Sahil Lavingia — From Web 2.1 to Web 3 (EP.87)

Hi, I'm Jim O'Shaughnessy, and welcome to Infinite Loops. Sometimes we get caught up in what feel like infinite loops when trying to figure things out. Markets go up and down, research is presented and then refuted, and we find ourselves right back where we started. The goal of this podcast is to learn how we can reset our thinking on issues that hopefully leaves us with a better understanding as to why we think the way we think and how we might be able to change that to avoid going in infinite loops of thought. We hope to offer our listeners a fresh perspective on a variety of issues and look at them through a multifaceted lens, including history, philosophy, art, science, linguistics, and yes, also through quantitative analysis. And through these discussions, help you not only become a better investor, but also become a more nuanced thinker. With each episode, we hope to bring you along with us as we learn together. Thanks for joining us. Now please enjoy this episode of Infinite Loops.

Jim O'Shaughnessy is chairman and co-chief investment officer of O'Shaughnessy Asset Management, where Jamie Catherwood is an associate. All opinions expressed by Jim, Jamie, and podcast guests are solely their own opinions and do not reflect the opinions of O'Shaughnessy Asset Management. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Clients of O'Shaughnessy Asset Management may maintain positions in the securities discussed in this podcast.

Well, hello everyone. It's Jim O'Shaughnessy with another episode of Infinite Loops. And today I cannot tell you how excited I am to have Sahil Lavingia, founder and CEO of Gumroad, author of The Minimalist Entrepreneur. And honestly, I said to him beforehand, so I'm going to say it to you so you know I said it. I asked him, Sahil, are you either from the future, a Taoist sage, or a bodhisattva? And he was very modest. He did hedge on the from the future thing. Sahil, welcome.

Thanks for having me. Excited to be here in 2021.

Aha. So I'm guessing you're probably from maybe 2049, 2050?

Let's say 2025. Oh, I like that.

That's even better. Well, as I was reading your book and reading about you, I mean, you literally personify for me the way I see things going. We're actually doing a series on it called The Great Reshuffle, and you just got there 10 years ahead of everybody else. And so, what I'd like you to start out with is just telling your story because when I was reading it, it kind of reads like a novel, honestly. It's like, I'm working on trying to figure out this pencil icon on a Friday night. I can't figure it out. And so you think, if I had a file for this, I could do this so easily, but you're going to tell it so much better than I do. So if you'd tell us that beginning story. Totally.

Yeah. So I started Gumroad. I was fully employed at the time at Pinterest, where I had joined as employee number 2 and was in charge of Pinterest for iPhone. So I was kind of the first designer, second engineer at Pinterest. I took a leave of absence from USC as a freshman to join them. So I was still very kind of early in my career and it was the first time I'd ever lived in the Bay Area before, which as a kid growing up in Singapore was shocking to me that you could walk outside and people around would know what startups and venture capital and Y Combinator and Paul Graham, it was just amazing. So I would basically spend every weekend either building something new or going to a coffee shop and trying to meet and kind of network with other people in the industry. And one weekend, one Friday night, I was at home and I had an idea for a Mac app. And I basically wanted, I'll tell you the problem. The problem I had was I would constantly copy paste things. And I don't know if you've ever had this, but you would copy paste one thing, then you have to go back, copy paste the second thing, go back, go back. And what I wanted to do is copy paste, 1, 2, 3, you know, copy, copy, copy, copy, and then paste, paste, paste, paste. So I wanted to make an app that would basically allow you to have these multiple copy paste boards, which now exists. But anyway, I needed an icon. So I designed this photorealistic pencil icon and I basically just found a bunch of tutorials online. And at the end of 4 hours, I had this beautiful photorealistic pencil icon. And for whatever reason, my reaction was like, man, I wish I had this thing 4 hours ago, like a source file or some equivalent. It would've taken me 15 minutes or 30 minutes or something like that to figure out, wait a second, like I would pay money to save myself time. So, you know, I had the source file. I felt like, okay, if I wanted something like this 4 hours ago, there must be someone else who's like 4 hours later in their journey of icon design or something like that. And so I tried and had a really hard time selling a single thing on the internet, which was just kind of surprising to me because if I wanted to give it away for free, right, you could put it— there's like 50 places you can put on Dropbox, you can email it, you can put on Twitter, YouTube, whatever. Like there's a million places you can host free stuff on the internet and it's all kind of paid for via advertising. But if I wanted to sell the thing, even for a dollar, it was like virtually impossible. Which I felt was very strange because at the same time, Instagram, YouTube, Pinterest, Reddit, Twitter, like all of these platforms were basically bringing all of these people into the internet. All these people were building audiences and I assumed would need to sell stuff quite quickly. And there was no easy way to kind of do that. And so I pinged a friend, John, from Stripe and said, hey, could I use this? They had yet to launch. Could I use Stripe and build like this MVP, basically Bitly plus a credit card form. Spent the weekend building Gumroad and ended up launching it Monday morning.

Okay. I just have to interject here. You figured it out over the weekend and then you launched on Monday morning?

Yep. Before my day job, I guess, at Pinterest, so I had to launch it at 6, 7 in the morning. It reached the top of Hacker News and the rest is history. This is something I talk about in the book, which is generally I feel very strongly about, which is The best ideas you can build in a weekend. Obviously Uber, Facebook, it takes a decade to get to where they are today, but the crux of the idea, the Facebook wall or profile picture album or the Uber call a cab, I actually built the first thing. One of the first things I ever built was an app called Taxi Law, which was an app. I grew up in Singapore, as I mentioned, was an app that allowed you to call a cab from your phone. And so yeah, it took a weekend. And so Twitter, people would joke about this because Twitter, was one of the first kind of Web 2.0 startups and raised gobs of money and people would deride it as like, I could build this in a weekend. Like, why is this worth hundreds of millions? Obviously the value is not in the software, it's in the network effects, et cetera. But yeah, I just feel really strongly about the fact that like a lot of ideas, you should be able to at least get a proof of concept going in a weekend. And the weekend constraint forces you to actually pare down what you're building because otherwise you end up spending all your time saying, oh, I need this and I need this and we need that part. And many of those things you don't actually need. You want, you want them, but you don't need them. So I find that the weekend constraint is just super helpful for me to say, okay, what— instead of thinking about what do I need to ship, it's like, what can I ship in a weekend? And I find that that's generally enough to test the waters and get a sense from the market. Because ultimately what you really want is like market feedback. That's ultimately what leads the way to the future is reacting to the market and learning by fire. Yeah.

And we're going to get into that much more deeply when we talk about your book, which I think is It's fantastic. So you built no storefront, no complicated setup. You had one link. You were going to Craigslist the thing and learn from what the market, what it wanted. But I love this part because you did something that I did, and that is you had all of these kind of principles that you wanted instill Gumroad, but then you admit, we didn't do it that way. We went out and we raised a bunch of VC money. We wanted to be first mover, which I personally, you're going to be much more versed in this than me, I think it's a myth, the whole first mover. You went VC route, you went the all-star team route, you wanted to ship fast, and then you learned a lot, which ultimately came to your book. Tell me about that.

Yeah. So I launched Gumroad that Monday morning and had basically spent the next few months still working at Pinterest and hacking on different side projects, and eventually just realized that I wanted to focus on as a company, not just as a project. The reason was twofold. One was that I had left college to go to Pinterest because I wanted to see if startups were really what I wanted to do. And ultimately the way that I saw my career going into school was I'd spend 4 years getting a degree, then I'd go work at Google for 10 years, then I work at a smaller startup and eventually like I'd start my own thing. And that would take, you know, at 35 or something like that. And when I had this opportunity, like at 18, 19 years old to start a company and raise money from investors, And so like, why wait 15 years to know if this is the right thing for me if I could do it today? I did give up a lot of stock options at Pinterest to do that, but it felt like it's incomparable, right? Even being employee number one to being the person that is fully at fault if things don't— you have to answer the phone sort of thing, which is very appealing to me. And then just the learning opportunity of it. And this is one thing that I do think that the people on the more bootstrap side of the aisle miss is that when you raise money and you build an amazing team, like you're learning by osmosis, like it's just so unfair. Instead of going to school at the best engineering school, I can hire the best engineer from that engineering school and basically like learn from them. Every day I get to read all this amazing code and design and learn and improve. And it's absolutely awesome. Pretty similar to the reasons I became kind of an investor, but yeah. So I left Pinterest in August and raised a $1.1 million seed round from a bunch of folks, Max Levchin, Chris Sacca, First Round, Accel, Lowercase, I said that Collaborative Fund, Danny Reimer, Naval from AngelList. And then raised a Series A like 3 or 4 months later from Kleiner Perkins, and Mike Abbott joined the board. So we raised around $8 million or so in total, and then just started hiring like crazy and did the thing that everyone does in Silicon Valley, which is— used to be untraditional, now it's kind of like traditional. It's kind of the cargo cult thing to do, which is you get an office in SoMa, you hire a bunch of people, primarily engineers and designers and product people, you ship, you talk to customers, you sell, you market, you do this over and over again. You hope that your kind of growth curve goes up and to the right, and it did for Gumroad. Like it was definitely up and to the right, and I felt Like, that was great. And fast forward sort of 3 years later in late 2014, I started talking to investors about the Series B, right? The kind of next big round of funding. And I felt like, okay, the creator economy is starting to hit its stride. Wasn't really what people refer to it as, but it was starting to happen. Patreon had launched, Teachable had launched, and we were the first. And we went out to raise a round. I started talking to investors and the feedback I got from the market was, you're not growing fast enough. Like you have this interesting idea, you made a bet on this thesis that all these creators now would join the online economy and need ways to sell without a storefront and Gumroad would kind of be the default. And for many reasons, the set of assumptions that we made didn't play out the way that we thought they would. And so met with hundreds of investors, which you can do when Kleiner leaves the A, and basically got as many nos as that, got no yeses and ended up shrinking the team down to get to profitability so that we could continue serving our customers, our creators. You know, they were making $2.5 million a month And I didn't feel like if I sold the business to Patreon or Square or Medium or some of the other businesses we were talking to, that I could convincingly say that Gumroad would be around in a year or two. The only way to ensure that Gumroad could be around in a year or two was to basically shrink the company. We went from 20 employees down to 5, and then eventually from 5 down to 1, just me, and get to profitable. And if it's profitable and I run the business, I know I can keep it around. And so that's the dramatic undoing of the company. And then I basically ran it by myself for a couple years, did the Tim Ferriss 4-Hour Workweek, took that book more literally than maybe he intended. And when I started growing back the company again, hired amazing people like Watzl and other folks to chip in instead of be full-time employees of the company, kind of think about the unbundling of work per se. And that's how we run Gumroad today. We have 40 people. We're at like $11 million in annualized revenue. We just raised a crowdfunding round, $5 million at $100 million pre-money valuation from Naval, Jason Fried, and a bunch of— 7,000 actually other individual investors. So yeah, just kind of, I would say the old path, the sort of 2011 to 2015 Gumroad was the startup path, the blitzscaling, zero to one, that whole mental model and big fans of a lot of those, those things. And then the sort of 2016 onwards has been first principles thinking like, what does the future look like? I don't have a board anymore. I don't have a team anymore. I'm really, really starting from scratch in almost every way. What kind of business do I want to run? And when I was growing Gumroad as sort of a phoenix, I was living in Provo, Utah at the time, culturally like a very, very different place from San Francisco. And so I felt like I was able to— it was easier for me to kind of think from first principles without kind of the reality distortion field of society saying, hey, no, that's not how you run a business. You need employees, you need to give equity, you need to do things in this sort of way.

Yeah. Batsal, you had a good question. I think it fits right in here.

Yeah. So even in the book, The Minimalist Entrepreneur, I think it's in the introduction itself where you mentioned that when you moved from Silicon Valley to Utah, there was this shift in perspective of what success actually is. In Silicon Valley, success is building a billion-dollar business, having a bunch of hotshot VCs in your cap table, that kind of stuff. While in Utah, it was having a happy family, a sustainable business, going to the church, that kind of stuff. I'm wondering now that we are transitioning into a world where online communities are much more prevalent than physical communities, and you don't really have to move your entire life to be part of a different community, different idea. You can just log in to those communities from wherever you are. I'm thinking if the effect of online communities on how you look at world, how you look at things, and that shift in perspective, can that be as impactful and long-lasting as what a physical community does.

I believe that the only real constraints on what we get to build is the laws of physics. That's sort of our playground as humans. Like those are the bounds. And so I think so, right? Like I think ultimately we will get to a place in which there is no real distinction between the metaverse and the universe. They are really the same sort of thing. I don't think we're there yet. Right. And I actually had a great phone call with someone yesterday who's a pseudonymous entrepreneur and don't know his name, know where he lives by city.

That's about it.

And he made some really interesting points. One is that you need to build a reputation somehow. Ultimately, you need real, you know, what Nassim Taleb calls skin in the game. And that's a lot easier in the real world. I remember like a lot of when I moved to Provo, Utah, like a lot of the conversations I had with people were very uncomfortable. Things about gun control or like abortion or something like that, to a point where like I knew if I had this conversation over Zoom or on the phone or certainly over DMs on Twitter or something like that, I would just exit, right? I would just leave the conversation because I didn't have enough at stake there. And I didn't really care about the other person on the other side. But when you're in person, I think you're just more willing to kind of have a lot of those conversations in a way that, you know, it's kind of high activation energy to get into, but that also means you're more likely to stay because it's equivalent high energy to leave the system. A friend of mine says people are a lot smarter when there's the threat of being able to be punched in the face. You generally carry yourself a little bit better So I don't think we're there yet. I'm not sort of as far as Balaji in the sense that you can totally do this from scratch. And I often think about the 17-year-old Sahil who decided to move to California because that's where all the startups were from Singapore. Would I have done that in 2021? I think the answer is still yes, I would move somewhere in the US. I think that there's still so much privilege that living in America gets you that I would probably still do that. But certainly it's becoming less and less important. And depending on the industry, I think it's like, for example, if you're building a B2B SaaS startup, I still think it makes a lot of sense to be be in the Bay Area or near the Bay Area, because that's where so much of your customers ultimately are. And, you know, often it's not up to you, the future, like it's a collective decision we all have to make together. So even if you want to live in the future, it's like, well, cool, like this guy mentioned, like I want to be fully crypto native, but ultimately, like I have to pay rent, right? Like I have to live somewhere. And that means that I have to pull money out of Web3, crypto, Bitcoin, etc., and turn it into US dollars so I can, you know, I can't buy a burger with Bitcoin yet. I'd rather make progress than be right. If I could go to the rooftop and say, this is the way everyone should live, and be very right about that. But if that means that nobody votes the way that I want them to vote, and I ultimately lose every single election, and they get their way, then what's the point? Do I care more about being right, or do I care about actually making positive progress? And this is something I learned when I moved from San Francisco to Provo, Utah, is I realized even at the beginning, it wasn't, am I right or wrong about these issues? It's more like, how do we win? Even if the liberals are right on every single issue, we clearly lost. So just strategically, I think we should be a little bit more open-minded about, even if we think that the right or whoever is on the other side is totally wrong on every issue, they won. So we have to, if we care about progress, and I remember someone telling me this about feedback, which is I think one of the hardest things to learn as a new CEO is giving positive and negative critical feedback. And they framed it really well for me, which is like, there's basically two reasons to give someone feedback. One is to make them feel bad. And then the other is to— is so that they improve. But if they're— if your goal, and hopefully you're not giving feedback for them to improve or to cut them down, you're giving them feedback because you want them to improve. But ultimately you measure that not by the quality of your feedback. You measure it by, well, did they improve or not?

Right?

Like it doesn't matter how good your feedback is. And often I'm sure everyone listening has experienced this where you really want to give someone feedback. It's the right kind of feedback. You're doing it because you really believe that they will improve if they listen to it, but they're just not open to it at that point. And so there's also that sort of pragmaticism there where you're like, ultimately, what do you care most about? And I really care about real manifestations of change, not just, wow, I have a bunch of really great ideas that people will retweet. No, I want people to actually improve the kind of the quality of the standard of living that they have. I think that's really important.

I could not agree with you more. I often say that action without knowledge is foolish, but knowledge without action is futile. So what you want to do is take informed action. And I'm totally on board with your assessment of, do you want to make something happen or do you want to be right? I'm stealing a line from Jed McKenna here, but it would— the smartest decision I ever made was to stop being smart and always just naturally assume that any of my thesis or hypothesis, I'm going to get the null set. And so it's very easy for me to like, "Oh, that didn't work. Well, let's try something else." I have found I work with a lot of people, Vatsal's age, but older people as well in both finance and tech. And I'm flabbergasted by the amount of people that still want to be right. I've gotten to the point— and Vatsal can definitely attest to this— where I have a hard time processing that. Okay, so you're right. I'll say you're right. You're right. Okay, now let's move on. And they'll dig in and they'll be on it like a dog on a bone. And I'm like, you're not doing anything here except exhausting your mental and emotional energy. Is that what you really want to do?

I think the answer to many people is yes. I do think it's sort of like a different kind of sport that has developed in a way. Nate Friedman from GitHub had a great quote. He said, pessimists sound smart, optimists make money. Exactly. There's definitely that cynicism. Like, you feel good because if you want to be right, you can just go to every single startup, every single new technology, and say it's going to fail. You will be right 90% of the time. That's not hard to do. But if you want to be rich, you have to be optimistic and right. You have to pick the right ones. And luckily those bets are asymmetric. I think Naval also framed this really well with sort of wealth games versus status games. And I think until he framed it like that, I never really thought about that because I've always been quite oriented toward wealth. I think maybe it's, I don't know, son of immigrants or what have you. Money is fungible. And so if I want anything else, I know I can always trade money to get it at some exchange rate. And so why not start with the universal currency of the world? I've learned over the years that, holy crap, not everyone thinks like this. Actually, many, many people are incentivized by status. And what an amazing feeling because that means there's so much less competition. If everyone were truly trying to get rich, I guarantee you that these people are just as smart, just as hardworking. It's just that they have a totally different, as you said, a different set of priorities. What do they really want? And I was reading a Michael Crichton book, Disclosure, recently, which is phenomenal.

He's a great writer.

Oh, he's so good.

I love Michael Crichton.

Yeah, he had a great line in there, or one of his characters did, which was basically like, all human behavior is problem solving. And I love thinking about that, which is like, instead of saying, oh, why, that this person is stupid for doing this thing that I would never do, just really be like, why are they doing this then? I remember the 2016 election, like the liberals would say, wow, like the right is voting against their best interests, you know, because they were voting for all of these things that, you know, maybe like tax cuts and all these things that they wouldn't benefit from or whatever. And then the right would say the exact same thing about the left. Oh, well, they're voting against their own interest because they're voting for higher taxes on themselves. It was very strange. And it's like they're both trying to paint the other side as more charitable, which is kind of interesting, as kind of almost like a neg. But I realized, no, they're both self-interested, and they're just both terrible at realizing that and almost giving the other person credit. Like, no, they are actually doing what they want. They're not being duped. They know what they're getting into. They're not going to regret this decision 6 months later because of Russia or Facebook or who knows what. These people are making decisions that they believe in for better or worse. And it's important to acknowledge that and just give them that. I think of it as just being respectful, just like I would want them to respect the fact that I made, I don't know, whatever decisions I made because I wanted to solve a problem that I truly had. I want to give them the same benefit of the doubt.

Which is great. And it made me think about a podcast I did with a friend who lives here in Manhattan. He's anonymous on Twitter. He's a medical doctor, but he's an amazing entrepreneur. One of my other taglines is we are deterministic thinkers living in a probabilistic world. Hilarity or tragedy often ensue. And so I got on with my first podcast with Max, that's not his name. And he got after me about that. He's like, "Jim, you don't want people to be probabilistic thinkers. You want them to be deterministic thinkers so that you're sitting like Hannibal up on your elephant and gauging all of the probabilities." And so, we had a fun exchange about it, but I really got obsessed with that thought for the rest of the day because I had never thought about it that way. If people who were long vol, which is me, I love being long vol. I literally don't understand people who don't want to be long vol, and yet 95% of the people want to short vol. They want to sell vol. And Max got me to understand that if that didn't exist, I don't exist. You don't exist. Bezos doesn't exist. Elon doesn't exist. Because if it was 50/50, there's a lot of smart people. And in my opinion, I put it off to the model that they're using just isn't the right one, or at least from my point of view, it's not the right one. But like you, I came to the conclusion, well, fuck, I'm lucky. I mean, because if there were a bunch of other people were as risk-seeking as I am and look at it as quite normal, by the way, we have an amazingly efficient marketplace.

Sahil Lavingia: Yeah, totally. No, you're totally right. I mean, I think of it like simple power law distribution. If In that world, the vast majority of people are on the tail of the curve. Very, very few people, the Amazons and Teslas and Apples of the world are actually on the head. The crazy thing is that that head is by quantity very small, but quality or magnitude is just getting larger and larger and larger. And so the world tends to operate by those people setting the rules more and more and more. And I think that's underrated in this, the discourse is that capitalism is a voting system. It's just a new kind of voting system. It actually has a lot more votes than American democracy does. Every single person participates virtually in our capitalistic economy. And I think that's one of the dissonances that we have to figure out. What do people want? How are they voting? And they're voting in many different ways. But yeah, you're totally right. I'm super long vol. I'm a Nassim Taleb kind of person, but the vast majority of people are not. And I remember actually when I first started having any disposable income and savings, The thing to do, which everyone told me to do, is just put S&P 500 ETFs, Vanguard, awesome. And I did that. And man, that was a dumb decision. It did okay, but in hindsight, especially for the learning associated with it, what I should have done is every month picked one stock and really built my mental model of, can I pick the head of the curve on this power law distribution? And I have unique knowledge, specific knowledge that I've gained through experience that many people do not have. I invested in Tesla at a $2 billion valuation because I knew who Elon Musk was. No sophistication as an investor, just knew his name. Why? Because I was in tech and I knew PayPal. Those things add up. Those things are incredibly unique data points that you have that most people don't. And I think it's really important to be like, what are those? What is my long vol? What Peter Thiel says, what's the thing you believe that most people don't believe and make bets on that belief. I would love if America could adopt prediction markets. For more things. I think the price discovery of the market would be very useful if you believe that the future is probabilistic, having more and more of these prediction markets I think would be really, really, really helpful. And yeah, I remember talking to a friend and I noticed the deterministic mindset, and I think it's human nature. I think you have to almost fight it to some level. Because for example, in today's world, you can't imagine that Tesla and Amazon are not trillion-dollar companies. That's just kind of assumed, but there's a very real kind of alternate reality in which Tesla did not work, Amazon did not work. Some of these decisions were kind of hairpin decisions and outcomes. Every startup has these stories where it's like, wow, if we didn't figure this thing out, we would be dead, but we put together the round and now we're a massive multi-billion-dollar public company 4 years later. But to the outside, it's like, of course Tesla was going to be where it was today. It's just like, No. We would've had something else because I do believe the laws of physics would lead to the electric car and all of these sorts of things, but it might've been a totally different person, different company, or same person, different company. I think it's impossible to really know. It's unfalsifiable. You can't A/B test reality. You have one option and one planet, et cetera. So I remind myself of that pretty frequently. It's so easy to say, "Oh, obviously Tesla's the next big thing," or whatever, but it's not. And even if it's an 80% likelihood chance, Hillary had an 83% likelihood chance of winning the election, and everyone's surprised that she lost, but it's like, well, no one said 100%. But I remember with Trump, there were all these things that were like, no one who's never received a major newspaper endorsement has become president. No one without experience in legislative branch or military has won. And it's all these things basically saying, This hasn't happened before, so it can't happen in the future. And it's like, have you not read Black Swan? Have you not— 9/11? Actually, every single event ever is new at some point. It was the first time it had ever happened. And things are only getting crazier and crazier and crazier because of the internet and software and all of these trends. The volatility is only going to go up over time, I believe. And the past almost matters less and less over time in a sense. It's like, oh, of course, yeah, it's like Trump had— didn't have any of those things. But also, no one has ever won the election with 65 million people following them on Twitter. Like, that's also a fact of the universe that is also new that we might want to incorporate in our model, but we can't because there's no model. It's kind of like the point of a model is just to know what assumptions you're making. It's not necessarily to rely on the model for everything that you do.

So I'm speechless because you just said like virtually everything I believe. I, I think prediction markets are woefully underused. I think that we could maximize utility in this country enormously by having prediction markets for everything. Anyway, so I totally agree with everything that you've just said there, which leads me to the book, which I think is fabulous. The whole idea behind No Meetings, No Offices, this to me is the way that the future is going to be. You prioritize the creator, not the shareholder. You need to be distinctive. You need to be honest. You need to be transparent. These are all things that we do with OSAM. We're an asset management firm. So how is it being received? How are people reacting?

Yeah. I mean, I think generally people love the idea of it. Definitely people want it to happen. I think there's a lot of people saying, "I'm glad you're doing it. You're going into the coal mine and we'll see if you live." So there's definitely that. We got rid of our office in 2015, mostly because we had to. We were running out of money and the office was $25,000 $5,000 a month in the center of San Francisco. And that was really kind of, yeah, done sort of forced upon us and then realized like, wow, without an office, then why do we have standard working hours? Like if no one's showing up anywhere and if we don't have those, then like, why don't we allow anyone to work anywhere in the world? And we have that, then we certainly can't have meetings because someone's going to be asleep. And it kind of was like a very graduated thing. And then obviously 2020 happened and everyone was kind of forced to adopt some of the— and we actually, I remember in March of 2020, literally no changes happened at Gumroad. We had nothing. We'd already worked in this way. We already had no meetings, no deadlines. We already had a bunch of part-time people all over the world, no change whatsoever. That was one of the moments I think I often think about, which is, are you kind of correct on accident? You should lean into that. For example, I got into iPhone apps because I thought it was really fun. And then the iPhone became really, really important. And I happened to be at the right place at the right time, which I like to credit to my subconscious. What was I wanting to do that got me into the right place at the right time to take advantage of this wave without even knowing that this really paying attention to trying to make a bunch of money or whatever it may be. Generally, people are excited about the way that we work. It's definitely early. I consider it the Web 2.1 way of working, which you have the traditional way, and then you have the crypto Web3 way, which is pseudonymous, DAOs, liquidity, instant liquidity, super transparent, open source, et cetera. And I think that's all awesome, but I think it's going to be quite a while until the rest of the world is on-chain, quote unquote. What I think is more likely is that companies like Gumroad will adopt many of those ways of working, and it's going to happen a lot faster than people think. And partly it's the feedback loop between the companies that work like this and the tooling that exists to allow those companies to work better. Because the more companies that work like this, the more of a market there is to actually build software, kind of an industry. Just like Stripe enabled a lot more businesses to form, but Stripe's existence was only possible because all of these startups were starting to exist. And then vice versa, Stripe existing now makes it easier for more people to build businesses that gives more cash flow to Stripe to do more and more and more. And it's kind of this nice, feedback loop, and I think you see these all over the place. So I'm hopeful that Gumroad will create more of a market opportunity. And actually, one of the projects we have internally is figuring out, can we play in this? Can we build our own set of tooling that we can— a new product effectively to allow companies to adopt the way that we work more readily and more easily? It's still very early. There's probably 5 or 10 companies that I think have really worked this way at scale. I have a lot of hope because if you said in 2019 that you could have a publicly listed company with no office or no headquarters, it would've been impossible. I don't think there was ever an example of one. You needed some mailbox somewhere. And then Coinbase listed, and they, I think, were the first to say, "We don't have an HQ." And then that was crazy and a big deal. And then GitLab went public and they don't even have an office. They literally are 100%. I think they have 1,100 or something employees and they're fully remote. And this is what I love about capitalism. You can convince people by just winning. No one's going to get convinced by a nice, beautiful Wired article or Atlantic article or Harvard Business Review thought piece. What ends up convincing someone is, holy crap, Tesla is Tesla, and I want to invest in Tesla. And unfortunately, it's all in, it's a package deal. You sign up for it or you don't, you're voting for this way of working, whether you like it or not. And I think that's seeing Coinbase, seeing GitLab, and I think a lot more companies in the coming years work this way, I think is going to be very, very, very interesting. And though the jury is still out, the way that I think about it is that we've had co-located work, for let's say 150, 200 years or something like that, right? With kind of industrial factories. And before that everyone was working from home, I guess. We've had real full remote work for like 2 years. And already I think we're pretty competitive. And so imagine 5 to 10 years from now when you have, we're kind of where the iPhone came out, where the App Store just came out, the iPhone just got copy and paste, right? Like we're still there in terms of remote work, asynchronicity. Even when I think about Gumroad, the way that we work today would not have been possible 3 or 4 years ago, right? Because tools like Notion, GitHub has radically increased, Figma, which is phenomenal, Slack is getting better, and all of these things compound. We're making a bet on the, not just on Gumroad, but on the infrastructure that we get to use. We literally, I wake up every day, I'm like, "Oh wow, working at Gumroad is now cheaper because Amazon lowered our pricing on their cloud stuff over here," or faster because Figma now has this feature that lets us do this in a minute instead of 10 minutes. And if you're using the old system, you don't get any of those benefits. You think you're doing better because you're on the cruise ship, but you don't realize that you're not on the speedboat that's like all the way over there and you can't easily make the switch. You kind of have to do that, kind of like go dip back down the mountain to start climbing this new mountain. I think Web 2.1 is like a good framing. And also like there's a great book, I think it's called The Cathedral and the Bazaar, which is about the origin of Linux and the open source movement. And it was kind of this similar chaos and people were like, there's no way you can make any good software this way. It needs this kind of top-down planning, visionary, product visionary at the top. Steve Jobsian figure. There's plenty of evidence that humans, why do we exist? It's not because someone ordained us to exist. It's because evolution is crazy, a ton of trial and error, and it's a very bottoms-up way of doing things, kind of like overproliferation, and you kind of go down the longest chain, right? In a sense, a lot of similarities actually to kind of like the blockchain in that way. So obviously it works. Obviously the bottoms-up approach works. It's a lot more chaotic. There's a lot more madness, There's a lot more failure maybe potentially, but I do think that ultimately some of the strongest ideas are these kind of happy accidents that compound into each other. And so that's kind of the experiment we're running is like, can we build a company of effectively mini CEOs where they're dictating what they think is the best thing to do? And then me, I'm really honestly, I'm just a capital allocator. All I'm doing is raising money either from the product revenues or raising external capital, and then investing in people, hiring people, investing in them. I really believe quite strongly in Bezos and Elon are really more capital allocators than anything else. They're really able to say, this is a massive opportunity and I can rally the troops, and capital meaning people, it means social capital now, especially with Elon, all these different kinds of forms of capital and leverage and pointing them at the right problem at the right time. This is the 10-year frame in which this thing is going to happen. And obviously they get it wrong all the time. The Fire Phone or whatever was, I don't know, a multi-billion-dollar failure, but I love what Bezos said about it. He's like, what would be scarier is if we didn't have any multi-billion-dollar failures because it would mean that we're not taking the risks. You have to fail. You want some of those false negatives in a way or false positives. You want to be taking those kinds of risks and building a diversified portfolio within the company, I would say, not just as a human, as an investor, but being able to take those risks is I think really, really, really important. And I always optimize for that. I would always rather do the weird new thing and have the potential of working than back away from that. And I think that takes a culture of people who are wanting to work at Gumroad because they know I'm going to lean into these kinds of things. Why would I do a $5 million crowdfunding round, be super transparent, do board meetings on YouTube? I don't know. I'm just trying to increase the kind of serendipitous nature of these happy accidents. And I see that all the time. I look back at Gumroad and I'm like, wow, if we didn't hire this one person, government would be totally different today. A lot of it comes down to the Harry Sheldon kind of Sheldon crises and being prepared with the right kind of people. I'm sure things would've been fine in some different path, but we would've ended up in a very, very different place.

Absolutely. I would guess that you're a fan of David Deutsch's The Beginning of Infinity.

Oh, huge fan.

Yeah.

Huge fan.

As am I. I proselytize about that endlessly. Most of the time, you can tell by looking at Watzl, he's like, "Oh God, here we go again." But the idea of— he has 3 critical things that really changed the way I looked at the world. The first is that we believe that we know everything now, and we don't. In fact, we've just scratched the surface, and that's thus the title, The Beginning of Infinity, because we're going to continue to have new knowledge, create new things. And pessimists sound smart, Optimists make money. So you've got Malthus writing, "Oh, everyone's going to starve to death because we're going to have this population explosion and the food will run out." He was right about the population. He was totally wrong about the fact that we could figure out ways to 100x farm output. So always I'm thinking, "Well, yeah, but that hasn't been invented yet. So let me look around for the people who might be inventing things like that." The second thing is this idea of anything that does not violate the laws of physics is possible. And I'm a huge science fiction fan, and I love that aspect of it as well. Harry Seldon, I love that whole series and everything. And I kind of model myself on Harry Seldon because essentially, that's what we do. We do huge samples. Now, I have machine learning that I can use, And the thing you need to understand, and actually, Selden says it, I can't make a prediction on you or on Watzl. I can— I'm getting much better at developing systems and tools that allows me to make predictions on broad trends, on where things are going. Now, am I going to be wrong a lot? Sure, absolutely. But you've got to take that feedback and continually update upgrade and update. I also love what you highlight in your book about build as little as possible and outsource the rest. Do you see a time when this all becomes kind of like— basically, when my wife was asking me about you, I told her I was really excited for this podcast and she goes, "Okay, shorthand. Give me shorthand." And I said, "Okay, you know how I always talk about the way you're going to win is to play a really long game." with positive-sum outcomes. And to me, that's what you were doing. Do I have that right?

Yeah, totally. I think generally, if you're willing to stick around, you know, I had a tweet the other day that was something like, most people don't start, most people who start don't continue.

I saw that. I wrote it down, actually.

It's so true. Like, I've seen so many people— I remember talking to Ben from Pinterest about this when I was an early employee there. You know, it was his third or fourth startup, and it was like, what separates people who succeed and the people who fail? And he had a really simple answer, which was like, well, the only thing that the people who fail have in common is that they gave up inherently. I mean, everything else is up for debate, but like, that's the one thing, because if you didn't give up, you're still— you haven't chosen that bucket for yourself. Or I had heard someone else say, which is like, as long as you're trying, you either will die in the process of trying, which you'll feel good about because you won't know that you failed, or you will eventually succeed. So as long as you keep trying, you should never— you'll— you never have to kind of admit that failure state. Um, and I think that's I think you have to pick a super long-term game. Most people are not willing to, and this kind of goes back to what we were saying before. It's not hard necessarily. It's just that it's not what many people want. Pick a super long-term game, play it positive sum, and be super open and transparent. Collect feedback from the market, ship quickly, ship early and often is what I say. Anytime you have something better than what the market has, give it away to the market, upgrade the operating system of the world., and you just literally just do it. Like do that for 5 to 10 years. And like, you will almost inevitably, I think, bump into somebody, help somebody who can 10x you, right? Like for me, that might've been Ben from Pinterest or like Naval from AngelList with my rolling fund or whatever. But that all just came from building stuff, putting it out into the world, genuinely trying to like improve the system, just like an ant may in like an ant colony, right? Very bottoms up and being like, hey, you did that. You deserve a promotion. Like, can you help us with this other problem? We have this much larger problem over here. And people are watching it. People get sometimes upset when I say the internet turned all these reasons into excuses, like lack of connections is now an excuse. Having no time is an excuse. It's like imposter syndrome is an excuse. Perfectionism is an excuse. Why? Because you can see it all. You can literally see how these people who became these people became these people. Literally, it's like the sausage factory is in full view of anyone who wants— You can read the Warren Buffett letters. You can read the Amazon, the Elon. This is all public domain. And what it means is, One, you'll get there, I think, if you find success, but two, you almost need the time. And this is something I think a mistake I think I made in the early days of Gumroad is I felt like, oh, if I worked harder, faster, these are just a bunch of bits floating around, I can make this happen 10 times faster or 100 times faster. And I remember the projections for the company were something like $10 million in revenue the first year and then $400 million in revenue the second year, or GMV or something, some stupid number looking back into it, because I really believe that the bottleneck was the speed of light effectively, right? And once I built this thing, it would take over. But the truth is people almost need to see that you've been around because why would you make a bet? Like you kind of want everyone to take a sip before you take a sip and then you want to wait 5 minutes. Like, okay, no one died. I'll take a sip now. And it's kind of the same with startups. Like any of these things, businesses, it's just kind of like the Lindy effect. The longer it's been around, the longer it will be around. And I often think about this with humanity. Some people are like, oh, we're at the edge. We're going to die. Peak oil, or climate change, or whatever. And it's like, people have been saying that since— I assume since the beginning. If we're here, even if we're not at the beginning of infinity, let's say we're at the beginning of a bell curve that we're just about to hit the peak of, and then we still have effectively 2x the amount of time to go, just based on drawing out the curve. And so we must have— there's stuff coming. And I assume it's not going to be just like an iPhone 15. It's going to be some crazy just like no one could have predicted the iPhone 15, 20 years ago. That's the other lesson I think I got from the beginning of Infinity that I thought was super important, is that we're not just slightly smarter monkeys. We are truly a different step function change on what came before us. I think he calls them universal explainers or—

And connectors, universal explainers and connectors. That's what we are, Homo sapiens sapiens. I'm a really smart man. I had a theory. I told you I keep journals. So I was reading one from 1983 and it was all about my feelings about where computers were going. And I was speculating, okay, so the next evolution is going to be what I called, silly name, but Microman. And here's Elon with the Neuralink. So I get super excited about all this stuff. I'm rational in my optimism, I understand that we're going to have all sorts of new problems. And like Bucky Fuller said, you don't change a system with the problems that got you there, you create a new and better system. And so, I constantly have to remind myself though, that my son calls me a cohort of one. He's like, "Dad, people don't think like that." And he goes, "You do sound a little batshit crazy sometimes when you're talking about all this great stuff that come down the road." I am not at all delusional that there's going to be serious, serious problems, but I am long human ingenuity. And as you put it, peak oil. They just uncovered one of the earliest known texts found, and it was Sumerian, and they're dating it to about 3000 BC. And you know what it was when they translated it? It was a poet complaining about the fact that all the earlier poets had taken all the good stuff.

Switching gears a bit, you mentioned Web3 and metaverse, and apparently everyone has a different definition of what that is, which is, I guess, fine because it's so early that we don't really know what Web3 is actually going to be. So maybe what is Web3 to you? What is the metaverse, or whatever you want to call it? What is it to you, and how do you see it changing the world in some big ways, let's say, in the next decade?

Totally. So I think when I say Web3 or the metaverse or crypto, I think we're all saying roughly the same thing, which really started with Bitcoin in 2007 or 2008 or something like that, and then Ethereum and some other projects. But I think basically, the way that I think about it is on-chain. I like using— it's either on-chain or it's off-chain. And if it's off-chain, it's not part of the metaverse, it's part of the internet, or the fabric of reality or any of these things. When I say Web3, I'm really referring to on-chain. The reason that on-chain is so interesting, and the origin of Bitcoin was the solution to the Byzantine General's problem, basically this idea that there was no real way before that to coordinate in a way that you could really, in a trustless fashion, if you had to rely on people sending messages from each other to coordinate an invasion of a town, people could always manipulate the message. And the solution that Bitcoin very cleverly came up with, or Satoshi Nakamoto or what have you, is that effectively you just expend energy and that energy, everyone has to expend the same energy at the same time to get to— and it's probabilistic of the person who's going to get it right. And that person gets to decide what the truth is. And it basically costs a lot of money to send a message. And Hashcash tried this with spam, Before Bitcoin, email spam was kind of another thing. Like what happens when you make it free to effectively send mail to everybody? You get a ton of spam. Like how do you deal with that? Well, maybe there's a cost. It turned out it was not the right solution. The right solution was these centralized spam filters. I think that started this whole thing. And I often think about that as an investor. What are the trillion-dollar problems? Like the Byzantine Generals Problem, the double spend problem. What are these problems that are clearly worth trillions of dollars because we've had to build systems around them, the entire financial industry or what have you. And so if you can solve this problem, then that's going to be a shuffling, as you mentioned, a reshuffling of a trillion dollars of value. And if you believe in stochasticity, then maybe a 10 trillion, 100 trillion, who knows what the real order of magnitude impact of these things can be. I think it's very hard to predict. And I think NFTs and Ethereum have solved their own sets of problems. Provenance, I think, is a really great one. But yeah, when I refer to it, I really think of Basically, there's no centralized authority. It's not like one person gets to print all the money in the system. It's that everyone can collectively— it's the truest democracy there is, which I think people can argue against. It's effectively saying one dollar, one vote, which is maybe not what you would want in America. We have a communist voting system in a sense, and I think we probably want to keep that. But yeah, and the way that I think it changes things One is I think it will eventually move us away from the macroeconomic system that we have today. Just the basically quantitative easing, the ability to tax and subsidize certain kinds of behaviors will just not be possible. It just will not be possible. The market, it's basically like if you took the stock market and you said, there are no limits. You can do whatever you want. It's open all the time. The stock market can go to zero tomorrow. Any trade is valid if there's a buyer and a seller on either side. And I actually think that would be great. It would be very volatile, but I do think long-term it would lead to the survival of the fittest in a sense. And so I think one, it's just going to lead to better products and services. Just kind of like how Amazon, I think, really pioneered this insane customer centricity that has like obviously worked for them. I think everyone is going to be forced to take that view of things over time. Like my margin is your opportunity. I also think about some of these companies in the beginning, solve a real problem, are super innovative, build new technology. Over time, they basically become the incumbent, they become the rails, they become the protocol. Visa might be an example of this, where they're almost like a 3% tax on the economy, the credit economy. And I wonder if maybe the answer is not necessarily that we kill Visa or break it up or what have you, like people talk about, but more like we just— it transitions into a protocol, an open source publicly owned utility. But instead of the socialism, that might bring up, it's more like a decentralized layer 2 or layer 1 on crypto land, right? Web3, et cetera. I think it has a lot of implications for pseudonymity. It allows for anyone to effectively have a wallet. If you have a wallet, then you don't need banks, right? Like what does a bank do? It stores your money for you, right? That's kind of like the fundamental thing that it does. And then all these other things they do come on top of that. If you own your money, if you own your wallet, it's on your computer or in your house, it's sort of custodial then, like, or non-custodial, then that requires a total reshift. One, anyone can participate in it. Two, anyone can provide those services. It doesn't have to be the bank that provides those services to its customers. It can be anyone else, which is where the whole DeFi comes from. Then the other thing that I think is really interesting is these permissionless trustless smart contracts. I think this is really important because I think ultimately, if you want people to work together, getting a diverse set of people to agree on the same thing is just virtually impossible. I noticed this actually in Provo, Utah, where The government is a lot more efficient, but one of the reasons it's more efficient, or the left critique of it would be, well, it's a lot less diverse. So it's a lot easier to get everyone aligned on something if everyone is the same. It's like you go to a dinner and everyone gets a steak, it's easy to split the bill. But if one friend goes all out, you're like, well, what the fuck? We all got to pay for ourselves now. And so I think the answer is not, oh, we need to figure out how to get everyone to trust each other. I think the answer is, how do we have collective action without needing to trust each other, without saying, for example, I had this thought recently, why do we have political parties? We have political parties because the running for office independently made no sense 50 or 100 years ago. You needed the infrastructure, and so you had the parties, and then you had the politicians, and then the politicians have proposals, and the Congress, I think they're 90% of the value they have is one bill a year, this massive spending bill. And I was thinking, well, why don't we just vote on the bill? If that's the value of— if that's becoming the majority of what they're doing, because it has to be, because there's no way to— there's one block that's mined, everyone has to get consensus on this one thing, it's super hard and difficult. But then it's like, well, why doesn't everyone just submit a bill and then we all just vote on which bill, who we spend money on, which is effectively what a DAO does. All a DAO does— I had a hard time wrapping my head around what does a DAO do? How do you get all of this stuff on chain? I run a company, there's no way you can bring all of this on chain. And then I realized a DAO is actually really simple. It's just a treasury. All it does is have money get sent to it either via smart contract or contributors. Then all it does is people vote on who to give that money to. That's as simple as how much and to whom, which wallet, that's it. If you think about it, that's what the government does. You just like, how much money do we print and who gets it? 2 billion for Tree Equity or whatever. But there should be a Tree Equity wallet tied to some organization that does this and then I was like, wait a second, maybe we don't need parties. Maybe we don't even need politicians. Everyone's been focused on we don't need parties anymore. But I was like, well, maybe we don't even need politicians because all the politicians do is we have to trust them. And then we hope that they do what— they have a bill that supports the things they ran on or what have you. And then obviously that never happens. There's all these things that— excuses and consensus that you need and all these things. But what if I could just vote on a bill?, and it has allocations for this and that, and I don't need these other middle layers in between me and them. And so I think the largest thing, the thing that has the largest target on its back, I guess, is the federal government of the United States. It's the largest employer on planet Earth. If you have one customer, I mean, that is the TAM. If you care about TAM, TAM is the US government. And so I actually think ultimately the final boss of Web3 and crypto and decentralization is the United States federal government. It's going to have to subsume that, which is maybe why they're so resistant, is they detect that's an innovator's dilemma. But I really believe that that's where we're going. And I often think about the Ben Thompson unbundling and bundling, but I often think about you basically cast one vote, and that is an insane bundle of things that you get for that one vote. And then all of a sudden, the person that wins is like, "Hey, look, we have the mandate from the people to do all of these things." And it's like, not really, You have this incredibly blended mandate and you actually only have a 51% mandate. So most people don't like this and you don't know. On taxes, people might have wanted this kind of president. On climate change, this person might have won. All the cabinet members, easy list of all the different potential slider scales that you would have. But if that's the case, then why don't we just vote for those? And obviously, more— this is why I think The Sovereign Individual is so interesting. And I think The ultimate power the federal government has and all these nation states have in terms of their preservation is violence. Basically, they provide security and safety, or theorize that they do. Kind of the state has monopoly on violence. And I actually really believe that one of the, like, just like we need self-driving cars for certain things to happen, I really believe that one of the technological pieces that we have to figure out is how do we reduce basically violence to zero? Because imagine a world in which you had zero threat of violence. How amazing would that world be? How much money would we save? How much money gets spent on defense, quote unquote? I know running Gumroad, most of the code is defense. It's like click fraud, it's forget password stuff. Imagine if you could just log into Gumroad by typing in your name and we just trusted you, if we had full trust, our code would be 1% of the code because we wouldn't have to test for all the bad cases. Oh, that's how much money you say you have? Cool. We trust you. But that's what crypto is. Crypto, basically, you do the trust thing at the gate. You transition into it and you have this trustless economy, and then boom, you don't have reset your password. That doesn't exist in crypto. You don't have KYC. You don't have any of these things. You just assume— It's better than trust. It's trustless. So anyway, I think that's where a lot of the world goes and where I would love for Gumroad to go eventually is these ideas. As a CEO, Why do I get to make certain decisions? Why can't I outsource them? Just like we talked a little bit, build as little as possible. My goal is to excommunicate myself from the head of this religion. And how do I do that? It's give power to the people. And right now the technological infrastructure, everyone would need crypto. We're not there yet. But certainly the writing to me is on the wall, which is like, yeah, at some point in the future, I'm going to be able to delegate my votes to somebody else and they're going to be able to decide the fate of this system. It's going to take a lot to get there, but I do think that generally power corrupts absolutely. And the answer is to not put smart people or amazing people in power because those people don't want to be there anyway. It's to reduce the power and make it so that— Naval has this great saying, which is, if you want to vet a system, you want a system in which you would be comfortable with your enemy at the front. So only make things legal or illegal if your enemy was in the front seat of the car. And I think that's a really good test. It's like you ultimately want a system that you trust, and the best way to trust it is that you don't need to. There's no threat on you. I think we're already actually there in a sense. Like, I don't think we'll ever have a World War III. I think the internet makes it virtually impossible to go to war. The sort of dehumanization you needed to be able to do, the propaganda, there's like TikTok. I mean, I'm sorry, but like, you're not going to think that these people are evil. We all know that most people are not. Maybe there's a few monsters out there. It's just a telephone game gone wrong, right? Like, that's what most, I think, conflicts are, and the solution is sunlight is the best disinfectant, open source everything. And by the way, you can still print money. The government can still, in this totally new world, print money. It just has to be a collective decision to print money, and then certainly you can. But my guess is it's not going to happen. You're going to move past this point, and it's going to hurt. It's going to suck when an airline goes bankrupt and it just goes bankrupt, actually. There's no and. That's just the end of it. And I often think about this with the Peter Thielian kind of model. It is harmful in the sense that it's a lot more destructive. There's a lot of things that will die. It is sort of this process of evolution. Nature is metal. It's not pretty to watch it play out, but I do think it gets us into a better future faster. That level of competition, that's just what I end up caring more about is I just care more about getting to that 10, 15. And maybe that's just me from a position of privilege, knowing that if the world goes to crap, I can hide in an ivory tower somewhere. Or something like that. But I just really want the future to improve at a faster rate. And I believe the way you have that happen is you just reduce the barriers to competition, you make it a free-for-all, and then see what happens.

So in today's news, and this isn't official yet, so I hope I'm wrong, but apparently the Indian government will make it illegal to hold crypto assets in a private wallet. I'm thinking if the governments realize that the endgame of crypto can be an existential threat to them, What if they start coming up with policies like this, which disincentivize the public? Because of course they have the army and the military. That in turn becomes an existential threat to crypto before it can actually become an existential threat to the governments. Do you think of possibility of something like that?

Yeah, I mean, it's going to happen. If it truly is an existential threat, then yes, China, India, the US, often the innovation doesn't come from— like the electric car didn't come from Ford or GM, it came from Tesla. And like, thank God it's an American company. But we kind of got lucky, I think, on that one in a sense. A great example of probabilistic versus deterministic. It's very easy to think, "Oh, obviously," but it's like no one thought America would be the leading car automaker in 2021 or had the chance to. That was Asia's game. Totally shocking to the world. But yeah, it'll happen. And I think ultimately what you'll see is you'll see kind of like what's happening in El Salvador, maybe what's happening in Portugal or Singapore, where new smaller countries who have have less to lose and more to gain that will be willing to take these sorts of bets, because it is a bet. It is a bet that a startup will make, not an established company will make. I think there are a lot of interesting ideas around charter cities like Prospera in Honduras and other things like that that I think may allow this to happen. But ultimately, I think the big companies in this case will lose because it's so much easier to exit. I could move to the Cayman Islands in 3 months. They're happy to have It goes back to that question of violence. Will these countries do something about it? Will these people try to claw the money back or what have you? California's rumored to do this, where it's like, "Well, if you start a company in California and then before it IPOs, you move to Florida, we're going to try to get that. The value was created on our land." But the more mobile people get, which is only going to happen more and more and more, effectively the lowest tax rate is the tax rate because just like companies have to compete, now cities and countries are going to have to compete more. Coming out of COVID Portugal is going to offer this and Thailand's going to offer that, and Singapore's going to offer this, and New Zealand's going to offer that. And if they can get a critical mass of just a few people to move to a certain place and put it on the map, imagine if Elon moved to, I don't know, Bhutan or something like that. It would boom, Bhutan's on the map. And the US is really the only country, I believe, in the world that taxes its citizens no matter where they live, basically. Puerto Rico or something like that. But basically, which is what a crazy thing. No country can even play the game that we get to play. It's kind of a singular game. But even that, I think over time people will renounce their US citizenships and will move. And if the threat of violence is gone, which eventually, do we really believe that the US is going to invade a country? I just don't think we're going to get the popular consent to do something like that. The common consent. I actually think that's going to be, in terms of remote work and the way that Gumroad operates, we have people in 17 different countries. I think that's going to be one of the big questions, which is how do you deal with— for example, the EU had to do VAT, Australia is doing something similar, some US states are doing something similar. Why? Because they're noticing that all of these flow of funds are changing and it's not as simple as it used to be. And what happens when you have all of these people who are getting paid in crypto? I don't think anyone has the answers to this, to be honest. I mean, this is the beauty of reality is it is probabilistic. So we just have to play it out and we'll see what ends up happening. And maybe the answer is It's the null set. The future is the null set basically. We're not going to get there. It's not written in some book, some Monte Carlo situation or something like that scenario. Even I was thinking about this pre-COVID where I was like, wow, what if I got a car and just drove around the US and worked on Gumroad? And this is, by the way, a question like self-driving cars. Once you have a self-driving car, then all of a sudden you're going to have a self-driving house. Once you have a self-driving house, where do you pay taxes? What if I work in a beautiful place and then I go to sleep and I wake up in Florida or Washington, and I sleep in 0% tax income tax states. NBA players had to figure this out. They play games in a bunch of different states and they have to pay taxes in all the states that they play, and they can't really get away with it because there's a paper trail of them playing in all of these different places and they've established the methodology and the precedent of how this works. And so my guess is imagine everyone, or 30% of the population, or 10% of the population even, or 1% of the population, the infrastructure to support that, just the million-dollar accountant that an NBA player or team may have to help them with this. We're all going to need, it's going to be a lot more dissipated. But to me, self-driving cars was actually going to be the technology that was going to lead to all of this political regulatory changes. And it's funny because actually self-driving has taken a lot longer than we thought, speaking to the probabilistic nature of things. I thought self-driving cars and then AR, VR, and then crypto, and then remote work. And then it's like, nope, it turns out it's like Self-driving cars is like 3 years out maybe, I don't know. Crypto's happening now. Remote work just happened. The order is different, but they all lead to the same future, which is the sovereign individual. Everyone for themselves. Hopefully that's a world of uber transparency. No one can choose to print more money more than anybody else can. And you have the ability to see what's happening. I believe all taxes should be real time or pseudo real time. Maybe you get the money, but it's automatically going to get withdrawn from your account after a year or something like That.

that.

But when government sends me a paycheck, just like they take money out for social and for other things, everything should just be done. Why do I pay taxes at the end of the year? The IRS already knows how much I owe them. Just tell me. Just send me a bill. Send me an invoice. But ideally, every receipt should have a list of those things, and that list should not be one item to the federal government, or the state, or what have you. It should be 4 cents went to this thing and like 8 cents went to SpaceX through this subsidy that we have. And this data's there. Like this is happening, right? This is already happening. It's just super opaque. It's on pen and paper. I can write a SQL query and just do some math on my own taxes. How much did Sahil earn in the last 6 years and how much of that went to Tree Equity? I want to know. I want to put that as a badge on my Facebook account, or I want to open a coffee shop and say, if you've done this, if you've contributed this much to these sets of things, you get a dollar off. The composability of this, when you can start to do all of these kinds of things, obviously opt in on it. Everyone's going to choose to have their data as part of these things. I'm pretty optimistic that these things will happen. And one of the amazing things about crypto is the zero-knowledge proof privacy things that you'll get that you don't currently have in today's society even, or you have it through very weird arbitrary things like HIPAA compliance and things like that.

That.

That's going to be an incredibly exciting world. Imagine I launch a new startup and I say, oh, everyone who's made at least a dollar on Gumroad gets early access to this. The composability to do that is just not there today. And certainly it's not there for a non-technical person, but it will be. The laws of physics say it will be. So I have faith in that. So it's very exciting.

I completely agree with you and could go on for another 2 hours because you are very compelling and I love hearing it. It's the right way to look at things, in my opinion. Probably wrong. I'm probably wrong.

Well, the good news is if you're wrong, people will be distracted with the world being on fire anyway.

Exactly. That's right. Exactly. Well, this has been incredibly fun. At the end of each one of these, we ask a question that is kind of fun to me at least, because it shows you what is really important to the guest. And so the question we ask is this: we're going to wave a wand and make you the emperor of the world for one day, You can't kill anybody. You can't put anyone in a reeducation camp, but what you can do is incept them. You can put an— what does Doug Adams call it? An ear frog or an earwig. They're going to wake up the next morning, and they're going to have two ideas that they thought they came up with that further to our earlier part of the conversation, they're going to act on. They're not just going to be lovely ideas, but they're going to wake up and think, think, "You know what? I'm going to— What two things you got for me?" Yeah.

The first one is that software is just as important to the evolution of humanity as writing was. So just like we went from oral tradition to writing tradition, I think writing tradition to software, I think software is just as big a deal of that in terms of a positive sum game. It's just absolutely incredible. And so I think anyone who can be like, okay, I need to use software in my future. My life needs to rely on software. Either you are the one who gets to use software to eat the world, or you're the one that gets eaten by the people who get to use software to eat the world. I think that's a really, really important idea. And maybe thinking when we have Neuralink will be the next level of that, where we can start beaming thoughts into each other. And who knows, the highest, the fidelity we're missing on when we're trying to communicate, it might be an order of magnitude or more. It'll be very interesting to see that. So that's one. And then two, really simple, is capitalism is really awesome. Like, I think capitalism is like a dirty word. It's a four-letter word. Many people don't like when I say the word, even though they know what I'm referring to. It's like almost become like a triggering in a sense. But I really believe that capitalism and this kind of weighing scale, it leads to like the best possible future for everybody. And it's kind of undeniable to me. And I've read the books like The Rational Optimist, you kind of mentioned or alluded to, Steven Pinker's stuff. I see it. I see the world getting better and better and better, but that requires people to start companies, raise capital, hire people, organize. Yeah, it's a ton of work and it's unfortunately going to lead to billionaires and trillionaires. And that's not because they're evil or because there's a ton of corruption. It's just because we literally choose to give them the money. That's literally what we did. We said, we prefer that Bezos spend our money and Elon spend our money than us. They're good at that. Let them do that. And I think, I'd like to think that 2020 has shown people how essential that is. It's how awesome entrepreneurs and startups really are. And I think it's very early days. And so yeah, I would say capitalism and software and the combination of the two, if you can just think about those two things, and figure out how you can apply those two things into your life, I think you'll be happier. And a lot of this just comes down to that. You'll be more free and you'll be happier. You'll have a larger impact on society. Society will have a smaller impact on you. You will feel less controlled by it. You'll just be a happier, healthier person, I think.

I love it. I love it. Thank you for being on the show. One final thought. I love that idea about capitalism. I've always been I'm a big believer in free markets because evidence, man. Let's just look at the evidence. And the evidence is so overwhelmingly in favor of free markets and free minds and free people. They do amazing things. And I just shake my head. I sometimes joke on social media like, "Capitalism sucks.

He tweet it from his iPhone at Starbucks." Yeah, you live in a society or something, you know.

Exactly, exactly. But you know, I have said that kind of thing all along, and I've noticed a change. 5 years ago, me saying things like you just said, people my age would like look at me like, you're crazy, man. Now I'm saying it and they're like, yeah, that makes so much sense. So it's one of these things, you know, we evolve. What'd you say about the evolution of software You're absolutely right. We have been much more affected by our aggregate social evolution, in my opinion, than we have even from the mother evolution. The written word changed the shape of our brains. We're being rewired as we speak by these devices. We're carrying supercomputers in our pocket and they're rewiring our brains. Some people like, "Oh, that's awful." No, it's not. It's the future and it's going to be a better place.

Yeah. And not to let this run on too long, but there was a big thing in the last couple of years about how everyone was addicted to social media and it was the worst thing on planet Earth and all these kids were going to get ruined by it. And I had an inkling, I was like, the human brain and body is more adaptive than we give it credit for. It's unlikely that we made it this far and then in 2 years we all fucked up. If we don't have cancer from these phones, like, I don't know, we seem to be pretty darn resilient. And it turns out in the last like 6 months or so, there's been a lot of these studies coming out that basically everybody knows this, like none of us are really addicted to our phones. We are when we're at home and there's nothing else to do and there's a pandemic, but actually if you're having dinner with friends or whatever, it's not a drug. It's really not. And yeah, that just gives me a lot of confidence that we're over-indexing and maybe you should, right? Sort of the mother evolution, as you said, encourages that because the downside is you get eaten by a lion. You want to really prevent that. But if the downside is much more mitigated in reality, then yeah, you should be much more comfortable taking risks because the risk is really just like, oh, you, I don't know, had a tweet that didn't resonate with people, or like, it's not, not the same as it used to be. But I, I really believe that. I think we're constantly realizing technology has a lot of benefits, more benefits than we think, and even has fewer downsides than we think, because the human brain is pretty good at picking and choosing. It's worked out so far. It's the same thing with America. Like, people have crapped on America forever. It seems like, seems like we still have it. We've been lucky like 10 times in a row at this point.

Maybe there's something deeper Yeah, there might be something deeper. All right, this has been fantastic. Really great. Thank you for being on. This is going to be awesome. You're welcome.