Balaji Srinivasan - Angel Investor/Entrepreneur, Formerly the CTO of Coinbase and GP at a16z Ep #28

Foreign. Hey, folks, this is Anatoly, and you're listening to the Solana Podcast. And today I have an awesome guest. It's Balaji Srinivasan, who is a former CTO of Coinbase Garden GP8816Z, one of the first folks that ever heard of working on crypto. Like, one of the most coolest people to follow on Twitter. So really excited to have you here.

Well, thank you for that kind intro, Anatoly, and glad to be here.

Awesome. I mean, I think I kind of have like, a bajillion questions to ask you around crypto, but also kind of around the general world, and I guess I'll just dive right into it. Like, you were one of the first folks to call out the pandemic, like, as a. As it was. And like, my, like, I, like, kind of tended to, like, downplay the risks, even though my, like, former. My parents who are from the former USSR were like, this seems a little weird. Like. Like they, like, they've seen this before, right, like, or something like that.

The Chernobyl type stuff or what have you. Like, yeah, they're paranoid in a certain way due to just seeing, you know, bad stuff happen.

Basically, yeah. Like, what was your instincts on this? Why was this, like, scarier than, like, swine flu or like SARS or like the kind of the previous ones?

Well, you know, the thing about it was just that it was a serious threat that people weren't taking seriously.

And.

And how do you. Like, it's actually a lot like angel investing in the sense that you're constantly scanning the horizon. There's a thousand things trying to get your attention, and you have to sort of ruthlessly prioritize to figure out which things are important.

Right.

And which macroeconomic drivers are real versus which are. Can be ignored versus which are real, but will happen in the long term and so on. And the thing about it was, when I saw this, I was like, you know, you know, it's a virus and like a true, like a truly virulent kind of thing like this. I mean, basically the moment that was really obvious for me was when China shut down Wuhan, and, you know, they put Wuhan into lockdown. And China is a serious country. You know, there's a lot of things, you know, that one can and should disagree with that they do, but there's not used to committing economic suicide for no reason. And for them to do that at such massive cost, and certainly they're aware of how much it would have freaked out everybody else in the rest of the country, you know, it really did seem like, you know, a virus out of a movie. Now the issue was that, you know, in the, in the west, it wasn't being taken seriously until really it hit Italy and then it caused a lot of death over there. And one of the problems is that, you know, now with some degree of hindsight, like nine months later, you know, you can see like we're fortunate. Well, yeah, I got to say, we are fortunate. We're fortunate. This isn't the Black Death, right? It isn't the virus from contagion, but in the early days it looked like it could have been. And you know, we're still trying to figure out exactly why that is. You know, why is it that Wuhan and New York and you know, place in Italy had such a surge of deaths? You know, why. Why was it being reported that, you know, for example, hospital workers were getting sick and so on. That's the kind of thing that, you know, can knock things down versus today. The conventional wisdom is more like, oh, this mainly, you know, kills older people. It does cause long term issues in lots of other people, but it doesn't kill them. That's not to downplay it, by the way. There's folks, you know, on Twitter, you know, people who I know who have had Covid and who feel like their life is just worse as a consequence. You know, there's this whole kind of group of people with long haul Covid. Right. So, you know, where it sort of settled out is something where, I mean, there's no question the pandemic will be written about in history books is something that changed the world. It's about to close in on a million deaths worldwide. But it doesn't look like it's going to hit the Spanish flu numbers of 100 million. Unless it mutates and something changes. It might go on for quite some time though. So. So, you know, I mean like guessing is a mugs game but you know, if folks don't vaccinate or this becomes endemic, you could imagine this going on for years and claiming several million lives. I think an upper bound would be 10, but it'll be somewhere between 1 to 10. As non aggressive a projection as that sounds. Still, anything on that level? Yes, it's not 100 million, but there are huge precautions also taken by, you know, the whole world to stop this thing. And it's interesting, it clearly pushed us from the 20th century into the 21st in a sense because everything physical got deprecated and we moved to kind of this Remote first digital environment. Anyway, those are just my thoughts like nine months in. Happy to delve into any of that.

Yeah, there's so much to unpack there. And like I've kind of like, as I've been working on crypto, I'm, I think my brain has been infected by this idea that crypto isn't so much about money as it is about like the governance side of it, like organization of people around a decision. So like that's right. It's bizarre to me that like this, this like thing of we couldn't figure out what the, so what truth was in China and how to value it and how to, how to actually price it and take action on it until it was kind of smack right in our face. And that to me seemed like a total lack of human organization. Our non digital mechanisms for measuring this stuff totally failed in a lot of ways. I kind of saw the Twitter side of it, that information to be almost more reliable than the previous 20th century mediums, which, which was like, as you pointed out, like a really clear like kind of break from the old world and now I guess the start of a new century.

Yep, I think that's absolutely right.

Go ahead. Do you like, do you see that, like this idea, like I saw a tweet from you that this is going to be like a century of the Internet so much more than like China century or like Asia century or something like that. Do you, do you think that like, is that narrative because of COVID Like was that like kind of breaking change, like kind of really solidified that?

Great question. I mean I, I think that, I think that would have been true even without Covid, mainly because I mean, in a sense this is obvious, but I'll, I'll, you know, I'll say it anyway, which is, you know, Chinese people aren't American and American people aren't Chinese in the sense of citizens. Obviously there's folks who can immigrate from country to country, but like Chinese nationals aren't American nationals, American nationals aren't Chinese nationals, but both of them are Internet users. And more deeply, people don't understand the full impact of this. I talked about this a few years ago, but both of them are also crypto users. And so what we find is even as all of this cross border trade is being impeded due to, you know, the countries fighting, you know, with the. China has done this obviously for a while and now the US is retaliating with this TikTok thing and what have you while all that is happening, you know, there's also the, the people on the ground. You know, even if you're. There wasn't a trade war, an American citizen might not trust the Chinese legal system and a Chinese citizen certainly might not now trust the American legal system, but both of them can trust a blockchain. And that's why the cross border trade, you know, the place where you're on the same cap table, so to speak. A Chinese person is Bitcoin, it's Ethereum, it's Salana, it's these new chains, it's the smart contracts. Because mathematics is a universal language and you can just diligence math in a way that you can't really just diligence the law because the issue with the law is if you're a Chinese citizen, an American judge may just interpret the law against you in a negative way and vice versa. There's a bias built into what is know the legal text is. Whereas with a smart contract a computer is executing it and that's not biased towards either the Americans or the Chinese. Every single opcode, you know, you can print it out. It's, it's basically the next step after open source. It's not simply open source, it's open state and open execution. You have a glass box, a transparent algorithm where if you distrust it, you can literally replay every single aspect of it and you get out the adjudication of that blockchain in a way that you can't replay the mental state of a judge or prove that, you know, they were biased against you because you were American or you were Chinese. So that's why I think in the medium to long term global rule of law is going to be based on computation which everybody can diligence. And that's where, you know, people won't train. I mean not that they won't, they won't just train to be a lawyer in this or that country, they'll be a lawyer in this or that country and they'll need to learn international smart contract law, which is what the rules based international order will become.

Do you think that that would be actually a legal basis or just really like a commercial one that people will kind of.

Yeah, I think the best, like kind of prerequisite or prerequisite rather precedent for this is the law of the sea. Are you familiar with that?

No, not like in, not enough depth to have an opinion.

Okay. If you Google the law of the sea, right. Crypto can be thought of as the new international waters. It's like an intrinsically demilitarized zone. The law of the sea governs what happens when like two boats crash into each other, for example, you know, when you have. Because basically for, for centuries nations have had to deal with what happens in international waters, who has jurisdiction, etc.

Right.

And you know, is it, is it Germany or is it like, like France if a German and friendship collide into each other or have some issue in the Pacific Ocean.

Right.

And the law of the sea goes through lots and lots of these eventualities. And where you can think of a blockchain is being like an ocean that connects national Internets. And so you've got different waterways, the Pacific, the Atlantic, et cetera, that connect different kinds of national entities. And just, you know, this is what decentralization actually will mean over time. I think we need to get better and better at decentralizing things because the tricky part is it starts centralized and then it gets decentralized. But you know, maybe, maybe what happens is best practices evolve where everything really is done pseudonymously, everything is default pseudonymous. You don't actually expose your real name unless it's like a, you know, official government document where you need to put it in. And if that's the case, over time we come up with better and better best practices for decentralization. You really do have these blockchains serving as sort of the seas, the oceans in between these national Internets. I say national Internet, by the way. What I mean is a balkanized Internet similar to the Chinese Internet with some kind of great firewall outside and some sort of speech or thought control stuff inside. Unfortunately, many countries are going in this direction. Um, but I, but I do think that the Internet will, will bridge them regardless of that in the medium to long term.

I suppose that like even United States with kind of what happened with TikTok is kind of firewalling itself, right? Because part of a, a huge part of it was getting the data into like, you know, Oracle servers apparently.

Well, I mean we're, we're going to see what actually happens with all this stuff. It's so silly. Um, you know, but, but go ahead. Yeah, you're going to say so.

I mean like, I think that like, it's hard to, to find, to imagine like a world where there is a lawyer that interprets a contract. Like to me it seems like those agreements are going to be mostly commercial, right? That myself and somebody else that's around on the other side of the world, we can kind of come to agreement on a piece of code and use that protocol in this like, kind of like low risk way. Right.

I mean, ideally what you'd have is a web page or something that shows who is signing. It shows the jurisdiction at the top. It's a Solana chain, it's the Ethereum chain, or it's something like Claros. It shows a bunch of scenario analyses which are contemplated outcomes. If X, then Y happens, if Z, then W happens, et cetera, et cetera. And then both parties affix a digital signature there.

And.

And then it has been attested and it's executed on dispassionately by this third party arbiter, the chain. And that's amazing. Like, in a sense it is, quote, just automating and digitizing things that already happen. But it's absolutely insane how impactful that is that you can do that programmatically. That, you know, bias creeps out of it. You don't have a judge who's biased for or against you. That is going to be the, you know, Yale Law gets replaced by smart contracts over time. Just like the Kennedy School of Government. The new head of state is a head of network. And actually just like Columbia School of Journalism because, you know, media also becomes crypto since, you know, you have my concept if you look at my pin tweet on the ledger of record. So crypto isn't just the new Wall street or the new Silicon Valley. It's also the new Columbia School of Journalism, Kendi School of Government and yell off.

Do you like my, I don't know, do you follow like defi, like the actual, like dgn, Yield Farming, crypto, Twitter Defi. Like to me, like what's been like, kind of crazy is that like, even though a bunch of people around the world, we don't speak a common language, we can easily get all behind a meme because that's very easy to translate and almost kind of like simple, like tokenized compression of an idea. And in itself I think that is kind of like without having any value behind it, right? Not like even store value or anything like that. I think there's something kind of, I think revolutionary there in the same sense that Six Degrees was in the early days of the Internet. Can you imagine 100 million people all owning the same governance token?

That's basically, it's a quantifiable vote in many different senses of the term. One of the things we're going to run into now, I know that there's so Basically there's like V1, V2, V3, right? V1 is, oh, we should vote online. V2 is a bunch of quote, experts say oh no, you can't vote online. We should just use paper and so on. And that's what Schneier and Matt Blaze and so on say. And I understand why they say that stuff V3 is, we're actually doing it. And that's crypto. You know, crypto has high stakes digital votes happening all the time. Not without its error modes, right. Not without its problems, but it's happening. And as crypto gets better and better and establishes a better track record, and you start having a billion, 10 billion, 100 billion, whatever on the line with these votes, which is, which is basically happening and they're proof of stake votes. There's all kinds of mess because humans are messy. Every weird edge case we're actually seeing and seeing how it works out. But what we're going to get at the end of it is we're going to get essentially an online voting system. And it's funny because it's not just voting with your ballots, voting with your wallet and voting with your feet. And several things are all kind of encoded in this. But one thing that's really interesting and funny about this is that there's this sort of Stalin apocryphal Stalin quote, which is he who votes decides nothing, but he who counts the votes decides everything. And you know, now I think we have to have a third addendum to that, which is. But he who can't count the votes can't decide anything. Right? Meaning essentially, you know, where America may end up in a few months is a situation where it literally can't properly count the votes, or more precisely, it can't come to a vote count account that everybody believes is real and fair and not fraudulent or whatever.

Right?

Both sides. If you saw my thing, do you see my thing on the red Mirage on this?

Yeah, yeah.

Not, not to be political or given that everything is politics right now, but, but just it is almost a recipe for everybody thinking that, you know, this, this was like a stolen election or whatever. It seems like both sides are set up for this kind of a slow motion train crash in its own way, like Covid, kind of predictable that it's going to happen. And so in the sort of environment after this when people are fighting about this for whatever, months, maybe, who knows, years, you're going to see that actually we do need some kind of digital system because it is simply not possible for the average person to come to confidence in the system if they can't audit the system. And that's where crypto comes in. Because you could hold a Private key, you could vote and you yourself could see that your vote was counted. Literally there could be a table that shows, you know, 300 million people in the US and you know, they're all, but they're all, they've got their, their public key identifier so their privacy is protected. And you can search by, you know, California or Texas or Illinois or whatever and then go down to your county and then go down to your city and you can paste in your, you know, private key into your local wallet or whatever and see that your vote was actually counted there. And I think that's so awesome. And you, and I understand what that means, but most people don't understand what that means yet.

Right.

We're still 10 or even maybe 20 years away from people really getting that. So it's not going to be ready in time. But that's clearly, I think, the medium.

To long term solution in a way. I think, I honestly disagree with you there. I think that like, so I, I think that the federated system in United States when, especially when it was tested in like the 2000 election with Bush actually proved itself to be robust in that it can look. So you laugh, right? But I think when we do see failures, they're localized within a single state. And then the only belief that we need to establish isn't like the global vote or United states of all 300 million people, but just within that one failed thing that's under contention. So I think if this election is close, everyone is going to focus on counting ballots, let's say in New Hampshire or Pennsylvania or whatever. Right. And that's a solvable, that's doable because it's no longer like a problem of counting the entire like recounting all of the US it's only like a single event. And to be honest, I think it actually makes it more robust because if you think of it as like me, a blockchain operating systems designer that's always thinking about attack vectors, I actually don't want systemic attacks. I want localized attacks. I want like if there isn't. Yeah.

So your argument is rational. I just don't think it is applicable in 2020 as opposed to 2000. I mean, obviously, you know, a lot has changed in 20 years and one of the things that changed is that there's far less trust in the U.S. and so, you know, people can't, can't even agree on how many coronavirus deaths have happened or you know, that type of stuff. All of that is symptomatic of not having shared truth so they, at the time, they kind of outsourced the count to the Supreme Court or what have you. Or like. Well, let me actually separate out two things. First is the narrow technical point you're making, which is if you have a dispute over a count, it's better that it's in one county of one state rather than a national kind of issue. Number one, I agree with that, except we're going to see a surge in mail in ballots across the entire country, and there's enough swing areas that I think you're going to see contested votes in quite a lot of places. So that's number one. It's not just going to be like Florida. You know. The second thing is that with the 2000 election, people thought it was going to be close, but they, they weren't like, preparing for a fight. Like the current one is. The stakes were, in a sense, lower because it was coming out of a time of peace and prosperity and so on. Here you have folks who are basically gearing up for a fight, and, you know, they've basically spent the last four years delegitimizing each other. So the commons are a tragedy, you know, and the. So first year, I think you're going to get a more globally contested result than maybe we might think we'll see. Okay. And, and second is there's not enough trust to basically, if you've got, you know, ballot contestation happening in like seven states or something like that and 30 counties and who knows, right? It's just going to go on forever. And, and here's one other thing.

Like, I think, like, because it is like a state that's being like, in dispute and states themselves have fairly robust kind of. We don't, we don't see like a 5050 split in almost any state legislature or governance. Right. They're all kind of like basically either all Republic. Yeah. Blue or red. So I think what we're going to see is this kind of like, you know, almost like a parliamentary election. Right. Like, whatever the state is, that's the way it's going to go. And that's not too bad, right? That's not like.

Well, I, I don't think. I don't think that's what's going to happen. I think basically you're going to find there's actually a fair number of purple states, you know, where there's like a governor and legislature split. I think we're going to all hear about all kinds of arc. Here's my prediction. Okay. You have my coronavirus style prediction. And this is not, I don't even think this is controversial, what I'm about to say. I think it's sort of, you know, visible like a few months out. So I think this election ends up potentially, and I'm not saying this in a positive way, I'm just saying as an observed way, okay. I think this election ends up delegitimizing American democracy in the eyes of at least 50 of the country and much of the world because there's many outcomes and many of them are bad. If for example, you know, Defense one for published this article talking about using military force, you know, in the event that the election isn't conceded or what have you, even if legitimate, the use of military force and the cameras associated with that make the US look like a banana republic, right? The fighting over it, you know, it's, it's kind of hard to argue that oh, it's a democracy after you have troops march in and so on. Even if, even if it's like, if you can make the argument that was the right thing to do, it's actually similar to Venezuela where you know, oh, this side has a military on and the other guys are really arguing that it's not legitimate and so on. When you have something like that, even if you can argue that it was the right thing to do, simply the presence of the fighting and the presence of an extremely embittered 40 or 50 or whatever percent of the country is enough to make the country not seem like a functioning republic anymore. Right. And, and I think that, so whatever the outcome is, the, the fighting over it will make the US look really bad on the world stage. I don't think people are really thinking about that. That's a B is I think that fighting may go on for a long time. It's possible it just comes to a crashing halt on January 21st. It's possible that you have, I mean, if you saw like the concept of blue states are talking about seceding in the event that the election goes in a wrong, wrong direction. You see the interstate compacts from earlier.

This year about like kind of preventing people from crossing the borders. Yeah, exactly. That's it.

So the interstate compacts are like almost like a sci fi like headline, you know, California, Washington, Oregon, Nevada form interstate compact. I mean it's allowed in the Constitution, but it's also basically a devolution of power where it was a massive thing. It's actually relatively underreported in terms of how significant that was, where you're basically forming sub national entities that are Taking on functions. In a sense, it's a continuation of sanctuary cities and marijuana laws and so on, where states are increasingly going their own way against the federal government. But it's an acceleration of that and it's a dress rehearsal for, you know, gosh, what's his name there? Podesta. In, in the simulation, he talked about how blue states would, would potentially secede if, you know, the, the vote wasn't, you know, counted appropriately in their estimation. And so I think that this is basically, I think 2020 will be looked at as potentially the end of the, certainly the American empire. It's like 1945 to 2020. You know, that's like 75 years is basically like almost exactly like one human, human lifespan.

This is like basically, man, am I really like blessed to live through, to follow the Soviet Union.

That's right. No, it's funny, it's one of these things where, know, 30 years is, it doesn't seem like a long time in the history books, like 18, you know, if I said 1790 and 1820, you think of them as being relatively close together.

Right.

But 1990 and 2020 are very, very, very different. Right. That's a lot of change that's happening there. Yet at the same time, from like the big macro vantage point of history from like a thousand years in the future, it'll be like, oh, the USSR collapsed and then USA collapsed like 30 years later. You know, like that's, that's, that's like how like a historian from the year 3000 might write about it.

That's what GPT12 is going to write about.

Something like that. That's right. And you know, here's the thing is like, you know, I'm not, I'm not trying to be flip about it. That's going to be crazy if that happens. You, there's, there's, there's just a lot of uncertainty around it. But I think the one certainty is that like the US Government just loses even more reputation points. And it did, you know, in the 2008 crisis and it did with the Iraq war and so on and so forth. But it's like, you know, with, with COVID 19, for example, if you read foreign policy.com and other things like that, like the US is no longer the leader of the free world, you know, other countries, you know, this is an international disaster. Like normally what happens is when there's like some hurricane or flood in, in Haiti or West Africa or something like that, you have U.S. marines who are landing and they're providing order and you've seen the images on TV of that. Right? The US is the backstop that lots of countries can look to and so on.

Right.

And there's, you know, I'm not saying that's gone completely to zero. The US is still thought of as an important player, but it is simply not. It was just absence on COVID 19. Completely absent in maybe the most important global crisis since World War II or something. Right. Just in terms of the number of countries pulled into it. Nine, 11, for example, wasn't as important in China as Covid is. Right. Covid is like globally important. It's a behavior change everywhere. It's like World War II in the sense of totalizing, you know, even Vietnam, for example. You know, lots of these things any individual country could ignore. This is like an ongoing thing that's changing behavior all around the world. And so the, the US being sort of absent here, where it's unable to lead within its own country and inf. Let alone be able to private world leadership. It means many people in the US have become inward looking. They're no longer internationalist in their orientation. This is a huge shift from 2015 when there was this sort of rules based international order. And the US was the backstop of that. And that is, I think, the vacuum that crypto is going to fill. Because crypto is a better rules based international order because it's based on, you know, computer science and as opposed to fallible judges. Actually, did you see my thing? This is an interesting. I, I thought it was interesting at least my tweet on math versus science.

I have not.

Okay, so normally, you know, for example, the acronym stem, Right. Science and math are grouped together. People don't usually think of them as being, quote, in opposition. Right. And you put math and science on one side versus religion on the other side. Here's what I've recently realized. Math over science. Okay. And let me explain what I specifically mean by that. Today there's many things where science is essentially man in the middle, okay. That say there's science and then there are scientists, and then there are the popular summaries of what scientists say. And that MITM attack is actually quite significant as a distortion, even if it's not thought of as such. Right. You know, one example, a classic, I mean, very important example, is the whole, whole and Surgeon General saying masks don't work, and then completely flipping, you know, three months later. Now, the level of confidence with which that statement was issued, right? Not just, you know, confidence. It was a hectoring, condescension and then a complete reversal of it. This is something that everybody understands that the people who said that they knew what they were talking about did not. Because to contradict yourself that dramatically within three months. It's not like there was some major new research study or something like that. It just. They changed the null hypothesis. You know, that's literally what it was right? Now, look, I'm pro mask in the sense of, you know, it's probably better to take those kinds of precautions given that, you know, we have droplet physics, right? Not everything. This is, the thing is like there's a certain kind of biomedical person who's like, oh, everything has to be a double blind period. Like, look, that, that actually throws away a lot of information. Physics exists, you know, like we know the germ theory of disease, we know Cox postulates or whatever. Like there's a degree of logic that you can use on some of these things that gives you a different, you know, base case.

Okay, there should double blind study, right?

The patch. Double blind study. Actually, why don't you summarize that? That's a really good, it's really good example.

I only like it. I'm probably going to butcher it. But basically like the, you can look at the like, if you did a double blind study, whether parachutes save lives or not, right? You're effectively, you're throwing like, I forget, like the exact phrasing of it, but the summary of it is that you're throwing away the knowledge that obviously the person's gonna die and you're probably gonna kill somebody when you do the study. Yep. Yep. So it is like kind of a, the dumbest thing about that statement when they said that masks don't say lives. Is that like that, like I'm an optimist. I honestly like disagree with you. I think we're gonna see like an election. People are gonna fight and everything's going to be fine.

But like, I will bet you on that.

I'll bet you on that it'll, it'll be as fine as like Florida in, in 2000. It'll suck for, for like part of the country. But I think that, that why are you so optimistic? I think the world is getting better. Like my, my personal view is that like the reason why people are so upset is because they just see the information is propagating faster, they see more of it, that they're, that they're just not used to in their lifespan. So we're getting, we're just getting more data, right? Like, yeah.

So, you know, like Moses Naim, you know, the End of Power or Martin Guri. Right. Both those books, I think, are quite good. And essentially they make the. They have a different premise, which is that we're seeing the unbundling of states because legacy authorities can't just survive. Transparency, everybody, you know, find me a man, I will find your crime. The barrier thing, right? Put a microscope to any person. Snowden had the same concept. You could take an innocent life, and if you surveil them enough, you can make it look like they're like evil people or whatever. Right. And that was also the Soviet secret police thing. And so the. The same actually applies to legitimate institutions on just legitimate people. Given enough information on any institution, you can make them look evil. And. And that's what we've got. And I think that what that means is the. Basically, I don't think any institution that predated the Internet will easily survive the Internet. And that includes nation states, that includes colleges, that includes retail stores, that includes, like, legal systems, medical systems. All of that stuff is about to get just like, ripped apart and pulled together into Internet native things which have a legitimacy and stability that comes from opt in as opposed to coercion. I can drill into that. Go ahead.

I think in the United States specifically, what we will likely see is maybe like a reduction of power of the presidency. And this might not even be through any legal course, just through a natural kind of like the way that, like, the. The state operates. Right.

So Greg Ritchie is basically the model for where I think things go. You know, Greg Richie is.

I do not.

It's kind of a joke in Snow Crash 1992. By the way, that book is absolutely. It's insane how well that holds up. It's absolutely. For him to have seen and projected out a future like that in 1992. I mean, 2020 is really like the Snow Crash year. Lots of Snow Crashy things are happening. We're finally getting the Metaverse with Oculus and, you know, with VR and whatnot. But even just the thing is that he was like, here, I want to get this quote from Snow Crash.

I think the only thing it's missing is like, I feel like the Dopamine newsfeed is the entertainment from Infinite. Just. And like, the virus in Snow Crash was just a little bit too sci fi. And if they just. If that was like the, like the thing, it would have almost been like a perfect explanation of what's happening in the world right now.

I want to give this, this, this quote here, which is unbelievable from 1992. When it gets down to it, talking trade balances here, once we've brain drained all our technology into other countries, once things have evened out, they're making cars in Bolivia and microwave ovens in Tazikistan and selling them here, once our edge in natural resources being made irrelevant by giant Hong Kong ships and dirigibles that can ship North Dakota all the way to New Zealand for a nickel, once the invisible hand has taken away all those historical inequities and smeared them out into a broad global layer of what a Pakistani brickmaker would consider to be prosperity, you know what? There's only four things we do better than anyone else. Music, movies, microcode, meaning software, and high speed pizza delivery. And, and I was like, I mean, Jesus Christ, that holds up so well 30 years later, right? I mean, just to, just to go through that, right? Brain drain our technology into other countries. So the thing about that is it didn't, it didn't exactly happen the same way Neil Simmons is saying it, but I mean, it's 30 years ago, so you have to give a lot of partial credit. What happened, I think is in the year 2000, so in the year 1980, 1990, even the year 2000, physically being in America was a big asset, right? By 2020, by, by 2010, a big chunk of America had been uploaded. And by 2020, I would argue 2020 is the year that digital America is significantly more valuable than physical America. And by digital America, I mean cloud services, I mean the Internet. I mean, you know, the Internet is really a sequel to America in the sense that, you know, the, the British colonies in the New World were a piece of the UK till they weren't, right? So digital America is still a piece of America, but it is, it is becoming its own thing. And 2020 is actually the point at which you can make the, you know, four row table, right, with two columns. Are you physically in America? Are you, do you have accounts in digital America? Right? And so up until 2019, you know, perhaps the world preference was for both, right, to be physically in America and to have digital America, meaning Google and, and, and Gmail and Facebook and whatever, right? And then you've got three more options, right? Option number two is you're physically in America, but you don't have the Internet. Option three is you're not in America, but you do have the Internet. And option four is you have neither, right? You know, maybe you're in like some prison in China or something, okay? So, so the thing is that, you know, obviously option four is the worst. But, well, some might, some might argue, well that gets you digital detox or whatever. You know, I live in the middle of nowhere. Fine.

Okay.

But the, the really interesting thing to me is I think most of the value proposition of being in America has now been uploaded to the cloud and it's just available anywhere internationally. And because you've got Starbucks everywhere, you've got flush toilets everywhere. This was not true 40 years ago. Right. This is not even true 20 years ago. And you know, basically like credit, like.

Just being able to buy a house like that. I don't know if that's true. And like, like, so I mean this, this is just me looking at like my parents, they like they were middle class in the ussr, right? They came over here and kind of started at the bottom and kind of got to the middle class and were able to buy a house, right. With a mortgage. Like that was not possible in the Soviet Union. I don't think it's possible now in like Russia or Ukraine.

So I agree with you that for certain kinds of things, like I want to buy a house, right. If that's a very big deal to you, then physical America has value. But if you are a city dweller, right. If you. And by the way, I do think actually that going out into the middle of nowhere is going to be a bigger and bigger thing.

Right.

But for a certain class of the. I mean, sorry, so there's two different trends here. Let me talk about them because they're different. The first trend is that a big chunk of America's value proposition is now in the cloud. A big chunk of it. We can argue about what percentage. Right. I think you make an excellent point that if you prize huge, wide open spaces and owning real estate, then America still has a competitive value proposition. Right. I think you can do that in New Zealand, I think you can do that in Canada. I think. I think you can do that in Russia. I don't know actually if you can own large amounts of real estate in Russia, there's huge, it's property rights.

Like, it's more so much that that like mortgages and interest rates. But to your point about crypto, I think it's slowly eating away at that and moving into the cloud.

Right, Right. So I think what happens, and you know, I actually don't know enough about, you know, like Finland, Sweden, etc. Those seem to be like fairly large countries where you could have like a big house. I mean, it's cold, right? So, so I actually, I don't know enough about the International real estate market to say for sure on that. I understand your point though, in terms of having title to a big chunk of land and having that reliably, you know, approved. The issue though is like, you know, the US is just trending in the wrong direction for a lot of those things. You know, like rule. It's becoming more arbitrary, it's becoming worse as a country in terms of these, these kinds of dynamics. And there's lots of different reasons for that. But I think that what you, what you're correct about, absolutely correct about, is if you prize large pieces of real estate, then yes, the US has advantages. But we can generalize this, which is that nation states become commodity providers of land, natural resources and rule sets, right? So if you prize large amounts of, you know, I don't know, bauxite or something like that, you know, there's a, there's a place that, that has lots of that, right? Or, or diamonds or, or something, right? And then that is actually where the, where the countries come in is they become useful as, as providers of those rule sets and land and natural resources. But what they don't have a lock on is the media, the, the technology and everything else that's digital, which is an enormous part of human society.

Now.

Go ahead.

That, that is like, I mean the, the fact that United States has been uploaded to the cloud like solves I think a lot of the, I mean, it's like, it's. I, I almost don't think it's like a US is shrinking. I think US is almost like basically the empire is growing.

So this is, so this is a thing where there's a tension of like a few different things. And let me see if I can resolve them. Like one of my one liners is the Internet is to the USA what the Americas were to the uk Right. Like for example, in the Americas there was a scramble for America, right? Spain, you know, did a lot in South America. You know, France, England, you know, actually, you know, Germany never really got into the colonial, colonialism game. But Spain, France, England, the Netherlands and so on, they're all, they're all big in terms of making colonies and so on in, in this new world, right? And the Internet is like the new new world, except there was nobody living there. So there's no, you know, Native Americans to oppress or, or harm or anything like that. So it's a frontier that doesn't have that aspect of conquest and oppression in the same way. It's just a pure digital frontier. And with virtual reality, by the way, this becomes much more than a metaphor. You know, you. You feel space in that. You know, with Oculus, with. With virtual reality, with. With the fact that we're spending on the order of 50% or more of our waking hours looking at a screen. You're really. Mentally. You've emigrated to the cloud, right? It is. There's billions of people who've emigrated to the cloud. They don't think of it quite this way. It's like they. You know, it's like people who live in Canada and come to the US for, you know, work and go back, right? It's kind of like that. You go to the cloud for work, and you come back, right? And your physical environment just becomes more and more and more of a commodity. You know, I mean, don't get me wrong, there are people who are, like, really into the land. Oh, the rivers of, you know, the hills of West Virginia or whatever. Great. Okay. Love you to death. That's your. That's your thing. You love the hills. Wonderful. I get it. Right? But for. For. For a big chunk of people, that's just a piece of scenery. I mean, it's fine, you know, but you're not like, spending that much time like, the hills.

Ah.

You know, and going and like. Like rolling on the hill or whatever, you know, and. And, you know, again, like, for people who have that preference, it's okay. But I think that a big chunk of the. The symbol manipulators in the world, right? You know, media technology, finance, mathematics, physics, you know, all of these kinds of things are just less and less location dependent.

And. And.

And, you know, the thing is that mobility is leverage against the state. Like, law is a function of latitude and longitude. If you can move, I mean, in different ways, both mobile and VR are ways to make your location less important. Right? VR, you just go to the cloud. Mobile, you move to another location. But both them reduce the cost of your, you know, the fixed aspect of your current location, how impactful it is.

Go ahead. So, I mean, like, I. It's funny they keep mentioning Oculus. I recently had Michael Shivalev, who's the CEO of Fireblocks, on it, and we were just talking about Libra, and he kind of. I've been kind of discounting Libra as anything interesting in crypto because it's. Because it's coming from, like, product managers. But he had a point of view that was quite scary to me, which was, imagine that what Libra folks do is they basically make it super, super easy for everybody in the world. That's outside of the US to click through their local regulation agreements and set up a fiat ramp to go digital dollar for everybody there, like wherever they are. So it's not so much that Libra cares about the think of it as PayPal with access to Facebook's organization and team and marketing and resources to onboard everybody on the same platform. And what makes it kind of frightening is that cryptography makes it secure and easy for them to do this decentralized custody, right? And makes it easy for them to onboard everyone. And it's just a matter of like, can we get everybody in the world to click with this agreement and to become the local bank? That's everything is custodied by Libra, by this single blockchain that now has the entire world on it, even if it's sort of regulated, even this is full kyc. It's not like crypto in the sense that you and I believe crypto is. But the scary part there isn't them creating a product that's interesting, but it's them click through regulation basically, like, sure, we'll be compliant, and we will be compliant to the letter, but as soon as you. As soon as you're using cryptographic keys whose actual value is decided by this one blockchain, it doesn't matter, you're kind of screwed.

Well, yeah, I understand. I think I wouldn't worry about that at all, though. And here's why is there's lots of things that you can imagine a large company would do if it was as nimble as a startup and had the resource of a large company.

But.

But the only things that it actually can do are those things that the CEO personally wants it to do if that person still has control over the company. Because the issue is that. So, you know, to Zuck's credit, he saw that crypto was important and he took a more aggressive stance on it than, you know, Google, Facebook, Microsoft or Apple did, right? So he is, you know, the most innovative in that sense of the big five on this particular matter. But he got it wrong. And the reason I think they got it wrong is that crypto is to. Crypto is to desktop intranet as desktop intranet was to, you know, desktop software. Or rather, let me put it slightly differently, crypto is to the Internet as Internet was to desktop software. That is to say, crypto like Ethereum is to Google, as Google was to Microsoft, right? Or Google was to Borland, you know, or like those companies that don't exist anymore from the 90s, right? Like there's a Whole like Microsoft and Oracle and Apple are some of the very few that managed to maneuver through the issues of the 2000s and 2010s and are still valuable companies. Uniforacle. You know, I think like I don't like it very much as a company. By the way, I was tweeting about it even before this whole dumb TikTok thing. As a negative example, did you see that one tweet? Basically like last year you could analogize SF to Java, this year you analogize it to Oracle. Last year you can say SF was here on. I'm going to pull up these two tweets. Whatever.

I think this is pretty funny. Okay, so this is all the fault of some microsystems.

Okay, so July 10, 2019. Choosing San Francisco in 2020 is like choosing Java in 2010. You can do it. You might even be able to build a great company with it. But it's a legacy choice. It's a default proven but makes it harder to do simple things and doesn't give you an advantage over incumbents. We're in an interesting transitional era where San Francisco and Delaware is obviously wrong. But incorporating on chain and going full remote is not yet obviously right from price performance standpoint. At a minimum, that means on chain incorporation needs to be systematized. We need proof points orgs that'll take the risk and pioneer, maybe something like Aragon, Project, Stripe, Atlas. But on chain the organization is defined. On chain the nation state is a configurable parameter. Right. So what's great, that holds up pretty well from a year ago, right? Because we got half of that, we got remote.

Right.

So now the new tweet is of September. I was like last year San Francisco could be analogized to Java. This year it's more like Oracle. Overpriced at any price, worsening with time, only justifiable as a legacy choice and a big mistake to build your new business on relative to the alternatives. So that's my take on San Francisco. Go ahead, shoot down.

Give me your thoughts. Are you still in sf?

Undisclosed location.

Okay, I'm still based in sf. Like actually out in Palm Springs, avoiding the smoke. There was something charming about San Francisco with no traffic that I was like, huh? This is like a lot cooler now. Like there's nobody here, right? Like I. The stuff that is missing I didn't care about. Like you mean.

Yeah, I mean like in la.

Yeah, yeah.

Because your friends are in the cloud. I mean look, you're. You're going to be signaling, DMing, Twittering, Whatsapping, et cetera, you don't meet that many people in person on a daily basis. You might, you might talk to 10x as many people digitally as you do physically. Right. Am I wrong about that?

No. Yeah, 100.

Okay, sure. Okay, so, so again, so you're like the Hills guy, right?

Yeah. You love the hills.

All right, great.

Good, good job.

I mean, but the thing about it is this is if you actually did a search, okay. For places with good weather. Okay. I mean, let me, let me express it differently. With the, with the smoke, with the homeless problem, with the prices, with the poop on the streets, with the hostility of city government, with the crime and like random attacks on people, with the fact that you can't really even meet people in person because of COVID restrictions or whatever, or at least it's harder to do. So with the fact that the cost of living is so much lower in other places. I mean, there's no way, no way that from first principles, if everybody was just starting from scratch, you'd pick San Francisco other than the fact that other people are already there physically. Right. It's not like. To give you an example, what I mean by from first principles, the San Francisco Bay is an amazing place to do shipping, right. If you're talking about like physical shipping, there's natural features of. I mean, that's why it was initially, you know, colonized, whatever. It's like this really great place to dock boats and whatnot. Like, you know, all that type of stuff. Right? So, so that makes sense from first principles. You, you scour the world or scour the west coast, you're like that spot, right? Or, you know, why do you go in and set up in Houston? Or why do you set up in North Dakota? Because there's oil there. There's actually like a, a different kind resource, not a bay or something right here. With technology, with the Internet, the only natural resource is the people. And you know, so, so that's, that's completely mobile, right? That's a mob. So the natural resource based view means is. I shouldn't say it's obsolete because you know, you're still going to need natural resources. But so long as there's two or three or five providers and they aren't like colluding like opec, which is a big F. Right. Then the place is a parameter. You know, for example, we had this company Teleport, which we sold, but basically, you know, I think it would have been millions and millions of users if it had gone to 2020, which was, we set up in 2014 co founded this and it was, you know, sold in 2017. It was fine. It was basically a search engine to find the place in the world that optimizes your utility function. A completely different kind of. Right. I mean that's ahead of the curve, right? I think. Yeah, go ahead.

That's awesome. I mean like my, we had like this conversation with my friends years ago and we picked Colombia, Medellin, as, as like the, the prime spot.

There you go. And, and basically you, you can be like narcos or what have you right here. I'm gonna, I'm gonna see if.

No, it was in the same, it was in the same time zone, right? As.

Yes.

Like so you could work on tech. You're in a much cheaper location. There's awesome universities there. Right. It's like a, a growing like kind like. That's interesting. Right? And like you're not stuck in San Francisco.

Exactly. No, I mean like I actually, I was just tweeting about this how longitudes, if you, you know, the hardest thing remote can be divided into different levels. Right. And at least one of. One of my commenters made this observation. It was actually valuable. I mean again, this is not novel. People have been talking about this for 20 years or whatever, but just I think it's a useful term. Synchronous remote versus asynchronous remote. Synchronous remote is like plus minus one or two time zones. Asynchronous remote is a truly global distributed team. And I think an important thing for any org chart is to, you know, require people to be plus minus one or two time zones. And you know, then, then what you might do is it might be that the executives coordinate and one of them just. There's like one person who doesn't have to get a lot of sleep.

Right.

You know, at time to time rather than 20 people. Okay, there you go. Right. Okay. So, so, but, but I think that is going to be an important thing. You know, actually a related thing to this is I'm actually surprised that nobody has made any to do list that is integrated with the org chart. You know, like you basically as a manager want to look at, especially as CEO, you want to kind of look at the org chart constantly as if you'd look at your, you know, your, your, your architecture of your, you know, company or your corporate infrastructure. And yet. And what you want to see is like drill down to do's, right? Like be able to monitor what folks are doing and so on and so forth. That doesn't really exist. Which is kind of surprising. It seems like a very obvious view. Go ahead.

Yeah, we've been actually successful in being in kind of globally spread out time zones, because there's almost like we got this kind of natural handoff that whoever's in San Francisco's time zone, they work a little later, and then Europe and Asia starts picking it up. It is bizarre because crypto is 24 7, and we kind of deal with customers and users 24 7.

I think you can make it work. I mean, crypto is interesting because there's really a value to having somebody on call at all times. Right. Someone who's just like, oh, shit, this is. This is blowing up on Twitter or whatever. Like this whole sushi thing or whatever. Right. Like, you could see that some people were asleep. So I recognize all that. I still think, however, that at least for individual teams, there's some value in synchronicity because, you know, you can get pretty far with async, like GitHub issues and so on and so forth. But sometimes it's like, so much faster to just whiteboard something for five minutes than to discuss it for a long time. Should just go back and forth. Latency of basically feedback. Go ahead.

So the odd thing is that we are synchronous, that people are just at weird time zones. It's just that, like, there is, like a context, like tribal context. Handoff between me talking to somebody and then that person talking to the next person.

That's cool. Well, that's really good if you can make that work. Well, I don't know if it actually.

Scales or just the fact that I don't sleep.

Yeah. You know, the thing is, the CEO basically has to be the guy who is. Who's taking that hit for sure. Well, cool.

We've gone, like, way over our time, but this has been, like, really fascinating conversation. It's been, like, really a pleasure to talk to you, of course, and awesome. Like, yeah, really cool to have you on the show. And thank you so much. Awesome. Sam.