30% loss. You remember this is live and we have we take questions. I didn't remember but I knew that so. And there's music. Is it holding out for a hero? No it's a new one. Oh radical. Fundamental principles of freedom, rational self-interest and individual rights. This is the Iran book show. All right everybody, welcome to Iran book show on this Thursday, March 9th. He's already making faces at me. This is going to be fun. I haven't had Robert on the show yet. I'm not sure exactly why but we have a good reason to do it now or have had for the last year or so. Robert is my business partner, best friend. We've known each other since 1993 when we both got jobs at the same university in Santa Clara, Santa Clara University and got officers across the hall from one another, landed up hanging out most of the time together, doing our research together, starting a business together and we're still together after all these years. So hey Robert. Hey Iran, I guess this is our 30th anniversary. It is, God, that's right. So it'll be, it'll be September or late August. It'll be the 30th anniversary. It's my 40th wedding anniversary, my 30th Robert anniversary. So very cool, very cool. I didn't, I didn't remember that. I didn't either till you mentioned it.  All right, I'm not sure how we recover from that one. So as you guys know, we have, Super Chat is live so you can ask questions of me or Robert. We'll be talking about kind of the work we're doing now or some of the work we're doing now and we'll just see where the conversation goes and you guys get to shape the conversation because you guys get to ask questions. You know, you can ask questions about finance and we'll talk, we'll talk some about finance particularly as it relates to kind of tech but you can ask about finance both Robert and I, PhDs in finance and Robert is a portfolio manager at our hedge fund. So it's all good. All right, so for the last year or something, we've been working on a project that really was instigated by Robert called In Genuism with the idea of really looking at progress, innovation, but particularly focused on kind of what's happened in the 21st century. So why don't you just describe kind of what led you to think about this? What are the big questions that were intriguing you that led you to come up with this? Well, pretty early on in our work together consulting, we looked at venture capital and we looked at it from a little bit different perspective than most people. We looked at it from an academic quantitative perspective and tried to get a sense for what would be the indicators of why venture capital would either succeed or fail and that's a whole another ball of wax but what came out of that was I started teaching a class on Silicon Valley of venture capital at Santa Clara University and it was very different than your traditional entrepreneurial finance class and as we got out of the first internet boom and into the second internet boom, the social networking boom, my general here's how it works story continued to be very satisfying. I kind of felt like I had it figured out and then we hit the around 2015 and we started to see a sort of unprecedented success and we've had some extraordinarily successful companies in the United States. AT&T was probably the first that really changed the world. Maybe Standard Oil, Standard Oil even before that. So sorry, I should have qualified technology companies. Yeah, technology. Although Standard Oil was a technology company in its day. Information technology companies. Chemistry company, yes. And so we had this new evolution of technology companies that didn't really fit the story that I had been telling it didn't not fit but that's when I started thinking about ingenuism and why it was that starting around 2015 we started to get these kind of unprecedented results and the numbers are just staggering. You're talking about companies that are creating value that are the equivalent of the GDP of a major country. So companies like. Well, the big one is of course Apple. Most people realize that Apple is an extremely innovative and very successful company. But what most people don't remember is that despite being very successful in the 1980s, Apple was really flailing in the 1990s. And it was arguably saved by some combination of an investment by Bill Gates and the first internet boot, where technology generally was rewarded. But coming out of the end of that and the bust, Apple was a marginal computer company. And then it introduced it became a consumer electronics company and it did it in a series of product introductions that all built on each other, but that were as innovative or more innovative than the original Macintosh because they have changed the world in ways, you know, the idea of a smartphone really wasn't on the radar when Apple first introduced the iPhone.  When I say that, I mean, literally, the impact that smartphone has on us here in the United States is modest compared to what a phone, the impact of phone has is probably not an iPhone, but smartphone has on someone who doesn't have reliable electricity, doesn't have reliable wired networks, doesn't, you know, it's it's really been amazing. But then you also have Google, you have Amazon, and you have other companies that are coming up, you know, these are the three that that are currently that have had the biggest impact, along with Microsoft. But you know, if we're if we're having this conversation in 20 years, I think we'll be talking about a whole different set of companies. Yeah, and there was also the big social media companies also succeeded enormously during that period. Many of them have come down to earth a little bit over the last few years, but particularly Facebook just just took off and the kind of valuations something like WhatsApp and you would have never predicted a messaging platform would with no business model, right? No business model, no revenue model would would would, you know, be as as successful and as impactful as for example, WhatsApp has on an international scale. Exactly. And, you know, everyone question Google buying YouTube for $1.7 billion turned out to be, you know, one of the bargains of the century or Facebook buying Instagram Facebook, we probably only be talking about Facebook if they hadn't bought Instagram for a billion dollars. That's gives you a sense of the surprise that people thought those numbers were very large and it turned out that relative to the impact they could have both on the business and on the customers, they turned out to be very small. So, given the success of all this, and we're getting some questions and one one is from Ian, Ian, you have no clue how relevant to quite he's asking about Silvergate and Silicon Valley banks. So we'll get to that I promise. Robert has a lot to say about both Silvergate and Silicon Valley bank. The bloodbath today was interesting and and and then okay Michael has all right we got some interesting questions good Mel. It's just shift gears here, come back to journalism later I'll weave it in when I can. Yeah, we'll go back to it. We'll get to that covering topics and then and then doing the Q&A, the questions afterwards so far so good. So you're seeing this incredible success 2015, I think we're all living through it you know to a large extent. It's it was hard to tell at the time is this real is this market just being frothy and to some extent it was but it always is that that's not surprising with new tech. But what what what got you thinking about this is something different something new different than maybe Web 1.0 and and and what is it about this that you know got you thinking about maybe something new is explaining it all. Well when you have dramatically you know different and enormously you know much bigger results there's almost always a positive feedback that's built into it that's what generates the and in this case you know it led me to thinking about you know what really is behind progress and you know I think we both agree and if you really get down to it most people have thought about it would agree that there's something about human ingenuity that is essential to progress that explains why humans advance by virtue of their own effort at a much different scale and much different speed than any other species. And once we got thinking about it and really trying to model a little bit to think of how how would we consider the world inside its context. The big aha was that connection is extraordinarily important and what had changed in the 21st century was the world gotten much more connected you know there's been lots of people have looked at connection over time you can look at post rates or whether two spots were connected by telephone wire or by a railroad but that's a completely different level of connection where it's slow it's basically analog versus what the internet offered and then if you look at these companies that were wildly successful they all offered an increase in connection while benefiting from that connection so Google took the world of the web and made it accessible searchable you could find what you were looking for if you weren't searching in the 1990s you have no idea how good you have it and then you know currently the the large language model chat bots may be taking that to a whole nother level which we've talked about and I think it is it will be super interesting in the next five years but you had the same thing with Amazon you had the same thing with Apple Microsoft did an extraordinary job of shifting gears from you know really being a desktop company to becoming a connection company and that works in a lot of different dimensions and so once you recognize that then it all sort of fell in place because what does connection really get you it gets you the sharing of knowledge and it gets you collaboration and if you look at these companies they're all about sharing knowledge and collaborating they're connecting people in ways that didn't exist before and then that itself creates value that they can they can capture but then it also feeds back into overall progress for human humanity in general so so let's walk through what it is about connection that creates value here I mean even as you said even in the the telegraph was a massive innovation and by connecting people it created opportunities to creating huge value partially because suddenly you could make decisions from across the other side of the world and partially because you you had more information and you and and then collaboration how does collaboration fit in what how does that add value well if there's sort of three dimensions in how I think about it one is the basic sharing of knowledge so there's there's um connection in terms of existing knowledge and if you have access to it and today we do to basically all of the knowledge on the planet or 99 of the knowledge on the planet that allows you to build on what has already been discovered instead of starting from ground zero another their advantage is starting from ground zero because when you build on what has already been discovered you tend to absorb the existing paradigms and sometimes they're not right or they're not fully fleshed out there's something on an alternative but you have you have the option to do both and then the second is that building your own paradigm is that there's a much greater reward to discovering new knowledge and new information you know whether it's a new business model or a new manufacturing technique or a new wave of providing computing cycles or software package it's all much more valuable in a connected world because the entire world can benefit off of it so you know if we were you know living on an island and we were talking about innovating the amount of time that we would spend on innovation would be very different because the only the two of us could benefit from it so we'd focus on well what does benefit us and we wouldn't worry about scaling and it would be it would be very very different than what we have in Silicon Valley where the incentive is to build things that are going to have the biggest impact for the most people and that's because of connection and then the third piece is collaboration is you know it's very easy to think about innovation is happening with you know an individual individual genius like a Thomas Edison that is a savant in a particular area and is willing to work really hard and is experimenting and not giving crap because continually moving towards that model major projects that happen they require much more input than a single person to provide and it used to be you would have to bring all those people together physically together in order to work on them so the Manhattan project was a physical bring everyone together and have them work on it and that requires a kind of commitment that rarely happens for a major project and now that's just not the case you know we've certainly seen it since the pandemic that people can collaborate and people can produce great results without even being in the same hemisphere and of course the connection you know we now have eight billion people somewhere close to that six billion five billion connected in a real way through the internet connected to one another connected to all the connected to one another connected to all the knowledge in the world and then can leverage their ideas across all of that so when Apple sells iPhone it's not limited to an American you know this is all connected to globalization as well I think so you're not just limited to selling to an American you know American market of course if it's a digital product like Google you're not limited you know instantaneously you can sell across the entire planet and suddenly you've got this massive market it's interesting and I think it was it was was the professor I think out of Chicago one of the finance guys who talked about when they talked about ceo pay and why ceo pay was rising so much and one of the arguments he made was well you used to manage a company that sold to 350 million people now you're managing a company that has the potential to sell to eight billion people it's it's a whole different ballgame it's like LeBron James is going to make a lot more money than Michael Jordan because Michael Jordan it wasn't a global industry and now it is now you've got billions of people watching so you can leverage all that all those resources absolutely I mean the the rate limiting factor today I would argue is coordinating that collaboration because we've we've moved into a new paradigm and it takes time to figure things out you have to try a lot of things you have to have a lot of things not work you have to then figure out what is working and how to combine with other things that are working and this is a decade long process I mean if you look at past innovations the steam engine is a good example of an innovation that was wildly important you know it was the first time that you could really turn energy into mechanical action in a meaningful way and so suddenly the limit of human power and animal power was superseded by you have you can now turn energy into mechanical power but it took decades to figure out you know what all the applications were and that is you know I don't know if it'll take decades because things seem to be moving a lot faster but but that is relatively simple compared to coordinating hundreds or thousands or tens of thousands of people around the globe that used to have in one office park or one campus in New Jersey but it's much more powerful because you have access to all the eight billion people as opposed to you know some tiny fraction of that and you get feedback so much faster so when things don't work or things do work you get feedback immediately so experimentation is accelerated and feedback mechanisms accelerated you know at this pace maybe within a few years we'll figure out why tiktok should exist and if you heard the latest filter that tiktok has is you add this filter and it takes your face and it makes you look the best that you could look I thought that was already being used by everyone on the internet except for us except for us this is new so it's it's now you know teenage girls can see what they could look like if they were perfect uh yeah that seems like really healthy yes very healthy so so so maybe something will evolve out of this that's positive I I don't see it yet but I guess that that's why the metaverse will eventually take off because people you know won't be willing to to show their their actual face in the real world metaverse I could be anybody I want I can use any face I want so uh so connection is is is super important and you can see I think I've seen a graph where you can see as uh growth technological growth in particular and new telecommunication I mean we published that graph actually in one of our ingenious and you said by the way if you're interested in this whole area we do a regular podcast and a youtube uh show you can subscribe to the ingenious um channel on youtube you can subscribe to it as a podcast on other podcasting apps also for a while that we were writing a sub-stack and uh that is available in on ingenuism.com so you can go and read some of the stuff we started writing this a year ago Don Watkins was working with us um over a year ago uh yeah it was almost two and a half years ago really yeah all right um all I have is pre-covid and post-covid yeah it was post-covid everything else early post-covid so it's it's uh so there's a lot of written material there that you can find psychology to do that um so you know there's this direct correlation between the the connectivity technology and progress and connectivity connectivity now is exploded I mean it's hard to imagine more connectivity uh than what we have yet yes the chat bots suddenly look like uh there could be a whole new level and so how does how do chat bots actually help us connect well if you take the evolution of search you'd say all the information is out there there's some amount of information and the question is how can you access it and the the big innovation for google was to actually find what you're looking for to make search effective and then google's been slowly adding things like some related questions that you might have not have thought to ask but are really available on your search page so the you're not really looking for a website you're looking for information and the chat bots just appear to have the ability although with poor reliability in terms of staying factual but to have the ability to synthesize information in ways that you know maybe a really smart junior high or a high school student would do so it's almost like having an r.a. that can go out and grab the information for you and then it's also you know it's one less step if you're reading an article and you come across a concept that you're not familiar with you can always google that and find an explanation pretty quickly but with the chat bots you'll go out and find it for you and deliver it in a way that uh it can be and you can refine the search so it can be very close to what you would have wanted immediately and I think that that is a way of connected information that is fundamentally different in part because it's easier and the easier it is to access information the more connected we are to it because we only have so much time so much energy so much attention and this is why you know you you like to talk about getting implants in your brain and having the internet already you know very flowing straight in here and that would be an even you know a dramatically higher level of connection and there's no reason to think that something like that it probably won't be what we think it is but it's something like that won't show up at some point and you know people are very down in the chat boxes over the last few weeks I guess because there are all these disappointing results and chat boxes chat gpt acts like a teenage teenage boy sometimes or girl depending um and and it some of that is made up some of it's real but so why why should anybody take this seriously well you know I think google has probably had a chat bot I mean there was some talk about that researchers were concerned that the chat bot had become sent back over that maybe 18 months ago and so this is all very very new and so if we use a search analogy we're not actually at the google stage we're at the altavista stage where you look at searching go this doesn't work at all you know why am I bothering and it was because well this is the best we got and then it improves and it doesn't improve linearly there is incremental improvement but there tend to be major jumps forward and you know we've had whatever we've had in the initial development but there's every reason to think that it'll become much more refined and much more useful as we move forward yeah no absolutely I mean the one can only imagine how this technology will improve dramatically and um and the fact that I think they've made it public is probably going to accelerate its improvement partially because of connection right more people giving feedback more people interacting with it more uh and and that's exactly how this kind of technology improves itself by more interaction and I think it's representative of although it's kind of ironic that it was Microsoft who really just threw it out there but of how people see the potential for progress in iterated learning uh you know you you have there's one model is you try and fix it behind the scenes you try and fix it and make it and refine it and and then release it when it's as good as it can be and there's still going to be some problems but they'll be minimized and you know this is the NASA model because when you're sending astronauts into space you you don't have much room for error it's widely expensive and very slow uh and when I say very slow I mean that you don't get the progress nearly as quickly as if you're willing to go out there and fail because you learn much more from your failures than your successes uh and so the fact that Microsoft was willing to throw it out there and of course that was after it had already been been released by open AI uh that was definitely a a nod to the SpaceX approach of or generally a Silicon Valley approach of move fast and break things except that's often used to refer to move fast and screw things up and then ask for forgiveness this is actually a strategy of we're going to take we're going to take the technology out we know it's not going to work the first time but we're going to release it in a way where we can learn as much as possible as quickly as possible we're going to make it really good really soon and you know this is just one application of AI I mean the model the the model behind it is going to make is going to actually contribute to our knowledge not just through connection but through just it discovering things that we can't do I mean I was just reading an article about AI's ability to identify cancer uh at least with breast cancer where you get a lot of screen a lot of screen so they can it can learn um and it's just as good as radiologists today maybe even better in some cases and that's only going to improve yes AI is very good at pattern recognition and when you have a situation where it it's can be used as a front end even today it's you know wildly more efficient I mean a lot of radiology was was being sent to India to be read initially and now you can automate that on the front end then you know there are going to be situations that the AI has not hasn't learned enough to be able to handle and this is always the that's that one percent that is always the the trick when you get into the real world and it'll be the one percent as well when you get to you know actually accepting the results from a chatbot's internet search that come back synthesized and you have to have confidence that it's not made up and getting the last one percent of crap that's made up since it's coming from the internet it's going to be very great hard but there's still value of having it 99 percent right and whether it's radiology or a research project or even you know driving a car so 20 years from now you know how valuable is going to be AI broadly I have no idea but probably really value I mean not in dollar terms but in terms of scale I mean it tells me that it changes the world at some point that at some point it it's it's in everything that we interact with well it's a it's it's a really interesting technology because it is very very good at pattern recognition and then working out the effective ways to optimize within a particular pattern regime and so I think it'll have a huge impact on things like drug discovery or the testing of new materials of figuring out let's okay let's just take an example I'm going to make up off the top of my head so if if we had a room temperature superconductor that would change the world and a room temperature superconductor that at a reasonable pressure is a hard nut to crack there's just a lot going on and we don't completely understand the physics and it's something that I think an AI could lead researchers into a particular area that they might not have seen before and then that would change the world and it would impact our lives massively although indirectly more directly you can imagine that the that the AI becomes and we've talked about this the AI becomes you know a literal personal assistant it handles a lot of your life you know the 99 percent of the routine tasks that you don't want to handle but you have to because nobody knows what you want in the same way that you do well you know personalized AI could learn that and could then be providing you with you know itineraries or plans or scheduling or booking you or what you know there's just the sky is the limit but the the thing that is most interesting to me on this isn't on the technology side it's on the business model side because AI is a lot like most connection technologies where there's a massive upfront investment where you train the model and then there's ongoing improvement that that comes from people using the model so there's the positive feedback and the marginal cost providing it we can expect to be very low now it's very expensive to train the model so up front it's expensive and depending on how you amortize that you might even say it's expensive to use the model although given that the current models are being offered for free I don't know you know up to a million uses or something that it can't be that expensive to use it and so you have this this situation where you're going to have AI is that have been trained and that basically tells you how good the AI is and then it's going to be the obvious price point is free because the marginal cost providing is so low but there does need to be some way to monetize it to both cover the training costs and also to make it worth offering and it's not obvious how you do that it's it's easy with search it's easy with social media and basically everything that's free is generally advertising supported it's not as clear how you do that with an AI so it's that to me I think is the most interesting piece of it because it seems like we're going to get a very rich market where there'll be AIs that are are relatively less powerful that are completely free and other ones that you subscribe to in the same way that you might subscribe to Netflix and maybe it's a similar cost and then maybe they're super powerful AIs that you'll cost a lot more that researchers or universities that there's going to be a very rich market but that over time more and more of it will be free and if you think about the global impact and you're talking about eight billion people with smartphones and access to these kind of intelligent agents that'll be huge you know change people's lives and it'll just be a spillover from the work that's being done now yeah I mean it makes it'll make people dramatically more productive I mean this is people always fear technology is going to take jobs and fear technology is going to make people poor because they can't they can't but it does exactly the opposite because it helps everybody become more productive because it gives them access to information and to abilities they wouldn't otherwise have if you want to argue the opposite of that the burden of proof is on you because that's how it's always been and if you think through you know how AI can be used there I don't see any reason to think it'll be different so shows but once they know if you've seen the movie X Machina I have comment on it well I mean we do movie reviews in the Iran book show go for it well it's been a while since I saw it but basically the idea is you you know AIs are used to create sex spots I mean it's not it's not exactly the it's it wasn't that movie but that is basically the idea and then if you are trying to make an AI that is is very human like that it certainly could you know become an independent entity and kill his maker but I would be interested in talking to someone who's thought more about the movie I found it to be entertaining but it was basically Frankenstein and that's that story comes out over and over there's something that appeals to us as human beings and of course AI will definitely be used in the sex industry oh yeah I mean almost all progress in technology you know spurred by spurred on by the sex industry there's a new model there's a new movie out in the theaters I thought recently with this doll Megan Megan Megan this is exactly the kind of movie I don't go to see but it's actually so I watched it streaming oh you did okay and it it was actually really interesting because it has all the Frankenstein elements to it you know they tell the doll you know keep keep this girl safe and and you know protector physically and emotionally and so it you know starts killing people who bully her and it makes complete sense given its orders except then at the end it turns on its creator and on the little girl and and this is not consistent so it's the same idea sex machine aware where it's like you know I'm not going to do what they tell me to do anymore and that's that's the normal ending but it was it was done in a way where you could also interpret it as taking care of the girl's emotional well being so if you think about taking care of a a young girl's emotional well being so you're an AI and you're given this instruction so you know it's pretty easy to say I'm going to protect her physically and I'm going to kill the nasty dog next door I'm going to kill the bully I'm going to kill you know that that's easy to write but how are you going to take care of her emotionally so you want to be a friend you connect with her you give her and so she becomes very connected with you and then you're connected to the internet and you start your learning and you come to realize that as the AI that this isn't the healthiest relationship for this little girl that she's completely attached to a machine and starting to not be attached to and the little girl's parents have been killed in a car accident and but you know the close the alternative relationship in the movie would be with her aunt who has taken her in and given her the murderous AI and so in the end the AI is destroyed which it's hard to imagine how it would be destroyed because it's been sort of superpowered all the way through except that if you roll it back you'd be like okay well if if the machine is learning which is what it should be doing and it figures out that actually it has not been acting in the best interest of this girl's emotional health then it would have to sever the tie with the girl because the girl's very attached to it so it can't just turn itself off and say you know I screwed up because the girl would be very sad so you know it becomes an overtly murderous machine and then all of a sudden loses is a good way to reconnect her with her aunt and sever the tie and I'm pretty sure that's not how they wanted you to interpret but it made the movie a lot more enjoyable for me the machine commit suicide in order to save the girl's emotional well-being basically that's that's the way that's the way that you could interpret it you know not overtly but by allowing itself to be beaten in the end all right here's another AI question could you comment on the highly interactive neural network AI on the model of deep l deep learning deep learning I guess I don't know I mean it would be silly for us to comment on that because this is not the area where expert and I didn't know ask me about server gate and get on silicon valley bank so you get in the weeds then you your listeners are probably are better suited for this so I'm gonna pass or instead of making passing on a neural network instead of just making stuff up so connectivity is crucial but you know one of the one of the crucial things for innovation is you know what do you do with all this knowledge you go out and try new things experimentation and and and with that comes of course failure so talk a little bit about exploration and failure and how they fit in with this model of learning and progress so progress means that you're learning new things and you know one of the things I've gotten out of thinking about this is that we use the word learning without applying any distinction so most of us think of learning is like we open up a book and we we read it and we learn some new things so that's absolutely a legitimate way of learning but that's not the learning we're talking about that's important because it allows you to it facilitates the the second more powerful kind of learning which is discovering new things and those things can be you know factual they can be empirical they but they're the things they're it's knowledge that didn't exist in the world before and that's what drives progress if the knowledge body is static then you don't have any progress I mean there's nothing to build on there's something to build on but nothing's being built and so the kind of learning that really matters and that is amplified by connectivity is the new information new knowledge new practices and that is something that sometimes is done theoretically but even in the areas that you think of it as being done theoretically it's usually there's a massive implementation issue so you figure out the physics of a transistor but then you have to actually get a transistor work in the real world and that that you're you figure out the idea behind electric current and a light bulb but then you have to figure out how you're actually going to make it make it happen and so those kind that kind of learning of actually making things in the world it does require a lot of experimentation meaning that you try things you generally fail and you don't try things randomly you then try the next thing based on what you learn from the previous failure and the problem with the not applying distinction learning is that in the first type of learning the the book learning I'll call it is failures just bad if if I give you a book and you're supposed to read it and learn what's in it and then I give you a test and you don't can't answer any of the questions then you then you didn't read the book I mean it's you you've failed and it's definitely bad but it really is a failure of reading the book and that isn't the same as if I ask you to write a new book by you know learning all these new things then you have to go out and you try things and there's going to be a lot more failure than likely successes so for every page of the book that this new book that you're creating there might be 10 things that you tried that didn't work and so they didn't ever made it into the book and that's what you see in Silicon Valley where for every you know company that we see is a wild success and going public and there are 10 companies that we're trying to do a similar thing that I don't mean similar and sort of just trying to do the same thing but the same kind of ambitious very very potential very large potential activity and it just didn't work out and it didn't work out for whatever reason and we don't know because we never hear about those and so when you have both of those existing in the human condition but we we grow up with the first kind of learning the first kind of failure it colors how we think about failure for the rest of our lives unless we make a concerted effort and this isn't true for everybody from the majority of people then you you're stuck with failure is bad and what we really want people to to grow up with is failure is bad if you didn't put in the work or you didn't learn from it otherwise failure is absolutely to be expected and you know we can even celebrate it because it means that you did you did you're doing something and that's a key part of ingenuism is that this kind of learning is generally in the process of doing things if you think about where you apply your ingenuity you apply your ingenuity when you're trying to get something done and it could be very simple you know something you're doing around the house to you know trying to design a rocket ship that'll go to mars all that full spectrum as long as you're doing things you have the opportunity to apply your ingenuity whereas if you're not if you're not doing interesting challenging things then the opportunity to apply your ingenuity is going to be very limited and part of part of ingenuism what's the deals with kind of the the culture that is necessary the environment that is necessary to kind of breathe this kind of attitude towards failure and towards progress and towards connectivity I mean we know for example that they are cultures within even the US but certainly internationally they are cultures that are less accepting of failure Europe is well known as if you fail you're out you're done you know if you do a startup and you don't succeed you're done whereas Silicon Valley is I wouldn't say no big deal but you're expected to have a failure in on your resume and people would be surprised if you didn't you know almost all the great entrepreneurs testament to that and people build businesses around failure you know we talked about space acts makes this is a great example where they fail to learn and but amazon also had had this amazing has an amazing culture of allowing failure absolutely and I you know this this last piece because it's clear that a supportive environment is going to play a huge role in progress we see that across time at different times of different environments and progress shows up when this environment supports learning in all of its depth and then there's also across geographies and you know our favorite example my favorite example I don't know if it's your favorite example but is North Korea and South Korea where you have two very different environments you have basically the exact same people and you have an extraordinary divergence of progress and it's not the only example you know we saw the same thing in East Germany and West Germany and what was super interesting about the germany is is when they're reunited you find out that it wasn't you were it was confirmed that it was the environment and not the people because well it took a generation I think for there's a certain residue of the of the of the culture in Eastern Germany and and that has to kind of die off and be replaced by a better culture but yeah it's yeah it's it's the environment you create and the details of that are you know one of the things that's clear is that in the supportive environment people have the opportunity to do interesting things and you know what does that mean in practice is something that I grapple with you know if we we believe that freedom is essentially here because if you're just doing what someone else tells you you're not applying your ingenuity if you're doing what someone else tells you as here's the task and go and figure it out and you have some agency over it then you're applying your ingenuity so there's there's a certain level of freedom at you know that within a team or at a company in an organization in a society that is essential and how do you you know we have this weird dichotomy you know in the United States but I'd say in the world as a whole where we have we talk a lot about freedom we have a commitment to freedom we have some areas that we're extremely free and then we have other areas that are not and how that dissonance exists and what we can do about it and because we have to be in some sort of unfortunate equilibrium where you know the both these things can exist simultaneously and we don't seem to be moving out of it versus having and I don't have a pre defined idea of exactly what it means but they have a truly free society where people have they are given the full benefit of being able to apply their ingenuity that I think would make a huge difference and it's something that you know I don't have an answer for but maybe AI can figure it out for us. Well we see what freedom does at the margin right North Korea South Korea so we see what it does there and and you wouldn't would think that people would say hmm I want to extrapolate more freedom that is let's go even further along this line and see what happens and it seems that beyond a certain level there is definitely resistance in populations to going that extra mile and that's part of what we're trying to educate people about and trying to get rid of that resistance. All right so we have a few questions you guys can ask I won't say about anything because let's let's try to stick it to stick to the areas that we've talked about or areas that you can project Robert has as you can see if Robert doesn't doesn't think he knows something about something you'll just say nah I'm not going to answer that so ask questions where you think you might have something to say about it we are so super chat is open so feel free to to to ask questions let's see where should we go with this looking at these all right let's let's do Silicon Valley so thoughts on big finance news today Silvergate collapse and the run on Silicon Valley Bank. Well you know this is really interesting because it's the end game of basically what was created by a long period of zero interest rates so and it's easy to see this at hindsight and we were talking about it in advance but it's just very much clicking together so for listeners who don't know Silvergate is a San Diego based bank that just was traditional small community bank that sort of rotated it pivoted into crypto and became the nation's crypto bank and so it grew very rapidly in the late teens and early 20s because it was the place where you would go if if you were banking crypto now crypto has a there's an increasingly hate but it's always been a relationship with US regulatory authorities and so there weren't there weren't very many banks where you could actually change dollars into say bitcoin and Silvergate was committed to being that and facilitating transfers without having to do that and they were talking about creating a stable coin they bought the the Libra technology that Facebook was was putting together for a stable coin to be used on Facebook it was all very exciting and it was the most expensive bank in the country not that long ago about 18 months ago and the reason it was it was successful because it was operatingly successful is as a traditional bank it takes deposit and it invests that money at a spread and collects the spread so most banks you know they take deposits and they invest in they they make loans Silvergate was that kind of bank it was primarily real estate bank in Southern California a very plain vanilla but when they rotated into crypto they became more of a take deposits and invest in securities so they you know grew from 800 million in deposits to 12 million in deposits or some number I made those up but they're they're close and what kind of what kind of securities did they invest in well so if you put yourself back a year and we've talked about this in the context of stable coins but it applies to anybody who's trying to to live off of a spread is you you're getting all these deposits for free because if you're investing in Bitcoin you don't care about you know getting a 1% on your your cash deposits you want to make your 100% on your Bitcoin and so you get all these deposits free but if you put them into treasury bills you make you know 25 or 30 basis points so your spread is tiny and you know you're a very ambitious bank so you're spending a lot on technology you have overhead you you want to pay yourself a lot there so Silvergate was probably running around 150 million dollars in annual expenses so you know you do the math if you have 12 billion dollars in deposits and you invest it at 30 basis points it doesn't really work but you know 30 basis points is 0.3% but if you go out farther into the into the yield curve so you go out to a longer duration you don't invest in very short-term treasury bills or you go into riskier things like mortgage back securities you know that give you a higher yield well then maybe you get 3% and it's you you're doing really well if you got 12 billion dollars in deposits at zero cost and you're making 3% on it you know it's 10 times as much money in it you go from not making a Monday cover your expenses to being wildly profitable and this is basically the same thing Silicon Valley Bank Silicon Valley Bank has a different business model but they bank startups in vcs and startups in vcs also don't care about earning one percent interest you know a vc writes a not literally writes but you know figuratively writes a 50 million dollar check to a technology company in Silicon Valley basically Silicon Valley Bank just takes 50 million out of the vcs partnership account and puts it into the startup company's account it's super easy and then they they provide great service they don't pay any interest but they don't care about interest they're happy with the service and of course venture capital has been booming for the last five years until last year and so Silicon Valley Bank's deposits didn't grow like silver gates grow like by a factor of 15 but so Silicon Valley Bank's deposits exploded as well because all this money was sloshed around a bunch of capital a lot of it's finding its way into Silicon Valley Banks and they did the exact same thing they invested in securities that gave them enough yield that they could be a very profitable bank and they were also a very highly valued and bank a year ago but you fast forward to today and interest rates have gone way up and all the securities that you bought at 3% now look terrible because you go out and buy treasuries and get 5% and your cost of funds if you were to go out and borrow yourself would be say 6% and this is essentially what happened in the savings and loan industry in the 1980s is you know they went from paying 3% on deposits and lending mortgages at 6% and taking 3% spread to paying 9% on deposits and only getting 6% of the mortgage in the whole industry went bankrupt well that's that's it's the same old story and so today now if you could hold your deposits this can can work and what happened to the thrifts is all the deposits started leaving because money market funds were paying 12% but what happened Silvergate was crypto went into its winter and FTX failed and Silvergate had a lot of deposits from FTX and so your 12 billion deposits suddenly 6 billion just they say we want our money back which is the whole point of a bank except you know they they didn't have $6 billion sitting around waiting to go out they had all these securities that were all down 10% so they had to sell the securities and then they took a big hit and then people started realizing that they weren't doing well and people start pulling their deposits we saw a Coinbase say you know we're not going to bank with with Silvergate anymore we just we don't think it's a good idea they're having trouble and it's boom it is literally a run on the bank not because of insolvency which was the case with the savings and loans but because of illiquidity so in the end I expect Silvergate's equity holders to probably get a little bit back you know they're they're liquidating it wouldn't surprise me if they got I think the stocks probably around $3 a share it wouldn't surprise me if they got $3 or even $4 that's why it should be for another zero yes is that and it'll all be done on how effectively they can liquidate and we know they can't liquidate super effectively or else they wouldn't have gotten in this trouble and I don't expect Silicon Valley Bank to to end up in receivership or to liquidate but they're basically down 80% and and way more from their peak I think the stock is at 80 and it was over 320 so down now I'm getting the numbers mixed up I didn't look at it carefully enough I didn't anticipate the question but it's the exact same story is the deposits that that so startup companies put deposits of Silicon Valley Bank and then they start spending them and so those balances go down but there are new startups coming in and they're putting more and what have been happening is there's just more startups with more money and more startups with more money huge piles of money and now the startups are taking out money and that the taking out has accelerated because things have slowed down and the flows in have decelerated and suddenly your pile of money is shrinking instead of lots more coming in that was going out lots more is going out that's coming in and you have to replace those deposits and once people start talking about the problem it becomes a real problem because now if I'm a VC firm and I've got 60 million dollars sitting in Silicon Valley Bank for my next investments I'm thinking maybe I should move that because it's going to be an issue for Silvergate's depositors it's deposit insurance has limits now on non expiring accounts those limits are really moot but if a bank gets into trouble it might be that you can't get your money for a week and that's when the investment round was happening and now everything like it's might as well just take it out and put it with JP Morgan Chase because this is not going to happen with JP Morgan Chase so this is a classic bank run I mean this is the same thing as we saw in the 19th century and it's just a little bit more sophisticated now it is for different reasons and I think they're unique to these two banks because they have very narrow they had very narrow business models and it was in a sense and I did not see this coming in advance but if in hindsight it's in a sense that they were built with negative feedback because as long as Bitcoin was going up Silvergate was going to do great they're going to have lots of deposits their Bitcoin loans which turned out not to be really a problem we're going to continue to grow and there was going to be really nothing between them and growth except for you know capital requirements but once crypto turns down particularly if people lose faith in crypto it was predictable if crypto became unpopular that most of their deposits would leave and so at the exact time that their business was melting down they would have a liquidity crisis and that's a recipe for failure and kind of the same thing with Silicon Valley and that's why when we started when you first raised this a little while ago so this is really a fallout from having zero interest rates for so long because you get you get the sense that this is the normal and it's no problem to have 12 billion dollars in intermediate term treasuries they're super safe because you know what could go wrong and the same thing if with Silicon Valley Bank is it's sort of predictable that if interest rates go from zero to who knows where they're going to go let's say it's six percent that it's going to impact the startup ecosystem and not in a good way so you're going to get hit on both sides so what's a little surprising is you know Silvergate I get it they were dabbling in something completely new and exciting and all the way up and and and just to be clear they weren't buying crypto right they weren't investing directly in crypto they can't as a bank they're not allowed to they were taking deposits and issuing loans to the industry but the loans were tiny and they those haven't been the problem the it's mainly they the deposits which is they bought 12 billion dollars with securities that today are only worth 10 billion dollars what's interesting to me Silicon Valley Bank which has been around forever I mean not forever but it's for a very long time Silicon Valley back to the probably late 80s certainly in the 90s I remember them being a significant play in Silicon Valley they've had the same business model throughout and even they got suckered into the low into the zero interest rate environment and and maybe there's just nowhere around it maybe that it's kind of a trap that that once you once you have this flat yield covered zero screwy things are going to happen well with this with this particular business model so if you think about the model banking this is a problem for everyone at zero interest rates but if you're making loans you can say you know what I'm not going to make you a loan unless you pay me three and a half percent and you know interest rates are zero so we would call these floors and the borrower is going to be well I would like to lower rate but three and a half percent is really low I'm cool with that but when you go to the treasury market it's a global market you can't say okay I'm not going to buy anything that doesn't pay three and a half percent unless you're willing to take credit risk or interest rate risk and so and this is exactly the problem that money market funds had is you know money market funds take people's money and then they pay them the yield on their underlying security so they invest them in really safe stuff like commercial paper and treasuries and I think and then they take a little piece to cover their expenses and then make it a profitable business well that didn't work for years and so most of the money market funds were either not truly money market funds or they were loss leaders for larger companies so you know fidelity or vanguard was so yeah we're going to offer a money market fund and we're just going to eat the fact that it's going to cost us six basis points a year because it's we need to offer a money market fund and then they weren't that popular because they were paying basically zero interest just like everything else but if you're a bank and you have a full set of overhead and you want to keep the organization in place you don't have it you can't be a lost leader Silicon Valley bank you kind of have to now the trouble is that both these banks okay my objection to that giving them that passes both these banks were extremely profitable before it hit the fan and that means that they got greedy that they reached for enough yield not to just survive zero interest rates but to thrive in zero interest rates which meant that they were going to get slammed if rates went up quickly particularly now that we can see that it was going to hit them on both sides not just their interest rate losses but their overall business was going to deteriorate at exactly the same time you know and the crazy thing you're on is that both of their models if you were starting today yeah you'd make a lot of money because there's still even though there's a lot less venture capital money there's still lots of venture capital money even though there's less 0% interest rate there's still except 0% interest rate you know crypto deposits going to be really hard in the United States but there are going to be people are looking for a way to deposit dollars and access crypto and if you could provide those things starting from scratch you'd have zero cost deposits and now you can invest in treasures at 5% your spread is huge it's wildly profitable but you know this so we should be buying up the assets of Silvergate and and start we should start a crypto bank probably right now yeah probably we should wait at least a year for things to settle down before doing that but there is an opportunity if you could provide legitimate service because if you look at basically this is what stablecoins provide as they provide a way to hold effectively dollars but if you look at the stable coins none of them are like banks none of them are oh you can have your money back whenever you ask for it we have fully audited and we're 100% there all the stablecoins are well we've seen stablecoins blow up and I assert with a fair amount of confidence we'll see more stablecoins blow up because everybody would have been reaching for yield until recently and if you get through the transition it's a wildly profitable business but the transition is what blows people up yeah and I think I think we're still in the midst of that transition we're not on the other side of it yet definitely rates are still going up and we have no idea when they're going to stop nope all right let's see Michael thank you Ian that was a great question to get us going this one's out of left field so I know what we do with this do you think it's a sign of decay in our culture that people are dressing down at work Michael you're asking the wrong people here um there are aspects of popular dressing to reflect egalitarianism as an ideal nobody looks too fancy and if you do then it's some sort of pretentiousness yeah so Robert was the first guy I ever met who taught went to university and taught in shorts at California I never I don't think I ever got to that point again today I would but I think in those days I I dressed up relative to you down relative to everybody else yeah I actually have something to say about it only because I've been so bad most of my life so I have a friend who said something to me maybe five years ago well because you know we were we were talking and he was just dressed sharp you know tailored suit and and there was absolutely no reason for him to be dressed sharp I mean he was he was working but he certainly wasn't trying to impress me and I said do you just like to dress up because you know if I can get that he said no I I got the advice at one point to dress for the job that you want and I I took that to heart I just don't want a job I mean a different job but I but I think that it's I don't I wouldn't call it a sign of decay because I think that it's there are a lot of ways to express your ambition and your your your willingness to to do whatever it takes to get something done and dressing the part is one of them but it's not the only one I do I suspect and then now I'm just flapping my lips but that you know work from home has completely changed and not that we're not in a permanent equilibrium that we're not going to go back with everyone wearing yoga pants to work but but it is interesting I mean we we started out in our careers when I remember going to New York and you had a you had to wear a suit and tie and everybody wore a suit and tie and it was just it was just accepted and but in Silicon Valley you didn't you you you could you could be pretty casual in Silicon Valley and Silicon Valley is infected the rest of the world I mean I go to London now and and I don't wear nobody wears a suit and tie in New York certainly nobody does or very few people do and I mean you know I I personally view it as a positive because it allows me to dress down which I enjoy but I also I don't know there's a stuffiness to it and there's a kind of there's a there's there's a tradition bound to a particular type of dress and there's much more individual individualization something like that in in people's ability to dress what's comfortable and work in comfortable clothes work is hard arguably we've replaced the uniform just with something a lot more casual you know the hoodie versus it was a uniform and it was actually it's a funny but you know related story irrelevant to everyone else's life but so I didn't have a lot of fancy clothes when I became a portfolio manager and we had partners who were very dialed into expectations and appearances and so I came home one day and found two giant boxes from Brooks Brothers they had given up telling me to go get nicer clothes and just send it to you and there's something to be said for for having the uniform but I agree with you that I find it to be an improvement to have a more a broader spectrum of what's acceptable and I wouldn't include slovenly despite the fact I am often slovenly I would not include that in it from a business setting well in you know it reminds me of IBM remember IBM used to have a uniform it was a dark suit white shirt red tie and it was just certain but in that at least the sense was in the 80s that dad had that was reflective of a kind of a well you remember the apple the the commercial the big brother commercial yep yep that they were part of big brother they were and they were stayed they weren't going to innovate they weren't growing they weren't doing anything exciting and apple on the other hand was the exact opposite extreme because the stories are that when when Steve Jobs would go and raise money I mean he often hadn't showered in a couple of weeks because he went through this period we didn't believe in showering and he had long hair and so he stunk and he was he was a complete mess and what's amazing is that he still raised money and that's a testament to Silicon Valley entered Steve Jobs probably but but to the fact that they they weren't he couldn't have raised money from IBM he couldn't have raised from that type of person couldn't have raised money in New York it had to be from a new type of and these are the first venture capitalists a new type of financier who paid attention to something different and yeah so I think that's an improvement although yes I mean I'm not sure I would want luckily Steve Jobs grew up and and created his own kind of uniform and look right the the total neck and the uh in a very sharp very sharp look but that was uniquely his it wasn't something that you just copied from everybody else right let's see um oh this is on on the same topic Jennifer says my dad said he was proud to finally get to wear the long doctor's coat instead of the short intern coat yeah when uniforms invoke promotion or really explicit status symbol then then they're really important there's no question they remind me Jennifer but you know Robert might remember this point I think first time my mom and and dad came to visit in us and in um in San Jose when I was a professor and somebody called and asked for Dr. Brooke my my mom got really upset because like my dad was a Dr. Brooke right I mean because he had earned it because he got a medical degree and how dare I use that terminology so so I don't right just nobody calls me doctor anymore hasn't in a long time all right let's see um all right this is a question to me it looks like Robert you can answer it too do you typically watch movies or listen to music on long flights what's your strategy do not be bored since you fly so often and will we see supersonic commercial aircraft in our lifetime um what do I do on long flights so I used to read I mean it's a it's a great time to just pick up a book and read and and that used to be the case and then the internet completely screwed that over um so now I mostly watch movies I watch video it's I'm usually tired when I'm flying reading is a little bit too much of an effort for me these days so I find it just laying back and and watching something but either reading watching or listening to a book on tape is how I um deal with kind of long tedious tasks like working out I listen to books on tape when I work out I try not to not to do those long tasks without something going on how about you I don't fly nearly as much but I do fly and I do fly between California and Puerto Rico which is a journey in itself and it's funny because I'm all about connection but I'm also committed to being disconnected I'm terrible at email since we started using Teams internally I basically don't check email I don't have my work email on my phone I do not ever connect to the internet on a flight and um my wife it drives me crazy because I have my my ringer turned off on my phone and I usually don't know where my phone is you know if I'm around the house you know if I'm you know and that's because I think it's very important to have time where you're not being interrupted I find it both productive and also restorative and a flight is an obvious thing for me I will sometimes watch movies although I have you know now with streaming we have access to movies so it used to be that you get on the flight you'd be like oh I finally get to see this movie because you know you hadn't gone to a theater and now I typically read and it's a it can be you know if I'm tired I'll sleep but it can be a time where I am just not interrupted except by those stupid announcements that yeah I download I download a tv series I want to binge watch and just binge watch it on the flights it's it's the one time we have a block of time which just I'm not doing anything so um let's see um Adam asked did the oh commercial aircraft a supersonic commercial aircraft in our lifetime well I certainly hope so because we absolutely should if you think about the aircraft industry it's been an extraordinarily success in terms of making planes more reliable and safer I mean it's literally been over 20 years since we had a fatal crash from a major u.s. airliner and you think about your your flying 200 tons of metal five miles in the sky over thousands of miles and thousands of times a day and no fatal crashes for two decades that that is I don't want to take anything away from that and the rest of the flying experience is basically unchanged or you know worse although cost adjusted I think it's probably better but but the the fact that we haven't seen progress in terms of the the speed of travel makes me I'm very suspicious and I'm afraid whatever has stopped that in the past is going to continue stopping it and given that the world has gotten smaller better connected without actually physically being together I don't know that the impetus is there to overcome whatever that barrier is so I absolutely hope so because what what we learn is how to make planes go much much faster but it requires advances in materials or engine efficiency or and those spillover into other areas and sometimes the biggest impact ends up being not what you originally were looking for and we miss out on that when we're not doing things so this gets down to you know how are we going to learn how to you know make new materials other than what Spacesk is doing and figuring out that stainless steel is a great way to build spaceships well you you have to try a lot of things and supersonic travel you know outside of the military has just been completely neglected so so I'm optimistic because there's just so many projects right now you know that seem to be moving forward and NASA has a project boom has a project there's at least one of the company that's doing it airlines the investing we'll see I mean it can always be killed but let's it really does look like the technological breakthroughs have been made and now it's a matter of getting the regulators on board and getting the noise issues dealt with and and and and then making sure it's economical that's the other thing is is it economic all right uh Adam asked did us lose its competitive advantage and he takes us an example here am am s l the the Dutch company uh that had to stay in Europe because of us antitrust immigration restrictions etc I think that so it's unfortunate that the world doesn't seem to be going the way that I had hoped it would where thinking about a US competitive advantage would make no sense and I think that we have we made a choice uh it was sort of a it was a choice we didn't have to make because the United States is a big enough country that we could be completely isolated we you know if we were North Korea um well not not with all the craziness but just being isolated we would be a lot less rich but we'd still be very rich and most countries can't do that but we made the the choice that we were going to particularly with our allies we were going to treat it like this is one world and so I think the question I would ask is so first of all no because we would not be as advanced if we were if we were not tapping the rest of the the other 7.6 billion people out there we would not be as advanced you know that's what I say we wouldn't be as rich I don't mean just money I mean everything in life uh but they we do seem to have a you know with Russia invading the Ukraine and with China you know continually threatening this South China Sea and Taiwan and you know Taiwan being so important in the semiconductor food chain it's we do we do seem to be splitting into two diff distinct parts of the world or two poles I don't know what the best way to say it but definitely Europe is is part of our group and so I wouldn't say that we've lost our advantage in fact if you think if you think of it in bipolar world our our team has enormous advantages and it's starting to use them against China and I think that's you know a horrible outcome I don't know that it's it's there's a choice I'm just I'm not an expert on this I can see arguments for why this would make sense but it's it's definitely a second best outcome ideally you know we wouldn't be talking about US is competitive or competitive advantage we talk about comparative advantage but not about competitive advantage because we would all be working together yeah and and I think well the US probably does lose some I'd say immigration restrictions right now are definitely a barrier to US success even in the context with China I mean a lot of Chinese would move to the US and and be incredibly productive over here but SML is an example of a company that for example they buy their lasers from US companies so the US company comparative advantage is the laser right but they buy their their lenses from a German company and I'm just not sure it it would be worthwhile for the US to try to mimic kind of German expertise in in mirrors and and lenses given that Germans have been doing this for 150 years and they're really really really good at it you got Leica you've got and why so whatever they call they you know they you've got so many German good lens companies so ASML just not just but puts it all together and of course where did the idea come from from the most sophisticated machines as ASML makes it came from Intel so Intel basically gave not gave exactly but but traded with ASML and gave them that idea it knew it couldn't develop it internally so it let ASML do it I think US companies could benefit from it if they had the right attitude towards towards it why Intel declined the way it did is a good question that probably has to do a lot with corporate culture and but I'm I'm not sure we have the answers for that I don't know if you have any thoughts on why Intel is not at the top of the game anymore I think it's very hard to you know Intel was trying to be a generalist and that's very hard to do because you have to be number one in every area and once you're not then you're at a disadvantage for someone who is buying number one from or putting number one together so Apple's a good example of you know Apple is is the leading smartphone company there's no question about that but is Apple the leading everything that goes into a smartphone is the leading touch screen company is it leading chip companies and leading radio company is the leading no they're continually developing their their capabilities and they are leaders in design and and putting it all together and they are leaders I'm sure of different components of it but that's the model that generally is is more successful than if you were going to use only homegrown for everything and Intel you know they gave up on the manufacturing equipment which makes sense and you to to be number one in semiconductor manufacturing equipment and semiconductor manufacturing and semiconductor design and semiconductor mark sales and marketing and put you know that that would be unheard of and it wouldn't last very long even if a company were able to accomplish it so I think it was inevitable because they didn't really pick an area of focus and they're still doing that now you know they're big into we're going to move fabs and have fabs in the US and if that's going to be if you're going to be manufacturing then you there's no reason in hell couldn't be number one but really they were around design of desktop processors and that market is mature and they were they didn't move into and say become number one in smart phone chips well now they're going to get a government subsidy so who knows so it should only get worse yes exactly all right um Richard asks I see high potential value in trustworthy curated knowledge bases for generative AI um specializing in professions like medicine they would have deep expertise with little suspect content from the internet what do you think that I I completely agree I think it's very hard to predict how this is going to evolve but as I said earlier I think there's going to be a spectrum of AI they're going to be broad and they're going to be narrow they're going to be different costs and they're going to be different quality and I do think that and this is with no personal knowledge this is speculation given that we're early in the curve I do think that the training methods and the data on which train has not been optimized and it may be hard to figure out without just a lot of trial and error because these sort of models are they're not uh what's the right way to put it they're not deterministic in the sense of you have a bunch of if then statements so you know exactly what goes in and what comes out and it's fully predictable so if you'd have to experiment a lot and I expect people will um particularly you know as the cost of computing continually goes down and and hopefully that'll continue there's no reason to think that won't continue uh and and if we ever solve the cost of of electricity which is a whole another ballgame um you know we talked we we talked about airplanes flying through the air and never crashing but we can't build a nuclear power plant that would be fully you know monitored or even your car like it used to be cars would break down they just would and now you buy a car and you drive for 10 years you get the oil changed once a year you don't do anything and it just keeps working with no maintenance so if you combined you know a stationary uh asset like a nuclear power plant with with high level maintenance like an airplane you it has to be better than an airplane and so no no problems I mean 20 years maybe it's new problems in 200 years but if we if we could get uh the energy cost down because a lot of the the um as you train these models a lot of the cost is just running massive amount of computing cycles then you could experiment and you could say okay well let's go and let's just train one on the broad internet and it's going to come back you know hallucinating like crazy just because that's the internet for you and that's train one on the technical journals and um and maybe select blogs and you know you could try 10 different ways of doing it and see what the different results are and then we'd start learning how to make uh generative AI more reliable you know and I said generative I mean generative knowledge AI I was supposed to create a pass all right thanks Richard all right Martin says good evening from Liechtenstein wow low vats on super chats here that's good low vat is always good what's your explanation for the us having the largest companies and the most radical innovations and what are the most radical innovations you can think of outside the us let's just go one at a time um so Silicon Valley and some of that is accidental and some of it is um you know just fortuitous and some of it is by design um you know the the fact that there there was a major technology industry through the defense industry and Hewlett Packard um in the 60s already uh that there were major research universities particularly Stanford that was very very open to the idea of working in the you know unapplied problems uh and then combined with generally great weather although it's been terrible for the last uh two and a half months um it it was a a magnet for people who were interested in working on these on technology and then everyone stayed there was there was never reason to leave um you can imagine going to Manhattan and getting rich and having a really great time but then people end up leaving you know they have families they have they might only move to Connecticut or New Jersey but you know they might move to Florida well in the barrier that was never the case and so you got a critical mass of finance engineering talent management talent and then it becomes a positive feedback loop then more people come and and it just sucks people in I don't think if you take Silicon Valley out I don't think the US is that different now if you excised it today like with a massive earthquake um the US would still be different because it's spread you have you know venture clusters in Austin Texas and in Seattle and and in Southern California and in New York and it's all fed on the same thing uh where you get enough people that it starts attracting more uh it it would be terrible if that happened to Silicon Valley it'd be terrible for the US to be terrible for the planet but uh my point is that I think that really explains why the US is different because it's it's a sense like a virus infected the country as a whole and is infecting other countries it's infecting India I thought it was infecting China unfortunately I'm not sure maybe I shouldn't be using a virus example at this point but uh the most exciting innovations outside of the US Yon can you can you pull something out I mean they're definitely the FinTech out of Europe Europe leads in FinTech I think partially because there's less banking regulation there um but what give me an example I was going to say mRNA was you know a big chunk of it was developed in Germany um yeah but but a lot of almost all the basic research was in the US you know some of the some of the some of the Chinese companies but it's not none of it is radical innovation I can't think of a radical innovation CRISPR was a collaboration between US and Europe so if you think about the two people who won the Nobel Prize it's a Italian she Italian I thought she was French French and an American but there were labs in Europe clearly working on this at the same time as the American labs um but once you once you suddenly once you go out of outside of Europe you don't see it but even Europe they might be good at the research but but it doesn't come to fruition in companies I think that has something to do with the culture we talked about earlier about failure I mean silicon I agree with Robert in terms of Silicon Valley being a drive-up modern innovation there's no question about that but America's always led in innovation even before Silicon Valley and I think that has to do with that individualistic freedom and an attitude towards failure that just is new it just didn't exist in the world particularly not uh you know pre-industrial evolution failure was just not failure was was you died if you failed I mean it was it was a life of death thing and and America it changed in the 19th century and um and that's why America was a place of innovation back then it continued in Silicon Valley and it really hasn't picked up in a huge way anywhere else a lot of it still like that anywhere else I agree and I think a lot of it it has to do with specialization because you know people first of all people left because of the world wars but people would leave Europe and and immigrate to do things because it made more sense to be trying it in the U.S. or in Silicon Valley specifically and that goes back to Adam's point about immigration I mean immigration has been crucial to American success and restraining immigration definitely will will put that it takes away an element of connectivity yes it you know anything that reduces connectivity should be off the table in terms of policy fortunately it's the impact is a lot less than it would have been you know even 20 years ago much less 50 years ago but that's no excuse for sacrificing connectivity in the pursuit of some other you know even question you know definitely questionable but even if it was a reasonable goal but I think that the connectivity explains a lot of it in the sense of you know a lot of knowledge came out of a lot of scientific knowledge came out of Europe and in the 20th century and it was able to be commercialized and turned into actual innovations because of that connection and you know that's even more true today so I don't know that it matters that much I mean I again I don't want to sacrifice connectivity or a supportive environment anywhere but as long as you have places where people can go to express their ingenuity in every way that you know whatever way is that they're going to express it I think you end up with a pretty good result yeah I mean the decline in China is primarily a fear now that people will not be able to express that ingenuity without government permission and and that that's what authoritarianism does which is an oxymoron all right Harper Campbell asks how can we how come we haven't had a great depression since 1929 if economists learn something or are they just growing are we just growing faster than they can kill us well I definitely believe in the latter although I don't think it's the reason for this particular question I think that despite the best efforts of people to ruin things ingenuity generally wins out and people just find a way to thrive under the new environment uh you're on can probably answer this better than I can but I'll put my two cents in as that the great depression was a horrible mistake macro economics has not advanced that much but enough that we probably won't make the same horrible mistake again but we'll see yeah I mean my view is macro economics is advanced to the point where they know how to avoid the big collapses and they they there's a trade-off between one big collapse and slow just lower economic growth instead of a you know so I think I think we've we've gotten really really good at spreading out the pain over many decades instead of feeling it all at once um I remember first realizing that you're in the s&l crisis when they when the government kind of issued it took on 300 billion dollars of debt which was a lot back then and paid off people and then they took you know 30 years to pay it off and in a sense wow that's pretty cool and nobody felt nobody felt the deep pain that you would have had if you'd had to take the loss all at once it had to write it off all at once so yes we've gotten better at avoiding pain uh Valdrin asked the mixed economy has done wonders in the last 40 years google amazon apple we need to stop demonizing it it's leading to the rise of fascist right or the fascist left or everybody in between all right apollo zoo says investing in green tech and the morality of it so what do you think about investing in green tech uh well I am pretty sure that green tech has already been um been absorbed in the same way that um organic and every other positive connotation label has been and that people are doing largely the same things the largely the same things they're just coloring in green uh which is one of the ways that the ingenuity gets around some of this nonsense uh I do think that you know by by my definition of green tech would be it's more resource efficient um that makes perfect sense I mean a lot of what is making the world a better place now is doing more with less uh and so I'm all in favor of that uh and fortunately um it's it's generally just a an excuse to dole out money to favor constituencies you know just and ask who's my guest next week that's peter shorts um okay this is so boys ask the same question of every guest I have on um feel free to answer any part of this you want to because there's no way you can answer all of it okay tips for burnt out parents of my nine month newborn how do we gain back focus and then thoughts on bitcoin nft tech layoff china russia housing crisis ar vr and elon musk wow we're gonna have to go back and do this one at one um so be willing to get help for a nine month old I was confident say that you'll look back and and wish that you had some of these days back you know and I totally get that having them all in a row I have experience having them all in a row is not optimal but that's how the world works um but what I what I learned was being willing to to ask for and to hire help makes all the difference because you know it's the last 10 of you know what's taxing you that is really the pain and the rest is you know at least halfway enjoyable uh in terms of regaining focus uh you have to get enough sleep that's what you're probably not getting it sounds like uh but I have find that uh we live in a world where there's there's just like a massive drain on your focus just ongoingly from many different directions very subtly and in ways that uh rewards you so you know I said I keep my phone off I don't do email I'm uh and and I don't do social uh media uh except I started uh reading Quora for no good reason and they're very good at hooking you so I had to I had to stop like it would be like if I was waiting somewhere I say oh this you know just learn some trivia it's fun and it's a rabbit hole it's a rabbit it's a bottomless rabbit hole so now I just can't do it and I would uh my experience is that if you look at your life and you say what are the things that are preventing me from focusing yeah there's the fact I'm not getting up sleep and it's the fact that that my kids bother me but that's that's my life that's the life I chose it's what are the things that have wormed their way into my life and are bleeding me dry of my focus and just ruthlessly get rid of them even though it seems like you might not be able to like oh my god I'm gonna stop going on twitter yeah stop going on twitter if that's what it takes and then the whole rest of it I think well first of all I think Elon Musk is is amazing in a sense that I think most people uh don't mean I don't mean that he's amazing innovative um you know he's he's started a a online uh yellow pages company in the 90s uh which was was very successful and made him rich but it's not that innovative you can just move something online uh he started x.com which was an online financial services that didn't have a business model but worked really well when paired with confinity which and made PayPal and got really rich uh and then he bought into Tesla um and took over running Tesla and then he started SpaceX you know it not inviting spaceflight uh and he's got the boring company you know he owns twitter and the I'm just uh so I am just amazed that he gets so much of done yeah the fact that these companies were all successful is what amazes me the fact that you know nobody thought commercializing uh spaceflight was even a thing to think about electric vehicles like it's it's not that no one had the idea it said everyone else said ah that's just a dead end and he's actually made stuff happen and so of all eight billion people on the planet I think he's the most effective at getting things done and that you know being number one out of eight billion says something and the rest of the you know the shitposting tweets and all of that that's you know if he wants to have that be his life more power to him but getting things done that that is amazing even if it's pissing people off like he's incredibly good at getting things done and then the rest of technology I don't I I think it's a I think it's a mistake to try and predict the future I think it is and I don't mean like a life-threatening mistake or a terrible mistake or it's kind of fun to talk about speculate how the people with the world would look like but the world is not going to like show up the weather shows up and predicting the weather whether it's incredibly frustrating if you're trying to do it more than you know three days out and the future doesn't just show up the future is what we make of it and some of it is like the weather you know I'm not going to go out and design new technologies for electric cars and autonomous driving it's just going to show up and I could I could tell you what I think about that but really what matters is is from a technology perspective is what are you going to do with those technologies you know what are you going to do with powerful chat bots what are you going to do with powerful VR AR systems and you don't have to figure it out now if you but it's worth speculating about because at some point you're going to need to figure it out and of course the ingenuous way is to try things and experiment and try using it one way and another find out what makes you more fulfilled more satisfied more productive more whatever it is you're trying to get out of it and be willing to to say you know what I'm not doing this it's not aligned with what I'm really trying to accomplish and then try something else that's that's where technology really impacts your life is what use can you personally do use put the technology to you says that really gets you what you want and furthers your goals that's good all right last questions I think how is the state of productivity in the western world nowadays well if you believe the numbers terrible I'm not sure that believing the numbers make sense and one problem with productivity is it's measured in terms of dollars but what you want is productivity in life and historically dollars you know and even today it's a nice objective way to measure it and it is a pretty good metric and so I don't have any problem with that but if if you think and Mark and recent made this point recently but it's it's a kind of point that has been around for decades you know there's even a term formal cost tragedy or whatever cost disease is that areas that become more productive become cheaper so you know the amount of computing power that we have is maybe a billion times what it was 30 years ago and it we're spending more money on it but we're spending maybe a thousand times as much so the productivity has been like a million acts and again I'm making up these numbers but they're also not wrong they're they're basically ballpark versus you know my my career as an educator I started teaching with your on in in the university in 1993 and we basically taught the same way that you know Socrates was teaching a couple thousand years earlier and now 30 years later I'm largely not doing that because it hasn't changed at all you're still doing now I'll take that back a little bit and part of it was the pandemic you know the teaching I do now is online and there are new tools and there's but it's changed a tiny fraction of what you know could possibly happen and what it has and compared to the changes that have happened elsewhere in the economy so the productivity statistics are measuring something and what they're measuring is the fact that government education some areas of healthcare have not been advancing there's been very little progress and they have become because of that they from a of the cost of what we do they become a bigger and bigger part of it so a lot of it is just mathematical inevitable when you allow major sectors of the economy to stagnate stagnate exactly excellent good so um thanks Robert I'll remind everybody that you can follow our discussions about ingenuism on the ingenuism channel on youtube you can go to substack so ingenuism.com to get more material over there you can also it's also a podcast so you can go to your whatever podcast app you use and get it there thank you to all the superchatters this has been great you can support the one book show on patreon subscribe star and you're on bookshow.com slash support and I mean it's only it's I guess it's early evening where you are Robert but it's late at night here in California in Puerto Rico although it's going to get it's going to get now this weekend this weekend that's right this weekend great we'll talk I'll see you tomorrow we'll talk tomorrow bye everybody see you tomorrow bye