CW 267: Technological Optimism with Steven Kotler Author of 'Abundance: The Future is Better Than You Think'

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It's my pleasure to welcome you to episode number 267. This is your host, Jason Hartman and today we are going to talk about abundance. The future is better than you think. We have an interview with the author Steven Kotler today and his co author of course is Peter Diamandis. And I think you'll really, really enjoy this show and you know, it's kind of timely really because of course there's a lot of bad news in the media and there has been for several years now with the financial crisis and so forth. And we've covered it on the Creating wealth show and more so even on the holistic survival show. The more doom and gloomy of my. And you know, at the same time it's kind of like we have these two sort of parallel. Well, maybe that's not the right word. Maybe divergent trends which in a way are converging too. It's sort of hard to explain or even wrap your head around. I certainly haven't done it. But in one way the future looks incredibly bright and most of this future comes through technology. But it's not just through technology, it's through the type of community technology creates. And of course that is centered largely around the Internet and all of the new products and services. Not, not just technology in the way we think of it of gadgets, but new products and services that come out of that technology. For example, another great book that I just finished is entitled Reality is Broken. And that book is about gamification. It was written by Jane McMonagle and I hope to get her on the show because the book was just, just brilliant and it really talked about, you know, gaming, something that I, I'm not a gamer, you know, I kind of always dismissed gaming as something I just don't have time to do. And some of my friends are into gaming and you know, I sort of give them a hard time about sitting in front of a TV screen a lot and, and playing these games. But amazingly, it's been a revelation to me. And in going through that book, that gaming, in many ways, lot of the world's problems, I really never realized it. And when we talk about abundance and how the future is better than you think with the author in today's interview, you're going to be amazed. And hopefully you picked up a copy of this book because it really, really is quite interesting. I have always been fascinated by the future. When I was a little kid, I was into Star Trek. I always liked science fiction. When I got a little bit older than that, in my early 20s, I was really into futuristic books. I remember over the years, you know, I've read the Megatrends books by John Nesbitt. I'd like to get him on the show. I know he's still around and I used to subscribe to his newsletter. I think it was called the Trends Report or something like that. And Faith Popcorn, who wrote the Popcorn Report. I also thought that was a very interesting book, the book the Fourth Turning. And I think the author was Strauss on that one. Anyway, I've always liked futurist books. They've always fascinated me. And it begs the question when it comes to my investment philosophy, when you look at technology, when you look at so many things about the future, they are largely deflationary in many ways because of what, what is known as disruptive technologies. And also Moore's Law. Now, of course, you've probably heard of Moore's Law. Moore's Law is basically, I think it was Gordon Moore is his name, who was the one who noticed that everything becomes sort of obsolete in about 18 months. That's the cycle. And that cycle is speeding up. Moore's Law proceeds at an even faster pace as technology increases. So I mean, here's another example of it. I just got, and I am recording right now onto my brand new MacBook Pro. I just got this two days ago. It is literally now the most powerful laptop in the world. Cost me 4,000 bucks. And I gotta say, I love how fast it is. I am finally about the same speed as my computer. My computer moves about as fast as I do now, whereas I don't have to wait for it anymore to do things, at least not yet. And, and it's because it's all flash memory and it's got like 16 gigabytes of RAM in it. And the, these things get cheaper and better all the time, don't they now compare this to my very first computer. This will be sort of interesting to you as a perspective. I remember back a long time ago. I won't even mention the year, but I do know what year it was. You could probably figure it out. I got my first computer. I got a Compaq SLT 286, and it cost $4,200. It was a sort of a big lunchbox style computer. It weighed 14 pounds. I remember this computer very well, actually. And it had a little tiny, you know, black and white screen. And it was a. I guess you'd call it a laptop, but it was much bigger. And I remember when I got. And I remember when I got my first cell phone. Now, let me tell you about my first cell phone. My first cell phone was a Radio Shack knockoff of a phone called a Mobira. And it weighed about 14 pounds, too, I think, actually. And it was one of those. It was portable, it would come out of the car, but you actually had it installed in the car. And it had, like, the receiver and the sort of lunchbox that you would carry around with it. And I thought, oh, that's so cool. It's a portable phone. And I remember I actually financed that phone as a. You know, I was basically a kid when I bought it. And I financed it. It was $3,200, I believe. I financed it through Radio Shack Credit the store. Radio Shack, you remember them? There's a few of those around still, I guess. But I don't know, Radio Shack, I don't know if they're going to make it in today's world. It's all changed, obviously, but these things, these gadgets are really influenced by Moore's law, and they're also influenced by the concept of disruptive technology. But when it comes to my investment philosophy, as you know, if you are a regular listener, my investment philosophy and the reason I love income property is because I really, really like commodities. I think commodities are a great investment. We are increasing in population on this earth faster than ever before in history. More and more people are being created all the time, and more and more people are expanding lifespans all the time. And if a lot of the stuff comes true in the Abundance book, in terms of technology, people will be living even longer and longer lives and better qualities of life, too. So what does this mean? Well, it means more demand for commodities, and that's why I like commodities. So as an income property investor, the way I buy my commodities, of course, are I buy them as packaged commodities or assembled commodities. Two of my trademark phrases. And I buy all of the wood, the copper wire, the petroleum products, the energy, the concrete, the steel, the glass, all of these commodities. I buy them in the form of houses or apartment buildings. And houses and apartment buildings, of course have universal need because everybody on the planet has of course, those three common needs, right? Food, clothing and shelter, don't they? And as such, I hope they can rent it from you and me. This, I think, is a great, great thing. So as a commodities investor, it begs the question, and here was my point, does disruptive technology affect us, these materials? Well, sort of, because in the book they talk about nanotechnology and of course materials might be made cheaper in the future and this would be deflationary. However, these materials, unless we're all going to be living in a force field, which probably someday we will, maybe these materials could be a little cheaper, who knows? But let me tell you something. When you think about investing in commodities, as you know, if you're a regular listener, I am constantly getting into debates that I always seem to win with gold bugs. The people that love precious metals that like gold and silver, and I've said it before many times, I think they have the right premise but the wrong conclusion. And I have read and heard in the news media about how metals like gold and silver and certainly diamonds, they do this already with diamonds. You may not even know this. By the way, diamonds can now be made in a lab. In a laboratory. So what does that do to the price of commodities that are small and valuable like gold and silver? There is even a company I heard about on the news recently that is raising money now to send spaceships to asteroids to mine precious metals off of asteroids and bring them back to Earth. What will that do to the price of some of those commodities? Well, it will reduce it probably. Now that's pretty far fetched, you know. I mean, right now it's probably fairly unlikely that anytime in the next five years we're going to be sending spaceships to asteroids to bring back metals mined from asteroids, right? I know you think that's far fetched, but someday it might happen. Someday gold and silver might be made in a lab. But the thing about housing and the reason I love it so much is because it's very simple and by the pound it's not very valuable. It's not like a little tiny piece of gold that is worth maybe 16, $1700 for an ounce. It's something that is big. And as such big, big and cheap drywall lumber, those kind of things. It's not really worth making. The materials cost a lot lower, at least not initially. It's not one of the first areas where there's a lot of pressure to advance like there is in a cell phone or a laptop computer. So the disruptive technology and Moore's Law does not really apply to housing nearly as much in anywhere near the magnitude that it does to some of these other items that are very deflationary. So as technology improves our lives improve, our quality of life improves, hopefully the quality of our health improves. One of the things they talk about in the book is how there is a new X Prize to make a tricorder. Do you remember, you know, how Spock on Star Trek would carry around the tricorder and. Or, I'm sorry, Bones, the doctor. Well, Spock had a tricorder, too, but it did different things than the one doc the doctor carried. Bones McCoy. Boy, I'm dating myself with the Star Trek stuff, aren't I? But anyway, you know where you could run it over a person's body and it would scan their body to see what was going on? Well, there's an X Prize now to create a tricorder. And by golly, I'll bet you they'll do it. So it's amazing. You know, I just read an article today about the company Under Armour. Do you know Under Armour, the sportswear manufacturer? Well, Under Armour has this amazing laboratory. They call it their innovation lab. And they talk about what they're creating. They're working on a shirt that will come out next year. They say you can buy this shirt on a retail basis in 2013. It's called the E39 shirt. And it will monitor your heart rate. It will monitor your breathing level and even your G force. And it's already been tested on NFL players. Okay, so amazing. You know that heart rate monitor where you have to put the strap around your chest and wear the wristwatch? Well, now your shirt's gonna do all that and a whole lot more. It'll monitor your G force. So if you're jumping or tackling, can you imagine that? It'll monitor all of that and your breathing. Soon there will be shirts that regulate or not shirts, but all clothing will regulate our body temperature with nanotechnology clothing that will wash itself. So maybe you don't need a washing machine anymore. Can you imagine that? Clothing that will. If you spill a glass of red wine on your slacks, it will clean itself. I mean, instantly. Isn't that amazing? I mean, look at the amazing stuff coming our way in the future. There are so many reasons to be so optimistic and hopeful about the future. Of course, you've heard of Google goggles or Google Glasses, right? These are the glasses and I was looking at them today online. Just Google it. You can Google Google glasses. That's a mouthful, isn't it? And basically this is a computer that you just wear in your glasses and you control it with your eyes and incredible. I mean, just amazing, amazing things. Back to Under Armour. They have a sweatshirt they're going to sell for 60 bucks real soon that repels water as good as a duck, so you don't need to carry a raincoat anymore. It's basically a cotton type of sweatshirt. It's called storm cotton and it's a new version of cotton. Just incredible things. I mean, I could go on and on about this stuff, but the place to be, in my opinion after reading all of this stuff, hearing about all this stuff is in the housing business because it's simple, it's not very prone, although it has things, small changes and advancements, but it's a simple technology and it's not very prone to Moore's Law or disruptive technologies. Not very susceptible to it, I should say. And just think, as the world becomes richer in so many ways, demand for basic, simple, simple, cheap commodities, housing oriented commodities will increase and increase and technology will allow people to do more and more with their lives. It will make them live longer, it will reduce mortality and boy, I think population will increase faster and faster. Now I'm not saying that's all good because of course if you talk to the environmentalists who many of them hate people and want to see the earth's population reduced dramatically, you know, the Malthusian kind of thinking out of scarce resources and so forth. If you talk to people about the agricultural effects in this book they talk about how urban gardening and vertical gardening is changing so many things. So think about it. If you're an investor in farmland, you know, like one of our listeners, I'm thinking of Cy, who's going to be on the show here real soon. We did a case study with him that could change the game for farmland, couldn't it? A lot of this stuff really can change. But again, you know me, I'm not that fond of land. I'm fond of packaged commodities on cheap or free land, which is basically what we offer in our different markets. So a lot of great stuff coming. We almost, by the way, we have almost inked. I'm just about to sign the contracts on two events we have coming up this fall. And that is our Atlanta Creating wealth boot camp and our property tour in Atlanta, Georgia. And it's looking like that's going to be the last weekend of September. And I think we're going to be at the Grand Hyatt in Buckhead, a big, beautiful hotel that I've stayed at myself. And wow, what a gorgeous, gorgeous property. We're just about to ink that and announce it in full detail probably on the next episode. And then our Meet the Masters event, of course, that we're working on as well. And we'll get that announced. We've, of course, got special room rates for these events for you and just some really good stuff coming up like that this fall. So let's get to the interview with Steven Kotler on the book Abundance. And so many great shows coming up for you on all kinds of topics, including case studies, economics, et cetera, et cetera. But I just wanted to kind of talk about this abundance thinking and how it impacts prices and, you know, maybe just to make one more comment on that before we go to the interview. This is the whole concept of hedonics. Remember inflation, the consumer price index, the most widely accepted measure of inflation, which is manipulated like crazy. I believe the real inflation rate now is about 9 to 10% in real inflation. Of course, that differs for every person. We all have our own personal, individual inflation rate because we all spend our money differently. But the government would have you believe it's much lower. What techniques do they use to manipulate the consumer price index? Well, one is they use what's called the core rate, which is the cpi, minus two major things. Of course, you probably know what they are as a regular listener. Those two things they take out of it, they strip out are food and energy. As if anybody can survive without food and energy. They strip those out because they're too volatile. And then the other thing they do, when you look at the overall cpi, not the core rate with food and energy stripped away, put it back in. They do weighting, substitution and hedonics. Just a little refresher here for those of you regular listeners. Weighting, of course, means how much weight do they give to the food component or the housing cost component? And as they weight these things differently, they manipulate the index lower. The government has a huge incentive to say inflation is lower than it really is. Mostly this incentive plays out in two ways. Number one is, of course, all the government entitlement programs are indexed to what, inflation. So if they say the inflation rate is high, then they have to increase Social Security at a higher rate they have to increase other benefits and entitlements at a higher rate. They have to increase wages for government employees. And when the federal government's almost, or maybe a little bit over 20% of the overall economy, which of course is ridiculous, but that's another subject that is a major, major expense for the government. And then, of course, there's the public sentiment, there's the political aspect of it. If you think the inflation rate is really high, you're going to be disappointed with your leaders, with your politicians. Right. And you won't vote them back into power. So those are the two reasons now when it comes to hedonics, the hedonic index, Hedonics, the root word is seeking pleasure, Right? Hedonism. So they're saying that this new MacBook Pro that I'm recording on right this moment is much better than my old MacBook Pro, which is about a year old. The one I replaced it with. The old one cost about $2,800. The new one cost about $4,000. But the new one is a whole order of magnitude better. I mean, it's. It's much better than the old one. So even though I really paid $4,000 for it, they will only calculate into the index that I paid maybe $2,000, and the old one I only paid $2,800 for. So they think my cost of living has gone down. What the Hedonics index does, although seemingly logical on its face, is that it deprives us as people of the right to progress, because what it says is that we don't deserve the benefit of the better, faster, cheaper product. The index for inflation deserves it. Even though I really spent more money for the new thing than I did for the old thing. It thinks, the way the index is calculated, that the new thing was actually cheaper than the old thing, but it wasn't. So that's the misnomer of hedonics, and that's what plays into this whole concept of commodities and technology and Moore's Law and disruptive technology, and. And that's why, again, I like the housing concept. It's a simple technology. It's not subject to very disruptive factors, and that makes it great as an investment for us. And of course, as the government spends more and more irresponsibly, that inflation coming toward us will benefit us dramatically as investors. One of my Facebook friends posted a video today, and the video said something like, I think it was called what happens when the dollar becomes worthless? And I didn't do it. But, you know, this is one of the gold bug people I always argue with and I didn't do it, but I wanted to say what happens when the dollar becomes worthless? Well, my comment was going to be, and maybe I'll go back and post it, is that your debt becomes worthless. So long term fixed rate debt for three decades long at the lowest rates ever on record, attached to commodities that last for hundreds of years. I mean, how long does a house last? There are houses in parts of this country and many in parts of Europe that are hundreds of years old and they are still standing there. They still have economic value and if they're rented, they're still producing income for their owner. That is the part of the ultimate investing equation, folks. And that's why I love income property so so much. Find out about those events I mentioned@jason hartman.com that's jason hartman.com as well as take a look at some of the new blog posts we have. And of course the property section and the events will be posted soon that I mentioned. And we will be back with the interview with Steven Kotler, the author of Abundance the Future Is Better Than youn Think here in just a moment. Did you know that you can call into the Creating wealth show? Yes, you can call me and talk to me direct or later broadcast on the show. The number is 949-200-8009 or via Skype Jason Hartman, ROI. Please make sure you have a good connection when you call, get your questions answered, participate in the show and share your experiences with other investors. Call in 949-200-8009 or Skype Jason Hartman, ROI and participate in the Creating Wealth Show. My pleasure to welcome Steven Kotler to the show. I just finished reading the book that he co authored with Peter Diamandis and I absolutely loved it. This is one of my big, big book recommendations for the year. The book is entitled Abundance the Future Is Better Than youn Think and it's something everybody listening needs to read. Stephen, welcome. How are you?

Thank you for having me. I'm well. How are you?

Well, thank you for joining us. I'm doing well. And thank you for joining us from New Mexico today where you have a dog rescue operation on the side when you're not writing books, huh?

I do good. There's a couple of different entrepreneurial projects going on at all times.

Well, that's fantastic. Well, Abundance Peter is behind the X Prize. I don't know as much about your background with it, but the book is awesome. Tell us more.

So the book, the central thesis of the book is pretty straightforward. It's that because of four emerging forces, we should have the power to significantly raise global standards of living over the next 20 to 30 years. That's the central premise of the book. We are not, and I should flat out say this, this is not a techno utopiaist home. We are not saying the world is not facing a considerable amount of dire challenges where you're saying that it's absolutely the case. The experts are not wrong. But what we are saying is that for the first time ever, it's possible to rise and meet them.

It sure is. And I mean, you outlined so many incredible things coming forward in the way of technology, Things that are already here. In fact, many of them that really, really can change things. And talk to us about some of those. I mean, you talk about the rising billions, and they say that globalization has lifted about 275 million people already out of poverty around the world. So is there another billion beyond that 275 million?

Well, so to talk about the rise in billion, we have to back up a little bit and kind of just talk about abundance in general. A lot of people, when they hear this concept, it sounds very, very foreign to them. And we could talk about why that is and why there's kind of the brain is hostile to the idea if you want, but people always ask for examples. Great example is communication information technology. If you think about it today, a Maasai warrior in the middle of Africa on a cell phone has better access to information communication technologies than the president of the United States did 25 years ago. That's Reagan. If they're on a smartphone with access to Google, they have better access to information technology than the president did 15 years ago. That's Clinton. That's astounding. That is a world of communication and information abundance. What's really astounding about that is the numbers. Right now, there are roughly 2 billion people online. By 2020, that number is going to jump to 5 billion. So there are 3 billion new minds coming online for the very first time. So when Peter and I talk about the four forces that are bringing us to abundance, One of these forces we call the rise in billion, which other people have nicknamed the bottom billion, the poorest earth. These people over the next eight years are going to be coming online for the first time. We've never had access to their minds. We've never had access to their thoughts. They're going to. Everybody's excited about the bottom billion as a potential market. And it's a huge market. It's tens of trillions of dollars purchasing power coming into the economy on an annual basis. That in itself is a big deal. But as producers and as creators, that's where things get really, really, really exciting. And to your point earlier about technology, one of the other things is it's not just 3 billion people coming online. It's 3 billion people who are going to be better educated than ever before. And for example, this is just one example. Right now there's something called the Khan Academy. It was started by a hedge fund analyst named Salman Khan and he started making tutorial videos for his nieces on subjects in high school and posting them on YouTube.

And they are fantastic, by the way. Watched a few of them, yes.

They became a massive, massive hit. They now have, I think it's closing in on 2,500 of these. They're literally adding more every day. You can essentially go kindergarten. Not kindergarten, but some of the early grades through high school, probably in first or second year of college in terms of general classes for free online in English today. Now here's where it gets really interesting. Google is now translating all the Khan Academy videos into the seven major languages. Khan Academy is then going to crowdsource them into every language on Earth. Now this is one example. There are tons of other things going on in education online. All of them are interesting. But what it means is within a few years, everybody on Earth who wants access to an education and has a smartphone can have one.

Incredible.

That's incredible. So you've got this population that's coming online, the rise in billion. They're going to be smarter than ever before. They're also going to be healthier. Let me take another example, an example you talked about Peter a little bit. Let me talk a little bit more about what Peter's doing right now. Peter, the X Prize foundation just launched the Qualcomm Tricorder X prize. It's a $10 million prize for the first team who can build a tricorder, which if you're a Star Trek fan, you may remember as the medical scanning device that Bones use.

Sure bones McCoy.

So the idea is to make a handheld device that can diagnose illness better than board certified doctors. Now why is this a huge deal? Well, in America, with massively spiraling healthcare costs, diagnostics, first of all, 50%, it's actually 45% of the time that you go to the doctor, they get it wrong. That's what the studies tell us. That is massively expensive, very dangerous, etc. Etc. Etc. So better diagnosis really helps. Cheaper Diagnosis really helps in parts of the world where there are, you know, barely. There are not enough doctors, not enough nurses, not enough hospitals, not enough anything. This is a huge step forward. So how does it happen? It sounds miraculous, right? Turns out none of the technologies that are needed to create the tricorder are pie in the sky. They're all here today. Combines three technologies. The first, you may remember, a couple years ago, a computer beat human contestants on Jeopardy.

Good old Watson. Yeah, IBM's Watson.

So after Watson, the big deal, by the way with Jeopardy. I don't know if you know this or not. You probably do, but the big deal on Jeopardy. Was to win on Jeopardy. Watson had to understand natural language, slang, how people spoke all that stuff. That was a very tough AI nut to crack that nobody's been able to crack for a long time, but they've got it. So after Watson was done on Jeopardy. Do you know what they did with Watson? They sent Watson to medical school at the University of Maryland. They are now packing Watson with as much medical information as they possibly can. Watson will then be uploaded into the cloud. So anybody with a smartphone can access Watson.

That is truly incredible. And I want to talk about the network effect in a minute. I mean, we're really talking about it now, but I have some specific questions about it for you. But think about that. If you can access Watson's brain for, or maybe a smartphone app that's either free or 99 cents, how does that just level the world? It's amazing.

The last technology that goes into it is Lab on a chip. So here's the thing. Lab on a Chip technology means you can put a drop of blood, spit, urine essentially on your smartphone. It analyzes a sample, uploads the information to Watson, and suddenly you have zero cost diagnostics.

Incredible.

Huge, Exciting, interesting deal.

Very exciting. And you talk in the book about how when people are healthier, more educated, and more urbanized, the birth rate just naturally declines.

Yeah, it's one of. So when Peter, Peter and I, we each had about 50% of this book in our head when we first got together. And we've known Peter forever and we've been wanting to do a project for a long time. And he came to me with kind of with the core idea and some of the stuff. And I had been looking at these exact. He had been looking at how do you make humans lives better? And because of my background with animals, I had been looking at environmental issues and we both had seen the exact same kind of leverage and trends and things. So we kind of met in the middle there. But one of the early sticking points for me was population, because I did not know. I had seen technology solve really intractable problems, problems that I had. I spent most of my life thinking we're unsolvable. And I had seen some of these solved, but I didn't know what we were going to do about population, and had been writing about population, was one of the very few kind of vocal voices about population in the world at the time. And so Peter and I went back and forth on this, and I read essentially everything there is to read. And you're absolutely right. It turns out, and this is one of the reasons people have a very difficult time understanding what's possible. We understand that all our problems are nestled, that they function like dominoes. Global warming goes up, we grow less crops, we have less water. All these things are nestled and stacked, Right? Same thing happens with the solutions. The solutions actually work like dominoes. For example, the single greatest thing you can do to lower population is provide people with clean water. After that, it's women's rights and information about access to condoms. Those are the three things you do. So essentially, if you raise basic standards of living, population plummets. And we know this because we've seen it and we've seen absolute examples of. Morocco is a phenomenal example. Over the past 20 or 30 years, they've instituted the exact same changes I've talked about. They went from having, I believe it was 8 to 11, was the average birth rate in the 70s, and it's now down below 3.

Well, Morocco's a pretty. I mean, I've been there. And at Marrakesh, it's a pretty. You know, I don't want to say this in a demeaning way, but, you know, a civilized country, it's pretty advanced for. Compared to many African nations, obviously. And so the birth rate has gone from 11 to eight to three per couple. Huh?

It's. It was eight. It was between eight and 11, but it's down. It's down around three now. Yeah.

That's amazing. It's amazing. You know, why does that happen? I mean, I can see with women's rights, why it would happen, but why with health? I mean.

Okay, so it's really. It's a. It's. It's a very. The answer is heartbreakingly sad, but the truth of the matter is, people have. They hedge their bets. So what people want, if you're living in dire rural poverty and you want out, you need three sons to work the land. You need one to Work the land. One is going to die. One to work the land and make enough money to send the third to school. That's the only plan that works. Now it's 50, 50. So for every boy, you're probably going to get a girl. So those are the numbers. The problem is, and the thing is, if you can get people to live longer, if you can take away the need for what they call replacement births, then population drops because the numbers come down. You don't need as many sons, basically because they stay alive. So you don't need that extra son and the extra daughter it can produce. So you get kind of really dramatic effects that way. And the simplest way to keep people alive, the number, you know, kind of the number one killer is dirty water.

Water. Water is big time. And in the book, when you talk about the Lifesaver bottle, what an amazing bottle. You can literally buy this today on Amazon.com for about 150 bucks. And the survivalist community would love this thing because, I mean, it can really, really clean water and an incredible amount of water very, very economically. Can it?

Yeah. The Lifesaver bottle's astounding. Dean came in Slingshot, which is kind of the next stage up that chain, is astounding. There's really, really interesting water innovation coming. And a lot of that is also because this is one of those older issues. It's been around for a while, so we've kind of tried a lot of the early solutions. So we're getting to the real stuff now and it's really exciting. Certainly one of our other forces is the exponential growth rate of technology, which essentially says that all kind of information based technology is kind of also advancing at the rate of Moore's Law. Right. So it's doubling every couple of years. And for example, biotechnology is advancing five times faster than Moore's Law. So this underpins a lot of it and certainly underpins a lot of what we're seeing in water now.

Well, let's talk a little bit about technology and Metcalf as well, because he popularized the concept of the network effect. And you know, the traditional thinking is 1 plus 1 is 2. But in the information age, in the age we're living in, maybe one and one is not two, it's 11. And it grows exponentially as more people come online and more people share ideas and more people can do things. And the thing I want to ask you about is the Google Library project, because you talked about that in the book and that was just fascinating to me. I had heard of it, but I Never heard some of the things you had said about it in the book. So what were you going to say though?

I was going to. Well, I was going to talk about the network effect for a second, which was. And Dean, this is in the book, right? We have this in the book, but it's something Dean Kamen said when we were talking to him, one of the conversations. And it struck me, a lot of people have said similar things, but this just struck me as. This is the clearest way to say this. In a materials based economy, which is essentially what we had up till about now, all exchange is one for one. It's zero sum. I've got a hunk of gold, you've got a watch, we trade. I've got a watch, you've got a hunk of gold. But in an information economy, if I have a good idea and you have a good idea and we trade, we each have two good ideas. It's non zero. At the heart of the network effects you're talking about is that simple equation. You can immediately see how that gets exponential fast.

It sure does. It's unbelievable. I remember reading Alvin Toffler's book many, many years ago, power Shift, when he talked about the three forms of power. First it was fire, then it was violence and. Or I'm sorry, it was violence, capital and information. Those were the three forms. And with violence you eventually, you know, it stops motivating because you eventually have to just kill your opponent. Right. Or the person you're trying to gain something from. So that's barbaric. And with capital it has limits, but with information, it literally is completely limitless in its value. And information can be known by both people and benefit both parties in completely new and different ways. Can it?

It can. And the other thing you get is very. I mean, and this is what you see with open sourcing. And this is, this is where there's so much leverage. You get very peculiar weird network effects. And this is the other big deal about the rise in billions of. Do you know the story? Are you familiar with the game Fold It?

No.

Okay, so how essentially they're not really. But how essentially two dimensional amino acids fold into the structure of three dimensional proteins. Oh, yeah, yeah.

You talked about that in the book. Yeah, sure.

No, we don't.

Oh, I thought you did. I thought this was Peter has.

I think Peter's told this story before.

I heard on his video because that's the lady that at home was folding or something.

Yeah, tell me more. So this, the story is essentially the structure of a Protein determines its function, right? So that structure is everything for drug discovery, medical technology, big deal. It was a supercomputer problem until a couple years ago. And then a bunch of guys from the University of Washington, graduate students actually, and not just guys, women too, decide. The human brain has a great pattern recognition system and we're really good at determining shape. And let's see how we do with folding proteins. What the hell, we'll turn into a game and put it online, see what happens. The game is called foldit and over 100,000 people have signed up to play. And it's produced astounding, astounding results. I'll give you one random example. A couple Years ago, about 10 researchers working for free in their spare time, over the course of 10 days cracked the structure of an AIDS causing enzyme that it puzzles researchers for 13 years. So you get, and it happens because you get people poking in from all different disciplines and you get combinations of ideas that happen in very weird ways and you get these network effects. But the point you were making earlier, which is the cool point is when they went and looked to see who the best protein folder in the world was, they did not find a Caltech scientist. They didn't find an MIT grad student. They found Suzanne, a woman from Manchester, England who by day is an executive secretary at a rehabilitation clinic and at night is the world's best protein folder.

That is amazing. I mean, who would have known, right? Who would have ever thought on top.

Of it, Suzanne didn't know, right?

Right.

So that's, I mean that's the flip side. So when you talk about 3 billion minds coming online and access to them for the first time. Good God. Have you ever spent time in developing countries and see what people come up with as workarounds for electricity or water, things like that, the engineering, the creativity. And start applying this to grand challenges that are directly going to impact their lives. It's going to be pretty.

We'll be back in just a minute. Now's your opportunity to get the Financial Freedom Report. The Financial Freedom Report provides financial self defense in uncertain times. And it's your source for innovative forward thinking investment property strategies and advice. Get your newsletter subscription today you get a digital download and even more. Go to Jason hartman.com to get yours today. In the book you give so many examples of how the X Prize and other sort of contest oriented things like that, whether they be gamification, which is another huge area, which fold, it definitely is part of that. But there's more to that. That one a Lot more to that too. But all of these areas where holding a contest has created so much non traditional innovation. I mean, most obviously the X Prize, the first one where you get people that don't have training in aerospace, they don't work for NASA. It's not some government agency or a defense contractor that comes up with some incredible way to make space accessible to civilians. An incredible future when we can finally tap into all these minds and maybe we're doing it in a way that's just entertaining to others. You talk also about the Google project, which is taking all of these old books and manuscripts and digitizing them and how the computers through optical character recognition software aren't perfect. At best, I think they'll get like what, 70% right, if you scan it twice in two different software programs. But then people through the network effect are really helping digitize these old books, right?

Sure. I mean, you're seeing it. I mean, you're seeing it everywhere. The point, I mean, at the root of all of this, right, is another one of our forces, which is essentially the newfound power of the DIY innovator. And what's important here and why this is a big deal is for the very first time in history, small groups of motivated individuals can tackle the kinds of grand challenges that not 10, 15 years ago were the sole province of large corporations and governments. Right? And the X Prize, which you mentioned, fantastic example of this. Every aerospace contractor in the world said it couldn't be done. NASA said it can't be done. And if you do do it, you're going to have to spend the $300 billion we spent. And how are you going to pull that off? And et cetera, et cetera, and Burt Rutan and a team of. And they also said, by the way, it would take thousands of engineers because that's what they use. Burt Rutan had a team of 20 guys, roughly, in an oversized garage in the Mojave. Pretty oversized garage. It's an actual business, but that's what it is. For $26 million, put a man into space twice in two weeks. They did what nobody else had been able to do before. And here's the cool thing. Peter and the XPRIZE foundation put up $10 million for that prize. They got over $100 million worth of research. So that's a massive amount of leverage. And that shows up over and over and over with incentive prizes. Which is why the Obama administration has adopted incentivizes into every kind of area of government to stimulate innovation. Because government has a big problem, right now how do they keep up with exponentially advancing technology? Our system is not designed to move that fast. So incentive prizes are one way you can harness that kind of unbelievable leverage and gain some ground. The Google project is one example. The craziest one is the story we tell about goldcorp. That to me is the one that's the most mind blowing. It's a guy who basically took over a gold mine and spent 10 years turning the ship around and got it right. And then he started asking his engineers, where should I? I want to expand my company, I want to dig for gold. Where's my gold? Nobody could tell him. They had no idea. They didn't have a clue. So he open sourced his data. He created the Gold Corp Challenge. Half a million dollars for whoever can tell him where his gold is. And three teams won the prize. None of them visited the mine. Two were from Norway, one was from Russia. I believe I could be wrong on that. It's been a while since I thought about this story. But that open source crowdsourcing, all these tools give the DIY innovator just access to knowledge and power that they've never had before. And the effects are incredibly potent, as we've already seen.

It is truly, truly, truly an amazing time. I bet the listeners didn't know, and I didn't know this either until I read the book. The book before yours that I just finished, by the way, this morning was Free by Chris Anderson. And that was great too from a business perspective. And then your book, and you both mentioned this, you talked about captchas. I had no idea when I was filling out a captcha on a website to fill out a web form, that I was actually helping solve problems and helping Google digitize manuscripts that blew my mind. I mean, it's an incredible example of the network effect. As you talk about, talk to us about the network effect, you sort of end the book with this discussion on freedom and economics and the future of governments. Really, the cat is sort of out of the bag in terms of free speech nowadays, even in countries that probably wouldn't prefer it this way. You look at the uprising in Iran and the Arab Spring and how Twitter played a part in that and other social media. In the blogosphere, there's this dialogue that's going on that has never happened before. You know, I remember back to the old days when we had a Soviet news agency called tass. Remember tass? And then China has an official news agency, but. And you know, of course they block websites. But even there the cat is out of the bag completely.

Well, you know, I tend to agree with Jared, Jared Cohen and Eric Schmidt, who we talk to about, we talked to in the book, they have made the argument, and I tend to agree with it, that well, technology obviously is fundamentally neutral, right? A hammer can be used to hit nails or bash brains. But information based technology, information communication technology, seems to have a bias towards personal empowerment. Now that is a double edged sword. You empower the man on the street and you empower the terrorists at the same time. But it does seem that the longer these technologies are around, freedom, you know, it's hard to keep freedom of speech down. But these are also ongoing trends, right? We talk about this in the book. If you look at all these categories of improvement on the human rights front, we've been massively improving over the past century. This seems to be the next step forward. And there's of course always going to be a push and pull. There's going to be a lot of blowback. I mean, the very same tools that set a lot of people free in the Arab Spring, in the beginning, the government's figured out how to use them against their citizens by the middle of it. And we're rounding people up. So they caught up, they figured it out. But I think as this kind of tugs forward, that little, that fundamental bias towards personal empowerment is going to continue to spread and we're seeing greater and greater and greater freedom as a value. And I mean, the funny thing is, while most people don't have problems with democracy, whatever version, it's still the, it's now the preferred form of government kind of across the globe. As a global opinion, I think it's 80 or 90% prefer democracy. That's a crazy statistic. That's a big number.

It's never happened before, has it?

Yeah, no, nothing like this has ever happened before. I mean, Peter and I poke at what is almost a metaphysical argument in one section of the book, and again I point out it's almost a metaphysical argument. So I can't, I can tell you things are trending. I can give you a lot of science, but I can't tell you if it's true. But it does seem that we are evolving towards greater and greater states of cooperation.

I would agree with that. And I think one of the reasons for that is that all of these technologies that empower, they tend to empower the individual more so than the big organization, whether it be government or the corporatocracy, because they're distributed power. They're not held in one mainframe. Pretty Much everybody has access to this information and it's all so beautifully indexed nowadays. I remember reading John Nesbitt, the Futurist many years ago who wrote the Megatrends books. I'm sure you're familiar with him. And one of the things he said a long time ago is he said that the challenge was that it was. It was easier for a researcher, a scientist, to just perform experiments over again than it was to find the result of that experiment from somebody else. But of course, that was before the Internet's evolution or revolution. And nowadays it's easier to just find out than to redo the experiment. And it's easier to crowdsource and open source that experiment as well. Right. And that's what. But that's just flattened everything out. It's changed it so much, hasn't it?

It has dramatically changed it. I mean, we have access to. I mean, there's an overload effect. Of course, at a certain point you start going, well, which is the good information, which is the bad information, and sorting and sifting becomes a much bigger deal. Right. But also that problem leaves really neat ways. If you look at the flip side of that problem, which is data caves, which are huge visualization caves for massive amounts of data, are progressing in really weird ways. Guys are turning the stock market into ski slopes. And you can go out and ski the stock market in visualizations. And instead of having to look at numbers, which the human brain isn't great at, you can look at contours of landscapes, which we're really good at identifying patterns in. And so our capabilities with this swamp of data for identifying significant trends are also increasing. So it's really, you know, you're going to get network effects tucked inside of network effects tucked inside of network effects. But I think, you know, the other side of your point, we've been talking about information, but you brought up Chris Andersen earlier and you know, on a certain level this is the fantasy, but the utopian version of long half economics is everybody gets to do exactly what they want. And as long as they can productize it, there's a way to reach their market. So there's a significant amount of freedom built into that idea as well.

Just by itself? Yeah, yeah.

I mean, just the fact that you can make a living without all the old structures anywhere is a big deal.

Is traditional education, including grade school and of course, college, it's so overpriced nowadays, I think. But is that really just an outmoded idea? Is it better if you've got a kid who's 17 years old. Is it better just to send them to the Khan Academy, which, you know, is to send them to their computer screen, or is it better to send them to college?

Well, I mean, there's two answers to this question. The first answer is, of course, yes. We've got. I mean, Ken Robinson has made this point as eloquently as anybody's ever made it. We've got a massively outdated, antiquated batch processing education system that is designed to treat every student the same. And it was developed at the time that we were mechanizing and industrializing and moving towards the assembly line. So of course, that was the best thinking at the time. Turns out everybody learns differently. How do you individuate that system is a big deal going forward? This does not mean, by the way, that we get rid of teachers. What it does mean is that we have to transition from teachers into coaches. And that's what's happening. And it does mean we have to radically. Every possible learned person who's looked at this has pointed out that we need what they're calling 21st century skills, which is, you know, if you boil all the 21st century skills down into one thing, the most important thing we can teach kids today is the ability to ask good questions. And that's not what our educational system is designed to do at all. So we have to change all of it just to be able to keep up in the world. And it's happening anyways in really, really innovative fashion. So that's the first answer part of your question, which would lead me to say, don't send the kid to college. The problem is we have not solved the accreditation problem. There are really amazing people teaching for the University of Phoenix right now. Really brilliant people. Nobody believes it, right? The University of Phoenix is an online education institute that is in most people's minds, somewhere near a scam. And it makes them nervous. Well, is that really the case? Are we, you know what I mean? We haven't accredited. We haven't figured out how. How do you give somebody a college degree if they don't have to go to college anymore? How do you accreditize that? How do you trust that? Right? There's, there's trust issues, there's validation issues. That's why reputation is so important online. And you know, it does. Eventually. Reputation certainly can trump a lack of degree, but it doesn't in the beginning. So we're going to have to solve that puzzle. And I think it's a really interesting and exciting one.

It sure is. Yeah, most definitely. Well, listen, we didn't get time to talk about some major portions of the book, which are so exciting. If you want to just. I know, I know time is limited, but if you want to just mention anything on these, you talk about some incredible progress, of course, in water, we touched on that. But in food production, synthetic foods, urban gardening, high rise gardening, I can't remember.

So let me close with telling you how I came to write this book.

Sure.

Because that'll answer that question. I am an animal geek. And if you're an animal geek, you care about biodiversity, and if you care about biodiversity, you know we're in the midst of what was being called the sixth Great Extinction. What most people don't know is that every year the environment for free provides us with $36 trillion worth of what are called ecosystem services. These are things the environment does for us for free that are critical. Pollination services, pollution control, flood protection, disease protection, resource production, all kinds. The list is giant. $36 trillion is essentially the global economy. So we can't afford to pay for these things. And what we Learned in Biosphere 2 is we can't recreate ecosystems, so we can't recreate ecosystem services. So if these things go away, we're in very, very significant trouble. And this is an issue that's complicated, that a lot of people are not even talking, environmentalists are talking about this, but a lot of other people. It's one of the forgotten problems. So I was staring at this one, trying to figure out, how do you solve this problem? And we've known since the 60s, if you want to preserve biodiversity, you need to preserve keystone predators, people at the top of the food chain. And the only way to do that is what are called mega linkages, big chunks of land linking together our national parks. We know how to solve the biodiversity crisis. The issue is, how do you get enough land? Well, the answer is you've got to get people off land and into the cities so you can free up land to repurpose. And that is already happening. Right. By 2025, 70% of us are going to live in cities. That's happening naturally. The other thing you have to then do is you have to move agriculture. So I started looking at food production technologies and I keyed in on two. The first was vertical farms, which are essentially moving farms from agricultural lands into skyscrapers. And what you get there, because the environment is totally controlled, because they can water the plants using aeroponics, which essentially mist the roots better with 70% more water efficient than hydroponics. And hydroponics is 70% more water efficient than traditional agriculture. The water reduction in a vertical farm is 80%. It's totally enclosed, so there's no pesticides whatsoever. And it cuts food transportation miles down to zero. And that's a big deal because right now the Average foodstuff travels 1500 miles to get to your plate. And that's both energy expensive and nutrition erodes over time. So you're getting less nutritious food. So it's a health issue as well. So vertical farms solve all these issues, but the biggest deal to me was they free up all this land that can then be repurposed for protecting biodiversity. And the next technology I looked at was in vitro meat, which is essentially growing steak from stem cells. Same exact thing. Most of the land out there, I think it's 30% of the land globally, is used for rangeland, for cattle. Cattle. You know, you're. And no matter what you do to a steak, by the way, it's always going to be bad for you. But if you can grow steak from stem cells, and we're moving very far along in this technology and we've already kind of got all the basic steps, and the next question is, how do we scale it up efficiently? And people are working on that right now. And suddenly you freed up massive tracts of land. You're providing much more nutrition, especially food, for a population where they are. So their food miles are gone. And everything scales up really, really well. For example, vertical farms. There's a vertical farm that's being built by Plantagen International, which is a Swedish company, one of the companies developing these that can grow 100,000 acres of crops and 10,000 acres of building. So you get a lot more food and a lot less space. And it's a. It's a way to solve the biodiversity crisis. And you get. You solve a lot of things all at once, and they're all problems that nobody thought were possible to solve.

Amazing. Amazing. And we didn't get to talk about energy, which. Amazing breakthroughs coming there too, right?

Absolutely.

Yeah. Yeah. Phenomenal. Well, the book is abundance. It's got four and a half stars with 139 reviews on Amazon. I'd give it five stars for sure. Steven Kotler and Peter Diamandis. Anything else you want to say? I mean, the future is bright. Everybody put on your sunglasses because it is bright.

The last thing I want to say is, you know, we wrote this book because we wanted to change people's minds and give them a bit glimpse of what was possible. And before anybody has to rush out and buy the book, if you go to our website, which is abundancethebook.com we give away the first chapter for free. So check it out there, see what we're talking about and go from there.

Good stuff. Well, Stephen, thanks so much for joining us today.

Thanks for having me.

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