Erik Torenberg on How Startups Can Help Save The World

Hey everyone, this is Lucas Banjo, an investor at Village Global, and I'm here with my co-host Ian Cinnamon. Welcome to Solarpunk.

In this podcast, we cover topics related to space and defense and discuss how technology can contribute to a better and safer world.

Hey everyone, welcome to another episode of Village Global Solarpunk. As all of our regular listeners know, here at Solarpunk, we spend a lot of time talking about the aerospace and defense industries. And today we're really excited to welcome a coworker of ours here at Village, Erik Torenberg. Erik has spent a ton of time thinking about how startups can help save the world and how to grow the startup economy. And we're really excited to have a conversation with Erik today as to how startups relate to those industries and how they can help us build a better and safer world. Erik is a co-founder and general partner here at Village Global, and also a co-founder and co-CEO at On Deck. Before that, Erik was on the founding team at Product Hunt, and through Village and On Deck, he's focused on growing the startup economy. Now onto the show.

It's great to be here.

Awesome. Well, you're a very familiar face to us, so we're really excited to have the opportunity to have this conversation. And part of the reason why we wanted to do this is because we spend a lot of time, Ian and I, talking about space and defense and why these things matter. And you have talked a ton about why, you know, startups can save the world. So I think there is a very important link between those two. So I was hoping maybe you could— we could start off by commenting on your investment thesis. How do you look about the startup economy, the role that startups play in the world, in, you know, growing the startup economy?

Yeah, that's great. Great question, Lucas. As we all know, and as the listeners know, you know, Village invests across sectors, across every sector, but— and is network-driven. But to the extent that, you know, there are things that I'm excited about or ways of explaining some of our investments, startups saving the world is one way of looking at it. You know, over the past few decades, we've realized that startups are the most effective orgs at creating new technologies for some of our biggest problems, whether it's, you know, space and SpaceX, whether it's electric vehicles and Tesla, whether it's Anduril doing for defense, as you've covered. And we at Village are investing in startups that do that, right? Whether it's Applied Intuition for autonomous vehicles, whether it's Living Carbon for climate, whether it's Loyal and Spring Discovery for longevity, whether it's First Resonance and Hadrian for manufacturing, and some of the startups that you've featured on the show that we've backed, startups that are trying to bend the cost curves in healthcare, education, and housing, something we'll talk about later. So startups saving the world, I think of as one thesis. And another thesis related to that is startups are saving the world. Well, then startups that help create more startups, i.e., startups that help grow the startup economy, also have a big impact. Startups create jobs disproportionately. Startups disproportionately contribute to economic growth, which we'll also talk about. And there's no natural rate limiter on the amount of successful startups. The amount of startups is just limited by the amount of capital, founders, and good ideas. So if you want more startups, you can either increase the inputs or you can accelerate the matching, the effectiveness by which founders, capital, and ideas find each other. And we have a few companies that do that. That's what On Deck does, which I helped start. On Deck, we say we're trying to organize the world's ambition, i.e., accelerate the rate at which ideas, talent, and capital can find each other, remove bottlenecks for people to start companies. What are those bottlenecks? Finding a co-founder, getting the right idea, raising money, but also things like, you know, people have healthcare challenges or they have immigration challenges. And so On Deck does that by programs that help people start companies, join companies, and get better at their jobs. But then we have companies like A-Team, right, that helps match talent, create teams for hire, so, so more startups can get built. But then also startups like Pave that helps make compensation more efficient. Which is important to startups and employees. So, so the broad thesis are startups can save the world and startups help create more startups.

So given all of the variables that go into starting a company, one of them that you briefly touched on is capital. And obviously where we are right now is markets are down. Uh, there's a lot of doom and gloom out there. How do you think that affects the number of startups being created? Does that affect the inputs? How should founders think about that?

Yeah, absolutely. So there's, you know, the inputs are startups, capital, ideas, customers, and in an environment where there's, you know, less capital, that's going to affect the amount of startups. The other thing that's related to it is the effectiveness by which they match. And so I'm excited to see, you know, fundraising marketplaces is still an unsolved problem. You know, how many times do we see on Twitter, who is the best investor for SaaS, for space, who invests in this, et cetera? Like, you'd think as an industry, we would have solved this problem. problem by now, but we haven't. But if all founders knew, had a better sense for— like, how many times are we helping founders with their investor lists, and yet how redundant is that process? So I'm excited for us as an industry to figure out how to better match founders and investors. And in terms of how founders should think about it, well, I think we've seen in the Series A and Series B stage a correction in valuation that's really significant. And we haven't yet seen it for seed and pre-seed to the same degree. And I think it just takes a little bit of swallowing the bitter pill of like, hey, it's a different market out there. And so have different expectations, otherwise the round might not get done. And that's what we're advising a lot of our companies right now. And that could change, but there's a question as to, is this the anomaly or was the last 2 years where— and a lot of our founders are first-time founders, a lot of founders are first-time founders. They've only started companies in an environment where maybe that was the anomaly. So that's also something to consider.

So a fair number of the companies that we profile or talk about on the SolarPunk series end up being fairly high capital-intensive companies. Now, not all of them, right? We have a lot of great companies that are purely software-based, low CapEx, et cetera. But for the founders thinking of that high CapEx environment who might be in the early stages, do you think that's going through a correction too, or how should those founders be thinking about the world they're in? Should they be indexing more on low CapEx-intensive ideas?

That's a great question. I think you want to have founder-market fit. So you want to— if you're a founder, you want to work on a company or a product that you are more likely to have an advantage doing so. And so for these deep tech startups, the advantages are deep expertise, like vertical-specific expertise. and an ability to raise capital. And what is the ability to raise capital? You're well known by other investors, you're pedigreed, et cetera, you have some capital of your own. And so, yeah, if you don't have deep expertise or an ability to raise capital, go to Web3, my friend. I'm just teasing. I don't want to dissuade anyone from going out to start a company. That's what we do. But it might be a bit harder than it was 2 years ago. Now, maybe that means you go work at Hadrian for a year or 2 years, or build up that Air Force Resonance or Anduril or whatever, build up that credibility and respect. Or, and at the same time, to argue against myself, we now have American dynamism as an industry. Catherine started the first practice, a16z, but lots of other firms are calling it different things. And so maybe there's more capital in the space than there was 2 years ago, even though there's less capital overall. I think in terms of the overall impact, I mean, founders should do what they're meant to do, and they should not let the market determine whether they are or not going to be successful if they're just starting a company, because that market could change in 6 to 12 months.

Right. And then, Erik, so you mentioned Katherine in American Dynamism, and something that she talked about when we had her on the show is how, you know, the world's best talent is no longer working for the government. That is something that happened back in 1950. Why are startups saving the world and not the government? You know, what happened and what's this future that we're headed towards?

Well, it's important to realize that startups and government work together, right? And then it's the question is, what is the role of government? Well, at the very minimum, government creates a level playing field by which businesses can operate in a trusted environment, right? Hernando de Soto wrote about, you know, what makes the US and other developed nations unique is that they have valuable property rights, rule of law, low corruption. And Lucas, you're from Brazil, obviously. We know— and my mom's Colombian— we know what it's like to be in regions that don't have the same business-friendly environment. So at the very minimum, government has to provide a business-friendly environment. And we take that for granted here. We take that for granted in ways that other immigrants don't. But at the same time, it's very true that I said startups are saving the world. Startups are the ones innovating. where, you know, from in the mid-20th century, government innovated, right? The Hoover Dam, the Manhattan Project, the moon landing. And so why isn't that the case today? Well, I would argue that there are structural reasons why startups will just outperform. One is that startups have competition. They have market accountability. They're forged in the evolutionary petri dish where tons of players are trying to innovate, the best one wins, all the others fail, and then go do something else. Whereas governments are, you know, by nature, like, don't have competition. And, you know, areas that don't have competition, they're called monopolies. And monopolies don't innovate because they don't have to. There's no check. There's no accountability. There's no evolutionary process. And so this is why we see, you know, a lack of innovation. And when we, you know, areas that are totally dominated by the government, like housing and healthcare and education, prices skyrocket. So one is the structural incentive of competition. The other structural incentive is incentives. If you start a company and if Hadrian is the next big thing, the whole team gets rich. Whereas sometimes public organizations or nonprofits, sometimes, certainly they don't get rich, but sometimes they even have the perverse incentive, which is if they solve their problem that the org has been created to build, their organization is no longer needed. And so they have this perverse incentive to preserve the problem for which they are paid to be the theoretical solution. So there are structural incentives, and those structural incentives have led to this huge talent gap, right? And, you know, the best people used to serve in government. And then in the '70s, we had venture capital and private equity emerge, which meant people can get richer sooner in their career. But then more broadly, and this last thing I'll say about it, is, you know, as organizations that have no sort of accountability, like public organizations, they become what someone called a vetocracy. There's too much regulation. We're not allowed to develop, let's say for example, new drugs with the FDA because it costs $1 billion, the drug. We're not allowed to fly supersonic jets because they're too noisy. We're not allowed to build nuclear power plants. We've outlawed too many things. And so people want to grow where they can build freely and make money for doing so. And this is Peter Thiel's argument for why we've had innovation in bits and not atoms. There's been too much regulation.

Erik, so at the same time, while I hear you there, you're somewhat painting a picture of, you know, it's almost startups versus the government, who's innovating more, how is that pushing them forward. What about all the billions or tens of billions of dollars or more that flow from the government into startups, whether it be CIBER grants or different vehicles to help these startups get off the floor and be that initial source of capital? How do you view companies that are trying to utilize that? And what's your take on how that's enabling the future of innovation?

I think that is critical, and Elon and many others have benefited tremendously from that and perhaps couldn't exist separate from that. It's worth understanding that all the money that goes into government is taken from companies, or is taken from private individuals. So it's not like the government is creating that money out of thin air, whereas private companies actually are to some extent. And so, yes, if you're saying, hey, should we take tax dollars and give it back to these companies? Yes, I think that's great. And the question I'd have is how much waste, like what percent of those tax dollars actually goes to those companies and how can we increase that? And I think that's one problem, whereas like, this is why people don't appreciate some of these bigger companies that contribute so much to the tax base, or these people, these billionaires that contribute so much to the tax base, is because they don't realize that when money in the form of services, or as we saw during COVID like literal money, we think that government owns that money when really they're just redistributing it. And the question or the challenge is, how do we have as minimal waste along the way? There's this charity called GiveDirectly. that they say, hey, we're going to take your money and we're just going to give it straight to, to, you know, someone in need, and we're going to have as minimal waste in that as possible. And I would love the same if we knew— we have no idea where tax dollars go, right? But if we knew that they were going to like SpaceX or Tesla, like directly, or as much as possible even, or things that are, you know, whether it's housing or healthcare, education, that would be— that'd be amazing.

So I think we're all in agreement that we want more efficient use of our tax dollars. And, you know, I'm with you. I, of course, would love to pay less taxes and see it be used a lot better. However, I do want to push you on the point that the government funding is simply kind of redirecting that money. So you mentioned Elon and SpaceX as one example. To my understanding, it wasn't just the initial capital that the government provided that enabled SpaceX. It was the fact that the government was SpaceX's initial customer.

Yes.

So if you're building a rocket company, no commercial company, no private telecom satellite company is going to say, great, let me strap my $100 million satellite on your rocket that has never flown before and may or may not work. Where the US government and the US Space Force or Air Force at the time would go to SpaceX and Elon and say, look, we know this is important for innovation. We will pay you so that we could be a customer of yours. So it's not just the redirecting of the tax money. It's almost more of saying, The government's willing to be that initial customer in order to get you to commercial viability.

100%. And so to rephrase, if one asks, what's the role of government in terms of helping these companies? So one, we talked about the rule of law, property rights, that kind of stuff we take for granted. But 2, we talked about capital source. And then 3, being a customer, being a buyer, and being willing to take risks in working with startups and not just the big incumbents that are prone to regulatory capture. And so those are huge opportunities for government to stay involved. And one thing I like to say also is, private companies in some ways should take direction from how government should operate in theory, whereas private companies should be more long-term oriented. This is why we talk about Web3 a lot, but one of the things that I'm really excited about Web3 is expanded ownership and expanded participation, right? And this is what public organizations are, in theory, are all about, which is the users are shareholders too. And so yes, government plays a critical role. And I think private organizations can learn from how public organizations are structured and vice versa. Public organizations should have competition. Customers should have the ability to choose between different options, which forces people to be at their best.

Totally. And Erik, so you mentioned, you know, the government should be willing to take the risk, willing to be the customer, and a few other things. On that topic, what would a pro-startup agenda, policy agenda, look like?

A pro-startup agenda would have a couple, a couple items. So one is we need either less regulation or more areas of experimentation in areas that have been way too, you know, regulated way too much. We talked about housing, we talked about healthcare, we talked about education. These things, prices have skyrocketed, whereas in other industries where it hasn't been regulation, they've decreased significantly. In the next decade, we might see college cost like $1 million a year. And it's just, we're restricting supply. And so I can get into why it's so expensive, but those areas, as well as biotechnology, the FDA is way too restrictive. I mean, all these 3-letter agencies across sectors, Peter talks about what we've had innovation in bits and not atoms. And that's because atoms are too regulated. And we now finally, we've had so much innovation in bits that now people are coming for the atoms. Like software has eaten so much of the world already. Now it's coming for the whole thing. And governments, a startup agenda would be playing nice with that, would be letting that happen effectively. Another more broad thing I would say in terms of pro-startup agenda is an agenda that focused on increasing our population. An increased population, and you can increase population in a few ways, by either increasing births, increasing birth rate, decreasing deaths, or increasing immigration. But when you have more people, you have more people starting businesses, more people joining businesses, more people being customers, more innovation, and a better economy, and more startups. And so the thing that holds that back, immigration, there's a huge opportunity there. I mean, so let me back up for a second. People say, oh, why does population matter? Well, look at China. China has the GDP per capita of Mexico. That's not very big. It just has so many people. And if you look at the power of China, Why does the NBA bend the knee to China? Why does Hollywood bend the knee? We could talk about all these organizations that bend the knee to China, because they have so much power. It's because they have so many people. And if we could increase our population, the US should be trying to be a draft almost for all the talented people globally. It should have a multi-pronged agenda, whether it's increased immigration, trying to improve the demographics with birth rate, And then also focusing on longevity. I can get into each one of those, but those are some high-level thoughts on what a pro-startup agenda could look like.

No, I love that. And I think your point on China is spot on. And I wanted to bring this back a little bit. You mentioned my background in Brazil, your background in Colombia. You would expect, given all the things that you said, for people, at least here in the US, to embrace economic growth, to think about economic growth and capitalism as a positive thing. And yet, you know, the narrative has shifted quite a bit, especially in the last 10 years. So why is it, in your perspective, that economic growth has become so unpopular?

Economic growth is deeply unintuitive, right? Because we're communists with our families. Like, we, you know, everything's equal, we all share. And so we expect that to work at scale, right? It's tough to explain to someone making $8 an hour why the minimum wage, like, won't help them. And the real answer is they'll probably be unemployed, right? It's tough to explain compounding returns. Like, we've evolved for a zero-sum world that Malthus predicted would continue, and we still haven't internalized that the economy is positive-sum. And what's interesting is that Malthus was actually like a correct historian. Like, you know, in his era, like, more people did mean fewer resources, more deaths did mean higher incomes, right? And what happened with the Industrial Revolution is that we figured out how to get income and population growing in tandem. Thanks to productivity growth. And then what happened a few decades ago is that we also figured out how to get economic growth and resource usage decoupled, more from less, as Andrew McAfee, the title of his book, he calls the process dematerialization. And so people haven't kind of understood that economic growth makes them— people will sort of laugh, like trickle-down, trickle-down, oh, that's not real. But no, it's actually real. Our standard of living is orders of magnitude better than it used to be. We've gotten so many people out of poverty. That's because of economic growth. And then for the people who say, oh, but it's bad for the planet, not anymore. We figured out how to decouple it. And the only way to a better planet is through technological innovation. And that comes from more people and more economic growth.

That's a very solarpunk response, Erik, which we love, right? Like thinking about how is this going to work in pushing the Earth and our planet forward in a positive way, yet also encouraging that growth. You know, we've heard a lot of talk about the decadence of our institutions. In your mind, what is driving that? And is the decadence related to economic growth at all?

So it's a few things that we can put together here. One is the talent gap that we talked about. Talent is going to startups. And so that means that kind of the rest of the institutions, academia, media, government, others, which have had decreased approval ratings for quite some time. They're just getting— they're not getting the best and the brightest in the way that they used to, because the incentives aren't there for them to be able to innovate freely, or profit, or have as big of an impact, frankly. So one is the talent gap. Two is there's just more transparency, right? And so the question is, is it that they're getting worse, or just we didn't know how bad it was, right? Take public schools. Are they better today than they were 50 years ago? Maybe. Or they're just, maybe they're just as bad and we just didn't realize it due to lack of transparency and context back then. Then there's just the matter of like, as I talked about earlier, industries that like don't have accountability, they just get more bureaucratic and sclerotic as they get older. And part of it is that like, you know, the internet has changed, has changed a lot. And Balaji puts it, no institution that precedes the internet will survive the internet. And so those are just a handful of reasons why institutions haven't been able to keep up. Oh, and you also asked about economic growth. Well, yeah, Eric Weinstein has this concept of embedded growth obligations, where certain institutions just expected to be able to receive, have certain budgets based on our growth rate. And what happens when that growth rate isn't the same growth rate as it used to be? Well, now things become more zero-sum. And what happens when things become zero-sum? You start to fight over the scraps.

So Erik, I think this is a perfect setup for something else that Ian and I have talked quite a bit on the podcast, which is the rise of nihilism. If I hear the things that you're saying, which is people do not understand economic growth, and then on the other side, you have the decadence of the institutions, does the sum of those 2 things just equal nihilism? Is that how those factors interact? Is it almost an equation?

Well, it's fascinating because you can think of nihilism in 2 ways. You can think of nihilism in the world is going to go to shit and I am just going to play video games and not care or whatever, or just do meme stonks or whatever it is. And there's definitely some of that. But then there's also nihilism in the sense of the world is going to shit and I'm going to riot in the streets. I'm going to dedicate my life to changing this, to changing the world. And so, and I'm much more concerned about the second kind, because the first kind, that's sad, but they're not going to get in your way. The second kind is actively preventing growth, preventing innovation. And we have a lot of these people, and it's a similar ideology to the Unabomber. Humanity is bad, humans are bad, humans' impact on the world is bad, And you shouldn't have children because humans are bad for the planet. You know, Ezra Klein yesterday in his article, and good on him, he was encouraging people to have children, but he said that the question he receives the most in his social milieu, and he's like, you know, an elite, is, should I have kids given that there's a climate crisis and I don't want them to experience a climate crisis or contribute to the climate crisis? Like, the fact that we have incredibly intelligent people, you know, that's the most common question he gets asked, asking that is scary. And it's, it's not because— I think nihilism is the wrong word because it's not because they don't care. It's because they have an incorrect understanding of the world. I don't know you guys, but when I was growing up, everyone was worried about overpopulation. There was Population Bomb, this book that came up, and then Bill Gates was working on some stuff. And it was only recently that we realized, oh, the problem is actually underpopulation. And so people have a flawed narrative around that. They have a flawed narrative around nature, right? They think that we need to go back to this glorious Garden of Eden, right? But we don't live in nature as we understood it centuries ago, right? Nature is— you have an average lifespan of 30, and your 5 or 6 kids die at childbirth or whatever. Nature is trying to kill you, right? You can't live in New York, like the New York we know and love. That's just not natural. And I'm not even talking about the buildings. I'm talking about Like, they have brutal winters, right? Without technology, living in places like New York would be miserable. So when people talk about nature, they're talking about this like magical, you know, fantasy land of nature, like nature without lions roaming, or nature that's like somehow has medicine or internet connection or like a warm bed. And so what I call them Luddites, what they fail to realize is that, you know, humans are naturally a technological species. Like, we build tools to make our lives better, right? And so, you know, Bology has this framework called the techno-progressives and techno-conservatives. It says techno-progressives look at the world and ask, how can we improve faster? How can we, you know, create nuclear power, you know, genetic modification, space travel, internet, like all the stuff that you guys talk about on the show. And techno-conservatives, they say, how do we delay it? You know, how do we almost reverse the technology growth and live how we used to live. And the simple fact that people have to realize is that, you know, that may have worked for a world of 10 million people, but it's not going to fit a world of 8 billion people. And we can't tell the rest of the world like, hey, you know, we have had all these nice things. You can't have these nice things now. And so the only way out is through. And thankfully, we've decoupled resource usage so that we can— so that we're all aligned here. But to put a pin on it, Nihilism is a wrong word because the people who are the problem are the people who care so much that they're getting in the way of growth, even at their own expense.

So how do we course correct this? This sounds like a large systemic problem. Is this done at a low level, at a high level? How do we even begin to help fix this?

By telling our story, telling the story, by arguing. And I think one of the One of the pros and cons of the startup world in the past, startup culture, right? It was really kind of like, if you go back to like, you know, Paul Graham, YC, like, don't, you know, just focus on your customers, just focus on customers, that kind of thing. I think what we realized, like, too late perhaps, is that we also need to— that being a full-stack startup is also owning your distribution, is also owning your media, is also in some ways in the future, like, owning your governance potentially too. But like, We let other people tell the story for us, and they told an incorrect story that cast us as the victim, as the oppressors, and made tech the whipping boy. Why are people so negative on tech? Because partially because they have had incorrect stories told by the media. And so when you say what needs to change, we need to invest in storytelling, in capturing hearts and minds, in the same way that we do on building incredible products. And, and we're starting to do that. There, there, you know, um, you see, you know, Balaji is pushing a lot the transhumanist stuff. Like, he's really focused on, you know, on that narrative. You see Solana, Mike Solana, right, like focusing on a better SF or like a more inspiring, um, America, more inspiring nationalism. You see Patrick Collison and Tyler Cowen with progress studies, right, trying to popularize economic growth by, you know, educating people on how it's the best thing to reduce poverty. So it's bottoms-up in terms of storytelling, and then it's also tops-down in terms of some of the policy things we were talking about earlier in terms of, hey, we need more people to solve this, whether it's immigration or focusing on our birth rate, et cetera.

So in the vein of fixing things, Erik, tomorrow, news for you, you wake up, you're President of the United States. What's the first thing that you're gonna do take action on what you just stated?

Yeah, well, let me focus on immigration here for a second, because immigrants are 1/3 of America's Nobel Prize winners. They're 50% of America's billion-dollar startups. And like, high immigration, high-skilled immigration, is like a trillion-dollar check lying on the ground, right? The number of successful companies which we establish is, is going to help solve some of our crucial problems is just limited by talent and capital, but talent is one of the big limiters. And this has been our superpower. Universities have for decades gotten the best people in the world. Our companies have gotten the best people in the world. How many Indian CEOs are there?

A lot.

And so we need more people. And we need— so I would highly focus, change our tune on immigration. This has been a Trump and Biden thing, by the way. They've both been— it's been a horseshoe theory, the left and the right at this point, They worry for the wrong reasons. They worry about immigration. And it's not just, by the way, that we need more people, it's that we also need more younger people. Because younger people, not to be ageist, I'm just saying generalizing, relative to boomers, relative to people retiring, they start more businesses, they buy more stuff, and that subsidizes older people who aren't producing or spending. And one problem we have and as a global problem is that our demographics are out of whack. Like China's one-child policy, they now have a 3-child policy. They're trying to correct for that. And the number one thing by far that's keeping US average working age low population is immigration, especially Hispanic immigration. And you see what happens to countries where the demographics get out of whack. Like Russia's demographic is really out of whack. And Peter Zeihan predicted a few years ago that they were going to have to invade Ukraine and invade other sort of nearby area regions because they just need more people, they need more resources. And if you think about how bad the culture war is now in, let's say, America, like, imagine how bad it would be with even worse economic growth or even a more diminishing pie than we— without— rather than having a growing pie. So I deeply focus on immigration in terms of focusing on the birth rate, I think that's interesting. I mean, I think there's a few things that can be done there. One is, you know, there's fertility startups, like we invested in Orchid, you know, Carrot Fertility on the benefits side. So there's fertility technology. There's childcare startups. We invested in TinyCare. We invested in Primer, which is a homeschool company. There's housing companies. We invested in Contrafour, a construction startup, Houseable on the housing side, because if people are able to afford a house, that means they're more likely to have kids. There's upskilling. Like, there's a whole set of of reasons why people are having less and less kids. And I think both startups and policies can help address that, but also a culture that understands, that isn't asking the questions that Ezra Klein's friends are asking, or a culture that realizes that the way to have impact in the world, or one of them, is to have children that go out and make an impact. And I'm glad Lucas, Ian, and myself have agreed to have 7 kids each. I'm really glad.

I'm just kidding.

I signed up for 9. So, you know, there we go.

Exactly.

So, Erik, we're talking a lot about policymaking, government, and how all of those things relate to startups. What is your perspective on how politics and ideology in Silicon Valley, you know, and let's say Silicon Valley, the, the actual physical location, but also broadly, has evolved over time?

I think that we now have a renewed appreciation for how important politics is. Like, people, you know, it's fascinating, right? Like, the media narrative on tech, um, and I was talking about the techlash, and, and one way of framing the techlash, by the way, is, is saying that it was actually just media versus tech, but it was actually never— it was like the Rotten Tomatoes phenomenon, right? Where like Dave Chappelle gets like 99%, you know, approval rating by the fans, but the, the critics hate it. Or Fauci, the reverse, the, you know, critics love it, but the fans hate it. And, and similarly, like startups have been popular. It was Facebook, it was DoorDash, like Amazon. Like, they're way more popular than these other institutions, right? But they kind of let themselves— they didn't fight back. And then we realized that, like, by apologizing all the time, we're actually, like, being painted as the enemy. And we're not the enemy. Like, you know, we have responsibility, of course. And, but, like, we are choosing the wrong strategic direction and choosing the wrong moral direction. And so we've built a kind of, like, immunity or a change in narrative or a vibe shift where tech is now standing up for itself. And one of these places where you see this is San Francisco. And going back to the narrative, the narrative at first on the techlash was they're making all these toys, all these stupid apps. When I was at Product Hunt, I was like, all these silly apps, et cetera, not making a big impact. They think they're doing something, but they're not, et cetera. Then the narrative changed to, Oh, they're ruining the world. Like, they're the reason why democracy is over. So it changed in a second. And similarly, like, you see that in San Francisco. So if you say, hey, if tech is so powerful, why can't it swing city council elections that are decided by like a few hundred votes to protect their own narrow interests? It's incredible. Like, we can build SpaceX, but we can't like win an election in a— you know, that just can't get a few hundred people to go out to vote. And so I think that's changing. Like, you see Gary Tan, you see Solana, you see a lot of people are saying, hey, we need to be more active in areas other than startups. Like, Nadia Asparouhova has this framework of Davos Man, Startup Man, and Crypto Man. And Davos Man tried to spread liberal democracy around the world. Startup Man is trying to present the founder mindset. And I'm in there. We've talked about why startups are are great, but startups are not the only thing. Like, ideas matter. And startups are— we're starting to realize that ideas are really important. And you see people getting more active in media, right? Like, we're starting to tell our stories, like, not just Solana, and like, we also have Ben Thompson and PAC. Like, we're doing tech-native analysis. You see it happening in government, right? On both sides. Like, Peter Thiel is now running these candidates, right? Like, on the other side, like, Reid Hoffman is getting— is really involved. You know, SBF is really involved. You know, on academia side, like, you know, Patrick Collison just launched a new research institute, right? And we're seeing startups like, you know, Lambda, Multiverse, and On Deck, like, try to get involved there. And then these, like, movements that I talked about earlier, progress studies, transhumanism, tradhumanism. And so what we've learned is that we can't just sit on the sidelines. Like, we have to get involved.

I love that. And I guess, so you've done a ton of thinking around education. This is actually a topic that we have not really covered on Solarpunk so far, but given how much you've thought about education, how much do you think that the issues that we've discussed actually relate to education somehow? Is your view that we actually have an educational crisis in America?

We have to admit that we have an education crisis in this country. like on any axis that you look at it, if we go through K-12, test scores, earning potential, employment rates, student satisfaction, teacher salaries have over the last 20 years stayed flat. And college tuition revenues and student debt have skyrocketed. We have a trillion-dollar student debt loan. We're not training people for the jobs that they need. We're not filtering people for companies anymore. And we're eliminating competition on both the K-12 side and the higher education side. And so the public school teachers have an NPS of -17%. Teachers say 10% of other teachers are unsatisfactory educators. 55% of Americans think that K-12 is heading down the wrong track. So what do we do about that? Well, we do what— it's time to build. And so We at Village, we've invested at every level of the stack in terms of from childcare, TinyCare, homeschool, Primer, high school, Sora Schools, college and apprenticeships, Multiverse, On Deck. If the government is not going to create their own competition, we need to do it outside the system and create such a better product that's going to encourage public schools to improve. So yes, there is a crisis, but yes, there also is a flurry of people who are acknowledging that human capital is what makes this country— is what's going to make this country work. And so they're building in that area as well.

So as we solve those problems with technology and great companies, like you mentioned, if we fast forward 5 or 10 years and let's say the government starts to take notice, How do you see that evolving? Is it a collaboration between these companies and the government? Is it more privatization of education? What's your hope of how this evolves over time?

My hope is that they work together in the ways that we were describing earlier, that they set a level playing field. Like, you know, I don't want like Trump University to exist, right? Like, I don't want just anyone to go create a university. I want a, you know, I want some accreditation, but I don't want it to be a cartel. I want people, you know, I want— if you want to go out and create a K-12, you know, high school or create a, you know, higher education, create a college that tries to compete with Harvard, I want you to be able to do that because that's going to make our product better. I want us to stop restricting supply while subsidizing demand. Why are we encouraging people to take these loans? You know, the average person has like $30,000 in debt and, you know, half the country doesn't even have $2,000 of disposable income, right? And you can't even charge that debt in bankruptcy, right? And so ISAs could be one model that are more aligning between students and colleges. ISAs have their own challenges. But across the board, we have to stop restricting supply and subsidizing demand. And then we have to do what we were talking about earlier, which is create a level playing field, be a funder, right? Like, you know, Race to the Top was one sort of initiative in K-12, but there could be others that give capital to the best ones, or that act like VCs almost. And then also, you know, be a buyer when helpful and when it makes a difference.

Love it. And Erik, so putting together all of those threads, you know, if you're a listener, if you're someone that cares about the future of America and American values, what do you recommend them to do? You know, what's the call to action coming out of this conversation?

There's a few ways I'd look at that question. One is that One critique of our culture is that we've become too pessimistic. Peter Thiel has a couple of examples of Nixon declared war on cancer in 1970 and said we would defeat cancer in 1976. And so today, we wouldn't even declare war on Alzheimer's, even though 1/3 of 85-year-olds suffer from it. In infrastructure, Golden Gate Bridge was built in 3.5 years in 1930. Right? In the 1930s. Today, it takes 7 years to build an access road that costs more than the original bridge. And we just expect across the board, we're expecting less than our governments than ever before. And you see this really played out by sci-fi, right? Like, all the sci-fi is dystopian. Like, we have Black Mirror. Where's the white mirror, right? And so we were talking about telling our stories earlier. So reinvesting in optimism as a fundamental narrative. And then also what you say about, like, you know, one thing that's really interesting, you talk about a lot on your podcast, is you kind of take it as an assumption and a given that American values mean something that everyone agrees on. Say, okay, how can, you know, companies do more to spread American values? Whereas, and if you say, hey, like, what can someone who wants to do, like, spread American values, what can they do? Well, first they should codify what those values are, because I, I don't think that they're given. I think that we're still fighting for them in this country. Like, Is free speech an American value? That seems really up for debate in the last month or two with Elon and Twitter. Are free markets American value? Well, that seems really up for debate. When you say American values, be specific as to what exactly you're spreading, and then realize that there are battles in this country for what those mean, and learn the different sides, get involved, pay attention to ideas. That's one big takeaway, is that startups, you know, it's time to build, but it's also time to learn. It's also like time to understand that I, you know, Nadia has this great blog post called Idea Machines that everyone should read, that, you know, the reason why you're working on a startup in the first place is because you read, you know, you heard Paul Graham, or you heard Patrick Collison, or you heard, you know, whatever. And we need more of those people who inspire people to do new things. Like, who's the Paul Graham of climate? Who's the Paul Graham of nuclear power? Who's the Paul Graham of XYZ? We need kind of these, these leaders to, um, to inspire more people. Just like this is how we started the podcast, right? Like, you can either solve cancer or help other people solve cancer. You can either save the world or, you know, improve the infrastructure by which other people can, can go do that. And ideas are part of the infrastructure to go do that.

Totally. And on your point about optimism versus pessimism, On top of all of the challenges, what is it that keeps you optimistic that we're going to be able to overcome them?

I think one thing that keeps me so optimistic is that the values of technology— you know, we say Silicon Valley as a space, but right now it's a mindset because it's expanded far out beyond Silicon Valley— they're starting to get exported to the rest of the country and also globally. And what are those values? Well, there's a few of them. One is that people help each other out without asking for anything in return. It's a shared upside culture, right? Like, you know, skin in the game, people invest in each other, people don't want to miss the next big thing. That's really big. We were talking earlier about how to make economic growth more popular. One way is by, you know, the progress studies work, education. Another way is let's just give people more equity, right? And that's why Web3, right, it gives people more upside. That's why people love— all these socialists love Web3, because they get rich. So it's really funny. What if the US has been experimenting with UBI? What if instead of it was UBI, what if it was instead stocks in the S&P 500? That way you'd be rooting for Amazon, rooting for Facebook, rooting for these companies, because you'd be aligned with them. So more equity alignment, I feel like, is a Silicon Valley value that is now being exported into the world. And that's a positive-sum view. Whereas like in Hollywood, you don't have that, right? Hollywood, there's a certain number of movies that get made each year, certain number of roles for people to fill them. So there's opportunity cost, but there's no opportunity cost in startups. Sorry, there's no natural rate limiter in startups. It's just the amount of capital, the amount of talent, the amount of ideas, and more and more people getting exposed to that means there's gonna be much, much more of that. And so that is one thing that has me optimistic. And the fact that, you know, what COVID enabled the past 2 years is, is more remote. So we finally decoupled where you work from where you live, which means people all over the world are getting access to that. And let me close on this one idea, which is, we were talking about organizing the world's ambition. I'm excited about this idea that Uber and Airbnb are marketplaces that figured out how to utilize an idle asset. Airbnb turns spare bedroom into cash. Uber turns your car into cash. But the most valuable asset in the world that's underutilized, that's idle asset, isn't cars or bedrooms, it's people. There are billions of people whose talents are underutilized. These are people with the same IQ, same potential, getting paid 100x more because of where they live. And so seeing that opportunity being spread globally is what gets me really excited.

Wow, Erik, that is— what an amazing outlook on the world, and I think something that inspires Definitely myself, and I'm sure Lukas, and honestly, I think the entire Village team. So thank you for sharing that outlook. I absolutely love it.

Thank you so much, Erik.

Thank you. It's been a great episode. If you're an early-stage entrepreneur, we'd love to hear from you. Check us out at villageglobal.vc.