[Music] [Music] tetron I was myself a product of you know an Elite Education I was you know Stanford undergraduate Stanford law school and uh I graduated from undergrad ' 89 Law School class of 1992 and then probably throughout the 90s and 2000s I had a bias towards hiring people from the top universities I thought there were things that had gone Haywire with them there was too much uniformity too much political
correctness but I I still believe that they were an incredibly important ways that the Elites in our society get formed and that one had to reform them or do something about them if you're going to have an impact on an elite level in our society you know then I had my success with my first really big breakthrough success was PayPal which was in the Years 98 to 2002 and then invested in Facebook in 2004 so by by
the late 2000s by many standards I was quite a successful person and Circa 20072 2008 I I thought that the big philanthropy thing I wanted to do my one big philanthropy project was going to start a new University and uh it was a little bit vague but it was the fantasy was that it was going to be a kind of a liberal arts college where people somehow got a broad education about the world maybe they also would be trained
in computer science or something it would both be good for life and good in sort of a theoretical way and in a practical way and for about a year year and a half one of my colleagues research project and we looked at all the universities that had been started in the United States and we arbitrarily picked the 100 years before so 1907 to 2007 and when you looked at that 100-year process it was a tale of donor
intent betrayed and money wasted and you sort of got the sense that it was really really hard to start a new University and there was it was somehow this I come with all these theories why but just empirically in a broad brush look almost everybody who tried to do it had failed quite badly even though I I like to think of myself as smarter than other people I don't think of myself as that much smarter and so if you've seen
something which people have tried to do for a hundred years and never succeeded you start to wonder if maybe something very different needs to be done and that that was at least part of the Genesis the idea that maybe too much money is going into this higher education system and maybe it would be good to get people out of it instead of pulling them in and it would be good not to try to hire a few more faculty or graduate students or
something but to a new model have a completely new model and uh in September of 2010 there was a Tech Conference in San franisco was going to give a talk at and it was like 24 hours before we came up with this idea we again talking about the universities and how how they were broken and we sort of came up with this idea and you know we brainstormed it and should we have thir 32 kids no that's 32
is like the road scholarship we don't want it to be just a copycat of the road scholar and then we sort of came up with 20 under 20 but it was like a 24hour brainstorming session we were figuring it out and the half hour drive over to to the talk I was given that morning and then it took off what was the first year that you did it well we announced it in Fall of 2010 and then effectively the first year was 2011 it was basically
envisioned as a 2-year program you know we gave people stiens of 50,000 a year 100,000 over two years I there were all sorts of things that were imperfect there are all sorts of questions you know is this really something we should do in a nonprofit versus a for-profit context but it it hit a very raw nerve because it was clear the system was way more exhausted than people thought and you know there
was I know there was a Silicon Valley Reporter I did an interview with in 2011 and it was s like this is like very controversial crazy idea a Peter has was sort of the way it was presented but then you know you looked at the comment section and 70% of the people in the comment section agreed with me and so so already you know in 2010 2011 it was maybe maybe it was unconventional for me to articulate this but there was a sense
that uh the business as usual was not quite working I always bad at doing the autobiography personal history thing but the summary autobiography I always give of myself and I always see myself as you in some ways having been very guilty of the same things you know you often see your younger version having done certain things wrong that maybe you couldn't have done differently or you would never have known differently but in retrospect
as as a lot of talented kids was just hyper tracked and so my e8th grade Junior High School year book my best friend wrote in you know I know in four years you're going to get into Stamford and then four years later I got into Stanford and then I got into Stanford law school and then I ended up at a uh top New York law firm and and it was one of these very strange places where from the outside everybody wanted
to get in on the inside everybody wanted to get out and so in my mid 20s I had kind of a quarterlife crisis like you know what why in the world was I so dominated by social status Prestige you know the money was okay it wasn't that great relative to selling your soul or something like that you feel like it was selling your soul I I felt it was like yeah on on that scale if you think in other words you achieved
it because it was the goal to get to but when you were there you realized that it was empty for you yes but it was sort of an odd goal because you know if you ask where did that goal come from it didn't really come from where did it come from it somehow came from our society broadly it came from I would say 2third of the undergraduates at Stanford in the 1980s were on one of four tracks it was pre-law Prem medicine pre Banking and pre-c
Consulting my sophomore year I decided to major in philosophy so that was my so had this Humanities major and on some level this is not what I was thinking as a undergraduate sophomore but in some ways when you chose to major in philosophy you already kind of deciding to go to law school so there's sort of all these points where you implicitly make decisions even though you're not consciously aware of them of course you
could was there any pressure from your parents or none there was surprisingly little fresher you know I was born in Germany we emmigrated the states when I was a year old so they were they wanted me to get a good education so they believed in that strongly they weren't as immersed in the you know Elite American system so it sounded good to them but uh how did they move to the US you know my dad uh worked as an engineer
and uh he sort of got a master's degree at Case Western in Cleveland and then working on these sort of large large engineering projects sort of the beel kind of a thing yeah there was sort of a way that the tracking was I would say was very very socially grooved you know it's sort of everyone wants what everyone wants which is on one level just a topology and on another level is this incredibly powerful dynamical
process and there was something like this that was very powerful and was there was sort of an Elite Education track generally and then of course there was were these particular tracks of banking Consulting law medicine that dominated the the Elite Education and then I think you know I think the the strange history of it is that you can think of the global financial crisis in 2008 as the point where all the tracks blow up maybe
centered the most on banking medicine had already gone Haywire for a long time law you know elite law was often adjacent to to Banking and in some ways all these tracks got deranged in 2008 and so there was you know around 200920 when we we start the the taale fellowship there is actually sort of a a real opening to rethink this stuff for the first time in decades in in the US and there there all these different ways
you can describe it you can also describe it in terms of the the student debt problem in the year 2000 student debt in the US did a 300 billion it now stands at $2 trillion so you know 300 billion was kind of a lot but in the 90s or 2000s there was a way you could get a decent job and earn your way out of it maybe it took longer to start a family and to buy a house than it otherwise would have but there was sort of a way
in which it was manageable and gradually the costs and the debt just went up so much more than inflation that uh you know you you just sort of ended up in a hole where it got harder and harder to get out I have a student debt question which is there's talk of government relieving student debt and the way that would be relieved would be the government would pay for it instead of the students paying for it yes why is
the idea that the government would pay for it instead of these institutions that have these huge endowments just erasing the debt the place where I am sympathetic you know I'm I'm probably a big critic of the Biden Administration and of the left I am somewhat sympathetic to the idea that something has to be done about the student debt problem in some way and that you know in many ways we've doubled down on the
system so in 2005 the bankruptcy laws got Rewritten under Bush 43 where you cannot discharge student debt even if you go bankrupt and so if you go bankrupt why would that be well because we wanted to make sure the system kept working the theory is uh the debt attaches to you as a person and so you got all this great education and uh you can't get rid of the education and therefore you also can't get get rid of
the debt and if you don't pay it off by the time you're 65 we'll start garnishing your Social Security checks and use that to pay off the student debt and then you know there are sort of all these ways the debt got worse and worse and if you so if you do a cohort analysis if you graduated in 1997 you 12 Years Later by 2009 most 97 graduates had gotten out of most of their debt 2009 first year after the financial crisis is the first cohort
where when you look at it 12 years later in 2021 the median person with debt has more debt than they started in 2009 so you can't even make the interest pays wow and that's a big change and so and of course has this backward looking feature where it's a big change but it takes 12 years to notice that you're somehow in a uh more corrupt and different regime but even after noticing it after 12 years nothing has changed
well that's where the Biden Administration try to start doing some things but then then you have these very crude measures where maybe we just cancel the debt and make the taxpayers pay for it because you don't want to question the ideological assumption you had which is that college education is so wonderful so if if you start saying you know college education is not so good and it's been counterproductive for
a lot of people you maybe we'll cancel the debt but you know we were going to put these colleges under a lot more scrutiny you weren't supposed to do that and so they wanted to cancel it but then they were boxed in you know ideologically in all sorts of ways I believe the total amount of money in all the college endowments put together is only $800 or 900 billion dollar so it's it's weirdly less than the the student
debt and it's very uneven so it's like Harvard and Stanford have like 40 or 50 billion and then it quickly drops off so so yes so in some sense the colleges charged a lot but they were not terribly well-run and you know the money was mostly wasted it went to a lot of overhead administrative bloat so if you make the colleges even partially responsible probably you know a lot of them would go bankrupt and then you know
the other sort of drastic thing you can do is just say the Deb holders are responsible and then of course they will say that it' have been guaranteed by the government and then maybe you know maybe there's some some point where the government should actually just say you know it was it was really an evil thing to give all these people this debt and uh you're going to have to take somewhat of a haircut but it's sort of weirdly
boxed in it's very very very slow moving and it's led to this you know I think experience for you know much of the millennial generation and uh even more for Gen Z kids now going to college are the terms of the student loans own Rous I don't have the exact numbers in front of me you know it's a it's several percent above the risk-free rate I imagine it's maybe typically a 6 s 8% interest rate which
is you know is probably not an unreasonably High rate given how how risky the debt is I'm not sure the rate is ridiculous high but it's just the the amount is high understood what have you learned from the experience of starting this what worked what didn't work it worked very broadly if we Define work simply as a better alternative than going to college and anyone who got a tail Fellowship could always go back to
college they weren't dropping out we always say they only were stopping out because the colleges if you stop out of college for 10 years years the colleges still would like you to come back and finish your degree because they have all these statistics they they want to have as high a percent of people who start uh finish as possible you know I I think roughly three qus of the people who went in the program did not go back to
college and found better things to doing not necessarily that their companies would succeed and a lot of it was s Tech adjacent and they somehow got into this silic Valley World Silicon Valley Network and uh there were a lot of opportunities that came with you know you try to do something entrepreneurial you learn a great deal you meet a lot of people and so it was sort of a you know I would say it was an alternate track
but it was a way to restart people's trajectories that was that worked quite well you know the outliers are way more successful than the median so you do do end up with you know a crazy amount of variation you know probably the the single most successful tail fell in terms of impact was uh Scott guaran who started ethereum and so it was the you know the second biggest cryptocurrency and I don't have the number right in front of me but it's
probably like in aggregate worth you know $400 billion doll or something like that I mean it was sort of this crazy person who had you know this fantasy about building a world computer and turning the world into a giant computer and it would be Computing ethereum and it wasn't even a company you know it was it was just this computer protocol and somehow you know there were things like that that one could do and then there
were probably things that were extremely ambitious and where you know if you're a very young person you weren't necessarily embedded enough so you could start something like ethereum where just a small number of people could do an iteration of the Bitcoin crypto protocol and start ethereum that was possible in the world of you know 2014 another one had you know built a small nuclear rea reor in his parents
basement in Arkansas but then the problem was you know the next thing you have to do is get you know $50 million to build a bigger reactor and then that might not be that easy to do if you're you know 17 years old yeah that's wild though but it was sort of a the the opposite of the stories that I know people told themselves when I was in college in the 80s where you know the tracks are set there's a certain grooved
way you're supposed to compete with people you know there are a lot of different things people can do this was allowing people to try something difficult exciting that they're passionate about that most sane people would say that's a bad idea don't do that don't even consider it yeah don't even consider it finish school something impactful it's always hard to measure this but something counterfactually relevant where if you
didn't do it it would never get done I'm not always sure hard is the Criterion this was always a debate Max left PayPal co-founder and I had in 99 2000 and he always thought we needed to do things that were hard and I always said we need to do things that were valuable and he would say well you know anything that's valuable is necessarily hard and I would say things that are hard are not necessarily valuable true
and so you know it's it's it's extremely hard to get a a medal in the Olympics how valuable that is in an in an econom IC sense you know what's the value of the bronze and a bronze metal the human foot is a true Marvel of engineering with 26 bones 33 joints and over 100 muscles and tendons it's built for flexibility balance and natural movement unfortunately today's narrow rigid elevated shoes undermine this
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sustainable choices for our world learn more at Vivo barefoot.com Tetra and embrace your human nature tell me the story of PayPal from the beginning probably a lot of these companies is always so much mythologizing and uh you're always tempted to redcon the stories which is this Hollywood term retroactive continuity where you somehow tell a coherent single narrative from the very beginning and there were we had elements
of that there were of course there was a lot of stuff we had no clue about if we'd known how hard it was to build a payments company probably would have never started so there were ways in which being clueless was a bug but also a feature yeah because otherwise if you knew how hard it was you might not have done it you would you would have known why not to exactly to start it I met up with Max lechin and we we somehow
connected in the summer of 1998 he had gone to University of Illinois and there were some of his friends I'd met in Silicon Valley and in the fall of 98 he wanted to start a company we started brainstorming different ideas he was into uh cryptography which was uh all these sort of complicated privacy protocols and uh things where uh messages could not be decrypted had more of a finance background but I was
interested in some financial application of cryptography could one create you know we had nothing like the Bitcoin idea but we there were s of is could you somehow encrypt money could you find a way to to shift the dollars away from government control to the privacy of a wallet we were Loosely in this financial cryptography idea at the beginning and then of course you have to come up with a way you have this big picture idea so
changing the nature of money that's a big big idea and then how you do this you know how do you attack the problem do you think of it as digital money or no to some extent there had already been various attempts at digital money in the 80s 90s there was a company called digicash I I think had been started years earlier and had just gone bankrupt around 1998 and there was sort of this I think it was David Cham was the mathematician
cryptographer who had helped start it and so there were sort of a lot of theoretical ideas about it but there were also these very practical ideas so you have something can work in theory but how do you get people to use it and there's a there's a way in which if everyone's using it so if a billion people are using it I can understand why the other you know 999 million plus are using it but why would the first person
use a new form of money or the thousandth person and so we thought a lot about you know how do you initiate a new form of money how do you start it and it it looks like a network but what's the value of a network if if nobody's in it and so there were sort of a lot a lot of these questions we had all these different business models but February 1999 our first plan was you know we're going to do encrypted money
on Palm Pilots which was you know this small Computing platform that you know a few million people were using U but then you know why would you need a money on a Palm Pilot if you just had your wallet on you so there all these basic questions did you get it to work on P pilot yeah two three years later we had maybe four million users and maybe 6,000 were on Palm Pilot so it was sort of not the best approach the question the sort
of practical we have this big picture Theory question about the nature of money Financial cryptography and then we had this a detailed question of how do you get distribution how do you Market it how do you get people to use it and the idea we somehow stumbled I'm we're just brainstorming all these different ideas summer of 99 of 99 as we launched it and we finally hit on the idea that you had to bootstrap it off some
pre-existing Network and the the natural pre-existing network was something like email and there were I want to say maybe 150 200 million people with email addresses and so if you could use someone's email all you have to just type in their email and then you have an account with PayPal and you send the money and then we create a virtual account in that person's name you send them $50 and then it's uh you've gotten
$50 and then you have to click on this link and give us your bank account or other information and we'll get the $50 out to you and so email turned out to be a way you could bootstrap it and you could have a what I describe as a one-way Network you only needed the sender on the receiver who's be more interested in joining the network since you got the money yeah would naturally sign up whereas the digit and all these
sort of pre PayPal digital currencies were networks that only worked if other people were on them first and described the world in 1999 technically so we know what were the devices people were using were there search engines yet what was happening you had search engines it was dominated by desktops you know people had cell phones there was a thought that you'd eventually be able to do internet things on cell phones but it was
extremely minimal you know we had this pitch in June of 99 was we were going to be the world's first mobile internet bank and this was like a decade too early but we got Nokia had a venture firm Nokia Ventures was our series a investor in summer of 1999 and then one month after they invested we told them you know we' thought some more about the mobile internet we think it's actually pretty far away and so we're going to
Pivot back to the regular internet and we're just going to try to bootstrap it off of email you had a decent amount of e-commerce you know you Amazon you have sort of lots of other sites was Amazon dress books at that time it had already Diversified into a wider range of things and then eBay was was this rather big thing but when we launched in October of 1999 we had actually no particular idea
who who would use it and we started with the 24 people in our office they got PayPal accounts and then we thought of all these things maybe we could do Partnerships with AMX we spend two months talking to them we sent them all these boxes and they couldn't figure out who in their New York office should open our boxes and the boxes got sent back to us okay so we can't do a partnership with a big company maybe we can do
advertising advertising was super inefficient and then by sort of this weird process of elimination we concluded that the cheapest way to get more people to open PayPal accounts was just to pay them money you paid people to use the service and we paid you $10 if you opened account and another $1 if you got someone else to open an account wait tell me about when the light bulb went off it's like let's pay people to
use it we needed the network to grow as fast as possible yeah and it was like if you advertised on Yahoo it would cost you $50 or $100 to get a customer and so it's cheaper just to pay people directly and then of course you think well it's going to be some really bad adverse selection but at least if you pay people and I send you money I'll send money to somebody where there's a connection between the two people and maybe that's
actually more organic way than if you just randomly advertise on the internet and you get this these disconnected notes and if it works it works it's the other part you know it it took off exponentially we were up to you know a thousand users by mid November by December 31st 1999 we were up to 12,000 we crossed the 100,000 Mark early February of 2000 and we hit a million by April 15th when did you have to stop
paying people to use it you gradually dialed it back but you know we probably burned through about $20 million by mid April so it was an exponentially growing user base an exponentially growing marketing base and then you gradually dialed it back where people have to give us more information to get the referral bonuses maybe you have to give us your bank account number you never fully turn it off but you just gradually added more
conditions to it and then of course as more people are using it you start noticing the use case pattern and it turned out that the the place where it was used you know very heavily was on eBay which was this you know network of small businesses selling stuff to other people who are often both buyers and sellers on eBay insurance it was it was a naturally super networked economy very small businesses or individuals
typically can't accept credit cards so I think you know in the US I don't know there were maybe 100 million people with pil in um for 2000 there were maybe two or three million people who could accept credit cards and so if you can't accept a credit card your next best alternative was for someone to send you a check and that took s to 10 days to clear and then PayPal had the system where you know the money was good right away maybe we'd
have to eventually send you a check but you could then take the money turn around and use it and so it was it was an extremely natural mat with extremely natural used case and of course you know there were all these questions about fraud that we you know ignored and we then dealt with later in the world of 1999 2000 all the stuff was way less regulated it was pre 911 you could not have started a company like this after
911 there were relatively few know your customer requirements I maybe if you had tens of thousands of dollars but if someone's moving $50 in the world of early 2000 nobody thought you know this is probably just a terrorist or something like this and so so there was sort of an opening to start a business like this for it to gain traction you could not have done it a year or two earlier and two years later it probably
would have been completely [Music] illegal and then how long did you continue to build PayPal and tell me about the PayPal Mafia just because it's uh yeah storied so launched the product in late 99 Elon had a competing company four blocks down the street he was at you know he was at 384 University AV in pal Alto we were at 165 University Avenue and it was this crazy war and then we sort of is that
how you met him they were just competing like crazy yeah and then we decided to do a 5050 merger in early March of 2000 you know of course we had both had exponential burn rates it's interesting both of you had a similar vision for this digital payment system yeah it was his company was x.com you know Elon with his with his ex word obsession his vision was it for it to be sort of this this multifaceted online bank and you have
checking accounts and' be all these different things you could do but he had sort of by late 99 also zeroed in on payments as the initial piece to start with you we we combined the companies we figured out ways to to keep scaling it we gradually started charging people for making payments like 2 2% as yeah like two two and a half% like you know roughly the same as a credit card and then parts of them were funded by credit
cards that was sort a very low margin part then about about half the payments ended up being funded through uh a which is like a through someone's bank account and that was sort of one of our big Innovations and and then you know we burned through a lot of money but we quickly reduced the burn rate and the company was profitable by worth quarter of 2001 wow you know it went it went public and early 2002 this was now all
after the dotom bubble had burst but it was sort of one of the we were one of the few survivors and then there were these natural synergies with eBay where you know in some ways you know all these mixed things one could say about it it was sort of this very boring MBA run kind of a business and you had this crazy PayPal business that was running the checkout counter and they only needed to figure out how to get their
own checkout counter to work once they weren't quite able to figure it out and so it was sad that we ended up selling PayPal to eBay but it was fortunate that you know they were too incompetent to run their own checkout counter since otherwise we would have been probably it would have just ended uh ended more badly so we yeah we combin the company with eBay in the fall of 2002 and in some ways you have any
feelings of remorse doing that or only good feelings it's the first time you built a company and selling it there must be some emotional component it felt like clearly the right thing at the time you know the the synergies were were very big and then at the same time it is very sad because you know you lose control and there were things all these things about that were you know crazy and charismatic and you know sort of a wild libertarian crypto
Anarchist undercurrent we were now going to become this boring corporate culture you know it was sold for one and a half billion to eBay which seemed like a lot of money in 2002 you know decades and decade and a half later when PayPal got spun out again as its own Stan loone company it would eventually get to a market cap of north of a 100 billion wow and so you know then when you look back it's like wow do we really have to sell
it for one and a half billion if it's worth a hundred but uh it felt hard to navigate through all the things because if 70% of the payments are on eBay and that's the part that's growing gr the fastest it was just it was just so natural yeah did you guys continue to run it with eBay or did you immediately take off when it was sold it varied for different people and I I was the CEO at the time I think the CEO is always the
single most redundant person in an acquisition and so it was probably natural for me to leave it was probably highly desired by the senior eBay management that I leave quite number of the other senior people left within a few months and you know it was also by by this point it was just a well-running machine yeah and so we had we had figured out all these creative product things maybe there were some
more things one could have figured out we didn't have that many ideas left and the mission was accomplished there was a part of it where we're kind of out of ideas there were there were new things people did in payments years later were things to doing mobile payments there were you know there were all all sorts of somewhat different things but not that much happened I would say in the payments world in the six years let's
say after we sold to eBay and before the iPhone gets started at that point in time did you see yourself as a serial entrepreneur or investor and this is what I'm doing for the rest of my life well the the the PayPal thing felt really big it it was really insane so I you know it was like you know you couldn't think past it you had every day you had a near-death experience and you were going to take over the world and
you move between Heaven and Hell five or six times a day very exciting you know if you told some this is going to go on for like this for 26 years and it's a marathon that would have been an incredibly exhausting thought to have at the time and so a lot of was just how do we survive the next you know month the next three months the next six months things like that and then I think things were quite unformed in 2002 2003 and
there was sort of a way at least for myself you there all these different things I I thought of doing you know you know I scaled up a hedge fund I um you know started doing Angel Investing as a venture capitalist I was involved in you know starting several different businesses we tried a variety of things that were more old economy and then uh the the piece that worked by far the best were these iterations on internet
ideas and uh yes it was in a way it was sad for me and for a lot of the pal Founders to leave but it was also it was actually a good time because it was probably the point of Maximum depression on the internet in 02 03 04 it felt like there were no new ideas possible nobody was trying and in retrospect that was actually it was a good time to start all sorts of things you know I I meet you know Mark
Zuckerberg by summer of 2004 end up being the seed investor in Facebook you know I start a company called [Music] paler l m NT element electrolytes have you ever felt dehydrated after an intense workout or a long day in the sun you want to maximize your endurance and feel your best add a element electrolytes to your daily routine perform better and sleep deeper improve your cognitive function experience an increase in
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was 19 years old it was just pasted his sophomore year at Harvard in mov to California for the summer I'm not sure he had actually decided to stop out of Harvard yet they had launched it at Harvard and maybe 20 other colleges and they basically just needed to buy some more computers to launch it at 100 more colleges in the fall was there already the plan to go beyond colleges or was colleges the whole plan at that point in
time colleges was the whole plan but I had started one of these um conservative student newspapers when I was in under graduated Stanford and um I I already had sort of a little bit of this Monopoly idea and I thought you know actually you have to think of Facebook it's like the student newspaper it's the online media equivalent of a student newspaper and we have a chance to have a single Media company that will be the
the new economy version of thousands of student newspapers and if you could aggregate the thousands of student newspaper in the great idea all it was it would be a great idea I mean that would be like I know a billion dollar business and then in a way you know you had these small but very tight networks at every at every single College I believe at Harvard it was something like 6 7,000 undergraduates maybe a little bit more
in the graduate school but it was it was something on the undergraduate level I believe it was something like within 10 days of launch you got to 60% market share 60% of the undergraduates that signed up and so the pro Facebook proa thing that I very strongly believed at the time and I am still quite partial to is that uh people were actually pretty isolated in college it was quite scary to go to college when
you leave High School you don't know anybody and um it was sort of a way to make some friendships before you even showed up it was a way for people to get uh better connected in in college life and to make it to make it a much richer experience it seems like communication's always good I don't know if I'd be quite as you know Pang glossing as that today but there probably are contexts where it also really deranges people and so if
you if we don't like each other and we just tell each other how much we hate each other and maybe peace through separateness is is better than just ever more deranged Communications but uh but certainly the the picture in the world of 2004 2005 was you know it was more transparent more efficient you know just a very different world from the sort of disconnected 20th century we had just left behind us how would you compare the
roller coaster ride that you witnessed with Facebook versus PayPal how were they similar how were they different PayPal was in a way a much more complicated thing because you had to think about how to integrate with all these existing credit cards and bank accounts you know you needed you needed a lot of customer service if people had questions you know if you have $100 stuck with you you have to have an
actual human being to answer questions you know there were sort of more problems of of a fraud and age for it was a incredibly complicated product in a way Facebook it was just sort of this it just hit the Zeitgeist perfectly and and maybe something like this would not have quite been possible a few years earlier where um there was not enough broadband and so you couldn't actually download all these pictures and all these images and so
Facebook sort of starts to be possible in a world of 204 probably was not quite possible in 99 or 2000 so there was sort of a there was a way that you know it was in the air there were you know there were all these different approaches to social media that people had close rival was this company called Myspace I often think the names of companies are are incredibly important you know PayPal was in a way like was it
was this easy to spell two-word name friendly sounds friendly it sounds friendly initially it was just to pay your pal yeah but then it turned out the meaning had the second more important meaning was it was your pal who helped you pay yeah and so it had this uh fantastic dual meaning you know Facebook alluded to you know a college Facebook where you put something about yourself and then you
read about other people and Myspace was sort of the LA Facebook starts at Harvard Myspace starts in La they're both social media they're both about self-expression and about learning about other people so they involve both writing and reading they started the same time start I I want to say it's roughly the same time but the emphasis is different in a subtle way where my space it's it's a little bit more this narcissistic LA
self-expression and so it's it's more dominated by writing and less about reading and then Facebook the stress is 90% on reading about other people and then that turned out to be the correct balance you know Facebook was in a way the stress was more on everybody else my space the stress was just on the Creator you as a disconnected person and I think even the name somehow anticipated The Arc of the company and
then but yeah it just hit the Zeitgeist in an incredibly powerful way I don't remember exactly when it got opened more broadly I think it was about two years maybe 2006 early maybe 2007 that you start opening Facebook to everybody and it was just this incredible expl IAL growth for years and years and years and then it was not just the US it was in some ways the whole world and you were on the board of Facebook for a long time
yes 2005 to 2022 17 years and why did you decide to leave well 17 years is a long time to be to be on a board um for sure there always are lots of different things to say on this um there's there's a way that that public company boards are much less fun than private company boards you know once you're on a board of a public company you know in some sense it's a formal more legal kind of a
thing it's a lot more process a lot less you know creative brainstorming substance and so uh you know Facebook went public in 2012 and I I probably was talking about leaving the board you know since then then and then soon and then I and then at the same time I was genuinely grateful to mark for letting me invest and you know all this success I had and so and so I you know I stayed on the board for another decade after after it
was public and of course you know yeah there's there all these different ways that uh the big tech companies became you know bigger than anyone would have thought and then I don't know it's the you end up with all the you know attributes of the judeo-christian god or it's it's you know omnipotent and omniscient and if it's not Omni benevolent it must be Omni malevolent and uh and so there were you know yeah
endless number of crazy Dynamics but they kicked in at Facebook at a at a much much later stage than at PayPal you talked about a names of companies if we think of companies that have either mission statements or motos like Google had don't be evil M where does the idea of a motto or a mission statement fit in in your world I think it's very important you know I I I don't know whether it always has to just be this super short aotto but I think
there's always some kind of a tight narrative you want on how you know what is this company doing that is unique that is different I believe it's in TL sto I think it's in anacor know where uh at some point he tolto says something like all happy families are alike and all unhappy families are unhappy in their own special way and I always have this weird cut where something like the opposite is true with companies where
all unhappy companies are alike because they're somehow undifferentiated and they're you know hyperco competitive all happy companies are unique in their own special way and they they found something that they're doing that nobody else is doing or that they're doing better so I always think there's some kind of a narrative like that that you want you know on some level you know companies are about capitalism and
success and making money but it's a very lame company where where you don't have uh some kind of a narrative of you know why it matters white matters to the larger World why uh if you weren't doing it this wouldn't happen things of that sort you know and then and then of course the place where I'm always hesitant though with the I don't know the corporate speak is that it it can get hijacked in all these ways there's a way that you
have a a mission statement that can be really powerful in certain ways and then at some point you know so don't be evil I think was a was a charismatic mission statement and I don't know exactly what it meant but I what I imagine meant in the Google of the early 2000s is you know we're not just going to squeeze out every last dollar in every way possible and you know there are all these things we can
do that are question questionable but we don't need to do them we don't have to be evil to have a great company and then at some point it either gets hijacked where maybe it becomes a vehicle for incredible corporate political correctness where if the company's not politically corrected gets redefined as evil and so it becomes this weapon for all sorts of fights inside the company or there are all these ways that uh if
you want to criticize Google you can say it's it's it's being evil in some way and then the you know it becomes this allpurpose excuse for self-destructing it so there's there's something about the motto that was very charismatic in the world of 2005 and that you know maybe a decade later had had somehow deranged yeah the idea of retiring that particular slogan seems just seems wild I think they retired it a while ago
though because it's so open and poetic what it means it can mean a lot of things but to make the active statement we're going to take away don't be evil from our company it's just a wild idea and it's always easy to say these things with 2020 hindsight but I I would say with 2020 hindsight you should have thought about that before you came up with a slogan like that you should have realized that it's a it's a very very
dangerous slogan because um maybe you're setting yourself up to an impossible standard you're like a minister in a church and that's it's it's probably a good thing to be a preacher it's it's probably a really really tough standard and again easy to say with 2020 hindsight probably much harder to say exanti in a world of artificial highs and harsh stimulants there is something different something clean something
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looking for learn more at athletic nicotine.in Next Level performance with athletic nicotine warning this product contains nicotine nicotine is an addictive chemical you sold PayPal to eBay with their other suitors it was it was a very strange dynamic because there was only one natural buyer and one natural seller because if something like 70% of our volume was on eBay someone else spoted eBay could always threaten to shut us
off I see and then at the same time there were obviously enormous synergies with eBay because most of their users were still not using PayPal and so they could push it to them and uh there would be sort of an enormous lift for the PayPal service if eBay owned it and then if you yeah if you have a merger transaction in which there is only one seller and only one buyer and then if you say well you know
we end being one and a half billion but let's say you know our next best offer would be 500 million and it let's say it's worth three billion to eBay up to three billion or more to eBay yeah and then you know if we'd sell for 500 and they'd pay up to 3 billion the question is how much would the price go for and I think the theoretical answer is that it's completely arbitrary and completely up to the relative negotiation skills of
the two parties and so it's the kind of combination that's extremely valuable and extremely hard to negotiate what do you think happened to eBay since then because felt like I used eBay all the time and somewhere along the line me and everyone I know stopped using eBay but I don't really know why yeah it's a complicated story so it was certainly if you look at it as a market capitalization of the the largest
internet companies I want to say initially the biggest one was Netscape and from 1997 to 2001 the biggest sort of pure internet company was Yahoo and 2001 eBay overtakes Yahoo 2005 it gets overtaken by Google so eBay was the largest pure internet company for four years it probably during that time had a market cap two or three times as big as Amazon which in some ways is the one that really replaced it on on e-commerce
yeah there all sorts of things one could say the eBay site had this auction format and then an e-commerce site is sort of a commodity product which you sell a whole bunch of things and then there were there were things that involved elements of both on eBay where was you know these small businesses that would sell things and not everything they sold was unique and then somehow the auction format was valuable but for only a
pretty small part of of e-commerce I maybe it's good to auction stamps or Rare Coins or things like Collectibles but then once you you shift to books or maybe old rare used books are Collectibles but then most books are are not in that category probably there was some way where the product should have iterated a lot and become you know a lot more of an e-commerce site and uh I think they didn't have the vision to do
that you know it was it was working well enough it was profitable it just worked but uh there was a limit to how much it scaled and and there was sort of a weird way that the eBay business of the early 2000s it was a hybrid of this really bad valuable let's say auction Monopoly and this bigger but more competitive e-commerce business and it was not as big a monopoly as it looked was a valuable core Monopoly and then a big
more competitive business and somehow they didn't think that through navigated as well as they could have probably tell me the story of the book zero to one how did it come to be it was a series of lectures I gave you know I've been given various speeches about the stuff for for years and various perspectives and how to start companies and various lessons I learned and then was in in the spring of 2012 I
did sort of a big Stamford class with you know hundreds of kids and it was just I'm going to just teach everything I've learned about starting businesses in one class how did you prepare for that you know in retrospect was actually quite uneven you know there were some some lectures were really good some were more mixed about half of them I just had material that I did and you s put into these you know pretty good Powerpoint
formats there were a bunch of other ones where I just had conversations with people in Silicon Valley and you know a lot of them were sort of these high-profile people a lot of them weren't that interested in saying anything controversial so it there were parts of that were fairly uneven but there was there was a lot of material one of the people in class of Sky Blake Masters who I became friends with he
posted it on the internet which was sort of a a good format because if someone else takes notes and posts them m you know there can be all sorts of mistakes in it you don't need to double check it but uh you got hundreds of thousands of readers and then that was a compelling pitch to The the publishing house that uh that's interesting you know so many people had read it on the internet that even more people would buy the book and
I had all these charts and it was one of the charts that came back to over and over again I had a zero to one was on an X axis and 1 to n was a y AIS and so so on the x- axis was extensive growth where you do more of the same and then on the y- AIS the vertical axis was you know intensive growth where you do something new and then somehow uh Blake came up with this idea of zero to one is the title it's a great and then you know
it's as soon as as soon as I heard the title it's okay the title's good enough we have to just do the book yeah yeah you know it's it's creation from nothing you know it's like God creates the universe in a zero to one move and it's somehow it is like the creative act yeah you very similar and then it has you know it has this computers zeros and ones it has this world of bits vibe to it it's just two numbers that are you
know that are the most basic you know we sold a crazy number books in China somehow got pushed that's interesting it I have all sort of sociological things but you we published in the fall of 2014 and I did a two-e book tour in China in 2015 it somehow got pushed by the Communist party like crazy and you know it's it's since then it's been sort of semi deplatformed and you know but we're
selling you know I think we sold maybe a million and a half copies in China on which I got paid royalties and there's you know there all these interesting cultural Cuts you have on different societies so there's probably something about want to say maybe it's specific to China but it's it's where you often you have you have sort of these categories of things that are numerically coded so it's like the three-fold way of the TOA
or the gang of four yeah the 64 hex GRS of the you have these these numbers uh that are very important and and so somehow it was very Chinese book because um we had two numbers in the title yeah but it was an extremely non-chinese book Because as far as I can tell the numbers zero and one almost never get used because the way the numeric category thinking goes is you have categories of it has to be at least two in a category
to have a group and to sort of abstract about the group and it's almost like reasoning starts with a number two or three if China continues to build itself based on imitating what happens in the states your book would be a gued book to what happens in the states so it would resonate yeah although you know paradoxically of course my book was also about how one shouldn't imitate how you should do new things and how you should
think for yourself I think one of ways it resonated in China was that the sort of the question of you know should China just imitate or should it do something new was already a very acute question in 2015 2016 and the argument that China should just imitate the West is I'll get these numbers somewhat garbled but it's you know the nominal GDP is 1/5 1 16th per capita of the United States and so if you just copy the US there's so much
room to catch up you don't need to do anything creative and this is this is sort of the boring part of the globalization story that you know in some ways the developing world to become the developed World it just needs to copy you don't need to come up with new things you just need to somehow transpose Western institutions and Western knowledge and Western technology and if you can just copy it you know
there should be a lot of catch up in that and then there's always some intuition that maybe there are limits to western style growth you know maybe if everyone has a you know a combustion engine car there's not enough there's enough oil for that in the US but there's not enough oil for 8 billion people and so you need to have electric vehicles if everyone's going to have a car so I think that was already a very
acute debate behind closed doors in China somehow was this question can we just copy which is the straightforward thing or do we need to do something new you know in some ways of course Japan had been the society that in important ways had just copied in the 70s and 80s and then it worked incredibly well and then at some point it it kind of hit a wall and so if you do as well as Japan that's pretty good but you're still
going to hit a wall is China like Japan in 1970 where there another 20 years of copying or is it like Japan you know in 1995 where it's kind of hit a wall tell me the story of Japan post World War III I've spent a moderate amount of time there it's obviously in some ways the society that copied the West like crazy and then in some ways the forms also stayed very different from the West culturally I probably always approached
these things through somewhat of an economic lens there was some kind of manufacturing export oriented growth model that Japan was able to perfect and to do incredibly well at and there was mainly Toyota well it was Toyota I I I think it started with all sorts of silly games and then eventually moved up into like small cars and then more luxury cars you know there was a big semiconductor part to this you know were
all all kinds of sort of very complicated industrial machinery and of course it was a pre-World War II history to where you have the mag Restoration in the late 19th century and somehow Japan radically modernized incredibly fast in the 19th century it was one of the very few societies that wasn't you know simply overwhelmed by by the West in the 19th early 20th century it was very traditional but somehow um you know they
were able to to turn it to radically transform you know Commodore Perry shows up in Tokyo Harbor 1850s or whatever that is and it's been the this closed Society for almost 200 years and then within 20 30 years it radically transforms you know it also advances on the military side very quickly it's 1905 where they defeat Russia wow Japan by 1905 is strong enough to defeat one of the great European powers and then yeah
it obviously goes Haywire with the Fascism and the militarism in the 30s and 40s but then yeah after World War II ends there is some way the energy gets channeled in this relatively peaceful but you know aggressive modernization it ends up being incredibly competitive it violates every free trade Theory one would have because you know it's it's super mercantilist you know you have all sorts of effectively you have massive
tariffs in Japan on any Goods that get produced outside of Japan and then culturally people don't buy them and so it's uh there's a way the consumer standards of living are relatively low it's this you know unbelievably competitive machine and um in some ways uh there are these processes they do better where it becomes more efficient and smoother functioning and then somehow it somehow hits a wall in the in
the 80s and 90s again the maybe the zero to one prism I'm tempted to give on it is that there's some point where they more or less caught up with the us but then they needed to do something new and they were not it was just not geared towards Innovation at all it was it was process innovation of the sort where you build a more efficient Factory but it was not you know inventing radically new things and then maybe the
globalization piece that worked for Japan where you had you know the labor was cheaper the environmental standards were more laxed than in the US so you had this sort of Arbitrage then the Asian tigers start to apply the same to Japan where it's cheaper to have a manufacturing plant in South Korea or Taiwan or southeast Asia and then by the 2000s you know China does the Japan Playbook against Japan and so the sort of
manufacturing tradable Goods we build Goods that you can trade globally was extremely power powerful but it had it had this hidden problem because there were billions of other people who were paid even less that might eventually catch up with you and you know China wasn't necessarily going to just keep the cultural revolution and the mass Insanity going forever and so so yeah the Japan thing worked extremely well
when it was the only country in the world doing it but then it had some hidden problems with it and you know there's there's always a part of me that that thinks something that went wrong in the US is that we de-stressed manufacturing a great deal we have these incredible trade deficits current account deficits which doesn't seem like that good a way to run the economy but the problem we don't have that that
Japan ran into is there's some way where the US has to compete much less directly with labor in other countries and people in the US they're basically in these non-tradable service sector jobs and there's some way in which the US is the most immune from from Global competition which is good and bad things to it so much of today's life happens on the web Squarespace is your home base for building your dream presence in an
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get started today how important is manufacturing for any country can you be a successful country without a manufacturing base it's very important in some dimensions and the disturbing thought I have and again it's it's very multi-dimensional but I'll simplify this where maybe it's less important eon omally than you think and it's more important militarily than you think and so if you build ships and you have to
compete with people in South Korea or in China or Vietnam you're never going to make any money building ships and so it's going to be economically not great but then if you can't build ships in general it's probably gets very very expensive to build ships only for your Navy so yeah so the I don't know the crazy intuition I have is maybe maybe in a global world where there's sort of these massive differences incomes and
standards in different parts of the world globally traded manufacturing can be quite a tricky economic proposition but it's very important militarily and then that's where there are all these extremely odd Dynamics in the relationship between the US and China we you know economically it probably is really efficient to have I know the iPhone Factory in chanen if you try to move that to Wisconsin it wouldn't work
and people wouldn't work for $2 an hour and they wouldn't be as perfectionist and there's all these ways it just wouldn't work at all and then there is this question you know how much are we losing this geopolitical battle with China as a result too how much is the markup on iPhones it's a crazy amount I don't know my my intuition is it's something like 50% it's so Apple makes you know incredible profit margins and of course
it's all the services that get layered on top of just the handset itself it's probably wrong to simplify it into just two companies but if you have apple which is sort of the design and marketing firm and you have foxcon which is the you know employs 2 million plus people and it's sort of the the manufacturing assembly firm fir the market capitalization of Apple in 2011 when Steve Jobs passes away is something
like 200 billion the foxcon market capitalization is something like a 100 billion and you think of it as a like a duopoly of sorts we have the design branding firm and you have the assembly manufacturing firm and one's worth twice as much as the other but they're sort of roughly same ballpark you fast forward to 2024 13 years later and I want to say apple is you know about three and a half trillion and foxcon is barely over 100
billion Apple's captured a lot and what's weird is how little foxcon been able to capture it and then the qualifier to this is maybe there more bespoke parts that further up the supply chain in China so maybe the people who make the machines that fox hon uses to assemble the iPhones maybe the machine makers really make some money or maybe there are other parts of the supply chain where people make money but if you
if you simplify it into just those two companies it's simply a mystery to me why uh why foxcon hasn't been able to extract slightly more value tell me about the difference between Mysteries and secrets it's from the book well probably these words are all like a little bit misused but the way the way I use it in the book a mystery is something that is just unknowable maybe there's some metaphysical
mysteries about the nature of the universe that are deeply unknowable and then a secret is something that's not yet known but that is humanly knowable that we can figure out and uh there's somebody who will be a first person to figure it out and maybe you know it's a fuzzy line what's a mystery what's a secret but from the point of view of the 16th century you know the map of the world it was still a mystery because no
one knew it but then at some point you have these explorers and they and you can be the one to to figure this out so so geography and exploration it was a thing to do and of course you know at some point you know the whole world's been explored and that's not a place to even look for for Secrets anymore and then the question is always what are things in the 21st century that are analogous to Christopher Columbus
discovering the new world in you know 1492 what what are the things that nobody knows but somebody might be able to figure out because those are the breakthroughs those could be and that's where I think you'll have fantastic breakthroughs fantastic businesses or at least yeah you're going to change our society change the world tell me about the first internet bubble popping it's always hard to even tell these things in retrospect 24 years
later but uh the NASDAQ peaked at something like 5,000 in March of 2000 it had probably gone up from 2,000 to 5,000 in you know less than 18 months and then it crashed something like 80% over the next uh two plus years and then you gradually built its way back and then you know all these individual stocks you can describe so I think there was a pre-split adjusted Amazon was $113 a share in December of 1999 by October of
2001 it was down to 5 a half bucks Amazon went down 95% wow and then if you'd held on to it you'd get back to this December 99 level at the end of 2009 so took a decade just to get back to where you started and then if you'd held on to it for another 15 years you would have made 30 times your money so You' have made 30 times your money from December 99 but if you bought it at the bottom you would have made made 600
times your money yeah because it went down by 20 to 12th then it went up 20x and then another 30X and so one cut I've had on the bubble of 99 and this is a little bit retrospective but I've had this for for a while was that in some sense 99 March 2000 was both a peak of insanity and a peak of clarity so there was a psychosocial Mania and yeah people had just lost lost their minds and then at the same time they saw with perfect
clarity that the internet was going to take over the world that uh the new economy was going to replace the old economy and so there was some way in which this was you know an extreme peak of clarity and then you know B Toc was you know business to Consumer and B2B was business to business and then the you know the post bubble gloss in 20012 2002 was B to C meant back to Consulting and B2B meant back to banking and in
some ways you can think of the Bush 43 era which starts right after the bubble bursts and we went from you know went from bricks to Clicks in the 90s and then we went from clicks to Bricks in the 2000s real estate or bricks BR Brazil Russia India China the sort of old economy Emerging Market story and there was some way in which it it looked like we went back to sanity in the 2000s but it was just
maybe that was just a giant DeTour for eight years and then it was only the last 15 years that you had this slow build and what what happened really did so did it have to happen I don't think it had to happen I think it was a very natural thing for it to happen because if you can see that the internet's going to take over the world but not too quickly yeah it was more question there are some catastrophic proximations that come with
that and so you can do you value it like it's going to dominate the whole economy or do you value it like a bunch of it will go broke first or you know the internet might take over but the specific companies might be different so you know Yahoo and eBay might turn out not to be as dominant as they appeared so the companies might might change Facebook didn't yet exist in 99 Google existed but wasn't public till 2004 but
yes I'm tempted to give it that gloss because it was such a formative period for me you know PayPal was 98 you live through it we liveed through the bubble and Sur survived and so it was probably overly formative and so I probably think about it too much um but uh the 2024 cut I have is maybe AI is like the internet in 1999 where it's real it's very big it's going to change things and May still be a completely
crazy bubble yeah tell me about Silicon Valley Bank crash you know Silicon Valley is the only sector of the US economy that is extremely underleveraged where there's very very little debt you know debt is always this more complicated product in a way than equity and one way to think about it is that if you're a tech company early on it's very risky so you invest as a venture capitalist and it's an INE equity and
then later on if the company succeeds it's so wildly profitable it never needs to borrow any money and so I believe the tech sector as a sector is one where the companies have way more cash than they owe money in bonds or debt they're very very under levered as companies and almost every other sector of the US economy you know debt is a big part of the corporate structure it's a big part of your structure of a bank has debt
manufacturing company has debt there's of all these ways you have cash flows and you can borrow against the cash flows real estate of course is you know you know mostly dominated by debt with typically a much thinner tranch of equity and so silic Valley is this unusual place that's extremely light on debt as a sector and then sort of maybe a cultural gloss on it is you have a bank that's called Silicon Valley Bank
and it tries to be part of the Silicon Valley culture the self-image I believe at Silicon Valley Bank was that they were not bankers at all and you know we don't know anything about debt you know we're like these tech companies we're going to copy our customers and we're going to be as clueless about debt as our customers are you know even though Silicon Valley Bank it sounds like it's a technological Bank maybe it should roughly have the
connotation I don't know Bank of Nigeria or something like this where it is it is a completely clueless bank and you know nothing about the stuff you don't know what's going on and and so that's that's roughly my understanding of why it was run in this unusually risky Cowboy like way because they were copying the tech companies and it would be a low status thing in a tech company to understand
debt too much and somehow that should not have been true on the level of Silicon Valley Bank but I think I think they uh they got swept up they want to be like Google or something like that where do you think is likely to be the next silic Valley on the planet can there be another man this is this is like the the multi-trillion dollar question you know there obviously all these countries that would like to have it or states that
would like to have it it's been very very hard to engineer you know there's a strange history of Silicon Valley where a lot of it came out of defense spending in the 50s and 60s and but then somehow it was also part of the hippie counterculture and then at this point it's pretty Divergent from both of those I I would I would say I have for a long time been in the camp that there should be ways to build tech companies outside of Silicon
Valley and then it has also been quite difficult I I remember a talk I gave at Stanford back in 2005 and it was entitled where do you find the next Google so it's a search problem we're searching for the next Google as an investor and my answer was you know it's pretty hard it's very hard search problem it's very valuable I think there is a 50% chance you will find it within a 5 mile radius of this Auditorium where
I'm giving the talk which I I'm not going to get the numbers right but I want to say it's like one millionth of the surface area of the planet that's wow so I'm reducing it by 6 zeros wow but there's a 50% chance you will find it within a five mile radius of this talk I'm giving at Stanford in 2005 and then in retrospect you know I would say the next Google was Facebook and it was located 1.7 mil by bike 1.8 mil by car
from where I gave that talk I was already involved in it I didn't think of it that way at the time at all and then you know the updated version that I I've been tempted to give over the last decade is there's less than a 50% chance it's within a 100 mile R radius there's better than 5050 chance it's somewhere outside of outside of Silicon Valley I still don't know if that is true because there are these Network effect there's
this knowhow there's this capital in Silicon Valley there's a scale and there's an argument that maybe it gave Silicon Valley a small but decisive Advantage so you know the internet was supposed to get rid of the tyranny of place and yet it all happened to First approximation I mean you had Microsoft and Amazon were in Seattle but to First approximation so much would happened inside of inside of Silicon Valley
there's an argument I've made that maybe at some point point the network effects can shift from being positive to negative so you have positive Network effects where you have the wisdom of crowds or you're connected with all these people and you have these positive externalities and you communicate and you get ideas and then maybe there's a point where Network effects become negative and the wisdom of crowds
becomes The Madness of crowds and it's dominated by group think or political correctness that be the argument against the universities now against universities or even you know maybe maybe the Silicon Val version is that it's gotten so expensive and so competitive that you have more space to be creative in LA or Austin or or somewhere very different but then I I don't know whether that's just wishful
thinking on my part or or deep reality there's probably a lot of it that is specific to the vectors of Technology you know so tell me what the next technology will be and maybe that tells us something about the geography so consumer internet was this thing where small differences made in enormous difference you had to be extremely fast and and so the the sort of advantages Silicon Valley had were of decisive importance maybe in 2020
2021 it looked like crypto was going to be this next big thing and there was something about crypto that was decentralized and also decentralized GE geographically and so people could build the crypto protocols and some ways it was better to do it outside the US so if crypto would have dominated ated all of Tech uh maybe that would have been a more distributed type of Technology we fasted forward to 2024 it looks like AI is the is the next
technology and um that one seems concentrated in a way that I find disturbing inside Silicon Valley you know the the big AI companies are Google Facebook Nvidia of course with the chips in in Silicon Valley open AI anthropic the big large language models new companies startup pure companies are all in Silicon Valley thei Engineers are all in Silicon Valley so the the geographic mapping on AI is that it's perhaps even
more concentrated in Silicon Valley than the internet was let's say in 1999 how has moving from Silicon Valley to Southern California impacted your life man Southern California is such a more pleasant place to live than uh Northern California and the weather is better you know the the real estate is somehow vastly better Silicon Valley is probably the worst real estate place in the world if you sort of adjust for wealth you know like
if someone makes X dollar what quality of a place do they live in and it is probably the absolute worst in the world there are some pieces of it I I I do miss I think you know I think there's a way you have a lot of really talented people in Silicon Valley you know there's a part of it that felt to me like it was exhausted and had gotten more on The Madness of crowds and the wisdom of crowds side back in 2018 when
I moved to Southern California but it's uh it's complicated and I yeah I don't think it can be fully replicated what's the etiquette in Silicon Valley between the companies and players I think the etiquette is better than it is in the entertainment industry I think you know I think in both Industries people pretend to be nice to each other and I think in Silicon Valley the niceness the um trying to find ways for
people to work together are I won't say it's all fake in Southern California but it's fairly authentic in Silicon Valley you never know who's going to succeed because been a part of it that's been this you know massive Gold Rush for decades and if you're too Zero Sum if you get too difficult to reputation that seems like a very very suboptimal strategy in a Silicon Valley context I do think probably there are
ways it changes with the scale of the players and so the Silicon Valley of the 1990s you know it wasn't all small companies but it it was not dominated by by really big tech companies the one big tech company of the 90s was Microsoft but it was far away in in Seattle and you now have these companies that are on a truly truly enormous scale and I I think probably the social graph at a place I'll pick on Google at a place
like Google it's a very internal world you know most of your friends will be other people who work at Google maybe Apple's even more this way and it's it's it's somehow it's a bubble it's somehow surprising less connected to the rest of Silicon Valley you know in that sense maybe maybe southern California maybe the yeah the entertainment industry in Southern California actually is more networked than silicon valleys at this point what
is paler well I'm always I'm always tempted to sort of give a JRR Tolkien literary reference where it's this round orb originally built by the elves it's this very powerful device that enables you to make sense of things in Far Away places and maybe even different times you know it's a very important in the Tolan Lord of the Rings was one of my favorite books as a kid it's it's a very important plot device
for all sorts of reasons I could go through but uh you ultimately gets used for good even though it can also get misused yeah I was this Tolkien fans and it was this company we started in 2003 2004 it was all these contradictory motivations we had to sort of the Li libertarian deep State adjacent company to help the CIA find terrorists in ways that wouldn't violate civil liberties as much as they would if they were just
relying on Lite lowtech highly intrusive airport security machines and making everyone take off their shoes and stuff like that and uh that was sort of the the founding Vision but was kind of yeah sort of this James Bond type company that uh is it still that it's on decent amount of work with intelligence agencies with the military probably about you know roughly half the revenues are sort of government related
which is I think always a very difficult place to work but I also think is sort of an important one you know I'm sort of this anti-government libertarian and so the glass half empty version is you should never work with the government because it's endlessly frustrating and then the glass half full or glass on10th full version is that there's so much room for improvement and there are so many ways that maybe the
government is the single institution that could be most improved by technology and then you know I always Define technology as doing more with less and so the the paler version would be can we have more security with less intrusion into civil liberties and that's that's what a technological solution would would look like whereas you know the the standard way these IDE logical debates are grooved is you know
more with more which I'll say would be the Draconian dick chainy Security State versus the less withth less the 20th century Lite ACLU approach and my view is you had to try to find a third way I worry that if you frame it as the Lites versus the totalitarian tech people you know the totalitarian tech people will Cheney will always beat the ACLU after you get a terrorist attack and so yeah part of the paler hope is we could you
know it was in the aftermath of 911 that we started it and the Hope was we will stay a free country or a relatively free country you know it's it's important to prevent these attacks from happening because after they happen the civil liberties always go out the window tell me about the connections in general between the government and silicon valy how deep are the ties I think historically they were very deep
in the 50s and 60s I think they are quite decoupled in general in the postc Cold War era let's say post 1989 Washington DC and Silicon Valley are are very different places they feel very different you know DC is sort of this functioning middle class City from the middle of the 20th century that's sort of it's the land the time for God something like this and DC is too focused on government you know Silicon Valley even with all the liberal
political biases the center of energy is completely on the private sector you know it's it's fairly low on on the Civic side even in extremely liberal San Francisco it's just you know the city governance doesn't work nobody cares about it nobody thinks about it so somehow politics governance getting these things to work is something that people in Silicon Valley don't think about very much you can almost say that
this Escape into virtual reality into the internet the world of bits you know the world of Adams got regulated and governed and uh it got governed and overregulation especially in California and so in a way the natural thing for an entrepreneur or someone who wanted to make a difference in the world to do was to escape into this world of virtual reality into the world of bits or you know Southern California is more
entertainment and all these parts of our world that interface with I don't know City zoning laws and building a house or you know the schools or the all these things have maybe gotten more neglected in California than elsewhere what sources do you trust for news you know I I have a Bloomberg terminal so I I end up getting a lot of my news from there I always think I I should not trust them at all because it
is like just this official center-left establishment voice you know I get physical copies still of the Wall Street Journal in the New York Times I think there sort of all these interesting ways to to read the New York Times where it's like there's probably some way to read Pravda and so I and probably this too confident but I trust my ability to decode the New York Times and to actually figure out things about the
world from the extremely distorted way they talk about it what's the most controversial idea you believe probably way too many but I I don't think idea is always being controversial I I certainly don't think that makes them correct I do have this intuition that when there are things we can't talk about or that are that are somehow blocked it doesn't necessarily make them right but there's there's something about those things
that's interesting to think about but yeah I don't know I don't even know what's what's controversial at this point the covid VAC I I mean I got vaccinated three times and I don't think I should have gotten vaccinated I don't think it works in any way it probably has all these these bad side effects and 3 four years ago that seemed too crazy and too unscientific for me to question the vaccines and now that doesn't even
seem controversial yeah what have been the most interesting in things you've seen in anti-aging going forward what are you most excited about regarding anti-aging what what's crazy about it is how we're somehow not trying enough and it's somehow it's it's a it's a very uncomfortable topic because you know we're probably not making progress quickly enough that the two of us will will live forever and then
psychologically there all these ways it's so uncomfortable to think about but it's crazy how we've almost given up on making progress and uh and so yes I think anti-aging biotech generally it should be this area where there should be so much Innovation there's so many things you know we we should be able to do and when I look at it my frustration is you man we've made some progress in cancer really modest made almost no progress on
things like dementia 40 or 50 years and I I don't think these things are unsolvable Mysteries I think there should be ways really to make progress and so I I always find it shocking that we're as stuck as we are you know I I I shifted to starting to use some of the asmic Manjaro things a year and a half ago it seems powerfully effective you know there probably are all sorts of side effects that uh don't know what the
trade-offs are but uh but yeah I think there's there's probably some very basic stuff like you know getting your diet under control that we can do it's not a Hana but it's a it's a big lift and then I'm always interested in the psychological question what you know if eating healthy or not eating too much diet means both a healthy diet but a non-excessive diet in particular if it's that straightforward why are we so blocked
from it and then the metal level psychology Theory I often wonder is where you know what supposed to do and that almost becomes the excuse for not doing it yeah you know yeah there probably are some esoteric secrets that need to be discovered and that could be discovered and that we're stuck on and then there is I think a lot of relatively basic things that that we kind of know and just are I want to say
psychologically blocked in the book you talk about diversification in business as a bad strategy tell me about that well it was meant in the context where it's not a perfect metaphor but I often think a good startup is it's kind of like a sports team and it's different from a sports team because it's not like a set game you're playing so it's but for a sports team to be effective it really is this whole is greater than the
sum of its parts the people there sort sort of are these deeply complimentary skills you respect one another it's not everyone's a clone but there's a lot of complimentarity you have vigorous debates but then you also find a way to to get in sync and on the same page and move on and so it it's not an endless debating Society yeah if you define diversity as difference for its own sake that's probably not quite the right
metric so I in investing also you talk about not having a diverse portfolio but focusing on the area that you think is the area of growth yes I always think there aren't that many great ideas and you know you you could say here are 20 pretty good ideas and and maybe there's a nihilistic reality where they're all pretty good but you can't differentiate them and then you should invest in all 20 but I
think that's too nihilistic and maybe maybe the truth is you can actually figure out here are the one or two that are the best and you should concentrate on those and it's uncomfortable because it feels really risky but actually the synonym maybe diversification sounds good but it's really synonymous with nihilism or not thinking hedging your bets yeah it sounds like you're hedging your bets but you're sort of being
willfully ignorant or oblivious and you actually know more than you think you do and you should somehow bring bring that out you know in a corporate culture there definitely ways that I think having vigorous internal debates are very important and then there also are ways that it's good for people to be aligned on a product or or some Transcendent Mission you know we early on at PayPal this sort of a silly
example we like to say that we were a Star Wars not a Star Trek company and uh you know Star Trek is sort of communist because and you have the transporter and you have no material shortage and there's no money in the world of Star Trek so we have a new payment system and then you know Star Wars starts with you know Han Solo and he needs to get some money to pay off these debos and we were a Star Wars company not a Star Trek
company maybe maybe it's not necessary for everyone to like Star Wars more than Star Trek but it worked it worked and it would have been odd in the PayPal context if someone was a crazy Star Trek fan do you invest in anything outside of tech I I end up doing you know a lot of smaller Investments where I you know just find it interesting what the person's doing or I think it's worthwhile but yeah the place where I'm
really anchored is tech at times it feels extremely overvalued but I I don't know what else moves the needle and so I yeah I I keep having this diversification thought that I on some level should diversify out of tech in theory that's the diversification portfolio and then when I try to concretize it I have no idea how to do it and it's very likely it would be much worse and so I end up never in theory I
should do it in practice you know I don't can Hardware be Tech I always think technology simply means a place where you're innovating and where you're doing new things so if we sat here in 1967 the year I was born technology would have meant computers but it also meant the Green Revolution and Agriculture and it would have meant supersonic Aviation and Rockets for Tech and uh new medicines for Tech and that sort of reflected a
society where there was progress and advancement on on many different fronts and then an odd thing that's happened the last 30 years is that Tech has sort of collapsed to becoming synonymous with it with software bits internet mobile internet and even semiconductors maybe the been a return to that with the AI chips but uh for 30 years we're we're seen as somehow powerful to to the software Tech story and so I yeah I I would hope that the
definition of Technology would broaden out again because that would be indicative of our society advancing on many fronts versus this incredibly intense but incredi narrow cone of progress we've had around the world of bits where you know the world of Adams has been sort of inert regulated too hard to do things in who do you see yourself in competition with now I'm always bad at these self-reflective questions you know I
don't want to ever be in competition with anybody is is my reflection there was a zero to one essay that I had where you know it was competition is for losers yeah and if if you want to compete like crazy if you want darwinian com competition nature bear red and tooth and Claw you should open a restaurant and you know capitalism and competition are opposites capitalism is about accumulating capital a world of
perfect competition is a world where all the capital gets competed away you know and I I think from the inside you're not always perfectly self-aware of these things but to the extent I am you know I I try to avoid it like crazy and uh the people I think of as extremely successful is more successful than myself you know are the ones I want to compete with the least so I I don't know the person on this planet I would
want to compete with less than anybody would be Elon Musk that just sounds like a a recipe for losing yeah if competition leads to competing away profit how does the luxury and fashion Market fit into that idea I don't know much about it and I I think there's this very mysterious thing called brand which when you get a brand you get some kind of pricing power and then it is a somewhat mysterious process how Brands get created or
strengthened you know get monetized occasionally they also get eroded and for the most part I I I think of fashion as centered on this extremely mysterious thing called branding it obviously on some level it works and on some level I suspect there's a there are some interesting secrets that people who've succeeded in that industry could say about what they did or how it worked that are very very Divergent from the
official story and then for good reason they would not tell us those Secrets because um that probably would be the shest way to to erode it and then there's probably a Time dependent thing where there were ways to create new brands in the 70s and 80s and you know it's may be very very different today tell me about the age of most of the founders of successful unicorns I think all these things are massively contested and probably are all
these different ways to skew the data even on something as seemingly basic as the age of the founder I'll do the pro- young and the anti- young person arguments so I think the consumer internet companies were founded by people who were quite young you know typically in their 20s I was 31 years old when you know I was one of the PayPal co-founders and I think 31 was relatively old to start one one of those
businesses the other three people I started PayPal with were were 23 maybe that was a little bit on the younger side but let's say you know mid 20s was probably a good reasonable age now the the anti-y young person thing that I believe is that there is something where an entrepreneur you're sort of good at a range of different things you have people skills you have ideas about where the world's going and a lot of these
skills actually are ones that get developed over a long time period and uh the Great entrepreneurs at 45 are better than at 25 you know I don't know how old Zuckerberg is now I think he's is maybe he's 43 44 years old and I think a 44 year- Old Zuckerberg is way more talented than a 19y old and so in that sense the 44y old is better than the 19y old but he's not available he's busy with Facebook and so there's a
selection effect where if you started a great company most the time it made sense to keep running it it's it's the PayPal story is actually sort of an unusual one where it got short circuited and all these people started new companies start started over and then if you compare the 19-year-old Zuckerberg with let's say a 44 year-old professional CEO you would bring in where there had been four or five semif
failed companies in the past that's much less clear so I think I think there's an yes I think empirically it seems to favor people who are quite young but maybe it's just a selection effect why do you think boards for public companies tend to like to remove Founders and put in operators in their place I don't know if it happens as much in Silicon Valley anymore this was certainly the way Silicon Valley operated in the ' 80s
and '90s the in the 9s the generational story was it was gen people like myself that started the companies the 90s and we got replaced by Boomer CEOs and so there was sort of the you can describe it as yeah this Professional Management versus Wildey founder or you can describe it in terms of some kind of generational Warfare in the 90s you know at this point it not absolutely but it has someh the balance of power in Tech
has shifted more to the founders you know they often get voting shares where they have more voting control there's a lot that's worked to them even when they don't have voting control I think you know Elon owns like I don't know maybe 13 14% of the Tesla shares and in theory could be voted out by the other shareholders but then you know there's been a lot of volatility that came with Elon but uh you'd be out of your mind to get rid
of them yeah and that's that's the story that has tended to dominate you know there obviously are still some exceptions at some point the board got rid of Travis clanic at Uber not sure that was a good idea yes there were ways he was probably a very uneven person and still I I I wonder if they they would have been much better off finding a way to to keep him but you know public companies you can think of as almost
extensions of the government this is the way I always describe it when a company goes public it's private it's like private sector public is like public sector and when you go public you have an IPO initial public offering and you sell shares to the public and it's not just sophisticated wealthy small number of sophisticated wealthy investors it is your 70-some grandma and she has to be protected by the SEC you have to have
more disclosure and then the the CFO you know has to have perfectly accurate numbers and if he doesn't or she doesn't you go to jail so the CFO is sort of this important quasi government actor the accountants are the lawyers are super important the HR department you know is important and in in some ways the board has this this quasi governmental role and again the the private sector is probably more geared
to taking crazy risks move fast break fingers the public sector is more geared to to risk reduction and there's some kind of balance but the balance should radically and so I yeah I it's a little bit of an exaggeration but I yeah I often tell CEOs that when they take their company public they should think of it as in part A government takeover that's happening what you're empowering the lawyers you're empowering the
accountants you're empowering all these people who are Quasi acting on behalf of the government or on the rules and they will have more power and then there's some other set of people who maybe are maybe the more creative people the engineers the product people will have correspondence less power what do you think the government's good at let me frame it more negatively I don't think pure capitalism is good at
everything and I don't think every problem can simply be solved in a corporate context and then you know there are I don't know there's the example I gave with manufacturing companies might not be great companies but they're important if you want a military or there are all these things that have the nature of a public good but that wouldn't necessarily be provided by the market and so I I'm always inclined to these deep government
critiques where it's really inefficient it often ends up being political and the people who are empowered are the political actors and not the the technocrats or not the people who are necessarily the best of doing these jobs and then I suppose the prover argument is is that we often don't have that great an alternative to the government you if we're going to have a military the government has to be
heavily involved it can't be probably just a pure private sector thing and there probably are ways governance can work better and less well there you know there probably are states in the US that are better governed that are worse governed there states where you know it's it's it's pretty efficient there's states where it's very bloated so I think I think the are sort of a lot of gradations that that one could look
at how did you get involved in the hul Hogan lawsuit I have all these sort of complicated thoughts about media and the nature of media you know it's it's extremely powerful it's important as a Communication channel it's an important Vector of technology and radio television internet and then I think there also are dimension of it that are not purely good and sort of a First Amendment absolutist sense where speech
is always good more speech is always better and there's sort of a part of it that has you know this is always where I have this sort of girardian scapegoating intuition where it's probably a celebrity part of the media but there's a political part where part of it is to put people on pedestal and to raise them up in order to tear them down and that it is kind of this deification and scape coating cycle that the media's kind of engaged in it and
you can say that you know a startup founder like myself where the media helps PayPal in important ways when we were getting started or if you're a Hollywood celebrity in the media you know is essential to helping one break through and then there's the there's some point where we have to find some way to talk about that and also to talk about the ways in which it can become extremely resentful destructive and um that it is sort of
like this uh like almost like a like a hate Factory or or a scape coding machine and then I think there were New Media forms that this also took on Gawker media know it started in the early 2000s as a kind of transgressive gossipy blog and it was it was very powerful because it looked like it had this sort of authoritative objective Voice Even though on the psychology of it was just these you know extremely
angry underpaid deranged writers it would be wrong to say they were all individually sociopathic but I think I think on an Institutional level it was deeply sociopathic and then there were sort of you know I there were all these ways I ran into even in the tech industry which again is not you know where there's a media Dimension but the idea had never been that you know it was mainly about the personalities the
founders or these Larger than Life characters or that you know if you were the CEO of a tech company you were making a different trade-off from being an A-list celebrity and there was some idea that you still should have had some privacy or or something like this and U yeah there were all these ways that uh you know we started to encounter this you know very this very toxic Gawker blog and it went after very you know probably one of my
first friends it went after was Sean Parker who's the Napster guy early on the Facebook board and then there was a number of other people ways they went after the ways they went after me and then there was always a sense there was nothing you could do you know it was basically if they're beating up on you you're supposed to bury your head in the sand and hope they get tired and move on to beat up on some someone else
and at some point I I I don't know I sort of uh started to really thinking isn't there something you can do and and then you know got pulled into financing Hulk Hogan and the litigation against gaer and you know I think Aaron my friend Aaron dusza who ended up being sort of the day-to-day Mastermind of the The Gawker litigation and the the way I think he initially convinced me to do it was something like you know I I I made
some categoric argument was it felt like was there was nothing one could do and then it was some triggering thing he said like Peter do you really believe there's nothing you can do and this sort of uh appeal to figuring out a way to regain some agency just tired of being bullied tired of being bullied tired of implicitly coopting in The Bullying of others because you're always hoping they move
on and bully someone else yeah you know and um doesn't feel good none of it feels good you know and then we somehow you know what sort of thing do you go after you don't try to use liel as the main argument because you don't want Gawker to be simply conflated with the most elite media where it's just sort of this first amendment protection and then we somehow stumbled early on on the Hulk Hogan case where they had you know
posted a video of him having having sex with his best friend's girlfriend wife in the privacy of their bedroom and so that's okay and so it was it was initially not about liable but about privacy the point I always make is you know if you think about in terms of constitutional law there's a First Amendment which is freedom of speech but there's also a Fourth Amendment which is where the right to privacy comes on and
it is against unreasonable search and seizure and that means not just you know the police officer is not supposed to rumage through your car or your whole house without you know a search warrant and but it also means a private actor can't do this either and uh and then you know what does the right to privacy mean and it means something you know like when you get cameras in the late 19th century it starts to mean something
different from the 18th and then and there's a question what does it mean in this age of the internet the 21st century and uh you know the case involved this core the place where I think the fourth amendment should Trump the first amend so that's constitutional law version but then yeah I I think the yeah the bigger story was that uh it's this very complicated tradeoff between you know a media that's transparent in communication and one
that you know becomes sort of a sociopathic hate Factory and uh in my judgment yaker was extremely unbalanced and being more towards the latter what have been the ramification since then what effect do you think it had I think it was powerful and I think we we do live in a very different world from you know 2007 Gawker outs me as gay even though this was already generally known and Hogan wins the lawsuit and
Gawker gets bankrupted in in 2016 but I think I think we're in a very very different world because in the world of the 2000s early 2010s the media was extremely biased but people didn't know that they were biased and so they believed them and today today the media is very biased but it's known to be biased and therefore gets discounted correspondingly and I think is is somehow it can still be very
damaging in certain contexts but it's it's somehow shockingly less effective at the at the sort of scapegoating violence it's it's trying to inflate you know the the gay version of this I always say is that you know what's the difference between outing and bullying and in 2007 when you know I was outed it's this person is gay and they have a psychological problem because they didn't want us to talk about it and then in
2015 they did a similar story on the Ki Nast CFO who's a Tim gner the former New York fed shar's brother but it got described as bullying in 2015 where um and bullying is is a story about someone who's gay but the psychological question gets asked not about the subject of the story but about the reporter writing it and so it was what is your problem and why why do you have to make this such a big deal and why do you need to
weaponize this and this way and why are you such a hateful person and this was in some way yeah 2007 you know outing was considered acceptable by 2015 bullying is not and that's that's what I think was sort of the the big cultural shift that happened where we've come to learn more about how the sausage making in the hate Factory works and in all these ways it's it's working less well so that's I think that's the big
cultural shift that happened I'd like to tell a story where I was a big part of this but maybe that just uh is sort of a way that the the internet has matured [Music] [Music] tetr gtin is a podcast tetr tin is a website tetr tin is a whole world of [Music] knowledge what may fall within the sphere of tetron Counter Culture tetron sacred geometry tetron the Avant guard tetr grattin generative art tetr gtin the
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