A Critical Thinking Crisis Is Underway | Keith Rabois

all right we're gonna uh we'll get started though i'll come over here um obviously i'm very excited about doing this uh before we get started um i don't know where constantine is from reed smith uh reed smith is uh sponsoring this they're amazing keith and i don't know really where we are in the store uh but we're here this cool place and uh reed smith's like an 1800 person law firm they do everything from tech they've got a huge crypto practice etc uh i use them for a bunch of stuff so take that for what it's worth either i'm an idiot or they're good um but uh if you are looking for any legal services uh talk to constantine he's the there he is right there i was gonna say the good looking guy uh but uh but go check them out so thank you guys so much for uh for sponsoring this all right are you ready keith you gotta turn it on i think now i'm ready yeah see there we go one meal that's the only time tonight that i will look better than keith all right uh what is your resting heart rate uh it's 46 today which is lame why it should be 44. that's a great place to understand keith or boy um why is health diet berries all this like like why do you spend so much time on it and what has changed over the years around your health or diet uh in your life so it's a function i mean truthfully it's a function of vanity life extension and performance and they're all related like you can't disembank disinfigurate these some things are then around like how do you live longer like have more life span so to speak when you can be active of getting old did you start thinking that way second thing is definitely aesthetics like vanity like anybody else i just like i'm conscious about it and the third is pure athletic athletic performance and competing with people and competing for various things so for example resting heart rate mostly around life extension uh two minute recovery is definitely around life extension um you know other things are designed for other purposes berries just happens to be the most efficient way to do it like so i'm generally pretty busy in one hour i can do everything i need for all three goals and it's the only time probably during the day that i put my phone away which is a pretty big accomplishment maybe date night i'm usually pretty good at putting uh we do two day nights a week i'm usually pretty good at putting my phone away so are you optimizing for longevity or you're optimizing for all three of them pretty much all three like for example if you were optimizing only for lifespan you'd probably never drink alcohol you can debate this whether you should have like a glass of red wine once in a while but like i actually do drink alcohol so obviously i'm not totally optimizing that way but like generally speaking optimizing for the middle of how do i live longest be as high performance as possible like mentally so i optimized my sleep we were talking about mateo just briefly but like i've been optimizing my sleep for like 30 years like literally eight hours sleep basically every day um and then reverse engineer everything around that so it's accommodation so we're gonna talk about a bunch of topics that uh some of them are very down the fairway some of them will people will be scratching their heads being like what are these guys talking about um but part of why i want to start off talking about fitness is there's a mental clarity that comes with being fit with eating healthy et cetera is there anything that you do specifically for the mental clarity or the ability to think better make better decisions well sleep is definitely the number one variable if you're going to change anything in your life if you change your sleep you're both going to live longer most likely but you will definitely think smarter ox smarter have a better personality i used to remember as an executive at square i'd present you know i'd actually run the board meetings at square and i had this board member some of you will know mary meeker was on my board and she would observe after a couple of years that she could tell how much sleep i had the night before a board meeting because my vocabulary would suddenly shift and i would use like less elegant words and usually my usually before a board meeting my adrenaline would be running so my sleep was mediocre but the fact that she could notice this and i actually knew the sleep differences and she was picking up on it it was just evidence of how you act differently when you haven't had you know a perfect night's sleep obviously there's great studies done by the stanford basketball team about free throw shooting and three-point shooting that really make it clear that elite trained athletes stanford basketball team historically been pretty good so if you can add 10 percentage points to free throw percentage by sleeping an extra hour that's like amazing you could train for the rest of your life and not add 10 percentage points to your free throw percentage or like similar comparable percentages to threes so that that was very eye-opening but i was already pretty dedicated to sleep so when we think about how to think before we actually talk about specific topics uh you're trained as a lawyer i think you practiced for like maybe three days no i was dumb enough to practice for three and a half years okay my friend peter thiel practiced for three months and four days and he still introduces me as this is my greatest character flaw he's like literally he'll be like oh keith's obviously incompetent because it took him three years to figure out what i figured out in three months true story actually he's done this several times no doubt that's a true story uh what did the legal training though uh from a how to think standpoint like what do you attribute that you took away from it well there's a way of thinking that you learned as a lawyer and some of it's very valuable across all disciplines some of it's very narrow the the part that you do develop a hierarchy of thoughts in an organized mind one of the ways you can tell is if you ever date somebody who goes to law school you will see his or her mind change before you everybody who has who dates somebody through law school notices the change in like how their significant other starts to think so that that's really useful you do learn a little bit too much of what they call issue spotting so when you're graded in law school the the primary driver of your law school exam grade is how many of the potential issues can you identify things that could go wrong and then can you resolve them meaning discuss how they would most likely be resolved by a court of law the problem with this so it's a very good uh general exercise like of avoiding risks in life but it leads to a little bit of overthinking because every everywhere you go everything you see all you do is these problems it's like problems still left problems to the right just like that song joker still left you know uh so you start thinking like everything that can go wrong which really doesn't help you certainly not as an entrepreneur or investor like when people pitch me with an uh a new investment idea it's obvious what can go wrong the heart with our part is what can go right but so that part doesn't translate as well and then the part that also translates relatively well is you know i've been involved in a lot of financial services heavily regulated areas with ip issues or like health care with with lots of legal issues and being trained as a lawyer allows you to navigate stuff for yourself is rather than outsourcing it to some block box and so i like things that have perceived legal and regulatory risk because i don't outsource the diligence to other people so when you think about that pathway to becoming an investor or an entrepreneur are there certain operational roles or certain investment styles that lend itself if you have been trained as a lawyer you're more likely to be better at operations or marketing or a venture investor or hedge fund investor like how do you think about the overlap uh coming into investing in business a global statement is i always believe that you should invest in things that you have an asymmetric advantage in so the earlier in your life you figure out what your asymmetry is the easier it is to you know sort of magnify that amplify double down on it so if you're a lawyer for my point i love things with legal risk like maybe the most obvious example of this is when youtube first uh was started yeah i knew the founders from paypal we'd worked together on paypal and i met them at a barbecue or i met one of the three ran into one of the three at a barbecue and i asked him just casually like hey what are you up to just like you would do like sort of introduce yourself to any friend at a barbecue and he said oh i just launched this new company and it's like well what's it called then it's called youtube.com i said okay what does it do and he basically is like sharing videos blah blah i asked him three questions um literally as we're lying to get a drink like literally like in line to get a drink at my friend's place and at the end of those three questions i was like i need to invest can i invest he's like don't you want to see the website and at the time this is like 2005 or six or something we didn't have like you know basically computers in our pockets and so he goes to the host guy named mike and says hey can we borrow your computer and so we go off into mike's bedroom and for the next hour he shows me every single video on youtube which was very painful but it he did allow me to invest now the point of the story though is when people when i started telling other people about the potential opportunity to invest with me because back then i couldn't write a big enough check myself to need other people every single person talked to their lawyer friends and every single fund was like terrified of the legal risk and so i just walked through my favorite funds at the time the legal diligence myself i just said here's what people are going to tell you and here's the right answer and blah blah blah and you know not surprisingly we were able to convince a very good fund to go invest uh but like if i didn't understand ip loss i happened to have been partially an ip litigator there's no way that i would have been able to do that a with confidence and you know enough credibility to convince a very large vc fund but b would i have known the right answer myself almost surely not kind of funny anecdote to this is there was one part of the law that i forgot so you know i graduated law school a long long time ago and had quit a few years before this there's a slight part of law around music licensing that's that works very differently than standard law and certainly i.p law because congress passed a statute in like 1914 or 1910 or something where every time music plays in the background there's a statutory fee so it's one of the few things that doesn't doesn't have a market price and i sort of forgot this part because it doesn't generally conform to normal principles a lot so when youtube did eventually have some legal risk it was only because of the background in music being played in the background of the videos that caused a problem they never had ip risk around the actual videos which is what everybody was paying attention to but i sort of forgot that now we passed the statue of limitations so i can tell the story what were the three questions that you asked is it coded in flash was the number one one um there's a reason for that i'd been waiting for three years to fight a company uh i found it on flash so my friend max why well so after we left paypal um i went to work sort of part time with my friend peter thiel and peter said go down to mountain view and figure out the future and what he meant is go talk to max max left him and so it's like okay so i called back so i'm like peter's dispatched me down to mountain view to meet with you to figure out the future of technology i'm not just like okay whatever so we sit down and he starts you know he's like i can't really predict the future but he's like one thing that is kind of cool is this thing called flash and no idea i've heard of it but no idea why so he explained to me that all the magical properties in 2003 that flash had and that someone would take advantage of it particularly around commerce but like here's what it could do that other people weren't realizing so i'd been looking around scouring the universe to find some way to invest in flash and then i realized as you're talking about videos that flash was actually a pretty good application about second question was around whether it was long tail videos or he was targeting like professional videos and he said long tail videos which led to some of the legal analysis but made me more interested i always am interested in long tail stop still i'm interested in long tail stuff as the guys from open store here no and then third the question was and we had a well we had a paypal product that internally we called x x click for the web what that really was was an html button you can embed in your ebay listing and that's what led to the viral adoption of paypal back in the day and so i said are you going to be able to do something like xclick for the web and he's like yeah that's the whole plan so fully embedded flash video that could be embedded anywhere and it would lead to ideally the same adoption as paypal and it actually turned out to be the case pull it back to the website uh you mentioned paypal how much of it is like nurture versus nature do you got the right people into that business versus you guys had some magic potion and got everyone to be really smart and go on to be super successful afterwards i think it was mostly that peter and max deserve a lot of credit for hiring people so peter hired most of the non-technical people max basically hired all the technical people and they assembled a critical density of talent and then that became self-fulfilling meaning the derivative people that were hired were probably comparable and you know you get a critical density tell and all of a sudden things that are unsolvable will become solvable i don't think i mean there was definitely lessons i learned that i specifically abstracted from those days and those people but fundamentally came down to their hiring skills last question about kind of history paypal obviously is now not only very well known that story but everyone went on to do such great things that i think a lot of not everyone there's 254 people there you know probably about 20 games 20 people went on to do great things but i think a lot of young founders look at that they're like wow that was this like amazing business um on a scale of like you guys had your together it was a complete show internally where were you on that scale it was a complete show like well one easy example of that is we had three ceos in four months so you usually don't have three ceos in four months unless things are going pretty catastrophically wrong uh the you know the other empirical data point is in august 2000 we had a burn rate of 10 million a month and 30 million dollars in the bank in the in the middle of the complete internet bubble collapse so that's a real problem um but it was always kind of a mess it was a kind of a fun chaotic mess it was intentionally chaotic that once things started working peter came back as interim ceo after we fired elon musk september 25th 2000 and within a couple months it was clear that the you know first derivative and second derivative were good or better and then you know things did work but it was always always a mess there'd be like all these random things that you thought everything was okay and then boom you know gets slapped in the face with some very pleasant surprise so in november i was mindlessly scrolling on twitter and i saw somebody uh chirp at you and say are you calling the top and you responded it was october 18th by the way and you said yes and i said to myself they better hope to god he's wrong because he'll never let them forget so by the way it wasn't a random person this is it was ari levy of cnbc so it was a pretty well-known journalist and i think it was the day of the top it was exactly the day it was off by a couple hours so uh they have not forgotten because they keep bringing it up um describe why you thought it was that and a lot of it i think came from the 2000 uh kind of bubble bursting and kind of what the historical overlay was so yeah i mean 2000 a lot of people had this view including a lot of my colleagues at founders fund that i've been let's say cracking a whip on recently that things just go up into the right and then it's only a question of time like every company will be worth more money or more value over time whether it takes one year two years three years or five years so that you could pay any price for an investment let's say because eventually you'll grow into that and that's logic over the last 18 months peter and i particularly internally were like this market is going to collapse here's why blah blah blah so internally we've been debating this pretty consistently with with incredible clarity both peter and i argued this at an off site last summer and then strongly argued like about a week before so one of the reasons why we're already asked we had done we conducted an offsite in san francisco about a week or two before and i'd made strong case internally that we should stop investing period like there's nothing that's priced appropriately so my brain had been chewing on this it wasn't kind of a random response that said the lesson of 2000 was you know things that go this way also go this way and this specific reason things clapped in 2000 was the federal reserve raised interest rates six times from mid 1999 to early 2000 and what that did was it caused technology stocks to collapse collapsed by 90 percent so i was like well guess what if the fed raises interest rates six times technology stocks are going to collapse by 90 this is like a law of physics we had actually used this slide a version of this slide which i've actually tweeted recently in our lp presentation at founders fund the last two years so we've been internally talking to our lps saying eventually interest rates have to go up when interest rates go up technology stocks will go down yeah we can talk about why that is but it is actually inevitable and so when the the reason why that specific timing came to be is for a long time many people myself included have been talking about publicly jack dorsey et cetera that we've been going through inflation in the united states um i started tweeting about inflation in january 2022 and uh oh sorry yeah maybe actually 21 but yeah 21 sorry getting the years confused and but everybody was the government the current administration and their you know sort of supporters were in denial about that were inflation and they were suffering inflation there's all these excuses it's like transitory blah blah blah you should see the reaction to my tweet about we're in real inflation and everybody's like a transitory like no it's not transitory that's the stupidest thing ever um but basically all the excuses were starting to decay over the last year and by october even the transitory people like ran out of logic to argue that it was transitory so i was like basically what's going to happen is eventually when the excuses go away the fed and everybody else is going to realize we have actual inflation when they have actual inflation the technology stocks will start going down and so that's basically what happened so when one there was one press conference i think the white house press secretary basically gave up on the transitory line i was like okay all hell's gonna break loose and that was right around then and that's why i was like okay well you don't have to discount the probability that people figure this out anymore so i don't want to spend too much time on macro but uh they say inflation's eight point six percent now the fed when it was seven percent back in december was still uh conducting quantitative easing they hadn't raised interest rates just what's your general take in terms of uh maybe incompetence ignorance how do we get here and then how much confidence do you put in their ability to uh navigate a i think they call it a soft landing now um euphemistic for a recession like a moderate recession uh moderate unemployment moderate session um no there's an old paper from milton friedman in 1972 that you all should read basically bill freeman argued among many things but this is probably his number one nobel prize winning contribution is that a federal central decision maker whether the federal reserve or some other institution will always get this wrong they will always raise rates when they should be lowering them and lower rates when they should be raising them basically the lag is too great so that leads to consistent because you're basically amplifying the problem by the time you act but then it makes the problem worse so the best thing to do is to do nothing in his view and it's a very well argued paper so this is a classic illustration of that but um right now i don't know all i can do is go shopping so this is what i've told several some of the people here before just go to the grocery store and if the price of your groceries going up every week we have inflation if they start settling and being stable then you know we're fine and then when they start going down again we'll have deflation which is not necessarily a good thing but in any event groceries are still going up as far as i can tell the craziest thing to me is uh i don't know why i did this but one day i went deep down the rabbit hole of how they calculated influence oh yeah yeah that's 466 people who are employed by the bureau of labor statistics and they go into the grocery store and they're giving a printout and they make sure they find the exact campbell soup tomato with no salt and there's like an 11-page document to make sure they have the right one and then they punch it into a device so yeah so when we were starting square before we launched we wanted to build a true inflation tracker so because we had all these good in services obviously sales in real time price adjustments basically in real time and so when jack started tweeting about inflation hyperinflation i was like he's looking at real data he's not making this stuff up he's not a backer he's not being a macro thinker he's actually seeing the data and so it was so obvious from the square data that we had real inflation in early 2021 well it's not just the price and point of sale stuff there's also uh payroll data like he kind of has a full 360 view of the economy to some degree and i think that it does beg the question so we have i don't know we can call like an analog version of price uh um collection versus even if you look at apartment.com or zillow open or like all of these real-time data points and sometimes 100 million data they don't use real-time data so here's the funny there's just a twitter thread about this this morning so you talk about leasing the methodology really matters so if you say what is the rate of inflation on rental prices you can calculate it two different ways and you can you'll immediately see the difference one is across all leases in the united states the other is leases signs in the last three months guess what one is up like 41 and one is up six percent guess which one actually tells you where you are i can only imagine um when you start to think of uh the geopolitical landscape there's a lot of blaming of inflation on the putin price hike and other uh excuses that have been uh invented recently um but i don't know if you saw i think putin yesterday or today gave a speech and in it he basically said hey this is exactly what's happening he talked about the monetary expansion he talked about the us's sanctions and how that drastically reduces people's trust in keeping their foreign currencies and reserves with the u.s system how much do you think about things outside of the tech industry or the business industry when it comes to geopolitics inflation or other things that could be like macro or external shocks to the system well i don't think this is a macro shock this is pretty simple there's a let's see there's two only two variables that lead to inflation you have a a fairly finite amount of goods produced and over time it's not finite but at one point in time at this point in time today this week maybe next month there's only a certain amount of variance how many goods there are that's all the goods that could be bought by everybody in the world or everybody in the country and when the government prints more money there's only one thing that can happen there's more money chasing the same number of goods guess what the price has to go up like this is so basic it's like basically where you're going with this by the way i actually think all life kind of works this way that there's a couple fundamental principles and once you understand them the world just makes common sense it's like you know newtonian physics and stuff like that what's another example um like another example of how this applies to wrestling let's see yeah this was another one a good one i stumped keith for a boy everyone no it's just like i have so many of these like it's like simple it's basic simple rules like i i did tweet once i was actually pretty popular surprisingly popular tweet that like the easiest way to be successful is just forget all the stupid stuff in the world if you didn't know anything you'd probably be more successful i was going to ask you at the end but i'll ask you now are you going to put your kids through traditional school or how do you think about educating them so that they don't have to unlearn things later good question they're 11 months old so starting to think about it they're not ready for homeschooling yet although we are interviewing educators to start like indoctrinating them i've taught i've actually taught the little baby boy like my favorite expression which is no no no but really good at it i guess how do you think about the legacy education system and is it net positive net negative like do you see specific things that should be changed or fixed there that would have a drastic impact yeah i mean homeschooling has been the greatest success of policy in the last 40 years anywhere on the planet so 40 years ago there's about 78 000 i think kids that went they were homeschooled last year there was five million that's where the world's going and the reason why is some of it's ideological like people that are opposed parents are opposed to what they're being their kids are being taught um zoom sort of unlocked a lot of that exposure because suddenly you could like watch what your kids are really taught a lot of parents are like barfing like oh my god i didn't realize they were doing that all day second though is one size fits all education makes no sense if you want your kids to be successful you need to allow them to grow at their own pace and challenge them to grow at faster and faster paces and a school a traditional school room just is not organized that way so keith has no clue that i'm going to ask him this i want to do an example of how you critically think about topics and i figured i'd find something that was complex enough uh but also not uh leave you completely outside like live magic tricks basically um gun control has [Laughter] started the easy stuff and then build from there cool well the reason why i think it's an interesting one to uh kind of talk through is there's an emotional element to it right there's obviously people who get hurt uh die and that emotional component can make people mad can make people sad all this stuff there's also kind of a constitutional element to it in people's rights then there's also a federal level a state level there's like this individual responsibility versus dependence on the government you know pretty simple problem here so how do you think through not necessarily what is the answer but like how do you think through coming to a conclusion as to where you would stand on an issue like that yes it's a good it's a good example um so one thing i would do is i tend to like to contrast things either before or after or in multi-states like so like to take data from point a and compare it to point b and you kind of just did this with kovid which is a popular thing to do the reason why one of the reasons why we moved to miami was all the policies of san francisco made no sense to us like everything san francisco and southwest california was doing were completely irrational we're just like we just woke up and said we're not wasting our lives this way and we're moving you know et cetera so the good news was miami and florida were an open laboratory where you could compare different policies around masks and vaccination and indoor outdoor weather all this stuff and so basically just take that experiment there's a you know the framework of the constitution sort of framers of the country basically how this call like clever phrase turn a phrase called laboratories of democracy and that the whole point of having 50 states was that you have 50 different policies and see what worked and what didn't work and without that actually you have one unified policy that you're running one experiment at a time which isn't a great way to learn so i always start that way and there's great places great books to read like i also like books i have a li i actually built maybe the first library in miami um because a custom built library um i was like none of the homes here seem to have built-in libraries i need a built-in library so it took me six months but i have one um but so i go back to like books interesting books what's it what's one so john on gun control john lott who's i think still a professor at university chicago wrote a series of books about gun control you know there's critics and debate it debates about the quality you know the research but it's it's it's a pretty good start and then you can read all the critics of different studies and different chapters if you want to but it'll give you a good introduction um and then the other thing to do is actually there uh there's a lot of data that you know sometimes the world is getting a lot better than people realize there's a couple there's two really good books about this but about how the world's better than people realize and one thing about gun violence particularly is when i was growing up the gun violence was like probably an order magnitude worse than it is today in the united states like your chance of being murdered with a gun was like about 10x spence where you live in the new york city for example where i was growing up it was at least like basically 10x more likely that you'd be murdered with a gun than today so to some extent you also have this like comparison set of like what problems are you trying to solve what risks are real what risks are very real then we have this a little bit with covet too like if you really cared about the risks of kovid are you changing everything else in your life like your chance at certain ages of dying by drowning was significantly greater than your chance of dying by covet your chance of dying in an auto accident at certain ages was significantly greater than a chance of dying by covet but people didn't stop driving the joke i think is always um there are states that want to leave the united states or if you go to those states they may talk about it california at one point somebody proposed to break it up uh texas i saw an article recently that there's people who are always talking about it florida it just happens to be kind of you know on the edge and people think it could go underwater or float away how do you think about the state experiment today is that what we need to put more emphasis on or do you think that there's actually a healthy balance between kind of federal government and state experiment i think the experimentation state level is great in education you're also seeing that um where there's some ideas here that are going to become popular there's you're seeing starting seeing competition now around policy like city city by city policy like why are we all moving to miami because the city here has different policies than other places and you know as i saw a lot of people tweeting you know after the news this morning that citadel's moving here a lot of people are tweeting like oh well all these cities are going to have to really start competing i mean the framework around city competition is we're now all your customers and cities have to compete for our business states have to compete for our business we're not you know basically locked down into some monopolistic you know tyranny and so that's going to change everything now at the city level where everybody tries to attract business attract know entrepreneurs attract high performing people on different industries when's the last time you changed your mind oh all the time this is underrated i mean i used to be a silicon valley elitist i was like the worst defender ever like up until like two ish years ago or maybe three i remember internally even um peter would want to move founders fund outside the bay area and he moved outside the barrio 2015 i think um and he was always on this crusade that we needed to get founders fun outside of the bay area and i i used to think he was like crazy like you know like this thinking when he was making these arguments that's what made you think he was crazy that's what made you think he was crazy yeah well i agreed with most the other stuff no um uh like that's what we call a softball i would only invest in like companies in silicon valley you know i had maybe left some ten percent of my portfolio of investments was outside silicon valley until 2019 and then obviously i changed you know pretty radically and the epiphany coveted obviously magnified the epiphany but the epiphany was not from coven it was in february 2020 i met this founder from germany from brooklyn um showed up in my office and i didn't even want to take the meeting honestly like uh my colleague matias who you know was constantly trying to force me to take this damn meeting i kept trying to cancel it and he's like no you got to take with me you got to meet i'm like cancel take the meeting too anyway i show up finally sit down three minutes into the presentation i was like oh my god we need to invest and so i was just like trying to well hold on i'll come down so i was just like oh my god oh my god i need to invest and so i was basically selling the founder on like working with us the whole time so i walk out of the meeting and matias like taps me on the shoulder at the time we had we'd only worked together for like about a year we didn't know each other as well um so he touched my shoulder and he's like what happened to you it's like what happened like you know like you barely wanted to take the meeting and i was like you just found the greatest founder in the history of europe and like we're investing um and so but that epiphany of like the sing i i sometimes call him the michael jordan but this if michael jordan is sitting in berlin then the epiphany wants them why the hell do i need to be just sitting in silicon valley and why are all the entrepreneurs sitting in silicon valley because this guy had never been to silicon valley before this fundraising trip he had no connection to silicon valley there was no side channel of information the new bank example is a little different because they went to stanford business school one worked at sequoia so yes they built a great and very impressive company in brazil but they had a lot of infusion of silicon valley thinking in people and networks uh christian a trade republic had zero he'd learned it all sort of online and through osmosis and i was like great well michael jordan's sitting in berlin then the days of silicon valley are over i asked for questions online now i'm taking one of them because it was so good when's the last time you were wrong oh yeah i saw that one uh well i'm wrong i mean the funny thing about being a vc is you're wrong all the time i'm you know like for example if i do my job really well i'll probably write 40 of the time that means 60 of the time i'm wrong yes but you have told me uh what is the percentage of founders that you've met just tell you just tell the uh i don't want to ruin it yeah so this is mostly true it's mostly true because every day like as an experiment you can screw it up but uh i've basically maybe met one founder in person that i should have invested in that i didn't in like 20 years now that's turned down a significant number of meetings but out of the ones that turned into good companies so keith basically said to me one time he said uh out of all of the times that i've met a founder in person i basically have never missed and then actually i'm surprised that now maybe there's one well there's one one the one's a complicated story i actually wound up becoming an investor later but i i missed on the seed which it cost me 100 x small thing um but i fixed it i realized that i made a mistake i'm like this is we need to fix this actually that's interesting so what made you fix it and why were you not emotionally tied to like i missed it i'll just go find the next early stage company well without giving away the company but maybe it's fine to give away the company um my mom actually convinced me i was wrong this is very true she's like why did you pass on the company x and i'm like blah blah blah and she's like no it's amazing and i'm like so yeah like uh that that's actually the story i tell publicly like when when we announced the financing because some people knew i had passed earlier um and just that's true it was true charlie true unfortunately she's coming to visit this weekend i'm sure she's gonna remind me has mom ever commented on another investor yes yeah you want to make her on your reporter to your investment committee maybe she's got a lot of free time right now sitting in charlottesville virginia she's got plenty of time but uh no she she's usually more conservative that's well that's why it was so astounding was like i remember when i joined linkedin she's like nobody'll ever use that and put their resumes online yelp like nobody near us in new jersey you know we'll ever use that blah blah blah so she's often wrong but she she did this was striking counter treating she did call stripe correctly yeah you're accounting of trading mom until stripe okay yeah now i listen to her much better um the last thing i want to talk about i'm just going to call it uh kind of wokism seems to have infiltrated everywhere and it's not a thing right it is a state of mind it's a set of ideas but everything from uh the way we work the way that we operate on a daily basis the things we're allowed to talk about not allowed to talk about um just so many things in life how do you think through that problem right and i always say that's actually easy okay just ignore it i mean if something's on the wrong side of history and just wrong the best thing you can do is like refute either ignore it or refute it or definitely don't let it affect you so like use an example you've invested in a company do you and you start to see that there's a change in the company by your reaction i know you've dealt with this how do you talk with the founder is it uh immediate identify it and stomp this out is it a let's coach how do you just deal with it no i mean my role as a board member and investor is is really to be a a consigliere which is like if the founder wants to talk about it founder identifies that this is a frustrating or challenging issue then we can talk about it at length and i can you know point them in different directions people to talk about who've dealt with this before here's like the pros and cons of different approaches but like it's not my job to kind of fix it like ever i have one well i do have one job but two jobs i have to fix like if i don't like with found response investing and i have to fix that and i've actually been a little slacking on that and then obviously at open store it's like ultimately my responsibility all right we're gonna take questions in one second um you peter max we can go to the line there's a bunch of them if you had to sum up uh one thing when it comes to critical thinking or independent thought that you all share what is that thing is it something you guys read is it a way of thinking is it's you know something that you can tie it all back to and say this is something we did that a lot of other people don't no i think there's just because all these people are very different like all the paypal people that you named and the ones you didn't name that are you know very successful they all have different asymmetric advantages in life and they figure out how to leverage them the common denominator is that they do think for themselves they have their own views on the world so two examples there's a kind of a funny woody paragraph in uh zero to one that peter talk peter leads the book with which actually originally was going to lead the book if he ever wrote a paypal book but enough time was going by he basically gave it up and put it in zero to one that four of the six co-founders of paypal built bombs in high school so i didn't build a bomb in high school i was way too normal for that but um maybe now i would but like back then i was way too normal way too normal um but um that shows a certain kind of thinking now three of the four before you get too nervous actually grew up in communist countries so building a bomb was probably a pretty good idea um but like only one of them was american um but uh in any event like that kind of hiring philosophy led to people who are kind of iconoclastic and iconoclastic people do have the tendency to think for themselves and then they figure out what areas are they strongest and what dimensions so max thinks about things differently than peter does than reed does than elon does than jerry stapleman or chad or you know whoever but they all have figured out how to be different you can see like you can see chad on twitter you can see some of his iconoclastic thinking um sometimes he likes to make fun of miami he's eventually he's eventually moving here whether he knows it or not chad south beach hurley that's who's gonna be all right what questions do you guys have just raise your hand and uh we'll call on folks nobody has over here just yell it out i think sometimes people think that in the latter is sort of like they're kind of like america's over right like it's too bloated to fail so people can go off again we're like really concerned about you know preserving the west building the country do you so the question just in case anyone didn't hear is uh basically is there tension between like hard tech varda and duro et cetera and then more of like the u.s is screwed let's build a different like a skate boat basically with crypto web 3 uh bitcoin etc so two answers personally in that founders fund um we don't back trends we don't invest in trends we invest in people so founder you know if you read the technology manifesto the founders fund published probably in 2014 we basically have no one founders so the right founder we find the right founder for the right problem and we'll give the money so we funded varda anderl funded there's crypto companies we funded we bought bitcoin directly when that was appropriate um so fundamentally we just want to find the right founder tackling the right problem not try to you know sort of predict the future but is there tension i mean ultimately there's people probably better suited to solve different types of problems too i'm not sure i'd be the best biotech founder um but i could probably learn parts of it like for example there is a heavy biz dev component distribution component that i can learn there's some legal in like fda so i could learn parts and contribute but i probably am not designing molecules very well and please don't adjust these molecules if i design them secondly i i also think the the best thing about technology is you get to write the future so you can believe that america's in decline and say you know what i'm going to wake up and do something about it like think farda and delian um is actually like america is in decline we need to do something about it and earl like america's vulnerable we're going to do something about it so like technology is kind of this magic wand that you get to shape the future you pick it up it's like learning to code it's kind of this magic wand you want to rearrange the world and you kind of walk through the world and you kind of wave your wand let's do uh two or three more who else got a question why does anybody over 35 years old believe it why does anyone over the age of 35 believe in web 3 i planted him i don't know i guess chris dixon's over 35 so we should probably ask him um he's way over 35 actually uh so um i don't know i'm not one of the web 3 proponents i would invest in a web 3 company if i believe the founder was tackling a specific problem that he or she had insight into and i have you know funded i guess two companies that arguably could be web three-ish but they don't brand themselves well one definitely doesn't brand itself it's royal it's reinventing the music industry just happens to use some components but it's really reinventing the music industry for the future not reinventing crypto the other one is a more web30 company but it was the specific founder had insights into a very unique problem it's pretty slim chance that's really going to so the question is about nfts uh being built on top of ethereum being highly dependent on ethereum and a lot of the internet history would suggest that it might not be around 20 years well i think the macro point behind an ft makes sense which is people are going to have concentric circles of people professionally and socially that they care about in their lives that are more virtual or more digital than real world like i.e people are going to manage relationships in the real world differently than they manage relationships so like when i go out i you know care about what sneakers i wear what brand a shirt i'm wearing you know to have an apple watch versus like a traditional watch people are going to encounter more and more people online and nfts of different types or way of self-expression self-expression is incredibly important and is there are there going to be unique ways to express yourself online absolutely and so what would you purchase online to express yourself that's the open question for entrepreneurs and but it's not that's not going away that's a human emotion back to shakespeare and i think the other piece of this is just uh the underlying technology almost doesn't matter right if i ask you guys what is the tech stack of google if you're not an engineer who worked at google most of you don't know right and so i think at some point it's just like can people buy what they want and if it works then it works what can you transition it too right i mean like most almost every successful company i've ever invested in or been involved in has recoded itself almost from scratch that's scra you know from scratch at some point if you have enough traction you'll reinvent like square started believe it or not i hate to give this away but like on ruby on rails another very famous site started in php like you really don't want to worry about that stuff too much well you'll just have a different generation of like that's oh that's definitely true but like do people but like do people still collect the same baseball cards that they used to some extent mickey mantle's still valuable but like the values of different people change over time too all right we're gonna take one more question but uh quickly what are your thoughts on bitcoin specifically not the other stuff have you changed your mind at all so i had two concepts around bitcoin and they're they're kind of directionally correct but not perfectly correct i don't know that anybody's been perfectly correct to bitcoin now for a while i was while there was people claiming to be perfectly correct with their bitcoin predictions there's actually i'm not sure anybody who's really got it right so it's hard when things go up hundreds of percent and down 80 percent yeah try calling both of those um to the day um uh but in any event um i had two concepts around bitcoin so you know in some ways as enthusiastic when it first started because the original t-shirts at paypal those of you reading the paypal book will know this you know we are t-shirts i still have some at home um the the world you know the world currency whatever so the vision of paypal originally was to try to do this and one of the reasons i was somewhat dubious about the coin is i remember how damn hard many pieces of that were building the new world currency were but the first thing that occurred to me in 2013 when i started to think about this like professionally because i didn't become a vc until 2013 was bitcoin adoption should be inversely correlated with the rule of law so in countries that have a predictable rural law there should be less adoption to on a per capita basis or whatever or per gm gdp or something some metric than in countries that have a predictable rule and you can even argue that kind of happened in the united states like according to some people after trump got elected we had less rule of law here and you do see bitcoin actually appreciating after the election of trump but the the number two point that's probably more live and relevant is i believe that bitcoin was a speculative asset in that eventually if you could stitch people like to speculate people speculate on stocks obviously people will speculate on nfl games like speculation is a really big business in the united states if you could get everybody to adopt a platform on a speculative basis could someone build an application layer on top of the network or the nodes that were built on speculation in power some fundamental utilitarian thing that was not speculation absolutely so i started saying this as early as 2015 publicly then you know basically no one's really built that application layer on top but there's a lot of nodes that were built in this speculative error now with prices going down in other let's say in equities going down unless people have less dollars available for speculation you may have to build on top of the nodes that are already you know sort of plugged in but that's like 80 million folks i mean this is uh if you read um what is it power law i think they talk about a lot of speculation a lot of capital goes in you basically build the infrastructure and then eventually do it last question no pressure so how do you protect the critical thinking that the question is science started to become very political but a huge piece of science is collaboration especially sometimes across borders but if it gets politicized how does a scientist in america and a scientist in china work together if there's this political divide i think that's a choice that scientists scientists and quotes made most scientists in history that you remember the names of were incredibly controversial in their own times and so i think there's a certain character to the scientists to come up with the most important ideas and then eventually bring the world with them it's not the other way around like how do i dumb down my ideas to be approachable to everybody that's it all right everyone i hope that you guys enjoyed this thank you so much for your time real quick constantine thank you very much i think we have this place uh for like another hour or so hour and a half so enjoy there's drinks upstairs there's drinks downstairs if you need a lawyer constantine's right there go harass the out of them uh at reed smith [Laughter] yeah yeah one lawyer for the whole room all right thank you guys

Channel: Anthony Pompliano

Views: 35,057

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Id: NVjVcgYbI68

Length: 48min 11sec (2891 seconds)

Published: Sun Jun 26 2022