only guide we have is our desire and our curiosity once you find your purpose it also leads to a happier life even at the smallest levels a little bit of rebellion actually outsmart a question of like what else can you do he says oh like all Fortune Shadow opaque on arrival inevitable in retrospect I would say everybody should try and create something it doesn't really matter what it is everything that gets invented
started out in a human mind AI is the first tool that we have created that allows us to talk to machines in our language it is going to be co-creation it's going to be a creation that humans are intimately involved in and directing human abilities are normally distributed human achievements are power law distributed let your curiosity have a rain on your actual actions thanks for joining us now please enjoy this episode
of infinite Loops Jim O'Shaughnessy is Chairman and co-chief investment officer of O'Shaughnessy Asset Management where Jamie catherwood is an associate all opinions expressed by Jim Jamie and podcast guests are solely their own opinions and do not reflect the opinions of O'Shaughnessy Asset Management this podcast is for informational purposes only and should not be relied upon as a basis for investment decisions
clients of O'Shaughnessy Asset Management May maintain positions in the Securities discussed in this podcast [Music] foreign [Music] buddy it's Jim O'Shaughnessy with my good friend Rohit Krishnan an Indian name that I get Bing right out of the gate I usually have to practice forever and ever and that's not the reason I love you right it's for your beautiful mind of course welcome back to infinite
Loops uh Rohit is a one of the things that really drew me to him he is uh basically a probableist which is I think the only right way to think as many of you who listen or read me no and he's also a venture capitalist which leads me to my first line of questioning for Rohit that he didn't know about dang so I'm I'm kind of ambushed I'm kind of ambushing you here Rohit first welcome my absolute pleasure to be here this is
this is the most fun part of this week slash month oh that's good I'm I'm happy to hear that um so I didn't tell you about this which is normal for listeners or viewers of the podcast that's kind of like the vibe of this podcast most of my guests are people like Rohit who are super smart and can think on their feet and I sometimes hit them with things that we haven't even chatted about but I've never done it like this bald face before
so are we ready there's a the I I love the book American Gods and they did a TV show of it which uh I like to I'd say read the book first and then watch it uh if you're interested but um it's uh Odin uh the old one of the old gods has Enlisted the help of a human or not so human if you read the book um and and he has this wonderful thing that he says to him which is as follows he says to his guy Shadow Moon he's talking
about prophecies and he says oh like all Fortune Shadow opaque on arrival inevitable in retrospect now obviously everyone can see everything in retrospect and so what I want from you my good friend is I would like you to tell me what can be sees in particular Venture capitalists learn from the comic Opera that is FTX Mr Sam bankman Creed when the new CEO taking it over who by the way ran Enron after their
fraud he said now this is the guy who did Enron he said that he had never seen such a Fubar [ __ ] up beyond all recognition situation and his exact quote in the Wall Street Journal was it represented a complete failure of corporate controls you're a BC why on Earth did all of these name brand VCS not know this huh what a question all right let's get into it so I'll give you first the answer that the VCS would give you I'm pretty sure
they would say something to the order of look our job is to take risks we take these risks some of them don't pan out for whatever reason like sometimes things don't work Market's not right in this case it happened to be fraud and who can see through Prof you know nobody can right that's not the job you're in if uh Sequoia lost 200 million dollars out of 8 billion 5 billion whatever that number is they're like it
happens you know we will still return a great portfolio to the a great return to the album the rich I look at that and go yeah it's a reasonable argument right I mean like if your job is to take risks and sometimes risk are wrong and occasionally like your Founders will try to trick you because you know what there's a real world I get that the lesson I take away however is much simpler you're investing in a financial exchange
now you know you're far better version of the markets than I am but I've spent a little bit of time in it I would recommend one of the questions you ask would be do you guys have an accounting department I it it strikes me that like the soap opera parts of the story has gotten more visibility you know they all lived in a big house together Bahamas party drugs whatever and I'm like I mean
okay like you know whatever late 20 year olds I don't I don't care like I genuinely don't care when it comes to the point where I I read raised uh first date I I could not believe what I was reading there's no way when I read things like um yeah he has never seen say anything close to being as screwed up as this fine but why they don't know who their top predators are they don't know who their top
debtors are they don't know whether the money that they have distributed or the grantees or even their Venture Capital Investments not recorded any I mean I am a big fan in VC that like VC due diligence is not like private Equity utilities or like an accounting due to listen right it's not right I mean you don't invest in a company and go like you know we need to do a forensic accounting of every line item cast
because that's not your job but basic Common Sense would have told you that like guys they don't have anybody they don't have a their lawyer their accountant in accounting firm audit firm had an office in the metaverse like I'm like there are red flags all over this thing and if you were looking at all of the red flags and go like yeah they're young you know they will fix this all right let's invest and it's like a
20 million valuation 100 million valuation I would still get it at a 30 billion valuation I mean 30 billion is like almost half of Goldman right like this is not small but any stretch of imagination even if you think it's gonna go from 30 billion to like 1 trillion you should expect a certain basic level of hygiene when you're running a company and even if all of these things sound like or so boring paperwork I'm like
you're an exchange like you're a financial ex like they're not running you know stamp collecting it's a financial exchange people put money in and trading they they were Jane Street trained Traders and quants and you couldn't understand that like you need a back office like or a middle office or even at the accounting system that knew how much money you owe to somebody so the lesson I learned in some ways is
like I get the rest point I don't give too much blame for the due diligence like they didn't pick up the corporate structure because VCS don't understand corporate structures anyway right like who cares businesses don't understand regulatory risks that's fine like you kind of put all risk in a giant bucket and go like should we take this what's a percentage probably that's all but like the basics got left out
that just strikes me as crazy I'm like how do you invest in a company that doesn't really have an accountant how do you how do you do that like you know at series B when I look at a company and they don't have like a cdro to handle revenues or a CMO who's not good enough you can look at that and go like maybe you should hire that you don't have a board how does that happen like 30 billion dollars dealing with I don't
even remember like billions of trade they made a billion in Revenue last year or so they say who could even know right and you're like you don't have a board how do you not have a board like somebody anybody to sit a terror nurse had a board I mean like hey this is this is this Saga is gonna go down in history as one of the weirdest craziest most insane stories about like the world that we live in it is insane that this happened I do not
understand I mean in the beginning very beginning of the story I was like maybe binance is just playing a game right I mean they did some shady stuff and they're pushing them down good job I made this happen then it came out that like they did some bad balance sheet accounting they kept their own tokens on the balance sheet I was like okay stupid but still understandable because their tokens were not just like random
right their tokens were ability to get discounts on their own trading platform trading platform generates a billion in Revenue you get some 10 discount the tokens are worth something extrapolated like the next 10 years fine tokens are worth a billion 5 billion you can make some numbers out of it but like but when you have like every single number is questionable you don't know where you invested you don't know
who you owe money to you don't know how much customers gave you you have no internal controls over people sending money from one place to the other and it's like your job is to send money you don't have another job this is not like I mean you know I I can't even think of one right it's like when you go to Amazon and the thing that they're supposed to do is send you packages and they're like yeah we don't know like
like you're like but that's the only that is the job everything else is like extra right your venture capital is extra oh man I could go on about this but do the basics come on like just do the basics yeah so like I and and I don't ask this question to paint with a broad brush or any or indict any any particular VC as you know O'Shaughnessy Ventures has a vertical that is Venture Capital we call it uh infinite
Adventures the original name for venture capital um and and I'm also willing to uh concede that my own experience in Asset Management one of the most highly regulated businesses in the United States uh has been like due diligences that would make you look forward to a proctology exam uh I mean like this much of a stack of paperwork multiple visits checking all references checking customer I mean literally well some of
the largest uh uh firms that decided to do business with us we we're talking like a 10 week process on the due diligence side so I know that um I I probably am not seeing it clearly enough because of my own memory and history of dealing with due diligence and and whatnot not but the reason I'm I'm so fascinated by this is because you know we're doing Venture and like uh if you can learn from the mistakes of
others you better learn because that's a really rich mind or or vain for you to mine uh one of the things that surprised me was the almost um almost CA well not almost the Cavalier attitude throwing around like massive as you yourself point out 30 billion evaluation uh big checks uh people are apparently playing games during the presentation and people are doing thumbs up like yeah is that is that just me as a nascent
I've been doing private investing since 07. so I'm it's not my very first rodeo but like is that just is that part of the culture what am I missing tell me what I know um no not um so I have a more nuanced point of view on this it is not part of the culture let's get that out of the way okay um but I equate that a little bit to like you know if you're on a boring Zoom call you know sometimes you look at Twitter
on the side or whatever like fine and this is maybe a different version of that and in some ways I feel like when people succeed beyond our wildest dreams or people fail beyond our their wildest dreams we ascribe a lot of Mythology to them [Music] so when like Sequoia had this thing put up on their website right this exceptionally adulatory article written about Samba Freedom like how he is the future of I don't know many things
um and the in that at that time the fact that the partners were so impressed with the conversation but he was also playing League of Legends on the side was seen as this like cute eccentricity detail that effectively should tell you that this guy is no ordinary guy he is like Superman now you look at that and go like oh my God what the hell were you thinking right I mean you couldn't even respect the time to talk to his
investors were putting in 200 million dollars don't PC firm in the world a few minutes this is hubris and they're both kind of true right I mean like metal like the outcome colors everything that kind of came before so that I am not particularly fussed by the fact that he did it because clearly it didn't have any impact on his ability to answer questions when sekoya was asking presumably because they invested
um I think it's rude you should do it but then fine like you know I get that sometimes people are rude like all right not my style but like if he wants to do it do that but to do that while you're also doing uh quasi-ponzi feels like a step too far I I'm pretty sure Madoff wasn't reading books while he was ripping people off like you're probably right like I think he paid a bit of attention um or like you know he at least got an
accountant to kind of I mean it wasn't he also didn't get like the best account by the way like he got this Dime Store guy right but um but at least like he tried and I think there is hubris and there is hubris and this is ikara style I mean this is like you were basically asking for your wings to be melted and fall down under the earth I mean what the hell were you doing because you look at the list of
things that happened it's like a it's like a menu where everything is ticked off right like a buffet everything is wrong it's like what do you I mean the hiring was all firing us off top management was off there is no board there's no CEO the structure was extraordinarily opaque for no particular reason nobody knew where the money was at any given point in time relationship with the investors were screwed up
relationship with The Regulators apparently he tried to Cozy up I'm not a big believer in the fact that it's just because you give money you get influence because I mean if 70 million dollars got you influenced with the US government I think we would be living in a very different world and I'm like you're gonna go down the list and you pretty much just like a story of like every single box being take the red flags but
I mean there is only red I don't know what the green flag is here right like I can't see one right yes you're your exchange was growing that's the green flag and like you know in 20 and 21 we also went through this phase where everybody was on Zoom all the time you never met anybody really face to face and at that point it kind of we also had the most insane Mania both in Tech as well as crypto crypto particularly I think
people started excusing a lot of erratic Behavior as like seemingly The New Normal and this probably Falls a little bit into one of those as well right I mean like you know when when everything is going well and people think you're Jesus Christ all of a sudden you know they're like oh no no Sam gets of course he can play League of Legends as well as negotiate a term sheet or whatever but like even if you can do that ideally reserve
the right to do that for when you're actually right I mean to me this is the most important bit and also like even if you can't do that just don't I mean you know it's rude I I said to my wife not too long ago that I never thought that I would live to see the day that having good manners would be an asymmetric opportunity it's insane I mean it's the most I'm like why why would you do this why like
why do own goals right like other people are gonna try to hurt you anyway just don't help them yeah right right uh so many interesting themes that you went into there and first off like everyone listening watching we are doing this retrospectively and this has always been one of my things of course Rohit and I are going to be able to kick off every glaring problem but quite frankly I certainly didn't no I wasn't paying
attention because it was it it landed in my uh ignore pile uh you know I'm a cognitive Miser and like I didn't understand what they were trying to do so I just ignored it um but so hindsight bias of course everyone can be ticking off the same sort of things so it's hard often and and by the way let's also get it out on the record Sequoia just happened to be chosen as it because there was a lot of material Sequoia is also one of the most
legendary of the Venture Capital firms so that this should in no way be seen as an attack and or a criticism of Sequoia I'm trying to get behind that thinking in general and so I'm trying and it was why I decided oh yeah today I can ask him directly I am trying to like learn as one who's going to be doing a lot more Venture Capital yeah what what can I learn from this what can I incorporate into my own due diligence Etc that uh is
not specific to write that to to like that behavior Etc so for example hey if you're on the Island of Misfit Toys I'm probably going to want to talk to you because you those are the people who aren't the traditional um what is Caleb's thing always pick the guy who doesn't look the part right um so I I definitely already if I like understood that space which I really don't and so since I don't I
don't invest in it nor do I own anything in it just because my opinion is just that it's an opinion and everyone has an opinion uh so mine are as valueless as everyone else's can I tell you the one story one lesson that I take away the simplest message please don't let anyone push you into a decision that you don't want to make it's pretty much as simple as that and like you know you worked in asset management
and you ran a qantasy management by definition Quant asset management is the game of don't let anyone push you into a decision you don't want to make by definition this is the human version of that right and in venture you're pushed into a decision you don't want to make all day long all day like that's all you do that's effectively like your game you know or someone else is putting a term sheet their competitor just raised around this
uh is moving fast they stop this you know great company great like speed is all the only competitive Advantage you have it is also the biggest competitive disadvantage that you have because like it's an advantage if you're willing to move fast it's a disadvantage if you're getting pushed into it so when things are going you know up and to the right everybody goes like oh man we have to get into the top
deal of this decade because if fftx was not a debacle and I'm you know like but if it didn't turn out to be that the Sequoia LPS might ask them like why did you get into it it's a fair question for them to ask as well so there's a bit of fomo like you have to kind of do these kinds of things and they're a wonderful investor right like just like you said so you know we don't know what they could have seen what they
could not have seen I think to me like it kind of comes back to your job is not to make no mistakes and in in fact specifically in Venture your job is to make a mistake about 30 to 50 of the time right you're not wrong at least that often you're not doing your job right and you will not be able to do this by doing an eight week uh deep you can't like that's just not even in the realm of possibility for any
of the companies you want to be able to do it for right so you have to slice and die somewhere right you got a pattern recognize something and say like that founder has something and sometimes they'll be frauds or something they won't that's okay what you can do is to look for like exactly what you said ignore pile to hard pile complicated pile like this seems shady pile and then just kind of move it to that and for
that I am more of a buffet style thought process of like if it does tick the box it's okay you don't need to hit every ball that comes your way right it's okay let it Sail by it's fine because if you try and play everyone else's game you're gonna get pushed into making decisions you do not necessarily want to have to make and sometimes it's p sometimes is lack of information um you know in ftx's case even after
bankruptcy piling they were he was a Samsung race capital and he was sending around bullet points on his sheet and forgetting the hoods by Etc there I think the fact is like he still doesn't have financials anybody trusts right like I to me that's the most interesting part of this whole process of like this is a failure of Basics this is not a failure of like some ridiculously com like I wrote a thing comparing it to the
08 crisis and one of the differences in the 08 crisis is like a weight crisis had multiple parties actively working to make this into a crisis right this is sort of a dumb man's crisis like a way it had like you know regulatory bodies got captured like sap and Moody's got captured in order to write specific like you know ratings for the boss like there was such a layer after layer after layer of
problematic Behavior here it was basically somebody needed to ask do you have an accountant which feels like the kind of thing that shouldn't happen in real life the other thing that fascinates me and you've written about this quite a bit so I'd be really interested in your take on this part um I I am for again I I perhaps am captive of my priors um that's always uh probably a comms razor probably I am yeah uh but so one
of my priors is that you you made the point quants become quants because they understand that they are just as palatable as every everyone running human OS is going to be uh at risk of falling into the same holes as everyone else myself included you include it all the VCS who fund it here include it and and so one of my pretty significant beliefs is that narrative follows price not the other way around price doesn't follow a
narrative narrative follows price but I'm fascinated at the same time I believe that everything is storytelling and if you can't I for example in my early days of what works on Wall Street I used to give speeches in which I said I'm going to tell you a series of stories that illustrate why you should not pay attention to stories when making investment decision right I had to turn it into a story because that's our in
our base code of human OS is storytelling narrative all of that so I guess I have sort of a three-part question for you number one to be charitable it do you think that there is a non-zero chance that he was so delusional that he actually believed his own story first off secondly as evidence against that he recently a few days ago I think was chatting via text big mistake by the way um in which he said he basically said oh
yeah woke capitalism it's just a total grift it's a total grip so that sounds like a guy with a little harder Edge than the the night sky who is deluding himself into thinking he truly is this Visionary so that's the second part here but then the third part is like is there a probabilistic methodology one could use to sort of try and take apart a narrative to the point where you get the red flag
that is like you know what this just is this narrative's fantastic great story but there's just so many parts of it that don't add up or no there is I'm forever looking for algorithms right so maybe there isn't one but take them take them in order do you think a was he truly uh with delusional and he believed him that would be somewhat negated by his comments about wolf capitalism being the biggest grift
um in in a long time um and then the the money shot uh for me at least is if you can give me away to disambiguinate narratives such that your probability of binding all those red flags increases that would be a really nice tool to have in your kit as a venture capitalist so I'll answer them in order and funnily enough I do have an answer key on the third one which I didn't think I would when you were asking um
I don't know whether he believed the narrative exactly as he portrayed it to answer your question I think the way I see it is a little bit that like the way I see it is a little bit that like he started both his uh giving campaign as well as his um FDX running Alameda campaign both of them with the ambition that he's gonna make a tremendous amount of money and try to give it away I kind of take it for granted that he
did actually believe quite frankly okay and the reason I believe that is that he said it repeatedly quite a long time I mean I kind of waffled based on his uh um uh text exchanges but it feels at least like this was something that he genuinely wanted to do now the question is like he was always planning to run a con and I'm not entirely sure because if you're planning to run a con and you're a relatively smart guy you would do a
better job than this right exactly uh um so if that's not the case to me effectively what that means is he was basically a captive of his belief that we can keep betting betting big because he was much smarter than everybody else much better than everybody else he can actually like do it like a phenomenal job and like you know give away you know 20 billion dollars instead of 10 100 billion dollars instead of 10
whatever that is um and that's a different narrative right it's not quite a hero or a villain narrative it's just wrong right like it's just and we are humans are rationalization creatures we can rationalize anything I mean I when I sort of play with my son when he comes up with rationalizations that make no sense by default since he was like two years old three years old and because that's because we have the
ability to start grammatically saying sentences like I did X because without knowing what comes after and our brain fills that Gap beautifully what that means is like you know the VOC capitalism Stuff Etc this is all after the fact right I mean he's fallen into well he needs to kind of rationalize his way through so this is the only way he can do it so you know I don't know like we can all choose our lenses to look at
him as like a hero a villain a fallen angel whatever like I think ultimately I kind of look at it as a example of hubris gone awry um now it's all rationalizations looking back but it's hubris Gunnery and just a terribly misguided sense of what works in the markets which if he had continued and Jane Street would have gotten disabused really fast because guess what you know Equity fixed income currency markets are pretty good at that
unfortunately where you know you get to play a fool for a little while longer so The Next Step therefore becomes like you know how do you kind of guard against some of these things right and I from a venture investing point of view your job is to create a narrative about the future that you can believe or at least two three narratives and you've got to kind of believe one of it now you can get seduced by narratives
like very quickly because that's any CEO who's good is good at selling the net that's their job that's their one job yep so you can get caught up in that all the time to me the way I solve it it's at least by like breaking up that narrative into its component parts right because every company narratives are not that com they're not like American Gods right I mean they don't have like 15 subplots
and things moving like it's fine we can all figure it out so you look at what does this mean for you know the five or six components separately the market the customers the go to Market unit economics whatever like I mean choose your own I have a spreadsheet it has not that many like 20 factors which is not much and if I can independently I think through those 20 factors and even put a qualitative one two three
for the company that I'm looking at it instantly gives me clarity about whether I believe the narrative or not it's a little bit like I don't know you watch a movie and the movie like Thrills you and you're deep in the movie Etc but you read a review and they're like oh no there were these like 15 plot holes that you missed and you're like yeah I missed it because like you know when when I'm hearing it I love it and it's the same
process in Reverse right let's look for the plot holes and then you will at least know what risk you're taking you will say like look I don't know if they can get I don't know from today they have 10 customers we need them to get 10 000 customers I don't know if they can get it maybe but at least you know what risk you're kind of signing up for or well their product today is only good for like tiny companies can they sell to
Enterprises we don't know maybe they'll figure it out but at least we know what we're risk we are taking to get to that final and state and this is not to say that the narratives will turn out to be true because they won't no matter what the narrative you sign up to but at the very least the narratives you sign up to might start like guiding you away from making the stupid mistake and hopefully
you can make slightly more sophisticated mistakes which is all you can hope for the ability to uh deconstruct a narrative I think if used properly is close to a superpower um and I think your thing about hubris is bang on again I have been around a long time and I have run into a lot of people and the I was thinking about I was just journaling about this the other day actually and I was looking for characteristics
that like all of the big flame outs had and virtually all of them the protagonist was beyond you know uh hubris would be an understatement for their belief in themselves in what they were saying and some of these by the way were not uh Ponzi schemes they were not uh criminal or fraudulent these were people who were like Icarus they just flew too close to the song and their wings melted and they didn't they didn't
have a clue right because they had so convinced themselves that they were smarter faster better than anyone else so one of the one of the great things that I have uh going for me I think despite all of my many known deficiencies is the fact that if you're around in markets for as long as I've been around in markets markets beat that out of you if you if if if you can stay you you're not going to be filled with
hubris because the market will have repeatedly reminded you what a dumb [ __ ] you are and you get to the point where you change your entire way of looking at things you become very probabilistic in your thoughts you you you begin you you liberally say I don't know um and and you acquire all of the what IBU ads gills and advantages to uh making these kinds of decisions so that's definitely one of them um that I've seen that carries on
throughout and historically as well right you know what's funny I was just reading this about the tiger head's fund obviously that had the spectacular blowout where they lost more money than they have made in the last 20 years effectively works and and like it's an example right like I don't know whether it was Hubris or bad risk management or just growing too fast but like if you're in the markets long enough like
survival is important I mean my respect for like you know that's why like butcher Etc it grows every year because I'm our rent tech for that matter because like you know every Market condition like they just stick to what they know what they don't know and like do what they know and like do not mess with the market or do not presume that you are the all-knowing All-Stars who can figure everything else
out because I tell you I it's like the first bit of advice that I would give to younger people joining the firm is if you ever get the idea that you're right and the market is wrong you're wrong and the market is right you are never ever smarter than the market because the market is the collection of all human Minds that aggregate down to a price uh and to a uh Vibe if you will to use my friend Kyla scanlon's terminology
um and if you don't know that you're going to be carried out Pete first um pretty I mean much all pretty much all the time of course because ultimately like the funny thing about playing the reason I like this so much is because the interplay of narrative and fact and reality kind of Blends very nicely together right because you're kind of in Venture especially you're trying to create a story about the
future because unlike secondary markets the thing that you're investing in doesn't exist yet right right it will exist at some point in the future which means like stories are important and that's what you're actually investing in which means like they will blend together enough that it's very easy for to believe your own sort of Kool-Aid right sure I mean in fact some might say necessary I don't think so but like it is that is the job
so to speak yeah you have to be reasonably probabilistic to step back and go like nah you know what like maybe I was wrong maybe I was right but lucky wrong but lucky or right like right but unlucky whatever unlucky yeah yeah there's a combination of factors there where like your success is never all your own your failures are never all your own and there's some combinations so you can learn and kind of move
forward yeah my my friend Danny Duke calls that resulting where and it's one of the it's one of the cornerstones of why I use base rates like if if you're if you look at an investment that say went sour and then you decide I was wrong I made a mistake you could be you could be wrong there you you could have the reasons for making that investment could have been absolutely sound and it just so happened that the timing was off
or the whatever was on that's why the snapshot and conversely and much more damaging in my opinion is you make an investment for really stupid reasons and it pays off yeah and it's a hard day oh it's so hard luckily um I had the Good Fortune of doubling my money on my first options trade when I was 19 years old so I of course thought that I was God skipped to options trading and that I was a certifiable
genius and that I would quickly be one of the richest Market participants and then of course the market kicked the [ __ ] out of me for the rebalance of that year to disabuse me to disabuse me of that fantasy and hallucination I think it's one of those things where you're like what game are you trying to play it's a super important question and you need to have an answer right and you need to know like you can't be all things to all
people so you've got to kind of choose like no oh this was my strategy not what I thought it was or like everywhere like everybody did that right I mean you know even back in the day when Keynes was trying to invest according to his amazing macro theories he did currency speculation did really well then it all went to hell then he was like you know what like I think all of that was lovely and I like it clearly
it was like good at the theoretical aspect of it but when it came to practice I will pick the stocks that I like most and like keep them close and do the more Ben Graham style approach which worked very well for him thereafter so like ultimately you gotta choose your game you try and play everyone else's game you're gonna fail just because you won't know enough I think it's as true in the markets as in
life I totally agree and um it's reminiscent When you mention Kane's uh I thought immediately you were going to the quote about why the markets are so hard is that they're a beauty contest but you have to guess what you have to guess is what the other people are gonna pick as the most beautiful person yes not not necessarily what you would pick as the most beautiful person and so he he had some delightful quips
um and then the other guy who gets everything attributed to him that he didn't say half of uh Oscar Wilde uh maybe or maybe didn't say um be yourself everyone else is taken um so so I I totally and this has been my advice continually for the last for all my career like don't copy me don't copy or hit listen to both of us read both of us read our books or or our blogs or whatever take away what what resonates
with you and then do and then do this continually and and build your own process that is unique to you because it resonates with you you've done your homework but the minute you start trying to copy someone else unless it's just a formula well what's gonna what you're gonna [ __ ] up there is you probably don't have the emotional fortitude that that formula investor has like sometimes people would say to me like what are you
most proud of about your career as an asset manager and I give them the answer I'm most proud that I never emotionally overwrote a model excellent more than anything else yeah because that's the hard stuff like yeah you know coming up with the Algos especially since we're all using the same data sets anyway you know hint all quad bottles look a lot alike everybody yeah exactly because we're using the same data I think the emotional
fortitude is extraordinarily like um it's not talked about much at all I mean it's talked about generically like in in sort of circles but it's never like explicitly mentioned as you know something folks should think about for themselves because it's it's good practice as opposed to like you know whatever um you need to believe in yourself for like one there are these generic pieces of advice which are not helpful or
actionable but I like this yeah but the fact is like yeah you should try and figure out what you are good at and what game you want to play and then go play that game not necessarily because that game will you know get you whatever super rich or successful but like that is your game so like you can't go off and play someone else's game because like you're gonna fail and to be miserable this way at least only one of
those is an option and and what I love about it and it's going to lead me into my second uh line of uh thought with you and that I want to get your thoughts on uh because you wrote an interesting piece about it but this idea that um you've really got to this is applicable elsewhere not just investing like people that I know that are the happiest have have have found some purpose for their own life right
and if if they are like one of my purposes is to be useful and that's a broad category so I can always say I'm on purpose today uh but but once you find your purpose once you find what is what you're good at it's all it also leads to a happier life in most circumstances um sure if you're ultimately like one of our themes as we roll out uh shots Adventures is creativity is a curse um and and it's a curse because you
can't help it right you just got you just gotta keep doing and yeah and keep doing it it's as one of my colleagues said a Magnificent Obsession and if you if you have one of those like that's great good follow it be but it's gonna be not gonna be as smooth as smooth Road um but it leads me into the piece that you wrote about why isn't there a philosophy of business and I was fascinated by that piece uh for a
variety of reasons uh my first when I read it I actually went back and looked at my original notes when I read it and in the margin uh I wrote well maybe it's because people had already confused economics as a philosophical uh description of business which as one with a degree in economics I can tell you it ain't that it really ain't that but but there's a good book that I actually did a a thread about that that maybe
and I want to get you to read the book and then we'll come back on and have you on another podcast and we'll talk about it but it's called the Genius of the Beast a radical revision of capitalism and it's by a gap at an empowered blue Who start who started out in science and then went to business and so what worked for him was finding all of the um ways that markets were like uh natural the natural world and like right
like humans and and he he makes some really interesting statements among them you know capitalism offers more to believe than than all religions that was one of the things that he said and he said it also from all the religions from Christianity to Marxism promise to raise the poor and unfortunate to better circumstances and capitalism at least the Western variety did it in 300 years it achieved what for Lydia those
ideologies could not achieve and then he makes the case that that's probably because capitalism is a complex adaptive system like most things in the world in which we live and and then he continues on by saying if you pay attention to human emotion you're going to understand markets vastly better than if you try to you know use all the jargon of commoditization and yeah you know what to Tam What's the total addressable
Market he he says basically everything Springs from Human desire and you made the point about your son uh and I there's a there's a Gip I always use and which is a kid saying because reasons because of reasons right and and it's lovely to me because I passionately believe that markets are come out of the minds of humans and are entirely based on human OS and that bloom would make the uh the uh he would submit that most
of our decisions are made emotionally yeah and and then we uh paper them over um afterwards with rational arguments and and then he goes on to finally say markets don't emerge xnelia right markets are created by humans they are very consistent with complex adaptive systems and more importantly they're very consistent with human evolution and the way a lot of natural systems work too so what do you think do you think that
that's closing in on more of a philosophy of business and markets than economics and all the other I think it definitely starts to get at something that is super interesting um I mean the reason I started wondering about this was well two things number one is the fact that you know look around us like business Endeavors are literally you know everywhere right I mean we live it's like asking fish what's water
accordingly like you know David Foster Wallace said it's very much that most of us sort of spend you know a third of our day whatever half of our Waking Life in the pursuit of something that effectively nobody seems to think a huge amount about apart from saying like either it has to be your life's purpose like we said before or some lucky folk or for a lot of others just a way to kind of punch the clock get something so
they can go out and buy some resources to do other different things and I felt like we have a philosophy of education philosophy of language philosophy of Mind philosophy of science philosophy of physics and particular we also have a philosophy a philosophy as you do actually and I'm like okay this feels like something that we should think about a little bit stronger in terms of why we end up doing these things
um spoiler alert I don't have an answer but it's something I'm gonna think about quite a lot more the second reason that I thought about it was like and this is new so I'm going to think through while I'm talking to you science used to be pretty paradigmatic at one point of time right we had folks like I don't know bang things together drawing stuff out seeing what happens it was very trial and error they had some
notion some idea of what would be good try it out see what happens rinse and repeat um at some point it started getting more systematized closer to the enlightenment in many cases or like the Industrial Revolution when it's only took the next step and my point of view about business as it stands today is that it is the way by which the knowledge that exists in one bundle gets democratized and pushed
to everybody else the distance exactly yeah yes the only way we have found to do it like you know you and I are you know the way we are talking now we wouldn't be able to do this with pure science we need business in the middle so that it can actually reach everybody else and do all of the fun stuff including economies of scale and bringing the price curve down so as a consequence like one way I look at it is like I tend to separate the
markets part of it from the business part of it and I'll tell you why like it's a bit of an artificial separation but like the markets because it can exist for trade purposes right like even if you go back you know whatever only the Thousand Years you will have two thousand years Ten Thousand Years we'll have people performing market like transactions because all you need is some version of you know I agree to give
you X you agree to give me y boom we have an exchange rate right you can do some market-based activity you come back a little you come forward a little further when I looked at money you know we've had inflationary panics in like the 1200s before that as well I mean I've read stuff about like silver getting diluted all sorts of fun stuff so by by the way that's why people would bite the coin they would bite it to see
if they it had been it's real shaped yeah it's very rare yeah so so the markets exist as this way for us to effectively create some form of impersonal trust based mechanism so that like you can trade goods with each other if you know them you can kind of create the exchange rate if you don't let the different exchange rate fine all good we can do that just to just to interject like the way I look at markets and the way I look at
money even is their information Technologies that's the way I Define them 100 and and so when you think about them that way your separation of business and exchanges makes a lot of sense yeah so the business case that I'm saying here is like we had different sorts of businesses for a long time right family owned Guild type businesses for a while but slowly started getting professionalized at some point I would
say at least in the Western World sort of 1500 1600 1700 ish 1600 is when the East India Company type ones were set up it had some um companies that came before it didn't do so well and all of a sudden you started having a mechanism to pull Capital together which had an objective to go off and actually do something and the way I look at this mechanism of spread is that it both incentivizes the
front end where you have to have people figuring out what the purpose needs to be and it could be very simple like we need to take a ship and go to India get spices and bring it back which is like moving good from point A to point B or it could be things like you know um the the Watts engine like I created something super cool and I think I can build a business around it like it incentivizes both those things that's
the exploration side and here is like the invention side that it can actually incentivize which then goes on to fill this is rectum closer to the book's thesis I think of it as little bit like ecological niches right I mean there are companies that are you know okay our whatever want landscape that lies in our head has different bits and Bobs of one some of which we know some of which we don't know like I never knew I would need it I
don't know two-day delivery until Amazon gave it to me but now I kind of need it right whatever right so that exists as a niche and somebody will exploit that Niche and that Niche you can think of it as the broader part of the convenience Mega Niche within which sort of little tiny niches exist in different places and some business will actually go and say I know that want exists I have a bunch of raw
materials and stuff here together I'm gonna go solve that so there is a way in which we can think of you know use natural kind of um uh language that's the right word to say or concepts to try and understand why it spreads in some places why it stays in some places why it dies out in different places like you're serving you know uh Mochi to Travelers in Japan like who are on a pilgrimage to a site
that need hasn't died for 1500 years guess what neither has your business as long as you don't do anything silly um however that the same place like what about the people who are building temples by you know using wood that business has a problem because construction of new temples is not a growth business today it was until recently so like I think that's the way I think of at least that's why conceptualization of
how the a philosophy of business might look this is with like wide error bar fences and it's very much me thinking out loud because ultimately the reason we needed it also like this is very macro level that's right even from an individual point of view I there are many things that push us to go off and do different types of work right like curiosity exploration need for resources money love attention
working with people that you love like whatever like there's a combination there and we kind of sideline almost all of that and replace it with one single monetary metric of salary or like one single career metric of advancement which is I don't think that's fair it might have been fair for a short period like in the last like 30 years but it's definitely not fair any longer I think the next decade is going to bring a whole lot
more complex complicate complexification of this particular sector competitors of anything that has come before oh I totally agree and in fact it's one of the reasons why I started O'Shaughnessy Ventures was because I think if we were chatting prior to starting the podcast I think that uh all the old models are collapsing and yeah uh those who are who are tuned into that are at a decided advantage over those who are not
um and and on back to markets though and quoting bloom again he says desire is the force behind every exchange behind every transaction be it money or information he said coin is masked attention cash is emotional need and then you had Robert Anton Wilson who famously said uh you know we used to be in Clans and hunter-gatherers and it was meat that we share and then when we when we left there uh we had to figure out
some way to exchange things with other people and so we in but invented what he called Fun coupons I.E currency currency but you know into that you also have this great quote from my friend Rory Sutherland who says one of the single-gridden strengths of pre-markets is their ability to generate Innovative things whose popularity makes no sense yes it's so simple so what you were saying earlier about it
being much more complex than just like here's the salary I'm going to do it because I want that salary okay so the 50s the man in the gray flannel suit you know the whole that was an anomaly that's what I always try to get people to understand the end of World War II to like the early 1970s that was the anomaly that was not the norm not before or after yes not before or after and it's like especially in America people
like I have a hard time with that and I'm like do you realize that we had the we we produced 86 of all cars sold worldwide in the early 1950s not because we were great but because we had demolished all of their manufacturing if somebody you know book work for confederate country I mean it's you know I could not agree with Bloom's quote more like desire being the root I think I would probably have an addition
to say to that which is that desire of help in terms of consumption and in terms of some types of investment I think the one added Nuance that has come especially now is that um accumulation allows you to basically make come about make manifest things that you want to see that you wouldn't otherwise be able to see because investment is a privilege right like investment is you effectively trying to do time travel you're trying to see
something and make it manifest or like magic whatever you want to call it um and you can't easily do that honestly if you're you know purely thinking of it in terms of sort of I I have X you have y let's transact like you need to have a bit more of theory that sort of stands Like A step above where you can kind of look at the World of Tomorrow is going to have I don't know crazy amazing AI automatically generated movies we're
gonna have or like um uh cars that run itself or like organizations that run itself for that matter better materials I don't know space elevator like you're gonna have to kind of those things only exist currently in our imagination we don't even know how to make and manifest but if we actually would people's Ingenuity towards it which is what you know the which is a particular type of Desire I suppose then
we can kind of make that manifest again we are incredibly aligned on our thinking on this because that that is again we get back to Emotions Don't we um we get back to we get back to striving we get back to human Ingenuity you know you we get back to my North Star David Deutsch and his whole idea that we're at the beginning of infinity um only because we have these imaginations and only because we are at least refer right now we are the only
sentient explainers and connectors that we can talk to yes so so if everything that gets invented started out in a human mind and 100 and for a variety of reasons many of them need based um uh but often not need based for example you mentioned space elevator remember John Kennedy's famous speech in which he announces that we have we're going to go to the Moon Yeah so so when JFK made that speech in the early 60s we
had no idea how we could build a rocket to go to the moon and and it was him putting it out into base yeah base State reality right when all of a sudden all the human Ingenuity started getting ignited oh that's a good idea but it's really hard and to which Kennedy replied we are doing this not because it's easy but because it is hard exactly it's one of the best lines of any speech ever honestly true truly I I
agree because it captures the why we have why progress has been mostly up and to the right directionally yeah right because we ignite and then combine the Ingenuity of human beings and of course because back to Robert Anton Wilson we can now time bind because we have books right and so you can send your ideas into the future and now as you know because I'm the chairman of the board uh we have things like stability AI yes
with generative AI which I believe is going to be the next the third Tech Revolution yeah and you know like I mean I've written about the combinatorial stuff a little bit right I think ultimately like in the stuff that I've written before one of the limiting factors has always been that our ability to serve the latent space and identify the correct combinations of things to explore has always been limited by us right if I
have to learn how to um create I don't know anything this laptop like there's a heck of a lot of stuff that I'm gonna have to go and learn however currently we model through because we can kind of figure out like oh I know about software you know about Hardware someone else knows about chip manufacturing someone else knows glass whatever combine them together we can make something interesting as things get
more and more complicated at some point combining a bunch of things to create something new becomes harder because like there's a whole lot of combinations that make like honestly no sense right I mean I don't know what will happen if you combine glass software Hardware ships gpus and this glass but like probably nothing good but you know they asked the number of components increase a number of combinations
increase like our ability to Surf that latent space the only guide we have is our desire and our curiosity right like I mean that's all we have somebody's got to say that sounds interesting and then we gotta figure out how so in some ways I find that like the very uh unreality of the uh generative models that we have so far are the interesting bits because like these are models that are trained on vast spots of human input information
but they have no idea what the world is like right which is both why oftentimes you get like crazy outputs not real outputs lies whatever I mean and I'm like it doesn't need to be a lie it can be a truth from a different averity and Branch right it's not truth from our reality it's the truth from a different reality because how the hell would the AI know it doesn't know what the world is right it could why would it it's not evolved in
this world like we are that's our interviews right to create new things if you wanted to do that as well then what are we going to do like at some point it will get better and then you will get better I mean it's a Dance I mean that's the whole point so the fact that it will allow us to serve that latent space and identify better combinations or better things that can help solve our curiosity is one of the
major leaps that I feel we're definitely going to have going forward definitely and and something that I am always telling people is that for the foreseeable future uh this idea of of uh sentient AI is a pipe dream and if for example we still can't Define qualia in human consciousness and and you're gonna need to be able to find qualia to program it and the only way that you get a sentient
AI is to have qualia programmed in there at least that's my thinking I could be wrong um but but the the the bigger point is that for the foreseeable future it is going to be co-creation it's going to be a creation that humans are intimately involved in and directing but with tools because that's the way I see like uh everything that we're coming down the uh road with and releasing through stability AI each one is a tool
it's a tool and and we just have these incredible tools right and and the other thing that trips up the human mind in my opinion is like to the human like numbers right so so for most humans we have one two three four a lot that's why humans don't understand the exponential function they have a really hard time with infinite or Infinity uh with all of that sort of stuff and so when trying to humans the big thing with
humans is why why I mean you have children right that why why why why why and I get it right we should ask why yes the challenge is in investigating these latent spaces that you referred to the only way to get there for the most part at least for now that I see is to have this Matrix array it's million in the array and and and we we are not designed to function like that human beings no we don't as as impressive as these quantum
computers that we carry around or our skulls are they weren't they were not designed for that kind of iteration of uh discovery and but but the point that I always like to underline is but they were designed to invent that yes clearly by definition but it's also that like you know AI as it exists today is the first tool I think that we have created that allows us to talk to machines in our language
and I don't mean English it means as us yes because one of my like block Bears forever is like any time you do anything like you learn coding you do accounting you do markets Financial Services models law these are all us trying to talk like machines Right This Is Us learning insane levels of systematization incredible amounts of jargon um trying to compress the extreme complexity of some crazy thing into like
a one tiny term in a term sheet whatever like these are us acting as machines like whereas now we can actually have machines that are understanding us as opposed to you know us going down in the level it's early down you know we I find the AI Essentials debate a little bit I mean I don't know what to make of it right it's a little bit like I don't know what weird Ascension means to me the questions about like B zombies
already doesn't make any sense on let alone the hard problem of Consciousness now you want me to do that for an AI but we can't even do it to each other I mean like we are effectively all pointing questions at each other saying this is hard this is hard this is hard but it's like yeah it is so let's you know let's just all agree that it's hard and then like move forward because we got to disagree and commit here there is no
you're not going to get an analytical answer that makes anybody happy it's just there's no chance I mean we've been debating these questions about humans for 2000 years and we haven't gotten anywhere so like it's not like there's a sudden you know oh now we figured it out qualia it came from this part of the brain when these are inspires like so right real Creator theories ultimately with my perspective at least I mean
there's a longer post that I'm kind of working on about you know AI risk um you know but to create a Drake's equation for it effectively to try like guys I mean we should systematize at least part of our thinking but I think the sneak preview is a little bit like we gotta know at some point if it starts exhibiting symptoms of agency or like having some internal Consciousness or quality up that are not necessarily
pattern match the things that we input into the system then guess what just treat it as you would read anything I think this comes back to our original conversation about spfs like don't be rude like act as if you have discovered an alien intelligence and worst case you're wrong it's fine this happens right like to me I feel like a lot of these discussions are analytical attempts to ants get a definitive answer for an exceptionally
complex question which I think is a Fool's errand in the first place because like we can't do that for any complex adaptive system in any meaningful sense like the only thing we can do is to try and learn and iterate and move our way through right which is kind of how we do it anyway so I I don't know my personal prescription is that I think we should continue to do what works and try to like not look for the god equation
before we are willing to build anything yeah and and I think that the your observation about complex adaptive systems is is right on the mark because as everyone knows all emergence from a complex adaptive system comes from below not from above so this idea that we can analytically just analytically have solutions for everything I love your idea that I'm going to steal and broadly broadcast uh you know for the
first time in human history you know we don't have to have humans acting like machines anymore we now have machines that can understand us as humans in terms of what we want them to do yeah right and and so I believe that the the uh it's going to be a cambrian-like explosion of innovation and creativity because well because as we were talking about earlier tell the story about um doing the book for your for your son
because I think that's such a great story so the there's a story that like uh my my first son vedant when he was younger I used to make up stories for him um for to help him go to sleep or generally just to kind of keep him happy it's fun right I mean sure I did the same best imagination so it's it's fun so the story started at some point when he was crazy about dinosaurs so it was about these two dinosaurs who are in
this um Cretaceous Forest it sees a giant volcano erupting far in the distance they're exceptionally curious they go they want to try to go and climb it and it has a lot of twists and turns and they meet a bunch of friends along the way and like River Crossings Etc um and the thing is the story is a story right like I mean it was fun to make it with him but now I was like because these tools exist I can actually
create and do a little bit of a picture book which would be wonderful especially if I can create it because he'd love it and then he can read it to his younger brother um or just generally I'll put it out there and this is not something that would have been possible with like almost anything right like before now I could get somebody to draw it like I was telling you but like I would have to
explain what I want them to draw and I don't know what I want them to draw either right like this is me figuring it out I mean what am I gonna say like you know uh baby Tyrannosaurus Rex and a baby Triceratops are on a on a like a log crossing a river is that what I want I don't know like I'm gonna I'll have to mess with it to kind of figure it out unless I get my hands dirty I don't know what to ask for so I've been getting my
hands dirty with with stability to try and figure out like oh okay this is how we can think about it like if I do this prompt and what actually comes up no I want to change this aspect in this picture let me do any painting out painting like it's been fun to mess with it and it's a very simple example of something where you can use generative AI to create a bit of a story that you want to tell in a way that you want to
tell it that you wouldn't be able to tell it otherwise right this is not a massive commercial Enterprise there is no you know Rohit world like Disney World that's gonna pop up but it's fun and this is the point of life and like it is something that I can do now that I wouldn't have been able to do before I mean like you talked about American Gods I'm a huge diamond fan so like when I was in college one of the things I really wanted to do
with one of my close friends is to make a graphic novel and like we could write it and we tried to kind of work our way through drawing it and he's a better artist than I am but like it was such enormous amounts of work that it was just not something that two of us could do unless we dedicated like I don't know 10 hours a day for like a year because like you have to draw it and then ink it and then color it's like
a it's a huge amount of effort and today I think we could probably have done that after writing it like a few weeks that's step change right again creative explosion I think the amount that we are actually going to be able to see in the coming year I I don't think we are prepared for it in any meaningful sense and I don't mean it just like commercial creative explosion I mean indeed for people to do things that they
lie I I 100 agree with that uh after we did the release of stability AI with the full model with the weights which no one had done uh because that's given away the secret sauce uh we had had some kind of uh internally speculated on you know how how much you know what are we gonna see and like everyone was very bullish obviously sure that we were going to see a lot of innovation because uh we uh you
know through cognitive diversity you're gonna see a bunch of different things because people are better at like some people are really great at graphic novels others are right yeah and so we were all uniformly shocked by the amount and the quality of the innovation of the Artistry and what came and it was like our thesis was humans are the creative spark if you give them the tools they are going to come up with
amazing Innovations like Rory said that there is no practical reason for but so what that's correct I mean that's a point exactly right I mean the point is that you can now do your your using our uh Tech from stability AI you can do a good picture uh book for your son to read to your younger son yeah and you know you could start out as simply that but then I might get a copy and I might be reading it to my granddaughter uh
who's coming who I'm happy about coming uh for Thanksgiving and and she might love it and my daughter might say it was an author might say hey let me let me see that book and you can see how it through the Stepping Stones right it could turn in you it could be Rohit world because then find a better name yeah okay I agree if I'm invest if I'm investing in this first off do you have an accounting department
no no I'm moving to Bahamas as soon as I write this but but the point is uh from from these many many things that we now cherish for a variety of reasons grew out of things that were not that thing right yes and and so it when you have this continual burst of creativity where people who had limited ability in say drawing right so graphic novels that's why I love that book on flattening which I recommend all
the time I know I love um yeah it's a great book and he's very clever but now I mean like imagine this is a great example it could grow and we who knows yeah but but the the base case that I love here is it doesn't matter it doesn't matter if if you are providing some other human or group of humans with a way to experience the joy of creating something that they've always wanted to but they couldn't like find the right
way to draw or write words or anything they now have this set of tools that can make them just like excel at the very thing that they've always kind of you know I've always wanted to do that but now like all of the Innovation is taking away all of your excuses right as far as I'm concerned and I mean it's like curiosity was always the thing that pushes you to try stuff abilities what stops you from
doing stuff I think like if the ability boundary gets pushed out you can let curiosity have a further Reign right like highly curious about a lot of stuff ability stops me from doing a bunch of those things like but guess what if the ability barrier goes away I'm gonna go down to Maria in a trench but like but like uh you know not now but like uh that's that's the trade-off that we're gonna play with it and ultimately exactly your
point I mean I think of it like I don't know like it's like a word processor you can write the Great American dollar from it you can also write anything else you like right I mean you can write a blog post a book whatever the processor is agnostic what it does is that it allows you to do what you want and then you choose what you want to do with it so it's just pushing the ability boundary higher ability kind of level higher so
that when your curiosity kind of Rises at least it's not like hitting a ceiling it can move up a little bit yeah Ed made me think of uh a guest I just had on Tinker thinking um who won our white mirror literary essay contest because it was oh thank you and and I'm I'm a huge fan of Science Fiction in general and I love Black Mirror even though it's just you know profoundly pessimistic uh but but
and so we got this idea for white mirror and he had a great thought back to kind of like the philosophy of business which we're still kind of on here in a way yeah um is he had the Insight that I'd never thought of and when he said it I'm like oh my God that's brilliant and and it was advertising grabbed all the positive emotions of Idaho yeah I mean I think it's like we live in the even advertising has changed right like
when you see these uh the older shows advertisings were very much like here's a counter tune it's really nice go buy it like it was exactly or or it was a list a block of text if you go way back yes at so-called advertising it was a block of text trying to convince you rationally yes why why this this particular brand of soap was the best exactly right it was very like you know it's like it's fine I mean that's
totally okay advertising today is a like I actually remember some of the advertisements that existed in TV when I was growing up in India because they were brilliant they like those people I think they could make anything they like it was like you know they had like whatever 30 seconds to grab your interest tell a story it's beautiful it's funny it's hilarious it was like it was wonderful but it's a great point that like it
captured our positive attention because like everything else especially um with kind of the easy media landscape that allows us to do you know social dunking you get going negative pays off right in in many ways it gets you a feeling of catharsis internally I'm being charitable but it also gets you a lot of other people kind of glomming onto that emotion and kind of blowing it out of proportion now I don't know how to what
extent this is purely because of sort of the change in circumstances over the time I don't think it is but like I think it is a very true thing to say that being doing overtly positive things has started to seem a little bit I don't know like it seems a little or you have not thought about this deep enough if you think about this deep enough get it's actually a dystopia I feel you know you don't have enough
utopian Visions written by really smart people you know I think the example thing to think inside is Jules word wasn't he that like yeah yep neither pessimistic nor really it's about the future where cool things can happen and really pay more of that I I yeah I mean I'd love to read so much I'm a huge sci-fi fan but like the relentless pessimism kind of makes me stop reading it every now and then because I'm like
it's okay like I do not want yet another War it's fine like I mean even if there is a war it's like I need some positive push so that the future feels like it's worth building exactly and like you've just given part of the elevator pitch for why I did O'Shaughnessy Ventures and why we're doing infinite films what because they don't make movies that are inspirational anymore in Hollywood so somebody's got
to make them so I guess that's gonna be me I mean it's important like and it's I think it'll be fun it's precisely right and and this whole idea of um you know it's much easier to be pessimistic and negative like the old quote uh pessimist sound smart and Optimus make money yeah um and and it it it also it defaults to all of our our base code in human OS lights we are emotionally driven creatures the dominating emotion is fear
the biggest fear is fear of the unknown yeah and and so if you have a novel threat everybody's gonna pay attention to that novel threat and because that's we're programmed to do so so I get it um but the the the whole idea of also it it falls into all of our blind spots right so like one of the one of the central things that you get these people who dilute themselves into thinking that they know all there is to know right and
it's a natural default I've found yeah people people actually unless you confront them on it and say let me ask you a question uh did did you know that um like Amazon was gonna be the one of the biggest companies in the world back in 1980 well of course I didn't know that because there was no internet and man yeah okay so how do you know now that like that's it everything's done we know everything you don't end of History
end of History like exactly what I mean oh my God I mean it's a bad title but like Barry yes that was better but still man but yeah I mean come on because because that the the it's easy to delude ourselves and uh to to think that we know all there is to know and like we don't know of action of what there is to know that's the exciting part yeah the excitement yeah exactly the exciting part is that we get to learn we get to
invent we get to innovate and that comes with new knowledge and so to presume that you know what new knowledge is going to be talk about hubris yes I I I I I it baffles me and yet like I'm happy that that's the default because I can be over here being really optimistic and of course I'm gonna make a lot of mistakes but at least I'm gonna try to make new mistakes and interesting mistakes and I
think part of it is that like there is this uh mimetic desire if you're pessimistic and someone else is pessimistic they tell you hey you're right to be pessimistic you're telling me yeah you're also right like there is this little circle that kind of comes up about like it it stops to get called realistic which annoys me um and like a loop kind of gets created right and this more recent in fact like you know
I used to read pretty much every um a Booker and Noble winner in literature at one point then I stopped because I got depressed from Reading I was like me too Fame I I exactly I read all those books and so I was just like and then I was like just why why is everything so Bleak all the time I like I used to say this about Indian literature like everybody's dying everybody's sad everybody's upset and I'm like even if this is the case that
in your story everybody's in a sad position can you at least try to make sure that like I don't want to kill myself at the End of This Book it's not that much to ask right I don't know why everything is like that like there should be more fun positive optimistic books but they don't get prizes so anyway like this is one of my you know biggest pet peeves and this is why it needs to be pushed and to your
point about the future like I mean I am like you know I I'm one of my ongoing projects is to look at all of the innovations that have happened in the history and try to figure out like why they happened or how they link to each other and I have this broad pieces which might turn out to be wrong if I could probably will that almost all of the Innovation can be looked at as some function of like energy materials and knowledge
energy because you need something to do the work materials because you actually need a material to do the work and like knowledge because otherwise how do you know how to put them together and if you push the boundaries of all three of those things forward sufficiently then like you will keep getting hitting different barriers right we have enough materials in enough knowledge but we don't have enough energy to do things
which are arguably in some cases how we feel today or like we have enough knowledge and enough energy but like we don't have the right material to build something space elevator being an example and like these things keep shifting and like each time you hit the barrier in one you level up something else in order to kind of push these things forward and that's kind of the game right I it's very
kind of crazy to say that like yeah we've kind of Hit the barrier on all three now it's stopped like you're not gonna get more energy in anything We're not gonna get better materials for anything and like yeah we're not going to know anything else it's like as an implicit assumption you make about the world I mean why would we've been wrong about it historically every time we have taught that might as well assume you're wrong now
and in fact even if you don't think you're wrong for whatever reason assuming you're wrong is a way better way to live life it's a totally you know I I like I I I cannot tell you the number of times I begin talking with somebody and I start with I'm probably wrong but because when you program yourself to think that way you don't have those restraints that many people have yeah where where they feel like they need to
be right before they ever suggest or dream up something or whatever they feel I've got to be right and so I'm all you know constraints in many Arts and Sciences and everything are a good thing often but but when you get the constraints so narrowly bound that you're only going to propound for something that you have a pretty high degree of certainty that you're right about my God you're you're you're you're
leaving 80 of some of your probably best ideas yes out in the wilderness to die because you're too afraid to Advocate and oh then I'm going to be proven wrong and so when you have programmed yourself to say to say it yourself yes your your own mind goes oh well if if I can be wrong then look these look at all these ideas that I have right and just try it out right I think that's part of what like makes life good it's the you remind
me of uh in Bell Labs the Hamming question you know like what's the most important thing in your like open question in your field and why are you not working on it and there can be good reasons why you're not working on it but like the fact that that is a question that very few people thought to ask themselves then it tells you more than it should because you know this is not a question that should be blowing people's
minds it should be like if you're at the top of your field what else are you gonna think about but more importantly I think it's like one of my others kind of long long threaded Explorations is uh to curiosity at the fundamental driver for a large amount of individual as well as sort of collective Brokers you know because you have to decide where to put your time energy effort money whatever right
you have to individually collectively we all have from an individual standpoint if you're going to do that the two ways is either you say I love X I'm gonna go do that and that's my life and occasionally you will be right in which case godspeed You know you're happy um occasionally you will be wrong that's fine too the second option is to try and optimize at top down which I have done in my career several as well which is
probably not the best way to kind of go about it because you can't get an intellectual answer to solve all of life's problems with an analytical equation doing a top-down analysis right you can't do a tam calculation to figure out where you should spend your time you could right but you shouldn't because you'll be wrong and you'll be upset and so this is one of those cases where like you have to use the guide that
Curiosity gives you to kind of at least point the spotlight of your life in some direction where it gives you a little bit of energy and then see whether you can do it and maybe you can maybe you can't but at the very least you will be doing something that you think will be slightly more interesting and important that for most people I feel especially today especially at the margins they could do more of that right I mean maybe
you can't do all of it all the way every single time but you know small examples like being able to create a picture where your son is a way to kind of push the boundaries of what you actually want to do in life or like writing or like you know it's even I feel like it's even at the smallest levels a little bit of rebellion actually helps spark the question of like what else can you do and we need
way more of that and I mean that's what a white murderer Society should get you to ask right ultimately totally and I have uh a uh thesis that these new tools will unlock a certain percentage of the population that had held themselves back from uh exploration from being curious about things that were outside there can so to speak yeah I think that we're going to the tools are going to unlock uh certainly not a majority but a pretty
reasonably sized uh cohort of people who will say well I let's just stay with your example you know what I'm going to write I'm going to write a picture book about the dinosaurs going to check out the uh the uh uh volcano yeah and and for that group it's it's like a hell of a drug curiosity uh oh I can't remember I think it was uh I can't remember who said it but she said curiosity is a [ __ ]
starter that's a good phrase and it really is yeah like so so some people in my way of thinking and interacting with others some people just got very lucky and were just naturally voraciously curious yeah and and those are the people who end up doing pretty well usually in in life um other people they they learn to become curious through a variety of Explorations Etc and then there is this this group here that I'm talking about
that you know they they have what I would Define as normal levels of curiosity but they they still have that constraint of being afraid to be seen to be wrong or whatever when they get these tools they're gonna that that's gonna unlock I think and obviously the degree to which it unlocks it will be very it will be various but it will unlock it because they'll see wait a minute there is there
is a way that I can write that graphic mod there is a way that I can become a fashion designer there is a way that I can build a space elevator yum and and so I think that like you know that's all part of what I call the great reshuffle and I think we're in the middle of it and not really even the middle of it honestly uh I think it's towards the I think it's the early Innings I think one of the ways that I think about this is
like or one of the kpis that I think would probably show it to be much further along is I think a lot more people are gonna have portfolio lives right like there's no you know work home spots and that's it kind of thing like they will have multiple things that they're excited about that they want to do that they are actually capable of doing that they wouldn't have been capable of doing before for a variety of reasons
but now they can I think that's important I think it is genuinely important especially in today's world because I think one of the weird subsets of the last several years is that we all live much more atomized lives than we used to which means this is important to create a little bit of a sense of community and coherence right because we can all create with each other which is yet another way we can connect because
otherwise you know you meet everybody you know at work or you meet everybody like they're they're aren't that many communal places where you meet people which means like unlocking more of the spaces are gonna have more payoffs than you can perhaps immediately you would imagine right on from an idol standpoint I would totally agree it was one of the founding principles of my new company um that uh networks were actually going
to become vastly more important than they were in the past because time space and and geography have all collapsed and it's very easy to move your digital zip code and it's very hard to move your physical one even today but now it doesn't matter and and this idea of communal a big communities are formed through mutual interests through mutual passions through all of these things well guess what now you have all eight billion of
us that that we can that we can form these sub communities but to your point that's a great thing because the ability we're social creatures again back to Evolution I think like you've got to always try to say does that make sense from an evolutionary point of view right like it does that's not the be-all and end-all but it's a good question to ask and at least I think and and so like we are
communal human beings are are definitely gregarious communal minded creatures and so the ability to build communities in a variety of different ways with a variety of different people from all around the world is going to like hello exponential age I think it's important because like if you think about one of the you know constant complaints I see from most people my age like slightly younger slightly older like in that cohortis
um we all have similar-ish problems where everybody became mobile at the same time roughly right so like I left all mad 17 to go to college whatever and since then like all of my best friends have also done similar stuff from high school but law also afterwards and as a consequence we are kind of spread all over the place right because trajectories take you in different places guess what if everybody's mobile
it's like you know High entropy system right so you're not all going to end up in the same place now the consequence of that several years later is that you kind of go like oh dang it like what do you mean like you know some of my friends are like blamed right away 10 hours a year 10 hours there whatever like you don't meet each other very much anymore so in the internet at least like you see quite often tries to create a
community go build land there everybody move it hasn't worked for the longest time for a number of reasons right I mean economic being primarily but also some social cultural reasons of like everybody can't just decide to buy a village in Italy and move there because you know you gotta do something so in order to unlock that you need to unlock the economic side which is starting to come about with some of the
remote work etc type of work stuff that you're coming to but you also need sort of the social communal side of people who are doing somewhat similar stuff so you're not like all doing something random stuck together in a village where you don't know it because one of the principles I forget where I read this is like strong tides are incredibly important which is what we're talking about but you also need weak ties yes
right and weak ties are harder to create de novo in random places because like you don't have a friend of a friend of a friend like you don't right I mean you all are sitting happily you know uh somewhere outside Rome but like guess what you don't know anybody in Rome and that it's a geography in some ways remains Destiny for this I think the weekday is the part that like whatever Network State some of the city people
kind of forget about however having more ways to create Community is a way to solve that because today like I mean like if you go anywhere on the wall can you meet people in your tribe so to speak yeah because you kind of found them through Twitter and the podcast and the writing and books and talks like there's ways to kind of create these communities that didn't really exist before right I mean even I
don't know 20 years ago if you were coming to London like if you knew people in London already you could meet them because you could call them if you didn't know anybody in London you have to go out and meet them but like there is no third way to kind of create a community before you went there didn't really exist right like that's it it's a different age and I was just in London a couple months ago and to your point
um now I I had let's let's set to the side that for a long time I was in London all the time for business so I did meet people the normal way okay but this trip to London was really focused on stability Ai and the offsite that we were doing the list of people who wanted to get together was so large that I decided you know what I'm going to go back to London just to get together with all of my friends there
and almost everyone on that list I met through Twitter the podcast some some communal Global Network that you then take down to like meeting the person BS talking to the person interacting with them as another human being and then guess what you become friends and friends want to see each other that's a normal thing that's an adorable thing and so I I was so struck by it though and yeah so I got I I was quite chopped about it because
it's like I showed the the list of people who had emailed or dm'd me or texted him and I showed it to my wife and I said that's almost two weeks worth of just good in-person visits and I'm gonna go back and do that because like that'll be fun that that actually will be just a lot of fun yes precisely but it underlines and I think illustrates your point quite nicely if like I you know I'm an investor in anchorless
Bangladesh guess what I know a lot of people in Bangladesh I've never been to Bangladesh if I go to Bangladesh though my dance card's gonna be full yes because of all of the incredible people that I have met through this particular thing so I think that from the way I look at the world I mean I just feel a incredibly grateful but also insanely lucky that I am alive right now because like are you kidding me like when you go
back and look at um uh I think was Brad Delong is coming up uh with I just subscribed uh to his Sub sub stack and he's trying to figure out why why was there no Economic Development prior to 1870 yeah and his book is fantastic and I could recommend it yeah yeah yeah uh anyway though I was thinking about it and it was because well there are a lot lot of reasons right and which many of which we've
discussed earlier in this in this discussion you know I'm not a big fan of organized religion because like I was born into the Catholic church right and I'm not religious at all I'm not an atheist because atheism and Maidu requires even more uh profound belief than it's like I know that there is not a God okay really really have you designed the thesis that can test that proposition um and so you know I'm an agnostic
and what do I know I'm probably completely wrong maybe they're maybe maybe maybe American Gods is right and it's the old gods verse the new gods and like gaming gaming nailed it because he's still on a higher plane than I did but my point is is that so many so much uh human history we got talk about regulatory capture societal capture by religions that and and I'm let's not just pick on the Catholic Church here let's make it all
not all like we'll give the Buddhists a buy here and and the taoists of a buy maybe a little but the point being that they put these incredible oppressive systems in place that were if you're cynical about it that we're kind of designed to keep whoever the man was the man for the rest of mystery right and and so we escaped that we escaped that with the with the Renaissance partially but then with the Age of
Reason with the founding of the Royal Society with the ability to ask questions and do experiments and all those kinds of things so I think like I'm giddy about it I'm I'm like incredibly chuffed about the next 30 Years I just think and for me they're like dude you're 62. like I know your dad lived until he was 97 and you're you know you have longevity and but come on you why are you so excited I'm excited
because I have grandchildren and like precisely you know it was one of the reasons why I was so passionate about stability Ai and open AI because I don't want my grandchildren to grow up we were a panopticon controlled by the few tells them what they can and can't do yeah so I think you know one of the funny things about seeing the AR revolution has been um anytime a breakthrough is made like Before the Breakthrough started coming I
was kind of thinking that like dang you know there's going to be a foundational technology here that's going to take all the tips off the table because like they'll get whatever Network effects they'll have locking effects once you create a technology and now I'm like dang it I mean but the the release of a closed model and the release of the open version of that model that are separated by like weeks you know so
it's fine we're all in it together it's all exactly so I am I've become more like more open to the idea that like at least having things open means like there will be a lot more experimentation for good and for real but like net absolutely experimentation has always been for Good Will it always be that way I don't know it's an empirical point it's not a you know theoretical point right there is no answer here but at the same
time you can look and say like mostly we have kind of done the right things and it feels like we want to do the right things going forward and collectively the explosion we have seen over the last like two three years has been for the right things right I mean like people have been proclaiming Doom with AI specifically for a long while long while not like the ultimate Doom even specific Doom like we're all
gonna be drowning in deep fakes I've been hearing this for and like we can do that today though right like I mean but we're not it's just like just because you can doesn't mean it automatically happens because like somebody needs to do these things you can have better scams today but I still get the dumb Nigerian emails because like I'm not their target audience and they could level up their target
audience to create a wonderful gpt3 crafted message in order to part me from my money but if they have the ability to do that they're a far easier ways to me at that point than to like scam me for 100 bucks so and and deep eggs like what was the potemkin village other than a deep fake right I mean I was like so so we've had them forever but to the point it's a great point because it also illustrates
something else that I'm very outspoken about you are absolutely right that the technology itself is neutral the human using it is not no and and so like there's a great quote I can't remember who said it but I loved it it was like hey we discovered fire and that one's great man because it gave us bigger brains and it gave us all these things it also was really dangerous and so we invented fire warnings fire departments
fire extinguishers you know so the the idea that like to blame the tool it's it it's a bit like saying um all knives should be made so that they can only cut food to be eaten or something to be cooked yeah so night should be made so they cannot kill another human or a animal or whatever well sorry you yeah it's it's the nature and it's not the Tool's fault it's the lunatic who's running down the street after somebody
with that knife trying to stab them that's the fault it's the human wielding that tool I mean civilization is a wonderful what else can I say exactly it makes it so that like you know we're not like all wandering around worried to help up like somebody bonking us over the head with something like I mean the entire point of progress has been that like we've kind of got to a point where you know that's not necessary I mean I'll tell
you sorry like when I was in college um uh this was a time when BitTorrent was big so like in the uh early 2000s and um Hazard was big I think like at some point a downward a pirated movie and I got a message from Columbia TriStar I remember like a like a message saying like don't do that so like fine I won't do it it was for the worst movie ever I don't know why I did that it was like it was it was for uh bad boys too or
something it was like horrible anyway um bad taste and like no a lot of free time in college anyway but the interesting thing was like I remember sort of Music piracy at that point was super large right it kind of came up to be big and then all of a sudden you started being able to buy a song for like 99 Cents and kind of falling off the radar effectively right it kind of like collapsed I mean it probably still
exists but like who the hell is gonna do all of that effort in order to Pirate some music when you don't actually need to so I think economic incentives are an extraordinary alignment mechanism that we've discovered not to eliminate like you know philosophically the the impetus for all crime but to eliminate empirically practically the impetus for a large chunk of problematic behaviors that we see around us
which is nice like I like you know living in a place where we don't have to constantly look behind every corner to figure out if somebody's going to do something horrendous because a what can a life would that be and B in any system that is more complicated than playing pong on your computer there's always going to be externalities it's just inevitable right like we have externalities in video games that are
designed for single players because like that's how complicated systems are and now think real life like what are you gonna do legislate away every single thing that is a problem you can't do it because like the number of ways in which you can figure out a way around that legislation is infinitely larger than the number of legislations that you can make and at some point you get a ceiling where people don't even know what
legislations are and it becomes Anarchy right so you know I don't know I feel like we don't kind of give this enough credit the fact that we live in what we have constructed to your point like this came out of our Collective ads as civilization where the collective um Force impetus is to push our curiosity in such a direction that we actually get to do things for the benefit of each other as opposed to
necessarily detriment like detriment is just not that beneficial yeah again um you're right um I I I I thought when you were speaking of Doug Adams uh uh quote about you anyone who thinks that they can foolproof anything is underestimating the Ingenuity of complete fools oh yes I mean like yeah I mean I've I've learned this far but about flapping kids definitely definitely children spent the first three years of their lives trying
to kill themselves and it is your and it is your job as their parent to not let that happen but but there's always something that the child figures out or wanders into that you didn't think about and then you gotta Dash but also it made me think of a I I'm a fan of Ian McEwen and his most his most recent book is Le his lessons um and I'm almost done with it and he makes um early in the novel um he takes
um a a man's the protagonists uh story from the beginning of his or the like when he was a kid seven eight all the way up into his uh late 70s um and in the in the beginning there's an incident in London and um uh there's a horrible accident that happens in front of him and his father and his father's an army officer in the British army and a motorcycle hits a car and the Motorcycle is his throne and it
it's being told from the view of the young boy and he said all I thought was how lucky that I live in a city London where everybody there there I don't know where they're coming from but they're already coming to help we have created a system where something happens and a bunch of people you don't know come and help you the First Responders and his own thought and his own father went and helped and everything so I you might love the book
it's it's if you're a fan of his it's it's a it's atonement and I liked it and I read I think the um Amsterdam I think is one of his if I remember the name right it is which I loved as well so I'll check this out yeah but I yeah I mean yeah I think the fact that the externalities of civilization actually help us is uh quite highly underrated yes I completely agree well as usual we've talked a lot longer than uh uh my
my nanny had scheduled me for uh but you get to come back on because your homework assignment is to read the book that I told you about Howard blooms um The Genius of the Beast a radical revision of capitalism and we will have I think a wonderful conversation about the advantages and deficiencies in his analysis as we see them I mean I'm a I'm a fan of it's the same Howard Bloom the writer the different
different different things it'll go on the Christmas reading list there you go well as you know we're gonna we're gonna make you the uh cheap inceptor of the world here and you get to speak into a magical microphone that is AI enabled I will tell you yes and you can you can say two things that will incept all eight billion people on the planet um whenever their tomorrow is they're gonna wake up from a wonderful night of
sleep and they're gonna sit up in their bed and they're gonna think the two things that you are about to tell me were their own idea that they had in a wonderful dream and that they immediately say I'm gonna start doing X what you got for me I think my number one I might have said it the last time as well is gonna be the my Bona Goodie and Maxim be kind I think we could always use more of that I think
it is one of the uh singular flaws of human beings is that we do get susceptible to getting caught up in uh whether it's a negative cycle or because we live in a large relatively impersonal world to get caught up in the feelings of I don't know name your negative emotion um being kind is one of it's underrated it's still underrated I don't know why it still is it's we could we should do vastly more of that because regardless
of what any kind of immediate rational utility calculation you do tells you that you don't need to that your calculation is wrong reality is right exactly the second one I'm gonna take one picked from our conversation today that like I would say everybody should try and create something after they kind of hear me speak it doesn't really matter what it is um AI enable non-ai enabled writing not writing painting music movies new
business new code whatever I think trying to push the boundaries of what you want to achieve with what you should achieve is important um do it yourself do it with someone else even better um I think the idea that creation is like this mythical thing is a bit of a myth that we've all built around each other I think I had this recent realization that you know human abilities are normally distributed but like human achievements
are power law distributed and when we look back on human achievements you go like whoa how did say achieve this they must be superhumans and this comes back to the Steve Jobs quote right everything around you was built by people basically like you I think it's important to flex our muscles so that we can try to sort of do more stuff and work with each other to be able to do that I think you know let your curiosity
have a rain on your actual actions and guess what the world has changed you can do more stuff than you could before so why not give it a shot exactly the tools and the platforms are taking all of your excuses away from you so um I I'm a big believer in both of those the only thing I would add to your first one is that I'm noticing that many people at least the way I read them um our our our
think that the words kind and nice are interchangeable they are not interchangeable they are two very very different concepts I'm not a particularly nice person but I do try to be a kind person yes because they're very very different I could not agree with that more I mean you're not I mean again kids help you're not always nice to your kids you're always kind to yourself yes exactly the distinction is you know well it matters
more than everything else in the world right like exactly exactly well Rohit as usual a fantastic conversation with you this time I did hit record so we're actually we're actually got for those listening you know I'm kind of an open Komodo guy and uh so we record it a while ago now uh which was also a fantastic conversation if my memory serves and my notes sir um just the little detail that Jim
forgot to hit record I mean I do I have to do everything we will soon have an AI that does this for us and it exactly I bet that was like that's my real reason for my investment and stability and everything yeah I want the AI to turn the goddamn recording on when I start a podcast you know what that was our secret Loops conversation it's all good exactly listen this has been great and till next time my friend indeed it was an absolute
pleasure this again and see you again the only guide we have is our desire and our curiosity once you find your purpose it also leads to a happier life even at the smallest levels a little bit of rebellion actually how smart that question of like what else can you do he says oh like all Fortune Shadow opaque on arrival inevitable in retrospect I would say everybody should try and create something it doesn't really
matter what it is everything that gets invented started out in a human mind AI is the first tool that we have created that allows us to talk to machines in our language it is going to be co-creation it's going to be a creation that humans are intimately involved in and directing human abilities are normally distributed human achievements are our law distributed let your curiosity have a rain on your actual actions