Anthropic's Hidden Money Network Will COLLAPSE Open AI Competition - Bill Gurley Exposes All!

One of the greatest tennis players who ever lived retired, came back just two years later, and got absolutely destroyed by players with half his talent. So, what happened? My guest today, Bill Gurley, has the answer, and it applies to everyone facing down AI. Bill is one of the greatest venture capital investors of all time. An early backer of Uber, Zillow, and OpenTable. He spent his career studying the exact pattern of who wins and who gets wiped out when a technology wave hits. He believed that Björn Borg, the tennis player whose career died fast, got left behind for the exact reason AI is going to destroy so many careers. Bill [music] and I discussed the most dangerous response to AI, how to navigate the AI transformation well, and why some [music] people want AI while others fear it. Without further ado, I bring you Bill Gurley. >> Between AI and massive political upheaval, this is a moment of profound transition for basically everybody. As an investor, how do you think about identifying what the future is most likely to hold, given there's no certainties, and how should people position themselves for that well economically? >> When I'm talking about investment advice, you know, it's I'm always very careful to separate kind of an individual from an institution, right? I just think they're two very different things. For an individual, I think you have to I always say, if you haven't read A Random Walk Down Wall Street by Burton Malkiel, then I really don't want to give you advice, cuz you need some kind of framework or bedrock before you dive in, and that book, I think, is the best way to get there. Um at this [snorts] point, you know, so much of AI is already reflected in the stock prices. So, I don't think there's an insight you're going to have about AI that you're going to be able to that that that hasn't already been accounted for unless you think it's going to be less disruptive than than you might be able to go in and value buy some of the stuff that's been hit more recently on concerns of concerns of disruption. Um the the piece of advice I would have for everyone about AI in general is the best way to protect yourself against AI is be the most AI enabled version of yourself you could possibly be. So, everyone no matter what what industry you're in, no matter what you're focused on it like you really need to understand what it's capable of in your field kind of on the edge. Um and curious people do that. Like the curious people have already done that. They don't need to be told to do that. I think the most dangerous thing you could possibly um have about AI is to be skeptical about it and therefore to not be learning about it. And there there a lot of people in that place. Uh especially a lot of older people. I found a lot of academics are in that place. It's a really dangerous place to be. Uh cuz this thing is is different. It's like really important and different. >> Now, I have an algorithm that runs in my head that says people just as a species fear change, won't embrace it. That every technological change change mows over a generation or two. Um do you have like a framework that people can use to >> everyone I mean my my my 89-year-old father, you know, has Bluetooth uh you know, hearing aids and watches Tik Tok videos on woodworking. Like I mean >> I like him already. >> Like it's possible like to not be afraid. But I agree with you, a lot of people do. Uh especially when it um threatens careers. That's where people get particularly protective and take on a bit of a victimization kind of mindset and it's dangerous. Like it puts you further behind. There's a great anecdote um Bjorn I think it was Björn Borg. He retired real early in his from an age perspective, like I think it was around 30, and he tried to make a comeback when he was like 36 or something. I'll probably get the the specific ages wrong, but he in that window where he was retired, the entire industry switched to these big-headed graphite rackets, and he came back and he tried to do his comeback with the wooden racket. He had to get them made from a manufacturer cuz no one sold them anymore. Um he got obliterated. Like like the and and we evolve with our tools. Humans evolve with their tools, and if the industry moved to a bigger, better racket, like you just don't have a choice not to. But, I love that anecdote um because it's easy to laugh at Björn Borg with his wooden racket, um but you got to see that, uh you know, in yourself if you're a denier of these AI tools. >> So, when I look at the history of this, it's pretty brutal. So, you've got the Industrial Revolution ate, call it one to two generations, the Great Electrification, same thing, the Internetification, I think it the data indicates, and I'm certainly open to a debate, but the data indicates that some of the deaths of despair that we see are from people that were north of say 35-ish that just were never able to matter again from a career perspective, and especially for men, that's just a it damages damages them psychologically so profoundly that they just spiral out and pull out of the job market essentially entirely. So, when I think about your dad, I worry, and I'm hoping that you have uh some countervailing insights here, I worry that he's just wired that way. Is there is there an insight you can give to somebody that's afraid right now that will reverse their viewpoint? I I think it's hard to um suggest that any idea is a a solution for the world's [clears throat] problems. Like you know, "Oh, do this and you'll solve world hunger. Do this and you'll solve" like there are technological shifts that happen. We as a country went from 98% uh agriculture to less than 2% of the population over a very long time frame, but it happened and and it survived [clears throat] and every everyone was okay. So, I mean to a certain extent it and you said this, it's always been happening. So, I don't The one thing I know, I'll tell you something that I think is super effective, but one thing I know that's not helpful is is rumination. Like sitting around just talking about it and complaining about it doesn't solve anything. And another thing I will tell you I'm highly skeptical of would be some kind of government retraining program. Like I just I I like I I don't have any confidence in a government program that's going to solve AI job displacement. I mean I'm open-minded and I and if maybe you could point to a policy that worked in another country that we're going to adopt like they're a best practice, I'm open to it. We should do it. But I'm I'm I'm somewhat skeptical. I I do see kind of this resurgence in open mindedness around trade schools. I think that's kind of cool. Um there's a lot of anecdotes people will hear about friends that are electricians or plumbers or welders making over 200 grand a year and they're like, "Holy shit." So, that's kind of cool just to have awareness of that so that people can know that those things are out there. But [snorts] my my The thing I wanted to land with in in my book, which I'm promoting over my shoulder here, Running Down a Dream, um people that have high curiosity and high fascination and probably high agency immediately see AI as a jet fuel as a as a rocket booster. It's like, "Holy [ __ ] look at all the stuff I can now do by myself that I couldn't do before." And they're the ones that come to you go, "Man, you won't believe what I did this weekend when I set up this claw bot, it went off and solved all these problems. I met a guy who does storage buildings and he he he lives in in down by Brownsville and he was I met him fishing. He's like, "You won't believe I needed like three more sites in the city and it just immediately made recommendations, explained why. Like I you know, I saved so much time and money." And he's like ecstatically happy, right? About what AI could do for him. If you're high agency and you're curious about your field, it immediately starts solving problems for you. Um but you got to be in that place. And so the the very first chapter of of my book's called Chase Your Curiosity. It's all about and I we studied over a hundred people that have come kind of started on rung zero of a ladder and gone on to wild success with no economic advantage, no networking advantage. And almost to a T, they were all continuous learners in their life. And I don't think that you're able to be a continuous learner unless you're fascinated with something. Like and so, you know, [snorts] one of my big themes is I want to encourage more people to believe they can have a career in a lot of fields that your parents probably would tell you not to chase because if it happens to overlap with your fascination, it becomes this perpetual motion machine. Things start falling into place. >> The only way I can think to get people on fire for that is the phrase that I use all the time and it's not nearly as effective as I would like is skills have utility. And so I agree with you almost violently and what I'm trying to get people to understand is if you get good at something, you can do something other people can't do. If you can outcompete them, then you can have things they can't have, and you just trigger that like competitiveness, that drive. Um you've raised three kids. Have you found a better way to get people on that path to fascination? >> Um by the way, there's one other thing that I want to throw on top of what you said. People notice fascination. If you're fascinated with something, you come to the table with a lot of positive energy. When you learn new things, your your face lights up. You love to talk about the field, and people notice that. So, if you're in an interview, if you're trying to close a mentor, if you're looking for peers, like it all gets easier. And people want people root for it. They're like, "Oh, you're into that? You should talk to this guy over here, cuz that's all he talks about." Like so you get free connections. Like like opportunity comes at you when people notice that you're that person. Does that make sense? >> Totally. >> So, you get a you get a lot of stuff for free. Um the I think that our society has um unfortunately, we we've entered this kind of industrialization phase of the college journey, and it's gotten way too competitive. The schools have not increased uh admission numbers, and and and so you you end up with a situation where more and more it's the schools I think both you and I went to a state school. Those used to be, you know, 30 years ago, like they were the default like they were the safety place. Oh, I'll just go to state school. Today, you know, those schools have 1,400 SATs and are hard to get into. And because of that, there's this kind of mania that comes over parents, and and kids become a part of it starting in sixth grade. Jonathan Haidt calls it the resume arms race. We just start, you know, preparing for that college application around sixth grade, and you're taking Mandarin lessons and lacrosse lessons and and [snorts] taekwondo and and you're volunteering and like the kids are so over scheduled and it's just a bunch it's a pressure cooker. >> We'll get right back to the show in a second, [music] but first let's talk about who's profiting from your personal information. 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Try it risk-free for 30 days. All right, [music] now let's get back to the show. >> Is that bad because they just end up burning out and getting tired or is there some sort of creative play that kids need to do that they're not doing? >> Well, so and you know, part of my journey writing a book was just to go read all the greats that have written about this stuff and both those things you talk about um the the the top academicians are talking about. So, Angela Duckworth, who wrote Grit, has said recently if she could write it again, she'd put passion way above perseverance because she says perseverance without passion is is suffering. She says it's just a grind. And we've taught kids how to grind. I think they come out of college exhausted, by the way. [laughter] Um cuz learning about something you're not fascinated with sucks energy. Learning about something you're fascinated gives you energy, right? And so they're completely different. Um and so yeah, that that's true. And then other people uh from Rick Rubin to Ken Robinson have talked about this lack of And And there's a chapter in in Calling on an American Mind by Haidt called The Decline of Play. So there's this notion that by not having more free time to just be curious and that you might not discover what you're actually fascinated with because you're in this this you're on this you're on this conveyor belt to get to this college. You know, when when I was young, when you went to college, they would not allow you to pick a major until the end of your sophomore year. And I I don't think it takes a genius to know why that was. They wanted you to take all these core classes, to look around, take a few electives, and see what you were interested in before you commit. Today, at many schools, you have to apply to the major. So you're talking to a 17-year-old saying, "What do you want to do the rest of your life?" You know? And they don't know. They just don't know. Um and it's okay that they don't know. Um but but there's a lot of pressure. There's a lot of pressure. There's pressure on parents, too. And so I do think what one of the one of the key ideas I had in writing the book uh we I probably read through a hundred biographies. I only wanted to include success stories, and there's about 10 deep success stories in the book from fields that were fields your parents wouldn't recommend. Um I just didn't want there to be a chapter on a consultant or a banker or a doctor. Like these are the fields they push people towards, you know? I wanted I wanted to give more permission to do these things that are fields you might not think are possible. Um and uh yeah, that's where a lot of fascination lies. You know, many of the people in the book switched from whatever career path they're on to their hobby. Uh that's a common common theme. Uh but the hobby's the thing you're fascinated with. >> Yeah, now there's I I've certainly in my own life gotten a ton of energy out of the things that I'm just naturally pursuing anyway. Um but let me run a counterfactual. You spent a lot of time in China, which I think is especially now, I'm a big believer in Thucydides' Trap. I think the US and China are locked in this competition that could get very problematic. Regardless of that, I think it's incredibly wise to look at what China does well, to learn from their leaders, to pay attention to all the things that they're doing extraordinarily well. And they've got a cultural value around this concept of 996. So, grinding, busting ass, working from 9:00 a.m. to 9:00 p.m. 6 days a week, they're building extraordinary companies. So, what is it that they're doing cuz they're hypercompetitive at like the provincial level and in a way that we're not. So, what is how are they able to leverage that pressure cooker to these like really awesome results and then we're sort of like crumbling in some way under that pressure. >> Yeah, they're I've By the way, I spent a ton of time in China and I'm pretty fascinated by it. And so, I could maybe I could go do a career just thinking about these things. Um I'll tell you two things about China. One one thing that I don't think people realize, of all the places I've visited around the world, um the one place where I find the most cultural affinity between entrepreneurs, between American entrepreneurs and some foreign entrepreneurs, China. Like the most like-mindedness. The you And I And I judge that not by some type of analytical study. I judge it actually by um going out to dinner, having a few drinks, and laughing, and sharing stories, and how natural it comes. And it's amazing. Uh Coatue used to run a conference called East Meets West, where they'd bring all the entrepreneurs in one place from both cultures. And there'd be late-night poker game I mean, it was just a blast. And I I I There's I don't know I don't know why that's true. I don't know why there's this like very cultural similarity um between the two. But And And as a result, they love entrepreneurism. They're really great at it. Um The other thing I would say, and I don't know if this will be true going forward, but I think it was true in the past, you know, part [snorts] of what Deng Xiaoping was able to unlock by bringing free enterprise to China was a massive impact in standard of living for the people. So, marginal work effort meant, you know, [snorts] moving from eight people living in a one-room building in a working in a rice field to, you know, a two-bedroom apartment in the city with a completely different life. And, you know, I I've often thought about marginal work effort relative to marginal increase in standard of living as as something that causes a harder work environment. And if [clears throat] you, you know, a a marginal effort in the in the US might allow you to get Showtime and Netflix, not, you know, not just Showtime or whatever not just Netflix. Like, I It's It's not It It takes a lot more work in the US to to to systemically impact your [snorts] quality of living. Um that could slow down in China. You know, like like like the the There's a point at which you're moving from, >> [snorts] >> you know, a farm to the city where you get this huge leap. And they may have already They may have already gone through that. They're They're very curious. I mean, they're very smart. They're very entrepreneurial. They're like I think there's a misperception that it's all that it's all just work ethic. But But But to your point, Mike Moritz, I think, famously >> [snorts] >> about 10 years ago wrote a I may have been in the FT or something. He just wrote that said they just work harder than we do. Like flat out. And there's there's an interesting notion in that in that in many fields, even Americans admit that work ethic is valuable, especially when you look at the arts. For some reason, like it's perfectly okay for the figure skater to to to like to toil, right? To to work hard. Kobe Bryant like works really hard, and we're so fascinated a cellist in the symphony. If they told you, "Oh, they studied 100 hours a week." you'd be, "Wow, that's amazing." But when it comes to work, we we adopt this workaholic and, "Oh, you can't make people do that." So, I find that fascinating. >> Now, do you have a guess as to why that is? >> If you went back to, you [snorts] know, the '30s, '40s, '50s when we were emerging as a country and and really dominating the world in terms of industrial and exporting, I think I think a lot of people would would have had would have viewed almost any occupation just like the the figure skater. But I think we've kind of moved past that in a way. And there's just more, you know, talk of of victimization and what I mean, remember what What is it JFK said? Ask not what you can do what your country can do for you, but what you can do for your country. That [snorts] sounds very foreign right now, doesn't it? >> Yes. Yeah, so my take on this is uh everybody's stuck in a frame of reference. We can't interface with the world the way that it really is, so we begin to tell ourselves a story about that. When the culture tells you a story that the harder you work, the better your life is going to be, and that gets reflected back to you in real results, like what you were saying in China, and most people just are so ignorant to Chinese history, they don't realize in the '60s, you had people starving to death in China. To death in the tens of millions. And so, this is for them, this is a very recent memory. So, to watch 4 to 500 million people get pulled out of poverty because you inject this notion of the free market, the harder you work, the smarter you are, the better you perform, that idea of skills have utility, like that's going to be the realest thing in the world, and you remember what it was like when it was hard. We've now raised three or four generations that just think success is the way that it is, and that the government just needs to tax more, and everything's going to be great. And they I remember this all too intimately because it wasn't but 5 or 6 years ago that I believed inflation was just a natural law. I didn't realize that it was man-made. And so, there's so much confusion that people have when your country's just been for successful for so long, >> Yeah. >> up in a career that you don't love. Uh the marginal benefit to working hard isn't there. You're in a K-shaped economy, so your boss is getting rich because he owns the company, but you're not. And so, you're like, "All right, well, this guy's an [ __ ] He just wants me to work hard, but why?" And so, that the thing that scares me to death about this moment is the reason I became successful was I grew up with I was middle class to lower middle class, so I didn't grow up with money. I certainly wasn't poor, but I believed that I could do anything I set my mind to, but my parents made it very clear I was going to have to work my ass off. And so, I just put my head down for effectively [snorts] 15-20 years and just worked and worked and worked and worked and worked, and then it finally paid off. >> Yeah. >> But, we now make fun of people who do that because we become culturally so divorced from that path. >> Yeah, and and and the data on the success rate of first-generation immigrants that come here specifically because they believe it is the land of opportunity, which they have the mindset that most people in the US had 30-40 years ago, um they succeed a lot more in the US than people that have been here multi-generationally. >> Yeah. >> But but they they I mean, part of part of being able to affect change in your life and in your career it comes down to a belief that you can. >> Yes. >> If you If you're convinced you can't, you won't. That's for sure. That's a certainty. >> So true. Bill, one thing that I find really um fascinating to stick on that theme about you is I can feel you're somebody who's trying to help people. So, um you legendary investor help founders, you write a book, which we'll talk more about the whys in a minute, but you write a book that's effectively self-help. But, now you've also started a um policy institute. I know some of the punchline of the policy institute, but if you would, why are you starting a policy institute? What What's the end goal? What are you trying to address? >> I probably would mention a great book by Arthur Brooks called Strength to Strength. I don't know if you've heard of it. It's actually >> the show. He's amazing. >> It's The book was written for people who are kind of finished their first career and have a lot on their mind and they have a lot of questions about what to do with the rest of their life. That's really which is a spot I found myself in. I had a incredible career in venture capital. I loved every minute of it, but for a variety of reasons I raised my hand and said it's time to move off the field and let the next generation play the game, which I did about 4 years ago. And I went [snorts] on a listening tour of what to do next, and a lot of people wanted me to do what I think is the more natural thing, run your family office, do a bunch of angel investing. And as I spent time imagining myself in those roles for and talking to people about it, I became convinced that that was 100% not what I wanted to do. Um I've uh I've developed a pretty good um rhythm about being able to synthesize and communicate. So, I did that in my venture career through blogs and eventually things like podcasts. Um I I tested doing it outside my field with a talk I gave at the All In conference on regulatory capture, um which had like 4 and 1/2 million views. So, if a >> Extraordinary talk, by the way. >> But if I can do a talk about regulatory capture and and and make it that popular, um maybe there's a skill there that I should develop. And um I'm also really enamored with the with the notion of effective policy. So, I I have a a quote at the top of the page on my policy institute from Milton Friedman that says, "One of the great mistakes is to judge policies and programs by their intentions rather than their results." >> Oh man, preach. >> And I think we elect a lot of people because we like what they're saying, but no one follows up to see if they can actually create change. And so, one of one of my sole goals will be to think about policies that are effective. I'm I'm enamored by the provincial competition in China, and I wonder if shining a brighter light on state versus state competition could lead to some pretty amazing and positive things for our own country. I I This is an example of something I'm excited [snorts] about. Um the other thing I kind of hold out as a success, there was a >> [snorts] >> there was a very negative opinion on nuclear energy about 6 years ago, not that long ago, and a few people, Steve Pinker, the Collison brothers, Elon Musk, there were a few people who stuck their neck out and said, "You guys are all wrong." Josh Wolfe at Lux Capital. They said, "This is fascinating technology, you know, we should be embracing it." And within a very short time frame, the global perspective on this shifted. And [snorts] to me, that's pretty amazing that you can use the power of communication and conversation to flip a bit like that. And it's a big big flip, huge flip. Um so, I'm I'm going to look just by see if I can find more things like that where just highlighting [snorts] things and communicating could potentially change things. The other The other thing is you you get to you get to go meet with and hang out with the top academicians in the world, which gives me a ton of emotional energy. Like, just chasing that curiosity. And these people are quite fascinating. And And so, that's another element of it. I've already been to the University of Chicago, which is the the birthplace of the notion of regulatory capture, where Professor Stigler won the Nobel Prize. And so, they have a Stigler Center and I went and talked to them about different ideas. And I'm talking [clears throat] to some people about maybe making a regulatory capture index for countries as a way to to identify policy that can push against it. >> That's awesome. If you don't mind, for people that don't know exactly what it is, can you define regulatory capture? >> Yeah, I mean, if you look up George Stigler, he he's the one that in won the Nobel Prize in 1958. But the the the simple concept is most regulation ends up being written by the people that are being regulated. At least in the US and the way our government works. And so rather than I have a phrase I use regulation is the friend of the incumbent. So they use it to actually raise prices, prevent competition, and further and ensconce themselves in the leadership role they're already in. Um and I believe in some of the the the more regulated industries in the US, particularly finance and health care, this is a huge problem. Fully locked in. Um there's there's more potential disruption in finance around crypto and stable coins, I think, than than the [snorts] in in the health care I mean I mean Mark Cuban's doing his thing, which I'm, you know, fully supportive of, but it's it's hard. It is so ensconced, so locked in. >> We'll get back to the show in just a second, but first, let's talk about AI slop. Most AI video tools produce content that's painfully obvious it was made by AI. The pacing is off, the visuals don't [music] quite match your brand, the message gets lost. You end up with something that feels generic, awkward, and forgettable. 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One story that you have from your own experience that I think would really help people get this is Tropos. >> Yeah. >> Um walk us through that cuz this one made me want to chew glass. >> Yeah. So, a long time ago, like maybe 20 years ago, I invested in a company that uh used um mesh mesh radio technology to allow in an open spectrum to allow basically using Wi-Fi outside and like covering entire downtown areas of a city. And we found many mayors all over the country that were excited about this and wanted to as a public good offer free data connectivity in their downtown areas, if you will. And I I often tried to equate it to, you know, [snorts] if a city early on built a port, that [clears throat] would make sense because industry moved in and out by boat. And then if they built a train station, that makes sense. Oh, no one said, "Oh, a city shouldn't be in the train business, right?" Cuz that's how Yeah, who else is going to build it? And then the highways, and cities are in the highway business, right? So, when industry moved online, it would make sense that a city might want to differentiate itself by having more connectivity and more options for that. But, what we what we ran into is um there are many First of all, the the the telecom space is probably equal to healthcare and finance in terms of regulatory capture, maybe it leads it. Um, but many um of these whether it's AT&T and Verizon or Comcast, they have lobbyist out the yin-yang. Like they have so many lobbyists and and at a state level and they were able to pass laws that said cities can't compete with them. Even though they're getting their pole rights from the the cities themselves. >> How do they justify that? Like do they even try or is it just money? >> but you'd be surprised. They get a lot of free enterprise Republicans agreeing with them because the of the notion that they use the mindset that the government's bad at industry. The government shouldn't be in industry. Right? But but I think that's ridiculous. Like I think this goes back to maybe city [snorts] versus city or state versus state competition. If a city if if a city wants to offer free connectivity for all of its citizens, I certainly think they should be able to to if the citizens are behind it and they have the money, why not, right? But but that's but I do I I do think that's the thing they were able to leverage to pass these laws is conservative people believing that they were keeping the government out of things they shouldn't be in. That's that was the the the the mindset they used to pay. Anyway, they passed these laws everywhere all over the country. Um, the thing that really killed us was we we um the the mayor of Philadelphia became excited about doing this and it put it on the front page of the paper and the the the government in the city of Philadelphia in the state of Pennsylvania was just full of ex-Comcast people. Like they they were just like they they were everywhere and they just crushed us. We I I think I said in the talk we were like a sixth grader playing against Michael Jordan. Try try trying to compete in in in the back rooms of of of, you know, policy. >> Do you have a sense of what goes on in those back rooms? So, I know Michael Jordan dribbles the ball well, he reads the court, he understands body language. What does a uh person formerly at Comcast >> I I'd have to look up his name. I I used it in the talk. There was a gentleman who was the head of the the head of lobbying at Comcast where I think New York Times or the Post, someone did an article where they said this is the most important executive at Comcast. And he had been working for the mayor before he went into that role. The mayor went on to be the the the governor of the state, you know, and when he left that role Biden made him ambassador to Canada. So, he was in and out of the And that article said he did like three or four dinners at his house for the Obama campaign. And so, he was just he was right in the center of all of it in a way that the startup in Silicon Valley had no chance that we didn't have any of those relationships, right? And so, just just woven into the fabric of it all. >> There's a huge irony. When I gave that talk, you know, and I spent 25 years in Silicon Valley, it was titled 2,851. And I I used that title cuz I had a punchline at the end where I said the reason Silicon Valley works so >> [snorts] >> well is cuz it's so far [ __ ] away from Washington, D.C. And that was the distance in miles. But since I gave that talk, I'd say Silicon Valley's gotten more like rooted in Washington, D.C. than it ever has more than it ever has before. So, there's a certain irony to that. >> Do you read regulatory capture as corruption? >> I think it can be both sides of the coin. I mean, you can look at what the crypto world did in getting Trump elected, and you can look at stable coins, and you could say, you know, I can move money via stable coin right now in seconds for pennies anywhere around the globe, and you can't do that through a bank. You can't do that through a traditional financial institution. They don't do it for that price. They delay it, and they charge you way more money. And you could say, well, they're trying to change things. Like Now, if they were to change things and win, I suspect over time they would start doing the exact same things, you know, once they had those relationships. So, I I'm I'm And And the the other big thing that's that's causing this right now is is venture capitalists have gotten into military equipment, which is nothing I know anything about, but rest assured, without relationships, they wouldn't have been able to do that because the McDonnell Douglas's of the world would have would have used regulatory capture to cut them off. So, it was probably imperative that they have those relationships to bring disruption to those fields and to fight back against it. Um but if they have it long enough, they'll certainly use it against the next guy. And by the way, this is I think this is playing out in real time in AI. I mean, there are many people, including David Sacks, that think Dario and the team at Anthropic, they're Anthropic's lobbying the only company that has lobbied as much as Anthropic early in its life was was FTX and SBF. Like he also lobbied heavily, but they have people on the ground in every state. They're the ones pushing for state-by-state regulation. And at the end of that talk I gave I said I was worried that the [snorts] AI people were begging for regulation to pull up the ladder. We'll see what happens. Like I'm I'm more fearful that that's their motive than anything else. >> Yeah. All right, you stopped shy of saying yes or no for that matter to it's corruption. So I have a growing thesis. >> Oh oh, I I'm sure they don't view it as corruption. Um although you know, to the extent that you're in you know, I don't think they I don't think any of them think it's corruption. I think they're just playing the game on the field. But but the problem is, you know, I I was really enamored I'm I'm kind of excited about stable coins cuz I've just been so pissed off at the US financial system for not embracing what I would call instant digital transfer. So every one of the seven other largest countries in the globe um [snorts] had the government fixed instant digital transfer a long time ago. In the UK it's called faster payment. [snorts] You can go straight to Wikipedia and read about UK faster payments. They put it in 20 years ago. And you can move money instantly for almost nothing. And in the US, you know, ACH is 3-day settlement. What the hell are we doing? It's 2026. And [snorts] in China and Australia and recently there's something in Argentina called I think bricks. They they just pushed this through like 6 years ago. So here's a country that everyone would admit is behind us from an innovation standpoint who just did this thing that the UK did 20 years ago and you can go look at it and we still can't get we still can't do it because the banks fight it, you know. There's a program called FedNow that's supposed to do this that's on the slowest roll you can possibly imagine. And I would when when when they would talk about FedNow in front of the financial committee, I would turn on what is it C-SPAN or whatever and I would watch and I would see the congressmen and senators that would >> [snorts] >> would be anti-FedNow and I would immediately go on to that website that lists who their donors are and you'd see large banks. Boom boom boom boom boom. You know. And so the problem the problem is I mean I I'm a big believer that Citizens United was a bad thing. Like these super PACs, like anything that allows more influence. And there's another crazy thing that I learned in the Turbo situation is [snorts] your senator and your congressman, the minute they get on committees, they start raising money outside of your geographic area. That should just be I think it should be illegal, but it's it certainly just send off an immediate alarm. Like like we live in a day and age of blockchain. Like if you raise money from a campaign contribution from someone in California and you're a Tennessee congressman, like that should just be instantly like what the hell are you doing? Like that's not your constituency, right? It's not. Like you know. So I I think and there may be things to do there. Like to create more awareness of those things, you know. >> Okay, so you're somebody that thinks through how we start untangling some of these things. One of the things that I found really interesting that you mentioned earlier is what they do in China to create competition. The analogous situation here would be interstate competition. >> Yeah. >> Do you think that's a potential solve or it's like, "Yeah, if you want to do stupid decisions, you go do your stupid no free Wi-Fi for you decision, but we're going to do free Wi-Fi." >> Yeah. >> Is that a way that we could start >> it can be. I think it can be and I I've recently become aware of a professor at Harvard, Thomas Kane, who I'm just learning about, who's trying to analyze different policies in K-12 and amplify the ones that are working better. That's something I'm excited about with the Policy Institute. People have asked me, a lot of people have asked me about the proposal in California for a a wealth tax, and I'm My opinion on it is, okay, they can try it. Like like let's see what happens. Like like let's run a bunch of experiments. I'm I've been told, and I'm still learning on this, that James Madison thought about this in the Federalist Papers, that he said, "People can move. We have a federalist system where there's there's federal laws and state laws. Let's run a bunch of experiments and see what works." And I think people might migrating is a is a great pointer to People are migrating towards probably towards good policy, right? Like I'm I'm sitting in Austin. Is it super hard for a lot of people to understand, and we should talk about it as loud as we possibly can. One of the fastest growing cities in the nation, rents have fallen for 4 years. That's good policy. Like half half of the country is up in arms because they say they have a housing crisis and housing's too expensive. Just come look at what's happening right here. Just study it. Like like it's it's solvable. Like and it's all a bunch of NIMBY like [snorts] build policy that they pushed through. Like they actually changed the policy, and [snorts] that led to more building, and that led to rents falling. Like like zoning policy, building policy. Like it is it's happening. It's like really happening. You can see it. There's a solution to this problem, and the states that have the problem and cry about it don't [snorts] do what Austin's doing. They do a lot of other things that's bad policy, and this is Yes, I think state versus state competition is a super interesting construct. Um, and [snorts] I think I think I can do a good job of of hopefully working with others and academicians of finding good policy and finding bad policy and shining a light on both. We can just make it positive. I'm fine with that. Austin has a solution to to housing prices. Positive. Everyone should study it. >> Now >> And by the way, Houston's done something really similar in homelessness. Um, and there articles you can go find on that. Houston's had a number of policies and they've reduced their homeless population by 2/3. Go study that. Go talk about that. >> Now, given that we have big wins like that, whether it's housing or homelessness, and yet they don't matriculate out to the other states, uh, is that politicians suck at creating, uh, financial models? Is it that, uh, they're just too good at storytelling? Like, is it that they get federal dollars and so they can paper over problems? Like, why doesn't that competition work in America in the way that it does in China? >> Some of it comes back to that quote Milton Friedman quote I had. I think people elect politicians based on what they think their intentions are versus what they're actually capable of doing. Um >> Do you think we can change that? Can we get people to pay attention? >> I don't know. I'm going to try. Uh, you know, I think shining a light on these policies that work and >> [snorts] >> is is worth the go. Like like you know, the similar to the nuclear thing that I mentioned. I I think if we talk about it more and people that are good at communicating can highlight it more, like no one should be able to have a discussion in a city that has a problem with housing prices and not be able to respond to a question about well, what are they doing it Like, that just shouldn't happen. Um it may take it may take people like you Tom. I mean the the it it's it it's not clear to me and I don't want to like go deep into this but it's not clear to me that the mainstream media is as um interested in uncovering this stuff as they used to be. Like and they used to be quite interested in it, you know? Uh although although to be fair on the Austin rent thing, you'll find plenty of articles. Like if you just go do a search, there are plenty of people talking about it. But I think you can get more people talking about it like like we are right now. Like I think it's possible. >> Yeah, it's interesting. When I do when I cover stories like this, they will um they'll be a base hit. It's rare that it really um goes viral. If I want something to go viral, it both has to be I have to get incredibly emotional about it. Uh which that may speak to just what people want from me and not necessarily something global. Uh and it needs to be something that triggers their emotion as well. And I think that's a big part of the problem. So while I think yes, it's good to shine a light on it and all of that, but as somebody who's spent the last call it 10 plus years mastering the algorithms, which is basically mastering human emotion, um you go down a path that I think people will recognize in the way that social media distorts behavior far more than it um does something positive. So I worry about that. On the policy side, I just keep coming back to um you know this about me, my audience certainly knows this about me, but I spent now almost 25 years as an active entrepreneur being able to pay people salaries by my ability to generate things that are profitable. And you it forces you to focus on uh cause and effect, what actually works, what's profitable, cut what's not, focus on what is. And we don't have that feedback loop, certainly in the US, I think because of central banking, the ability to run deficits, and money print. And if we don't get rid of that, I I think you run in Ray Dalio's big debt cycle, and there's no way around it, and the entire will collapse in roughly 250 years, and it just is what it is. Do you see a way out of that loop, [laughter] or are we trapped here? >> You're channeling David Friedberg's in in the same mindset. I Look, I don't um I guess if I felt that way entirely, I would probably just go fishing for the rest of my life, and and wouldn't wouldn't be talking to you right now. Like like like like what's the point of Like I don't I don't want to roll around in it if it's if the if it's inevitable. Um and so I'm going to go tilt against it, you know, maybe maybe >> is it tilting, or are you just holding on to like a feeling that maybe it's possible, or can you anchor on something that's like, "No, no, no, I've seen this thing that tells me that we've got a shot." >> Yeah, I mean, like on this state stuff, you know, it's not just like so certainly Governor Abbott is very much about moving red tape out of the way here in Texas, and as a result, you know, Elon moved all his companies here, and there's a lot of positive momentum um around data centers and other things coming to the state of Texas, semiconductor factory, like all kind of stuff. And that's been true in Arizona, but I would also say, like [snorts] if you look at Pennsylvania, Shapiro um the the highway went down, and they got it working again in like 12 days, and he did it by moving red tape out of the way. And and then it's celebrated. And if if a if a if a politician is going to stand up and tell you, "Hooray, look what I did. I got government out of the way." >> [laughter] >> I think it's kind of funny, but why get them out of the way out of the way just for an emergency? Let's get them out of the way for everything. And so, you know, look, there's part part of why I love studying China, both the provincial competition, but also how fast they're building things. Dan Wang's book, Breakneck. Um people need to be aware of what's possible, you know, and it costs 4x 400% more to build a a fission nuclear plant, 70-year-old technology, in the US than it does in South Korea or China. Get in touch with that. Get in touch with that. Like and every politician, that should scare the living hell out of them that that's true. And they should want to know why it's true. And and you know, to me, why wouldn't you put a government task force together to go figure that out? Like I think the NRC is all structured poorly. The Navy has tons of insight. They've they've used nuclear technology forever with no incident whatsoever. Like let's go solve that problem nationally and figure out what the hell's wrong. Like I like or let's just pay South Korea to build one here and tell us what's wrong. Like like let's go figure it out. >> I love that. Um I I'm optimistic by nature almost to a fault. Um and I look at say AI, which I think is is as it's going to be as profoundly transformative as people say. It's already wildly impacted my business, increased profitability, increased top-line revenue. I mean, it's really been extraordinary even at my size. When you look out at that, uh Americans are terrified. The Chinese are not. Do you have a sense of like what's going on there? What either what thing do we understand that the Chinese should be afraid of or what do they understand that should make us more optimistic? >> One thing that happened on a recent trip there, I was having lunch with a venture capitalist, a Chinese venture capitalist, and he said, "You know, >> [snorts] >> one thing that fascinates me," he says, "every Chinese entrepreneur reads everything they can about American entrepreneurism. So, there's podcasts, there's blog posts, there's articles, there's interviews, they listen to 100% of it. Like, every Chinese entrepreneur knows what Elon Musk is thinking, knows what Anthropic's thinking, knows all this stuff." He goes, "There's zero in the other direction. There's no There's no American entrepreneur that wakes up saying, 'Boy, I wonder what Lei Jun at Xiaomi's thinking tomorrow.' Even though some of that content's out there. And so, that's pretty pretty eye-opening, just that notion, right? That they're learning from us and we're not learning from them. Um it's not a good fact. >> Mm, for sure. Now, do you have a sense of what their take is on AI that keeps them so optimistic? >> Yes. Well, this is an interesting thing. So, so the polling is I'm going to guess at the numbers, you may have read it in more deeply, but the like [snorts] 70% of Americans are worried about AI, and that number in China is like 20. And part of the problem is the doomerism is loudest at at at at the biggest AI companies in America. And I I I fear it's because they want this regulatory capture. It is It is one of the most If it's not regulatory capture, I don't know what it is. Like, I've never seen an entrepreneur stand up and say, "I'm [snorts] making this incredible technology, and by the way, my employees are doing secondary transactioning, stuffing billions of dollars in our pockets, but it's really scary and it's going to kill us all. I've never seen this. I've never seen it before. My only explanation is they want regulatory capture, but I I don't know. But it's having a lot of perverse effects, including what you're talking about, sentiment for the whole country. Um >> [snorts] >> Yeah. And by the way, if we put a whole bunch of policy on top of our AI systems, I think [snorts] we're going to I think what may happen, if you look at what happened with the internet, there was a global market that the American companies served, and there was a ring fence around China, and the Chinese internet companies ended up serving that. Because China kept out Google and and Facebook and those types of companies. I [snorts] think what could happen with AI is we could build a fence around ourselves. And China could end up serving the rest of the world. I think that's already almost fait accompli in EVs and solar panels. >> Damn. >> But it it could be true with AI technology as well. >> Now, is that because they're outperforming us on the solar panels and EVs, or because we've done something from a regulatory perspective that just makes the hurdle too big? >> Both. I mean, Elon on Cheeky Point podcast said that he thinks American energy problem could be solved with solar panels and a huge section of Nevada. Like, [laughter] but but but he said the math won't work with American sourced solar panels, and that we won't do it because we won't put the Chinese panels there. >> Hey, do me a favor really fast because people aren't going to understand what that means. Tell the story of the COVID tests and the different I think it was Germany versus here. I was I didn't hear that. I was aghast. I was clutching my pearls hearing you tell this story. This is wild. >> Yeah, so so there were two types of COVID tests during COVID. One was the PCR test. That's the one that took 24 hours and um and was more painful and you couldn't do it at home. You had to go. Although that was probably a fallacy, too. I think the marginal cost of a PCR test was below $2 and the average price that was recompensate by the government was over $100. So I've heard all these stories. This is kind of I'll do it quick. I've heard all these stories of people that opened up PCR testing facilities, made $15 and retired. Like >> god. >> But but that was PCR. There was a much cheaper test which was the one that you can still buy at CVS and take home and and and you know, do yourself. Um the saliva test. And that one um that technology was like 40 years old and in Germany they approved 85 vendors and the marginal cost was about a dollar. Um like you could buy a test for a dollar. Here in the US they [snorts] the the the team at the FDA that that regulated this, the guy that regulated it and I had him in the talk. You can go watch it. Had worked at these two companies before and they were the only two that got a license to do them in the US. So we only had two manufacturers and they charged like $12 a test. So 10x higher. And the US government even when they finally got behind those tests, bought them from them. So they used taxpayer money and and and I I went I had well, the the list is online but I had it in the presentation of the 85 vendors Germany approved. And so [snorts] it was a non it was a trivial commoditized technology that the government helped protect two vendors selling at god-awful high prices when it could have been super helpful to everyone to have for a dollar a piece. >> Yeah. >> Yeah, this is crazy to watch this play out in the energy markets. To see that in in the guise of we're going to help you to your point, they like what people are saying, but nobody ever stops to check to see what's actually happening. Which spirals me out of control when we look at education. I don't even have kids and I'm mortified that we spend more per student than basically anywhere else in the world and we're middle of the pack in terms of results and everybody's cry is to spend more money. And I'm just like this is wild. And then if you look at KIPP schools to the point about do these experiments, you've got KIPP schools in the same building as some of these government schools and the KIPP schools are churning out kids that are like often times you'll have brother and sister separated, one of them goes to the KIPP school, one of them's in the public schools, they're in the same household. >> Yeah. >> And the one that's in the KIPP school crushes it and the one that's in the public school does not. So it's like everything that you could do to make it a natural test where there's a placebo control, you've done and and we still cannot get people to do like school vouchers so that parents can vote with their feet. Like this kind of thing literally spirals me out of control. >> But it's happening. Like like like I had mentioned this professor at Harvard Kane. He's he's studying this. School vouchers have been passed in in Texas and that's the state-by-state experiment. So it's playing out here. So like stay tuned. I'm going to I'm going to go tilt against this also. >> Oh, that one, man, I really hope you tilt hard. As again, somebody that doesn't have kids, but nonetheless I become obsessed with >> problem. >> Yeah, with you know, making sure that we are educating the life out of our kids. Again, this goes back to partly because I don't have kids, I want to pay something forward to the next generation. Uh and then partly because I am so um focused on Thucydides Trap and how to be the ones that don't end up in open conflict. >> Which >> doesn't happen nearly as often as conflict, but um getting us up to snuff, getting us excited to be Americans, getting us excited to compete and you know, really wanting the best and the brightest uh and to see that meritocratic push to get people to really like do something great. And that certainly what it felt like to me in the '80s was like America was the hotbed of like we could do anything. Like you >> Well, and Joe Joe Leman's tilting at some cool ideas as well with Alpha schools. So, we'll see those play out as well. They're going to expand that pretty dramatically and license the technology more broadly. >> Oh, let's go. >> Yeah. >> What do you think is going to be the role of AI in education? >> Well, so if you listen to him, this is Alpha school, Joe Leman, who's done I think he did uh Patrick O'Shaughnessy and then recently Shane Parrish. I haven't listened to that second one, but you can go listen to him talk about it. Um they they use AI for the rote learning in sciences and math and and and talk a lot about pacing. So, he he says in any given classroom the kids are all over the map in terms of how far along they are, but the teacher's forced to teach a curriculum that's that's fixed and the all those kids should be on different pacing and different cuz they're all at different spots. And one of the problems that happens in our system is if a kid's not properly taught math in kindergarten or first grade or second grade they get to third grade and they're they don't have the things they need to listen to that. So, they got no chance. Like they need to they need to go back and catch up. And so, one of the thing he's optimistic about is more personalized learning where everyone can kind of come along at their own pace. Um which which we'll see. I don't I don't have any way to know if that will work writ large, you know, and I don't have any way of knowing if every single child in every position in the socio-economic ladder can engage with AI in that way. Let's go Let's go test and find out. >> You've talked about when you're investing, you're always trying to do pattern recognition. Do you see any patterns in AI that map to other technologies that give us some clue where this is going? >> I mean, the one that's obvious that that doesn't need much discussion is like venture capitalists see these waves and they know they're they're disruptive and so they get behind them. And in in that way, AI's the same as the internet and the computer and all these other things. I think the venture capitalists have properly identified that this is going to change things and it already has in certain fields. I've talked to lawyers that have, you know, substantially reduced the number of paralegals that work for them, you know, as an example. So, it's already happening. The [snorts] um number of doctors that are now leaning on AI for second opinions is like 70% of the field. So, like this is this is already happening. So, so um I it's harder to think about it in terms of business models and winners and losers. The it it you know, venture capitalists will talk about stacks and different places in the stack. So, Nvidia's, you know, at the bottom of the stack and some application companies at the top and all these people are in the middle. There's hosting companies and there's model providers. There does appear to have been a move recently by OpenAI and to [snorts] embrace [clears throat] direct customer connectivity. You know, so one business model they could have, which they have had in the past, is we'll sell the token machine to a third party and that third party will turn it into a application. So, think >> [snorts] >> you know, Anthropic powering cursor that people then used for programming. More recently, Anthropic's launched their own competitor to cursor. So, that this move to say I want to be directly connected to the customer is a sign, I think it's a pretty strong sign, that there was fear that being a model provider solely um [snorts] was was as protectable as they wanted it to be. Cuz people were switching out the model, sometimes with open source from China and things like that. Um but if you have the customer lock-in and contract in, you don't have to worry about that as much. So, that's one thing we're seeing. >> Do you think AI is a bubble? >> Well, that that's a that's a very interesting question. The There's a I've said this before, but there's a wonderful book by Carlota Perez where she [snorts] she says that only real waves cause bubbles. So, when the question's asked, there's this [snorts] notion of, well, if it's a bubble, then AI's not real. >> Right. >> And you get into this argument. You know, what happens is when there are real waves, people get rich quick. That's already happening here. These huge secondaries at at these AI companies. So, people are stuffing billions of dollars in their pocket. When people get rich quick, it attracts interlopers and charlatans and you know, And this, by the way, this was true in the gold rush. Like, this isn't a new concept. Like, if people are getting rich quick, everyone rushes in. And that's what creates bubbles. So, yes, I'm seeing actions and activity that looks speculative and and that probably is over risk-seeking. And when will that correct? I don't know. It's a very big wave. There's real customers buying real products. There's people taking massive bets, the biggest bets ever taken in the venture capital world. And it may be that that some form of correction doesn't happen until uh 5 years from now. But there will [clears throat] be one day cuz the spec the speculative part is showing up. >> And how do you think about investing through something like this for the average retail investor? Like what should they do? >> tough, man. Like at this point, like the odds that you're going to have some kind of insight around some AI company when they're raising money at the highest prices they ever have, like I think it'd be foolhardy. And by the way, if you just had the index, you're pretty well exposed. Nvidia got so big as a percentage of the index. Like if you just had an S&P index, you have a pretty strong Nvidia position. Like And you certainly have Microsoft and Google. Like you're doing well. Like that that that that back to Burton Malkiel, like that generic advice would have served you fine for the AI wave. >> Now, [snorts] do you think that AI is going to have the kind of job disruption that we're expecting? We've We're on the back right now of a bunch of layoffs, but you've got Marc Andreessen who's saying, "No, no, no. This is not because of AI. This is them just using a PR excuse to right-size our organizations." And other people saying, "No, no. This is AI." >> Yeah. I think both are true. I mean, I think I think anyone that does a layoff today is going to write it in the "Oh, we're just being smart." Like why wouldn't you? Like it's just such an easy take and I think Square was the one that kind of kicked us off and plenty of people pointed out that on a employee revenue dollar per employee basis, they were like three or four X many of their peers. So, highlighting the the fact that they needed to get fit. You know, regardless of whether, you know, AI might help or not. And so, I think you're going to see some of both. Um Yeah, I I I go back to what I said earlier, whether you're a company or an individual, if you're worried about AI disruption, become the most AI enabled version of yourself you can possibly be. If there are 30 Let's Let's just pick something. Let's say there's 30 paralegals at a law firm and you're of the 30, you're the one that knows most about how to use AI to do what a paralegal does, what are the odds you get fired? I think it's very low. >> Mhm. Yeah, for sure. >> They're going to want to keep you around to run the AI tools. [snorts] >> [laughter] >> Yeah, I I try to get people to see that same thing is yes, it's entirely possible that the jobs market as we understand it now becomes um very different in the future, but you want to be the last man standing. And so, if you're the most efficient because you are leveraging AI, you're going to be in a really good spot. Now, I do think there's one question around AI. When When I talk about what I see in the future, I at least in my own mind have to be very careful to delineate between um AI as it stands now, which is a phenomenal tool, but it doesn't have a good taste unto itself. It will routinely make things up and so, you have to know how to catch it when it's, you know, getting into a problem. You have to know which answer is better than the other. But then there's where it could possibly, it's not there yet, but it could possibly get to the point where it becomes recursively self-learning and actually becomes super intelligent. Do you have any um mental model for whether this is likely to become more intelligent than humans? >> I'm not bought in yet to the notion that that will happen. Um I I I'm one of these big believers in that phrase uh what is strong opinions loosely held. So, my strong opinion right now is that's not going to happen. I know that it's that's that's certain people believe that it will and I know other people that that are skeptics on that. Um Regardless, like you have to know what it's capable of at the edge of your field, you know? And and the only way you're going to do that is by playing with it. I I've met many mostly academicians for some reason who are skeptics and they got it to fail once and that's the memory they locked in their brain and then they quit testing it. And I I said, "Well, when did you do that?" And I said, "Have you tried that experiment across four versions of the same AI bot cuz you can do that now. You can go back and use the older versions." And if if it's getting better, you should be be aware of that. Like does it still make that mistake or not anymore? And if it's not anymore, then you can't sit around and tell me that it doesn't work because of this thing you did. They're definitely getting better. And so, like knowing what's possible, certain fields are going to be more deterministic than others. Um I'm not saying to do it 100 like I'm not saying rely on everything it says 100% of the time, but it it can turbocharge what you do. And if [snorts] you listen to different people explaining, especially like small business people, talk to go out in your community and talk to small business people that have figured out that how this can help them and listen to the list of things they have it doing for them, it'll blow you away. >> That's wild. When you look at the way that we could do AI that would be better for humanity, do you think open source or traditional um proprietary companies? >> I'm I'm a big believer in open source for almost any technology. I'm I'm probably out on a on some kind of wild edge of the curve where I actually think the patent system may be a waste of time and just get in the way. And part of it comes from being exposed to open source and how wonderful it is, but there's this great book by Matt Ridley called The Rational Optimist, and he says most progress, and I love that word, progress, in in the world has come from when ideas have sex. That's the phrase he uses. And the the easy example to imagine is you go back to an agrarian society, and and a farmer walks into market and tells another farmer how he can double his crop output by doing this technique. That transfer costs nothing. That idea went through, and then that other farmer goes home and his whole community prosperity improves. So, the teaching each other things that the other person knew is a free gift to increase prosperity. And to me, patents just get in the way of that. Um and and the argument that someone would use against me making that argument is, "Oh, well, what's the incentive to succeed?" But there are there is a litany of academicians that have developed new ideas without ever being paid for. Like like there's no proof I don't think there's any proof whatsoever that progress would stop if there wasn't an immediate economic lock-in. You know, I think may relate to regulatory capture of like a 17-year window and um open source is just another incredible uh data point against that argument in that people contribute tons of time and ideas to these projects with no immediate [snorts] economic gain. Um and and these technologies become building blocks for other entrepreneurs because they're free. Like it's just so that any entrepreneurial endeavor, [clears throat] if there's an open source alternative, they'll tilt towards it um because it just makes their job easier and cheaper. >> Mhm. Do you have a sense of why China is going open source? Is it just for the reasons that you said or do they see a way to leverage it? >> previous five-year plan, I think that's the 14th five-year plan, specifically mentioned open source. And I think what happened is for 20 years they're accused by the West of being IP thieves. Like flat out. Like just straight up called that. And so if you're in that place where you're accused of that and you see Linux and you see MySQL, this looks like a pretty good solution to your problem, right? Like Like the world has said this stuff's free. And so they got behind these programs and in a big way. Um on a global scale. They got I mean and this started 20 years ago. And so I think it's a it's a pretty good foil to the accusation of being a IP thief if you if you embrace this idea that that IP should be free. Mhm. Um and and and in AI in particular, there there's a situation there where there's probably 10 deep-pocketed players who are all competing and open source has become part of the competitive requirement, and that's super powerful cuz they can all co-learn from one another. It's wildly powerful. >> It's very interesting at the aggregate level, but I really just don't understand what is the thing that they use to build a moat to make sure that their company is successful. >> so my firm Benchmark has has has had liquidity events on over 10 open-source companies. Like you you come up with ways to do it. It's just more competitive. There's a notion [snorts] in economics called pure competition. You can also go find a Wikipedia page on that. And in pure competition, marginal revenue equals marginal cost. And that's what drives the most prosperity for everyone in the eco for all the consumers that are out there because you end up with the lowest price product. And that's pure competition. If you Things like patents and and lock-in and the regulatory capture, these things prevent us from getting towards pure competition. And so you end up with products that are priced too high. You end up with margins that are ridiculously high. Um so I think it's bad for consumers to have that stuff. But you can build businesses in pure competition. Like they happen. And and there've been tons and tons. [ __ ] MongoDB, huge public company around an open-source technology. >> Hm. So they're doing something like >> it in different ways. You sell support. You sell security. You sell like the >> do anything proprietary on top of the >> to Yeah. Yeah, there's a huge continuum of what open-source is. So different people use different licensing models and things so that they can have add-ons and that kind of thing. >> Yeah, it's interesting. So I've thought a lot about this primarily because as a video game developer, I've watched one of the more spectacular um sort of dramas play out where you who a game being developed that they allowed for modding, they didn't put tight restrictions around it, and then the modded game ended up being more popular than the original game, and so they spun off like a, you know, multi-billion dollar franchise off of this open-source mod, and the people who made the game are obviously traumatized uh because they didn't see any of that revenue. I don't even know if they're still around. And so, it's um it's fascinating because one of the ways for me to get attention for my game is to allow people to mod it and build off of it. Um and at the same time, I don't want to be a midwife to somebody going and building something with this thing that I'm investing millions of in. >> It's all good. It's all >> Is it, Bill? >> Yes, it is. Like, because one of the key reasons we've been such a big backer of open source is because open source has a distribution advantage, which relates to the mod thing you're talking about. Like, if if people contribute to it and adopt it organically, then you don't have to go out You're not You're not hiring a salesperson to go convince someone to use your technology. You're calling into an account that's already using your technology and say, "How would you like us to help you feel more secure about this and provide patches and help you with problems?" And so, the the it has distribution built in. Like, it's an >> That's interesting. You're right. It shifts the business model. It it's maybe less interesting in entertainment, but uh if you're willing to do a services model or you build something new proprietarily on top of it, it's interesting. I I've tried to >> saying it's good cuz it's competition. If you believe in free enterprise, you believe in in, you know, capitalism and why America can exist, it's just a it's a more intense form of competition. So, as a business person, you don't like it cuz it feels more wild and woolly, but it's actually better for the ecosystem. >> Yeah, it's Well, there's no doubt on that. It is just that businesses tend to be capital intensive. You're putting yourself massively at risk, and so you're trying to think through, okay, what are the reasonable things that I should be able to control? Um >> You would have a hard time convincing me that risk capital is in shortage in America right now. I'm seeing the most risk-seeking venture capital behavior I've ever seen in my entire life. >> Yeah, that's interesting. So, let's talk about why, because this is where I think you and I may view Well, I don't know. I'm going to give you my take, and I'm very curious enough we just look at this very, very differently. So, I believe that the world that we see, all of the distortions, all of the madness, basically come down to two things. You uh have a central bank that allows you to deficit spend and money print, and then we have been successful for a very long time, and that makes people think that success is just natural. So, I've explained this success is just natural part earlier, but the um the central bank creating massive distortions by making money cheap, deficits possible, and debt just abundant. Um what do you think about that? Do you think that's creating some of the behavior you see, or is it something else? >> Certainly the long period that people now call ZIRP, where we had near-zero interest rates, which was unprecedented in the history of the country, um led to I I think had that not happened, you would have had a correction in venture capital, maybe in private equity as well, um that I would have called it a healthy correction, uh but but because of it, and then because AI came on the heels of it, that correction never happened, and so you had this prolonged uh availability of capital that I do think has contributed to um what I described as the most risk-seeking, you know, venture capital movement I've ever seen. >> How much do you think that risk-seeking has to do with people understanding that because we're in an inflationary environment, if they don't get into an asset somewhere, that money's just going to be eaten away. >> When when it when when it was zero, I I >> [laughter] >> I've only met Warren Buffett once in my life and and it was at a group function, so we all had one question each and I said, "You know, we've had zero interest rates for like 4 years in a row and your DCF models just don't even work. They If you set interest rates negative, they they literally fall apart." And and I said, "So, how do you And and I said, "It just seems to create a bunch of of risk-seeking behavior." And he goes, "You bet you." That's what he said. >> [laughter] >> So, so yeah. So, I do think that Yeah, I mean, rates have come back up and and uh you know, and there's questions about the dollar and whether other currencies compete with it. So, it could I I would be a I would I'm a believer that healthy resets aren't are good, not bad. And so, I I I ironically relative to your concern, and I'm not as big of a Dalio convinced it's all coming to an end, but if I were, I would want corrections to happen because they get people more in touch with the reality of it all. >> What's the thing you anchor around that makes you think maybe Dalio's not reading this right? >> I I wouldn't go as far as to say like he's a very smart man and he's thought about this a long time in that little video he created. Like, I want [snorts] to crawl under a rock every time I watch it. So, he's able to convince me that it's a problem. Um and I also [snorts] think humans in general have a hard time looking over time. Um and politicians certainly um aren't held accountable over time. Um there it's an area where I think transparency can help. Like, there are states that don't have their public pensions on their balance sheets, what's that about? Like and and and [clears throat] so anyway, I I I'd like to go study it more. I I think um I don't find any I [clears throat] don't find value in the notion that that there's no way to stop it. And it goes back to what I said about fishing all day. Like Like let's go try and affect change to prevent that from happening. That's I just want to tilt towards that frame of mind. >> Yeah, no, I hear that. The thing that I maybe I'm tilting hardest against in my life is the K-shaped economy. So we've got if you own assets, you're winning. If you don't own assets, your life is getting more expensive by the day. Do you as you think about the policy initiative, do you think that there are things that we can do from a policy perspective to start bringing that gap back together? >> mean I think I think this exact issue you bring up was part of the impetus for my former podcast partner to to launch the Invest America that became the Trump accounts. Like like I think this was on his brain when he came up with the idea and it's one of the quickest policy wins I've ever seen in my entire life. Like the way they pushed that through and then getting private public partnership was was that's a policy win I've never [clears throat] seen the likes of. So Michael Dell put six and a half billion behind this and there's more momentum around it. And it's even given me an idea like I I keep wondering what if you could do that for teachers. What if What if public What if >> That's interesting. >> private donors could help create teacher bonuses in different states in a state versus state competition. Like a way to give back that feels and and and and I talked to Michael about it. Like it just felt he's got a huge foundation that's been doing charity work for 20 years and and there's a in your brain you're like, is this really affecting anything? Is this really working? And the notion of a direct transfer of wealth from one party to the other feels way more um >> [snorts] >> way more of a win in his brain and will actually then funding a non-profit that may or may not affect change, you know. So, anyway, that's an example of of of a very recent thing that has transpired. There's a lot of ways it could go wrong, but but it's interesting. Everyone should go to claim their Trump account for their kids. Not everyone has claimed them yet. >> That's wild. Maybe some people just don't know. >> Yeah, yeah. >> Okay, so you famously backed Travis Kalanick and Uber. Um you were, if I'm not mistaken, a character in Super Pumped. Um one, how true was that? And then in terms of accuracy of portraying you and portraying the events. Yeah, yeah. Uh and then I'll have some follow-ups about what what may make, since he's still very active, what makes him such an extraordinary entrepreneur? >> So, one, they had Kyle Chandler play him and he's way shorter than I am and and uh most of the females I know in my life say he's he's >> [snorts] >> differently attractive than I am. So, [laughter] I'll leave it at that. They seem to be fond of him. Um and and so I don't think he looks like me. Um the the story missed a couple things. One, um I think you know, Travis is an extremely intelligent, powerful, successful entrepreneur and um and and multi-faceted, multi-dimensioned and I don't think that came across for whatever reason. Um and so you don't accomplish things at that scale without that ability. And so and and and and a three-time entrepreneur. So he had he had he had done two before. They weren't as successful as he wanted to be, so he was motivated by that. There's just a lot of dimensions of it. Um the early days of the company were very traditional founder scrappiness and I think the first scene of the show they're in some bank building like really nice offices. That's just completely false. Like it was it was traditional grimy, whatever cheapest rent you can get kind of place, you know. So some of some of those pieces were wrong. Um >> Now, an idea that I've heard about entrepreneurship that certainly I've lived and totally understand is uh every startup begins as pirates and ultimately has to figure out how to become the navy. >> Yeah. >> Um I'm very curious. He seemed at least from the things that I can get publicly, he seemed very good at the pirate phase and maybe less good at the navy phase and I wonder if that's accurate A and then B um if you had to define for people what that pirate phase is, what are the things that make somebody good at that? >> Yeah, and and by the way that that idea, that metaphor meme you're talking about was a blog post written by Reed Hoffman specifically about Uber. So it >> Really? Oh, that's funny. I've heard about it second hand, but didn't know where it came from. >> yeah, you can go find it online. So Reed was writing about Uber and he made he came up with that uh construct. And [clears throat] and look >> Look, plenty I think you can find pirate elements in the early days of Bill Gates and Microsoft and Steve Jobs and and and Mark [clears throat] Zuckerberg. Like, you can find piraty things that they did, you know, early on. Anytime you end up touching government and and Uber in particular was in a field where there was immense regulation. Um that idea becomes more poignant because you're going to get judged at a higher level. Um you know, and we ended up in a situation where we had like five state attorney generals investigating us. Well, um and so it it got very real very fast. Um but but I think that I think that is a good I think it's a useful metaphor as you wrote it. A lot of disruption comes from breaking rules, and I don't mean like breaking laws. I mean breaking whatever best practice thought process there was before. Um and a lot of Elon's thinking and the reason he's able to build SpaceX and Starlink is because he was willing to doubt that the prior best practices were right and and willing to to try new things and go in a different direction. So, it's part and parcel with being an entrepreneur that you want to look at things differently. And and and quite frankly, some of the regulations were complete and utter [ __ ] There in in many of the largest cities in the US, there was a rule that a black car after it dropped its customer had to return to base before it went out again. And those laws were written by the taxi lobby. Written specifically by the taxi lobby. And no mayor in their right mind would want to get behind a podium and explain why that law was on the books. And so, we were successful as a company, when I say we, at Uber, in getting those laws removed from the books. And those laws should have been removed. Like they were they were they were stupid and unproductive laws that existed. And so there was I think having come up and seen some of that it [snorts] makes you more pirate, right? To to see those things out there. But there's a limit to it, right? And we certainly touched many of those limits. >> What's the role of aggression in a startup CEO? >> I think there is I would use a different word. I would use a word that's more like unwavering determined. Like like just you can't take them off of it. It's you know, in in the book we talk a lot about fascination. They have such a commitment to what they're doing that that they can't sleep at night like thinking about how what they got to do next and how they're going to make it better. So there's just just this is this unwavering commitment to what they're doing. I think that's critical because especially in this day and age with all this venture capital available, there's five other people that have the exact same idea you do, I guarantee you. Like there's no proprietary idea and you got to run faster. Like you got to run faster and better than the competition or you're going to get eaten up. There's huge rewards if you do it and get it right. >> Yeah, no doubt. Okay, so this idea being determined you've talked a lot about in your book Running Down a Dream. You mentioned earlier with what you were saying about Angela Duckworth, it's got to be something that you're super into. You've got to have the passion in order to persevere. So you've had this incredible career as an investor. Why is that the part of your experience that you focused on? What is it that you hope people will take away from this book? >> So I stumbled on this idea about eight or nine years ago. I was reading a bunch of biographies and I noticed this through line between these successful people that started at the bottom and were able to rise to the very top of their field. And I noticed they were all doing the same thing and I wrote it down the way I would write a blog post about marketplace companies or something and and it just kind of grew over time. I got invited to talk at a university. I gave the talk. Certain people saw it. James Clear saw it. And so that talk and like posted it on his blog post and so people started encouraging me to think about it as a book. And as I got post venture and read Arthur Brooks' book and started thinking about what I wanted to do for the world, this book seemed like it could impact way more people than a book on how to be a good VC. Like I just don't know that the world needs that second book. Um and so it became it it became a passion project. It became something that and and I've been I've I've been in communication with people that saw that that original talk ended up on YouTube that saw [snorts] that talk. The talk gave them the permission to change careers and go do something they that they're fascinated by and love rather than what they were doing and a bit flipped in their head and they're now doing this other thing and they call me and they thank me for it. And so I think the book certainly lives in the self-help category, but many of those books preach oh, if you adopt this frame of mind and do this every day and have this new way of doing [snorts and clears throat] things, you'll eventually be better. My my book's more trying to create this toggle in your brain where I say stop doing this and just go do this and then it'll get easier for you and you'll have more fun and you'll be more fulfilled and you'll impact more people's lives. And so I'm trying to I don't know how many people I can do this for, but I'm trying to give people permission to go do that thing. To go do that thing. >> the thing that you think in modern America or just modern life, depending on how globally this works, that is trapping people into, let's call it the safe path? >> I I I think part of it we talked about it earlier, but I think it's this the way that our educational institutions have evolved and the fact that these schools won't increase capacity leads to this hyper-focused and and and by the way, I also think there's just a genetic hereditary part of your DNA that wants you to worry about your kids' economic stability. Like and I don't I think it's very hard to get around. And so in certain cultures, you know, like people talk about the Indian culture being very pro-doctor. Like there's certain cultures that just push kids in certain directions. And so it it it was a lot about economic safety. And and I started this idea in this book before LLMs came along. So I didn't write it as a solution to that, but certainly >> [snorts] >> there is a awareness now that safe doesn't mean safe or safe isn't what it used to be. And so I think that's causing quite a bit of anxiety. And for anyone that has anxiety about their job, I would just beg them to give my book a shot and see if there might be a different path in their life than the one they're on. If you There was a Gallup poll done 3 years ago that said 29% of people call themselves engaged at work. I think those people are in a good place. I don't think AI's threatening them, but they had 59% in this category they call quiet quitting. They said they were ambivalent about their job. AI is is coming after the ambivalent. I guarantee you. Like like the the the best practices that you would learn in a physics class or an engineering class, those are in the model. Like, the wrote program the wrote algorithm that you had to memorize and use on the test, those are in the model. And if you're if you're fascinated about your field, you live in the nuance. You live beyond those things, beyond those programmatic programmatic things that you're taught to do at school because you're constantly studying the edge and what's possible. And that's what's not in the model. And so, I think the artisans, you know, and I think you can use that word broadly across fields. You've met sales people that you would call artisans, right? The best salesperson in your in your company is an artisan. There's no doubt about it. And they have things the models don't have. But you got to put yourself in that place. And the only way I think you can be in that place is if [snorts] you're doing something you're fascinated by. >> Mhm. It's very interesting how easily people get trapped either because they, you know, sure your parents are giving you something, but also economic security really does help. Uh it's a very real thing. And then I think also a lot of times people struggle to figure out how to make a living doing the thing that they love. Um in the book, how do you advise people? You tell a lot of incredible stories. And by the way, for anybody that's on the fence about whether you should read it, um the way that the stories are told is going to give you both an intellectual understanding and like this visceral emotional connection to what that kind of profound change can look like and how successful people can be on the other side. But how how do you advise them to like, "Okay, you've got this thing you like. How do we take that hobby and actually make it a career?" >> I I I personally and and the the the the intersecting people younger in their life will be super helpful because you have less economic realities, right? It's if you have three kids and a mortgage, it's a lot harder to be flexible. But, one thing I feel profoundly about is a lot of these fields that we worry about being places you can't make money, you can actually have a career and do just fine. There's an anecdote at the back of the book where I was at South by Southwest and there was a panel on bedroom musician or bedroom producers. These are people that can now produce an album from a bedroom because all the tracks can be sent to them digitally and like and and the room was packed and they had a line for Q&A and this this girl said, "I you know, I really want a career in the music field, but but my parents say you can't make money." And one of the guys on the panel, I I found him and his name's in the book, but he stood up and he said, "I've never met anyone that tried hard that wasn't able to have a career in music." Like like just kind of flat out said that. And the trying hard part it >> [laughter] >> I'm going to tell another anecdote. I was talking to the with a person that leads job placement at one of the top universities in this country about [snorts] the book and she says, "Well, what do I do with, you know, a poetry major?" And I gave her two examples from the book, a guy that writes about the Grand Canyon and a guy in Houston that writes about Texas border culture. And I said, "Look at these people. They they made a career in these fields. How's that different from poetry?" And she goes, "But they worked really hard." And I'm like, "Yeah, yeah." And and and and the unlock the the thing that that I would tell you is if you're fascinated by something, the work's free. That's the thing. That's like the key unlock here. People that are fascinated by something it doesn't feel like work. Like they're just having fun. Like and you can see it in what they do and how they go about it, and they love learning about the field. And the hardest part, I would say, and we call it the hardest part in the book, is finding that thing. And you might have to wander around. If you haven't found it yet, I think that's fine. Keep looking. You know, don't I don't know that you can manifest it, right? You got to find it. I don't think you can just make yourself. And I think that's why Duckworth had this change of heart a little bit about grit. Like it it just perseverance alone is not going to get you there. You you need to it needs to be free. You got to find that unlock. >> Bill, on a personal level, um some relationships end because the two people fall out of love, and sometimes a relationship ends because somebody falls in love with somebody new. Um you've had one of the most successful investing careers ever in all of human history. Um did you fall out of love with investing, or did you fall in love with something new? >> Um a little bit of both, I think. Um yeah, a little bit of both. I This This will sound ridiculous, and but it's true. I was watching a uh an episode uh of the the new Letterman series where he interviews people with the long beard. >> Yeah, my next guest needs some work. >> guest, yeah. And he had um he had Seinfeld on, and they they both mentioned this book Born Standing Up by Steve Martin. Have you heard of it? >> Oh, yes. It's very good. >> So, I went and read it immediately cuz they were both so emphatic, and I tore through it. And he spent, I don't know, 15 years grinding to get his big break, Steve Martin did. And then when he got it, it went vertical. Like it just like went and he progressed from nightclub to arena faster probably than any comedian had at that time. Like he just instantly was doing big shows and one day he was on the stage in Vegas and he looked up in an arena and the upper deck was empty and he never went on stage again. >> Wow. >> He never went on stage again and he went and had an incredible career as a as a actor and became a famous banjo player, won some Grammy. And so anyway, after I read that, I was like, I'm going to hang them up soon. Like I'm going to stop soon. Um not because I couldn't have kept doing it, but I had such a awesome career and loved it so much. I didn't want to hang around and start being less good at it. Does that make sense? >> Yeah, oh yeah, yeah. There's a quote that that haunts me which is that genius is a young man's game and man, I really don't want it to be true, but I certainly get all the reasons why it probably is true. >> Oh, it VC's definitely a young person's game and I said that my whole career and we Benchmark is famous for bringing 27, [snorts] 28 year olds in as general partners which is when I got invited in at that age and there it tilts to towards youth in so many ways. They're fascinated by the new stuff. The the age of the new entrepreneurs much more likely to be their age so they connect with them. Um hustle hustle man, venture's a hustle job. And it's harder to hustle as you get older. It's just harder. You have more You have more things in your life. It's harder to hustle. So it bends towards youth and I knew that and I had talked about it forever. So those two things simultaneously made it very easy for me. And as you can tell, I have enthusiasm about these new things I want to go do. >> You know. >> Yeah. No, I love it, man. I'm so glad that you're going into this new phase. I'm super grateful that you took the time to talk to me today. Where can people find you, find the book? >> Yeah, the book's everywhere you can buy books. It's called Running Down a Dream. If you type dream and Gurley, g r l e y, into Amazon or Google or anywhere, it'll come up immediately. So, it's not hard to find. Um and I did Some people, for whatever reason, like my voice, which I am not fully in touch with, but I did the audio book. And so, if you if you like my voice, you got that opportunity as well. >> Rightfully so. I think when on a book like that, I think the author doing it is always much better. So, I think it's >> And I'm also hearing from people it's a great graduation gift. So, I'll throw that plug in as well. >> For sure. Yeah, great for that, great for anytime as it's one of the most important decisions you're going to make in your life. >> No doubt. >> That and who you end up marrying, those are woof. Probably the one and two biggest ones you're going to make. >> Although this one you can change. Like Well, I guess you can change the marriage one too, but >> I need a new people bill. >> Changing your career is more or less frowned upon, let's say that. >> Yeah, no doubt. >> dramatic, less dramatic anyway. All right, thank you so much, Tom. Appreciate >> taking the time, man. I appreciate it. Everybody, if you have not already, be sure to subscribe. And until next time, my friends, be legendary. Take care. Peace. If you like this conversation, check out this episode to learn more. >> America doesn't exist. There's blue America and red America and tech America and all these different subtribes within it. The word American is like the word Korean. >> Yo, you're saying something here, Balaji. >> Digitally, I disrupt Democrat jobs, and physically, I disrupt Republican