Chamath Palihapitiya argues that energy costs approaching zero will reshape geopolitics, making prolonged wars financially untenable. He credits Jerome Powell's rate hikes with deterring large-scale conflict and discusses how solar's low capital costs and high interest rates change strategic calculations, including Russia's invasion of Ukraine.
Chapters
to that optimal path you could have taken.
I think slightly different, I would say, mistake is maybe a bad proxy but it's the best proxy out towards learning. But I'm using the language of what society tells you.
Sure, got it.
Society tells you that when you try something and it doesn't work, it's a mistake. So I just use that word because it's the word that resonates most with most people.
Got it.
The real thing that it is is learning.
Yeah, it's like in neural networks, it's loss.
In neural networks, it's loss, exactly.
Yeah, right, so you're using the mistake that doesn't most, the word that is most understandable, especially by the way people experience it. I guess most of life is a sequence of mistakes. The problem is when you use the word mistake and you think about mistakes, it actually has a counterproductive effect of you becoming conservative in just being risk-averse. So that if you flip it and say try to maximize the number of successes, somehow that leads you to take more risk. Mistake scares people.
I think mistakes scare people because society likes these very simplified boundaries of who is winning and who is losing, and they want to reward people who make traditional choices and succeed. But the thing is, what's so corrosive about that is that they're actually not even being put in a position to actually make a quote-unquote mistake and fail. So I'll give you— if you look at like getting into an elite school, right, society rewards you for being in the Ivy Leagues in a way that, you know, in my in my opinion, incorrectly, doesn't reward you for being in a non-Ivy League school. There's a certain level of status and presumption of intellect and capability that comes with being there. But that system doesn't really have a counterfactual because it's not as if you both go to MIT and Ohio State and then we can see two versions of Lex Friedman so that we can figure out that the jig is up and there was no difference. Right? And so instead it reinforces this idea that there is no truth-seeking function. There is no way to actually make this thing whole. And so it tells you, "You have to get in here, and if you don't, your life is over. You've made a huge mistake." You know, or you've failed completely. And so you have to find different unique ways of dismantling this. This is why, you know, Part of what I've realized where I got very lucky is I had no friends in high school. I had a few cohort of acquaintances. But part of being so hypervigilant when I grew up was I was so ashamed of that world that I had to live in, I didn't want to bring anyone into it. I could not see myself that anybody would accept me. But the thing with that is that I had no definition of what expectations should be. So they were not guided by the people around me, and so I would escape to define my expectations.
Interesting.
But you didn't feel, um, like your dad didn't put you in a prison of expectation? Or we— it's like, that's if you have friends, like that. So the flip side of that, you don't have any other signals It's very easy to believe, like, when you're in a cult that—
Well, he, you know, he was angry. He pushed me. He used me as a mechanism to alleviate his own frustration. And this may sound very crazy, but he also believed in me. And so that's what created this weird duality where you were just— I was always confused about it.
You could be somebody great. He believed that you could be—
he did— I didn't truly special because I couldn't reconcile them the other half of the day, you know, those behaviors. But what it allowed me to do was I escaped in my mind and I found these archetypes around me that were saviors to me. So, you know, I grew up in Ottawa, Ontario, Canada. I grew up right at the point where the telecom boom was happening. Companies like Nortel and Newbridge Networks and Mitel, Bell Northern Research, these were all built in the suburbs of Ottawa. And so there were these larger-than-life figures, entrepreneurs, Terry Matthews, Michael Copeland. And so I thought, I'm going to be like them. I would read Forbes magazine, I would read Fortune magazine, I would look at the rich people on that list and say, I would be like them, not knowing that maybe that's not who you wanted to be. But it was a lifeline, and it kept my mind relatively whole because I could direct my ambition in a direction. And so why that's so important, just circling back to this, is I didn't have a group of friends who were like, "I'm gonna go to community college." You know, I didn't have a group of friends that said, "Well, you know, the girls My goal was just to go to university, get a simple job, and like, you know, join the public service, have a good life. And so because I had no expectations and I was so afraid to venture out of my own house, I never saw what middle-class life was like. And so I never aspired to it. Now, if I was close to it, I probably would have aspired to it because I— my parents in their best year made $32,000 Canadian together. If you're trying to raise a family of 5 people on $32,000, it's a complicated job. And most of the time they were probably making $20-something thousand. And I was working since I was 14. So I knew that our station in life was not the destination. We had to get out. But because I didn't have an obvious place, it's not like I had a best friend whose house I was going to and I saw some normal functional home. If I had had that, in this weird way, I would have aspired to them.
What was the worst job you had to do?
The best job, but the worst job was I worked at Burger King when I was 14 years old, and I would do the closing shift, and that was from like 6 PM till about 2 in the morning. And in Ontario, where I live, Ottawa borders Quebec. In Ontario, the drinking age is 19. You can see where I'm going with this. The drinking age in Quebec is 18, and that year made all the difference to all these kids. And so they would go get completely drunk, they would come back, they would come to the Burger King. You know, you would see all these kids you went to high school with. Can you imagine how mortifying it is? You know, you're working there in this getup, and they would light that place on fire. Vomit everywhere, puking, pooing.
Peeing.
And when the thing shuts down at 1 o'clock, you know, you got to clean that all up, all of it. Changing the garbage, taking it out. It was— and it really teaches you, okay, I do not want to.
But it's funny that that didn't push you towards the stability and security of the middle class, like, life.
I didn't have any good examples of that. I didn't have those around me. I was so ashamed. I could have never built a relationship where I could have seen those interactions to want them. And so my desires were framed by these two random rich people that lived in my town who I'd never met, and what I read in magazines about people like Bill Gates and Warren Buffett.
You were an early senior executive at Facebook during a period of a lot of scaling in the company history. I mean, it's actually a fascinating period of human history in terms of technology. Well, in terms of human civilization, honestly. What did you learn from that time about what it takes to build and scale a successful tech company? A company that has almost immeasurable impact on the world.
That was an incredible moment in time because everything was so new. To your point, like even how the standards of Web 2.0 at that time were being defined, we were defining them. You know, I mean, I think if you look at sort of the— if you search in the patents, patent library, there's a bunch of these patents that like me and Zuck have for like random things like cookies. You know, or like cross-site JavaScript, like all these crazy things that are just like these duh kind of ideas in 2023. We had to invent our way around how do websites communicate with each other, you know, how do we build in the cloud versus in a data center, how do we actually have high-performance systems.
You mentioned data science, the term, and the idea.
We invented this, I invented this thing called data scientists because we had a PhD from Google that refused to join unless— because he got a job offer that says data analyst. Um, and so he said particle scientist because he was a PhD in particle physics. So he really, you know, he was a scientist. And I said, great, you're a scientist here.
And that launched a discipline. And that launched a discipline, a term, you know, what's, uh, a rose by any other name. But yeah, like, you know, sometimes words like this can launch entire fields, and it did in that case. And you didn't I mean, I guess at that time you didn't anticipate the impact of machine learning on the entirety of this whole process because you need machine learning to have both ads and recommender systems to have the feed for the social networks.
Exactly right. The first real scaled version of machine learning, not AI, but machine learning, was this thing that Facebook introduced called PYMK, which is People You May Know. And the simple idea was that, can we and we initiate a viral mechanic inside the application where you log in, we grab your credentials, we go to your email inbox, we harvest your address book, we do a compare, we make some guesses, and we start to present other people that you may actually know that may not be in your address book. Really simple, you know, a couple of joins of some tables, whatever. And it started to just go crazy and the number of people that you were creating this density and entropy inside this social graph with what was some really simple basic math. And that was eye-opening for us. And what it led us down this path of is really understanding the power of like all this machine learning. And so that infused itself into News Feed, you know, and how the content that you saw could be tailored to who you were and the type of person that you were. So There was a moment in time that all of this stuff was so new. How did you translate the app to multiple languages? How do you launch the company in all of these countries?
How much of it is just kind of stumbling into things using your best, like, first principles gut thinking? And how much is it like 5, 10, 15, 20-year vision? Like, how much was thinking about the future of the internet and the metaverse and the humanity and all that kind of stuff. Because the News Feed sounds trivial.
I'll say something.
But that's like, changes everything.
Well, you have to remember, like, you know, News Feed was named, and we had this thing where we would just name things what they were. And at the time, all of these other companies, and if you go back into the Wayback Machine you can see this. People would invent an MP3 player and they would come up with some crazy name. Or they would invent a software product and come up with a crazy name, right? And it sounded like the pharma industry, you know, "Glukazumab," you know, "Tag your best friends." And you think, "What is this? This makes no sense." And this was Zuck's thing. He was like, "Well, this is a feature." feed of news, so we're gonna call it news feed. This is where you tag your photos, so we're gonna call that photo tagging. I mean, literally, you know, pretty obvious stuff. So the thing, the way that those things came about though was very experimental. And this is where I think it's really important for people to understand. I think Bezos explains this the best. There is a tendency after things work to create a narrative fallacy because it feeds your ego and you want to have been the person that saw it coming. And I think it's much more honest to say we were very good probabilistic thinkers that tried to learn as quickly as possible, meaning to make as many mistakes as possible. You know, I mean, if you look at this very famous placard that Facebook had from back in the day, what did it say? It said, "Move fast and break things." In societal language, that's saying, "Make mistakes as quickly as you can." Because the minute you break something, that's— you don't do that by design. It's not a feature. Theoretically, it's a bug. But he understood that and we embraced that idea. I used to run this meeting once a week where the whole goal was I want to see the there was 1,000 experiments that were run and show me them all from the dumbest to the most impactful. And we would go through that loop. And what did it train people? Not that you got celebrated for the right answer, but you got celebrated for trying. I ran 12 experiments, 12 failed, and we'd be like, you're the best.
Can I just take a small tangent on that? Is the move fast and break things has become like a catchphrase of the thing that embodies the toxic culture of Silicon Valley in today's discourse, which confuses me. Of course, words and phrases get captured and so on.
It becomes very reductive. You know, that's a very loaded set of words that together can be— many years later, people can view very reductive.
Steel man each side of that. So yeah, pro move fast and break things and against.
Yeah, um, so I think the pro of move fast and break things is saying the following: there's a space of things we know and a massive space of things we don't know, and there's a rate of growth of the things we know, but the rate of growth of the things we don't know is actually we have to assume growing faster. So the most important thing is to move into the space of the things we don't know as quickly as possible. And so in order to acquire knowledge, we're going to assume that the failure mode is the nominal state. And so we just need to move as quickly as we can, break as many things as possible, which means like things are breaking in code do the, you know, root cause analysis, figure out how to do things better, and then rapidly move into the space. And he or she who moves fastest into that space will win.
It doesn't imply carelessness, right? It doesn't imply moving fast without also aggressively picking up the lessons from the mistakes you make.
Well, again, that's steal-manning the pro, which is it's a thoughtful movement around velocity and acquisition of knowledge. Now let's steal-mann the con case. When these systems become big enough, there is no more room to experiment in an open-ended way because the implications have broad societal impacts that are not clear upfront. So let's take a different, less controversial example. If we said, you know, Lipitor worked well for all people except South Asians, and there's a specific immunoresponse that we can iterate to, and if we move quickly enough, we can run 10,000 experiments, and we think the answer is in that space. Well, the problem is that those 10,000 experiments may kill 10 million people. So you have to move methodically. When that drug was experimental and it wasn't being given to 500 million people in the world, moving fast made sense because you could have a pig model, a mouse model, a monkey model. You could figure out toxicity, but we picked all that low-hanging fruit. And so now these small iterations have huge impacts that need to be measured and implemented. Different example is like, you know, if you work at Boeing and you have an implementation that gives you a 2% efficiency by reshaping the wing or adding winglets, there needs to be a methodical move slow, be right process because mistakes when they compound when it's already implemented and at scale had huge externalities that are impossible to measure until after the fact. And you see this in the 737 MAX. So that's how one would steelman the con case, which is that when an industry becomes critical, you gotta slow down.
This makes me sad because some industries, like Twitter and Facebook are a good example, they achieve scale very quickly. Before really exploring the big area of things to learn. So you basically picked one low-hanging fruit and that became your huge success and now you're sitting there with that stupid fruit.
Completely. Well, so you're— I think, so as an example, like, you know, if you had to— you know, if I was running Facebook one day, you know, the big opportunity opportunity, in my opinion, was really not the metaverse, but it was actually getting the closest that anybody could get to AGI. And in fact, to steelman that product case, here's what— how I would have pitched it to the board and to Zuckerberg. Listen, there are 3.5 billion people monthly using this thing. If we think about human intelligence very reductively, we would say that there's a large portion of it which is cognitive and then there's a large portion of it which is emotional. We have the best ability to build a multimodal model that basically takes all of these massive inputs together to try to intuit how a system would react to all kinds of stimuli. That to me would have been a profound leap forward for humanity.
Can you dig into that a little bit more? So, in terms of Unless it's a board meeting, how would that make Facebook money?
I think that you have all of these systems over time that we don't know could benefit from some layer of reasoning to make it better. What does Spotify look like when instead of just a very instead of being a very simple recommendation engine, it actually understands sort of your emotional context and your mood and can move you to a body of music that you like. What does it look like if, you know, your television instead of having to go and channel sort of, you know, 50,000 shows on a horrible UI, you know, instead just has a sense of what you're into and shows it to you? What does it What does it mean when you get in your car and it actually drives you to a place because you should actually eat there even though you don't know it? These are all random things that make no sense a priori, but it starts to make the person or the provider of that service the critical reasoning layer for all these everyday products that today would look very flat without that reasoning. And I think you license that and you make a lot of money. So in many ways, instead of becoming more of the pixels that you see, you've become more of the bare metal that actually creates that experience. And if you look at the companies that are multi-decade legacy kinds of businesses, the thing that they have done is quietly and surreptitiously move down the stack. You never move up the stack to survive. You need to move down the stack. So if you take that OSI reference stack, right, these layers, how you build an app from the physical layer to the transport layer all the way up to the app layer, you can map from the 1980s all the big companies that have been created, right? All the way from Fairchild Semiconductor and Nat Semi to Intel to Cisco to 3Com, you know, Oracle, Netscape at one point, all the way up to the Googles and Facebooks of the world. But if you look at where all the lock-in happened, it's by companies like Apple, who used to make software, saying, "Mm, I'm gonna get one close. I'm gonna make the bare metal and I'm gonna become the platform." Or Google, same thing. "I'm gonna create this dominant platform and I'm gonna create a substrate that organizes all this information that's just omnipresent and everywhere." So the key is, if you are lucky enough to be one of these apps that are in front of people, you better start digging quickly and moving your way down and get out of the way and disappear. But by disappearing, you will become much, much bigger, and it's impossible to usurp you.
Yeah, I 100% agree with you. That's why you're so smart. This is, uh, the depersonalization and The algorithms that enable depersonalization are almost like an operating system layer, so pushing away from the interface and the actual system that does the personalization. I think the challenge is there. There's obviously technical challenges, but there's also societal challenges that— it's like in a relationship. If you have an intimate algorithmic connection with individual humans, you can do both good and bad, so there's risks that you're taking. You can— so if you're making a lot of money now as Twitter and Facebook with ads, surface layer ads, what is the incentive to take the risk of guiding people more? Because you can hurt people, you can piss off people, you can— I mean, there's a cost to forming a more intimate relationship with users in the short term, I think.
You said a really, really key thing which is— which was a really great emotional instinctive reaction which is when I said the AGI thing, you said, "Well, how would you ever make money from that?" That is the key. The presumption is that this thing would not be an important thing at the beginning. And I think what that allows you to do if you were Twitter or Google or Apple or Facebook, anybody, Microsoft embarking on building something like this is that you can actually have it off the critical path and you can experiment with this for years if that's what it takes to find a version 1 that is special enough where it's worth showcasing. And so in many ways you get the free option. You're going to be spending— any of these companies will be spending tens of billions of dollars in OpEx and CapEx every year on all kinds of stuff. It is not a thing that money actually makes more likely to succeed. In fact, you actually don't need to give these kinds of things a lot of money at all because starting in 2023, or right now, you know, you have the two most important tectonic shifts that have ever happened in our lifetime in technology. They're not talked about, but these things allow AGI, I think, to emerge over the next 10 or 15 years where it wasn't possible for it. The first thing is that the marginal cost of energy is zero. You're not going to pay for anything anymore. We can double-click into why that is. And the second is the marginal cost of compute is zero. And so when you take the multiplication, or if you want to get really fancy mathematically, the convolution of these do things together, it's going to change everything. So think about what a billion dollars gets today, and we can use OpenAI as an example. A billion dollars gets OpenAI a handful of functional models and a pretty fast iterative loop, right? But imagine what, um, OpenAI had to overcome. They had to overcome a compute challenge, They had to strip together a whole bunch of GPUs. They had to build all kinds of scaffolding software. They had to find data center support. That consumes all kinds of money. So that billion dollars didn't go that far. So it's a testament to how clever that OpenAI team is. But in 4 years from now, when energy costs zero and basically GPUs are like, you know, they're falling off a truck and you can use it effectively for free, Now all of a sudden, a billion dollars gives you some amount of teraflops of compute that is probably the total number of teraflops available today. Like, that's how gargantuan this move is when you take these two variables to zero.
There's like a million things to ask. I almost don't want to get distracted by the marginal cost of energy going to zero because I have no idea what you're talking about. That's fascinating.
Can I give you the 30 seconds? Sure.
Yes.
So if you look inside of the two most progressive states— three most progressive states: New York, California, and Massachusetts. A lot of left-leaning folks, a lot of people who believe in climate science and climate change. The energy costs in those three states are the worst they are in the entire country. And energy is compounding at 3 to 4% per annum. So every decade to 15 years, energy costs in these states double. In some cases and in some months, our energy costs are increasing by 11% a month. But the ability to actually generate energy is now effectively zero. The cost per kilowatt-hour to put a solar panel on your roof and a battery wall inside your garage, it's the cheapest it's ever been. These things are the most efficient they've ever been. And so to acquire energy to get energy from the sun and store it for your use later on, literally is a zero-cost proposition.
So what's— how do you explain the gap between the cost going up?
Great question. So this is the other side of regulatory capture, right? You know, we all fight to build monopolies. Well, there are monopolies hiding in plain sight. The utilities are a perfect example. There are 100 million homes in America. There are about 1,700 utilities. In America. So they have captive markets. But in return for that captive market, the law says, "You need to invest a certain amount per year in upgrading that power line, in changing out that turbine, in making sure you transition from coal to wind or whatever." Just as an example, upgrading power lines in the United States over the next decade is a $2 trillion proposition. These 17 1,100 organizations have to spend, I think it's a quarter of a trillion dollars a year just to change the power line. That is why even though it costs nothing to make energy, you are paying double every 5— every 7 or 8 years. It's CapEx and OpEx of a very brittle old infrastructure. It's like you trying to build an app and being forced to build your own data center. You say, "But wait, I just want I just want to write to AWS. I just want to use GCP. I just want to move on. All that complexity is solved for me. And some law says, "No, you can't. You got to use it." So that's what consumers are dealing with, but it's also what industrial and manufacturing organizations— it's what we all deal with.
So how do we get rid of ourselves of this old infrastructure that we're paying for?
So the thing that's happening today, which I think is— this is why I think I think it's the most important trend right now in the world, is that 100 million homeowners are each going to become their own little power plant and compete with these 1,700 utilities. And that is a great—
In the United States or globally?
No, just deal with the United States for a second because I think it's easier to see here. 100 million homes, solar panel on the roof, and by the way, just to make it clear, the sun doesn't need to shine, right? These panels now work where you have these UV bands that can actually extrapolate beyond the visible spectrum, so they're usable in all weather conditions. And a simple system can support you collecting enough power to not just run your functional day-to-day life, but then to contribute what's left over back into the grid for Google's data center or Facebook's data center, where you get a small check. The cost is going to zero.
How obvious is this to people? You're making it sound—
Not obvious.
Okay. So, because this is a pretty profound prediction, if the cost is indeed going to zero, that— I mean, the compute, the cost of compute going to zero, I can—
So the cost of compute going to zero is—
I can kind of understand, but the energy seems like a radical prediction of yours.
Well, it's just naturally what's happening. Right now, let me give you a different way of explaining this. If you look at any system, there's a really important thing that happens. It's what Clay Christensen calls crossing the chasm. If you explained it numerically, here's how I would explain it to you, Lex. If you introduce a disruptive product, typically what happens is the first 3-5% of people are these zealous believers. And they ignore ignore all the logical reasons why this product doesn't make any sense because they believe in the proposition of the future and they buy it. The problem is at 5%, if you want a product to get to mass market, you have one of two choices, which is you either bring the cost down low enough or the feature set becomes so compelling that even at a high price— an example of the latter is the iPhone. The iPhone today, the 14 iPhone, costs more than the original iPhone. It's probably doubled in price over the last 14 or 15 years, but we view it as an essential element of what we need in our daily lives. It turns out that battery EVs and solar panels are an example of that, because people like President Biden, with all of these subsidies, have now introduced so much money for people to just do this, where it is a money-making proposition for 100 million homes. And what you're seeing as a result are all of these companies who want to get in front of that trend. Why? Because they want to own the relationship with 100 million homeowners. They want to manage the power infrastructure. Amazon, Home Depot, Lowe's, you know, you can just name the company. So if you do that and you control that relationship, they're gonna show you, they're gonna, you know, for example, Amazon will probably say, "If you're a member of Prime, we'll stick the panels on your house for free. We'll do all the work for you for free. And it's just a feature of being a member of Prime. And we'll manage all that energy for you." It makes so much sense and it is mathematically accretive for Amazon to do that. It's not accretive for the existing energy industry because they get blown up. It's extremely accretive for peace and prosperity. If you think the number of wars we fight over natural resources, take them all off the table if we don't need energy from abroad. There's no reason to fight. You have to find a reason to fight. Meaning, sorry, there'd be a moral reason to fight, but the last number of wars that we've were not as much rooted in morality as they were rooted—
Yeah, it feels like they're very much rooted in conflict over resources, energy specifically.
And then, sorry, just the last thing I want to say, I keep interrupting others, but the chips, all what people want to say is that, you know, now that we're at 2 and 3 nanometer scale for typical kind of like transistor fab, we're done. And, you know, forget about transistor density, forget about Moore's Law, it's over. And I would just say no, look at teraflops. And really, teraflops is the combination of CPUs, but much, much less important, and really is the combination of ASICs, so application-specific ICs, and GPUs. And so you put the two together, I mean, if I gave you a billion dollars 5 years from now, the amount of damage you could do—
damaging—
could way in terms of, you know, building racks and racks of GPUs, the kind of models that you could build, the training sets and the data that you could consume to solve a problem. It's enough to do something really powerful, whereas today it's not yet quite enough.
There's this really interesting idea that you talk about in terms of Facebook and Twitter that's connected to this, that if you were running sort of Twitter or Facebook, You would move them all to like AWS. So you would have somebody else do the compute infrastructure. It probably, if you could explain that reasoning, means that you believe in this idea of energy going to zero, compute going to zero, so let people that are optimizing that do the best job.
And I think that's a, you know, the initially in the early early 2000s and the beginning of the 2010s, if you were big enough scale— oh sorry, everybody was building their own stuff. Then between 2010 through 2020, really the idea was everybody should be on AWS except the biggest of the biggest folks. I think in the 2020s and '30s, I think the answer is actually everybody should be in these public clouds. And the reason is the engineering velocity of the guts. So take a simple example, which is we have not seen a massive iteration in database design until Snowflake. I think maybe Postgres was like the last big turn of the dial. Why is that? I don't exactly know, except that everybody that's on AWS and everybody that's on GCP and Azure gets to now benefit from $100+ billion of aggregate market cap, rapidly iterating, making mistakes, fixing, solving, learning, and that is a best-in-class industry now, right? Then there's going to be all these AI layers around analytics so that app companies can make better decisions. All of these things will allow allow you to build more nimble organizations because you'll have this federated model of development. I'll take these things off the shelf, maybe I'll roll my own stitching over here. Because the thing that where you make money is still for most people in how the apps provision an experience to a user. And everybody else can make a lot of money just servicing that. So they work in a really— they play well together. Together in the sandbox. So in the future, everybody just should be— it doesn't make sense for anybody because, you know, if you were to roll your own data centers, you know, for example, like Google for a long time had these massive leaks where they had GFS and Bigtable.
Those are really good in the 2000s and 2010s.
And this is not to throw shade at Google. It's very hard for whatever exists that is a progeny of GFS and Bigtable to be anywhere near as good as a $100 billion industry's attempt to build that stack. And you're putting your organization under enormous pressure to be that.
I guess the implied risk taken there is that you could become the next AWS. Like, uh, Tesla doing some of the compute in-house. I guess the bet there is that you can become the next, the next AWS. For the new wave of computation if that level, if that kind of computation is different. So if it's machine learning, I don't know if anyone's won that battle yet, which is machine learning-centric only computing.
Software has a very powerful property in that there's a lot of things that can happen asynchronous, asynchronously, so that real-time inference can be actually really lightweight.
And that's why I think you can have a very federated ecosystem inside of, inside of all of these places.
Tesla is very different because in order to build the best car, it's kind of like trying to build the best iPhone, which is that you need to control it all the way down to the very bottom. And that's just not possible if you're trying to be a systems integrator, which is what everybody other than this modern generation of car companies have been. And they've done a very good job of that, but it won't be the experience that allows you to win in the next one.
So let's linger on the social media thing. So if you, you said if you ran Facebook for a day, let's extend that. If you were to build a new social network today, How would you fix Twitter? How would you fix social media? If you want to answer a different question, is if you were Elon Musk, somebody you know, and you were taking over Twitter, what would you fix?
I've thought about this a little bit. Um, first of all, let me give you a backdrop. I wouldn't actually build a social media company at all. And the answer is, the reasoning is the problem. I really tend to believe, as you probably got the sense, of sort of patterns and probabilities. And if you said to me, Chabat, probabilistically answer where are we going in apps and social experiences, what I would say is lots of important things. We spent the first decade building platforms and getting them to scale. And if you want to think about it, again, back to sort of this poker analogy, others' mistakes minus your mistakes Where is the value?
Well, the value that was captured was trillions of dollars, essentially, to Apple and to Google. And they did that by basically, uh, attracting billions of monthly active users worldwide. Then this next wave were the apps.
Facebook, QQ, Tencent, TikTok, Twitter, Snapchat, that whole panoply of all these apps.
Interestingly, they were in many ways an atomized version of the platforms, right? They sat on top of them, they were ecosystem participants, but the value they created was the same. Trillions of dollars of enterprise value, billions of—
Well, there's an interesting phenomenon that's been at play in the last 10 years, which is that the next most obvious atomic unit. I like to give you some examples.
Let's read from this brand new crazy guy here.
Mr.
Beast, just the two of you alone have had enough, okay? You guys are going to approach in the next 5 years a billion people.
The only thing that you guys haven't figured out yet is how to capture trillions of dollars of value. Now maybe you don't want to, and maybe that's not your state of mission, right, right? But let's just look at Mr. Beast's numbers. Mr. Beast is a billion-dollar tech entrepreneur. Right? You guys are atomizing the, the app sector.
You're providing your own curated experience.
You're providing your own curated communities.
And that reflection of that audience is very likely going to be reflected in the audience numbers.
So the honest answer to your question is I would focus on the content creator side of things because I think that's where the fuck is going. That's a much more important shift in how we all consume information, content, and our entertainment.
It's through brands like these individual people that we can humanize and understand part of the future.
But aren't you just arguing against the point you made earlier, which is we should recommend to stay invested in the AGI, the depersonalization?
Because they could still be a participant in that. I suspect all of my employees would. And so it's that stack of services, and then it's like a stack. It's like, you know, I'm not wearing a system today. You would pay a mortgage or rent, and then you leave.
So back to your question, so what would I do? I think that you have to move to that world pretty aggressively. I think that right now you first have to solve what is broken inside of these social networks. And I don't think it's a technical problem. So just to put it out there, I don't think it's a, you know, it's one where there are these nefarious organizations.
That happens.
Brigading XYZ, that happens. But the real problem is a psychological one that we're dealing with, which is people through a whole set of situations have lost belief in themselves. And I think that that comes up as this very virulent form of rejection that they've tried to put into these social networks. So if you look inside of comments on anything, like you could have a person that says on Twitter, "I saved this dog from a fiery building," and they would be negative commenters. And you're like, well, again, put yourself in their shoes. What do you— how do I steelman their case? I do this all the time. You know, I get people throw shade at me, I'm like, okay, let me steelman their point of view. And the best that I can come up with is, you know, I'm working really hard over here. I'm trying. I played by all the rules that were told to me. I played well, I played fairly, and I am not being rewarded in a system of value that you recognize. And that is making me mad. And now I need to cope and I need to vent. So back in the day, my dad used to drink, he would make me cook at things to hit me with. Today, you go to Twitter, you spout off, you try to deal with the latent anger that you feel. So a social network has to be designed, in my opinion, to solve that psychological corner case because it is what makes a network unusable. To get real density, you have to find a way of moving away from that toxicity because it ruins a product experience. Very interesting. You could have the best pixels in the world, but if people are virulently spitting into their keyboards, other people are just going to say, "You know what? I'm done with this. It doesn't make me feel good." So the social network has to have a social cost. You can do it in a couple ways. One is where you have real-world identity, so then there's a cost to being virulent, and there's a cost to being caustic. A second way is to actually just overlay an economic framework so that there's a more pertinent economic value that you assign to basically spouting off. And the more you wanna spend, the more you can say. And I think both have a lot of value. I don't know what the right answer is. I tend to like the latter. I think real-world identity shuts down a lot of debate because there's still too much, you know, there's a sensation that there'll be some retribution. So I think there's more free speech over there, but it cannot be costless because in that there's a level of toxicity that just makes these products unusable.
Third option, and by the way, all these work together. If we look at this, what you call the Korn case, which is hilarious, what I would call the human condition, which is, you know, that anger is rooted with the challenges of life. And what about having a an algorithm that shows you what you see that's personalized to you and helps you maximize your personal growth in the long term, such that you're challenging yourself, you're improving, you're learning. There's just enough of criticism to, uh, keep you on your toes, but just enough of like the dopamine rush to keep you entertained and finding that balance for each individual person.
You just described an AGI of a very empathetic, well-rounded friend.
Yes, exactly. And then you can throw that person, even anonymous, into a pool of Discorders and they would be better.
I think you're absolutely right. That's a very, very, very elegant way to say that. You're absolutely right.
But like you said, the AGI might be a few years away, so that's a huge huge investment. Like, my concern, my gut feeling is this thing we're calling AGI is actually not that difficult to build technically, but it requires a certain culture and it requires a certain, certain risks to be taken.
I think you could reductively boil down the human intellect into cognition and emotion. And, you know, depending on who you are, depending on the moment, they're weighted very differently, obviously. Cognition is so easily done by computers that we should assume that that's a solved problem. So our differentiation is the reasoning part. It's the emotional overlay. It's the empathy. It's the ability to steelman the opposite person's case and feel why that person, you know, you can forgive them without excusing what they did, as an example. That is a very difficult thing, I think, to capture in software, but I think it's a matter of when, not if.
If done crudely, it takes a form of censorship, just banning people off the platform. Let me ask you some tricky questions. Do you think Trump should been removed from Twitter. What's the pro case? I'm having fun here. Can you steelman each side?
Yeah. Let's steelman the get him off the platform. Here we have a guy who is virulent in all ways. He promotes confrontation. He lacks decorum. He incites the fervent believers of his cause to act up and push the boundaries bordering on and potentially even including breaking the law. He does not observe the social norms of a society that keep us well-functioning, including an orderly transition of power. If he is left in a moment where he feels trapped and cornered, he could behave in ways that will confuse the people that believe in him to act in ways that they so regret that it could bring our democracy to an end or create so much damage or create a wound that's so deep it will take years of conflict and years of confrontation to heal it. We need to remove him. And we need to do it now. It's been too long. We let it go on too long. The other side of the argument would be he was a duly elected person whose views have been run over for way too long, and he uses the ability to say extreme things in order to showcase how corrupt these systems have become and how insular these organizations are in protecting their own class. And so if you really want to prevent class warfare, and if you really want to keep the American Dream alive for everybody, we need to show that the First Amendment, the Constitution, the Second Amendment, all of this infrastructure is actually bigger than any partisan view, no matter how bad it is, and that people will make their own decisions. And there are a lot of people that can see past the words he uses and focus on the substance of what he's trying to get across and more generally agree than disagree. And so when you silence that voice, what you're effectively saying is this is a rigged game and all of those things that we told— we were told were not true are actually true.
If you were to look at the crude algorithms of Twitter, of course I don't have any insider knowledge, but I could imagine that they saw the— let's say there's a metric that measures how negative the experience is of the platform, and they probably saw, in several ways you could look at this, but the presence of Donald Trump on the platform was consistently increasing how shitty people are feeling, short-term and long-term, because they're probably yelling at each other, having worse and worse and worse experience. If you even do a survey of how do you feel about using this platform over the last week, they would say horrible relative to maybe a year ago when Donald Trump was not actively tweeting or so on. So here you're sitting at Twitter and saying, okay, I, I, and I know everyone's talking about speech and all that kind of stuff, but I kind of want to build a platform where the users are happy. They're becoming more and more unhappy. How do I solve this happiness problem? Well, let's ban— let's, uh, yeah, let's ban the sources of the unhappiness. Now we can't just say you're a source of unhappiness, we'll ban you. Let's wait until that source of course, say something that we can claim breaks our rules, like incites violence or so on.
That would work if you could measure your construct of happiness properly. The problem is, I think, what Twitter looked at were active commenters and got it confused for overall system happiness. Because for every piece of content that's created on the internet, of the 100 people that consume it, maybe 1 or 2 people comment on it. And so by overamplifying that signal and assuming that it was the plurality of people, that's where they actually made a huge blunder because there was no scientific method, I think, to get to the answer of deplatforming him. And it did expose this idea that it's a bit of a rigged game and that there are these deep biases that some of these organizations have to opinions that are counter to theirs, to their orthodox view.
So in general, you lean towards keeping, first of all, presidents on the platform, but also controversial voices?
All the time. I think it's really important to keep them there.
Let me ask you a tricky one. In the recent news, it's become especially relevant for me. What do you think about, if you've been paying attention to Ye, Kanye West, recent controversial outbursts on social media about Jews, black people, racism in general, slavery, Holocaust, all these topics that he touched on in different ways, on different platforms, but including Twitter. What do you do with that? And like, what do you do with that from a platform perspective? What do you do from a humanity perspective of how to add love to the world?
Let's, um, should we take both sides of it?
Sure.
Option 1 is he is completely out of line, and option 2 is he's not. Just to simplify.
Right.
So the Path 1 is, is an incredibly important pacemaker in the world that defines the belief system for a lot of people. And there just is no room for any form of racism or bias or antisemitism in today's day and age, particularly by people whose words and comments will be amplified around the world. We've already paid a large price for that, and that the expectation of success is some amount of societal decorum that keeps moving the ball forward. The other side would say, "Life, I think, goes from harmony to disharmony to repair." And Anybody who has gone through a very complicated divorce will tell you that in that moment your life is extremely disharmonious and you are struggling to cope. And because he is famous, we are seeing a person really struggling in a moment that may need help, and we owe it to him him, not for what he said, because that stuff isn't excusable, but we owe it to him to help him in a way, and particularly his friends. And if he has real friends, hopefully what they see is that what I see on the outside looking in is a person that is clearly struggling.
Can I ask you like a human question? And I know it's outside outside looking in, but there's several questions I want to ask. So one is about the pain of going through a divorce and having kids and all that kind of stuff. And two, when you're rich and powerful and famous, I don't know, maybe you can enlighten me to which is the most corruptive. But how do you know who are the friends to trust? So a lot of the world is calling Kanye insane, or like has mental illness, all that kind of stuff. So how do you have friends close to you that say, that say something like that message but from a place of love and where they actually care for you as opposed to trying to get you to shut up? The reason I ask all those questions I think if you care about the guy, how do you help him, right?
I've been through a divorce.
It's gut-wrenching. The most horrible part is having to tell your kids. I can't even describe to you how proud I am of them and how resilient these 3 beautiful little creatures were about it.
My ex-wife and I had to sit them down and talk through it.
And for that, they know me just so protective of them and so proud of them.
It's hard. I don't know if that does work for you, but it just does for me.
In that moment, there's no fame, there's no money, there's nothing.
There's just the bond.
Just get up and do your thing, right?
And I think that's what I'm good at.
Them?
How do you help them? The way you see the world being clouded— how do you help them?
Poor business decisions or—
oh, do you have How do you help them? How do you help them? And oftentimes, when you build with that, what's happening now isn't productive because those things have to be worked through prior to you being able to build with someone else.
Yeah, so yeah, I felt, you know, as well. So I had to go through, you know, this disharmonious phase in my life to get where I am now.
You know, I had the dream of meeting someone and building a relationship block by block, where there is just enormous accountability, where my partner Nat had— has just incredible empathy, but accountability. And so she can put herself in my shoes sometimes when I'm a really tough person to be around, but then she doesn't let me off the hook. She You can forgive me, but it doesn't make, you know, what I may have said or whatever, you know, excusable. And that's been really healthy for me, and it's helped me repair my relationships, be a better parent, you know, be a better friend to my ex-wife, who's a beautiful woman who, you know, I love deeply and will always love her. And it took me a few years to see that, that it was just a chapter that had come to an end, but she's She's an incredible mother and an incredible businesswoman. I'm so thankful that I've had two incredible women in my life. That's like a blessing.
But it's hard— so now it's hard to find a person that has that deep— I mean, a lot of stuff you said is pretty profound, but having that person who has empathy and accountability. So basically, that's ultimately what great friendship is, which is people that love you have empathy for you but can also call you out on your bullshit.
She's a LeBron James-like figure, and the reason I say that is I've seen and met so many people. I've seen the distribution on the scale of friendship and empathy.
She's the LeBron James of friendship.
She's a GOAT. Well, what's so funny is like, you know, we have a dinner around poker and it's taken on a life of its own, mostly because of her. Because these guys looked hurt. And I'm like, "Whoa, whoa, whoa." She's thinking like, her registers are already full, she's thinking of all kinds of crap with me. But it's a very innate skill and it's paired with, you know, it's— but it's not just an emotional thing, meaning she's the person that I make all my decisions with. These These decisions we're making together as a team, I've never understood that. You know, there's that African proverb like, "Go fast, go alone. Go far, go together." And Lex, since I was born, I was by myself. And I had to cope. And I didn't have a good toolkit to use in the world. And in these last 5 or 6 years, she's helped me. And at first, my toolkit was literally like sticks, you know? And then I found a way to, you know, she helped me sharpen a little rock and that became a little knife, but even that was crap. And then she showed me fire and then I forged a knife. And that's what it feels like, where now this toolkit is like most average people. And I feel humbled to be average because I was here, down here on the ground. So it's made all these things more reasonable. You see what comes from having deep, profound friendships and love to help you through these critical moments. I have another friend who I would say just completely unabashedly loves me, this guy Rob Goldberg. He doesn't hold me accountable that much, which I love. Like I could say I killed a homeless person, he's like, "Ah, they probably deserved it." Whereas now it would be like, "That was not good, what you just did." So, but I have both. I mean, I have Matt every day, you know, Rob I don't talk to that often, but to have two people, I had zero. I think most people unfortunately have zero. So I think like what he needs is somebody to just listen. You don't have to put a label on these things, and you just have to try to guide in these very unique ways. Unique moments where you can just like de-escalate what is going on in your mind. And I suspect what's going on in his mind— Anthony, I'm sure, or—
I don't know—
is that he is in a moment where he just feels lower than low. And we all do it. We've all had these moments where we don't know how to get attention. And if you didn't grow up in a healthy environment you may go through a negative way to get attention. And it's not to excuse it, but it's to understand it.
That's so profound. Feeling less than and at those low points, going externally to find it and maybe creating conflict and scandal to get that attention.
The way that my doctor explained it to me is, um, you have to think about your self-worth like a knot inside of a very complicated set of knots. So it's like a— some people don't have these knots, it's just presented to you on a platter. But for some of us, because of the way we grow up, it's covered in all these knots. So the whole goal is to loosen those knots knots. And it happens slowly, it happens unpredictably, and it takes a long time. And so while you're doing that, you are gonna have moments where when you feel less than, you're not prepared to look inside and say, actually, here's how I feel about myself. It's pretty cool. I'm happy with how— where I'm at.
I have to ask, on the topic of friendship, you do an amazing podcast called All In podcast. People should stop listening to this and go listen to that. You just did your 100th episode. I mean, it's one of my favorite podcasts. It's incredible for the technical and the human psychological wisdom that you guys constantly give and in the way you analyze the world, but also just the chemistry between the— between you. You're clearly There's a tension and there's a camaraderie that's all laid out on the table. So I don't know the two Davids that well, but I have met Jason. What do you love about him?
I'll give you a little psychological breakdown of both of these guys.
Sure.
Just my opinion. Yeah. And I love you guys.
Would they agree with your psychological breakdown?
I don't know, you know, I think that what I would say about J-Cal is he is unbelievably loyal, um, to no end. And, you know, he's like any of those movies where— which are about like the mafia or whatever, where like, you know, something bad's going wrong and you need somebody to show up. That's J-Cal.
So if you killed the that proverbial homeless person, he would be right there to help you. He would not think about it.
But he's the one that he'll defend you in every way, shape, or form, even if it doesn't make sense in that moment. He doesn't see that as an action of whether it'll solve the problem. He sees that as an act of devotion to you, your friend. And that's an incredible gift that he gives us. The other side of it is that, you know, J-Kal needs to learn how to trust that other people love him back as much as he loves us. And that's where he makes mistakes, because he assumes that he's not as lovable as the rest of us. But he's infinitely more lovable than he understands.
He's—
I mean, you have to see Lex. Like, he is unbelievably funny. I mean, I cannot tell you how funny this guy is. Next level funny.
His timing—
Timing.
Every—
the charm, the care he takes. So he is as lovable, but he doesn't believe himself to be, and that manifests itself in areas that drive us crazy.
Which makes it for a very pleasant listening experience. Okay, so what about the, the two Davids? David Sachs and David Feinberg?
David Sachs is the one that I would say I have the most emotional connection with. Um, he and I can go a year without talking. And then we'll talk for 4 hours straight, and then we know where we are, and we have this ability to pick up and have a level of intimacy with each other. And I think that's just because I've known David for so long now, um, that I find really comforting. And then Freeberg is this person who I think, similar to me, had a very turbulent upbringing, has fought through it to build an incredible life for himself, and I have this enormous respect for his journey. I don't particularly care about his outcomes, to be honest, but I just have— I look at that guy and I think, "He did it." And so if I didn't do it, I would be glad that he did it, if it makes any sense. And you can see that he feels like his entire responsibility responsibility is really around his kids and just kind of like give a better counterfactual. And, uh, and, you know, sometimes I think he gets that right and wrong, but he's a very special human being.
On that show, the two of you have a very kind of like, from a geopolitics perspective, I don't know, there's just a very effective way to think deeply about the world, the big picture of the world.
He's a very systems-level thinker. That's the word to put it in.
Yeah, very, very, absolutely very systems-level.
And he's very rooted in, you know, a broad body of knowledge, which I have a tremendous respect for. He brings all these things in. Sachs is incredible because he has this unbelievable believable understanding of things, but it has a core nucleus. So, Frieberg can just basically abstract a whole bunch of systems and talk about them. I tend to be more like that, where I try to kind of— I find it to be more of a puzzle. Sachs is more like anchored in, you know, a philosophical and historical context as the answer. And he starts there, but he gets to these profound understandings of systems as well.
On the podcast, in In life, you guys hold to your opinion pretty strong. What's the secret to being able to argue passionately with friends? So hold your position but also not murder each other, which you guys seem to come close to.
I think it's like strong opinions weakly held.
So I think it's really— Wait, is that a haiku or is it— Can you explain that, please?
Yeah, like, you know, like, look, today you and I, what if we steelman like the two sides of three different things? Yeah. Now you could be confused and think I believe in those things. I believe that it's important to be able to intellectually traverse them whether I believe in it or not, and like steelman, not straight up believe. That's a really—
But we intro those things by saying let us steelman this position since Sometimes you guys skip the—
We skip, you're right, we edit those things out and sometimes we'll sit on either sides and we'll just kind of bat things back and forth just to see what the other person thinks.
So that's how, like, as fans we should listen to that sometimes. So sometimes, because you hold a strong opinion sometimes, like for example the cost of energy going to zero. Is that— What's the degree of certainty on that? Is this kind of like you really taking a prediction of how the world will unroll, and if it does, this will benefit a huge amount of companies and people that will believe that idea? So you really, you like, you spend a few days, a few weeks with that idea?
I've been spending 2 years with that idea, and that idea has manifested into many pages and pages of more and more branches of a tree. But it started with that idea. So if you think about this tree, this logical tree that I built, I would consider it more of a mosaic. And at the base or root, however you want to talk about it, is this idea: the incremental cost of energy goes to zero. How does it manifest? And so I talked about one traversal, which is the competition of households versus utilities. But if even some of that comes to pass, we're going to see a bunch of other implications from a regulatory and technology perspective. If some of those come to pass— so I've tried to think sort of this, you know, 6, 7, 8 hops forward. And I have some— like, to use a chess analogy, I have a bunch of short lines which I think can work. And I've started to test those by making investments— tens of millions over here to hundreds of millions over there. But it's a distribution based on how probabilistic I think these outcomes are and how downside protected I can be and how much I will learn and how many mistakes I can make. And then very quickly over the next 2 years, some of those things will happen or not happen. Rapidly do a drawdown, and I'll rewrite that tree, and then I'll get some more data, I'll make some more investments, and I'll rapidly reunderwrite.
So, you know, in order for you to get to this tree, many people ask me, how did I get there?
It was a complete accident.
The way that it happened was, you know, I worked at a great organization called Edward MacLean, and I was working with a CEO named Baker.
Public, and it's a rare earth mine company.
How many mistakes can I make? How many mistakes can I make?
But Max, I did that to you, and then I did 7 of them, and And actually, I made like 7 letters wrong.
But I learned. I made enough mistakes where the net of it was I got to a thesis that I believed that I could see. And I was like, okay, I paid the price.
I acquired the learning.
I made my mistakes.
I know where I'm at. And this is step 1. Looking for perfection in order to make a bet either on yourself or company, a girlfriend, whatever.
If we just linger on that tree, it seems like a lot of geopolitics, a lot of international military conflict is around energy. So how does your thinking about energy connect to what you see happening in the next 10, 20 years? Maybe you can look at the war in Ukraine or relationship with China and other places through those lens of energy. What's the hopeful, what's the cynical trajectory that the world might take through with this drive towards zero energy, zero-cost energy?
So the United States was in a period of energy surplus until the last few years, some number of years in Trump, and I think some number now at the current current administration with President Biden. But we know what it means to basically have more than enough energy to fund our own domestic manufacturing and living standards. And I think that by being able to generate this energy from the sun that is very capex-efficient, that is very climate-efficient, gives us a huge tailwind. The second thing is that we are now in a world, in a regime, for many years to come of non-zero interest rates. And it may interest you to know that the really the last time that, you know, we had long-dated wars supported, you know, at low interest rates was World War II, where I think the average interest rate was like 1.07%. And every other war tends to have these very quick open and closes because these long protracted fights get very difficult to finance when rates are non-zero. So just as an example, even starting in 2023— so the practical example today in the United States is President Biden's budget is about $1.5 trillion for next year. That's not including the entitlement spending, okay, meaning Medicare, healthcare, Social Security, right? So the stuff that he wants to spend that he has discretion over is about $1.582 trillion is the exact number. Next year, our interest payments are going to be $455 billion. That's 29% of every budget dollar is going to pay interest. So you have these two worlds coming together, right, Lex? If you have us, you know, hurtling forward to being able to generate our own energy, and the economic peril that comes with trying to underwrite several trillion dollars for war, which we can't afford to pay when rates are at 5%, means that despite all the bluster, the probabilistic distribution of us engaging in war with Russia and Ukraine seems relatively low. The, the override would there would obviously be a moral reason to do it that may or may not come if there is some nuclear proliferation. But now you have to steelman the other side of the equation, which is, well, what were to happen if you were sitting there and you were Putin? Let's steelman setting off a tactical nuke someplace. Okay, I'm getting calls every other day from my two largest energy buyers, India and China telling me slow my work. I have the entire world looking to find the final excuse to turn me off and unplug me from the entire world economy. The only morally reprehensible thing that's left in my arsenal that could do all of these things together would be to set off a tactical bomb. I would be the only person since World War II to have done that. It seems like it's a really, really, really big step to take. And so I think that, ex of the clamoring for war that the military-industrial complex wants us to buy into, the financial reasons to do it and the natural resources it needs to do it are making it very, very difficult very unlikely. That is not just true for us. I think it's also true for Europe. I think the European economy is going to roll over. I think it's going— I see a very hard landing for them, which means that if the economy slows down, there's going to be less need for energy. And so it starts to become a thing where a negotiated settlement is actually the win-win for But none of this would be possible without zero interest rates. In a world of zero interest rates, we would be in trouble.
So you believe in the financial forces and pressures overpowering the human?
I believe in the human race. I really do believe in the human race.
Even in international war? More so there.
I think the invisible hand— and by the invisible hand for the audience, I think really what it means is, you know, the financial complex and really the central bank complex and the interplay between fiscal and monetary policy is a very convoluted and complicated set of things. But if we had zero interest rates, we would be probably in the middle of it.
See, there's a complexity to this game at the international level where the nations, some nations are authoritarian and there's significant corruption. And so that adds from a game theoretic optimal perspective, you know, the invisible hand is operating in the mud.
Preventing work. The person that is the most important figure in the world right now right now is Jerome Powell. He is probably doing more to prevent war than anybody else. He keeps ratcheting rates. It's just impossible. It's a mathematical impossibility for the United States unless there is such a cataclysmic moral transgression by Russia. So there is tail risk that it is possible where we say, forget it, all bets are off, we're going back to zero rates, issue a 100-year bond, we're going to finance a war machine. There's a small risk of that, but I think the propensity of the majority of outcomes is more of a negotiated settlement.
So what about— I mean, if you— what's the motivation of Putin to invade Ukraine in the first place? Financial forces are the most, uh, the most powerful forces. Why did it happen? Because it seems like there's other forces at play, both, uh, maintaining superpower status —on the world stage. It seems like geopolitics doesn't happen just with the invisible hand in consideration. I agree with that.
I can't beg to know, to be honest. I don't know. But he did it. And I think it's easier for me to guess the outcome from here. It would have been impossible for me to really understand— it is— what got him to this place. But it seems like there's an endgame here and there's not much playability.
Yeah, I feel like I'm on sturdy ground because there's been so many experts at every stage of this that have been wrong. But there are no experts. Well, on this— There are no experts, Lex. I understand this. Well, okay, let's dig into this. To that, because there's some— because we just said Phil Hellmuth is the greatest poker player of all time.
He has an opinion. Yeah. He doesn't— he's— they would be mistaken. Phil has an opinion. Ivey has an opinion as well on how to play all these games. Meaning an opinion means here's the lines I take, here are the decisions I make, I live and die by those, and if I'm right, I win, and if I'm wrong, I lose. I've made more mistakes than my opponent.
I thought you said there's an optimal. So aren't there people that have a deeper understand— a higher likelihood of being able to describe and know the optimal set of actions here at every layer?
Well, there might be a theoretically set of optimal decisions, but you can't play your life against a computer. Meaning the minute that you face an opponent and that person takes you off that optimal path, you have to adjust.
But what happens if a tactical nuke—
it would be really bad. Um, I think the world is resilient enough. I think the Ukrainians are resilient enough to overcome it. It would be really bad. It's just that it's an incredibly sad moment in human history.
But do you wonder what US does? Is there any understanding? Do you think people inside the United States understand? Not, not the regular citizens, but people in the military. Do you think Joe Biden understands?
Do you think— I think Joe Biden does understand. I think that—
I think they have a clear plan.
I think that there are few reasons to let the gerontocracy rule, but this is one of the reasons where I think they are better adept than other people. Folks that were around during the Bay of Pigs, folks that hopefully have studied that and studied nuclear de-escalation will have a better playbook than I do. My suspicion is that there is a, you know, in an emergency, break glass plan. And I think before military intervention or anything else, I think that there are an enormous enormous number of financial sanctions that you can do to just completely cripple Russia that they haven't undertaken yet. Um, and if you couple that with an economic system in Europe that is less and less in need of energy because it is going into a recession, it makes it easier for them to be able to walk away while the ships a bunch of, you know, LNG over there. So I don't know the game theory on all of this, but— Does it make you nervous that—
or are we just being temperamental? It feels like the world hangs in a balance. Like, it feels like, at least from my naive perspective, I thought we were getting to a place where surely human Civilization can't destroy itself. And here's a presentation of what it looks like, a hot war where multiple parties involved in escalating— escalation towards a world war is not entirely out of the realm of possibility. It's not.
I would really, really hope that he spends some time with his computer.
This is part of what I really— I really need to be spending time with. Agreed, but not kids, not just kids, but friends. The, the—
you may not have friends, but it's very hard for anybody to look at their kids and not think about protecting them.
Well, there's, um, partially because of the pandemic, but partially because of the the nature of power, it feels like you're surrounded by people you can't trust more and more. I do think the pandemic had an effect on that too, the isolating effect. A lot of people were not their best selves during the pandemic. From a super heavy topic, let me go back to the space where you're one of the most successful people in the world. How to build companies, how to find good companies, what it takes. To find good companies, what it takes to build good companies. What advice do you have for someone who wants to build the next super successful startup in the tech space and, you know, have a chance to be impactful like Facebook, Apple? That's—
I think that's the key word. If your precondition is to start something successful, you've already failed because you're not
