody remembers earn.com.
By the way, that’s actually doing extremely well at
Coinbase. Coinbase earn is on track for 100 million revenue.
Actually, it’s much more than that in terms of GMV, it’s
broken out separately in there. Not their s1, but their
quarterly filing. So you can go and check me on that. And the
other assets that we added after I joined Coinbase are more than
50% of Coinbase revenue, again, in their filings, and Coinbase
custody and all of its assets come from Rosetta, which is
something that we did there. And we launched USDC when I was
there. And that is whatever $100 million a day. So they got a lot
of value out of that acquisition.
Just and you were the CTO for a while of Coinbase. Obviously,
what was your take on Coinbase’s lend product, the SEC coming in
and saying, Hey, pump the brakes, we want a bunch of
information. And then they’ve just Brian Armstrong and
Coinbase announced that they’re not going to do the land
product. What’s your take on that?
So I don’t speak for Coinbase anymore. Okay, I’m, you know, in
my personal capacity. But I do think that this is sort of the
beginning of an era where we’re going to be rolling back the
alphabet soup that FDR put in place. That’s to say, you know,
the SEC is not set up to go after millions of crypto
holders and developers are set up to go after a Goldman and a
Morgan, you know, just like the FAA is not set up to go after
millions of drone developers to go after Boeing and Airbus. And
the FDA is not set up to go after millions of biohackers
are set up to go after you know, Pfizer and Merck. So the entire
20th century alphabet soup that regulatory apparatus is
meeting something that it’s not really set up for. And it’s
going to be it’s the problem is not the problem is not any one
actor like Coinbase or crack and or what have you their problem
is that technology has shifted. And they’ve got many more people
to deal with. And many of those are individuals who are more
risk tolerant than companies. So, so I don’t think they’re
going to be able to maintain the status quo of 100 years ago, the
statutes that they’re citing, I think that’s going to either get
knocked down in court, we’re going to be technologically
invalidated, there’s going to be sanctuary cities and states
for crypto, or there’s going to be international entities like
what El Salvador is doing in Switzerland. So I don’t believe
that that era is going to maintain, but I think there’s
going to be a big conflict over it. So we’ll see.
How do you think it’s different this time, though, apology to
the like, crackdown, because folks said the same thing. Going
into kind of the Napster era, when you know, everything was
basically peer to peer sharing of media files that were
technically copyright. And there was, you know, some regulatory
regime that, you know, had oversight over that copyright.
But then the DOJ got wrangled in, and they went in, and they
made an example out of arresting a couple 100 kids, I think, and
it basically caused everyone to back away entirely from the
market, similar to kind of what we may be seeing happening in
China right now. But is it not possible that we see a similar
sort of response this time around, where they kind of take
this targeted make an example approach to kind of share people
scare people kind of out of the the frenzy that’s, that’s, I
think, driving a lot of people onto these platforms, rather
than going after the platforms themselves. So kind of saying,
Look, this is this is a violation of security laws, you
guys are getting prosecuted. Here’s the 100 examples. And
suddenly 80% of the attention kind of gets vacuumed out.
Yeah, so I’d say a few things about that first is, I think
2021 is different from the year 2000. In the sense that China is
an absolutely ruthless and very competent state. Whereas the US
government, I would consider, you know, it’s a difference
between lawful evil and chaotic evil. You guys know that from
Dungeons and Dragons, okay. So the Chinese government is
lawful evil. They are very organized. And they plan ahead.
And when they push a button, they just execute, like, like
this whole society, and they don’t leave, you know, round
corners or things left out. The US government is today in 2021,
not the 1950 US government, the 2020 US government is like this
shambolic, chaotic mess that can’t really do anything, and is
optimized for PR and yelling online. And that’s a whole
important topic. But to your so that’s one thing where I think
there’s a difference in just state capacity. But in that’s
not to say that they’re not going to try with what they’ve
got. The other thing is that, so to your Napster point, there
was thesis and antithesis, but there was synthesis. That’s to
say, you know, Napster led to Kazaa and LimeWire. And
actually, the Kazaa guys went into Skype. So something legit
came out of that. But the more important or more on point thing
is, it led to Spotify and iTunes, the record companies
were forced to the negotiating table,
there was a there was a way point there that’s important,
which is good. When that happened in Napster. We, we ran
a company called one amp, and it was part of AOL. The biggest
architectural flaw of Napster was it’s a llama’s ass. And and
well, the biggest problem with Napster was that it was it was
not fundamentally peer to peer. And so there were these servers.
And so, you know, the the simple software architecture decision
that somebody had to make was okay, well, let’s just make a
entirely headless product that basically is a fundamentally
peer to peer. And that’s what the Nutella source code was, we
actually released that on AOL servers, without them knowing,
it took them a few hours to figure this out. They called us
we shut the whole thing down. But in those few hours, it was
downloaded about five or 6000 times all this open source code
that we put out, that was the basis of limewire, bear share.
And that is what basically just decapitated the music industry.
And it was there that then the music industry realized we
needed a contractual framework to operate with these folks,
because they’ll just keep inventing technology that makes
us impossible. And then that’s what sort of that’s what iTunes
was able to do with a 99 cent store. That’s what Spotify was
able to do after that. But a lot of it started was because of
what biology said earlier, which is a technologically, people
just will continue to push the boundaries. And we did that in
music. And I think that’s a lot of why the industry looks the
way it does today.
But ultimately, the print, the print, the premise kind of
resolved back to centralized systems, right? I mean, like,
think about, you know, the Napster concept, it was really
supposed to be true peer to peer file sharing, and it ended up
becoming the iTunes store where everything sat on Apple servers.
And they ultimately that’s, that’s the reflexivity. Because
like, what happens is all of these folks, you know, you’re
sitting at Warner Brothers or Warner Music or Universal Music
Group, you’re seeing an entire industry that was worth probably
20 or $30 billion, just getting completely decimated. And then
there’s this psychological thing that happens where first you
want to shut everything down. But then because there’s this
other thing that is even more evil, and even worse and
uncontrollable than the thing that you hated, then you
actually say, Well, listen, my enemy’s enemy is my friend. And
so then you say, Well, fine, let’s find a few partners to
work with. And we can try to find a way of, of living with
these technologies. And that’s going to repeat your point
biology. crypto is probably now where we’re going to see it play
out first, because that’s probably the most important
intersection of individuals desire and regulatory framework
that’s outdated, where the SEC has some extremely complicated
questions it needs to answer, especially even after something
today, like if you’re sitting inside, you know, the SEC, and
all of a sudden, you see that that China, an entire country,
that basically was where an enormous amount of this crypto
activity started and originated and was happening, can
completely turn something off. What is our position as a
government and as a society? We don’t know?
Well, let me just fill everybody in for a second, who don’t know
what happens on the taping today, September 24. Chinese
government has announced that doing any transactions in
cryptocurrency is now illegal holding it. Apparently, you can
still hold it. And this comes after Bitcoin servers being
kicked out of the country. So yes, they’ve pushed the button.
Go ahead, Balaji.
To Friedberg, I would say, BitTorrent is what kept the
record industry honest. And that kind of forced them to the table
of iTunes. So to Chamath’s point, also, I wouldn’t call it
more evil, I’d call it more good. And BitTorrent also lurks
out there as kind of this, you know, peer to peer enforcer
that it’s a check, exactly. And it’s not gone. And in fact, it’s
a basis for new technologies. And I think this is another
flare up. The other thing is that with crypto, the upside,
even though the state wants to crack down on it harder, the
upside is also greater, and the global internet is bigger. And
so I think the rest of world, meaning all the world besides
the US and China, is a huge player in what is to come.
That’s India, but it’s also, you know, Brazil, it’s every other
country that’s not the US or China. And so that’s a new
player on the stage. And then third to Chamath to your point
about, yes, China banned crypto. Well, you know, what’s
interesting is, people talk about China copying the US.
Nowadays, actually, in many ways, especially on a policy
front, the US is copying China without admitting it. But it
does so poorly. For example, lockdown. Okay, the Chinese
lockdown, you know, was something where it wasn’t just
sit in your rooms, it was something with like, drones with
thermometers and central quarantine, where people were
taken from their families and centrally quarantined, and 1000
ultra intrusive measures that the population by and large
complied with. I mean, forget about a vaccine mandate, we’re
talking about like, you can see all the videos and stuff from
from out of China, the government itself is published,
it didn’t seem real at first. They didn’t seem real at first,
right? Yeah. And so you know, the thing is that for the US to
follow that it’s a little bit like as a mental image, imagine
a life Chinese gymnast going and doing this whole gymnastics
routine, and then a big, you know, lumpy American following
and not being able to do those same moves, right? The Chinese
government, you know, is is, as I said, lawful evil, but they
are set up to just snap this, snap that do this, do that. The
US government is absolutely not and the US people are not
whatever you do.
Also, our system is a democracy, is it not like so you cannot
just do that, even if the government wanted to weld people
into their homes, we have a democratic state here, we have
to discuss these things. And there’s a legal framework to it.
In the 1950s, and 1940s, 1930s, the US was still a democracy,
but it basically managed to exert a very strong top down
control on things. Today, we have something for where for
right, like, you know, under FDR, or in the 50s, a very
conformist society, which was able to kind of drive things
through, even though as a democracy, it was something
where mass media was so centralized, that a relatively
few relatively small group of people could get consensus among
themselves. And then what they print in the headlines, I mean,
who’s going to go and figure out the facts on their own, this
gets into the media topic later. So it’s de facto centralized at
the media level, the information production and dissemination
level. And then you kind of manufactured consent from there.
Today, it’s you’re combining that democratic aspect, the
legal aspect with a new information dissemination thing,
which is destabilized, I think a lot of things. Saks, what’s your
take?
Yeah, well, I’d love to get Balaji’s take on an article that
came out this week in the Wall Street Journal, I think it was a
really important article came about four days ago. And it was
entitled, Xi Jinping aims to reign in Chinese capitalism and
Hugh to Mao socialist vision. And the article describes how
we’ve all seen and talked about on this pod, how they’ve been
cracking down on tech giants have been cutting down their
tech oligarchs down to size, like Jack Ma, how he disappeared
under house arrest. And, you know, and we’ve seen that, you
know, they stopped the the anti IPO. But But this article went
beyond those steps and really talked about she’s ideological
vision. And what it basically says is that what’s going on
here isn’t just the CCP consolidating power, they
actually want to bring the country back to socialism. And
what they say is that that within the CCP, or at least
she’s view of it, capitalism was just something they did as an
interim measure to catch up to the West. But ultimately, they
are very serious about socialism. And, you know,
reading this article, I had to wonder, well, gee, did we just
catch a lucky break here, in the sense that look, they’re
abandoning or if they abandon the thing they copied from us,
which is market based capitalism, they use that to
catch up, maybe this is the way that actually, this is the thing
that slows them down. And the thing that that historically
that it brought to mind is that if you go back into the 1500s,
and you compare Europe to China, China, the Chinese civilization
was way ahead. I mean, it was the standard of living was way
ahead. Technologically, it was way ahead. Europe was a bunch of
squalid, warring, tribal nation states. And then what happened
is a single Chinese emperor banned the shipbuilding
industry, any ship with more than two mass was banned. And so
exploration just stopped in China, it they became very
inward facing, whereas the European states explored and
discovered and conquered the new world colonized the world. And
that led to an explosion of wealth and innovation. And as a
result, Western Europe, and then it’s sort of descended, the
United States ended up essentially conquering and
dominating the modern world. And so I guess, you know, to
bring it back to my question to biology, is there a chance that
what she is doing returning to socialism? Could this be like
the Chinese emperor who banned shipbuilding? Or am I reading
way too much into the single Wall Street Journal story?
So my short answer on that is, I think it is. I think the
socialist thing is real. But I think it’s better to call it
nationalist socialism. With the implications that has, whereas I
think the US is kind of going in the direction of what I’ve
called maybe socialist nationalism. You know, where
it’s, it’s like different emphases in terms of what is
prioritized, but you know, and I think in many ways, China is
like the new Nazi Germany woke America’s like the new Soviet
Russia, and the decentralized center is going to be the new
America, I can elaborate on that. But basically, with
respect to this, one thing I try to do is I try to triangulate
lots of stories. So rather than for example, and nothing wrong
with the Wall Street Journal, you know, the piece like
looking at it, but for every WSJ piece you read, it’s useful to
get like, you know, what is CGTN or global time saying even if
you discounted just to see what they’re saying, and then you
also triangulate with, let’s say, the Indian or Russian
point of view. And by doing this, you I feel that it’s
better than just reading 10 American articles. And, you
know, especially reading primary sources, like there’s this good
site called reading the Chinese dream, which actually translates
primary sources, and then you can kind of form your opinions
from that versus like, like a quote, hot take, right? I’m not
saying you are, I’m just saying that that’s what I try to do. So
I think we’ve really gotten China right here. I mean, I
think that if you if you look at what’s happening, I think we’ve
basically forecasted this orchestration of essentially the
revertical integration of China. You know, we have China Inc,
where the CEO is Xi Jinping. And where there is a, it’s, it’s,
it’s almost like they’ve, they’ve changed the game, where
what they are playing, essentially, is like, settlers
of Catan or something where the goal is just to hoard resources.
And I think that they have enough critical resources for
the world. And the clever part of what they did was the last 20
or 30 years, they leveraged the world to essentially finance
their ability to then have a stranglehold on these critical
resources, whether it’s ships, or whether it’s rare earths, or
other materials, they leveled up. And I think that was the
genius. Yeah, well, they leveled up, they leveled up on our
capital. Yeah. And now that all that infrastructure is there.
And now that we are addicted to the drug, they can then change
the rules of our operating system. It was a brilliant move.
But they allowed entrepreneurs to believe that they could be
entrepreneurs, they allowed an entire society to basically
level up. Why did nobody see this coming to month? Nobody saw
this coming. People were starting venture firms, look
what they were taking companies public.
They did Belt and Road while we did nation building in Iraq and
Afghanistan. Right? I mean, what is Belt and Road Belt and Road
is there a bill is they’re creating ports and super
highways to extract the resources that mouth is talking
about and bringing them into the Chinese system. And what did we
spend our trillions on nation building in Afghanistan? I mean,
why didn’t we see this coming? Everybody was looking at China
starting venture firms, they’re, you know, embracing it taking
companies public Wall Street, politicians, nobody saw this
coming. So the Rising Tiger stories been around since the
late 90s. Right? No, no, I’m talking about why didn’t we see
them cutting the heads off the answer? entrepreneurship spent
because it was not about white people.
China was in Sri Lanka. China was in Africa. These are not
sexy, interesting places. Western audiences, they could
you guys couldn’t give a fuck. Let’s just be honest. Okay. And
so that’s why it didn’t matter. Because you we thought we all
thought that these are countries that are sort of, you know,
squalid third world, developing nation states that don’t really
matter. They don’t necessarily have the resources that matter.
But what did China do? They realized that those folks are
the future GDP, those folks are the future population pools, the
young that can actually do the hard work, and then they went
and they secured again. So not only resources now, so that’s
one thing, hold on. So that’s one thing. I think we entirely
missed it. Because, as David said, the military industrial
complex doesn’t look at, you know, a developing nation and
say, we want to be there. It looks at Afghanistan and says,
we want to dominate it, because we can actually feed off of that
domination. So that’s one thing. The second thing is that I think
that we misunderstood Xi Jinping’s ambition. And I think
that that’s a reasonable mistake to have made. The first one is
an error of just complete stupidity. The second one is
something that I think it was legitimate to have missed. And to
your point, you’re off he they not only stole the
entrepreneurial playbook, but the colonizing other places and
giving them debt and giving them resources and building ports in
other countries. We thought it was dumb. Let’s all be honest.
You know, 10 years ago, no, we did it. No, I would argue
previously argue in a lot of cases we benefited. So China set
up and bought like the largest pork production company in
Australia. And what do you feed those pigs, you feed them
soybeans, and where do those soybeans come from? largest
soybean exporting market is the United States. You know, we had
a tremendous customer in China, as they expanded their
consumption pattern through all of this investing they were
doing worldwide. We were exporting john deere, farm
equipment and Caterpillar construction equipment and
soybean products and there was a and our knowledge industry and
there was a tremendous service model and globalization really
created call it a catch 22 for the United States, where you
know, we were watching the rising tiger, you know, it
fueled in part by this kind of distributed entrepreneurism. But
as that distributed entrepreneurism creates, you
know, obviously, the social
you think there is an equal amount of dollars that went
into Western developed nations from China as it went into
third world countries. No, but it’s Western nations couldn’t
give a shit about that money is too hard to turn down.
There’s a mistake in our thinking with respect to the
rest of the world that we’ve been making, we make over and
over again. And it was all kind of predicted by a historian
named Samuel Huntington. At Harvard in the 1990s, he wrote a
book called called clash of civilizations. This, this book
was written the same time that another famous book came out
called the end of history and the last man and what the common
belief was in the 1990s in the US was that we had reached the
end of history where every country would become democratic
and capitalist, right? That was the end of history is democratic
capitalism. And we believe that the more we went all over the
world spreading our ideals, it would hasten this day where
they’d all become democratic capitalists. What Huntington
said is no, you know, cultures and civilizations, these go back
1000s of years, these are stubborn things. And what these
other cultures really want is not westernization, but
modernization. And what they’re going to do is they’re going to
modernize, they’re going to learn from us as much as they
can about technology, they’re going to assimilate and adapt
and take all of our technology, but they are not going to
become like us, they’re not going to westernize. And that is
basically what’s happened over the last 25 years. And so the
Chinese have caught up to us. And suddenly we realize, whoa,
wait a second, they have not westernized, they are still
their own unique civilization. They, they have they have
basically the equivalent of a modern day emperor. And, and
they have no interest in westernizing. And we’re like,
what have we done? Because now we’ve allowed them to catch up
from a technological standpoint.
biology, why do we why do everybody in the West get this
so wrong?
Well, so a few things. One is political differences aren’t
public in China, but they are real. So it’s it’s all the
backroom stuff. And there was a real leadership shift from dang
and jang and who to to G. You know, the Mao era was
revolutionary communist, the dang jang who era was
internationalist capitalist, I think that was real. And the G
era is nationalist socialist. And it’s just different, like
who did not fully control the military the way that she does.
There’s this ad, you guys should watch the Chinese military ad.
It’s called like, we will all be here or something like that.
And the thing about it, it’s not just that it’s like, extremely
well coordinated military parade and set to be
intimidating, and so on. It’s that the whole thing clearly
just falls up to one guy. Gee, it’s not him riding in a car
with the rest of the Communist Party, flanking him as an
oligarchy. It’s just like one guy, this 2 million person army
folds up to him. That is a true consolidation and roll up of
power that he was able to accomplish, among other things
with tigers and flies going and throwing bougie Lee in prison,
go, you know, having generals, you know, thrown in prison for
whether they were actually corrupt, or whether they simply
you know, dissented or were political rivals. Yeah, it’s
hard. It’s hard to know from the outside, you know, in one sense,
because so many folks in the Chinese government were taking
bribes is almost like an equity stake in their province, you
know, like coming up, they’re like, Hey, you know, hey, grew.
So, you know, give me a cut. Every lot of people were
vulnerable. So he just consult he so it’s not something you
know, people will say, Oh, you know, the Chinese plan for 100
years, they don’t plan for 100 years, they had this huge war in
the 20th century to the nationalists and communists, the
ding, the ding transition, you know, his triumph for the gang
of four, that was not something Mao had planned. They’re human
beings like everybody else. And they had a real leadership
transition after three hours of continuity, then this is what I
think this is the key point you’re making, which is, I think
the reason that this actually flipped, and we didn’t see it
coming is because Xi Jinping decided, I want to have
complete control over the country, these other people are
getting too powerful. And we’re actually reading into this, that
there’s some crazy plan. It just could be a crazy man, not a
crazy. I really disagree with you. Why explain? But I mean, he
just decided, he just decided to basically take away every
entrepreneurs company, they were not trying to do they were doing
all of this stuff in plain sight. Okay. As an example, you
know, we view Sierra Leone as a place where we make commercials
about or we try to fundraise for or we send USA ID, they view
Sierra Leone as a place where there’s critical resources that
are dependent on the that the future of the world depends on
and so they will go, they will modernize, they will invest and
they will then own those critical resources. View, we
view Chile as a random country in South America that abuts, you
know, Peru and Argentina, they view Chile as a place where you
where there is the largest sources of lithium that we need
for battery production in the future. They were doing this for
decades, right in front of us. And the reason we did the
cutting of capitalism, hold on a second reason, the reason we
didn’t pay attention is because none of those countries mean
anything to us. Okay, so I agree with Chamath. And the
thing is, though, I’d argue that the blindness actually comes
from both ends of the political spectrum, like on the
conservative end, oh, these are shithole countries, basically,
you know, you can believe that if you want, but you know, it’s
something where, for example, COVID was only taken seriously
once it was hitting Italy and France, like China was still
considered like a third world country. But it actually also
comes from the liberal side in a different look like it’s slightly
masked, but it’s a condescension of not the
military industrial complex, but the nonprofit NGO, you know,
complex like, oh, the white savior with the NGOs, you know,
coming in and, you know, you know, pat them on the head kind
of thing. They’re not a not a big deal. And the thing about
this is like the one thing I think is a huge thing for
diplomatic core today is making any generalization about another
culture, which says that they’re not completely good, or that
they have some aspect to them that doesn’t match exactly to
the US, you can be called a racist for doing that. And so
this is the criticism of Islam. I mean, if you criticize Saudi
Arabia for throwing gay people off of buildings, you’re not
respecting religious
say that biology just gave the most precise delineation that
I’ve had. So I let me just repackage what you said, because
it resonated with me. Western philosophy tends to view
countries in three buckets. bucket number one are countries
like us, right? Those are the other Western countries, the GA
countries, they feel like we’re aligned. And then what happens
is you get this weird thing where then you move into like
countries where you basically either deal with it with woke
ism, right? Oh, let me go pat them on the head. Let me go try
to save them because it makes me feel better. Or you deal with
them as neocons where just like I let me go dominate them and
take them to war. And literally, you can take all 180 odd
countries in the world and effectively sort them into those
three things. And that I think is the problem with with the
America’s view of what we’re doing. And so what David said is
really true, which is that while we were doing this, we had
neocon war, woke ism, or you’re our buddy, because you’re like
us. The entire world reordered itself with completely different
incentives. And they did it right in front of us. And now we
wake up to realize, oh, my gosh, that was an enormous
miscalculation that we just did.
Yeah. So you know, if you look at kind of the history of the
West interaction with the rest of the world, and let’s talk
about colonialism, and whether whether you’re talking about
colonialism over the last few 100 years, or even you talk
about a microcosm, like Afghanistan, over the last 20
years, I would argue that there’s three phases to the West
interaction with these other cultures. Phase one is sort of
domination, right? Like Jamal was saying, phase two is
assimilation, where the the culture that’s been dominated
realizes that they’re behind and they want to catch up. And so
there’s a process of Americanization romanization. And
what they’re doing is they are learning from us and taking our
technology and it lulls us into a false sense of security that
we think they’re becoming Americanized. It’s not
alignment. It’s just they’re trying to catch up. Then the
third phase is reassertion, where the the dominated country
culture, you know, what have you reasserts its traditional
culture and its traditional views, because they’ve
modernized, but without becoming truly becoming Americanized or
Westernized. And we are caught off guard by that. And we don’t
really realize that they never really wanted our culture, they
just wanted to throw off, you know, American domination or
Western domination. And so what they’ve actually done is use
this period to, to basically assimilate and catch up. And the
reality is, like in Afghanistan, they don’t have to fully
assimilate all of our technology, they don’t have to
become as strong as us, because we are in their land, they just
have to become strong enough to basically achieve upgrade their
systems, right? They just have to achieve a defensive
superiority. It’s not an offensive capability. So it’s
much easier for them to catch up that we think. And we are always
caught off guard by this dynamic, and it repeats itself
over and over again. And what you’ve seen in in in China is,
you know, 3040 years ago, you had the great economic reform
of Deng Xiaoping, he laid out what they had to do, he said, he
said, abide your time and hide your strength, hide your
strength under a bushel. That was the great motto by Deng
Xiaoping. He set that policy for 30 or 40 years, they embrace
basically perestroika without glasnost. They reformed their
economic system, they copied us, but but not making Gorbachev’s
mistake of giving up any political control whatsoever.
And by 2012, they had largely caught up. And so I would say
that she was not an aberration, he was a reassertion, they had
gotten to a point of strength where they were ready for that
strong leader who was ready to reassert their basically their
ethno nationalism. And that’s the point we’re at right now.
And once again, we’ve been played for fools and caught off
guard.
Friedberg, but I mean, one of the side, one of the signs was
his corruption crackdown a few years ago, right? I mean, that
was kind of step one, where he took all these provincial
managers and kicked him out and put him in jail and started to
you know, clean things up internally, where there was
clearly kind of corrupt behavior underway. But you know, I’m a
couple points back, I do think it’s worth highlighting that, to
some degree, you can kind of try and diagnose his motivation or
diagnose the motivation as being, you know, rather not too
surprising, and maybe not too nefarious in the kind of, you
know, power grabbing sense, which I think we all kind of
want to bucket it as, but, you know, if there’s a population,
like we’re seeing in the United States, where, when you loosen
the screws on liberalism, and you know, you kind of allow more
freedom to operate and more kind of free market behavior, you see
tremendous progress. And as I think we’ve talked about in the
past, tremendous progress always yields, you know, a distribution
of outcomes amongst the population, but everyone moves
forward, some people just move forward 10 times faster and
farther. And it causes populist unrest, right. And we’ve seen it
in the United States. I mean, if AOC, Elizabeth Warren and Bernie
Sanders were elected to kind of be the, you know, the
triumvirate that ran the United States today, they would
probably say, let’s end all you know, this capitalism that’s
creating all this wealth in the United States, and progress
generally would slow down. And I think that there’s been inklings
of that. Clearly, there’s data to support the inklings of this
in China, that indicates, you know what the the loosening of
the screws has allowed tremendous progress, but it’s
time to tighten the screws, because populism and unrest is
going to arise from kind of perceived inequality, just like
we’re seeing in the United States. And, you know, I
guarantee or I can’t guarantee, but I would assume that if you
know, certain populist leaders in the United States have the
same level of authority that Chinese leaders do, they would
probably act in the same way.
I think what we’re gonna see next is, and I think we should
talk about what we think will happen next with China. I think
China’s on the brink of having a revolution. If you look at what
happened to the Uyghurs, obviously, you can’t practice
religion, their students in Hong Kong can’t protest, you can’t
publish what you want. Founders can’t start companies. Now
you’re not going to be able to play video games as much as you
want. You can’t use social media. And today, you can’t have
any control over your finance. If you squeeze people across
this many vectors, this hard, this quickly, I think free
birds, right, it could result in massive China’s not like a
uniform people in a uniform culture. Of course, yeah. But I
mean, I’m just listed like seven or eight things they’re doing to
but there are many provinces, many cultures, many differences,
many differences of experience, by the way, I mean, you know,
the rural population in China doesn’t experience much of what
I think is driving industry and driving this inequality and
perceived inequality and the changes that are underway. I
don’t think that a revolution is generally supported unless you
have, you know, enough kind of concentrated swell across the
population. I don’t know how you could see something like that
happening. And as diverse a population as China,
I support China’s limits on social media use by children. I
could I could use that here for my kids.
I clearly sacks is letting his kids use whatever they want. I
mean, we definitely need to have some of those over here. Balaji
What do you what do you think is going to happen? worst case
best case for China in the next two decades?
Well, so one thought I want to give is basically that in some
ways, this is inevitable, because China and India are 35%
of the world, Asia was the center of the world. And one way
of thinking about it is that America and the West executed
extremely well over the last couple of centuries. And Asia
didn’t with socialism and communism. And now that they’ve
actually got a better OS, it’s not like the US really could
restrain them, you know. So in that sense, that’s also part of
their internal narrative in a way. I mean, of course, Mao
killed millions of people there, they screwed up their
own stuff. But their narrative is, they were colonized by the
West and the opium wars are patronized as copycats
emasculated on film. For decades, they’re like heads
down in sweatshops, they built plastic stuff, they took orders
from all these overseas guys, and announce their time to stand
up and take back their rightful position in the world. And
that’s like, that’s their narrative. And so it’s important
to not not agree with it, but at least understand where it’s
coming from. Because they want it more, I think. And so I
disagree, Jason, with your with your view that they’re going to
have a revolution. I think that’s, like, that’s the kind of
that’s a Western mindset, where, you know, Australia, for
example, is having these COVID protests. In China, the harder
the crackdown, the less more crackdown, like, the easier it
makes the next crackdown. It’s it’s like, it’s something where
it’s not gonna be an easy revolution, that’s for sure. But
we saw protests, you saw Tiananmen Square, you saw Hong
Kong, and you’re gonna see anything since that was 30 years
ago. It’s still proof positive that if you squeeze people, they
will take to the streets.
Life in China has accelerated incredible pace over the past 30
years, the average person in China is so much better off than
they were five years ago, 10 years ago, 20 years ago, 30
years ago, revolutions don’t come out of that amount of
progress, right? When when your life when you go from $4,000 a
year on average income to $20,000 a year on average income,
what happens if they don’t have jobs in the recession,
the only time you revolt is because of economics. That’s
what I just said. So what happens if there’s a, if they
have a market crash percent a year, the GDP is growing 8% a
year, the population is seeing an incredible benefit. And what
is that reverses? What if that reverses? Would you see a
revolution then?
Well, Jay Cal, I mean, look, I think I think we it’s a
topologies point about this is like a Western mindset. I mean,
think about the Arab Spring, we saw all those revolutions with
the Arab Spring. And we thought, Oh, look, they’re they’re
finally throwing off the yoke of oppression. And now they’re
going to set up democratic states. And what do we actually
get? We actually got religious fundamentalism, right? Like we
didn’t get what we thought. And I think this happens over and
over again, is that, is that, you know, we’re trying to
superimpose our mindset on them. You know, we’re thinking like,
frankly, a Davos, man.
Yeah, no, I’m thinking like,
people want security, by the way, and security, security can
come in a lot of different forms. And religious
fundamentalism is one of them. And you know, the the way that
we see kind of government operate in China may seem
foreign and uncomfortable to us, but it provides enough security
to people to know they’re going to have housing, shelter, food,
medicine, and be able to do the things that they want to do to
some extent in some limit. You know, it’s it’s not necessarily
an equation that says all humans that don’t live like Americans
are going to be unhappy.
Yeah, last thing I’ll just say is basically, I think the idea
that China will collapse from internal revolution, or, you
know, the US military is like really strong relative to
China, I think are both actually forms of wishful
thinking. With that said, I do believe that we need a strategy
for China on a global scale. And I think the future is a
centralized East and decentralized West. And but but
I don’t think it’s going to be just, hey, deus ex machina is
gonna gonna solve this problem.
No, I don’t think the revolution is going to necessarily
overturn China, I think you’re going to see revolutionary
moments.
Well, so just just to say one thing in your defense, Jake out,
because everyone’s kind of beating up on you is I was
beating up, by the way, just
defending Jake out what’s going on. I’m not saying it’s a
guarantee of revolution. But I think this is going to be
there’s going to be some social unrest.
Yeah, look, I the one way in which I agree with Jake out is I
do think that freedom ultimately is the birthright of every
human, regardless of where you’re born, you know who you
are, what culture you are. But I think the thing that the United
States has learned over the last 20 years is the road from here
to there is going to be much more complicated than we think
and longer and longer and cultures are very stubborn
things. And they’re not going away anytime soon. And the
transition is going to have to happen within those cultures.
It’s not something that we can superimpose.
By the way, I would I would also point out freedom is the
birthright and the want of a people that at some point have
enough security to feel like they have that luxury. Up until
that point, I think that you have to make the decision of
does security give me more than freedom. And in a lot of cases,
security coming with all the costs it comes with may give
people more than absolute freedom. And that’s a
transitionary phase, I think, you know, a lot of people’s go
through people’s being civilizations and states and
whatnot.
Anybody have a prediction of what’s going to happen in the
next 20 years? Or we’ll move on to the next?
I just can’t believe sacks was empathetic to your point, Jake,
although that was a great moment. It’s really insane.
I have a few predictions. Yeah, I think actually, if you read,
you know, the kill chain or similar books, that’s by I think
Christian bros. It’s a good book, where basically is like,
you know, the US military has a perfect record in its war games
with China. China’s won every round. And, you know, if you if
you look at just the fact that with COVID US military basically
suffered a military defeat in the sense that it had this whole
biodefense program, it’s supposed to protect against
biological weapons. That didn’t work. Afghanistan, huge defeat,
$2 trillion. You have this Aukus thing where it looks like France
is now pulling off and you know, from from NATO or the EU is
doing their own thing. I think that China is and then China is
really already predominant in many ways in Asia. And the US
just doesn’t care about the area as much. I mean, who wants to
start another gigantic war over this? Certainly, I don’t think
the people of America do after after 20 years of forever war.
And so and China really cares about Taiwan, they really care
about their backyard. So whether that’s a war, or whether that’s
a referendum on Taiwan, or whether it’s some unpredictable
event like COVID, I don’t know. But I do think that China does
have some Monroe doctrine like thing that it gets to within
Asia, where basically it says, you know, just like the US said,
Hey, you know, we’re running this hemisphere, they’re saying,
hey, we’re running the sector of things, whether that’s a
military conflict, where the US decides to just withdraw, I
don’t know. And then I think what has to happen is, we have
to figure out what the decentralized West looks like an
asymmetric response to China, because it’s going to basically
be the number one centralized state in the world, you’re not
gonna be able to combat it head on militarily, it’s just, you
know, it’s got like 10x growth in front of it, it’s already a
monster. Unless there’s some assassination or revolution or
something crazy like that, that’s hard to predict. If it
manages what it’s got, it’s got like, it’s like Google 2010,
it’s got 10 years of that in front of it. And whether it’s a
Chinese decade or Chinese century, I think depends on
whether we can build the technologies to defend freedom,
meaning like encryption, meaning, you know,
decentralized social networks, meaning these kinds of things.
Because that’s the only I think, kinds of tools that are going to
help us whether it’s drones, whether it’s other kinds of
things, asymmetric defense versus what they’re going to be,
it’s not going to just be a deus ex machina.
I think I look, I think that’s a great point to end on Jason,
because there’s other stuff we want to talk about. So what are
the things that you know, apologies commented on that I
give them, you know, a tremendous amount of credit for
is corporate is the idea of corporate journalism. In fact,
biology, you’re the first person I heard that term from corporate
journalism, which is a recognition that all of these
reporters actually are employees of companies, and they have a
company culture, and they often have they have owners, the
companies do, those owners often have an agenda, there’s often a
dogma inside these corporations. And, and it really got me to see
journalism in a new light, because these journalists
portray themselves as the high priest of the truth, who are
there to speak truth to power. And actually, they’re really
just kind of the lowest paid functionaries on the corporate
totem pole. And, and, you know, in contradistinction to what
you’ve called citizen journalists, who are people who
are writing what they see as the truth in blogs, or, you know,
formats like this, where they are not getting paid for it, you
know, we’re doing it because we want to put forward what we know
to be the truth. And actually, I’d love to hear you speak to
that, because I think this is like one of the most powerful
ideas that I’ve heard you put forward.
Sure. So, so much I can say about this. The first thing I
would do is I’d recommend a book that recently came out by Ashley
Rinsberg, called The Grey Lady winked. And the reason it’s very
important, and I put it up there, frankly, with top five
books I’d recommend, I know, I’ve recommended other books,
top five books, I’d recommend Grey Lady winked, it goes back
through the archives, you know, the New York Times calls
themselves the paper of record, they call themselves, you know,
the first draft of history, they’ve literally run billboards,
calling themselves the truth. But it’s just owned by some
random family in New York. And, you know, this guy, Arthur
Salzberger, who inherited it from his father’s father’s
father. And so you have this, like, random rich white guy in
New York, who literally tries to determine what is true for the
entire world, his employees write something down, we’re
supposed to believe that this is true. And I simply just don’t
believe that that model is operative anymore. Because I
think truth is mathematical truth. It’s cryptographic
truth. It’s true that one can check for oneself, rather than,
you know, argument from authority, it’s argument from
cryptography. And, you know, one of the things with Bitcoin with
cryptocurrencies is given decentralized way of checking on
that. Now, to the point about corporate media, it’s they’re
literally corporations, these are publicly traded companies
with financial statements and quarterly, you know, reports and
goals and revenue targets. And so once you, you know, kind of
are on the inside of one of these operations, you realize
that that hit piece, or what have you is being graded in the
spreadsheet for how many likes and RTS it gets on Twitter. And
if it gets more, they’re going to do more pieces like that flood
the zone with that. And if it doesn’t, then they’re going to
do less. And they’re all conscious of this. You know, for
example, Nicholas Kristof wrote an article, I think it’s like
it’s the articles, no one reads articles, someone will read
where you notice that his Trump columns get something like 5x
more views than his other columns, it’s like a huge ratio.
And so at least some folks there are privy to their to their page
views. So and of course, they’re looking at their Twitter likes
and RTS, even if they, those are not directly page views there,
they’re certainly correlated with pages on the article. So
all these folks are literally employees of for profit
corporations are trying to maximize their profits. But we
believe them when they mark themselves as the truth, like
the NYT, or as democracy itself, like the Washington Post, or
fair and balanced, like Fox, these people equate themselves
with like truth, democracy and fairness. They weren’t exactly
around at the founding. Okay, they weren’t they weren’t part
of the Constitution in 7076, the post offices, but these media
corporations were started later on and have kind of glommed
themselves on and declare themselves like part of the
establishment, you know, and and they are not. And the last
point, and I’ll just, you know, give you guys, you know, the
Florentines, but we didn’t go and say, Oh, BlackBerry do
better. Blockbuster do better. Barnes and Noble do better. We
just replace them disrupted them with better technological
versions. And so the idea that Oh, you know, New York Times do
better. That’s completely outmoded way of thinking about
it, we need to disrupt, we need to replace, we need to build
better things, we need to have things that have like on chain
fact checking that have voices from overseas, that have voices
that are actually experts in their own fields that have
voices that are not necessarily corrupted by what you mean by
on chain fact checking. Ah, give an example. So this is this is
a very deep area. But fundamentally, the breakthrough
of Bitcoin was that an Israeli and a Palestinian or a Democrat
and Republican or a Japanese person, a Chinese person, all
agree on who has what Bitcoin on the Bitcoin blockchain. It is
essentially a way of in a low trust environment, but a high
computation environment, you can use computation to establish
mutually agreed upon facts. And these facts are who owns what
million or billion of the roughly trillion dollars on the
Bitcoin blockchain. And that’s the kind of thing that’s I mean,
people will fight over a $10,000 shed, you know, when when you
can establish global truth over a byte, which says, you know, do
you have 20 or five or 10 BTC, you can actually generalize that
to establish global truth on any other financial instrument. And
that’s tokens, and that’s, you know, loans and derivatives. And
that’s a huge part of the economy. And then you can
generalize it further to establish other kinds of
assertions. And that gets a little bit further afield, but
not just, you know, proof of work and proof of stake, but
things like proof of location, or proof of identity. There’s
various other facts you can put on there. So you start actually
accumulating what I think of is not the paper of record, but the
ledger of record, a ledger of all these facts that some of
them are written by so called Crypto Oracle, some of them
arise out of smart contracts, but this is what you refer to.
And as a today model of what that looks like, it’s sort of
like how when someone links a tweet to prove that something
happened, people link an on chain record to prove that
something happened. Concrete example, do you guys remember
when Vitalik Buterin made that large donation earlier this
year? Yes. Okay, so you want to talk about that? Explain what
happened? I think that you basically tweeted out something
that was essentially trying to raise money to secure necessary
equipment and pharmaceutical supplies to India during a
pretty bad COVID outbreak. And then I think you you decided
that you were going to donate some money and then Vitalik
basically stepped up and actually gave quite a large
sum. I’m not exactly sure the exact number of all that.
Yeah. So it was it was an enormous amount in illiquid
terms of, of this meme coin, these Shibu coins. But the thing
is that everybody when they when they wanted to prove that this
has happened, because it’s so unbelievable, such a large
amount of money was marked it on the on the order of a billion
when he gave it, do how they proved that they didn’t link a
tweet, they linked a block Explorer. Okay, like an on chain
record that showed that this debit and this credit happened.
And the big thing about this is, you know, we take for granted
when you link a tweet, you’re taking for granted that Twitter
hasn’t monkeyed with it. But guess what, Twitter monkeys with
a lot of tweets, he says, a lot of people get disappeared. And
so it’s not actually that good a record of what happened
anymore. This is deleted, this guy got suspended this, you
know, like, even the Trump stuff, forget about like Trump
himself. But that historical archive of what happened, you
can’t link it anymore. It’s link rotted just from that, like, I
know, it’s one of the 1000 most important things about it. But
it’s an important thing.
In the example of say, Taiwan, and China believing Taiwan is
part of the one China concept, and Taiwan believes it is a
country and everybody in the world has a different vote on
that. How does the blockchain clarify? What is the fact about
is China a country? Or is it a province?
Very good question doesn’t happen. Well, what it does is it
clarifies the facts about the metadata, who asserted that it
was a country and who asserted that it was a province? And what
time did they do so? And, you know, what money, how much BTC
did they put behind that, or what have you, so it doesn’t
give you everything. But it does start to give you unambiguous,
like proof of who and proof of when and proof of what, and then
from that, at least, yeah, I mean, like the way, the way I’ve
kind of explained it to family members who’ve asked is, you
know, that the concept of a chain is difficult, I think, for
people to that aren’t, you know, have don’t have a background in
computer science really grok is like, but everyone understands
the concept of a database, you know, there’s a bunch of data in
there, except in this case, the data that makes up the database
is what’s being verified by everyone. And it’s distributed.
So everyone has a copy of it.
I want to know what you guys think about this week in the
Facebook dumpster fire. Let’s move to something splashy.
And can you say one thing? There’s a book Friedberg on what
you just mentioned, which is called the truth machine by Casey
and Vigna. And it gives a pop culture explanation of the
ledger of record type concepts I just mentioned,
which which I don’t think I don’t think a lot of people
grok at biology to your point. And I think, you know, we’re
skipping past it. But it’s a really important point, which is
historically, databases have sat on someone servers, and
whoever has those servers decides what data goes in the
database and how they’re edited and what’s allowed to come out
of the database. So in this notion, generally, a database
with information and it can be held by lots of people who
generally as a group kind of vote and decide what’s going to
go into it. And that’s, that’s the power of decentralization
and how it changes, you know, the information economy, which
drives the world. And it’s going to have a lot of implications,
right? Facebook’s worst month ever continues. We talked last
week about Facebook having a lead internal leak called the
Facebook papers. This is a continuous leak to not only the
Wall Street Journal, but apparently members of Congress
are also getting it and the leaker and the SEC and the SEC
and the leaker apparently works in the safety group, according
to a congressperson who has been getting it and they are going to
uncloak themselves, and that they were leaking this out of
frustration, that there is human trafficking, democracy issues,
and obviously self harm in girls using Instagram. And, you know,
this research, but that’s not all Facebook is admitting for
the first time this week that Apple’s privacy updates are
hurting their ad business. And I think the story you’re referring
to is that two groups of Facebook shareholders are
claiming that the company paid billions of extra dollars to the
FTC to spare Mark Zuckerberg and Sheryl Sandberg from
depositions and personal liability in the Cambridge
Analytica saga. From the political Politico article,
quote, Zuckerberg, Sandberg and other Facebook directors agreed
to authorize a multi billion dollar settlement the FTC as an
express quid pro quo to protect Zuckerberg from being named in
the FTCs complaint made subject to personal liability or even
required to sit for a deposition. According to the
article, the initial penalty was 106 million. But the company
agreed to pay 50 times more 5 billion to have Zuck and
Sandberg spared from depositions liability. Here is the money
quote, the board has never provided this from the group of
shareholders suing the board has never provided a serious check
on Zuckerberg unfettered authority instead, it has
enabled him defended him and paid him paid billions of
dollars for Facebook’s corporate coffers to make his problems go
I have one prediction. The Facebook whistleblower. You
know, when you are a federal whistleblower, number one is you
get legal protection. But number two, which people don’t talk
about much as you actually get a large share of the fines that
are paid by the act of your whistleblowing. You know, there
was a couple of SEC claims that I think were settled last year,
where the whistleblower got paid, I think, like 115 odd
million dollars or something, and just an enormous amount of
money. And the SEC has done a fabulous job. And, you know,
using whistleblowers as a mechanism of getting after
folks. And, you know, I think the SEC said they’ve collected
almost a billion dollars since this whistleblower program
started that they’ve paid out or something just an enormous
amount. And I had this interesting observation, which
is, this person leaked a bunch of stuff or whistle blew to the
Senate to Congress to the SEC, there probably will be an
enormous fine. This person may actually make billions of
dollars, which will then make every other employee at
Facebook really angry about why they didn’t leak it first,
because all I guess all this stuff was sitting around. And
apparently now they’ve shut it down, right. So that entire data
repository around this whole topic is no longer freely
available for employees to peruse. So
what under a key tam thing?
Well, I think it was more like, like, I guess, like, all of this
data was sitting inside of some Facebook internal server.
No, I mean, I mean, what this this leaker makes money under
like key tam.
So the SEC will pay for information that results in a
fine. And so they just recently announced that they paid out
$114 million whistleblower payment that was the highest
ever. And that they this whistleblowers extraordinary
actions and high quality information prove crucial to
successful enforcement actions. I don’t think they announce all
of these whistleblower payouts, they just pay them. So they’re
not
so that’s, that’s my one observation is I actually think
this whistleblower may make billions of dollars. So more
than any of us made at Facebook, which I think is hilarious. But
the second thing, which is more important is that there was an
article in the Wall Street Journal about how sentiment
amongst Americans have now really meaningfully changed. And
I Jason, I don’t know if you have those stats. But this is a
plurality of democrats and republicans where it’s like 80%
of anybody now basically says the government needs to check
big tech.
The Wall Street Journal published an article yesterday
highlighting a new poll conducted for the future of tech
commission, it found that 80% of registered voters 83% dem 78%
repubs agreed that the federal government quote, needs to do
everything it can to curb influence of big tech companies
that have grown too powerful, and now use our data to reach
far into our lives findings are based on a survey of 2000 or so
registered voters.
I think it’s a really, really, really tough road that these
guys will have to navigate these next few years.
Can I can I offer some contrary views here? Yeah, please. So, um,
you know, the whistleblower thing, you know, real
whistleblowers, in my view are like Snowden or Sanjay, who are,
you know, basically overseas and, or in prison for for telling
what the US government is doing. And the difference is, I’d say,
they’re whistleblowing, if accepted and acted upon would
reduce the power of the US government. Whereas these, you
know, kind of awards and so on, I think they they do distort
incentives. It’s not like they’re giving a billion
dollars to Snowden for blowing the whistle on the NSA, the
military industrial complex is not happy with that. But this
money is being given because government is currently mad at
Facebook and wants to do something that is like a quasi
nationalization of Facebook. Now, very similar to what
happened in China, where basically all the tech CEOs,
they just do it much more explicitly there. They just
basically decapitate all them say, okay, you’re going, you
know, spending time with your family. In the US, it’s done in
this sort of denied way, and so on. But the US government
getting more control over Facebook is not a solution to
Facebook’s real problems. It’s just going to mean backdoor
surveillance of everything, every single thing that was
pushed back on every end to end encryption thing that they
implemented. Now, the Keystone cops in the US government, not
they don’t just surveil everything, then their database
gets leaked. And it’s all on the internet, just like what
happened under the solar winds hack. So I’m not denying that
there are, you know, like bad things about Facebook, I
actually think on net, it’s probably being more beneficial
than many people say. But I don’t believe that the federal
government is a solution to those problems. I think the
solution looks more like decentralized social networking,
where people have control over their own data, not simply the
US government quasi nationalizing the thing.
So, you know, people bring up this decentralized social
network thing, and as if it is a better solution, I think you
believe it’s a better solution. But I rarely hear anybody talk
about, well, if there’s slander on a decentralized network, if
there’s child pornography, if your personal banking
information, or your, you know, you were personally hacked, and
that information was put on a decentralized social network,
that cannot be reversed and stopped, because it’s
decentralized, correct?
It depends. You know, the thing is, it’s basically about why does
it depend, you just said that the blockchain couldn’t be
changed, and that all the facts were permanent. So why does it
depend now?
Well, for something like child porn, for example, it’s actually
being used for that you’re not going to find lots of people who
are running those nodes. It is, it’s something where edge cases
are always used to attack something. There’s a famous
cartoon, which says, How do you want this wrapped, and it’s
called control of the internet. And it’s either protect children
or stop terrorists, right. And so when we talk about an edge
case like that, I mean, the CSAM stuff, child porn, you know,
that was that’s used by Apple to justify intrusive devices that
are scanning everybody’s stuff. The I think the answer to a lot
of those things is, if you’re doing something that’s bad,
there’s usually ways of going after it, that don’t involve
this gigantic surveillance state that was after all only built,
or in the last 10 or 20 years, just normal police work that you
can do. If they’re actually like, you know, a bad guy,
there’s other forms of police work, you can get search
warrants, you don’t have this completely lawless thing, where
you just, you know, some guy in San Francisco hits a button, and
you’re digitally executed. And so, so, you know, it’s not that
there isn’t any possibility for rule of law, it’s just that it
has to actually be exercised in this.
I think we’re on listen, I think we’re a long way away from
decentralized social networking actually being the norm or being
a solution, Jason, I think we’re at the step of actually
figuring out how much tolerance we have for probably
specifically Facebook and Google’s specific business
models. And it’s those business models that I think are coming
up against privacy, they theoretically now, and we’ll
figure this out, maybe coming up against mental health, and you
know, our child welfare policies, and what we all view
about that. And those are fundamentally governmental
issues that they should adjudicate. And I think the more
important thing that I take away from all of this is that we’ve
all kind of let it probably get a little bit too far. And I
think now that there’s a plurality, something’s going to
happen, I don’t think it’s going to be right. I don’t think it’s
going to be just it’s kind of like trying to perform surgery
with a rusty knife. There’s going to be all kinds of
collateral damage, specifically to how to police Facebook,
Twitter, social networks, I think it’s just like social
media, I think we’ve jumped the shark at this point. And I think
folks will want to
decentralization as the solution, like biology.
I do think that that’s the ultimate solution for two key
things. One is, the most important thing that we all want
is to know what the actual economic relationship we’re
having with folks that we spend time with this. So when we spend
time with friends, that’s friendship, there’s no economic
relationship there necessarily, okay. When we spend time with a
lot of these applications, there is a subtle economic
relationship that is actually hidden from us, which is that we
believe we’re getting value for free. But really, what’s
happening is we’re giving back a bunch of information that we
don’t know. When you move to a world of decentralization, you
shine a light on how people make money, and you allow us to vote.
Do I want it? Do I not that single feature will provide more
clarity for people than any of this other stuff will, because
it’ll force people to then step into an economic relationship
with these organizations. And I think that that’s just fair,
because those folks should be allowed to make money. But we
should also be allowed to know what the consequences are and
then decide.
David, you are a big proponent of freedom of speech. We saw
massive election interference, the Russians trying to use
social media to create division, other countries doing it to each
other. It’s not just the US and Russia, it’s China and Russia
and everybody doing it to each other. Do you believe that
something like election interference and those bots
would be solved or it would get worse because of
decentralization? Are you a fan of decentralization? Or would
you rather have a centralized Facebook, Twitter and somebody
responsible like Zuckerberg or jack to mitigate this for
democracies around the world?
Well, the problem that we have is we do have a problem of
social networks spreading lies and misinformation. However, the
people who are in charge of censoring those social networks
keep getting it wrong. So they allow disinformation to be
spread by official channels, whether it’s, you know, you
know, whether it’s a corporate journalist,
Are you going to say Dr. Fauci?
There’s so many official channels that get things wrong.
We talked last week about the Rolling Stone ivermectin hoax.
There’s been absolutely no censorship of that manifestly
wrong story. There’s no labeling of it. But then a subjective
opinion, like what Dave Portnoy posted about AOC, attending the
Met Gala, which can’t be factually wrong, because it’s
just him, an opinion that gets fact checked and labeled. It’s
bizarre. So the situation we have today is we’re not
preventing misinformation. We’re just enforcing the cultural and
political biases of the people who have the power. And that is
always a problem with censorship. And this is why I
agree with Justice Brandeis when he said that, you know, the
sunlight’s the best disinfectant, the answer to bad
speech is more speech. We need to have more free and open
marketplaces of ideas. And that ultimately is how you prevent
disinformation.
So decentralized Twitter, decentralized social networks,
do you think that is too much sunlight, and too unruly, the
fact that things could be spread on there?
And well, I’d like to see what those things look like when we
actually have them. It’s I agree with Martha, we’re still some
ways off from that.
Are we? I mean, but can I say a few things? Yeah, go ahead.
Because I think we have these out there, isn’t mastodon out
there and other services out there, and they’re contending
with these very issues. So by the way, it’s happening in
philosophy was not sorry, sorry, apology, I just say one thing
before you go. But like this, this general philosophy is not
novel. You know, the internet and the word being called the
tech platforms were meant to be the response to the undue
influence that kind of Americans thought existed already in the
media when they emerged in the late 90s. And, you know, you can
go back hundreds of years, like the state was meant to be the
response to the church. And, you know, the media was meant to be
the response to the state and propaganda. And then the tech
companies were meant to be the response to media. And, you
know, now we’re talking about decentralization be kind of
being the response to tech. And at some point, you know,
information accrues in this kind of asymmetric way. And it be
called becomes called that undue influencer. And that I think
ends up becoming the recurring battle that we’ll continue to
see whether or not this notion of decentralized systems
actually is the endpoint or is just the next stepping stone in
the evolution. That is this constant kind of evolving cat
and mouse game of where does the information lie, who has
control over it, and who’s influencing people ends up kind
of being I think, the big narrative that we’ll kind of
realize over the next couple decades. But I don’t know
biology, if it becomes the endpoint, right? I mean, this
is this feels to me part of a longer form narrative.
Yeah, so I think like lots of things look cyclic, if you look
at them on like this, if you look from the z axis is more
like a helix where you do make progress, even if it seems
you’re going in a loop. And so I think, you know, it’s
centralized, then you decentralize and you
recentralize. It’s like the concept of unbundling and
bundling, you unbundle the, the CD into individual mp3s, you
rebundle into playlists, right. And so with decentralized media,
it’s not purely every single node on their own. I think it’s
more like a million hubs and a billion spokes. And Jason, to
your point, basically, most of those hubs are not going to
allow things that 99.99% of people think are bad, like see
Sam, you know, as for other things like, you know, slander,
hack documents, you mentioned, the thing is current central
arbiters will falsely accuse people of these things or
enforce them in political ways. It’s the centralization is
actually also not a solution is being abused as sacks, you know,
points out, in fact, official disinformation early in COVID,
which, you know, I had to like, basically be back with a stick,
fortunately, you know, got some of it out in time. But, you
know, people said the flu is more serious, the travel bans
were overreactions that only Wuhan visitors were at risk,
that avoiding handshakes is paranoid, that the virus is
contained, tests are available, masks don’t help, you know, all
that stuff, the Surgeon General himself, you know, tweeted out,
you know, people don’t wear masks, right? BuzzFeed, you
know, NYT, all these guys got the story wrong, and then they
rewrote history to pretend that they didn’t. So that to me is a
much greater danger when you have a single source of truth
that’s false.
We’re picking the least bad solution.
It’s such a good point, because I’m old enough to remember when
Balaji was right. About everything related to the
beginning of COVID. And I’m old enough to remember when in April
of last year, I wrote a piece in favor of masks, when the WHO and
the Surgeon General and all these official channels were
saying don’t wear masks. So the problem is with with this, these
with official censorship, is that they keep getting it wrong.
They keep getting it wrong. And I want to hold on, I want to
bring up one more one more quick point. Okay, Jason, you
mentioned foreign interference on Facebook, I would really
encourage anybody who’s concerned about that issue, to
look up you can go look, you just Google the actual ads that
were run by agents of the FSB on Facebook. During the 2016
election, you can actually see the ads they ran. I want to make
two points about that. Number one, the ads are ridiculous.
They are. They are sort of like an absurd. You know, foreigners
perspective.
They’re me me with bad English. Yes.
Bad English. And it’s it’s somebody who doesn’t understand
American culture’s attempt to propagandize an American and you
look at it, it’s so ham handed. Let me give an example. It’s
like, in one of them, they’ve got Jesus arm wrestling with the
devil, sayings, and it’s Jesus saying that I support Trump, and
the devil saying I support Hillary Clinton. I mean,
literally stuff like that. Okay, it’s
utterly you’d see at a Trump rally,
it’s utterly absurd, and nobody would ever be convinced by it.
The second thing is, the second, the second thing about it is
that when you actually look at the number of impressions that
were created by the sum total of all of these, so the so called
disinformation of all these ads, it is a fractionally small, if
intestinal drop in the ocean compared to the total number
of impressions on Facebook. And so I’m not disputing the fact
that somebody in the basement somewhere in Moscow, perhaps was
running
so it was proven. It was like hundreds of people
was running some sort of disinformation operation that was
running ads on Facebook. What I am saying is that when you
actually look at the effect, and quantitatively and
qualitatively, you realize that that whole story was massively
brought blown up abortion in order to create an hysteria that
then justify censorship, then justifies the empowerment by
centralized authorities to be able to regulate to be able to
regulate these social networks with the effect that the people
in power end up censoring in ways that do not support the
truth, but actually just reinforce their own power. That
is what the disinformation story is really about.
No, it’s not what it’s really about sacks is that Russia wants
to pit people like you and me against each other, you’re right
leaning on left leaning and what they want to do is create this
moment where you and I are fighting over this instead of
fighting Russia. Russia has this as a strategy to demoralize us.
And this is classic KGB technique. So battles back and
forth between Americans so we don’t fight against
I have no interest in fighting Russia per se. I’m not interested
in picking fights with foreign countries.
And you should want to fight against Russian interference.
Yeah, I’m also not engaging in a fight with fellow Americans. I’m
attempting to de propagandize fellow Americans who’ve been led
to believe that Russian interference in the election was
I’m not saying it didn’t happen. But they’ve been led to we know
it’s been led happened, but they’ve been led to believe that
it was a greater threat than it actually was in order to empower
centralized authorities to engage in censorship over social
network. So I’m trying to essentially deprogram an
enormous amount of programming that’s taken place. I do not
consider that to be fighting with fellow Americans.
Well, I mean, the point is, you have the GOP recounting votes,
even to this day, saying the election was stolen. And then
you have on the left, you have the Democrats saying, Russia won
the election for Trump. In both cases, these are probably
factually incorrect.
In our last podcast, I cited the piece by Rich Lowry, which he is
the editor of National Review, speaking to conservatives saying
that this whole stolen election myth, yes, he called it a myth
is an albatross is it is nothing, it will do nothing but
backfire on conservatives and Republicans. I think there are
plenty of people who recognize that story to be what it is.
We’re talking about something very different here.
I kind of just want to pivot forward a little bit. And I
think it’s a good question with biology on on the line. But
yeah, let’s let’s use let’s assume we move forward to this
decentralized model where there isn’t a central media platform
that adjudicates content and makes it available to to the
users of the platform. So now in a decentralized world, take
to take YouTube, for example, YouTube has an application
layer, which is the website we all use to access the videos,
and there’s a recommendation list that pops up. And then all
the media that that exists on the YouTube platform sits on
some servers. And so the application is how I’m kind of
selecting what media to watch. But that’s kind of being
projected to me because of the recommendations being made by
Google and the search function. If you guys remember, I don’t
know if you guys are old enough. But you know, in the early 90s,
we were all on gopher boards, and we were trying to find
information. And it was a total cluster, right? I mean, there’s
just like, nowhere, no way to kind of find what you’re
looking for. And so search became kind of the great
unlock right and use that and search became the great unlock
for, you know, for accessing content on this distributed
network that we call the internet. Now in the future, if
all of the YouTube media is decentralized and sits on
distributed servers and sits on a chain or whatever, what is
the application layer look like biology? Because how do you end
up giving users are ultimately going to have to pick an
application or pick a tool to help them access media to help
them access information. And there has to be to some degree a
search function or an algorithmic function that
creates the list of what content to read, or they simply
subscribing to nodes on the network. And that’s kind of the
future of decentralization where there’s no longer a search a
recommendation function, but there is simply a subscription
function. And I think that that to me is kind of a big
philosophical question, because from a user experience
perspective, people want things easy and simple, they want to
have things recommended to them, they want to have a bunch of a
list of things, and they click down the list, and they’re done.
I’m not sure most people as we saw in web 2.0, when there were
all these, like, you know, make your own website stuff, and you
had RSS feeds, and that all died, because it was complicated,
and it was difficult, and it wasn’t great content for most
people, they prefer having stuff presented to them. So do we just
end up with like 10 2030 subscription applications that
create different algorithms and different kind of access points
for the content? Or are people just living in a subscription
universe in a decentralized world? When it comes to media?
It’s a great question. So I think, first, we have some
vision of what that world looks like already. Because if you
think about block explorers, and exchanges and wallets, and much
of the rest of the crypto ecosystem, they are all clients
to the Bitcoin and Ethereum and other blockchains, right? So,
you know, I wrote this post called, Yes, you may need a
blockchain, where, you know, people have said, Oh, blockchains
are just slow databases. And that’s like saying the early
iPhone camera is just a poor camera. Yes, it was worse on one
dimension, you know, image quality, but it was far better
on other dimensions, namely, the fact that it was ubiquitous, it
was always with you, it was free, it was bundled, it was
programmable, it was connected to a network and so on. And so
blockchains, yes, they have lower transaction throughput,
but they are 1000x or more on another dimension, which is the
number of simultaneous root users. That’s to say it’s a
blockchain is a massively multiplayer database, where
every user is a root user. That’s meaning everybody can
read the rows in the Bitcoin blockchain. And anybody who has
some Bitcoin can write a row that’s a debit or a credit to
someone else. Anybody with compute can mine blocks. Okay,
so it’s open and permissionless. Similarly, for a decentralized
social network could operate in a similar way. Whereas, let’s
say something like Twitter, or PayPal, the root password is not
public, nobody can can access it. And so what this leads to,
to kind of continue your point is basically, I think, there’s
basically been three eras of the internet. The first was p2p,
which was, you know, peer to peer, right. And so individual
nodes are point to point communicating, and that’s FTP.
And it’s, it was telnet before SSH address. Yeah. Yeah, exactly.
Right. And so the great thing about this is open source is
peer to peer is fully programmable, you can see
everything, right? Then, because of search, because of social,
because of the rise of the second era MVC model view
controller, essentially, many protocols like social networking
or search are not efficient. If every node is pinging every
other node, you can’t ping every other node with the index of the
web, you can’t ping every other node with Facebook’s entire
social graph, when you know, you go and message somebody, you
want a central hub with their photos and stuff. So you can
just send a few packets back and forth, right. And this led
to the, you know, the last 15 years, these gigantic hubs last
20 years, these giant hubs, search and social and messaging,
two side of marketplaces, hub and spoke architecture. And
these hubs have global state, and they’re highly monetizable,
you can make billions of dollars off them as many of our friends
have, right, by the way, that the early peer to peer versions
failed, right? Because juice, I mean, you know, the alternative
didn’t really work out. Right? Yeah, exactly. Right. So, I
mean, BitTorrent did exist during this time, it’s not like
it was zero. But generally speaking, this was the era of
hub and spoke MVC dominance. And now we’re into a third
architecture, which I call CBC, client, blockchain client. And
so desktop clients have a blockchain that they communicate
with, for example, I have a wallet, you have a wallet on
your client, and then the Bitcoin blockchain intermediates
us I debit in credit you, okay, that’s a different architecture
than both MVC and CBC, it actually combines the positive
qualities of both. It’s decentralized and open source
and programmable, like peer to peer. But it also has global
state, and it’s highly monetizable, like MVC. So
combines the best of both worlds. And it has some
something that’s very new, which is not open source, where it’s
open source code, it’s open state, where it’s open state
database, like open state means the back end is open also. So
all the applications that get built out, essentially, our
clients that same back end that same Bitcoin or Ethereum or
what have you back end, and then you kind of exchange between
them. And the true scarcity now comes not from locking in your
users, but from holding a currency, it kind of gets
reduced, the IP gets reduced to its minimal viable thing, which
is holding that cryptocurrency and what you can do with that.
But so give me the meat, give me the media analogy, right? So
where does the media sit? And how do I as a user have an
experience on what media to view and to access, like think about
because again, like just speaking in a in a layman’s term
for folks, maybe to understand, you know, most people, I don’t
think understand the dynamics of what underlies a social network
as much as they understand the user experience of browsing
YouTube, right? So yeah, what is the what is my option in
browsing the decentralized version of YouTube? What does
that experience end up looking like in this decentralized
world? Right? Who ultimately adjudicates the algorithm that
defines what my recommended videos are that I’m going to be
accessing from these kind of, you know, different nodes?
Well, I think the idea is you can bring your own, you can pick
one, there’ll be a library.
Well, that’s my point is like the picking function is what
doesn’t didn’t work in web 1.0 or web 0.9. Right?
So we’ll take take a look at. So first of all, that state could
potentially so today blockchains are not very scalable. But
tomorrow, they already actually they’re improving very rapidly.
If you’re if you’re following Matic, if you’re following
polygon, and if you’re if you’re looking at what Solana is doing,
like you can do a lot more on chain in 2021 than you could in
- It’s it’s kind of like bandwidth, it just improves
every year. So more applications will become
feasible, like search indexes. Moreover, blockchains actually
so just to your specific point about search indexing,
blockchains actually radically simplify search engine to such a
point there are dark horse competitor to Google. What I
mean by that is Google index the open web because open web is
open. And then social networks were like a dark web, you know,
to them where that’s why they were so mad. Google was so mad.
It couldn’t acquire Facebook, right? Because it couldn’t
index it couldn’t index Twitter had two deals with them. That
was all on their, you know, on their server. So the social web
is even harder to index than the open web. But block explorer
blockchains, and, you know, block explorers, which are like
search engines on top of them, blockchains are easier to index
than either the open web or the social web. And the reason is,
many of the problems associated with indexing just go away. For
example, just one small problem, as you’re probably aware, when
you’re indexing the open web, let’s say you’ve got a million
websites, you’re crawling, each one of them, you only have you
only have a certain bandwidth amount total. So you have to
figure out, okay, do I recrawl this site or this one? Which one
is going to freshen? Okay, does this update every day or not? So
you have to run all these statistical estimators just to
figure out when to crawl a site. All that goes away, for example,
in the context of a blockchain, where you just subscribe, and
you get a block of transactions,
everybody’s got the real time index, and they can, there’s no
advantage being Google and having to start from Friedberg,
we got to wrap for bestie Chamath, David Sachs, Friedberg
and our bestie Balaji. Thanks for coming on the pod. And we
will see you all next time on the all in podcast. Bye bye.
Let your winners ride.
Rain Man, David Sachs.
We open sourced it to the fans and they’ve just gone crazy with
it. I love you.
Queen of
besties are
dog taking a notice in your driveway.
We should all just get a room and just have one big huge orgy
because they’re all just like this like sexual tension that
they just need to release.
What your
b
mer.