All-In with Chamath, Jason, Sacks & Friedberg - E48: The role of decentralization, China/US breakdown & more with Bestie Guestie Balaji Srinivasan

So we have Balaji here. And obviously, Balaji is an expert

in everything. But Balaji, you’re used to being

interviewed. One on one. I’ve had you on my podcast a couple

years ago, we had some major great discussions. You’ve been

on a bunch of other people’s but today we’ll see how you do on on

the squad here with five people passing the ball. You’ve listened

to the pod before.

Yeah, I’ll pass. So 20% each or whatever. It’s fine.

Okay, perfect. Well, we will have all in stats. We’ll do

trying to get 20% with this moderator. This says the guy who

has the largest percentage.

Look, you’re you’re supposed to be a non shooting point guard,

Jason. Nobody wants to see you brick three pointer after three

pointer. Just bring the ball down the court and pass it just

pass the ball.

Just pass it out of the way, Jason.

That’s coming from the guy who has 24% of airtime David Sachs.

Yeah, exactly. I fit exactly what I’m supposed to be doing,

which is one quarter. It’s statistically proven.

Rain Man, David Sachs.

We open source it to the fans and they’ve just gone crazy.

Love you guys.

Hey, everybody. Welcome to another episode of the all in

podcast with us again this week. Chamath Palihapitiya, the

dictator in just a great sweater. And David Friedberg,

you should touch this, you have no idea the material that is

made from it’s made from like the, the chin hair of like a

baby goat, baby goat, that’s then really locked by a Tibetan

Sherpa, who literally is forced to use lotion and camphor to

keep their hands soft so that they don’t disturb the innate

properties of the thread.

It’s amazing and available right now two for one at Kmart 1495.

I’m just going based on the aesthetics of the look. David

Friedberg is back the queen of quinoa recently having his

office hit by a skunk. Are you okay, David? Are you gonna be

okay for the show?

Be alright, just getting getting used to the condition.

But you’re on. You’re on Benadryl. And you did you get

hit by the skunk or just your office got hit by the skunk?

Well, my windows were open. Apparently it’s baby skunk

season here in Northern California. So there were some

baby skunks playing around.

God, sorry, I’m sure it’s not your returns.

Oh, my God.

Way too soon. And let’s move on from definitely too soon. And

from a nondescript motel eight somewhere in Texas, in Texas,

Texas. David Sachs, a coastal elite in Texas.

On mute. You’re on mute, David. We’re this is episode 48. You

can Yeah, I happen to be in Texas. That’s correct. I had

happens to be a tax free state. No coincidence.

happens to be a state where you can carry a gun now. Yeah,

exactly. And women are no longer allowed to make decisions for

their own body. So two out of three ain’t bad. What a great

place to live. Ridiculous. David, are you considering

moving to the great state of Texas?

Well, I’m open to the possibility. Let’s just say I’m

open to it. You’re open to it. But I you know, I recently ran a

Twitter survey where I asked Miami or Austin and Miami one by

about 52% Austin got about 48% with over 10,000 votes. So it’s

pretty interesting. And do you have a preference yourself

between the two? I personally like Miami, I already have a

place in Miami, but I’m checking out Austin to serve

you know, just for how close are you to 11? due diligence, just

for complete due diligence. So I think at this point, we should

just go through the cities that sacks doesn’t have a home. We

just that might be easier for us to narrow it down. possible

location. Alright, listen, people started haranguing us on

the Twitter to have some bestie guesties on the program. And so

we decided we were bringing Balaji Srinivasan Balaji

Srinivasan. Did I get it correct? I mean, I’ve been

pronouncing your name wrong for five years.

I mean, it’s a fucking ignoramus race. You are such a fucking

racist.

Listen, Greek names are hard to pronounce. I mean, it’s fine.

It’s fine. Balaji Srinivasan names. Balaji. Everybody gets

that.

Balaji. Balaji. Balaji. Balaji Srinivasan.

Moon Moon attides Srinivasan.

Balaji you’ve you’ve listened to just figure it out how to say

Polly hop at Tia. So

I have been training the world how to say Polly hop at Tia for

years.

Sri Lankan names are the only names that are harder than South

Asian names, or South India. Although Tamil names are pretty

brutal. I mean, yeah,

Tamil names. Basically, you guys add like maybe one or two more

syllables. So I actually have to train and

hours end in a vowel. The Tamil always ended a consonant, which

always says then you can just they take liberal license to go

on for another 20 minutes.

Can you guys just drop a few syllables from your names?

Like we could. We could. Yeah. But we don’t.

Ball Street. No, I Matt Polly.

All right, there’s a big tech backlash. And it’s not just

because of David Sachs comments, a new poll shows that 80% of

registered voters, wait a minute, wait a minute, wait a

minute, wait, before we go there. I have a question for

apology.

You are, in my opinion, but I think a lot of people would say

one of the most incredibly well read, thoughtful, you know,

commentators, commentators that we have, frankly, like, you know,

not just in tech, but I just think generally, in our society,

I would give you that I think you’re incredible. I’m curious,

how did you become such a polymath? Was this just one of

these things where you’ve always been curious about

everything? Like, just tell us about I’m curious about like how

you grew up, first of all, and then second, how do you spend a

normal day? I just want to know those. And then then we can just

jump in. I’m just curious, because I’m sure extremely well

read and extremely knowledgeable.

Well, thank you. I appreciate that. Um, you know, I try to

learn from from everybody. What do I do? I think normal people

go to the club, or they they go out and have fun. And I read

math books and history books and science books and stuff like

that. That’s how I have fun. I find that more interesting.

Nothing wrong with with going out people do that I go for

walks and stuff, I work out. But so I do a lot of that. And I

have I mean, other than that, I just, I just read a lot. And I

think I remember a moderate amount. And so I cite that. And

for me, I think it’s something really much more complicated

than that. But that’s it.

I think we call that a polymath. The TIA.

The only difference is Chamath would be you, if he could stop

going to the club. And he lost that last 40%.

I will make an observation, which I was actually talking to

sacks about this, which is, there’s some people who are

great at business and learn the tech because that part is

necessary to put it together. And there’s some people who are

fundamentally like scientists or academics, and then get into

business in order to advance technology. And there’s nothing

wrong with the first group. And I think that’s totally, you

know, fine and legitimate, like business people first, and then

they get tech. I’m really part of the second group, I think

where, you know, I’m fundamentally an academic at

heart, you know, I spent almost the first three decades of my

life meditating on mathematics, and just kind of got into tech

relatively later in life than many others.

All right. And you spent your career building companies,

everybody remembers earn.com.

By the way, that’s actually doing extremely well at

Coinbase. Coinbase earn is on track for 100 million revenue.

Actually, it’s much more than that in terms of GMV, it’s

broken out separately in there. Not their s1, but their

quarterly filing. So you can go and check me on that. And the

other assets that we added after I joined Coinbase are more than

50% of Coinbase revenue, again, in their filings, and Coinbase

custody and all of its assets come from Rosetta, which is

something that we did there. And we launched USDC when I was

there. And that is whatever $100 million a day. So they got a lot

of value out of that acquisition.

Just and you were the CTO for a while of Coinbase. Obviously,

what was your take on Coinbase’s lend product, the SEC coming in

and saying, Hey, pump the brakes, we want a bunch of

information. And then they’ve just Brian Armstrong and

Coinbase announced that they’re not going to do the land

product. What’s your take on that?

So I don’t speak for Coinbase anymore. Okay, I’m, you know, in

my personal capacity. But I do think that this is sort of the

beginning of an era where we’re going to be rolling back the

alphabet soup that FDR put in place. That’s to say, you know,

the SEC is not set up to go after millions of crypto

holders and developers are set up to go after a Goldman and a

Morgan, you know, just like the FAA is not set up to go after

millions of drone developers to go after Boeing and Airbus. And

the FDA is not set up to go after millions of biohackers

are set up to go after you know, Pfizer and Merck. So the entire

20th century alphabet soup that regulatory apparatus is

meeting something that it’s not really set up for. And it’s

going to be it’s the problem is not the problem is not any one

actor like Coinbase or crack and or what have you their problem

is that technology has shifted. And they’ve got many more people

to deal with. And many of those are individuals who are more

risk tolerant than companies. So, so I don’t think they’re

going to be able to maintain the status quo of 100 years ago, the

statutes that they’re citing, I think that’s going to either get

knocked down in court, we’re going to be technologically

invalidated, there’s going to be sanctuary cities and states

for crypto, or there’s going to be international entities like

what El Salvador is doing in Switzerland. So I don’t believe

that that era is going to maintain, but I think there’s

going to be a big conflict over it. So we’ll see.

How do you think it’s different this time, though, apology to

the like, crackdown, because folks said the same thing. Going

into kind of the Napster era, when you know, everything was

basically peer to peer sharing of media files that were

technically copyright. And there was, you know, some regulatory

regime that, you know, had oversight over that copyright.

But then the DOJ got wrangled in, and they went in, and they

made an example out of arresting a couple 100 kids, I think, and

it basically caused everyone to back away entirely from the

market, similar to kind of what we may be seeing happening in

China right now. But is it not possible that we see a similar

sort of response this time around, where they kind of take

this targeted make an example approach to kind of share people

scare people kind of out of the the frenzy that’s, that’s, I

think, driving a lot of people onto these platforms, rather

than going after the platforms themselves. So kind of saying,

Look, this is this is a violation of security laws, you

guys are getting prosecuted. Here’s the 100 examples. And

suddenly 80% of the attention kind of gets vacuumed out.

Yeah, so I’d say a few things about that first is, I think

2021 is different from the year 2000. In the sense that China is

an absolutely ruthless and very competent state. Whereas the US

government, I would consider, you know, it’s a difference

between lawful evil and chaotic evil. You guys know that from

Dungeons and Dragons, okay. So the Chinese government is

lawful evil. They are very organized. And they plan ahead.

And when they push a button, they just execute, like, like

this whole society, and they don’t leave, you know, round

corners or things left out. The US government is today in 2021,

not the 1950 US government, the 2020 US government is like this

shambolic, chaotic mess that can’t really do anything, and is

optimized for PR and yelling online. And that’s a whole

important topic. But to your so that’s one thing where I think

there’s a difference in just state capacity. But in that’s

not to say that they’re not going to try with what they’ve

got. The other thing is that, so to your Napster point, there

was thesis and antithesis, but there was synthesis. That’s to

say, you know, Napster led to Kazaa and LimeWire. And

actually, the Kazaa guys went into Skype. So something legit

came out of that. But the more important or more on point thing

is, it led to Spotify and iTunes, the record companies

were forced to the negotiating table,

there was a there was a way point there that’s important,

which is good. When that happened in Napster. We, we ran

a company called one amp, and it was part of AOL. The biggest

architectural flaw of Napster was it’s a llama’s ass. And and

well, the biggest problem with Napster was that it was it was

not fundamentally peer to peer. And so there were these servers.

And so, you know, the the simple software architecture decision

that somebody had to make was okay, well, let’s just make a

entirely headless product that basically is a fundamentally

peer to peer. And that’s what the Nutella source code was, we

actually released that on AOL servers, without them knowing,

it took them a few hours to figure this out. They called us

we shut the whole thing down. But in those few hours, it was

downloaded about five or 6000 times all this open source code

that we put out, that was the basis of limewire, bear share.

And that is what basically just decapitated the music industry.

And it was there that then the music industry realized we

needed a contractual framework to operate with these folks,

because they’ll just keep inventing technology that makes

us impossible. And then that’s what sort of that’s what iTunes

was able to do with a 99 cent store. That’s what Spotify was

able to do after that. But a lot of it started was because of

what biology said earlier, which is a technologically, people

just will continue to push the boundaries. And we did that in

music. And I think that’s a lot of why the industry looks the

way it does today.

But ultimately, the print, the print, the premise kind of

resolved back to centralized systems, right? I mean, like,

think about, you know, the Napster concept, it was really

supposed to be true peer to peer file sharing, and it ended up

becoming the iTunes store where everything sat on Apple servers.

And they ultimately that’s, that’s the reflexivity. Because

like, what happens is all of these folks, you know, you’re

sitting at Warner Brothers or Warner Music or Universal Music

Group, you’re seeing an entire industry that was worth probably

20 or $30 billion, just getting completely decimated. And then

there’s this psychological thing that happens where first you

want to shut everything down. But then because there’s this

other thing that is even more evil, and even worse and

uncontrollable than the thing that you hated, then you

actually say, Well, listen, my enemy’s enemy is my friend. And

so then you say, Well, fine, let’s find a few partners to

work with. And we can try to find a way of, of living with

these technologies. And that’s going to repeat your point

biology. crypto is probably now where we’re going to see it play

out first, because that’s probably the most important

intersection of individuals desire and regulatory framework

that’s outdated, where the SEC has some extremely complicated

questions it needs to answer, especially even after something

today, like if you’re sitting inside, you know, the SEC, and

all of a sudden, you see that that China, an entire country,

that basically was where an enormous amount of this crypto

activity started and originated and was happening, can

completely turn something off. What is our position as a

government and as a society? We don’t know?

Well, let me just fill everybody in for a second, who don’t know

what happens on the taping today, September 24. Chinese

government has announced that doing any transactions in

cryptocurrency is now illegal holding it. Apparently, you can

still hold it. And this comes after Bitcoin servers being

kicked out of the country. So yes, they’ve pushed the button.

Go ahead, Balaji.

To Friedberg, I would say, BitTorrent is what kept the

record industry honest. And that kind of forced them to the table

of iTunes. So to Chamath’s point, also, I wouldn’t call it

more evil, I’d call it more good. And BitTorrent also lurks

out there as kind of this, you know, peer to peer enforcer

that it’s a check, exactly. And it’s not gone. And in fact, it’s

a basis for new technologies. And I think this is another

flare up. The other thing is that with crypto, the upside,

even though the state wants to crack down on it harder, the

upside is also greater, and the global internet is bigger. And

so I think the rest of world, meaning all the world besides

the US and China, is a huge player in what is to come.

That’s India, but it’s also, you know, Brazil, it’s every other

country that’s not the US or China. And so that’s a new

player on the stage. And then third to Chamath to your point

about, yes, China banned crypto. Well, you know, what’s

interesting is, people talk about China copying the US.

Nowadays, actually, in many ways, especially on a policy

front, the US is copying China without admitting it. But it

does so poorly. For example, lockdown. Okay, the Chinese

lockdown, you know, was something where it wasn’t just

sit in your rooms, it was something with like, drones with

thermometers and central quarantine, where people were

taken from their families and centrally quarantined, and 1000

ultra intrusive measures that the population by and large

complied with. I mean, forget about a vaccine mandate, we’re

talking about like, you can see all the videos and stuff from

from out of China, the government itself is published,

it didn’t seem real at first. They didn’t seem real at first,

right? Yeah. And so you know, the thing is that for the US to

follow that it’s a little bit like as a mental image, imagine

a life Chinese gymnast going and doing this whole gymnastics

routine, and then a big, you know, lumpy American following

and not being able to do those same moves, right? The Chinese

government, you know, is is, as I said, lawful evil, but they

are set up to just snap this, snap that do this, do that. The

US government is absolutely not and the US people are not

whatever you do.

Also, our system is a democracy, is it not like so you cannot

just do that, even if the government wanted to weld people

into their homes, we have a democratic state here, we have

to discuss these things. And there’s a legal framework to it.

In the 1950s, and 1940s, 1930s, the US was still a democracy,

but it basically managed to exert a very strong top down

control on things. Today, we have something for where for

right, like, you know, under FDR, or in the 50s, a very

conformist society, which was able to kind of drive things

through, even though as a democracy, it was something

where mass media was so centralized, that a relatively

few relatively small group of people could get consensus among

themselves. And then what they print in the headlines, I mean,

who’s going to go and figure out the facts on their own, this

gets into the media topic later. So it’s de facto centralized at

the media level, the information production and dissemination

level. And then you kind of manufactured consent from there.

Today, it’s you’re combining that democratic aspect, the

legal aspect with a new information dissemination thing,

which is destabilized, I think a lot of things. Saks, what’s your

take?

Yeah, well, I’d love to get Balaji’s take on an article that

came out this week in the Wall Street Journal, I think it was a

really important article came about four days ago. And it was

entitled, Xi Jinping aims to reign in Chinese capitalism and

Hugh to Mao socialist vision. And the article describes how

we’ve all seen and talked about on this pod, how they’ve been

cracking down on tech giants have been cutting down their

tech oligarchs down to size, like Jack Ma, how he disappeared

under house arrest. And, you know, and we’ve seen that, you

know, they stopped the the anti IPO. But But this article went

beyond those steps and really talked about she’s ideological

vision. And what it basically says is that what’s going on

here isn’t just the CCP consolidating power, they

actually want to bring the country back to socialism. And

what they say is that that within the CCP, or at least

she’s view of it, capitalism was just something they did as an

interim measure to catch up to the West. But ultimately, they

are very serious about socialism. And, you know,

reading this article, I had to wonder, well, gee, did we just

catch a lucky break here, in the sense that look, they’re

abandoning or if they abandon the thing they copied from us,

which is market based capitalism, they use that to

catch up, maybe this is the way that actually, this is the thing

that slows them down. And the thing that that historically

that it brought to mind is that if you go back into the 1500s,

and you compare Europe to China, China, the Chinese civilization

was way ahead. I mean, it was the standard of living was way

ahead. Technologically, it was way ahead. Europe was a bunch of

squalid, warring, tribal nation states. And then what happened

is a single Chinese emperor banned the shipbuilding

industry, any ship with more than two mass was banned. And so

exploration just stopped in China, it they became very

inward facing, whereas the European states explored and

discovered and conquered the new world colonized the world. And

that led to an explosion of wealth and innovation. And as a

result, Western Europe, and then it’s sort of descended, the

United States ended up essentially conquering and

dominating the modern world. And so I guess, you know, to

bring it back to my question to biology, is there a chance that

what she is doing returning to socialism? Could this be like

the Chinese emperor who banned shipbuilding? Or am I reading

way too much into the single Wall Street Journal story?

So my short answer on that is, I think it is. I think the

socialist thing is real. But I think it’s better to call it

nationalist socialism. With the implications that has, whereas I

think the US is kind of going in the direction of what I’ve

called maybe socialist nationalism. You know, where

it’s, it’s like different emphases in terms of what is

prioritized, but you know, and I think in many ways, China is

like the new Nazi Germany woke America’s like the new Soviet

Russia, and the decentralized center is going to be the new

America, I can elaborate on that. But basically, with

respect to this, one thing I try to do is I try to triangulate

lots of stories. So rather than for example, and nothing wrong

with the Wall Street Journal, you know, the piece like

looking at it, but for every WSJ piece you read, it’s useful to

get like, you know, what is CGTN or global time saying even if

you discounted just to see what they’re saying, and then you

also triangulate with, let’s say, the Indian or Russian

point of view. And by doing this, you I feel that it’s

better than just reading 10 American articles. And, you

know, especially reading primary sources, like there’s this good

site called reading the Chinese dream, which actually translates

primary sources, and then you can kind of form your opinions

from that versus like, like a quote, hot take, right? I’m not

saying you are, I’m just saying that that’s what I try to do. So

I think we’ve really gotten China right here. I mean, I

think that if you if you look at what’s happening, I think we’ve

basically forecasted this orchestration of essentially the

revertical integration of China. You know, we have China Inc,

where the CEO is Xi Jinping. And where there is a, it’s, it’s,

it’s almost like they’ve, they’ve changed the game, where

what they are playing, essentially, is like, settlers

of Catan or something where the goal is just to hoard resources.

And I think that they have enough critical resources for

the world. And the clever part of what they did was the last 20

or 30 years, they leveraged the world to essentially finance

their ability to then have a stranglehold on these critical

resources, whether it’s ships, or whether it’s rare earths, or

other materials, they leveled up. And I think that was the

genius. Yeah, well, they leveled up, they leveled up on our

capital. Yeah. And now that all that infrastructure is there.

And now that we are addicted to the drug, they can then change

the rules of our operating system. It was a brilliant move.

But they allowed entrepreneurs to believe that they could be

entrepreneurs, they allowed an entire society to basically

level up. Why did nobody see this coming to month? Nobody saw

this coming. People were starting venture firms, look

what they were taking companies public.

They did Belt and Road while we did nation building in Iraq and

Afghanistan. Right? I mean, what is Belt and Road Belt and Road

is there a bill is they’re creating ports and super

highways to extract the resources that mouth is talking

about and bringing them into the Chinese system. And what did we

spend our trillions on nation building in Afghanistan? I mean,

why didn’t we see this coming? Everybody was looking at China

starting venture firms, they’re, you know, embracing it taking

companies public Wall Street, politicians, nobody saw this

coming. So the Rising Tiger stories been around since the

late 90s. Right? No, no, I’m talking about why didn’t we see

them cutting the heads off the answer? entrepreneurship spent

because it was not about white people.

China was in Sri Lanka. China was in Africa. These are not

sexy, interesting places. Western audiences, they could

you guys couldn’t give a fuck. Let’s just be honest. Okay. And

so that’s why it didn’t matter. Because you we thought we all

thought that these are countries that are sort of, you know,

squalid third world, developing nation states that don’t really

matter. They don’t necessarily have the resources that matter.

But what did China do? They realized that those folks are

the future GDP, those folks are the future population pools, the

young that can actually do the hard work, and then they went

and they secured again. So not only resources now, so that’s

one thing, hold on. So that’s one thing. I think we entirely

missed it. Because, as David said, the military industrial

complex doesn’t look at, you know, a developing nation and

say, we want to be there. It looks at Afghanistan and says,

we want to dominate it, because we can actually feed off of that

domination. So that’s one thing. The second thing is that I think

that we misunderstood Xi Jinping’s ambition. And I think

that that’s a reasonable mistake to have made. The first one is

an error of just complete stupidity. The second one is

something that I think it was legitimate to have missed. And to

your point, you’re off he they not only stole the

entrepreneurial playbook, but the colonizing other places and

giving them debt and giving them resources and building ports in

other countries. We thought it was dumb. Let’s all be honest.

You know, 10 years ago, no, we did it. No, I would argue

previously argue in a lot of cases we benefited. So China set

up and bought like the largest pork production company in

Australia. And what do you feed those pigs, you feed them

soybeans, and where do those soybeans come from? largest

soybean exporting market is the United States. You know, we had

a tremendous customer in China, as they expanded their

consumption pattern through all of this investing they were

doing worldwide. We were exporting john deere, farm

equipment and Caterpillar construction equipment and

soybean products and there was a and our knowledge industry and

there was a tremendous service model and globalization really

created call it a catch 22 for the United States, where you

know, we were watching the rising tiger, you know, it

fueled in part by this kind of distributed entrepreneurism. But

as that distributed entrepreneurism creates, you

know, obviously, the social

you think there is an equal amount of dollars that went

into Western developed nations from China as it went into

third world countries. No, but it’s Western nations couldn’t

give a shit about that money is too hard to turn down.

There’s a mistake in our thinking with respect to the

rest of the world that we’ve been making, we make over and

over again. And it was all kind of predicted by a historian

named Samuel Huntington. At Harvard in the 1990s, he wrote a

book called called clash of civilizations. This, this book

was written the same time that another famous book came out

called the end of history and the last man and what the common

belief was in the 1990s in the US was that we had reached the

end of history where every country would become democratic

and capitalist, right? That was the end of history is democratic

capitalism. And we believe that the more we went all over the

world spreading our ideals, it would hasten this day where

they’d all become democratic capitalists. What Huntington

said is no, you know, cultures and civilizations, these go back

1000s of years, these are stubborn things. And what these

other cultures really want is not westernization, but

modernization. And what they’re going to do is they’re going to

modernize, they’re going to learn from us as much as they

can about technology, they’re going to assimilate and adapt

and take all of our technology, but they are not going to

become like us, they’re not going to westernize. And that is

basically what’s happened over the last 25 years. And so the

Chinese have caught up to us. And suddenly we realize, whoa,

wait a second, they have not westernized, they are still

their own unique civilization. They, they have they have

basically the equivalent of a modern day emperor. And, and

they have no interest in westernizing. And we’re like,

what have we done? Because now we’ve allowed them to catch up

from a technological standpoint.

biology, why do we why do everybody in the West get this

so wrong?

Well, so a few things. One is political differences aren’t

public in China, but they are real. So it’s it’s all the

backroom stuff. And there was a real leadership shift from dang

and jang and who to to G. You know, the Mao era was

revolutionary communist, the dang jang who era was

internationalist capitalist, I think that was real. And the G

era is nationalist socialist. And it’s just different, like

who did not fully control the military the way that she does.

There’s this ad, you guys should watch the Chinese military ad.

It’s called like, we will all be here or something like that.

And the thing about it, it’s not just that it’s like, extremely

well coordinated military parade and set to be

intimidating, and so on. It’s that the whole thing clearly

just falls up to one guy. Gee, it’s not him riding in a car

with the rest of the Communist Party, flanking him as an

oligarchy. It’s just like one guy, this 2 million person army

folds up to him. That is a true consolidation and roll up of

power that he was able to accomplish, among other things

with tigers and flies going and throwing bougie Lee in prison,

go, you know, having generals, you know, thrown in prison for

whether they were actually corrupt, or whether they simply

you know, dissented or were political rivals. Yeah, it’s

hard. It’s hard to know from the outside, you know, in one sense,

because so many folks in the Chinese government were taking

bribes is almost like an equity stake in their province, you

know, like coming up, they’re like, Hey, you know, hey, grew.

So, you know, give me a cut. Every lot of people were

vulnerable. So he just consult he so it’s not something you

know, people will say, Oh, you know, the Chinese plan for 100

years, they don’t plan for 100 years, they had this huge war in

the 20th century to the nationalists and communists, the

ding, the ding transition, you know, his triumph for the gang

of four, that was not something Mao had planned. They’re human

beings like everybody else. And they had a real leadership

transition after three hours of continuity, then this is what I

think this is the key point you’re making, which is, I think

the reason that this actually flipped, and we didn’t see it

coming is because Xi Jinping decided, I want to have

complete control over the country, these other people are

getting too powerful. And we’re actually reading into this, that

there’s some crazy plan. It just could be a crazy man, not a

crazy. I really disagree with you. Why explain? But I mean, he

just decided, he just decided to basically take away every

entrepreneurs company, they were not trying to do they were doing

all of this stuff in plain sight. Okay. As an example, you

know, we view Sierra Leone as a place where we make commercials

about or we try to fundraise for or we send USA ID, they view

Sierra Leone as a place where there’s critical resources that

are dependent on the that the future of the world depends on

and so they will go, they will modernize, they will invest and

they will then own those critical resources. View, we

view Chile as a random country in South America that abuts, you

know, Peru and Argentina, they view Chile as a place where you

where there is the largest sources of lithium that we need

for battery production in the future. They were doing this for

decades, right in front of us. And the reason we did the

cutting of capitalism, hold on a second reason, the reason we

didn’t pay attention is because none of those countries mean

anything to us. Okay, so I agree with Chamath. And the

thing is, though, I’d argue that the blindness actually comes

from both ends of the political spectrum, like on the

conservative end, oh, these are shithole countries, basically,

you know, you can believe that if you want, but you know, it’s

something where, for example, COVID was only taken seriously

once it was hitting Italy and France, like China was still

considered like a third world country. But it actually also

comes from the liberal side in a different look like it’s slightly

masked, but it’s a condescension of not the

military industrial complex, but the nonprofit NGO, you know,

complex like, oh, the white savior with the NGOs, you know,

coming in and, you know, you know, pat them on the head kind

of thing. They’re not a not a big deal. And the thing about

this is like the one thing I think is a huge thing for

diplomatic core today is making any generalization about another

culture, which says that they’re not completely good, or that

they have some aspect to them that doesn’t match exactly to

the US, you can be called a racist for doing that. And so

this is the criticism of Islam. I mean, if you criticize Saudi

Arabia for throwing gay people off of buildings, you’re not

respecting religious

say that biology just gave the most precise delineation that

I’ve had. So I let me just repackage what you said, because

it resonated with me. Western philosophy tends to view

countries in three buckets. bucket number one are countries

like us, right? Those are the other Western countries, the GA

countries, they feel like we’re aligned. And then what happens

is you get this weird thing where then you move into like

countries where you basically either deal with it with woke

ism, right? Oh, let me go pat them on the head. Let me go try

to save them because it makes me feel better. Or you deal with

them as neocons where just like I let me go dominate them and

take them to war. And literally, you can take all 180 odd

countries in the world and effectively sort them into those

three things. And that I think is the problem with with the

America’s view of what we’re doing. And so what David said is

really true, which is that while we were doing this, we had

neocon war, woke ism, or you’re our buddy, because you’re like

us. The entire world reordered itself with completely different

incentives. And they did it right in front of us. And now we

wake up to realize, oh, my gosh, that was an enormous

miscalculation that we just did.

Yeah. So you know, if you look at kind of the history of the

West interaction with the rest of the world, and let’s talk

about colonialism, and whether whether you’re talking about

colonialism over the last few 100 years, or even you talk

about a microcosm, like Afghanistan, over the last 20

years, I would argue that there’s three phases to the West

interaction with these other cultures. Phase one is sort of

domination, right? Like Jamal was saying, phase two is

assimilation, where the the culture that’s been dominated

realizes that they’re behind and they want to catch up. And so

there’s a process of Americanization romanization. And

what they’re doing is they are learning from us and taking our

technology and it lulls us into a false sense of security that

we think they’re becoming Americanized. It’s not

alignment. It’s just they’re trying to catch up. Then the

third phase is reassertion, where the the dominated country

culture, you know, what have you reasserts its traditional

culture and its traditional views, because they’ve

modernized, but without becoming truly becoming Americanized or

Westernized. And we are caught off guard by that. And we don’t

really realize that they never really wanted our culture, they

just wanted to throw off, you know, American domination or

Western domination. And so what they’ve actually done is use

this period to, to basically assimilate and catch up. And the

reality is, like in Afghanistan, they don’t have to fully

assimilate all of our technology, they don’t have to

become as strong as us, because we are in their land, they just

have to become strong enough to basically achieve upgrade their

systems, right? They just have to achieve a defensive

superiority. It’s not an offensive capability. So it’s

much easier for them to catch up that we think. And we are always

caught off guard by this dynamic, and it repeats itself

over and over again. And what you’ve seen in in in China is,

you know, 3040 years ago, you had the great economic reform

of Deng Xiaoping, he laid out what they had to do, he said, he

said, abide your time and hide your strength, hide your

strength under a bushel. That was the great motto by Deng

Xiaoping. He set that policy for 30 or 40 years, they embrace

basically perestroika without glasnost. They reformed their

economic system, they copied us, but but not making Gorbachev’s

mistake of giving up any political control whatsoever.

And by 2012, they had largely caught up. And so I would say

that she was not an aberration, he was a reassertion, they had

gotten to a point of strength where they were ready for that

strong leader who was ready to reassert their basically their

ethno nationalism. And that’s the point we’re at right now.

And once again, we’ve been played for fools and caught off

guard.

Friedberg, but I mean, one of the side, one of the signs was

his corruption crackdown a few years ago, right? I mean, that

was kind of step one, where he took all these provincial

managers and kicked him out and put him in jail and started to

you know, clean things up internally, where there was

clearly kind of corrupt behavior underway. But you know, I’m a

couple points back, I do think it’s worth highlighting that, to

some degree, you can kind of try and diagnose his motivation or

diagnose the motivation as being, you know, rather not too

surprising, and maybe not too nefarious in the kind of, you

know, power grabbing sense, which I think we all kind of

want to bucket it as, but, you know, if there’s a population,

like we’re seeing in the United States, where, when you loosen

the screws on liberalism, and you know, you kind of allow more

freedom to operate and more kind of free market behavior, you see

tremendous progress. And as I think we’ve talked about in the

past, tremendous progress always yields, you know, a distribution

of outcomes amongst the population, but everyone moves

forward, some people just move forward 10 times faster and

farther. And it causes populist unrest, right. And we’ve seen it

in the United States. I mean, if AOC, Elizabeth Warren and Bernie

Sanders were elected to kind of be the, you know, the

triumvirate that ran the United States today, they would

probably say, let’s end all you know, this capitalism that’s

creating all this wealth in the United States, and progress

generally would slow down. And I think that there’s been inklings

of that. Clearly, there’s data to support the inklings of this

in China, that indicates, you know what the the loosening of

the screws has allowed tremendous progress, but it’s

time to tighten the screws, because populism and unrest is

going to arise from kind of perceived inequality, just like

we’re seeing in the United States. And, you know, I

guarantee or I can’t guarantee, but I would assume that if you

know, certain populist leaders in the United States have the

same level of authority that Chinese leaders do, they would

probably act in the same way.

I think what we’re gonna see next is, and I think we should

talk about what we think will happen next with China. I think

China’s on the brink of having a revolution. If you look at what

happened to the Uyghurs, obviously, you can’t practice

religion, their students in Hong Kong can’t protest, you can’t

publish what you want. Founders can’t start companies. Now

you’re not going to be able to play video games as much as you

want. You can’t use social media. And today, you can’t have

any control over your finance. If you squeeze people across

this many vectors, this hard, this quickly, I think free

birds, right, it could result in massive China’s not like a

uniform people in a uniform culture. Of course, yeah. But I

mean, I’m just listed like seven or eight things they’re doing to

but there are many provinces, many cultures, many differences,

many differences of experience, by the way, I mean, you know,

the rural population in China doesn’t experience much of what

I think is driving industry and driving this inequality and

perceived inequality and the changes that are underway. I

don’t think that a revolution is generally supported unless you

have, you know, enough kind of concentrated swell across the

population. I don’t know how you could see something like that

happening. And as diverse a population as China,

I support China’s limits on social media use by children. I

could I could use that here for my kids.

I clearly sacks is letting his kids use whatever they want. I

mean, we definitely need to have some of those over here. Balaji

What do you what do you think is going to happen? worst case

best case for China in the next two decades?

Well, so one thought I want to give is basically that in some

ways, this is inevitable, because China and India are 35%

of the world, Asia was the center of the world. And one way

of thinking about it is that America and the West executed

extremely well over the last couple of centuries. And Asia

didn’t with socialism and communism. And now that they’ve

actually got a better OS, it’s not like the US really could

restrain them, you know. So in that sense, that’s also part of

their internal narrative in a way. I mean, of course, Mao

killed millions of people there, they screwed up their

own stuff. But their narrative is, they were colonized by the

West and the opium wars are patronized as copycats

emasculated on film. For decades, they’re like heads

down in sweatshops, they built plastic stuff, they took orders

from all these overseas guys, and announce their time to stand

up and take back their rightful position in the world. And

that’s like, that’s their narrative. And so it’s important

to not not agree with it, but at least understand where it’s

coming from. Because they want it more, I think. And so I

disagree, Jason, with your with your view that they’re going to

have a revolution. I think that’s, like, that’s the kind of

that’s a Western mindset, where, you know, Australia, for

example, is having these COVID protests. In China, the harder

the crackdown, the less more crackdown, like, the easier it

makes the next crackdown. It’s it’s like, it’s something where

it’s not gonna be an easy revolution, that’s for sure. But

we saw protests, you saw Tiananmen Square, you saw Hong

Kong, and you’re gonna see anything since that was 30 years

ago. It’s still proof positive that if you squeeze people, they

will take to the streets.

Life in China has accelerated incredible pace over the past 30

years, the average person in China is so much better off than

they were five years ago, 10 years ago, 20 years ago, 30

years ago, revolutions don’t come out of that amount of

progress, right? When when your life when you go from $4,000 a

year on average income to $20,000 a year on average income,

what happens if they don’t have jobs in the recession,

the only time you revolt is because of economics. That’s

what I just said. So what happens if there’s a, if they

have a market crash percent a year, the GDP is growing 8% a

year, the population is seeing an incredible benefit. And what

is that reverses? What if that reverses? Would you see a

revolution then?

Well, Jay Cal, I mean, look, I think I think we it’s a

topologies point about this is like a Western mindset. I mean,

think about the Arab Spring, we saw all those revolutions with

the Arab Spring. And we thought, Oh, look, they’re they’re

finally throwing off the yoke of oppression. And now they’re

going to set up democratic states. And what do we actually

get? We actually got religious fundamentalism, right? Like we

didn’t get what we thought. And I think this happens over and

over again, is that, is that, you know, we’re trying to

superimpose our mindset on them. You know, we’re thinking like,

frankly, a Davos, man.

Yeah, no, I’m thinking like,

people want security, by the way, and security, security can

come in a lot of different forms. And religious

fundamentalism is one of them. And you know, the the way that

we see kind of government operate in China may seem

foreign and uncomfortable to us, but it provides enough security

to people to know they’re going to have housing, shelter, food,

medicine, and be able to do the things that they want to do to

some extent in some limit. You know, it’s it’s not necessarily

an equation that says all humans that don’t live like Americans

are going to be unhappy.

Yeah, last thing I’ll just say is basically, I think the idea

that China will collapse from internal revolution, or, you

know, the US military is like really strong relative to

China, I think are both actually forms of wishful

thinking. With that said, I do believe that we need a strategy

for China on a global scale. And I think the future is a

centralized East and decentralized West. And but but

I don’t think it’s going to be just, hey, deus ex machina is

gonna gonna solve this problem.

No, I don’t think the revolution is going to necessarily

overturn China, I think you’re going to see revolutionary

moments.

Well, so just just to say one thing in your defense, Jake out,

because everyone’s kind of beating up on you is I was

beating up, by the way, just

defending Jake out what’s going on. I’m not saying it’s a

guarantee of revolution. But I think this is going to be

there’s going to be some social unrest.

Yeah, look, I the one way in which I agree with Jake out is I

do think that freedom ultimately is the birthright of every

human, regardless of where you’re born, you know who you

are, what culture you are. But I think the thing that the United

States has learned over the last 20 years is the road from here

to there is going to be much more complicated than we think

and longer and longer and cultures are very stubborn

things. And they’re not going away anytime soon. And the

transition is going to have to happen within those cultures.

It’s not something that we can superimpose.

By the way, I would I would also point out freedom is the

birthright and the want of a people that at some point have

enough security to feel like they have that luxury. Up until

that point, I think that you have to make the decision of

does security give me more than freedom. And in a lot of cases,

security coming with all the costs it comes with may give

people more than absolute freedom. And that’s a

transitionary phase, I think, you know, a lot of people’s go

through people’s being civilizations and states and

whatnot.

Anybody have a prediction of what’s going to happen in the

next 20 years? Or we’ll move on to the next?

I just can’t believe sacks was empathetic to your point, Jake,

although that was a great moment. It’s really insane.

I have a few predictions. Yeah, I think actually, if you read,

you know, the kill chain or similar books, that’s by I think

Christian bros. It’s a good book, where basically is like,

you know, the US military has a perfect record in its war games

with China. China’s won every round. And, you know, if you if

you look at just the fact that with COVID US military basically

suffered a military defeat in the sense that it had this whole

biodefense program, it’s supposed to protect against

biological weapons. That didn’t work. Afghanistan, huge defeat,

$2 trillion. You have this Aukus thing where it looks like France

is now pulling off and you know, from from NATO or the EU is

doing their own thing. I think that China is and then China is

really already predominant in many ways in Asia. And the US

just doesn’t care about the area as much. I mean, who wants to

start another gigantic war over this? Certainly, I don’t think

the people of America do after after 20 years of forever war.

And so and China really cares about Taiwan, they really care

about their backyard. So whether that’s a war, or whether that’s

a referendum on Taiwan, or whether it’s some unpredictable

event like COVID, I don’t know. But I do think that China does

have some Monroe doctrine like thing that it gets to within

Asia, where basically it says, you know, just like the US said,

Hey, you know, we’re running this hemisphere, they’re saying,

hey, we’re running the sector of things, whether that’s a

military conflict, where the US decides to just withdraw, I

don’t know. And then I think what has to happen is, we have

to figure out what the decentralized West looks like an

asymmetric response to China, because it’s going to basically

be the number one centralized state in the world, you’re not

gonna be able to combat it head on militarily, it’s just, you

know, it’s got like 10x growth in front of it, it’s already a

monster. Unless there’s some assassination or revolution or

something crazy like that, that’s hard to predict. If it

manages what it’s got, it’s got like, it’s like Google 2010,

it’s got 10 years of that in front of it. And whether it’s a

Chinese decade or Chinese century, I think depends on

whether we can build the technologies to defend freedom,

meaning like encryption, meaning, you know,

decentralized social networks, meaning these kinds of things.

Because that’s the only I think, kinds of tools that are going to

help us whether it’s drones, whether it’s other kinds of

things, asymmetric defense versus what they’re going to be,

it’s not going to just be a deus ex machina.

I think I look, I think that’s a great point to end on Jason,

because there’s other stuff we want to talk about. So what are

the things that you know, apologies commented on that I

give them, you know, a tremendous amount of credit for

is corporate is the idea of corporate journalism. In fact,

biology, you’re the first person I heard that term from corporate

journalism, which is a recognition that all of these

reporters actually are employees of companies, and they have a

company culture, and they often have they have owners, the

companies do, those owners often have an agenda, there’s often a

dogma inside these corporations. And, and it really got me to see

journalism in a new light, because these journalists

portray themselves as the high priest of the truth, who are

there to speak truth to power. And actually, they’re really

just kind of the lowest paid functionaries on the corporate

totem pole. And, and, you know, in contradistinction to what

you’ve called citizen journalists, who are people who

are writing what they see as the truth in blogs, or, you know,

formats like this, where they are not getting paid for it, you

know, we’re doing it because we want to put forward what we know

to be the truth. And actually, I’d love to hear you speak to

that, because I think this is like one of the most powerful

ideas that I’ve heard you put forward.

Sure. So, so much I can say about this. The first thing I

would do is I’d recommend a book that recently came out by Ashley

Rinsberg, called The Grey Lady winked. And the reason it’s very

important, and I put it up there, frankly, with top five

books I’d recommend, I know, I’ve recommended other books,

top five books, I’d recommend Grey Lady winked, it goes back

through the archives, you know, the New York Times calls

themselves the paper of record, they call themselves, you know,

the first draft of history, they’ve literally run billboards,

calling themselves the truth. But it’s just owned by some

random family in New York. And, you know, this guy, Arthur

Salzberger, who inherited it from his father’s father’s

father. And so you have this, like, random rich white guy in

New York, who literally tries to determine what is true for the

entire world, his employees write something down, we’re

supposed to believe that this is true. And I simply just don’t

believe that that model is operative anymore. Because I

think truth is mathematical truth. It’s cryptographic

truth. It’s true that one can check for oneself, rather than,

you know, argument from authority, it’s argument from

cryptography. And, you know, one of the things with Bitcoin with

cryptocurrencies is given decentralized way of checking on

that. Now, to the point about corporate media, it’s they’re

literally corporations, these are publicly traded companies

with financial statements and quarterly, you know, reports and

goals and revenue targets. And so once you, you know, kind of

are on the inside of one of these operations, you realize

that that hit piece, or what have you is being graded in the

spreadsheet for how many likes and RTS it gets on Twitter. And

if it gets more, they’re going to do more pieces like that flood

the zone with that. And if it doesn’t, then they’re going to

do less. And they’re all conscious of this. You know, for

example, Nicholas Kristof wrote an article, I think it’s like

it’s the articles, no one reads articles, someone will read

where you notice that his Trump columns get something like 5x

more views than his other columns, it’s like a huge ratio.

And so at least some folks there are privy to their to their page

views. So and of course, they’re looking at their Twitter likes

and RTS, even if they, those are not directly page views there,

they’re certainly correlated with pages on the article. So

all these folks are literally employees of for profit

corporations are trying to maximize their profits. But we

believe them when they mark themselves as the truth, like

the NYT, or as democracy itself, like the Washington Post, or

fair and balanced, like Fox, these people equate themselves

with like truth, democracy and fairness. They weren’t exactly

around at the founding. Okay, they weren’t they weren’t part

of the Constitution in 7076, the post offices, but these media

corporations were started later on and have kind of glommed

themselves on and declare themselves like part of the

establishment, you know, and and they are not. And the last

point, and I’ll just, you know, give you guys, you know, the

Florentines, but we didn’t go and say, Oh, BlackBerry do

better. Blockbuster do better. Barnes and Noble do better. We

just replace them disrupted them with better technological

versions. And so the idea that Oh, you know, New York Times do

better. That’s completely outmoded way of thinking about

it, we need to disrupt, we need to replace, we need to build

better things, we need to have things that have like on chain

fact checking that have voices from overseas, that have voices

that are actually experts in their own fields that have

voices that are not necessarily corrupted by what you mean by

on chain fact checking. Ah, give an example. So this is this is

a very deep area. But fundamentally, the breakthrough

of Bitcoin was that an Israeli and a Palestinian or a Democrat

and Republican or a Japanese person, a Chinese person, all

agree on who has what Bitcoin on the Bitcoin blockchain. It is

essentially a way of in a low trust environment, but a high

computation environment, you can use computation to establish

mutually agreed upon facts. And these facts are who owns what

million or billion of the roughly trillion dollars on the

Bitcoin blockchain. And that’s the kind of thing that’s I mean,

people will fight over a $10,000 shed, you know, when when you

can establish global truth over a byte, which says, you know, do

you have 20 or five or 10 BTC, you can actually generalize that

to establish global truth on any other financial instrument. And

that’s tokens, and that’s, you know, loans and derivatives. And

that’s a huge part of the economy. And then you can

generalize it further to establish other kinds of

assertions. And that gets a little bit further afield, but

not just, you know, proof of work and proof of stake, but

things like proof of location, or proof of identity. There’s

various other facts you can put on there. So you start actually

accumulating what I think of is not the paper of record, but the

ledger of record, a ledger of all these facts that some of

them are written by so called Crypto Oracle, some of them

arise out of smart contracts, but this is what you refer to.

And as a today model of what that looks like, it’s sort of

like how when someone links a tweet to prove that something

happened, people link an on chain record to prove that

something happened. Concrete example, do you guys remember

when Vitalik Buterin made that large donation earlier this

year? Yes. Okay, so you want to talk about that? Explain what

happened? I think that you basically tweeted out something

that was essentially trying to raise money to secure necessary

equipment and pharmaceutical supplies to India during a

pretty bad COVID outbreak. And then I think you you decided

that you were going to donate some money and then Vitalik

basically stepped up and actually gave quite a large

sum. I’m not exactly sure the exact number of all that.

Yeah. So it was it was an enormous amount in illiquid

terms of, of this meme coin, these Shibu coins. But the thing

is that everybody when they when they wanted to prove that this

has happened, because it’s so unbelievable, such a large

amount of money was marked it on the on the order of a billion

when he gave it, do how they proved that they didn’t link a

tweet, they linked a block Explorer. Okay, like an on chain

record that showed that this debit and this credit happened.

And the big thing about this is, you know, we take for granted

when you link a tweet, you’re taking for granted that Twitter

hasn’t monkeyed with it. But guess what, Twitter monkeys with

a lot of tweets, he says, a lot of people get disappeared. And

so it’s not actually that good a record of what happened

anymore. This is deleted, this guy got suspended this, you

know, like, even the Trump stuff, forget about like Trump

himself. But that historical archive of what happened, you

can’t link it anymore. It’s link rotted just from that, like, I

know, it’s one of the 1000 most important things about it. But

it’s an important thing.

In the example of say, Taiwan, and China believing Taiwan is

part of the one China concept, and Taiwan believes it is a

country and everybody in the world has a different vote on

that. How does the blockchain clarify? What is the fact about

is China a country? Or is it a province?

Very good question doesn’t happen. Well, what it does is it

clarifies the facts about the metadata, who asserted that it

was a country and who asserted that it was a province? And what

time did they do so? And, you know, what money, how much BTC

did they put behind that, or what have you, so it doesn’t

give you everything. But it does start to give you unambiguous,

like proof of who and proof of when and proof of what, and then

from that, at least, yeah, I mean, like the way, the way I’ve

kind of explained it to family members who’ve asked is, you

know, that the concept of a chain is difficult, I think, for

people to that aren’t, you know, have don’t have a background in

computer science really grok is like, but everyone understands

the concept of a database, you know, there’s a bunch of data in

there, except in this case, the data that makes up the database

is what’s being verified by everyone. And it’s distributed.

So everyone has a copy of it.

I want to know what you guys think about this week in the

Facebook dumpster fire. Let’s move to something splashy.

And can you say one thing? There’s a book Friedberg on what

you just mentioned, which is called the truth machine by Casey

and Vigna. And it gives a pop culture explanation of the

ledger of record type concepts I just mentioned,

which which I don’t think I don’t think a lot of people

grok at biology to your point. And I think, you know, we’re

skipping past it. But it’s a really important point, which is

historically, databases have sat on someone servers, and

whoever has those servers decides what data goes in the

database and how they’re edited and what’s allowed to come out

of the database. So in this notion, generally, a database

with information and it can be held by lots of people who

generally as a group kind of vote and decide what’s going to

go into it. And that’s, that’s the power of decentralization

and how it changes, you know, the information economy, which

drives the world. And it’s going to have a lot of implications,

right? Facebook’s worst month ever continues. We talked last

week about Facebook having a lead internal leak called the

Facebook papers. This is a continuous leak to not only the

Wall Street Journal, but apparently members of Congress

are also getting it and the leaker and the SEC and the SEC

and the leaker apparently works in the safety group, according

to a congressperson who has been getting it and they are going to

uncloak themselves, and that they were leaking this out of

frustration, that there is human trafficking, democracy issues,

and obviously self harm in girls using Instagram. And, you know,

this research, but that’s not all Facebook is admitting for

the first time this week that Apple’s privacy updates are

hurting their ad business. And I think the story you’re referring

to is that two groups of Facebook shareholders are

claiming that the company paid billions of extra dollars to the

FTC to spare Mark Zuckerberg and Sheryl Sandberg from

depositions and personal liability in the Cambridge

Analytica saga. From the political Politico article,

quote, Zuckerberg, Sandberg and other Facebook directors agreed

to authorize a multi billion dollar settlement the FTC as an

express quid pro quo to protect Zuckerberg from being named in

the FTCs complaint made subject to personal liability or even

required to sit for a deposition. According to the

article, the initial penalty was 106 million. But the company

agreed to pay 50 times more 5 billion to have Zuck and

Sandberg spared from depositions liability. Here is the money

quote, the board has never provided this from the group of

shareholders suing the board has never provided a serious check

on Zuckerberg unfettered authority instead, it has

enabled him defended him and paid him paid billions of

dollars for Facebook’s corporate coffers to make his problems go

I have one prediction. The Facebook whistleblower. You

know, when you are a federal whistleblower, number one is you

get legal protection. But number two, which people don’t talk

about much as you actually get a large share of the fines that

are paid by the act of your whistleblowing. You know, there

was a couple of SEC claims that I think were settled last year,

where the whistleblower got paid, I think, like 115 odd

million dollars or something, and just an enormous amount of

money. And the SEC has done a fabulous job. And, you know,

using whistleblowers as a mechanism of getting after

folks. And, you know, I think the SEC said they’ve collected

almost a billion dollars since this whistleblower program

started that they’ve paid out or something just an enormous

amount. And I had this interesting observation, which

is, this person leaked a bunch of stuff or whistle blew to the

Senate to Congress to the SEC, there probably will be an

enormous fine. This person may actually make billions of

dollars, which will then make every other employee at

Facebook really angry about why they didn’t leak it first,

because all I guess all this stuff was sitting around. And

apparently now they’ve shut it down, right. So that entire data

repository around this whole topic is no longer freely

available for employees to peruse. So

what under a key tam thing?

Well, I think it was more like, like, I guess, like, all of this

data was sitting inside of some Facebook internal server.

No, I mean, I mean, what this this leaker makes money under

like key tam.

So the SEC will pay for information that results in a

fine. And so they just recently announced that they paid out

$114 million whistleblower payment that was the highest

ever. And that they this whistleblowers extraordinary

actions and high quality information prove crucial to

successful enforcement actions. I don’t think they announce all

of these whistleblower payouts, they just pay them. So they’re

not

so that’s, that’s my one observation is I actually think

this whistleblower may make billions of dollars. So more

than any of us made at Facebook, which I think is hilarious. But

the second thing, which is more important is that there was an

article in the Wall Street Journal about how sentiment

amongst Americans have now really meaningfully changed. And

I Jason, I don’t know if you have those stats. But this is a

plurality of democrats and republicans where it’s like 80%

of anybody now basically says the government needs to check

big tech.

The Wall Street Journal published an article yesterday

highlighting a new poll conducted for the future of tech

commission, it found that 80% of registered voters 83% dem 78%

repubs agreed that the federal government quote, needs to do

everything it can to curb influence of big tech companies

that have grown too powerful, and now use our data to reach

far into our lives findings are based on a survey of 2000 or so

registered voters.

I think it’s a really, really, really tough road that these

guys will have to navigate these next few years.

Can I can I offer some contrary views here? Yeah, please. So, um,

you know, the whistleblower thing, you know, real

whistleblowers, in my view are like Snowden or Sanjay, who are,

you know, basically overseas and, or in prison for for telling

what the US government is doing. And the difference is, I’d say,

they’re whistleblowing, if accepted and acted upon would

reduce the power of the US government. Whereas these, you

know, kind of awards and so on, I think they they do distort

incentives. It’s not like they’re giving a billion

dollars to Snowden for blowing the whistle on the NSA, the

military industrial complex is not happy with that. But this

money is being given because government is currently mad at

Facebook and wants to do something that is like a quasi

nationalization of Facebook. Now, very similar to what

happened in China, where basically all the tech CEOs,

they just do it much more explicitly there. They just

basically decapitate all them say, okay, you’re going, you

know, spending time with your family. In the US, it’s done in

this sort of denied way, and so on. But the US government

getting more control over Facebook is not a solution to

Facebook’s real problems. It’s just going to mean backdoor

surveillance of everything, every single thing that was

pushed back on every end to end encryption thing that they

implemented. Now, the Keystone cops in the US government, not

they don’t just surveil everything, then their database

gets leaked. And it’s all on the internet, just like what

happened under the solar winds hack. So I’m not denying that

there are, you know, like bad things about Facebook, I

actually think on net, it’s probably being more beneficial

than many people say. But I don’t believe that the federal

government is a solution to those problems. I think the

solution looks more like decentralized social networking,

where people have control over their own data, not simply the

US government quasi nationalizing the thing.

So, you know, people bring up this decentralized social

network thing, and as if it is a better solution, I think you

believe it’s a better solution. But I rarely hear anybody talk

about, well, if there’s slander on a decentralized network, if

there’s child pornography, if your personal banking

information, or your, you know, you were personally hacked, and

that information was put on a decentralized social network,

that cannot be reversed and stopped, because it’s

decentralized, correct?

It depends. You know, the thing is, it’s basically about why does

it depend, you just said that the blockchain couldn’t be

changed, and that all the facts were permanent. So why does it

depend now?

Well, for something like child porn, for example, it’s actually

being used for that you’re not going to find lots of people who

are running those nodes. It is, it’s something where edge cases

are always used to attack something. There’s a famous

cartoon, which says, How do you want this wrapped, and it’s

called control of the internet. And it’s either protect children

or stop terrorists, right. And so when we talk about an edge

case like that, I mean, the CSAM stuff, child porn, you know,

that was that’s used by Apple to justify intrusive devices that

are scanning everybody’s stuff. The I think the answer to a lot

of those things is, if you’re doing something that’s bad,

there’s usually ways of going after it, that don’t involve

this gigantic surveillance state that was after all only built,

or in the last 10 or 20 years, just normal police work that you

can do. If they’re actually like, you know, a bad guy,

there’s other forms of police work, you can get search

warrants, you don’t have this completely lawless thing, where

you just, you know, some guy in San Francisco hits a button, and

you’re digitally executed. And so, so, you know, it’s not that

there isn’t any possibility for rule of law, it’s just that it

has to actually be exercised in this.

I think we’re on listen, I think we’re a long way away from

decentralized social networking actually being the norm or being

a solution, Jason, I think we’re at the step of actually

figuring out how much tolerance we have for probably

specifically Facebook and Google’s specific business

models. And it’s those business models that I think are coming

up against privacy, they theoretically now, and we’ll

figure this out, maybe coming up against mental health, and you

know, our child welfare policies, and what we all view

about that. And those are fundamentally governmental

issues that they should adjudicate. And I think the more

important thing that I take away from all of this is that we’ve

all kind of let it probably get a little bit too far. And I

think now that there’s a plurality, something’s going to

happen, I don’t think it’s going to be right. I don’t think it’s

going to be just it’s kind of like trying to perform surgery

with a rusty knife. There’s going to be all kinds of

collateral damage, specifically to how to police Facebook,

Twitter, social networks, I think it’s just like social

media, I think we’ve jumped the shark at this point. And I think

folks will want to

decentralization as the solution, like biology.

I do think that that’s the ultimate solution for two key

things. One is, the most important thing that we all want

is to know what the actual economic relationship we’re

having with folks that we spend time with this. So when we spend

time with friends, that’s friendship, there’s no economic

relationship there necessarily, okay. When we spend time with a

lot of these applications, there is a subtle economic

relationship that is actually hidden from us, which is that we

believe we’re getting value for free. But really, what’s

happening is we’re giving back a bunch of information that we

don’t know. When you move to a world of decentralization, you

shine a light on how people make money, and you allow us to vote.

Do I want it? Do I not that single feature will provide more

clarity for people than any of this other stuff will, because

it’ll force people to then step into an economic relationship

with these organizations. And I think that that’s just fair,

because those folks should be allowed to make money. But we

should also be allowed to know what the consequences are and

then decide.

David, you are a big proponent of freedom of speech. We saw

massive election interference, the Russians trying to use

social media to create division, other countries doing it to each

other. It’s not just the US and Russia, it’s China and Russia

and everybody doing it to each other. Do you believe that

something like election interference and those bots

would be solved or it would get worse because of

decentralization? Are you a fan of decentralization? Or would

you rather have a centralized Facebook, Twitter and somebody

responsible like Zuckerberg or jack to mitigate this for

democracies around the world?

Well, the problem that we have is we do have a problem of

social networks spreading lies and misinformation. However, the

people who are in charge of censoring those social networks

keep getting it wrong. So they allow disinformation to be

spread by official channels, whether it’s, you know, you

know, whether it’s a corporate journalist,

Are you going to say Dr. Fauci?

There’s so many official channels that get things wrong.

We talked last week about the Rolling Stone ivermectin hoax.

There’s been absolutely no censorship of that manifestly

wrong story. There’s no labeling of it. But then a subjective

opinion, like what Dave Portnoy posted about AOC, attending the

Met Gala, which can’t be factually wrong, because it’s

just him, an opinion that gets fact checked and labeled. It’s

bizarre. So the situation we have today is we’re not

preventing misinformation. We’re just enforcing the cultural and

political biases of the people who have the power. And that is

always a problem with censorship. And this is why I

agree with Justice Brandeis when he said that, you know, the

sunlight’s the best disinfectant, the answer to bad

speech is more speech. We need to have more free and open

marketplaces of ideas. And that ultimately is how you prevent

disinformation.

So decentralized Twitter, decentralized social networks,

do you think that is too much sunlight, and too unruly, the

fact that things could be spread on there?

And well, I’d like to see what those things look like when we

actually have them. It’s I agree with Martha, we’re still some

ways off from that.

Are we? I mean, but can I say a few things? Yeah, go ahead.

Because I think we have these out there, isn’t mastodon out

there and other services out there, and they’re contending

with these very issues. So by the way, it’s happening in

philosophy was not sorry, sorry, apology, I just say one thing

before you go. But like this, this general philosophy is not

novel. You know, the internet and the word being called the

tech platforms were meant to be the response to the undue

influence that kind of Americans thought existed already in the

media when they emerged in the late 90s. And, you know, you can

go back hundreds of years, like the state was meant to be the

response to the church. And, you know, the media was meant to be

the response to the state and propaganda. And then the tech

companies were meant to be the response to media. And, you

know, now we’re talking about decentralization be kind of

being the response to tech. And at some point, you know,

information accrues in this kind of asymmetric way. And it be

called becomes called that undue influencer. And that I think

ends up becoming the recurring battle that we’ll continue to

see whether or not this notion of decentralized systems

actually is the endpoint or is just the next stepping stone in

the evolution. That is this constant kind of evolving cat

and mouse game of where does the information lie, who has

control over it, and who’s influencing people ends up kind

of being I think, the big narrative that we’ll kind of

realize over the next couple decades. But I don’t know

biology, if it becomes the endpoint, right? I mean, this

is this feels to me part of a longer form narrative.

Yeah, so I think like lots of things look cyclic, if you look

at them on like this, if you look from the z axis is more

like a helix where you do make progress, even if it seems

you’re going in a loop. And so I think, you know, it’s

centralized, then you decentralize and you

recentralize. It’s like the concept of unbundling and

bundling, you unbundle the, the CD into individual mp3s, you

rebundle into playlists, right. And so with decentralized media,

it’s not purely every single node on their own. I think it’s

more like a million hubs and a billion spokes. And Jason, to

your point, basically, most of those hubs are not going to

allow things that 99.99% of people think are bad, like see

Sam, you know, as for other things like, you know, slander,

hack documents, you mentioned, the thing is current central

arbiters will falsely accuse people of these things or

enforce them in political ways. It’s the centralization is

actually also not a solution is being abused as sacks, you know,

points out, in fact, official disinformation early in COVID,

which, you know, I had to like, basically be back with a stick,

fortunately, you know, got some of it out in time. But, you

know, people said the flu is more serious, the travel bans

were overreactions that only Wuhan visitors were at risk,

that avoiding handshakes is paranoid, that the virus is

contained, tests are available, masks don’t help, you know, all

that stuff, the Surgeon General himself, you know, tweeted out,

you know, people don’t wear masks, right? BuzzFeed, you

know, NYT, all these guys got the story wrong, and then they

rewrote history to pretend that they didn’t. So that to me is a

much greater danger when you have a single source of truth

that’s false.

We’re picking the least bad solution.

It’s such a good point, because I’m old enough to remember when

Balaji was right. About everything related to the

beginning of COVID. And I’m old enough to remember when in April

of last year, I wrote a piece in favor of masks, when the WHO and

the Surgeon General and all these official channels were

saying don’t wear masks. So the problem is with with this, these

with official censorship, is that they keep getting it wrong.

They keep getting it wrong. And I want to hold on, I want to

bring up one more one more quick point. Okay, Jason, you

mentioned foreign interference on Facebook, I would really

encourage anybody who’s concerned about that issue, to

look up you can go look, you just Google the actual ads that

were run by agents of the FSB on Facebook. During the 2016

election, you can actually see the ads they ran. I want to make

two points about that. Number one, the ads are ridiculous.

They are. They are sort of like an absurd. You know, foreigners

perspective.

They’re me me with bad English. Yes.

Bad English. And it’s it’s somebody who doesn’t understand

American culture’s attempt to propagandize an American and you

look at it, it’s so ham handed. Let me give an example. It’s

like, in one of them, they’ve got Jesus arm wrestling with the

devil, sayings, and it’s Jesus saying that I support Trump, and

the devil saying I support Hillary Clinton. I mean,

literally stuff like that. Okay, it’s

utterly you’d see at a Trump rally,

it’s utterly absurd, and nobody would ever be convinced by it.

The second thing is, the second, the second thing about it is

that when you actually look at the number of impressions that

were created by the sum total of all of these, so the so called

disinformation of all these ads, it is a fractionally small, if

intestinal drop in the ocean compared to the total number

of impressions on Facebook. And so I’m not disputing the fact

that somebody in the basement somewhere in Moscow, perhaps was

running

so it was proven. It was like hundreds of people

was running some sort of disinformation operation that was

running ads on Facebook. What I am saying is that when you

actually look at the effect, and quantitatively and

qualitatively, you realize that that whole story was massively

brought blown up abortion in order to create an hysteria that

then justify censorship, then justifies the empowerment by

centralized authorities to be able to regulate to be able to

regulate these social networks with the effect that the people

in power end up censoring in ways that do not support the

truth, but actually just reinforce their own power. That

is what the disinformation story is really about.

No, it’s not what it’s really about sacks is that Russia wants

to pit people like you and me against each other, you’re right

leaning on left leaning and what they want to do is create this

moment where you and I are fighting over this instead of

fighting Russia. Russia has this as a strategy to demoralize us.

And this is classic KGB technique. So battles back and

forth between Americans so we don’t fight against

I have no interest in fighting Russia per se. I’m not interested

in picking fights with foreign countries.

And you should want to fight against Russian interference.

Yeah, I’m also not engaging in a fight with fellow Americans. I’m

attempting to de propagandize fellow Americans who’ve been led

to believe that Russian interference in the election was

I’m not saying it didn’t happen. But they’ve been led to we know

it’s been led happened, but they’ve been led to believe that

it was a greater threat than it actually was in order to empower

centralized authorities to engage in censorship over social

network. So I’m trying to essentially deprogram an

enormous amount of programming that’s taken place. I do not

consider that to be fighting with fellow Americans.

Well, I mean, the point is, you have the GOP recounting votes,

even to this day, saying the election was stolen. And then

you have on the left, you have the Democrats saying, Russia won

the election for Trump. In both cases, these are probably

factually incorrect.

In our last podcast, I cited the piece by Rich Lowry, which he is

the editor of National Review, speaking to conservatives saying

that this whole stolen election myth, yes, he called it a myth

is an albatross is it is nothing, it will do nothing but

backfire on conservatives and Republicans. I think there are

plenty of people who recognize that story to be what it is.

We’re talking about something very different here.

I kind of just want to pivot forward a little bit. And I

think it’s a good question with biology on on the line. But

yeah, let’s let’s use let’s assume we move forward to this

decentralized model where there isn’t a central media platform

that adjudicates content and makes it available to to the

users of the platform. So now in a decentralized world, take

to take YouTube, for example, YouTube has an application

layer, which is the website we all use to access the videos,

and there’s a recommendation list that pops up. And then all

the media that that exists on the YouTube platform sits on

some servers. And so the application is how I’m kind of

selecting what media to watch. But that’s kind of being

projected to me because of the recommendations being made by

Google and the search function. If you guys remember, I don’t

know if you guys are old enough. But you know, in the early 90s,

we were all on gopher boards, and we were trying to find

information. And it was a total cluster, right? I mean, there’s

just like, nowhere, no way to kind of find what you’re

looking for. And so search became kind of the great

unlock right and use that and search became the great unlock

for, you know, for accessing content on this distributed

network that we call the internet. Now in the future, if

all of the YouTube media is decentralized and sits on

distributed servers and sits on a chain or whatever, what is

the application layer look like biology? Because how do you end

up giving users are ultimately going to have to pick an

application or pick a tool to help them access media to help

them access information. And there has to be to some degree a

search function or an algorithmic function that

creates the list of what content to read, or they simply

subscribing to nodes on the network. And that’s kind of the

future of decentralization where there’s no longer a search a

recommendation function, but there is simply a subscription

function. And I think that that to me is kind of a big

philosophical question, because from a user experience

perspective, people want things easy and simple, they want to

have things recommended to them, they want to have a bunch of a

list of things, and they click down the list, and they’re done.

I’m not sure most people as we saw in web 2.0, when there were

all these, like, you know, make your own website stuff, and you

had RSS feeds, and that all died, because it was complicated,

and it was difficult, and it wasn’t great content for most

people, they prefer having stuff presented to them. So do we just

end up with like 10 2030 subscription applications that

create different algorithms and different kind of access points

for the content? Or are people just living in a subscription

universe in a decentralized world? When it comes to media?

It’s a great question. So I think, first, we have some

vision of what that world looks like already. Because if you

think about block explorers, and exchanges and wallets, and much

of the rest of the crypto ecosystem, they are all clients

to the Bitcoin and Ethereum and other blockchains, right? So,

you know, I wrote this post called, Yes, you may need a

blockchain, where, you know, people have said, Oh, blockchains

are just slow databases. And that’s like saying the early

iPhone camera is just a poor camera. Yes, it was worse on one

dimension, you know, image quality, but it was far better

on other dimensions, namely, the fact that it was ubiquitous, it

was always with you, it was free, it was bundled, it was

programmable, it was connected to a network and so on. And so

blockchains, yes, they have lower transaction throughput,

but they are 1000x or more on another dimension, which is the

number of simultaneous root users. That’s to say it’s a

blockchain is a massively multiplayer database, where

every user is a root user. That’s meaning everybody can

read the rows in the Bitcoin blockchain. And anybody who has

some Bitcoin can write a row that’s a debit or a credit to

someone else. Anybody with compute can mine blocks. Okay,

so it’s open and permissionless. Similarly, for a decentralized

social network could operate in a similar way. Whereas, let’s

say something like Twitter, or PayPal, the root password is not

public, nobody can can access it. And so what this leads to,

to kind of continue your point is basically, I think, there’s

basically been three eras of the internet. The first was p2p,

which was, you know, peer to peer, right. And so individual

nodes are point to point communicating, and that’s FTP.

And it’s, it was telnet before SSH address. Yeah. Yeah, exactly.

Right. And so the great thing about this is open source is

peer to peer is fully programmable, you can see

everything, right? Then, because of search, because of social,

because of the rise of the second era MVC model view

controller, essentially, many protocols like social networking

or search are not efficient. If every node is pinging every

other node, you can’t ping every other node with the index of the

web, you can’t ping every other node with Facebook’s entire

social graph, when you know, you go and message somebody, you

want a central hub with their photos and stuff. So you can

just send a few packets back and forth, right. And this led

to the, you know, the last 15 years, these gigantic hubs last

20 years, these giant hubs, search and social and messaging,

two side of marketplaces, hub and spoke architecture. And

these hubs have global state, and they’re highly monetizable,

you can make billions of dollars off them as many of our friends

have, right, by the way, that the early peer to peer versions

failed, right? Because juice, I mean, you know, the alternative

didn’t really work out. Right? Yeah, exactly. Right. So, I

mean, BitTorrent did exist during this time, it’s not like

it was zero. But generally speaking, this was the era of

hub and spoke MVC dominance. And now we’re into a third

architecture, which I call CBC, client, blockchain client. And

so desktop clients have a blockchain that they communicate

with, for example, I have a wallet, you have a wallet on

your client, and then the Bitcoin blockchain intermediates

us I debit in credit you, okay, that’s a different architecture

than both MVC and CBC, it actually combines the positive

qualities of both. It’s decentralized and open source

and programmable, like peer to peer. But it also has global

state, and it’s highly monetizable, like MVC. So

combines the best of both worlds. And it has some

something that’s very new, which is not open source, where it’s

open source code, it’s open state, where it’s open state

database, like open state means the back end is open also. So

all the applications that get built out, essentially, our

clients that same back end that same Bitcoin or Ethereum or

what have you back end, and then you kind of exchange between

them. And the true scarcity now comes not from locking in your

users, but from holding a currency, it kind of gets

reduced, the IP gets reduced to its minimal viable thing, which

is holding that cryptocurrency and what you can do with that.

But so give me the meat, give me the media analogy, right? So

where does the media sit? And how do I as a user have an

experience on what media to view and to access, like think about

because again, like just speaking in a in a layman’s term

for folks, maybe to understand, you know, most people, I don’t

think understand the dynamics of what underlies a social network

as much as they understand the user experience of browsing

YouTube, right? So yeah, what is the what is my option in

browsing the decentralized version of YouTube? What does

that experience end up looking like in this decentralized

world? Right? Who ultimately adjudicates the algorithm that

defines what my recommended videos are that I’m going to be

accessing from these kind of, you know, different nodes?

Well, I think the idea is you can bring your own, you can pick

one, there’ll be a library.

Well, that’s my point is like the picking function is what

doesn’t didn’t work in web 1.0 or web 0.9. Right?

So we’ll take take a look at. So first of all, that state could

potentially so today blockchains are not very scalable. But

tomorrow, they already actually they’re improving very rapidly.

If you’re if you’re following Matic, if you’re following

polygon, and if you’re if you’re looking at what Solana is doing,

like you can do a lot more on chain in 2021 than you could in

  1. It’s it’s kind of like bandwidth, it just improves

every year. So more applications will become

feasible, like search indexes. Moreover, blockchains actually

so just to your specific point about search indexing,

blockchains actually radically simplify search engine to such a

point there are dark horse competitor to Google. What I

mean by that is Google index the open web because open web is

open. And then social networks were like a dark web, you know,

to them where that’s why they were so mad. Google was so mad.

It couldn’t acquire Facebook, right? Because it couldn’t

index it couldn’t index Twitter had two deals with them. That

was all on their, you know, on their server. So the social web

is even harder to index than the open web. But block explorer

blockchains, and, you know, block explorers, which are like

search engines on top of them, blockchains are easier to index

than either the open web or the social web. And the reason is,

many of the problems associated with indexing just go away. For

example, just one small problem, as you’re probably aware, when

you’re indexing the open web, let’s say you’ve got a million

websites, you’re crawling, each one of them, you only have you

only have a certain bandwidth amount total. So you have to

figure out, okay, do I recrawl this site or this one? Which one

is going to freshen? Okay, does this update every day or not? So

you have to run all these statistical estimators just to

figure out when to crawl a site. All that goes away, for example,

in the context of a blockchain, where you just subscribe, and

you get a block of transactions,

everybody’s got the real time index, and they can, there’s no

advantage being Google and having to start from Friedberg,

we got to wrap for bestie Chamath, David Sachs, Friedberg

and our bestie Balaji. Thanks for coming on the pod. And we

will see you all next time on the all in podcast. Bye bye.

Let your winners ride.

Rain Man, David Sachs.

We open sourced it to the fans and they’ve just gone crazy with

it. I love you.

Queen of

besties are

dog taking a notice in your driveway.

We should all just get a room and just have one big huge orgy

because they’re all just like this like sexual tension that

they just need to release.

What your

b

mer.

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